New South Wales Supreme Court CITATION : Marcolongo v Mattiussi [2000] NSWSC 834 CURRENT JURISDICTION: Equity Division FILE NUMBER(S) : SC 3934/96 HEARING DATE(S) : 17, 18, 19, 20 and 21 July 2000 JUDGMENT DATE : 24 August 2000 Claudio Paul Marcolongo and Diane Kathleen Mary Marcolongo (P) PARTIES : Adrian Mattiussi (D1) Jennifer Mattiussi (D2) Jenner Holdings (NSW) Pty Ltd (D3) JUDGMENT OF : Young J P T Taylor (P) COUNSEL : J W Stevenson (D1) C Harris (D2 & 3) Gells (P) SOLICITORS : Mallesons Stephen Jaques (D1) Picone & Co (D2 & 3) CATCHWORDS : PROFESSIONS & TRADES [72]- Lawyers- Developer joint venturer with solicitor- Extent of fiduciary duty and duty of care. Adams v Bank of NSW [1984] 1 NSWLR 285 Atwood v Maude (1868) 3 Ch App 369 Beach Petroleum NL v Kennedy (1999) 48 NSWLR 1 Bennett v Minister of Community Welfare (1992) 176 CLR 408 Bryan v Maloney (1995) 182 CLR 609 Bullock v Crockett (1862) 3 Giff 507; 66 ER 509 Canson Enterprises Ltd v Boughton & Co (1991) 85 DLR (4th) 129 Carpenter v Buller (1841) 8 M & W 209; 151 ER 1013 Chittick v Maxwell (1993) 118 ALR 728 Clark Boyce v Mouat [1994] 1 AC 428 Colin D Young Pty Ltd v Commercial & General Acceptance Ltd - C/A - 24.8.1982 Cuckmere Brick Co Ltd v Mutual Finance Co Ltd [1971] Ch 949 de Vaux v American Home Assurance Co 444 NE (2d) 355 (1983) (Mass) Duncan v Commissioner of Land Tax (1915) 19 CLR 551 Hawkins v Clayton (1988) 164 CLR 539 CASES CITED : Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41 Kurtenbach v Te Kippe 260 NW (2nd) 53 (1977) (Iowa) Lamb v Evans [1893] 1 Ch 218 Law Society of NSW v Harvey [1976] 2 NSWLR 154 Lowy v Alexander [2000] NSWSC 661 Lucas v Mok (1983) 9 Fam LR 180 McDonald v Deputy Commissioner of Land Tax (1915) 20 CLR 231 Mackay v Dick (1881) 6 App Cas 251 Maguire v Makaronis (1997) 188 CLR 449 O'Reilly v Law Society of NSW (1988) 24 NSWLR 204 Perre v Apand Pty Ltd (1999) 198 CLR 180 Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146 Schipp v Cameron - 9 July 1998 Sheinkoph v Stone 927 F (2d) 1259 (1991) Solicitors' Liability Committee v Gray (1997) 77 FCR 1 Spellson v George (1992) 26 NSWLR 666 Tyrrell v Bank of London (1862) 10 HLC 26; 11 ER 934 DECISION : See para 161 THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION YOUNG J THURSDAY 24 AUGUST 2000 3934/96 - MARCOLONGO & ANOR v MATTIUSSI & ORS JUDGMENT 1 HIS HONOUR: The plaintiffs sue the defendants for breach of contract, negligence and breach of fiduciary duty. 2 The plaintiffs are property developers. The first defendant is a solicitor: the second defendant is the wife of the first defendant. The third defendant is a company controlled by the other defendants. 3 There are various editions of the statement of claim. The last edition that was actually filed was that of 19 July 2000. However, towards the end of the hearing a yet further document was sought to be filed as another amended version which I will refer to as "YSFASC", standing for "Yet Still Further Amended Statement of Claim". There were objections to most of the amendments sought to be made by YSFASC and I will deal with these in due course. When I refer to "statement of claim" in these proceedings, unless I refer to YSFASC, it is the version filed on 19 July 2000. 4 Basically, the plaintiffs claim that in March 1993 they retained the first defendant to act as their solicitor in relation to a proposed purchase of land at 120-2 Narrabeen Park Parade, Warriewood Beach (the "Warriewood land"). Paragraph 2 of the statement of claim then concludes: "The first defendant subsequently also acted on behalf of himself and the second defendant on the purchase and the development of part of the land." There are then charges that "In the premises" the first defendant owed both fiduciary duties and common law duties of care to the plaintiffs, that he breached those duties and that there must be an account of profits or damages. So far as the remaining defendants are concerned, they are sued on joint venture agreements that were made between the plaintiffs and all the defendants to which I will refer in due course. 5 The first plaintiff has been a real estate salesman for many years. Although he is referred to in the evidence as a real estate agent, it would not appear that he was ever a licensee of a real estate agency. The first plaintiff initially met the first defendant in 1975. Over the 18 years between 1975 and 1993, the first defendant had acted for the first plaintiff on many occasions, mainly on the purchase of real estate. Indeed, apart from a couple of occasions when Mr Greg Dunstan, solicitor, was retained by the first defendant, the first plaintiff retained the first defendant as his solicitor on almost all occasions. 6 The friendship between the first plaintiff and the first defendant progressed, and from time to time, the first and second defendants would dine at the first and second plaintiffs' home and vice versa. From time to time, the first plaintiff endeavoured to sell the first defendant some real estate so that the first defendant could develop it personally. Sometimes he was successful. The first defendant himself was also involved in some small property development in the Liverpool area where he has his professional offices. 7 It seems to be common ground that the first defendant respected the first plaintiff as a shrewd property developer and from time to time made comments to the effect that he would like to be personally involved in a development which the first plaintiff was managing. At the very lowest, the first plaintiff responded to these suggestions to the effect that that would be a nice thing to do some day. However, up until the current property development, the first plaintiff always found some reason to decline to have the first defendant involved and only developed property with members of his own family or extended family. 8 In March 1993, the first plaintiff came across the Warriewood land. It was owned by a surveyor and his wife who had obtained development approval for the land, but the first plaintiff says that he realised that a much more ambitious development could be put into effect on the Warriewood land and that with the profits that could be made from such development the asking price of the land was very modest. He paid a deposit. The Warriewood land consists of two lots being separate lots on a deposited plan and thus having separate titles. No 120 Narrabeen Park Parade is Lot C in the relevant deposited plan and No 122 is Lot B. 9 The first plaintiff told the estate agent that the purchasers would be himself and his wife (the second plaintiff). In accordance with usual practice, the estate agent sent to both the vendors' solicitors and to the first defendant the usual sales advice note. In due course the vendors' solicitors sent two separate contracts, one for Lot B and one for Lot C to the first defendant showing the purchasers as the first and second plaintiffs. On 2 April 1993 the contracts were exchanged. However, on the contract for Lot B the names of the first and second plaintiffs were struck out on the copy signed by the purchasers and the names of the first and second defendants substituted instead. In due course transfers were registered so that Lot C became registered in the names of the first and second plaintiffs and Lot B in the names of the first and second defendants. 10 The first plaintiff says that he spoke to the first defendant after his successful negotiations for the Warriewood land and said: "I have negotiated a deal for some land in Warriewood for $600,000 with six months delayed settlement. The owner will consent to a new DA being lodged. It's a steal. I reckon it's worth $600,000 per block rather than $300,000 per block if I can get the new DA through council. Even without the DA it's still a good buy". The first defendant replied: "What about me? I want to be in. You could do it your way and we could do it together". The first plaintiff replied: "Do you have the money to do this?" to which the first defendant replied: "Not a problem, this is perfect". 11 The next day when the contracts were available there was another conversation. The first defendant said: "I have had a look at the site and this is perfect for us". The first plaintiff said: "I don't really want a partner". The first defendant repeated: "This is perfect, you buy one and I buy the other". The first plaintiff says that he replied: "I normally do everything with my family" to which the first defendant replied: "You always say that, this is perfect. You've got the experience. You just do it the way you normally do it". The first plaintiff then replied: "Okay, you buy one block. I buy the other block. We have to move quickly for the agent says there is another buyer". 12 The first defendant denies this conversation. He says that he received a telephone call from the first plaintiff at the first defendant's Liverpool office where the first plaintiff said: "I have negotiated a deal for some vacant land at Warriewood. There are two blocks for $300,000 each. There is a DA for 6 units, 4 shops and 2 offices on it. It could be something we could do together. I think it's a good deal, are you interested?" The first defendant said that he indicated interest and then the first plaintiff continued: "Warriewood is a bit of an unknown market for luxury apartments and that's why I can get it for that price. I thought you could buy one and I could buy the other - what do you think, are you interested?" The first defendant said he was interested and would like to see the site and the plans. The first plaintiff said that they would have to move quickly. Later there was a decision that the first plaintiff could choose which block he wanted and the first defendant would have the other, and they would buy one block each. 13 The first plaintiff then says that he told the first defendant that the project had to be done quickly and asked again whether he had the finance to which the first defendant replied: "I have the money, there will be no problem there". The first plaintiff then says: "At no time prior to exchange did I receive any advice from any other solicitor, nor did Mr Mattiussi advise me to do so. Had I been aware that Mr Mattiussi intended to borrow against the property, or that he intended or was entitled to be involved in the design and construction of the development, I would not have agreed to be involved with him in any way". Again, the first defendant denies such a conversation though he does agree that he never advised the first plaintiff to receive independent advice. 14 It took time to get the new development approval for the site and for the building that was to be erected on it. The plaintiffs complain that the greater part of this delay was the fault of the defendants. I will merely note this for the moment and pass on. 15 Although the plaintiffs thought that nine months would be an appropriate time for the relevant approvals to be sought, in fact the excavations for the building did not commence until a year later, namely January 1995. 