New South Wales Court of Appeal CITATION : WHITE v. ILLAWARRA MUTUAL BUILDING SOCIETY LIMITED & OTHERS [2002] NSWCA 164 FILE NUMBER(S) : CA 40963/2000 HEARING DATE(S) : 30/10/2001 JUDGMENT DATE : 19 July 2002 Margaret Lorraine White (Appellant) PARTIES : Illawarra Mutual Building Society Limited (First Respondent) Dennis Grogan and Lewis Webb (Second Respondents) JUDGMENT OF : Powell JA at 1; Hodgson JA at 141; Hamilton J at 148 LOWER COURT JURISDICTION : Supreme Court - Common Law Division LOWER COURT CLD 10736/1995 FILE NUMBER(S) : LOWER COURT Bell J JUDICIAL OFFICER : R.D. Wilson (Appellant) COUNSEL : D.J. Fagan SC and D.M. Lowenstein (First Respondent) G. Inatey SC and B. McManus (Second Respondents) A.W.M. Dickinson & Son (Appellant) SOLICITORS : Russell McLelland & Brown (First Respondent) Colin Biggers & Paisley (Second Respondents) CATCHWORDS : CONTRACTS - Unjust contracts - When contract unjust - Relevant circumstances - Whether need be known to party against whom relief sought - EQUITY - Fiduciary relationships - Solicitor and client - Scope of duty - Varies from case to case - EQUITY - Remedies - Equitable compensation - Causation - Breach of fiduciary duty by solicitor - Court may consider whether loss would have occurred without breach - LEGAL PRACTITIONERS - Solicitors - Solicitor and client - Fiduciary duty - Scope - Varies from case to case - LEGAL PRACTITIONERS - Solicitors - Solicitor and client - Retainer - Scope D LEGISLATION CITED : Contracts Review Act 1980 ss 4,7,9 Conveyancing Act 1919 s.164 Abalos v. Australian Postal Commission (1990) 171 CLR 167 Antonovic v. Volker (1986) 7 NSWLR 151 Beach Petroleum NL v. Kennedy (1998) 48 NSWLR 1 Beneficial Finance Corporation v. Karavas (1991) 23 NSWLR 256 Brickenden v. London Loan & Savings Co. [1934] 3 DLR 405 Broadlands International Finance Limited v. Sly (1987) NSW Conv R 55-342 Clarke Boyce v. Mouat [1994] AC 1; [1993] 3 WLR 1021 In re Cousins (1886) LR 31 Ch D 671 Devries v. Australian National Railways Commission (1992-1993) 177 CLR 472 Elders Rural Finance Limited v. Smith (1996) 41 NSWLR 296 CASES CITED: Esanda Finance Corporation Limited v. Tong (1997) 12 NSWLR 48 Farrington v. Rowe McBride & Partners (1985) 1 NZLR 83 Maguire v. Makaronis (1997) 188 CLR 449 National Home Loans Corporation Plc v. Giffen Couch & Archer [1998] 1 WLR 207 Nguyen v. Taylor (1992) 27 NSWLR 48 O'Halloran v. R.T. Thomas & Family Pty. Ltd. (1998) 45 NSWLR 262 Saffron Walden Second Benefit Building Society v. Rayner (1880) LR 14 Ch D 406 Spector v. Ageda [1973] Ch 30 Target Holdings Ltd v. Redferns [1996] 1 AC 421 Taylor v. London & County Banking Company; London & County Banking Company v. Nixon [1901] 2 Ch 231 West v. AGC (Advances) Limited (1986) 5 NSWLR 610 DECISION : Appeal dismissed with costs IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA40963/2000 CLD 10736/1995 POWELL JA HODGSON JA HAMILTON J 19 July 2002 WHITE v. ILLAWARRA MUTUAL BUILDING SOCIETY LIMITED & OTHERS Judgment 1 POWELL JA: The Appellant ("Mrs. White") appeals from a Judgment delivered and orders made by Bell J on 24 November 2000, on which day her Honour entered a judgment for the First Respondent (IMB) for possession of a property known as 114 Quarry Road, Road in respect of which property the Appellant in December 1992 had granted a mortgage to IMB; dismissed a Cross-Claim which the Appellant had raised against IMB seeking to have that mortgage set aside, dismissed a Cross-Claim which the Appellant had raised against the Second Respondents seeking to recover damages for either breach of contract or negligence and, alternatively, to recover equitable compensation for breach of fiduciary duty; and dismissed a Cross-Claim which had been raised by IMB against the Second Respondents seeking to obtain an order that the Second Respondents indemnify it in respect of any loss which it might sustain by reason of any order which might be made in favour of the Appellant against IMB on the first Cross-Claim. 2 Regrettably, the facts which gave rise to the proceedings with which Bell J was concerned to deal, concern a gullible woman who, unless her appeal is to succeed against one or other of the Respondents, will have lost her only significant asset and who will face financial ruin. 3 In early 1992 – the relevance of which time will shortly appear – Mrs. White was a married woman living with her then husband and her four sons in her home at 114 Quarry Road, Ryde ("the property"), of which home she was then the registered proprietor. 4 Although it is not entirely clear that this was so, it would seem – since she said that she left school at the age of 18 years – that Mrs. White had sat for and passed the Higher School Certificate examination at the end of her secondary education. When she did so, Mrs. White obtained employment with a firm of stockbrokers working as a clerk, remaining in that employ until she was 25 years of age. 5 Although the materials which are before the Court do not clearly demonstrate that this was so, the probability is that, by the time she left her employment, Mrs. White had married her first husband David Crees as, in an Affidavit (Blue AB 252, 253) sworn by her in August 1997, Mrs. White said that, when she left work, it was to start her family. 6 Mrs. White did not return to the workforce until 1978, by which time the first three of her four sons had been born. When she returned to the workforce, Mrs. White worked as a factory hand for 2 days each week, continuing to do so until, in 1980, she left the workforce again to have her fourth child. In 1983 Mrs. White resumed part-time work as a factory hand. 7 In 1985 Mrs. White obtained casual employment with the Lowes men's' wear chain of stores as a sales assistant, continuing in the employ of that organisation until 1994. By 1992 Mrs. White had been appointed the Sunday manager at the Chatswood store operated by that organisation. By 1994 Mrs. White had been appointed the assistant manager of the Lowes store in the Macquarie Centre at North Ryde where, for a time, following the then manager of that store leaving, she acted as the manager. 8 It was about this time when Mrs. White left the employ of Lowes and obtained a position as a cashier with the Katie's fashion chain of stores. By the time of the hearing before Bell J, Mrs. White had come to be second in charge of one of the stores of that organisation. 9 The property was purchased by Mrs. White and Mr. Crees – but whether as joint tenants or tenants in common is not revealed by the materials before the Court – in 1976, that is, at about the time when their third child was born. 10 The marriage between Mrs. White and Mr. Crees later floundered and they were divorced in about January 1984. At that time, so Mrs. White said in her Affidavit, she and Mr. Crees "reached a property settlement in the Family Court by which it was agreed that (she) would receive (the property) in return for paying Mr. Crees the sum of $50,000.00". 11 In 1983 – which appears to have been after Mrs. White and Mr. Crees separated – she and Mr. White, a stockbroker by occupation, started to keep company – they were married in April 1984. 12 At about this time, Mr. White, on Mrs. White's behalf negotiated with the ANZ Bank for a loan on a mortgage of the property to enable Mrs. White to pay Mr. Crees the amount which had been agreed upon. That loan was later repaid and the mortgage discharged – in her Affidavit Mrs. White said that Mr. White was responsible for, and looked after, the repayments due under the loan from the Bank. Although it is not entirely clear that this was so, it would seem that, in addition to making those repayments, Mr. White also organised and paid for extensions which were carried out – at a cost of about $100,000.00 to the property between 1984 and 1993 – the relevance of which later date will later appear. 13 In her Affidavit, Mrs. White also said that, during the course of her marriage with Mr. Crees and later with Mr. White she was not responsible for, and did not manage, the family's financial affairs, each of her husbands in turn arranging any loans taken out with Banks and, as well, arranging for the payment of all bills and accounts. 14 By 1991, Mr. and Mrs. White's marriage appears to have come under strain and there was talk of their separating – they in fact separated in August 1993. During this time, so it would seem, Mr. White had told Mrs. White that he required $100,000.00 "for (his) share in the house". 15 In 1992, John Maggio ("Mr. Maggio"), who appears to be of an age with Mrs. White, was – as he appears to have done for the previous 20 years – living with his wife and family at a property No. 260 Quarry Road, Ryde. At the time Mr. Maggio – as he appears for some years previously to have done – conducted a small goods business in premises on the corner of Quarry Road and Dobson Crescent, Ryde, which property appears to have been near Mrs. White's home. 16 Mrs. White had met Mr. Maggio in about 1986. It would appear that his son was involved in the same sporting events as was one of Mrs. White's sons and, as the result of this fact, the two families became acquainted. In addition, so it would appear, Mrs. White was accustomed to patronise Mr. Maggio's small goods business. 17 In about April 1992, Mrs. White was shopping at Mr. Maggio's shop when, so she said, he said to her that he was involved in a commercial venture with an accountant named David Mansfield ("Mr. Mansfield") and that the two of them were trying to raise money for a gold deal in the Philippines. He then asked her if she was interested in investing and she replied that she would need time to think about it. 18 After considering Mr. Maggio's proposal, Mrs. White thought that it might be a good way of raising money to enable her "to buy out Mr. White's interest in the property". Accordingly, she returned to Mr. Maggio's shop and told him that she had $10,000.00 which she could lend him and asked what the arrangement would be. Mr. Maggio then told her that he would pay interest at 15% and that he would repay the principal and pay the interest within 9 months. On 24 April 1992, Mrs. White gave Mr. Maggio a cheque for $10,000.00 and had him sign a document (Blue AB 261) which she had prepared recording receipt of the loan and providing for the repayment of the loan and the payment of the interest by 21 January 1993. 19 In May 1992, while Mrs. White was in his shop, Mr. Maggio said to her "David needs more money for the gold deal" and, when Mrs. White inquired how much was needed, Mr. Maggio said "As much as you can help with really". As a result of that conversation, Mrs. White on 16 May 1992 handed Mrs. Maggio a cheque for $20,000.00 and had him sign a document (Blue AB 262) which she had earlier prepared recording that she would be repaid the $20,000.00 by 16 May 1993 together with interest at the rate of 20% per annum. 20 On another occasion in about the middle of 1992, when Mrs. White was in his shop, Mr. Maggio spoke to her about "A commercial venture to raise money for a gold deal. Someone puts up their property for 6 months at no risk for $20,000.00". 21 In the months which followed, Mrs. White had a number of conversations with Mr. Maggio concerning "the gold deal". On one of those occasions, so Mrs. White said (Blue AB 255-256), the conversation was to the following effect: WHITE: "If I put up my house what sort of benefits would I get?" MAGGIO: "You put up your house for six months, you get $20,000.00 in return, there is absolutely no risk. David Mansfield arranges the deal overseas and if anything terrible happens, David will sell his accountancy practice in Sydney." WHITE: "Is there any risk?" MAGGIO "There is definitely no risk" WHITE: "What happens if something happens to you?" MAGGIO: "I will put the loan agreement with my Will in the safe and if anything happens my insurance policy, $1,000,000.00 would cover the house." WHITE: "Let's go ahead". 22 If I may say so, this version of the conversation given by Mrs. White is curious for, immediately afterwards in her Affidavit, she said (Blue AB 256): "19. On or about 1 September 1992 I lent Mr. Maggio a further $2,000.00 and on 16 October 1992 I lent Mr. Maggio a further $15,187.00. Annexed hereto and marked C is a true copy of a loan agreement dated 1 September 1992. Annexed hereto and marked D is a true copy of a loan agreement dated 16 October 1992. 20. I was aware that Mr. Maggio required more money for the gold deal in the Philippines. I therefore decided to take up his offer to pay me $20,000.00 in the next 6 months time if I put up the house for 6 months. I informed Mr. Maggio of this in about October 1992." 23 I say that this version of the conversation is curious for the following reasons: (a) the reference to "the gold deal in the Philippines" occurred in the conversation said to have taken place in April 1992 and not in the conversation said to have taken place in the middle of 1992; (b) in the version of the conversation said to have taken place in the middle of 1992, Mrs. White claims that she said, "Let's go ahead" while in the later paragraphs of her Affidavit, Mrs. White claims not to have told Mr. Maggio that she would "take up his offer" until about October 1992; (c) meantime, Mrs. White had made two further loans, the first – on 1 September 1992 - to be repaid by 1 December 1992 together with interest at the rate of 15% per annum (Blue AB 263) and the second – on 16 October 1992 - to be repaid on a date which is not specified together with interest at the rate of 15% per annum (Blue AB 264). 24 Although the document acknowledging receipt of "the Deeds to 114 Quarry Road, Ryde to be treated as a loan" (Blue AB 265) which Mrs. White prepared and had Mr. Maggio sign, is dated 24 December 1992, in her Judgment (RAB 40), Bell J wrote: "Around October 1992, Mrs. White handed Mr. Maggio the documents of title relating to the premises." 25 At this stage it is necessary to pause for the purpose of recording the transaction which, although not involving Mrs. White, involved Mr. Maggio the existence of which transaction was, in the proceedings before Bell J relied upon by Mrs. White for the purposes of her claim against the Second Respondents (Grogan & Webb). 26 Finance and Mortgage Corporation Limited ("FMC") is – or was at the time – a company apparently carrying on business as a mortgage broker from premises in Alfred Street, North Sydney. 