16 In February 1995, the parties agreed with Westpac Banking Corporation that that Bank would fund the development. In connection with the securities to be given to Westpac Bank to secure the loan, the plaintiffs consulted Greg Dunstan, solicitor. The first plaintiff said that as a result of a letter directing him to do so from the first defendant, he sought a letter of independent advice from Mr Dunstan and at the same time took the opportunity of briefing him on the history of what had happened and "expressing my concerns to him". The first plaintiff said that Mr Dunstan gave him advice that: (A) he should get some assurances from Westpac as to how it would react if there were defaults by one of the co-venturers; and (B) there should be a written joint venture agreement. (A) was achieved. As to (B), the first plaintiff says that when he raised the matter with the first defendant, the first defendant said: "It isn't necessary". 17 There is no doubt that Mr Dunstan gave his advice in a letter of 23 March 1995 which is annexure F to affidavit PA03. That letter set out Mr Dunstan's advice that there should be a joint venture agreement between the parties to make it clear that the defendants were responsible for one-half of the moneys advanced and the plaintiffs for the other half, that the loan from the Bank would be repaid within 12 months from the date of the first drawn-down, and how the interest on the loan should be borne. The first defendant agrees that he received a copy of this letter and that he said to the first plaintiff: "I don't think we need it Claude, the deal is very straight forward but if you want one, have Dunstan prepare it. I will leave it entirely up to you". 18 In fact, the first plaintiff had been to see Mr Dunstan some time before March 1995. He saw Mr Dunstan on 17 January 1995 at the stage when the idea of both parties borrowing from Westpac was on the table for consideration (T57). Mr Dunstan swore in his affidavit that on that day the first plaintiff said to him: "I'm doing a development at Warriewood with my partner Adrian Mattiussi. Each of us own one vacant block, next to each other, which we intended to develop together. He originally told me he had the money to do the development but now he says he needs to borrow from Westpac and Westpac want as security, both lots. I don't need to borrow and I don't really want to give my half as security in case something goes wrong. Adrian says he cannot go ahead unless he can use my property as security. A condition of the DA was that the titles be consolidated. What can I do about it?" 19 The first plaintiff agreed with Mr Stevenson, who appeared for the first defendant, that there was no mention at any stage between January and March 1995 by him to Mr Dunstan that the first defendant had in any way misrepresented his position or had put any pressure on him to go into the venture. It is clear that the only matter that was agitating the first plaintiff at that stage was the Westpac mortgage. 20 This in itself shows that the first plaintiff's affidavit is not completely accurate when it says that the first plaintiff discussed the matters generally with Mr Dunstan in March: he had already done so in January 1995. 21 The first plaintiff says that in July 1995 the first defendant told him that the first defendant was having financial difficulties and wanted to get out of the project. The first defendant had said that he had another loan with Westpac which was causing a problem. The first defendant again denied this and particularly denied that he had any financial difficulties, or that he had another loan with the Westpac Bank which was having problems. 22 The first defendant says that he became quite ill in mid-1995 and became depressed to the extent that he could not make decisions. His statement as to his illness is supported, to some extent, by Dr Peter Klug, a forensic psychiatrist. The first defendant says that he asked the first plaintiff to take over the management of the project. He says that the first plaintiff declined to do so unless the defendants transferred their units to the plaintiffs. Mr Stevenson asked the first plaintiff about these matters in cross-examination. He asked (T68): "…you knew that he was telling you that he was having difficulties making decisions? A. Not at first no. Q. But by August or September 1995 he said that to you, didn't he? A. He's having - he said he was having a few problems with a partner and his business on another project that's going on that's slowing down." 23 Mr Stevenson then suggested that the second defendant had spoken to him about the first defendant's mental state in words such as: "Claude, Adrian is having a breakdown as a result of problems with his partner… Please be understanding and don't put too much pressure on him and please help us where you can". The first plaintiff agreed that something like that had been said "probably vaguely in that sort of context". 24 I should note at this stage the type of building that was being constructed on the Warriewood land. 25 The Warriewood land is level ground across Narrabeen Park Parade from the foreshore and Warriewood Beach. The vendor to the parties had obtained a DA for underground car parking plus shops and residential units. The first plaintiff realised that a better development would be to abandon the underground car park and rearrange the units. The development approval which was obtained by the parties provided for the erection of six residential units and four shops. The plaintiffs' property, Lot C, has erected on it shops 1 and 2 on the ground floor, unit 1 on the beach side of the units at the front and unit 2 at the back on the first floor and unit 5 on the second floor. On the defendants' land, Lot B, are shops 3 and 4 at ground level, unit 3 on the beach side and unit 4 at the rear on the first floor and unit 6 on the top floor. 26 The parties commenced negotiating. It would seem that at this stage they were each represented by solicitors, Mr Dunstan acting for the plaintiffs and Mr Greg Byles for the defendants. In September 1995, both parties signed deeds whereby units 3 and 4 and shop 3 were to pass to the plaintiffs for a consideration of $250,000. The first plaintiff describes these as the air space in those properties, but by this he means that they had no internal fit-out, they were merely a shell. Both parties signed the deeds. Both counterparts came into Mr Dunstan's hands but they were not exchanged. The draft deeds which never came into operation, were in evidence as TX1215. In November 1995, Mr Dunstan forwarded to the first defendant a new draft agreement whereby the defendants were to sell the whole of their interests in the project to the plaintiffs for $500,000. The defendants declined to sign this draft. They say that it was initiated solely by the first plaintiff: the first plaintiff says that it was following on from the indication mid-year that the first defendant wanted to get out of the project altogether. This is inconsistent with the draft deeds (TX1215) and it is not evidence that I can accept. Further discussions then produced another draft deed which was executed on 23 December 1995 by all parties. 27 It is necessary to set out parts of this deed in full, especially the main recitals. The parties to the deed defined as "Marcolongo" are the first and second plaintiffs. The parties defined as "Mattiussi" are the first and second defendants. Other parties to the deed are the first plaintiff's father, who is now deceased, and the third defendant. After defining whose property is what, the recitals provide as follows: "C. Marcolongo and Mattiussi entered into verbal joint venture agreement (the "Verbal Joint Venture Agreement") as follows:- (i) Marcolongo and Mattiussi would obtain a development approval and a building approval to construct residential units at shops on their respective properties as a single development (the "development") in accordance with the plans annexed hereto. Such plans have subsequently been amended with approval of the local Council. (ii) that the development would be financed by Marcolongo and Mattiussi borrowing (or Mattiussi's company borrowing and Mattiussi guaranteeing same and providing the security required by the bank) the cost of construction with interest up the $1,350,000.00 from Westpac Banking Corporation (the "debt") with Marcolongo and Mattiussi to be responsible as between each other for one half of the debt. (iii) that the debt would be repaid on completion of construction and registration of a strata plan for the development (the "strata plan") by Marcolongo and Mattiussi repaying or causing to be repaid to Westpac one half of the debt and accrued interest and if necessary by borrowing such amount as was required on the security of that part of the development in that parties name. (iv) that each of Marcolongo and Mattiussi would be responsible for the cost of the internal fitout of each unit (residence or shop) constructed on their own property including kitchens, baths, showers, basins, carpets, painting, light fittings and the like (the "internal fitout"). (vi) that the development subdivided by creating each unit and shop into a lot under the Strata Titles Act. D. The development is partially constructed at the date of hereof but has no doors, windows or roof and the internal fitout of each unit has not commenced." 28 The deed then provided in the operative part that the plaintiffs would purchase unit 4 and shops 3 and 4 for $150,000 and that the first plaintiff's father would buy unit 3 for $100,000. Instead of the parties paying 50% of the costs each, the verbal joint venture agreement would be varied so that the plaintiffs would pay 65% and the first plaintiff's father 10% with the defendants being responsible for the remaining 25%. 29 Clause 8 was then as follows: "8. Claudio Marcolongo is appointed as the parties representative to supervise completion of the development and internal fitout of Mattiussi's Unit No 6 and the parties hereby delegate to Claudio Marcolongo authority to make any decisions necessary and give any instructions required and make all payments for that purpose in accordance with the joint directions of Marcolongo and Mattiussi." 30 The strata plan was registered on 20 December 1996. 31 The current litigation was commenced on 7 November 1996. The initial phase of the proceedings culminated in consent orders being made by Abadee J on 30 January 1997. 32 The joint venture was concluded on 3 February 1997. However, the plaintiffs allege that the defendants have not paid their 25% of the development costs in full, yet have obtained their unit 6 on the top floor of the building. To put the plaintiffs' claim simply, the defendants have delayed their work, have made the project more costly, have not paid all their development costs, and yet have obtained a unit which the plaintiffs say is worth $1.5 million. The plaintiffs say that had they taken independent advice at the beginning which the first defendant was bound to advise them to take, they would not have entered into the arrangement at all. The plaintiffs say they have accordingly lost the profits they would have made on the development had the defendants not been involved and would have saved themselves a year's delay on the project. 