27 Although the facts are not entirely clear, it would seem that, in late October or early November 1992, Mr. Maggio, on his own behalf and on behalf of a Mr. and Mrs. Giuliano, approached FMC with a view to having that company arrange a loan of $250,000.00 to enable Mr. and Mrs. Giuliano to pay out an existing mortgage on a property at 17 Tudor Place, Cherrybrook, of which property Mr. and Mrs. Giuliano were then registered as proprietors – the existing mortgage was said to be $240,000.00 and the value of the property was said to be $385,000.00 (Blue AB 435). In a form of mortgage application which appears to have been prepared by FMC the following appears (Blue AB 437): "John Maggio is joined in this application because he assisted the Giuliano's financially with the purchase due to a family connection. Consequently, he still retains an interest in the property even though he is not shown on the title." A statement of Mr. Maggio's assets and liabilities which accompanied that application disclosed assets said to be worth $735,000.00 and liabilities – a mortgage on the home at Ryde and a mortgage on a property at Tamworth – said to amount to $300,000.00 leaving total nett assets of $435,000.00. Whether or not FMC forwarded copies of that application to other financiers, it seems tolerably plain that, at some time prior to 12 November 1992, the application was forwarded to either the McAlpine Superannuation Trust ("the Trust") or to Messrs. Mooney & Kennedy, the solicitors for the Trust, and that, on or before 12 November 1992, the making of the advance sought had been conditionally approved. A letter (Blue AB 439-440) dated 12 November 1992 from Messrs. Mooney & Kennedy addressed to Mr. Maggio and Mr. and Mrs. Giuliano c/- Grogan & Webb advised them of that conditional approval. The fact that that letter was so addressed is, to say the least, curious for the following reasons - (a) it would appear (see Blue AB 420-421) that Messrs. David Alexander & Company were accustomed to act for Mr. Maggio or for Mr. and Mrs. Giuliano; (b) a note (Blue AB 429) in Mr. Grogan's file, dated 13 November 1992 and seemingly intended for Mr. Grogan, was in the following terms: "Diane Joura (sic) phoned from David Alexander's office in relation to a loan to their clients Maggio and Juliana (sic). They want to know what we require to prepare the mortgage documents. Who is acting for the borrowers, us or them? Diane Joura's phone number is 4132600. Linda;" (c) a facsimile dated 13 November 1992 from Neil Macdonald addressed to Mr. Grogan (Blue AB 434) and appearing in Mr. Grogan's file was in the following terms: "SUBJECT LOAN TO MAGGIO & GIULIANO Attached herewith; (i) Copy of Loan Agreement etc from Messrs. Mooney & Kennedy (ii) Copy of our original application (iii) our direction to pay. Please have client sign when they call at your office. We would have you act for the mortgagors in this matter and will have John Maggio call you to get things moving." (d) a letter dated 13 November 1992 from Messrs. Mooney & Kennedy to Grogan & Webb (Blue AB 438) was in the following terms: "RE: McALPINE SUPERANNUATION TRUST DEED ADVANCE TO MAGGIO & GIULIANO We understand that you act for the borrowers and accordingly we enclose herein Loan Agreement for signature and return. As the Finance Mortgage Corporation is paying the interest differential on the cancelled loan to McCahon-Roberts, we would be pleased if this matter could be dealt with as expeditiously as possible." (e) a letter dated 16 November 1992 from David Alexander & Company to Grogan & Webb (Blue AB 420-421) reads in part as follows: "RE: MAGGIO AND GIULIANO FINANCE/MORTGAGE PROPERTY: 17 TUDOR AVE., CHERRYBROOK NSW We refer to our recent telephone conversation with your office and confirm that you will be acting on behalf of Mr. John Maggio and others in connection with the abovementioned Mortgage arranged through Finance and Mortgage Co Limited. We enclose herewith the following documents to enable you to attend to the early completion of the Mortgage: ………" 28 Although the letter giving conditional approval for the loan was addressed to Mr. Maggio and Mr. and Mrs. Giuliano as borrowers, the documents which were prepared by Messrs. Mooney & Kennedy to give effect to the proposed loan were a form of mortgage over the property at Cherrybrook to be given by Mr. and Mrs. Giuliano as mortgagors and a form of guarantee to be executed by Mr. Maggio (Blue AB 384). The form of loan agreement (Blue AB 441) executed by each of Mr. Maggio and Mr. and Mrs. Giuliano, the form of mortgage (Blue AB 340-342) executed by Mr. and Mrs. Giuliano and the form of guarantee (Blue AB 338-339) were forwarded by Grogan & Webb to Messrs. Mooney & Kennedy under cover of a letter (Blue AB 336-337) dated 19 November 1992. 29 The settlement of the loan from the McAlpine Superannuation Trust and the discharge of the existing mortgage took place on 20 November 1992. After payment to the existing mortgagees of $232,001.36, the costs of the existing mortgagees, the costs payable to Messrs. Mooney & Kennedy as solicitors for the Trust, the fees payable to FMC and Grogan & Webb's costs, Grogan & Webb received a bank cheque in the sum of $3,314.84 payable to Mr. Maggio. That cheque together with a cheque drawn on by Grogan & Webb on its General Account in the sum of $1,455.00 and payable to Mr. Maggio were forwarded to Mr. Maggio on 24 November 1992. 30 An Epitome of Mortgage (Blue AB 297-300) later forwarded by Messrs. Mooney & Kennedy to Grogan & Webb recorded that the term of the mortgage which appears to have been an interest only mortgage, was 2 years and that interest was payable monthly at the rate of $2,187.50 meantime. 31 Meantime, on 27 October 1992, Mrs. White and Mr. Maggio had signed a document described as "Loan Application" addressed to FMC, in which document each of Mrs. White and Mr. Maggio was described as an Applicant (Blue AB 276-279). In that document, the amount of loan sought was said to be $350,000.00; the purpose for which the loan was sought was said to be "Pay out existing mtge"; and, in the personal details which were provided in respect of Mrs. White, it was said that she was employed by "Mansfield & Co" and that her annual gross income was $30,000.00. The security for the proposed loan which was offered was Mrs. White's home at 114 Quarry Road, Ryde. On the same day, Mrs. White and Mr. Maggio signed a document entitled "Privacy Legislation – Acknowledgement & Agreements", seemingly addressed to a company known as Project Equity Finance Limited ("PEFL") (Blue AB 280), authorising that company, inter alia, to disclose to a credit reporting agency personal information provided by them to PEFL and to seek information relating to them from a credit reporting agency. The materials which are before the Court do not disclose what, if any, was the relationship between FMC and PEFL. 32 The evidence does not disclose what, if any, action FMC took between 27 October 1992 and 20 November 1992 and, in particular, does not disclose whether, during that period, FMC had made any inquiries from possible lenders as to whether or not they would consider an application for the loan which was apparently sought by Mrs. White and Mr. Maggio. 33 On 20 November 1992, Mr. Neil Macdonald of FMC forwarded to Mr. Grogan by facsimile, a memorandum (Blue AB 166) in the following terms: "SUBJECT: NEW MATTER – WHITE & MAGGIO I am preparing a new matter for clients who jointly own a property, but is lived in by only one, with the property held in the name of the resident (land tax purposes). Loan is to be via IMB and we are seeing $350,000 over 15 years. Can you urgently advise the joint income that they would require to show." 34 There is something a little curious about this memorandum, as the form of Loan Application addressed to FMC disclosed as the solicitors for each of Mrs. White and Mrs. Maggio, David Alexander & Co, and the materials which are before the Court do not disclose whether Mr. Macdonald and sought and obtained from Mrs. White and Mr. Maggio authority to approach Mr. Grogan on their behalf in relation to the matter. However, it may be that Mr. Macdonald was aware that by 1992 Grogan & Webb were retained by IMB to carry out all the legal work involved in relation to loans on mortgage which had been sought through the Chatswood Branch of IMB (see Blue AB 2) and that, by reason of that fact, Mr. Grogan was familiar with IMB's requirements in relation to proposed loans to borrowers and the documents required to give effect to any such loans which were approved (see Blue AB 155). 35 On 23 November 1992, Mr. Grogan forwarded by facsimile to FMC, for the attention of Mr. Macdonald, a letter (Blue AB 167) advising that the joint income which Mrs. White and Mr. Maggio would need to show in order to support the proposed loan was $120,000.00. 36 On 30 November 1992, Mr. Grogan forwarded by facsimile to FMC for the attention of Mr. McDonald a letter (Blue AB 168) advising that income details were required before the matter could proceed further. 37 On the same day Mr. Macdonald forwarded to Mr. Grogan by facsimile a form of "Mortgage Application" apparently prepared by him in which application Mrs. White's occupation was described as "computer consultant" employed by "Mansfield & Co.", her income being "$45,000 pa" and the amount of the loan sought was said to be "$360,000". In the accompanying statement of Mrs. White's assets and liabilities (Blue AB 174), the value of the residence was put at $460,000 and her only liability was said to be "Mortgage on Residence $360,000". 38 On 2 December 1992, Mr. Macdonald forwarded to Mr. Grogan by facsimile a copy of a letter on the letterhead of Mansfield & Co., Public Accountants and signed by Mr. Mansfield as "Principal" (Blue AB 171) which letter was in the following terms: "RE: MRS. MARGARET WHITE I wish to certify that Mrs. Margaret White is currently employed by Mansfield & Co/Mansco Group as a Computer Consultant. Mrs. White's current level of remuneration is $44,980 per annum. Should you require any additional information do not hesitate to contact the writer." 39 On 4 December 1992, Mr. Macdonald forwarded to Mr. Grogan by facsimile a memorandum (Blue AB 176) seeking an urgent appointment time for Mrs. White and Mr. Maggio. 40 On 8 December 1992, Mr. Grogan forwarded to "The Manager" of IMB – clearly intended to be the Manager, a Ms. Roebuck, of the Chatswood Branch of the IMB – a letter (Blue AB 177) referring to what was understood to be an appointment for Mrs. White and Mr. Maggio to see Ms. Roebuck on the following day and enclosing "evidence of income for both our clients". In her Judgment (RAB 41) Bell J recorded that she thought that that appointment was not kept. 41 On 9 December 1992, Mr. Grogan forwarded to the Chatswood Branch of the IMB a letter (Blue AB 178) which, inter alia, recorded that the estimated value of the property was $460,000.00, and enclosed cheque for valuation fees in the sum of $566.00. 42 A licensed valuer, a Mr. Houlahan, inspected the property on 14 December 1992 and subsequently provided to the Chatswood Branch of the IMB a valuation (Blue AB 179-180) recording his valuation of the property in the sum of $290,000.00. 43 Information as to the valuation of the property by Mr. Houlahan appears to have been given to Mr. Grogan who, on 16 December 1992, forwarded to Mr. Macdonald a letter (Blue AB 181) informing him of that fact and seeking further instructions. 44 On the same day, Mr. Macdonald forwarded to Mr. Grogan by facsimile a memorandum (Blue AB 182) which was in the following terms: "SUBJECT: MAGGIO/WHITE Can you proceed with a loan figure of $240,000. New application and letter from existing mortgagee attached. Cheque for $720 being IMB's membership fees being delivered to you under separate cover. Can you urgently advise time for IMB interview this week, preferably tomorrow. Please advise urgently any other requirements." The form of Mortgage Application (Blue AB 183) indicated that the amount of the loan required was $240,000, the purpose for which the loan was required being "to pay out existing mortgage". The statement of Mrs. White's assets and liabilities (Blue AB 185) which accompanied that application recorded as a liability "Mortgage on Residence $240,000". The "letter from existing mortgagee" (Blue AB 186) referred to in Mr. Macdonald's memorandum was on the letterhead of Meridian Management Pty. Limited ("Meridian"), addressed to Mr. Grogan and signed by Dean Peters who was described as being a director. Omitting formal parts, it was in the following terms: "RE: LOAN TO MAGGIO & WHITE PROPERTY AT 114 QUARRY ROAD, RYDE I refer to our discussions of yesterday and confirm that the total amount of our loan to the above is $240,000. Interest payments are up to date, and the account has been well conducted. Please contact us when you have a firm settlement date." 45 Quite apart from the fact that, at this time, the property was not subject to any mortgage, let alone a mortgage to Meridian, there are a number of decidedly curious features about what occurred at this time. Thus: (a) the sum of $360,000.00 which, in the Loan Application forwarded to Mr. Grogan on 30 November 1992 was said to be sought in order to pay out the existing mortgage was, on 16 December 1992, in the fresh Loan Application forwarded to Mr. Grogan that day, reduced to the figure of $240,000.00; (b) the terms of the letter from Meridian which accompanied that fresh Loan Application suggest that there had been discussions between Mr. Grogan and Mr. Peters on 15 December 1992, that is, the day before that on which Mr. Grogan wrote to Mr. Macdonald advising him of the valuation of the property and seeking his instructions; (c) the address for Meridian which appears on its letterhead is the same as FMC's address as shown on its letterhead and, further, each letterhead reveals that both companies use as a postal address "P.O. Box 226H Australia Square NSW 2000"; (d) in her Judgment (RAB 42) Bell J wrote: "Mr. Grogan understood that Meridian was related to FMC"; (e) in the Affidavit which she swore on 4 August 1997, Mrs. White deposed (Blue AB 256): "24. During the week prior to Christmas 1992, Mr. Maggio and I attended on the same day a meeting with Neil Macdonald of Meridian Management and after that a meeting with Mr. Grogan, a solicitor in Chatswood, and after that a meeting with Sharyn Roebuck at the Chatswood Branch of the IMB Building Society." (f) in her oral evidence (Black AB 42-43) Mrs. White said that the reason for the attendance upon Mr. Macdonald which she and Mr. Maggio made on that day was "because they were organising the finances". 46 Although – seemingly later in the day – Mr. Grogan forwarded to Mr. Macdonald by facsimile a letter (Blue AB 187) recording a tentative arrangement for an appointment with Mr. Maggio on the following afternoon, in her Judgment (RAB 42) Bell J wrote: "By reference to notations appearing on the front cover of the solicitor's file it would appear that the appointment for Thursday 17 December 1992 at 3.00 p.m. was changed to 11.00 a.m. on Friday 18 December." 47 Support for the comment there made by Bell J in her Judgment is provided by the facts, first, that it was apparently common ground that Mrs. White and Mr. Maggio attended only one conference with Mr. Grogan; second, that on the same day as that conference was held, Mrs. White and Mr. Maggio were interviewed by Ms. Roebuck; and, third, that although, in the Affidavit which she swore on 20 May 1996, Ms. Roebuck deposed to having had an interview with Mrs. White and Mr. Maggio on 9 December 1992, at which time she completed a form of "Loan Application" (Blue AB 2, 6-8) it is clear – since the amount of the loan required appearing in that form (Blue AB 7) was recorded as $240,000 – that application could not have been filled in on 9 December 1992 but must have been filled in on 18 December 1992 when an Authority for Loan Repayment Transfers (Blue AB 14) was signed by Mrs. White and Mr. Maggio and a form of "Assessed Repayment Ability" (Blue AB 16) was filled in by Ms. Roebuck. 48 The respective versions of the conference between Mr. Grogan, Mrs. White and Mr. Maggio which were given by Mr. Grogan and Mrs. White were at odds. It is, however, clear that, at that time, the IMB Loan Application form which was later filled in by Ms. Roebuck did not exist; that the loan which was sought from IMB had not been approved; that no instructions had been given by IMB to Mr. Grogan to act on IMB's behalf in relation to the loan which was sought and was later approved, and that none of the documents which were later executed by Mrs. White and Mr. Maggio, which documents included a form of Loan Agreement (Blue AB 24-38), a form of Guarantee (Blue AB 20-23), and a form of Real Property Mortgage (Blue AB 43-47) existed. Clearly, whatever else was said in the course of that conference, the position is as Mr. Grogan put in the Affidavit which he swore in December 1997 (Blue AB 162): "There was no explanation by me of the mortgage or guarantee documents to Maggio or White after they were prepared. The documents were not executed in my offices. If they had been executed in my offices then I would have provided an explanation. There was no explanation by me because the documents were forwarded to IMB and the documents were executed by White and Maggio at IMB's offices." 49 In the event, although she had reservations as to the acceptability of Mrs. White's evidence as to that conference, Bell J, in her Judgment (RAB 51), wrote: "46. It was Mr. Grogan's evidence that in the ordinary course he would have had a further conference with Mr. Maggio and Mrs. White. At that second conference the security documentation would have been explained to the clients and they would have been asked to execute in his presence. This did not happen because of the wish of Mr. Maggio and Mrs. White to have settlement take place during the Christmas break at a time when his firm was closed. It is common ground that the documents were executed in the presence of Ms. Roebuck as witness and that Mr. Grogan did not confer with Mr. Maggio and Mrs. White again. I consider the probabilities strongly favour the view that at the one conference had with Mrs. White and Mr. Maggio the focus was on the requirements of the IMB and the timetable for prompt settlement of the matter should their application be approved. I do not accept that the solicitor advised Mrs. White concerning the legal effect of the mortgage and the consequences of default. Nor do I accept that he explained to Mrs. White that she was both jointly and individually responsible for meeting the loan repayments." 50 This notwithstanding, Bell J, under a heading "Mrs. White's understanding of the transaction" wrote later in her Judgment (RAB 54-57): "52. In an affidavit sworn on 23 September 1999 Mrs. White asserted that at the time she signed the various documents evidencing the transaction on 29 December and 31 December 1992, it was her understanding that the loan from the IMB was for a commodity deal in the Philippines. She understood that there were no risks associated with the transaction. She understood that she was not to be responsible for repaying the loan. It was her belief that the deeds to her home would be returned to her in six months from the date of the transaction. She said that had she been advised that she was jointly and individually liable to the IMB for repayment of the loan and that, in the event Mr. Maggio failed to make repayments, there was a real risk that her home would be sold by the IMB she would not have participated in the transaction. For reasons which I set out below, I am unable to accept this latter assertion. ……… 56. Mrs. White knew that the premises had been the subject of a mortgage to secure the advance by the ANZ Bank in 1984. She understood that in the event that payments were not maintained to the ANZ Bank, action might be taken to sell the premises. 57. In the proceedings on 28 September 1999, Mrs. White was cross-examined concerning her assertion that she had asked Mr. Maggio whether there was any risk associated with the proposal that she put up her house for six months and receive $20,000 in return. Abadee J asked her: 'Q. Did you mean 'Is there a risk of my house being … A. The deal … Q. … Being taken? A. Yes, I would have been worried about that. INATEY: Q. The other risk, I suppose, is that you were foreshadowing apart from that very important one, the risk that the commodities deal would go ahead or would fail in some way; I suppose that was another problem? A. Yes. Q. And if that were to happen you house was mortgaged then the possibility, the real possibility was that you would lose your house, wasn't it? A. Yes, but I was assured that I wouldn't because of David Mansfield's accountancy practice.' (T. 27) 58. I accept that Mrs. White believed that the funds obtained from the IMB would be used in connection with a commodities deal in the Philippines. I also accept that she believed the assurances given to her by Mr. Maggio as to the absence of risk attending the proposal. Equally, I am satisfied that Mrs. White understood that the transaction involved the execution of a mortgage over the premises and that she understood in general terms that, in the event of default in making repayments under the terms of the loan agreement, the IMB might seek to exercise power of sale over the premises. She was not troubled by this because of her belief and the assurances given by Mr. Maggio." 51 Just as the respective versions given by Mr. Grogan and Mrs. White as to the conference between Mr. Grogan, Mrs. White and Mr. Maggio were at odds, so also were the respective versions given by Ms. Roebuck and Mrs. White as to the interview held later that day. In this regard, in her Judgment Bell J wrote (RAB 52-54): "48. There was an issue between Mrs. White and the IMB concerning the conduct of the interview during which the loan application was completed. Mrs. White recalled attending a meeting with Ms. Roebuck and Mr. Maggio on the date of her conference with Mr. Grogan. In her affidavit sworn 4 August 1997 she said this: 'My recollection of the meeting with Sharyn Roebuck and Mr. Maggio is that I signed some documents, had a short discussion of no consequence and left. I do recall opening accounts for each of my children with the IMB on that day. There is still $5 in each account. I have been shown a loan application to the IMB Building Society signed by myself and Mr. Maggio. This would appear to be a document I signed at the meeting with Mr. Maggio and Sharyn Roebuck. During that meeting, Sharyn Roebuck did not ask me any questions concerning my personal details including the name of my employer and the purpose of the loan. I was simply presented with some documentation and signed it. I do not recall Sharyn Roebuck completing the loan application whilst I was there with her and Mr. Maggio. I did not read the loan application prior to signing it. I recall at the time I wanted to get home to take the children Christmas shopping and was in a rush.' (para. 26) 49. The loan application form set out details relating to both Mr. Maggio and Mrs. White including their respective employment history and a statement of their assets. In a section of the application headed 'Financial Position' a notation recorded '$240,000 Meridian to be paid out. The application contained an assertion that Mrs. White's current employer was Mansfield & Co. Mrs. White was described as being employed by that company as a computer consultant. It was said she had been so employed for one and a half years. The purpose of the loan was recorded as 'to refinance an existing mortgage(s). 50. In evidence given before me Mrs. White asserted that during her meeting with Sharyn Roebuck she had not been asked any questions concerning her personal details. To the extent that information personal to her was included on the loan application form, Mrs. White suggested that it had been furnished by Mr. Maggio or that Ms. Roebuck had taken it from documents which had been supplied to the IMB. Mrs. White was insistent that she had provided no personal information herself. 51. Ms. Roebuck said it was her invariable practice to address questions directly to each person from whom she was taking a loan application. She rejected the proposition that she would have completed the application, insofar as it related to Mrs. White, upon the basis of material contained in documents. Ms. Roebuck was a careful and impressive witness. I had no hesitation in accepting her evidence as to the conduct of the meeting in preference to the evidence of Mrs. White in cases where the two conflicted. This view, it seemed to me, was supported by the contemporaneous documents. Thus, the loan application records Mrs. White's previous employment history as including 'temporary pre-school assistant Cheltenham'. In evidence Mrs. White agreed she had been employed as a pre-school assistant at Cheltenham. It was not suggested that any document to which Ms. Roebuck may have had access contained this detail. Mrs. White was asked where this information had come from and she replied 'I don't know, I'm sorry, no.' (T.34). Although she asserted in a general way that Mr. Maggio was familiar with her history I took her to suggest only faintly that Mr. Maggio might have been aware of this aspect of her employment history. Indeed, as the cross-examination continued, Mrs. White conceded that Ms. Roebuck may have asked the questions but that she had no recall of the same." 52 Following the interview with Mrs. White and Mr. Maggio, Ms. Roebuck, who, although the manager of the Chatswood Branch of IMB, had no authority to approve loans, submitted the Loan Application together with her recommendation that it be approved, to the head office of the IMB in Wollongong. An approval to make the loan was given on 24 December 1992 (Blue AB 7). 53 Meantime, under cover of a letter dated 21 December 1992 (Blue AB 188), which letter commenced as follows: "JOHN MAGGIO AND MARGARET WHITE – FINANCE - MORTGAGE PROPERTY: 114 QUARRY ROAD, RYD We enclose herewith at the request of Mr. John Maggio the following documents to enable you to attend to the early completion of the mortgage arranged through Finance and Mortgage Co. Limited." David Alexander and Company forwarded to Mr. Grogan the duplicate Certificate of Title to the property, the Discharge for the Mortgage to the ANZ Bank and a variety of other relevant documents. 54 Although the "Loan Approval" addressed to Mr. Maggio and Mrs. White (Blue AB 19) – annexed to which Loan Approval was a document (Blue AB 217) which provided (inter alia): "The following creditors are to be paid direct at settlement: Meridan (sic) Management" - was dated 29 December 1992 and not given to Mrs. White and Mr. Maggio until that day, and although the "Loan Approval" instructing Mr. Grogan to act for the IMB in connection with the loan which had been approved was dated 29 December 1992 and not received by Mr. Grogan until that day, it seems tolerably plain that Mr. Grogan was informed by Ms. Roebuck of the approval on 24 December 1992 and at the same time given instructions to act for the IMB in respect of the loan which had been approved. That this was so is indicated by the facts, first, that, on 24 December 1992, Mr. Grogan forwarded to Mr. Maggio by facsimile a letter (Blue AB 189) in the following terms: "LOAN FROM IMB BUILDING SOCIETY LIMITED We write to confirm that a loan of $240,000.00 has been approved subject to a letter from your accountant confirming that he prepared the financial details submitted with the loan application and we expect to receive this during the day. We anticipate settlement can take place before the New Year or at the latest on the 4th of January 1993." and, second, that Mr. Grogan appears on 24 December 1992 to have prepared and forwarded to IMB's Chatswood office the Loan Agreement, Guarantee, Form of Real Property Act Mortgage and associated documents on 24 December 1992. 55 On 24 December 1992, Mr. Grogan received from Ruth Buchanan & Associates Pty. Limited a letter (Blue AB 191) in the following terms: "We confirm that we are the accountants for John Maggio and that we prepared is 1992 tax return previously provided." 56 With the possible exception of the form of Real Property Act Mortgage, all the documents which had been prepared by Mr. Grogan and forwarded to the Chatswood Branch of the IMB were executed by Mrs. White and Mr. Maggio on 29 December 1992 in the presence of Ms. Roebuck at the Chatswood office of the IMB. Although dated 31 December 1992, it seems to me likely that the form of Real Property Act Mortgage was also executed by Mrs. White and Mr. Maggio on 29 December 1992 but left undated until the loan transaction was completed on 31 December 1992. I say this since, among the documents executed by Mrs. White and Mr. Maggio on 29 December 1992, was one headed "Direction" and directed to the Manager, IMB and to Mr. Grogan's firm which document provided (inter alia) as follows (Blue AB 39): "You are hereby authorised and directed to complete the mortgage herein by filling in all blanks in the mortgage document and, in particular, by without limiting the generality of the foregoing, blanks concerning the number of any First Mortgage or existing security and the dates of payment." 57 In the Affidavit which he swore in December 1997, Mr. Grogan deposed (Blue AB 161-162) that on or about 29 December 1992, he received the documents – with the possible exception of the form of Real Property Act Mortgage – which had been executed by Mrs. White and Mr. Maggio. 58 On 29 December 1992, Mr. Grogan forwarded to Ms. Roebuck by facsimile, a letter (Blue AB 216) which was in the following terms: "RE: MORTGAGE TO JOHN MAGGIO AND MARGARET LORRAINE WHITE LOAN NO. 333/71998 SECURITY – 114 QUARRY ROAD, RYDE We confirm that settlement has been arranged for Thursday 31st December 1992. We confirm the following: 1. The mortgage documents have been correctly drawn up in accordance with your instructions and have been executed by the borrowers. 2. That on settlement you will obtain a good legal security in accordance with your letter of instructions. 3. That we have received all necessary title searches, inquiries and certify that the property stands in good selling title. 4. That immediately after settlement we will proceed to lodge the Mortgage for registration and certify that all documents are correct in respect of the loan security. After its return we will forward all title documents to you. 5. We note that insurance has been arranged direct with the Society over the property. The mortgage advance of $240,00 will be collected from your Chatswood Branch on Thursday morning 31 December 1992." The loan transaction appears to have been settled on 31 December 1992. 