33 The proceedings were heard by me from 17 to 21 July 2000. On that lastmentioned date I announced that the defendants basically succeeded and also indicated what amount I considered was probably owed by the defendants to the plaintiffs on rough accounts. I stood the matter over for short minutes of order and undertook to provide reasons for that decision in due course. These are those reasons. 34 I propose to consider the case under the following headings: 1 . Overview Law and Equity 2. Outline of the Case A . The Case in Contract: (i) the retainer; (ii) the verbal joint venture agreement; (iii) the deed of 23 December 1995; (iv) the implied term about the plaintiffs being in control; (v) the implied term as to co-operation. B. The Case in Tort C. The Case of Fiduciary Duty D. Accounts between Joint Venturers 3. The Proposed amendments in YSFASC 4. Issues of Credit 5. Analysis of the Case A. The Case in Contract B. The Case in Tort C. The Case of Fiduciary Duty D. Accounts between Joint Venturers 6. The Valuation Evidence 7. The Result 1. Overview - Law and Equity 35 Before the Judicature Act 1873 (UK), or at least before the Chancery procedural reforms, it was not possible to commence in the one action claims for breach of contract and negligence on the one hand, and breaches of fiduciary duty on the other. The former called for the vindication of common law rights by way of an award for damages, the second was a matter of equity to give the appropriate remedy from equitable compensation to the imposition of a constructive trust, whichever was appropriate. 36 Even at the end of the 19th century, lawyers realised that there was some overlap, especially in the area of confidential information, between protection in contract and protection under a fiduciary duty. Thus a person may have a contractual duty to respect confidence in the case of bank managers and the like, or they may have an equitable obligation. It was difficult sometimes to put in the dividing line and it was thought not to be appropriate to have part of the case dealt with at law and part in equity. As Finn points out in Fiduciary Obligations (Law Book Company, Sydney, 1977) at para 278, there was a tendency at the end of the 19th century to surmount these problems by finding implied contracts where once there was only the equitable obligation of confidence; see eg the judgment of Bowen LJ in Lamb v Evans [1893] 1 Ch 218, 229. 37 In the 20th century, as the Judicature Act took effect, there was a growing tendency to coalesce principles of law and equity and indeed, in England some of the principles of equity somehow became transmogrified into principles of law; see eg Cuckmere Brick Co Ltd v Mutual Finance Co Ltd [1971] Ch 949. As the century progressed, it became more and more common to combine claims for common law relief and equitable relief in the one suit. A recent example is Beach Petroleum NL v Kennedy (1999) 48 NSWLR 1. 38 There is obviously no reason in theory these days why such causes of action should not be combined in the one set of proceedings. Also, once findings of fact are made on them, there is usually little to be gained by a precise analysis of the remedies even though one can fall into the probable heresy of discretionary remedialism; see Birks (2000) 20 OJLS 1 and Swadling (2000) 116 LQR at 359. Certainly no authorities were cited before me as to how one deals with this problem. The plaintiffs' counsel, Mr P T Taylor, merely says that those sort of matters can be worked out after the decision on liability has been made. 39 The problem does not arise in the instant case because I have found generally for the defendants. However, my preliminary view is that the way in which one approaches this sort of problem is first to work out whether the plaintiff is entitled to succeed at common law in either contract or tort, then to work out the damages. Then one asks oneself whether, in the light of any breach of fiduciary duty, that is an adequate remedy. Only if the answer to that last question is negative does one go on to look at the equitable remedies of equitable compensation or the imposition of a constructive trust which might flow from a breach of fiduciary duty. This seems to me to be the same sort of approach as McLelland J took in Lucas v Mok (1983) 9 Fam LR 180. 2. Outline of the Case A. The Case in Contract 40 The contracts on which the plaintiffs sue are: (i) the retainer of the first defendant to act on the purchase of the Warriewood land; (ii) the verbal joint venture agreement; and (iii) the deed of 23 December 1995. 41 As to (i), there was no written retainer. There is no doubt, and indeed it is admitted on the pleadings, that the first defendant was retained on the conveyancing transaction. However, there is nothing to suggest that there was any problem with what was done under that part of the retainer. Was anything else incorporated in the retainer? There is no documentary evidence of anything else, nor did the plaintiffs give any evidence of anything else. Furthermore, when asked how there was a breach of the retainer, counsel for the plaintiffs moved smartly onto the question of tortious liability. I thus can only conclude that there is no liability arising from anything that flowed from the retainer. 42 I should note that no point was taken that the suit may have been defective for want of parties because the retainer might have been with the first defendant and the person who up to April 1996 was his partner in his law firm. 43 As to (ii), the verbal joint venture agreement is recorded in the recitals to the deed of 23 December 1995. During submissions, the point was debated whether the recitals purported to set out the whole of the terms of the joint venture agreement or merely its highlights. 44 When an agreement is set out in a recital to a deed which intends to form the basis of parties ongoing relations, the Court usually finds it safe to proceed on the basis that the recitals correctly set out the position between the parties. One reason for this is that a deed is the most solemn act that parties can perform in law. Indeed, it is often said, and it is often appropriate to say, that parties are estopped by the recitals in the deed. So in Carpenter v Buller (1841) 8 M & W 209, 212; 151 ER 1013, 1014 Parke B, giving the judgment of the Court of Exchequer, said: "If a distinct statement of a particular fact is made in the recital of a bond, or other instrument under seal, and a contract is made with reference to that recital, it is unquestionably true, that, as between the parties to that instrument, and in an action upon it, it is not competent for the party bound to deny the recital…". See also Norton on Deeds , 2nd ed (Sweet & Maxwell, London, 1928), pp 213-217. 45 Mr Harris for the second and third defendants, submits that the way the recitals of the deed are phrased they purport to be exhaustive. I take the point, but it does seem to me that on any view of this case what is in the recitals is an over-simplification. However, what really is significant about the recitals is that one would have expected them to include all the vital terms and it is very significant that they do not include some of the matters which the plaintiffs say are vital, including the implied term referred to in sub-section (iv). 46 (iii) So far as the deed of 23 December 1995 is concerned, apart from its relevance to (iv) and to the accounting exercise in D, there is no allegation that there has been any breach. 47 (iv) The plaintiffs say that there was an implied term both in the oral joint venture agreement and the written joint venture agreement, that the defendants would not interfere with, or fetter the plaintiffs' plans to purchase and develop the Warriewood land and that the plaintiffs would have control over the development of the land as they would have had if the defendants were not involved. 48 In my view there was no such term. This follows for a number of reasons, probably any one or two of which would be sufficient to reject the allegation, but together they are virtually unassailable. 49 First, there is the problem for the first plaintiff that I do not accept his evidence generally for the reasons that I set out in section 4. Secondly, what he says is inconsistent with the deed of 23 December 1995 in that: (a) there is no mention of such a term in the recitals; (b) clause 8 of the deed of 23 December 1995 tells strongly against there being such an implied term; (c) the admission on page 39 of the transcript by the first plaintiff that there was no discussion prior to exchange of contracts as to whether or not the first defendant would be involved in the design of the project; (d) the admission of the first plaintiff at page 49 of the transcript that he must have had a misunderstanding about his thought that the first defendant would not have any active role to play in the project. 50 Thus, there is no implied term in either joint venture agreement about the plaintiffs being in control of the project. 51 (v) There is an allegation that there was an implied term in the joint venture agreements that the defendants would "take all reasonable steps to assist in the expeditious completion of the development". Mr Stevenson for the first defendant, accepts that there must have been some such condition: Mr Harris is not so accommodating. However, as a matter of general law, there must have been some such term. Whether or not it is breached is dealt with in section 5A(v) of these reasons. B. The Case in Tort 52 The action here is against the first defendant for breach of his tortious duty of care as a solicitor. It is clear that apart from a duty of care under a retainer, a person who is a solicitor may in certain circumstances owe a tortious duty of care outside the retainer, both to his or her client and to outsiders. Before the decision of the High Court in Perre v Apand Pty Ltd (1999) 198 CLR 180; 164 ALR 606, it was thought that these sorts of problems were dealt with by considering proximity. Although the Perre case has to some extent exploded that doctrine, it may be that it still is relevant in this aspect of the law; see the Beach Petroleum case at page 78. 53 In Hawkins v Clayton (1988) 164 CLR 539, 579, Deane J said of the solicitor's duty to avoid pure economic loss: "It is a relationship of proximity of a kind which may well give rise to a duty of care on the part of the solicitor which requires the taking of positive steps, beyond the specifically agreed professional task or function, to avoid a real and foreseeable risk of economic loss being sustained by the client. Whether the solicitor-client relationship does give rise to a duty of care requiring the taking of such positive steps will depend upon the nature of the particular professional task or function which is involved and the circumstances of the case." 54 In Bryan v Maloney (1995) 182 CLR 609 (a case which did not involve a solicitor), the majority of the High Court said at 619 that ordinarily the requisite relationship of proximity is to be found in special circumstances "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." See in general the judgment of Einstein J in Schipp v Cameron (9 July 1998, unreported) at paras [766] and following commencing on page 258 of the judgment. 55 The American tests equivalent to proximity were stated in de Vaux v American Home Assurance Co 444 NE (2d) 355, 357 (1983) (Mass) which quoted in turn Kurtenbach v Te Kippe 260 NW (2nd) 53, 56 (1977) (Iowa). In the absence of an express retainer the Court may well imply an attorney/client relationship "when (1) a person seeks advice or assistance from an attorney, (2) the advice or assistance sought pertains to matters within the attorney's professional competence, and (3) the attorney expressly or impliedly agrees to give or actually gives the desired advice or assistance… . In appropriate cases the third element may be established by proof of detrimental reliance, when the person seeking legal services reasonably relies on the attorney to provide them and the attorney, aware of such reliance, does nothing to negate". 56 In adopting this test, the First Circuit of the United States Court of Appeal in Sheinkoph v Stone 927 F (2d) 1259 (1991) said at page 1265: "Human beings routinely wear a multitude of hats. The fact that a person is a lawyer, or a physician, or a plumber, or a lion-tamer, does not mean that every relationship he undertakes is, or can reasonably be perceived as being, in his professional capacity. Lawyers/physicians/ plumbers/lion-tamers sometimes act as husbands, or wives, or fathers, or daughters, or sports fans, or investors, or businessmen. The list is nearly infinite. To imply an attorney-client relationship, therefore, the law requires more than an individual's subjective, unspoken belief that the person with whom he is dealing, who happens to be a lawyer, has become his lawyer. If any such belief is to form a foundation for the implication of a relationship of trust and confidence, it must be objectively reasonable under the totality of the circumstances." 57 I respectfully agree with this set of thoughts, as did the Full Federal Court in Solicitors' Liability Committee v Gray (1997) 77 FCR 1 at 43-44. Examining the objective conduct of the parties by this test, as will be made clear in these reasons, shows that there is no duty of care in this case. 58 Mr Taylor, after the oral argument, referred me to the decision of the High Court in Bennett v Minister of Community Welfare (1992) 176 CLR 408. Why he did this, I do not know. The case is not any more useful; indeed less so, than the cases I have already cited. 59 I must confess I find it very difficult to find any duty of care in negligence in the instant case. Although the first defendant was a solicitor and had been the solicitor for the first plaintiff for many years, on seeing the two men in the witness box, and in reading the affidavit material, there is no question as to who is the dominant figure: it is the first plaintiff. He is a successful real estate developer, he has supreme confidence in his own abilities and he is not a man who is accustomed if he does not feel like it, to take advice from solicitors. This was illustrated in the evidence in the present case where Mr Dunstan gave the first plaintiff some advice which he just did not follow. Accordingly, there is no hint in the instant case of a relationship of dependence. 60 The first plaintiff did say that he felt, at the very least, moral pressure to enter into the joint venture agreement with the first defendant that he would not otherwise have entered into, and he would have preferred not to. However, it seems to me from the evidence that that is not a result of any dependence on the first defendant. Rather I accept that the situation is as the first plaintiff actually told Mr Dunstan and is set out in Mr Dunstan's affidavit, PA24, that in the course of selling or attempting to sell real estate to the first defendant, the first plaintiff had made comments about involving the first defendant in a development and he had run out of excuses to avoid meeting that quasi promise. 61 Accordingly, in my view there is no duty of care in the instant case. However, I will deal in section 5B with the question as to if there was a duty of care, whether there has been a breach of the duty. C. The Case of Fiduciary Duty 62 Fiduciary duty has become a bit of a slogan these days. If a plaintiff cannot think of any other reason for suing a defendant, often breach of fiduciary duty seems to be the way in which the plaintiff puts his or her case. This present case involves the idea that because the first defendant is a solicitor, and because there are a number of utterances in leading cases as to the very arduous duties that lie on solicitors in the fiduciary sense, and because solicitor/client is one of those relationships from which one can usually presume a fiduciary duty, ergo the defendant must be liable. However, as Hayne J said when speaking extrajudicially recently, cases such as the present are to be decided on principle and not by slogans; see (2000) 74 ALJ at page 375. 63 Mr Taylor cited a series of passages from well-known authorities dealing with the fiduciary obligations of solicitors. I will cite briefly the main ones to which Mr Taylor referred. 64 In Law Society of NSW v Harvey [1976] 2 NSWLR 154 at 170-171 Street CJ, when giving the judgment of the Court of Appeal in a disciplinary matter said: "A solicitor, who deals with his client while remaining his solicitor, undertakes a heavy burden. Where a solicitor discovers that continuing to act for his client will, or may, bring the interests of his client and his own interests into conflict, it will be a rare case where he should not, at least, advise his client to take independent legal advice. … . "A conflict of interest which is avoidable, and ought to be avoided, is that which arises, from a deliberate proposal of the solicitor that his client deal with him. If, for example, a client seeks aid or advice from a solicitor concerning lending or borrowing, or the acquisition or disposal or dealing with assets, the solicitor will disregard his primary duty as a solicitor referred to so trenchantly by Lord Westbury, if he uses the occasion to become the party who deals with his client." The Chief Justice was referring to the judgment in Tyrrell v Bank of London (1862) 10 HLC 26 at 39 and 40; 11 ER 934 at 939 and 940. 65 These words were endorsed by the Court of Appeal in another disciplinary case, O'Reilly v Law Society of NSW (1988) 24 NSWLR 204 at 209 and 213-4. 66 However, these comments must be read sub modo. It is taking them too far to say, as Mr Taylor either said or got close to saying, that (a) the first plaintiff is not a solicitor; (b) the first defendant is a solicitor; (c) the first defendant dealt with the first plaintiff; (d) the solicitor did not suggest that the first plaintiff have independent advice; (e) the solicitor made a profit; and (f) therefore the solicitor must disgorge his profit either by way of an account of profits or as damages. 67 As Einstein J so simply put it in Schipp v Cameron, supra at para [665]: "I would not accept that the mere fact that a person who enters into a joint venture happens to be a solicitor, by itself imposes upon him any of the obligations which may be attracted had he been retained to use his professional ability or training for some purpose related to the joint venture." Indeed, in Lowy v Alexander [2000] NSWSC 661, Windeyer J at para [26] on page 16 of the transcript judgment pointed out that judicial pronouncements about the duty of a solicitor to at least bring to the client's notice the advisability of obtaining independent advice must be balanced against "the reality that the answer to such a question will almost certainly be in the negative". Indeed, I would say the reality is that problems in this area are not cured by any automatic formula that independent advice be obtained. The problems are not met by some adherence to a formula but to considering whether, on the whole of the material, there has been an unconscientious use by the solicitor who is a party to the transaction of his or her position of advantage in circumstances where the person in the position of the client was reasonably expecting a person in the position of a solicitor to act solely on his or her behalf. 68 I was referred to my own decision in Chittick v Maxwell (1993) 118 ALR 728. That case is of no help here as I cannot find any express or implied undertaking by the first defendant to act on behalf of the plaintiffs. 69 Although uttered in the context of negligence and vicarious liability, the passage from the judgment in Sheinkoph v Stone quoted in section 2B above needs to be remembered here too. 70 To my mind, there was no fiduciary duty in this case. However, should the Court of Appeal hold that to be an error, in my view there was no breach of duty for the reasons set out in section 5C. D. Accounts Between Joint Venturers 71 In all joint ventures, parties are entitled to an accounting between them unless the joint venture deed negatives this right. However, as Hutley JA said in Colin D Young Pty Ltd v Commercial and General Acceptance Ltd (Court of Appeal, 24 August 1982, unreported) which was quoted in Adams v Bank of NSW [1984] 1 NSWLR 285, 296: "… a party cannot, as it were, have little bits of accounts. There is one account and one account only and the issue is what is owed and what is not owed. The declaratory procedure cannot be used to get declarations about little bits of accounts because the proceedings may become, in relation to a total account, otiose". 72 In the instant case there are about half a dozen items in dispute between the parties. The only proper way in which these can be considered is by the filing of accounts by one party, the vouching of those accounts, falsifications and surcharges being filed formally or informally, a decision being made on those and a final balance being struck. I reminded the parties of this several times during the week's hearing. I agreed to make a ruling on the items in dispute and then leave it to the parties to consider whether in the short minutes they could once and for all strike a balance in the light of my comments, or whether there should be an order for the taking of formal accounts with of course issue estoppels on the matters which I have decided. I will return to this matter in section 5D of these reasons. 