59 Thereafter, on 4 December 1993, a cheque in favour of Meridian Management in the sum of $235,280.00 – but whether drawn by IMB or drawn on the trust account of Mr. Grogan's firm is not clear – was provided to Meridian Management Pty. Limited, Grogan & Webb receiving a form of receipt (Blue AB 222) which the handwritten note appearing on it suggests was signed by Mr. Macdonald. 60 On 4 January 1993, Mr. Grogan who had previously prepared, even if he had not sent, a memorandum of fees (Blue AB 449) directed to Mr. Maggio and Mrs. White "To our costs of acting regarding submission of loan application" - that memorandum being in the sum of $500.00 - and a memorandum of fees dated 21 December 1992 (Blue AB 478) addressed to Mr. Maggio and Mrs. White "To our further costs of conferring with you and the incoming mortgagee regarding the valuation and further submissions on your behalf in relation to the loan" as well as costs of acting for the IMB as mortgagee and Mr. Maggio and Mrs. White as mortgagors - that memorandum being in the sum of $1,795.00 - then prepared and seemingly sent a further memorandum of fees (Blue AB 221) directed to Mr. Maggio and Mrs. White "To our costs of expediting your application for finance including all necessary attendances upon you and Mrs. White outside our normal trading office hours" as well as the costs of acting for IMB as mortgagee and for Mr. Maggio and Mrs. White as mortgagors", that memorandum being in the sum of $3,000.00. 61 Although the position as to the first of these memoranda of fees is not clear, it seems probable – since a number of the figures for costs and disbursements appearing in the second memorandum of fees are reproduced in the third memorandum of fees – that the charges recorded in the second memorandum of fees were subsumed in those set out in the third memorandum of fees. 62 On 5 January 1993 a cheque (Blue AB 288) in favour of Mansfield & Associates Pty. Limited in the sum of $223,030 was drawn on the account of Meridian Management Pty. Limited with Westpac Banking Corporation at its Edgecliff Branch. 63 On 8 February 1993, Mr. Grogan forwarded to the IMB at its head office in Wollongong under cover of a letter (Blue AB 219) dated 8 February 1993, the duplicate Certificate of Title and the duplicate Mortgage in favour of IMB which had by then been registered. 64 Meantime, on 4 February 1993, Messrs. Mooney & Kennedy wrote to Mr. Grogan's firm a letter (Blue AB 305) in the following terms: "RE: MCALPHINE SUPERANNUATION TRUST DEED ADVANCE TO GIULIANO We are surprised to note that your client's second mortgage payment, due on 20th January, 1993 has not been received. Interest is now payable at the higher rate and amounts to $2,604.17. Please advise us of your client's position as a matter of urgency." a copy of which letter was on 8 February 1993 forwarded by Mr. Grogan to Mr. Maggio and Mr. and Mrs. Giuliano under cover of a letter (Blue AB 304) dated the same day. 65 It seems tolerably plain not only that that default was not remedied but also that the payment due under that mortgage on 20 February 1993 was not made for, on 3 March 1993, Messrs. Mooney & Kennedy wrote to Messrs. Grogan & Webb a letter (Blue AB 296) in the following terms: "RE MCALPINE SUPERANNUATION TRUST DEED ADVANCE TO GIULIANO AND MAGGIO We note that your client's interest payment, due on 20th February, 1993, has not been paid and is now payable at the higher amount being $2,604.17. We enclose herein a revised copy of the Epitome which you will note that interest is payable within 7 days from the due date. Please bring this matter to your clients (sic) attention as a matter of urgency." following which, on 8 March 1993 Mr. Grogan wrote to Mr. Maggio a letter (Blue AB 291) which was in the following terms: "RE: MCALPINE SUPERANNUATION TRUST DEED TO GIULIANO AND MAGGIO We refer to the above matter and enclose herewith copy of letter from Mooney & Kennedy, solicitors, dated 3rd March 1993 advising that interest payments have not been made. You will also note that the penalty rate is now due. It will be in your interest to attend to payment immediately and make arrangements with the mortgagee for payments on a monthly debit from an account. Should you wish to discuss the matter with the writer please feel free to do so at your convenience. We also enclose copy of Epitome of Mortgage for you to retain." 66 The materials which are before the Court do not disclose whether the defaults in payment of interest were thereafter remedied or whether the loan was thereafter repaid, but subsequent events would strongly suggest that, in the end, the mortgagees exercised their powers under the mortgage and sold the Cherrybrook property. 67 Meantime, so Mrs. White said in the Affidavit she swore in August 1997 (Blue AB 259): "30. During February 1993 Mr. Maggio said to me 'David needs more money for the security guards in the Philippines' or words to this effect. I said 'How much?' and Mr. Maggio replied 'As much as you can manage' or words to this effect. As a result of this conversation I lent Mr. Maggio a further $20,000.00 on or about 16 February 1993. Annexed hereto and marked 'F' is a true copy of a Loan Agreement dated 16 February 1993." (That "loan agreement" is to be found at Blue AB 265) 68 In March 1993, Mrs. White lent Mr. Maggio a further $2,500.00 (see Blue AB 267) and in May 1993 Mrs. White lent Mr. Maggio three further sums totalling $2,800.00 (see Blue AB 268). 69 Despite Mr. Maggio's request for further sums of money, it would seem (see Blue AB 259) that, until the beginning of June 1993, Mr. Maggio had, each month, provided Mrs. White with a cheque – drawn by Mr. Mansfield – for the payment of the instalments due under the mortgage, which cheques she would then deliver to the Chatswood Branch of the IMB which was situated in Victoria Road, Chatswood opposite the Lowes Chatswood Store. 70 In the Affidavit which she swore in August 1997, Mrs. White further deposed (Blue AB 259-260): "31. …… However, by June 1993 I was concerned as to why Mr. Maggio and Mr. Mansfield needed so much money when they already the money borrowed from the IMB Building Society and the money I had already lent them. In order to ensure that I would get all my money back, I decided once again to lend Mr. Maggio more money. On or about 4 June 1993 I lent Mr. Maggio a further $14,000.00. Annexed hereto and marked 'G' is a true copy of a Loan Agreement dated 4 June 1993." (The "loan agreement" is to be found at Blue AB 267.) 71 In the same Affidavit Mrs. White also deposed (Blue AB 260): "33. By about July 1993 I was very worried that Mr. Maggio would not return the Deeds to the said property and would not repay the monies I had lent to him. My then husband, Aubrey White approached Mr. Maggio to have a solicitor draw up a Deed between Mr. Maggio and myself in the hope that this would cause Mr. Maggio to repay the IMB Building Society and return the Deeds to the said property. Annexed hereto and marked 'I' is a true copy of a Deed dated 1 July 1993 between Mr. Maggio and myself." 72 That "Deed" (Blue AB 269-270), after reciting the mortgage advance which had been made by IMB, provided: "IT IS AGREED 1. Maggio is to be solely responsible for the repayment of the loan to IMB and pending such repayment for payment of all monthly instalments as set out in annexure 'A' hereto. 2. Maggio will pay the capital amount and interest outstanding under the said mortgage in favour of IMB to IMB on or before 24 August 1993. 3. Maggio will pay to White in consideration for the mortgaging of the property to IMB an amount of Twenty thousand dollars ($20,000.00) such payment to be made by Maggio to White on or before 24 August 1993. 4. Maggio hereby indemnifies White against all or any claims which may be made against her by the IMB Building Society arising from the aforesaid loan." 73 In the same Affidavit Mrs. White further deposed (Blue AB 260): "33. By about July 1993, Mr. Maggio had stopped providing the money for the repayment of the IMB Building Society loan. I then started borrowing money off friends to assist paying the mortgage. From December 1994 I was unable to meet any repayments to the IMB Building Society. However, to meet some of the repayments I sold my half carat diamond, my pianola, my car, dishwasher, my lounge and other items of property I had. I have also attempted to sell my dining room suite to no avail." 74 It would seem (see Blue AB 4) that, at about the time when the "Deed" was prepared and executed by Mr. Maggio, Mr. White called to see Ms. Roebuck at the Chatswood Branch of the IMB, seemingly for the purpose of complaining of the fact that the loan to Mrs. White and Mr. Maggio had been made. 75 Thereafter, on 23 August 1993 – that is, shortly after Mr. and Mrs. White had separated – Mrs. White wrote to Ms. Roebuck a letter (Blue AB 48) which was as follows: "RE: LOAN TO MAGGIO & WHITE I understand that my husband, Mr. Aubrey White, has been making inquiries regarding my loan with the Society on the pretext that he has an interest in my property. Please be advised that this is not so, and I take exception to the fact that any information has been released to him. Surely the Privacy Act is there to protect my rights in such instances. Mr. White is not privy to my financial arrangements and whatever tricks or subterfuge he may use to obtain information are to be ignored, and no information provided." It is not without point to note that, notwithstanding that, in her Affidavit, Mrs. White said she was concerned that Mr. Maggio would not return the Deeds to the property and would not repay the moneys she had lent him, Mrs. White, at that stage at least, made no complaint as to the conduct of IMB in approving the loan and obtaining the securities which it had, and made no complaint as to Mr. Grogan's part in the matter. 76 It seems clear enough that, by no later than July 1994, despite the efforts which had been made by Mrs. White to continue to service the mortgage, payments under the mortgage were in arrear for, on 28 July 1994 – at or about the time when the Statement of Claim commencing these proceedings (RAB 1-3) was filed in the Wollongong Registry of the Court - David Alexander, whom Mrs. White seems earlier to have consulted about a possible property settlement with Mr. White (Black AB 23) wrote to Messrs. Russell McLelland & Brown, the solicitors for IMB, a letter (Blue AB 282) which was in the following terms: "RE: MRS. M. L. WHITE AND MORTGAGE IN FAVOUR IF ILLAWARRA MUTUAL BUILDING SOCIETY LTD. SECURITY PROPERTY 114 QUARRY ROAD, RYDE We act on behalf of Mrs. M. L. White who has consulted us concerning your letter addressed to her on 13 July 1994. We are informed by Mrs. White that she is not able to make payment of the further instalment due on 28 July 1994. We are instructed, however that she is endeavouring to arrange for payment of all the arrear instalments by the end of next week and in the circumstances we are instructed to request that your client holds the proposed Supreme Court proceedings in abeyance until after 5 August 1994. We are informed that our client has had discussions with your client in regard to the arrear instalments. We request that our client's request for an extension of time will receive your client's favourable consideration." and, on the following day, wrote to Mrs. White a letter (Blue AB 281) which was in the following terms: "RE: ILLAWARRA MUTUAL BUILDING SOCIETY LIMITED/MORTGAGE/JOHN MAGGIO/FAMILY LAW I refer to our recent telephone conversation and enclose for your information a photostat copy of our letter dated 28 July 1994 addressed to the solicitors for IMB. I confirm your advice that you have discussed matters with your mother who may help you with the payment of the arrear instalments to enable you to consider your position in relation to the mortgage. I confirm my suggestion that you accept your mother's offer to consult with her solicitors in relation to your difficulties." 77 Although the materials which are before the Court do not clearly demonstrate that this was so, it would seem probable that Mrs. White was not able to pay the instalments due under the mortgage referred to in Mr. Alexander's letter and that thereafter in addition to commencing these proceedings in July 1994 in the Wollongong Registry of the Court, the IMB commenced proceedings to recover the instalments which were outstanding at the time when those proceedings were commenced. That this was probably so is suggested by the fact that in a report to the Guardianship Board (Blue AB 60-65) prepared in December 1994 in circumstances to which I shall shortly refer the following statements appear (Blue AB 62): "Mr. White has informed me that he has paid an amount of $6,400 – to IMB, following a Court Bailiff calling on Mrs. White for funds to repay the loan. According to Mrs. Kayes and Mr. White, the loan is in default." Since the form of Loan Approval (Blue AB 19) records as the calendar monthly repayment under the loan which was approved as being "$1,824" this would suggest that, in the proceedings in which the relevant Judgment was recovered, some three months' instalments were claimed. The payment made by Mr. White seems to have been in August 1994. 78 In November 1994, Mrs. Kayes, who is Mrs. White's sister, lodged with the Guardianship Board an Application for Guardianship and/or Financial Management Order (Blue AB 52-59), in which was sought the appointment of a guardian of, and financial management for, Mrs. White. In that application, Mrs. Kayes wrote as the reasons for her seeking the appointment of a guardian (Blue AB 53): "My sister has made irrational decisions and has been co-ersed (sic) into lending money by way of mortgaging her home and continues even against legal advise (sic) to act against the perpertrators (sic). She has 4 children – 3 dependant (sic) & has had the balif (sic) at her door & will be evicted from her home but will not act to keep a home for herself & children." 79 After that application had been served on her, Mrs. White, on 6 December 1994 – that is, the day before the application was listed for hearing – wrote to the Guardianship Board a letter (Blue AB 66-73) which contained the following (inter alia): "I am contesting the application by Janet Kayes to appoint a guardian & financial manager for my affairs. I am quite capable of looking after my own affairs. … I have continued to support this loan as I believe it to be completely honest, I have not been threatened in any way. It has taken longer than originally planned but being done in another country, against other languages, is not an easy task. I have faith in David & Paul's ability to get this off the ground and get my home and monies lent back so me and my boys can continue with our lives and put all this behind us. … I put up the deeds of the house in order to get money behind me to buy out Aubrey as he then wanted $100,000 to go. I spoke to David last night overseas and he told me operations would be commencing in next 7 to 16 days and money would be coming back to Australia on a regular basis after this. … " 80 It would seem that, by the time the application came on for hearing before the Guardianship Board, the mortgage to the IMB was in arrear once more (Blue AB 99) – Mrs. White seemed to suggest only one month in arrear. 