3. The Proposed Amendments in YSFASC 73 The present action was commenced by summons filed on 7 November 1996. The first statement of claim was filed in these proceedings on 10 July 1997. There was an amended statement of claim filed on 8 December 1998. During the pre-trial process, I gave leave for a further amended statement of claim and that was filed on 6 July 2000. The yet further amended statement of claim was filed on 19 July, the third day of the hearing. 74 On the fourth day of the hearing, Mr Taylor sought leave to file the YSFASC. The significant amendments made were as follows: (a) In paragraph 2 to allege that in the alternative to being retained as a solicitor for the plaintiffs, the first defendant acted as their solicitor and acted presumably jointly for himself, the plaintiffs and the second defendant on the purchase and development of the Warriewood land. Earlier versions had confined the second part of paragraph 2 of the statement of claim to an allegation that the first defendant acted for himself on the purchase and development of part of the land. (b) That the first defendant was bound not to use the plaintiffs' confidential information and did so. (c) That there was a duty of care to advise the plaintiffs to enter into a written joint venture agreement and to advise as to the terms of that agreement. 75 These amendments were opposed. Mr Stevenson put that as to (a), at the very least he would have wanted to consider introducing further evidence for the first defendant to meet such a claim. As to (b), there was a considerable amount of cross-examination of the first plaintiff that would need to be covered by further cross-examination, but even before one got to that the claim was a completely new claim unparticularised. As to (c), the first defendant would at the very least have wished to consider cross-examining the first plaintiff further. Mr Harris joined in Mr Stevenson's objection. 76 As to the objection to (c), I put to Mr Stevenson that I was not as concerned with that matter as I was with the others as I could always allow further cross-examination at that stage, to which Mr Stevenson very reasonably replied: "Your Honour, the cross-examination is over. Cross-examination has a certain dynamic". I replied: "I understand that". Mr Stevenson said: "The heat has cooled". 77 Mr Stevenson made it clear that he did not object to the amendment suggested in para 3(g), that is, to delete the word "plaintiff" and insert the word "defendant". This was clearly a typographical error, and I will in any event read that amendment into the yet further amended statement of claim filed on 19 July 2000. 78 I asked Mr Taylor whether, if the amendments were allowed, he would be adducing any further evidence. He said he would not. I then took the course of reserving my decision on the proposed amendments to the giving of final judgment. It seemed to me at that stage that the odds were that if I found against the plaintiffs the extra additions were unlikely to take the case any further, and if I found in favour of the plaintiffs it did not matter. However, I kept an open mind until the evidence was finished as to whether it would be better to rule first on the amendments and then permit Messrs Stevenson and Harris to re-open or have further cross-examination if they thought that appropriate. As things have turned out, it is not necessary to do this. 79 I should give some details as to how the case developed. As I said, there was an initial flurry of activity between the commencement of the proceedings and the end of January 1997 when the parties agreed on interlocutory orders to allow the development to be completed and units sold. The case then virtually went to sleep, apart from being put in the general list. There was a debate over whether there should be an amended statement of claim in November 1998 and Master McLaughlin granted such leave. The case was then set down for trial initially before Hamilton J who on 21 June 2000 gave some further directions as to affidavits. I conducted a pre-trial on 6 July 2000. The case was not at that stage particularly well prepared in that very little of the affidavit evidence was actually filed. I made comments to the lawyers for the plaintiffs that I felt that I should vacate the fixture, but because the plaintiffs said that they should get the case ready in time, and because the defendants urged me to keep the date, I confirmed the fixture. It was clear at the directions hearing that the plaintiffs' lawyers were under the misapprehension that the issue of damages or whether there was a need for an account of profits was not going to be dealt with during the hearing, but would somehow or other be postponed. They were disabused of this. 80 The hearing commenced at 11.30 am on Monday 17 July 2000. A small amendment was sought and granted to the statement of claim. There was some difficulty with the valuation evidence but a practical solution was arrived at in postponing this issue to the end of the hearing. It was in fact dealt with on Friday 21 July 2000, the fifth day of the hearing. I was very concerned with the form of the statement of claim and on the second day near lunch, I said: "There is something that concerns me a little about the statement of claim which I will put into Mr Taylor's mind so that he can think about it over lunch. I can't make sense of paragraph 2, the last sentence. Can you tell me whether it is a typographical error at 2 o'clock?" Mr Taylor said: "Yes". 81 At the commencement of the third day Mr Taylor tendered a statement of claim which was in due course filed, and that is the yet further amended statement of claim of 19 July 2000. The evidence then proceeded and, apart from the valuation evidence, it was completed at 3.39 pm on the third day. I then made further comments as to my problems with the statement of claim. 82 At the commencement of the fourth day, when Mr Taylor made his application to file YSFASC, I remarked that I had been hinting about the problems that were bringing about this change on Tuesday and "yesterday" and "finally the penny has dropped" (see T179). 83 It was obvious to any objective reader that the statement of claim was a very poor piece of the drafter's art. In particular, there were the allegations of the existence of a duty of care and fiduciary duty which arose "in the premises" without ever fleshing out what were the facts and circumstances which gave rise to either duty. This, if not obvious, was drawn to counsel's attention on the second day of hearing, and again on the third day of hearing, and only on the fourth day of hearing was the document produced. 84 I know that there is strong authority to say that amendments must be allowed if at all possible; see eg Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146. However, each case must be considered, albeit considered in the light of those general principles, as to what is the just position. In the instant case these proceedings were commenced three and a half years before the hearing, the imperfections of the plaintiffs' case had been drawn to the attention of the plaintiffs' lawyers at the pre-trial directions hearings and on the second day of hearing when the evidence was still being given, and it was only after the evidence was completed that finally "the penny dropped" and further amendments were suggested. 85 The effect of the amendments would have been inevitably to cause a further adjournment of the trial so that the defendants could think their position as to whether they wished to do any more than conduct further cross-examination, and in any event, as Mr Stevenson said, the dynamics of the cross-examination would have been affected. All of this because the plaintiffs just did not prepare their case properly from what I can see on the material before me. This may be too harsh a judgment as a Judge never knows the dynamics that were operating in the plaintiffs' camp, but that's what it appears to be. 86 To my mind it would be quite unjust to allow these amendments after the evidence, apart from the valuation evidence, has been completed. Accordingly I should refuse the amendments sought to be made in YSFASC and not have the document filed though the document will, for purposes of identification, be physically placed in the file. However, as I said, I have taken on board the typographical correction in para 3(g). 87 I think I have already made it plain that in the circumstances of this case, whether the amendments were allowed or not was extremely unlikely to affect the result in any way at all. 4. Issues of Credit 88 The defendants' counsel approached this case as being a case which could be decided on questions of fact. They did not spend time on technical defences that may have been available to them. They argued that there was no duty of care or fiduciary duty, or if there was such a duty, there had been no breach. So far as fiduciary duty was concerned, they also argued informed consent. 89 Many witnesses swore affidavits. The witnesses fall into three categories, viz: (a) the main players; (b) the experts etc; and (c) the remainder. Of category (c), only Mr Weymouth was cross-examined. Mr Weymouth is the draftsman who drew the plans for the building to be submitted to the council. I found him an impressive witness, accurate in what he said and completely unbiased. Although he was called by the plaintiffs, the balance of his evidence favoured the defendants. 90 I class amongst the experts not only the well-known solicitor Mr Neville Moses, but also the plumbers and builders who worked on the site. I need only really deal with Mr Moses' evidence. There is no question as to Mr Moses' credibility as a witness or his expertise, and indeed, he was not cross-examined. 91 Mr Moses' report sets out what is "standard conveyancing practice". On the material which was made available to him, which, of course, did not include the transcript of evidence, Mr Moses inclined to the view that in the light of standard conveyancing practice, the first defendant would have been expected by him to have advised a written joint venture agreement and independent advice. It is good that there is a standard. However, deviation from that standard does not necessarily mean that there is a breach of a duty of care or a fiduciary duty. 92 Of the main players, the first plaintiff was in the witness box for most of the first two days. He was extremely tested in skilful cross-examination by both Mr Stevenson and Mr Harris. 