81 According to statements made by Mr. White on the hearing before the Guardianship Board (Blue AB 105-107) by that time Mr. Maggio's activities – which were said to have involved a number of people and sums of money totalling in excess of $10 million – had been referred to the Fraud Squad, Mr. Maggio had failed to comply with a Bankruptcy Notice which had been served on him, and a Bankruptcy Petition – returnable on 3 March 1995 – had been filed on 20 November 1994. 82 In the event, as Mrs. White informed the Board that she had made arrangements to consult a solicitor, the further hearing of the application was adjourned – that ultimately the application with withdrawn and dismissed on 5 July 1995. 83 In the light of Mrs. White's assertions, first, that she did not read the Loan Application signed at the time of the interview with Ms. Roebuck (Blue AB 258); second, that she was not advised that the loan was to be used to refinance a mortgage (Blue AB 257-274); and, third, that had she been informed that the loan to refinance a mortgage she would not have participated in the arrangements with Mr. Maggio (Blue AB 274); it is as well to record that the transcript of the hearing before the Guardianship Board on 7 December 1994 contains the following (Blue AB 84-85): "Presiding Member: So then you went along to IMB and – whose suggestion was it to go, in particular, to IMB, was that Mr. Maggio's suggestion or … Mrs. White: I don't really know who organised it. The money would sort of be put up towards the deal concerning David Mansfield. Presiding Member: So how did you come to go to IMB? Mrs. White: Just said I'd do it and it was just organised. I don't really know who organised it. Presiding Member: So then you went along to IMB. Did you and Mr. Maggio go together to IMB? Mrs. White: I met him at Chatswood. I met him at Chatswood. We went to the IMB … Mr. White: Does that mean they went together? Presiding Member: I think we'll ask some questions for now, thanks, Mr. White. What did you understand to be the arrangement with IMB? Mrs. White: We got the loan to pay out an existing mortgage. Presiding Member: Did you have a mortgage on the house at that stage or … Mrs. White: (inaudible). Presiding Member: So what existing mortgage was being talked about there? Mrs. White: That was just what was written up in the contract. Presiding Member: Do you know how that came to be put in the contract or … Mrs. White: (inaudible) … Presiding Member: … How much was being borrowed from IMB? Mrs. White: $240,000. Presiding Member: Where was that money going to go? Mrs. White: It was going to go to David Mansfield. Presiding Member: What was he going to use it for? Mrs. White: To finance a – well, first of all it was to be a sugar deal and then a gold deal in the Philippines. … " 84 As Mrs. White informed the Guardianship Board, she consulted solicitors in relation to these proceedings and, on 20 December 1994, a Defence and Cross-Claim (RAB 4-6) was filed on her behalf. In reality, the only "defence" which was raised on Mrs. White's behalf was her claim for relief pursuant to provisions of the Contracts Review Act 1980 ("the Act"). 85 No further instalments under the mortgage were paid after the Defence and Cross-Claim was filed. 86 So far as related to the claim for relief under the Act the Cross-Claim was in the following terms: "3. The mortgage was 'unjust' in the circumstances relating to it at the time it was executed by the cross claimant pursuant to s7 of the Contracts Review Act 1980 (NSW) ('the said Act'). PARTICULARS PURSUANT TO S9 OF THE SAID ACT (a) The cross claimant was not afforded an opportunity by the cross defendant to obtain and the fact is that the cross claimant did not obtain any independent legal advice or any legal advice prior to executing the said document. Had the cross-claimant received independent legal advice on the transaction she would not have executed the mortgage. (b) The cross defendant did not advise the cross claimant at all as to the risks associated with the transaction even though it knew or ought to have known: (i) the cross claimant was not receiving any of the moneys advanced under the loan agreement; (ii) it was likely the only way the cross defendant would be able to recover the moneys advanced was by way of the sale of the cross-claimant's property at 114 Quarry Road, Ryde; (c) there was a material inequality of bargaining power between the cross claimant and the cross defendant; (d) the provisions of the alleged mortgage were the not the subject of any negotiation between the cross claimant and the cross defendant." 87 At some time which – save that it must have been during 1995 – is not revealed by the materials which are before the Court, the proceedings were transferred from the Wollongong Registry to the Sydney Registry of the Court. 88 The proceedings first came on for hearing before Abadee J on 28 September 1999. By that time there had been filed on behalf of Mrs. White a Second Cross-Claim directed to the Second Respondents and on behalf of IMB a Third Cross-Claim directed to the Second Respondents – the materials which are before the Court do not contain copies of either the Second Cross-Claim or the Third Cross-Claim. 89 On 29 September 1999 Abadee J granted Mrs. White leave to amend her Second Cross-Claim. The hearing of the proceedings was not completed on 29 September 1999 and, as Abadee J's commitments did not permit him to return to the hearing on any date during the year 2000, the hearing before Abadee J was abandoned and the matter was later fixed for hearing before Bell J, the parties agreeing to the tender of the evidence which had been given by Mrs. White on the hearing before Abadee J. 90 By that time there had been filed a Second Further Amended First Cross-Claim and a Second Further Amended Second Cross-Claim. 91 The Second Further Amended First Cross-Claim was as follows (RAB 8-9): "3. The mortgage was 'unjust' in the circumstances relating to it at the time it was executed by the cross claimant pursuant to s7 of the Contracts Review Act 1980 (NSW) ('the said Act'). PARTICULARS PURSUANT TO S9 OF THE SAID ACT (a) The cross claimant was not afforded an opportunity by the cross defendant by itself or by its agent Mr. Dennis Grogan of Messrs. Grogan and Webb to obtain and the fact is that the cross claimant did not obtain any independent legal advice or any legal advice prior to executing the said mortgage. Had the cross claimants received independent legal advice or any legal advice on the transaction she would not have executed the mortgage. (b) The cross defendant by itself or by its agent Mr. Dennis Grogan of Messrs. Grogan and Webb did not advise the cross claimant at all as to the risks associated with the transaction including the real risk that the property would have to be sold to repay the loan even though it knew or ought to have known: (i) the cross claimant was not receiving any of the moneys advanced under the loan agreement; (ii) it was likely the only way the cross defendant would be able to recover the moneys advanced was by way of the sale of the cross claimant's property at 114 Quarry Road, Ryde; (iii) that Mr. Maggio had on or about 20 November 1992 jointly borrowed $250,000.00 from McAlpine Superannuation Fund and that this would: (a) Detrimentally affect the ability of Mr. Maggio to service the proposed loan from the cross defendant; (b) Pose a real threat that Mr. Maggio would default in the repayment of the proposed loan from the cross defendant. (c) There was a material inequality of bargaining power between the cross claimant and the cross defendant. (d) The provisions of the alleged mortgage were not the subject of any negotiation between the cross claimant and the cross defendant. (e) The cross defendant by itself or by its agent Mr. Dennis Grogan of Messrs. Grogan and Webb, solicitors, failed to disclose to the cross claimant an unusual feature of the transaction, namely, there is no evidence of any mortgage to Meridian Management on the title of 114 Quarry Rd., Ryde which supported the stated purpose of the loan being to refinance an existing mortgage to Meridian Management, in circumstances where the cross defendant by itself or its agent Mr. Grogan ought to have known that this was a suspicious circumstance indicative of fraud on the part of Meridian Management and/or Mr. Maggio. (f) The cross defendant by its agent Mr. Grogan failed to advise the cross claimant that he had acted for Mr. Maggio in the matter of Alfonso Giuliano and Maria Theresa Giuliano's loan from McAlpine Superannuation Fund wherein Mr. Maggio on about 20 November 1992 jointly borrowed $250,000.00 and that this would: (a) Detrimentally affect the ability of Mr. Maggio to service the proposed loan from the cross defendant; (b) Pose a real risk that Mr. Maggio would default in the repayment of the proposed loan and that the cross claimant's home would have to be sold to repay the loan. 4. In the alternative, the cross defendant by itself or by its agent, Mr. Dennis Grogan of Messrs. Grogan & Webb, solicitors, failed to disclose to the cross claimant an unusual feature of the application for finance and the mortgage transaction in circumstances where it ought to have known that such disclosure would have caused the cross claimant not to proceed with the loan and the granting of the mortgage to the cross defendant. PARTICULARS The cross claimant repeats particular (e) to para. 3 hereof. 5. In the premises the cross claimant executed the said mortgage as a result of unconscionable conduct on the part of the cross defendant in consequence of which the mortgage is unenforceable." Bell J's Judgment (at RAB 58-59) would indicate that the principal ways in which Mrs. White's case was put at trial were those matters relied upon in para. 3(a), (b) of the Second Further Amended First Cross-Claim. 92 Insofar as is relevant the Second Further Amended Second Cross-Claim was in the following terms (RAB 15-17): "1. At all material times, the second cross defendants were solicitors of the Supreme Court of New South Wales and were partners of the firm Messrs. Grogan & Webb. 2. In about November 1992, the cross claimant retained Mr. Dennis Grogan on behalf of Messrs. Grogan & Webb for reward: (a) to advise, assist and act for her in relation to an application for mortgage finance from the plaintiff; (b) to advise, assist and act for her as mortgagor in relation to the granting of a first registered mortgage to the plaintiff over the property at 114 Quarry Road, Ryde, being the whole of the land in Folio Identifier 18/23652. 3. It was an implied term of the second cross defendant's retainer: (a) to exercise reasonable care, skill and diligence in advising, assisting and acting for the cross claimant in relation to the application for finance to the plaintiff; (b) to exercise reasonable care, skill and diligence in acting for the cross claimant as mortgagor in relation to the granting of a mortgage over the property at 114 Quarry Road, Ryde to the plaintiff. 4. In addition, it was the duty of the second cross defendants by themselves, their servants and agents to take such steps whilst acting for the cross claimant as were necessary or reasonable in order to avoid the risk of the cross claimant sustaining economic loss. ……… 8. In breach of the implied term alleged in paragraph 3 hereof, the second cross defendants did fail to exercise reasonable care, skill and diligence in advising, assisting and acting for the cross claimant in relation to the application for finance from and the subsequent mortgage granted to the plaintiff. PARTICULARS (a) The second cross defendants acted contrary to the interests of the cross claimant by also acting for the plaintiff as lender in relation to the application for finance and as mortgagee in relation to the granting of the said mortgage; (b) Failing to advise the cross claimant that in consequence of their acting for both the plaintiff and the cross claimant in relation to the application for finance and the mortgage over the property at 114 Quarry Road, Ryde she should obtain or was entitled to obtain independent legal advice concerning the application for finance and the proposed mortgage. (bb) Failing to ensure that the cross claimant received independent legal advice concerning the application for finance and the granting of the said mortgage including failing to interview and so advise the cross claimant separately from Mr. John Maggio. (c) Failing to properly investigate the title to 114 Quarry Road, Road, and in particular to ascertain that there was no evidence of any mortgage in existence over that property to Meridian Management which supported the stated purpose of the loan being to refinance an existing mortgage of $240,000.00 by (sic) Meridian Management to (sic) the cross claimant. (d) Failing to advise the cross claimant that as there was no evidence of any mortgage on the title of 114 Quarry Road, Ryde to support the alleged existing mortgage of $240,000.00 to Meridian Management, there were unusual features concerning the application for finance and mortgage which would require further investigation and verification. (e) Failing to advise the cross claimant that as there was no evidence of any mortgage on the title of 114 Quarry Road, Ryde to support the alleged existing mortgage of $240,000.00 to Meridian Management, there were suspicious circumstances surrounding the application for mortgage finance from the plaintiff and the cross claimant ought exercise caution in mortgaging the property at 114 Quarry Road, Ryde. (f) Failing to advise the cross claimant that as there was no evidence of any mortgage on the title of 114 Quarry Road, Ryde to support the alleged existing mortgage of $240,000.00 to Meridian Management, this may suggest fraud or nondisclosure by Mr. Maggio and/or Meridian Management designed to obtain the benefit of the loan from the plaintiff. (g) Failing to act in the best interests of the cross claimant by not advising her in detail as to the manner of distribution of the loan proceeds of $240,000.00. (h) Failing to warn the cross claimant of the risks associated with the proposed third party mortgage, namely, if Mr. Maggio was unable to service the loan, the cross-claimant would lose the house. (i) Failing to advise the cross claimant that they had acted for Mr. John Maggio in the matter of Alfonso Giuliano and Maria Theresa Giuliano loan from McAlpine Superannuation Fund wherein Mr. Maggio on or about 20 November 1992 had jointly borrowed $250,000.00 and that this would: (a) Detrimentally affect the ability of Mr. Maggio to service the proposed loan from the plaintiff. (b) Pose a real risk that Mr. Maggio would default in payment of the proposed loan and that the second cross claimants (sic) home would have to be sold to repay the loan. (j) Failing to advise the cross claimant at all as to her obligations, rights and duties under the Deed of Loan dated 29 December 1992, Deed of Guarantee dated 29 December 1992 and Mortgage dated 31 December 1992. 8A. The cross defendants in breach of their fiduciary duty to the cross claimant failed to advise that they had acted for Mr. Maggio in the manner of Alfonso Giuliano and Maria Theresa Giuliano loan from McAlpine Superannuation Fund wherein Mr. Maggio on or about 20 November 1992 had jointly borrowed $250,000.00 and that this would: (a) Detrimentally affect the ability of Mr. Maggio to service the proposed loan from the plaintiff. (b) Pose a real risk that Mr. Maggio would default in payment of the proposed loan and that the second cross claimants (sic) home would have to be sold to repay the loan. 8B. The second cross defendants in breach of their fiduciary duty to the cross claimant acted for both the plaintiff as mortgagee and the cross claimant as borrower and mortgagor without the informed consent of the cross claimant. 9. In addition, the second cross defendants negligently and in breach of duty pleaded in paragraph 4 failed to take such steps as were necessary or reasonable in order to avoid the risk of the cross-claimants (sic) sustaining economic loss. PARTICULARS OF NEGLIGENCE The cross claimant repeats particulars (bb), (d), (e), (f), (g), (h), (i) and (j) to paragraph 8 hereof. 10. In consequence of the breaches by the second cross defendants of the said implied term, fiduciary duty and/or duty, the cross claimant has suffered and will suffer loss and damage." 93 It seems to me that there is a certain air of unreality about many aspects of the Further Amended Second Cross-Claim. Thus: (a) Although what I might describe as the "Giuliano loan" is relied upon, what is overlooked are the following matters: (i) at the time when the application for loan was made to the McAlpine Superannuation Fund trustees, Mr. and Mrs. Giuliano were registered as the proprietors of the Cherrybrook land; (ii) at that time, the land was subject to a registered first mortgage in favour of Mr. and Mrs. Raso and Mr. and Mrs. Petracca; (iii) although Mr. Maggio was joined in the application for a loan as an applicant, the loan was made, not to Mr. Maggio in addition to Mr. and Mrs. Giuliano, but to Mr. and Mrs. Giuliano alone; (iv) the mortgage was in fact granted to the McAlpine Superannuation Fund trustees by Mr. and Mrs. Giuliano, Mr. Maggio executing a separate guarantee; (v) substantially the whole of the proceeds of the loan were paid to Mr. and Mrs. Raso and Mr. and Mrs. Petracca who executed a discharge of their mortgage; (vi) in respect of the loan of $250,000.00, the McAlpine Superannuation trustees obtained a registered first mortgage over the Cherrybrook property which was said to be worth $385,000.00. (b) The matters relied upon in relation to the mortgage granted by Mrs. White overlook the following: (i) at the time when the loan application was made, Mrs. White was the registered proprietor of the property free from encumbrances; (ii) although the property was in fact unencumbered, Mrs. White knowingly joined in an application for loan which falsely asserted that the property was subject to a mortgage in favour of a named mortgagee and, further, that the loan was sought in order that that mortgage might be discharged; (iii) the fact that a search of the title to the property would not have revealed the existence of a registered first mortgage in favour of Meridian Management Pty. Limited would not necessarily demonstrate that the property was not the subject of a mortgage to that company since A. it is not unknown for a lender to obtain an executed mortgage and the duplicate Certificate of Title to the relevant property but not register the mortgage; B. it is not uncommon for there to be given to a lender an equitable mortgage by deposit of the relevant title deeds; C. in this case, the letter of 16 December 1992 from Meridian Management Pty. Limited addressed to Mr. Grogan (Blue AB 186) provided evidence of the existence of a mortgage debt; (iv) the document annexed to the Loan Approval (Blue AB 217) provided for Meridan (sic) Management to be paid direct on settlement of the loan; (v) in addition to having joined knowingly in the representation that the property was subject to a mortgage in favour of Meridian Management Pty. Limited, Mrs. White joined knowingly in the representation that, at the time of the making of the loan application, she was, and had for 1½ years been, employed by Mansfield & Company as a computer consultant (see Black AB 38-39). (vi) there was, in my view, no material to indicate to either Mr. Grogan or to Ms. Roebuck and the IMB that, as Mrs. White sought to assert, the proposed loan would involve her in giving "a third party mortgage"; (vii) as contemplated, the proceeds of the loan were in fact paid to Meridian Management Pty. Limited; (viii) in exchange for that loan, IMB obtained a registered first mortgage over the property. (ix) as Bell J recorded in her Judgment, Mrs. White understood, at least in general terms, that, in the event of default in making repayments under the loan, IMB might seek to exercise its power of sale over the property; (x) as Bell J also recorded in her Judgment (RAB 80): "… I note that Mrs. White says that discussion at the conference focussed on the IMB's lending requirements and the likely date of settlement. In the context of the latter I consider that the probabilities favour the view, consistent with Mr. Grogan's evidence, that he made reference to the fact that an early settlement might be achieved because he was acting for all parties." Bell J's Judgment 94 In her Judgment, Bell J after recording the facts, turned first to consider "the IMB's claim and Mrs. White Cross-Claim against the IMB". 95 In this respect, her Honour wrote first (RAB 58-59): "60. Mrs. White seeks to meet the IMB's claim by contending that the mortgage is not enforceable against her because it would be unconscionable for the IMB so to do. Alternatively, she invites this Court in the exercise of the discretion conferred upon it by s.7 of the Act to refuse to enforce the mortgage. These matters are pleaded in the second further amended first cross-claim. As Mr. Lowenstein, who appeared on behalf of the IMB, noted that only paragraphs 3(a) and 3 (b) of the cross-claim were supported in submissions. This was consistent with the conduct of the proceedings. The principal focus of which was the second cross-claim brought by Mrs. White against the solicitors. 61. Section 7(a) of the Act permits a court, if it considers it just to do so, to grant relief to a party to a contract if it finds the contract to have been unjust in the circumstances relating to it at the time it was made. In determining whether a contract is unjust the Court is to have regard to the public interest and to all the circumstances of the case; s9(1). Section 9(2) sets out a number of considerations which the court is to take into account (to the extent to which they are relevant to the circumstances of the case) in determining whether a contract is unjust. 62. The principal ways in which Mrs. White's claim for relief under the Act are put are: 1. She was not afforded an opportunity by the IMB, or by its agent, the solicitors, to obtain any independent legal advice (or any legal advice) prior to executing the mortgage. 2. The IMB did not itself, or by its agent, the solicitors, advise Mrs. White as to the risks associated with the transaction including the real risk that the property would have to be sold to repay the loan even though it knew, or ought to have known; (i) Mrs. White was not receiving any of the monies advanced under the loan agreement; (ii) it was likely that the only way the IMB would be able to recover the funds advanced pursuant to the loan agreement was by the sale of the premises; (iii) that Mr. Maggio had, on or about 20 November 1992, jointly borrowed $250,000 from McAlpine Superannuation Fund and this would detrimentally affect his ability to service the proposed loan posing a real threat of default. 63. I will deal firstly with the contention that Mrs. White was not afforded an opportunity by the IMB to obtain independent legal advice." 96 Then, having recorded her findings in relation to certain contested factual issues, her Honour continued (RAB 62-63): "69. I return to the submission that the contract should be set aside as unjust for the reason that the IMB failed to afford Mrs. White an opportunity to obtain independent legal advice prior to proceeding with it. In written submissions, Mr. Wilson put it this way: 'The transaction was improvident. The IMB may not have known this at the time but it had the means of knowing this through Grogan. In this circumstance, it was incumbent on the IMB to offer some advice or explanation to White of her obligations under the security documentation.' 70. Mr. Wilson relied on Goldsborough v. Ford Credits (unreported) NSWSC, Young J, 10 November 1989, in this respect. Indeed it was his submission that as the mortgage was improvident it was incumbent on the IMB to ensure that Mrs. White received independent legal advice. For this he relied on passages in Teachers Health Investments Pty. Ltd. v. Wynne (1996) ASC 56-356. 71. I consider there were circumstances surrounding the application for finance known to Mr. Grogan such as to put him on notice, in his capacity as Mrs. White's solicitor, of the desirability of speaking with her privately about the transaction. I deal with this below. However, it does not seem to me that the IMB through its agent is to be fixed with knowledge that the loan was improvident. Mrs. White was a party to representations made to Mr. Grogan, as well as to the IMB, that the purpose of the loan was to discharge an existing mortgage to Meridian. On settlement a cheque representing the bulk of the advance was drawn in favour of Meridian. On the face of things Mrs. White was proposing to enter into a transaction which would place her in a position not worse than that in which she already stood. 72. I am not of the view that the IMB had actual or constructive notice that the proposed loan was improvident. I do not consider that the IMB was under any obligation to ensure that Mrs. White obtained independent legal advice concerning the transaction." 97 Then, Bell J turned to consider the question of the McAlpine Superannuation Trust loan. Having recorded her findings in relation to that loan and, in particular, her finding that Ms. Roebuck was not aware of Mr. Maggio's contingent liability under the McAlpine Guarantee, her Honour continued (RAB 64-67): "77. Ms. Roebuck did not have the authority to approve loans. In her experience officers within the IMB who held that authority would act upon her recommendation. I accept that that is so. I find that had Ms. Roebuck been made aware of the McAlpine guarantee she would have recommended against approving the Maggio and White loan. I consider the probabilities favour the view that Ms. Roebuck's superiors would have acted on her recommendation. 78. The solicitors had a retainer to act for the IMB in relation to mortgage transactions. Their retainer did not extend to making assessments of the suitability of applicants for approval for loan funding or advising on the same. It was by no means clear that the solicitors were aware of Ms. Roebuck's understanding of the significance of contingent liabilities to the assessment of an applicant's suitability for an IMB loan. 79. I do not consider Mrs. White has made good her claim that the IMB failed to advise her as to the risk associated with the transaction as particularised in paragraph 3(b)(i)-(iii) of the second further amended first cross-claim. The IMB did not know that Mrs. White was not receiving the benefit of any of the funds advanced pursuant to the loan. Mrs. White was a party to an application which asserted the contrary. 80. Based upon the material presented in the application by Mr. Maggio and Mrs. White there was no reason for the IMB to conclude that it was likely that default would be made in making payments in accordance with the loan agreement. The IMB did not have actual knowledge of the McAlpine guarantee. 81. There is no evidence that the solicitors had actual knowledge that the loan funds were to be applied for a purpose other than that stated in the loan application. There is no evidence that they had actual knowledge that Mr. Maggio was to be solely responsible for the repayment of the loan and that it was likely that he would default in this respect. It follows that I am not persuaded that the IMB is to have knowledge of either matter imputed to it. 82. The solicitors had actual knowledge that Mr. Maggio had executed the McAlpine guarantee. His contingent liability under that agreement had the capacity to impact on his ability to service loan repayments. Is the solicitor's knowledge of the McAlpine guarantee to be imputed to the IMB? 83. Mr. Lowenstein referred me to the decision of the Court of Appeal in National Home Loans Corporation Plc v. Giffen Couch & Archer [1998] 1 WLR 207. That was a case in which the same solicitor acted for both the mortgagor and the lender. The solicitor had knowledge that the mortgagor had defaulted under a previous mortgage. The solicitor did not convey this to the lender. The Court held that the solicitor's retainer was to ensure the lender secured a valid and effective first mortgage over the property. The scope of this retainer did not require the solicitor to investigate the borrower's financial position. The Court held that the solicitor was, accordingly, under no duty to pass on to the lender information touching on the financial position of the mortgagor. 84. It seems to me that the IMB retainer of the solicitors of a like scope to that with which the Court was concerned in National Home Loans Corporation . The evidence established that the IMB assessed the suitability of applicants for loan funding and did not look to the solicitors to do so. It follows for the reasons explained in National Home Loans Corporation that the solicitors were not under a duty to inform their client, the IMB, of the McAlpine guarantee. I consider the IMB is not to be fixed with knowledge of the McAlpine guarantee." 