93 The first plaintiff did not fare well under cross-examination. The overall impression of the first plaintiff at the end of his cross-examination was that a lot of his evidence was either reconstructed or the result of him making assumptions which were either never put to the defendants, let alone accepted by them. I thought that Mr Stevenson put it well in his submissions when he said that the first plaintiff constantly converted assumptions into assertions. A good example of this was highlighted at T69. In his principal affidavit, PA3, the first plaintiff said in paragraph 32: "In July 1995, the first defendant said words to the effect: 'I'm having financial difficulty and I want to get out of the project. The problem relates to another loan that I have with Westpac.' " At T69, the following occurred during Mr Stevenson's cross-examination of the first plaintiff: "Q. But my point is Adrian didn't say it was anything to do with any financial difficulties he had with Westpac, for example, did he? A. Well, not exactly Westpac, but I assumed it was another project and another project could be money, I don't know. Q. Did you just say 'not exactly Westpac'? A. Well, that's - I assumed it was something to do with finance and that's where the finance comes from. Q. Well, he didn't say to you, did he 'the problem relates to another loan that I have with Westpac', did he? A. Probably not in those words, but I understood that. That's what I recall." 94 I believe another illustration of the same problem is where the first plaintiff says that the first defendant told him that he would not be interfering with the project and would leave everything to the first plaintiff. I think the first plaintiff assumed this even though fairly shortly after the project commenced the first and second defendants were in fact making suggestions as to design and the first defendant was regularly on the site. 95 One of the major problems in accepting the first plaintiff's evidence was his evidence about the photo montage. As Mr Taylor submits, in itself this is a very minor matter, but the way in which the first plaintiff's evidence was presented, which evidence could not be correct on the balance of probabilities, shows that there are great doubts as to his credibility generally. 96 The parties saw a building called "Oronsay" whose balconies they admired and thought that they should copy it for their own building. The balconies were rounded. There is some confusion as to how and when the photographs were taken. These differences were across party lines, so to speak, in that the majority of witnesses were sure that the second plaintiff had a baby with her at the time the photographs were taken, yet she could not have had the baby with her if some of the versions as to the timing were correct. Be that as it may, there is no doubt on whichever version one accepts, that photographs were taken of the Oronsay building and then someone used those photographs together with drawings of the proposed building on the Warriewood land to prepare a photo montage as to how the property would probably look. Both the first plaintiff and the second defendant claimed authorship of the photo montage. 97 It may be that both prepared photo montages, but in the oral evidence, both claimed to be the author of the particular photo montage which was in evidence. At T90, in cross-examination from Mr Harris, the first plaintiff made it clear that he did that photo montage. At T96, Mr Harris put to the first plaintiff that the second defendant says that she prepared the photo montage. The first plaintiff said that that was not correct and that he had cut the photos and put them together and did the montage. At T97, the following exchange took place: "Q. You say categorically that you created the photo montage, which is drawing 7 annexed to Mrs Mattiussi's affidavit? A. Well, that's what I did. Q. You have no doubt about that? A. I'm sure of it. Q. And you know that she says that she was the person that created that montage? A. Yes, I do. Q. To be blunt, one of you is not telling the truth? A. That's right." 98 At T97 to T100, in response to Mr Harris' cross-examination the first plaintiff proceeded to say how he created the photo montage. The photo montage shows palm trees. Mr Harris asked where they came from and the first plaintiff said at T99: "Bits I've cut out of different posters". 99 The second defendant, at T176-177, gave a very detailed account of how she put the photo montage together. In particular, at T177 she indicated how she had cut out the palm trees in the original photograph and pasted them in various positions. As she says: "You will see they are all the same palm tree". The second defendant's explanation was obviously correct and indeed it was not the subject of any cross-examination. As the first plaintiff himself virtually admitted, the consequence of this is that his evidence was not the evidence of a person telling the truth on that matter. Mr Harris goes further and says that the evidence was deliberate lies. 100 There is then the matter of when there was a change from the underground car park as was in the original DA to deletion of that car park. In his affidavits and in his initial evidence, the first plaintiff was quite sure that the underground car park was deleted in April 1993 and that this was one of the prime reasons why he knew that the site would be so profitable to develop. However, the evidence of Mr Weymouth and others shows that the alterations were not made to delete the car park in the plans until September 1993. 101 In paragraph 13 of his principal affidavit, the first plaintiff said that he knew when he bought the property that profits could be made if the car park was removed. His evidence involves the absurd suggestion that from May to September he instructed Mr Weymouth to prepare plans including the underground car park when he knew that that was never going to be included. At T52 he got close to, if not actually admitting, that he must have been mistaken. 102 Then there is the evidence to which I have already referred that the first plaintiff went and saw Mr Dunstan in March 1995 and discussed the matter generally with him. We know from Mr Dunstan's evidence that the first plaintiff actually first saw him in January. 103 Then there is the matter of the statement about the first defendant having difficulties with his Westpac loans, referred to in paragraph 32 of the first plaintiff's principal affidavit to which I have already referred. In my view, the evidence of the first plaintiff contains so much reconstruction and conversion of assumptions into assertions that it is mostly unsafe to rely on it alone. 104 Finally, the first plaintiff over and over again sought to minimise the first defendant's involvement in the project in an endeavour to show that the intention was that the first defendant was virtually a silent partner. Time and again his recollection was shown not to be in accordance with the documents. 105 The second plaintiff gave evidence. She appeared to be a reliable and intelligent lady. She was not present at most of the vital conversations between the first plaintiff and first defendant. She gave me the impression that she was the type of wife who in the long run would let her husband do what her husband thought was best to do, especially in his area of expertise, but that she would not be backward in proffering advice before the decision was made to influence that decision. 106 The first defendant was cross-examined by Mr Taylor for about two hours. The main thrust of the cross-examination was an endeavour to get the first defendant to agree that he was a knowledgeable solicitor, that the first plaintiff was his client and that what the first plaintiff said was generally correct. The cross-examiner elicited that the first defendant had written to Pittwater Council saying that he was the solicitor for the joint venturers. The only challenge to the incorrectness of any part of the first defendant's evidence was in connection with whether the first plaintiff's father had done any physical work on the site which the first defendant conceded may have been incorrect: see T169. There was little challenge to the first defendant's general credibility and I would accept him generally as a witness of truth and accuracy. 107 The second defendant gave evidence. Her evidence was clearly correct, and indeed, was not challenged in the ultimate. 108 Accordingly, I generally accept the defendants as witnesses of truth but not the first plaintiff. 5. Analysis of the Case 109 In section 2 I listed the various causes of action and made some general comments about them. I will now deal with whether there was any breach in respect of any of those causes of action using the same numbering system. 110 In section 4 I dealt with the question of credibility and for the reasons I gave there, decided I should prefer the evidence of the defendants to that of the first plaintiff in times of conflict. I will now deal with the matters in order. A. The Case in Contract 111 As to (i) and (ii), nothing more need be said. 112 (iii) The deed of 23 December 1995 makes it clear that the plaintiffs are to bear 75% of the costs of the development after the deed and the defendants 25%. There is no argument about this and there are no other issues that seem to me to arise from the deed. How the accounting works out is considered in 5D. 113 (iv) For the reasons given in 2A(iv), there could be no such term. It would be inconsistent with clause 8 of the deed, it is not mentioned at all in the recitals and it is inconsistent generally with the way the parties went about the project. Furthermore, it depends on acceptance of the evidence of the first plaintiff which I do not accept. 114 (v) As I said in 2A(v), there must be some such term about co-operation. The real question is whether it has been breached. 115 There is no doubt at all that in the middle of 1996, the first defendant suffered some form of nervous breakdown. The extent of the disability was never fully explored in evidence, but there is no doubt that it existed and there is no doubt that its existence is supported not only from the evidence of the defendants, but also from the evidence of Dr Peter Klug. 116 Chitty on Contracts 28th ed (Sweet & Maxwell, London, 2000) at 13-011 says: "The court may be willing to imply a term that the parties shall co-operate to ensure the performance of their bargain. Thus 'where in a written contract it appears that both parties have agreed that something shall be done, which cannot effectively be done unless both concur in doing it, the construction of the contract is that each agrees to do all that is necessary to be done on his part for the carrying out of that thing, though there may be no express words to that effect.' However the conditions for the implication of a term mentioned above must be satisfied. Also the duty to co-operate and the degree of co-operation required is to be determined, not by what is reasonable, but by the obligations imposed - whether expressly or impliedly - upon each party by the agreement itself, and the surrounding circumstances." The quotation, and indeed, the flavour of the entire paragraph comes from the judgment of Lord Blackburn in Mackay v Dick (1881) 6 App Cas 251, 263. 117 There seems little doubt that the first defendant's inability to attend the site and make quick decisions did have some effect of delaying the project and probably delaying the whole project, not only work on the building on the first defendant's land. However, it has to be shown not that that was the result, but that such result was because of a breach of the implied term. 118 It was not suggested (even when I specifically put it to Mr Taylor) that when the first defendant became ill he was obliged to provide a substitute person who would make the decisions that ordinarily the first defendant himself would have been expected to make personally. If this is not being pressed, then the case that must be being made is that there is something else that the first defendant could have done in and about complying with his duty to co-operate that he did not do. In the light of his illness, the conversation that the second defendant had with the first plaintiff, which I have mentioned earlier, about being understanding of her husband's problem and carrying the project for a while, and the fact that these matters then led to the draft deed of September 1995 and the final deed of 23 December 1995 shows that there was no breach of any such implied term. 119 There is authority for the proposition that incapacity of mind or body will not relieve a person from the consequences of non-performance of a contract; see eg the cases referred to in argument of Bacon QC in Atwood v Maude (1868) 3 Ch App 369, 371 particularly Bullock v Crockett (1862) 3 Giff 507; 66 ER 509. However, when the authorities are examined, they all concerned situations where equity on accounts between partners on dissolution adjusts premiums which junior partners may have paid to join the firm in cases where the partner to whom the premium was paid did not work sufficiently in the practice even if the reason for that is ill health. This line of authority does not improve the plaintiffs' case. B. The Case in Tort 120 If, contrary to what I have said in section 2B, there was a duty of care, then the plaintiffs can only succeed if they show that there was a breach of such duty and they suffered damage as a result of such breach which was not too remote. Mr Stevenson puts that the only substantial allegation of a breach of duty of care is that there was a failure to advise the plaintiffs to obtain independent advice. Although there are some statements in leading authorities that this should ordinarily occur when one of the trading partners is or has been in the relationship of solicitor and client with one of the others, it is necessary in every case to look at all the facts and circumstances. In the instant case, the first plaintiff was an experienced, sophisticated property developer. The essential facts are that two friends agreed to enter into a commercial transaction. It just so happened that one of the friends was a solicitor. 121 The duty is not to be careless about the "client" and to use reasonable endeavours to protect the "client's" interest. It will not always be the case that failing to suggest that the "client" obtain independent legal advice will be a breach of the duty. The duty is not to provide the advice or to suggest it be provided, but rather that that is a part of the general duty to protect the client's interest. Where it is improbable that the plaintiffs would have accepted any such advice that was proffered or that, despite what they now say, the plaintiffs would have changed their position had such independent advice been given, is an extremely important matter. Both the plaintiffs now say that they would not have gone forward with the transaction had they obtained independent advice. This I just do not accept. 122 The whole history of the matter shows that the real reason why the first plaintiff reluctantly agreed to let the first defendant come into the project was that, as he said to Mr Dunstan, he had made overtures about the matter often enough in the course of his land sales enterprises and he had just run out of excuses. He reluctantly took the defendants into the project. He knew what he was doing. He may well have expected that he would be in complete control of the project but he never fully communicated that, nor was that the expectation of the defendants. (If I had not already made it clear I do so now that I reject the first plaintiff's version in paragraph 15 of his main affidavit and accept the first defendant's version of the conversation and his general denials). 123 The first plaintiff then continued to let his assumptions and reluctance prey on his mind until he reached the stage that he very much regretted letting the defendants into an enterprise from which large profits were to be made. He reconstructed matters of fault. 124 This is borne out by the fact that there were no complaints at all when the first plaintiff saw Mr Dunstan in January 1995 or March 1995 about not having independent advice or being pressured in any way by the first defendant. The complaints that the first plaintiff had were his property might be in jeopardy because it was part security for the defendants' property. 125 Again, in the deed and in the draft deed, there is no mention at all of any concern about not having independent advice even though at this stage both parties were represented by solicitors. 126 To these matters are added the fact that when Mr Dunstan did give the first plaintiff advice about putting the document in a written form, he didn't take it. 127 I do not consider there was any breach of the duty of care. 128 However, if there was a breach of the duty, the question is what damages will follow. 129 Mr Taylor simply says that the breach of the duty meant that the plaintiffs shared the development with the defendants, and had they not done so they would have made profits, those profits being the value of unit 6 which the defendants have, less adjustments. 130 To my mind this is too facile a way of looking at it. It makes various assumptions. For instance it assumes that (a) had independent advice been given; (b) the plaintiffs would have pulled out of the joint venture; (c) that they would have funded the project themselves; (d) it would have been equally successful; and (e) that it would have made the same profits as it in fact did make. Even apart from these assumptions the real damage was not the profit that was made by the defendants out of the venture, but rather the value of the lost chance to apply in equity to set aside the voidable agreement for breach of fiduciary duty. 131 In reality the plaintiffs did not suffer any damage at all. In fact they made a massive profit out of the joint venture. What they are really complaining of is that they would have had a chance to make a greater profit had the defendants not been involved in the project, and that they would have had a chance had they had independent advice to set the joint venture agreement aside and so make such profits themselves. 132 Accordingly, in my view the plaintiffs have not established any breach of duty. If they had then the question of damages would be one that I would have had great difficulty in being able to assess logically, though I would have had to do the best I could on the material that I had. C. The Case of Fiduciary Duty 133 I am now to assume that there was a fiduciary duty and on that assumption consider whether it has been breached. 134 A fiduciary duty involves an undertaking by one person to act on behalf of another and not to prefer his or her interests to the interests of that other; see Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41, 96-97. One ordinarily does not get this relationship where one has two principals dealing with each other as principals; see per Gibbs CJ in the Hospital Products case at page 72 adopting what Finn J had said in his work on Fiduciary Obligations (LBC, Sydney, 1977) at page 201. In the Beach Petroleum case at page 45 the Court of Appeal said that: "Whether or not there is a duty to advise on the wisdom of a particular transaction depends on the circumstances of the case". Their Honours cited Clark Boyce v Mouat [1994] 1 AC 428, 437 where the Privy Council said: "When a client in full command of his faculties and apparently aware of what he is doing seeks the assistance of a solicitor in the carrying out of a particular transaction, that solicitor is under no duty whether before or after accepting instructions to go beyond those instructions by proffering unsought advice on the wisdom of the transaction". 135 Mr Taylor submitted that it was not necessary for plaintiffs, in the position of the present plaintiffs, to prove that the profits flowed from the breach of fiduciary duty. If there was a breach of fiduciary duty and profits flowed, that was that. With respect, this is contrary to what the Court of Appeal said in the Beach Petroleum case at page 90 where they adopted the words of McLachlin J in Canson Enterprises Ltd v Boughton & Co (1991) 85 DLR (4th) 129 at 163 where she said: "…it is essential that the losses made good are only those which, on a common sense view of causation, were caused by the breach". 136 In the instant case, a key matter is whether it was the first plaintiff that suggested the venture or the first defendant. I have already set forth the respective parties' evidence on this matter. I have already in section 4 set out why I prefer the first defendant's evidence in general to that of the first plaintiff. Mr Dunstan gave evidence that the first plaintiff said to him that he (the first plaintiff) realised that in view of previous utterances he needed to offer the first defendant an interest in this project and he in fact did so. This I accept as the real motivation for the first plaintiff involving the defendants in the project. 137 Mr Stevenson says that if I accept that submission on the facts, as I do, that is the end of this part of the case. That is probably correct. However, even if I were of the view that the first plaintiff was correct when he said that the suggestion came from the first defendant, it would seem to me that there is insufficient to show there was a breach of fiduciary duty. The decision to share the project was made as between friends in the context of being friends who are doing developments, and it had nothing to do with the first defendant's office as a solicitor. There was no abuse by the first defendant of his possible influence over the first plaintiff as that person's solicitor. They met on at least equal bases; indeed, as I have said earlier, the first plaintiff appeared to be the more shrewd of the two. 138 This is borne out by subsequent events. It is quite clear from the first plaintiff's principal affidavit at paragraph 18 that he was upset in respect of two matters: (a) that the plaintiffs' interest in the property might be security for the defendants' borrowings; and (b) that the first defendant was being too involved in the design of the project. It seems that it was only after the first defendant's nervous breakdown or perhaps even after the deed of 23 December 1995 was made that the first plaintiff convinced himself that the first defendant shouldn't have been involved in any part of the project at all. 139 There is then the defence of informed consent. As the High Court said in Maguire v Makaronis (1997) 188 CLR 449 at 466: "What is required for a fully informed consent is a question of fact in all the circumstances of each case and there is no precise formula which will determine in all cases if fully informed consent has been given." 