98 Bell J recorded her conclusions as to the case seeking relief pursuant to the provisions of the Act in the following way (RAB 69): "91. Mrs. White agreed to mortgage the premises in order to obtain loan funding to be invested on her behalf by Mr. Maggio in an overseas commodities deal. She was a party to making a false representation to the IMB as to the purpose of the loan in order to obtain approval of her application. Mrs. White believed, wrongly, that she stood to make a substantial return over six months from the commodities deal. That the contract may not have been in the interests of Mrs. White does not make it unjust for the purposes of the Act; West v. AGC (Advances) Ltd (1986) 5 NSWLR 610 per McHugh JA at 621. Having regard to the circumstances relating to the contract at the time it was made and in the light of the consideration set out in s.9(2) I am not of the view that it would be just to grant relief to Mrs. White pursuant to the provisions of the Act." 99 Before passing to that part of her Honour's Judgment which dealt with the claims made against the Second Respondents, I should record that in paras. 85-87 of her Judgment, her Honour recorded that the matters set out in paragraph 3(c) and 3(d) of the Second Further Amended Cross-Claim were not pressed in submissions before her and that, in para. 92 of her Judgment, her Honour recorded that the matters pleaded in paras. 4 and 5 of the Second Further Amended First Cross-Claim were not pressed in submissions. 100 I turn next to record what Bell J wrote in her Judgment concerning "Mrs. White's claim against the solicitors". 101 First, her Honour dealt with the nature and extent of the Second Respondents' retainer in the following way (RAB 70-71): "95. Mrs. White pleads that the terms of the solicitor's (sic) retainer to act on her behalf were: (a) to advise, assist and act for her in relation to an application for mortgage finance from the plaintiff; (b) to advise, assist and act for her as mortgagor in relation to the granting of a first registered mortgage to the IMB over the premises. 96. A draft fee note dated 4 November 1992 prepared by the solicitors in respect of their professional fees in acting on behalf of Mr. Maggio and Mrs. White described their instructions as being to act for Mr. Maggio and Mrs. White 'regarding submission of loan application'. Mr. Grogan provided advice to Mr. Maggio and Mrs. White concerning the submission of their loan application to the IMB. He advised as to the level of income that would be needed to obtain approval from the IMB for a loan of $360,000.00. He also advised as to the maximum loan which might be approved on the security of premises valued in the amount of $290,000.00. The solicitors were also retained on behalf of Mr. Maggio and Mrs. White to act for them in connection with the mortgage and the loan agreement. The evidence did not suggest that the solicitors' retainer extended to the provision of advice as to the financial wisdom of the transaction; Citicorp Australia Ltd. v. O'Brien (1996) 40 NSWLR 398." 102 Bell J then turned to consider the claim based on "breach of retainer/negligence" in respect of which she wrote (inter alia) (RAB 71-74): "97. Central to the submissions advanced on behalf of Mrs. White as to both the solicitors' breach of retainer and/or negligence was the contention that Mr. Grogan should have sought to interview Mrs. White separately from Mr. Maggio and that he should have advised her to obtain independent legal advice. 98. Considerable reliance was placed on the decision in Gellert v. Bellamy [1999] NSWCA 123. It was submitted that there were a number of suspicious features of the transaction which ought to have alerted a reasonably competent solicitor to the possibility that Mr. Maggio was exercising some undue influence over Mrs. White. Put another way, there was a stark potential for Mr. Maggio to be taking advantage of Mrs. White just as the Court found in Gellert . Mr. Maggio and Mrs. White were jointly borrowing funds but the whole of the security was being put up by Mrs. White. The initial referral from FMC represented that the property was jointly owned. It was said that the purpose of the loan was to refinance an existing mortgage, however, the initial application related to a loan of $350,000. Ultimately it was said the outgoing mortgagee would be content with $240,000.00. ……… 100. To my mind there were features of this transaction which should have put the solicitors on notice of the desirability of speaking with Mrs. White privately. The elasticity in the discharge figure required to satisfy the out-going mortgagee was such as to strongly point to this transaction being other than a refinance of an existing mortgage simpliciter. The absence of registration of any interest held by Meridian would have tended to reinforce such a view. Ultimately Meridian were prepared to accept $14,500.00 less than the discharge figure which had been conveyed to Mr. Grogan by Mr. Peters in their telephone call of 15 December 1992 (and this after the initial suggestion that the pay out figure was $360,000). 101. It was apparent that Mrs. White, a middle aged woman of limited commercial experience, was seeking to jointly borrow as much money as might be raised on the security of her family home. She was incurring a substantial joint liability with Mr. Maggio in respect of which she was the provider of the sole security. Her income (as disclosed in the material available to the solicitors) was insufficient to service the loan repayments without the support of Mr. Maggio. That the solicitors were at least conscious of such consideration was made clear in the course of Mr. Grogan's evidence. In answering a question which was directed to why he had not considered it necessary to explain to Mr. Maggio his obligations under the guarantee he observed: 'Well my concern was to make sure Mrs. White knew what was happening. Mr. Maggio was a businessman, he apparently had been in some other commercial transactions before, but I wanted to be sure Mrs. White knew what was going on.' (T.154) 102. In these circumstances I am persuaded that the solicitors should have sought to confer with Mrs. White in the absence of Mr. Maggio in order to ensure that she was acting free of any improper influence. I consider their failure to make any attempt so to do to have been negligent. 103. It was further contended on Mrs. White's behalf that the solicitors had breached the implied term of their retainer to advise her with due care and skill by their failure to explain to her the legal effect of the transaction. 104. The solicitors' retainer in acting for Mrs. White required them to take reasonable steps to ensure that she understood the nature and effect of the loan agreement, guarantee and mortgage as legal documents and the consequences of default; Clark Boyce v. Mouat [1994] 1 AC 428. The circumstance that the solicitors' office was closed over the holiday period does not to my mind relieve them of the obligation to explain the legal effect of the mortgage and loan agreement to their client. 105. I consider that the solicitors were in breach of their contract with Mrs. White by their failure to explain to her the legal effect of the transaction and that they were negligent by their failure to take any step to seek to confer with Mrs. White privately. 106. It remains to consider whether Mrs. White has established that either the breach of the retainer or duty caused her loss." 103 In her discussion of that question, Bell J wrote (inter alia) as follows (RAB 75-77): "109. In her affidavit sworn on 23 September 1999, Mrs. White states that has she been advised that she was jointly and individually liable to the IMB for the repayment of the loan and that if Mr. Maggio did not repay the loan there was a real risk that her home would be sold she would not have participated in the transaction. I accept that Mrs. White as at the date of the swearing of her affidavit believed that to be the case. I am not persuaded that it accurately represented her state of mind as at December 1992. By December 1994 for Mrs. White to have continued to entertain confidence in the overseas commodities deal speaks eloquently of her absolute trust and confidence in Mr. Maggio. She was by then only too aware of her individual liability under the terms of the loan agreement and of the risk to her home. 110. … I was left with the impression that Mrs. White's trust in Mr. Maggio had been well nigh unshakable until some time after 1994. I am unable to conclude that the most thorough advice as to the effect of the transaction, including advice upon the joint and several nature of her liability and the consequences of default would have dissuaded Mrs. White from proceeding with the loan application. 111. In her affidavit sworn 23 September 1999 Mrs. White also asserted that had she been advised that 'the loan was to refinance a mortgage and not for a commodities deal in the Philippines' she would not have participated in the transaction. I cannot accept this. As I have observed I am satisfied that Mrs. White was aware of the deception being practiced upon the IMB. This is significant in the view I take as to whether the solicitors' breach of duty in failing to speak privately with Mrs. White caused her loss. I feel impelled to conclude that in the event that Mr. Grogan had sought to speak with her privately (and done so), Mrs. White would have maintained the device that the loan funds were to pay out an existing mortgage. 112. I am thus of the view that Mrs. White has failed to establish that her loss flowed from either the breach of the solicitors' retainer or their negligence." 104 When she turned to deal with the question of 'breach of fiduciary duty' Bell J noted at the outset (RAB 77-78): "113. The solicitors are said to have been in breach of their fiduciary duty to Mrs. White in two respects: (i) they acted for both the IMB as mortgagee and Mrs. White as mortgagor without obtaining Mrs. White's informed consent to the double employment, (ii) they failed to advise Mrs. White that they had acted for Mr. Maggio in connection with the McAlpine guarantee and that the latter transaction was one which would detrimentally affect Mr. Maggio's ability to service the proposed loan from the IMB and pose a real risk that he would default in payment of the proposed loan." 105 After referring to some of the evidence, Bell J continued (RAB 80-81): "119. For reasons which I have set out above I do not accept that Mr. Grogan's recall of the conference is an accurate one. However, as to this aspect I note that Mrs. White says that the discussion at the conference focussed on the IMB's lending requirements and the likely date of settlement. In the context of the latter I consider that the probabilities favour the view, consistent with Mr. Grogan's evidence, that he made reference to the fact that an early settlement might be achieved because he was acting for all parties. 120. On Mrs. White's behalf it is contended that on any view the solicitors did not take steps to obtain Mrs. White's informed consent to their double employment. Informed consent may operate as a defence to a claimed breach by a fiduciary. The onus is upon the fiduciary to establish the giving of informed consent. It was submitted that the failure to obtain Mrs. White's informed consent to the solicitors acting both for her and the IMB with respect to the transaction constituted a breach of their fiduciary duty to her without more. A deal of reliance in this regard was placed on a passage in Finn, Fiduciary Obligations, Law Book Company, 1977 at paragraph 583: 'If the same fiduciary acts with two different and unrelated beneficiaries in the same matter or transaction without the informed consent of both to the double employment, then this without more is a conflict within the rule. So where an adviser in sale is also the undisclosed adviser of the purchaser, he is automatically in breach of the rule.'" Then, after a reference to a decision of the Court of Appeal in New Zealand in Farrington v. Rowe McBride and Partners (1985) 1 NZLR upon which counsel for Mrs. White relied, her Honour continued (RAB 83-84): "123. I do not read Farrington as giving support to the proposition that a solicitor who acts for both mortgagor and mortgagee will be in breach of his or her fiduciary duty absent proof of the informed consent of both parties. In this respect I note that Richardson J referred to the paragraph in Finn which I have noted above and observed at p.92: 'It may perhaps be going too far to conclude as stated in Finn, Fiduciary Obligations (1977) p.253 that if the same fiduciary acts for two different and unrelated beneficiaries in the same matter or transaction without the informed consent of both to the double employment then this without more is a conflict within the rule (see also Bowstead on Agency (15th Ed. 176) pp. 143-143 (sic) But certainly, consistent with the underlying principle, it must be sufficient that there be an actual opposition of interests. In that situation for the solicitor to accept the second engagement with the consent of each principal would be inconsistent with his separate duty to each client.' ……… 125. In this case I accept that there was nothing about the transaction to suggest a real or sensible possibility of conflict between the interests of Mrs. White and the IMB. I am not persuaded that the solicitors' failure to obtain Mrs. White's informed consent to their acting both for her and the IMB constituted a breach by them of their fiduciary duty to her." 106 Bell J then recorded (RAB 84): "126. Secondly Mr. Wilson contended that the solicitors were in breach of their fiduciary duty to Mrs. White by reason of their failure to disclose to her their knowledge of the McAlpine guarantee. In written submissions he put it this way: '(The) failure to disclose the McAlpine transaction, demonstrates the actual position of conflict in which Grogan found himself by acting for all parties. Apprised of the knowledge of that transaction, it was his duty to advise both the IMB and White of its existence. But his duty of confidentiality to Maggio precluded any such disclosure.' ……… 138. Based upon the solicitor's understanding of the transaction (that the funds were being jointly borrowed to refinance an existing loan and not that they were to be invested in an overseas 'deal' which would return a fixed sum to Mrs. White at the end of six months) I would be inclined to accept Mrs. White's submission that they were in breach of the fiduciary duty they owed to her by her failure to disclose the McAlpine guarantee. Mr. Wilson submitted that it would flow from such a finding that Mrs. White was entitled to equity compensation for that breach. The measure of the compensation was said to be the payout figure under the mortgage to the IMB. In this respect it was submitted, firstly, that had Mr. Grogan disclosed the McAlpine guarantee, the IMB would not have approved the loan. Mrs. White should be restored to the position that she would have been in had the breach not occurred. I do not accept this submission. The breach, if it be one, was the failure to disclose information touching on Mr. Maggio's financial position to Mrs. White. I do not find that the solicitors were under any duty to disclose the McAlpine guarantee to the IMB." 107 Bell J then recorded (RAB 90): "139. Secondly Mr. Wilson relied upon the statement of principle of Lord Thankerton delivering the Judgment of the Privy Council in Brickenden v. London Loan & Savings Co. [1934] 3 DLR 465 at 469: 'When a party, holding a fiduciary relationship commits a breach of his duty by nondisclosure of material facts, which his constituent is entitled to know in connection with the transaction, he cannot be heard to maintain that disclosure would not have altered the decision to proceed with the transaction, because the constituent's action would be solely determined by some other factor, such as the valuation by another party of the property proposed to be mortgaged. Once the court has determined that the non-disclosed facts were material, speculation as to what course the constituent, on disclosure, would have taken is not relevant.'" 