140 The matter was considered in more detail in Spellson v George (1992) 26 NSWLR 666, in passages which appear to have been approved by the High Court in Maguire's case, namely per Handley JA at 669-670, Hope JA at 673-675 and myself at 680. A good summary of the law appears on page 895 of the 15th edition of Underhill and Hayton, Law of Trusts and Trustees (Butterworths, London, 1995), that if a beneficiary even acquiesces in a breach of trust or fiduciary duty he cannot afterwards charge the person who owes the fiduciary duty provided that: "…he had full knowledge of the facts, and knew what he was doing and the legal effect thereof, though … it is not necessary that he should know that what he is … acquiescing in is a breach of trust (provided he fully understands what he is … acquiescing in) and it is not necessary that he should himself have directly benefited by the breach of trust." 141 In the instant case, in my view there was full understanding of the first plaintiff as to what was involved. The first plaintiff was reluctantly giving the defendants the opportunity to participate in the project. If there was a fiduciary duty because of the fact that the first defendant acted as solicitor for the plaintiffs originally in the purchase of the whole land, there was full and informed consent to such participation. 142 Accordingly, if there was any breach of fiduciary duty there has been informed consent. D. Accounts between Joint Venturers 143 The items that are in dispute are dealt with in the calculation of account of profit sheets submitted by the plaintiffs, MI1300 and MI1302 and the defendants, MI1301. If one takes away calculations of damages and accounts of profits and turns merely to the accounting exercise, the items are: (a) adjustments of expenses $4,271; (b) amount allegedly due for rates $1,287; (c) costs of labourers $11,625, a total of $17,183. There are then five items claimed by the defendants: (d) LTO registration fee; (e) amount paid to Facade Technology; (f) account of Greg Dunstan & Associates; (g) profit made on occupation of unit 5; and (h) claim of $852.38. 144 Of these, claims (a), (d), (e) and (h) are either agreed, or virtually conceded. This means that when dealing with the disputed items the plaintiffs start with a credit balance of $4,271 and the defendants $1,701. I need to rule on items (f), (g), (b) and (c). 145 So far as (f) is concerned, the plaintiffs allow 25% of the amount paid to Greg Dunstan & Associates for the plaintiffs' costs re the deed of 23 December 1995. The defendants claim 50%. I consider that 50% is appropriate. This is a joint venture account before the proportion is reduced and accordingly I would allow $1,147 rather than the $574 which the plaintiffs are prepared to allow. 146 So far as (g) is concerned, the claim is that the plaintiffs occupied their unit as from September 1995. The joint venture did not cease until 3 February 1997. The plaintiffs were thus able to rent out the unit at Mona Vale from which they had moved to Warriewood Beach earlier than otherwise and made a profit. I do not consider that this is a matter to be brought into account. The joint venture deal was that each party would be entitled to make the profits out of the part of the building built on their land. It may be that the plaintiffs did not legally occupy the unit because it may not have been properly passed by the council for occupation, but as between the parties, this is of no moment. I cannot see how the plaintiffs occupying one of the units without excluding the defendants from occupying their units means that the plaintiffs have to account for the joint venture. If the parties as joint venturers were owing each other fiduciary duties, perhaps things might be different. In my view they were each standing alone. Accordingly, I disallow item (g). Thus, under items (a), (d), (e), (f) and (h) the defendants have a credit of $2,848. 147 The claim for rates under item (b) is that there is a dispute as to whether some rates on some part of the defendants' part of the building should be adjusted as at 23 December 1995 when the deed was signed or at some earlier date. In my view the rates were payable by the legal owners which were the defendants and absent any other agreement the rates are borne by the person legally liable. Accordingly I would charge the defendants with the $1,287 in dispute. 148 As to item (c), the plaintiffs claim for labour done by relatives, particularly the first plaintiff's father who is now deceased. These people were not paid wages in the normal way. They were not shown in any books of account as employees. There were no wages records kept nor were any income tax or workers' compensation deducted. Accordingly, I would reject any claim that they were employees of the joint venture. 149 On the other hand, the evidence does tend to suggest that general labouring work was done by these people, particularly the first plaintiff's father under circumstances where they could expect payment. $11,625 is claimed. Doing the best I can, I will allow $3,000 being basically a quarter. 150 This means that on these figures the defendants owe the plaintiffs $8,558, the plaintiffs owe the defendants $2,848 so that on adjustment of accounts $5,710 should be paid by the defendants to the plaintiffs. 151 When I announced the result of this case at the end of the hearing, I made the figure slightly larger. This was because I had not appreciated the difference between 50% and 25% of Greg Dunstan & Associate's fee. 152 As I said earlier, the parties will need to co-operate to come to a final accounting figure otherwise there will need to be some formal taking of accounts. 153 Mr Stevenson made it clear that although his client conceded that he owed some moneys, he required to be shown the paid invoices in respect of the various sub-contractors whose bills were four times $4,271 before he should be required to contribute. I agree that that is perfectly proper. 6. The Valuation Evidence 154 Although in the upshot it does not matter, in case the matter goes further I should deal with the valuation of unit 6 which the defendants retained. Two valuers gave evidence, Mr Schweinsberg on behalf of the plaintiffs and Mr O'Neill on behalf of the defendants. Mr Schweinsberg valued unit 6 at $1.5 million, Mr O'Neill valued it at $1.25 million. 155 I must confess I found neither valuer particularly impressive. In particular Mr O'Neill, whose evidence I generally preferred, seemed to have the view that the role of expert valuers in court cases was to tell the Judge what the valuation was rather than to assist the Judge in dealing with making his own decision. It was extremely difficult to get from him then any more logical reason for his assessment than "I am an expert valuer and I am telling you". 156 It is interesting that valuers include as part of their curriculum vitae that they have given evidence before courts on many occasions. I often discount this as the Court does not know on how many occasions the valuations assisted the Judge. 157 There are various ways in which one can obtain the value of land. Usually the most reliable is to find comparable sales. Often, as here, that exercise is difficult because of the lack of sales which are truly comparable. The present valuation exercise was complicated because one of the so-called comparable sales was a sale of a unit in the same building which had taken place in circumstances whereby it may not have been an arm's length sale between a non anxious vendor and a non over-willing purchaser. It was also subject to a delayed settlement. There was also a complication in that if one looked at the squarage of two units in the building which had been sold and worked out the price per square metre, there was a vast difference between the price that was obtained for unit 1 and that obtained for unit 3. There was a debate as to whether, in any event, pricing the property per square metre was the right way to go about it, and if it was, whether one included the balconies or not. 158 Both valuers seemed to take an uncompleted contract for the sale of one of the units in the block as good evidence of value. It is clear that whilst one cannot take into account offers for sale that have not yet blossomed into a contract as evidence of value (see McDonald v Deputy Commissioner of Land Tax (1915) 20 CLR 231, 238-9), accepted offers which have reached the stage of exchange of contracts may be taken into account. However, particularly before completion, one has to look more closely at the terms and circumstances of the contract. First, it may not ever be completed. Secondly, it is not the situation referred to by the High Court at page 239 in Mcdonald's case where the buyer has actually parted with his money so that there are two adverse parties in the community showing what the true value of the land is. Any indication that the contract is not completely at arm's length makes one wish to discount it and in any event where there is a delayed settlement, one may have to again make a discount; cf Duncan v Commissioner of Land Tax (1915) 19 CLR 551, 559. 159 Mr O'Neill, I thought, gave a better overall consideration of the valuation exercise than Mr Schweinsberg. Mr O'Neill really approached the matter on three bases, viz: (a) a so much per square foot basis; (b) capitalisation of rent; and (c) an expert's estimate of what a person might pay for unit 6. None of these figures was particularly precise. Indeed, the reduction of the equivalent price of the lesser of the other units to the figure Mr O'Neill adopted was just purely artificial and he was not able to justify it at all. 160 On the other hand, Mr Schweinsberg did seem to pay too much regard to the value of unit 3. I consider that Mr O'Neill is nearer the mark. I would think that he is probably a little on the low side and the proper valuation of unit 6 is probably $1.275 million. 7. The Result 161 The result is thus that the defendants are entitled to succeed save that the plaintiffs are entitled to a small allowance on accounts if the procedural problems can be fixed up between the parties. 162 I have said nothing as to costs; this can be dealt with at the short minutes stage. I do not know if anything was paid into Court. 163 The present state of the matter is that it will be listed on 30 August 2000 at 9.50 am unless counsel arrange with my Associate for some other day on due notice. **************** Last Modified: 09/27/2000 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.