108 Having recorded that submission, Bell J then proceeded (RAB 90-93): "140. In O'Halloran v R T Thomas & Family Pty. Ltd. (1998) 45 NSWLR 262, the Chief Justice (with whom Meagher JA agreed) noted (at 276) that the authority of Brickenden had been left open by the High Court in Maguire v. Makaronis (1997) 188 CLR 449. His Honour cited the Judgment of Brennan CJ, Gaudron, McHugh and Gummow JJ in which reference was made to 'the criteria which supply an adequate or sufficient connection between the equitable compensation claimed and the breach of fiduciary duty'. Generally in discussing causation and equitable compensation, the Chief Justice observed that the law in Australia accords with the passages from the Judgment of Lord Browne-Wilkinson in Target Holdings Ltd. v. Redferns [1996] 1 AC 421 at 432E-H noting his Lordship's ultimate conclusion at 439: 'Equitable compensation for breach of trust is designed to achieve exactly what the word compensation suggests: to make good a loss in fact suffered by the beneficiaries and which, using hindsight and commonsense, can be seen to have been caused by the breach.' 141. In Beach Petroleum NL v. Kennedy [1999] NSWCA 408; 48 NSWLR 1, the Court gave consideration to Lord Thankerton's formulation in Brickenden observing (at 91) that the principle 'requires some adjustment to accommodate the case of solicitors failing in their duty to give advice or impart information because of a divided loyalty' and that ' Brickenden is not, in our opinion, authority for the general proposition that, in no case involving breach of fiduciary duty may the court consider what would have happened had the duty been performed. The reasoning in Brickenden must now be understood in the light of the House of Lords decision in Target Holdings and the cases which have applied it (at 93).' 142. In the course of her evidence Mrs. White was asked: Wilson: Q. Mrs. White, I want you to assume that prior to the end of December 1992 Mr. Grogan told you that on 20 November in that year he had acted for Mr. Maggio in a matter where $250,000 had been borrowed on the security of the home of a Mr. and Mrs. Giuliano in Cherrybrook and in that transaction Mr. and Mrs. Giuliano had offered their home as security and were the mortgagors and borrowers and Mr. Maggio had signed the guarantee in which he guaranteed the obligations of Mr. and Mrs. Giuliano and in that guarantee Mr. Maggio also agreed to be bound by the covenant in the mortgage and that might mean that he might also have been a borrower. Would that have made any difference to your decisions in December of 1992? A. Yes, it would have because it would have been hard for him to service my loan as well as the other loan. Q. Would anything follow from that answer? A. Well, I wouldn't have gone ahead with it if he couldn't have paid the loan back because he was responsible for my loan. 143. I am unable to accept that Mrs. White would not have proceeded with the transaction had she been aware of Mr. Maggio's contingent liability under the McAlpine guarantee. Mrs. White understood that the whole of the proceeds of the loan would be invested by Mr. Mansfield in connection with the overseas commodities deal. I understood the evidence she gave before Abadee J to be consistent with her belief that the proceeds of the loan had been paid to Mr. Mansfield (28/9/99 T 29/30). As I have noted, it was Mrs. White's evidence that during the first six months following settlement of the transaction she was given cheques drawn on Mr. Mansfield's account with which to make loan repayments. This is consistent with the representations made to her by Mr. Maggio that it was Mr. Mansfield who was arranging the overseas deal. The evidence does not suggest that Mrs. White considered that Mr. Maggio would be meeting the loan repayments over the life of the loan from his own funds. I am satisfied that had she been told Mr. Maggio's contingent liability she would have considered it a matter of no moment at the time. 144. I do not consider that an adequate or sufficient connection has been made between the equitable compensation claimed by Mrs. White and the breach of fiduciary duty to which she points. Mrs. White's loss arises because she was duped by Mr. Maggio into believing that she was investing in a safe scheme arranged the accountant (sic), David Mansfield. Mr. Maggio's capacity throughout the life of the loan to meet repayments under the joint loan was, in reality, not a consideration for Mrs. White. In this sense in the view of Kirby J in his minority Judgment in Maguire (at 483) Mr. Maggio's financial circumstances was not 'material'. The loss would have occurred if there had been no breach. 145. For these reasons I am of the view that Mrs. White's cross-claim against the solicitors should be dismissed." Grounds of appeal 109 As amended by the Supplementary Notice of Appeal which was filed on her behalf, the grounds of appeal which, prior to the hearing, Mrs. White sought to rely upon were as follows: "1. Having found on the second cross-claim that Mr. Grogan ('Grogan') negligently and in breach of his retainer failed to explain the mortgage and guarantee to Mrs. White ('White') (J. 105), the trial judge erred in concluding that White had failed to establish that her loss flowed from the breach of retainer or negligence (J.112) in that: (a) The finding of a lack of causation was against the evidence; (b) The trial judge found that had White been separately advised it is probable that she would have accepted advice it was an unsound proposal (J.107) (sic). 2. Having found in the second cross-claim that Grogan negligently failed to confer separately with White in order to ensure that she was acting free of improper influence (J.100-2) the trial judge erred in concluding that White had failed to establish that her loss flowed from the negligence in that: (a) The finding of a lack of causation was against the evidence; (b) the trial judge found that had White been separately advised it is probable that she would have accepted advice it was an unsound proposal (J.107) (sic). 3. Having found on the second cross-claim that Grogan had breached his fiduciary duty to White by failing to disclose to her his knowledge that Maggio had earlier guaranteed a loan of $250,000.00 ('the McAlpine loan') (J. 132) the trial judge erred in concluding that disclosure of this would not have induced White not to go ahead with the IMB loan in that: (a) the finding of a lack of causation was against the evidence; (b) the finding of fact that White did not consider Maggio would be meeting the loan repayment or that Maggio's capacity to met the loan repayments was not a consideration for White (J.143-4) was against the evidence. 4. Having found on the second cross-claim that Grogan had committed a breach of fiduciary duty for non-disclosure of material facts, the learned trial judge erred in failing to apply the judgment of the Privy Council in Brickenden v. London Loan & Savings Co [1934] 3 DLR 465 at 469 by which Grogan cannot be heard to maintain that disclosure would not have altered the decision to proceed with the transaction (J.139). 4B. On the second further amended first cross-claim brought by Mrs. White against IMB, the learned trial judge erred in finding (J.82-4) that the IMB is not to be fixed with the solicitor's knowledge of the McAlpine guarantee. 5. The trial judge erred in failing to find that the measure of damages for negligence and/or breach of retainer was the amount White owed to the IMB under the mortgage. 6. The trial judge erred in failing to find that the measure of equitable compensation for breach of fiduciary duty by Grogan was the amount White owed the IMB under the mortgage. 7. In the light of 4B, 5, 6 above the trial judge erred in granting judgment for possession of the property at Quarry Road to the IMB." It is to be noted that notwithstanding ground 7 which had been substituted by the Supplementary Notice of Appeal, it was not asserted that Bell J erred in failing to find that the mortgage was unjust in the circumstances at the time when it was granted or in failing to find that, in seeking to enforce the mortgage, IMB's conduct was unconscionable. 110 Notwithstanding the dismissal of the Third Cross-Claim, IMB did not seek to appeal against the order made by Bell J in that respect. 111 An application for a stay of execution upon the orders made by Bell J having been refused in May 2001, the IMB proceeded to sell the property, that sale, at a price of $501,000.00, having taken place in August 2001. By the time – apparently early October 2001 - when the sale was completed the amount due under the mortgage had risen to $534,892.96. After deducting the costs of sale, the amount received by the IMB amounted to $483,904.97 leaving a balance then owning of $51,197.99, which amount, no doubt has since risen. 112 When the appeal was called on for hearing, Mr. R.D. Wilson appeared with Mr. I.E. Davidson for Mrs. White, Mr. D. J. Fagan SC appeared with Mr. D.M. Lowenstein for the IMB and Mr. G. Inatey SC appeared with Mr. B. McManus for Messrs. Grogan and Webb. Mrs. White's submissions 113 Notwithstanding that, as I have earlier recorded, the grounds of appeal as amended by the Supplementary Notice of Appeal, did not contain an assertion that Bell J erred in not holding that the mortgage was in the circumstances in which it was granted unjust, under the heading "Ground 4B Amended Notice of Appeal" – the first of the grounds of appeal addressed in the Written Submissions filed on behalf of Mrs. White; the following appears (Orange AB 7): "4. The Trial Judge did not engage in the 2 stage process of considering first, whether the contract was 'unjust' and second, whether the Court's discretion ought to be exercised to declare the contract void. So far as the first stage is concerned, the loan contract and mortgage entered by White was unjust because the IMB had approved a loan which, having regard to Maggio's McAlpine guarantee, should not have been approved. Maggio's guarantee had the capacity to affect his ability to meet the repayment to the IMB (J. 132). In the event of default by Maggio, there was a real risk the IMB would need to sell the home in order to recover the loan funds. White could not service the loan herself. White did not receive any advice by Grogan or the IMB as to her obligations under the security documentation." 114 In seeking to develop that primary submission, the Written Submissions – which I must say I found both confused and confusing – further submitted: (i) that Mr. Grogan's knowledge of the McAlpine guarantee ought to be imputed to the IMB (reference was made to Antonovic v. Volker (1986) 7 NSWLR 151 ; Broadlands International Finance Limited v. Sly (1987) NSW Conv R 55-342 ; Beneficial Finance Corporation Ltd. v. Karavas (1991) 23 NSWLR 256 ; Nguyen v. Taylor (1992) 27 NSWLR 48 ); (ii) alternatively, it ought to be held that the IMB had constructive notice of Maggio's McAlpine guarantee as Mr. Grogan was acting as its solicitor in connection with the Loan Agreement and Mortgage (reference was made to s.164(1)(b) of the Conveyancing Act 1919; Broadlands International Finance Limited v. Sly supra ); (iii) in either case, so it seemed to be submitted (reference being made to Esanda Finance Corporation Ltd v. Tong (1997) 41 NSWLR 482 ), the IMB, although not aware of Maggio's McAlpine guarantee, ought to be regarded as having been put on notice of a matter giving rise to unjustness; (iv) Bell J erred in applying "a duty to inform test" in determining whether the IMB ought to be fixed with Mr. Grogan's knowledge of Maggio's McAlpine guarantee; this test, so it was submitted, ought to be rejected in favour of "a test of relevance as the criteria (sic) by which knowledge obtained by a solicitor who acts for both parties to a mortgage transaction may be imputed to the lender (reference was made to Spector v. Ageda [1973] Ch 30 ; Clark Boyce v. Mouat [1993] 3 WLR 1021 ); (v) the fact that Mrs. White was a party to the making of false representation to the IMB "ought not as a matter of discretion preclude her from obtaining relief under the Act as the IMB through its constructive notice of Grogan's non-disclosure was also a party to unjust conduct". 115 Under the heading "Breach of Fiduciary Duty" the following passages appear: "12. The Trial Judge erred in finding that White did not consider that Maggio would be meeting the loan repayments from his own funds because there was a body of evidence which suggested the contrary. White was not directly challenged in cross-examination on this issue (see: SRA (NSW) v. Earthline Constructions (1999) 73 ALJR 306). ……… 15. … Having regard to the evidence outlined in para. 13 above, and the cross-examination in para 14 above, the Trial Judge was not entitled to draw the inference from para. 31 of White's affidavit that 'Mr. Maggio's capacity throughout the life of the loan to meet repayments under the joint loan was, in reality, not a consideration for Mrs. White' (J.144, Red 93). 16. Upon Grogan's understanding, Maggio's McAlpine guarantee had the capacity to affect his ability to meet repayments under the IMB loan. It was material information which required disclosure to White (J.132, Red 86). Equally, the existence of the McAlpine guarantee was material to White's decision to enter the IMB loan because she could not service the loan herself and was looking to Maggio or Mansfield to make the repayments. 17. The Trial Judge erred in finding that the loss would have occurred if there had been no breach of fiduciary duty by Grogan (J. 144). Upon a 'commonsense' view of causation, White's loss flowed from the non-disclosure. The authority of Brickenden v. London Loan & Saving Co . 18. In Brickenden (at p.469) the Privy Council held that where a fiduciary commits a breach of duty by the non-disclosure of material facts: 'Once the court has determined that the non-disclosed facts were material speculation as to what course the constituent, on disclosure, would have taken is not relevant. 19. The wholesale application of Brickenden in Australia has been severely curtailed. In Maguire v. Makaronis (1997) 188 CLR 449 Brennan CJ, Gaudron, McHugh and Gummow JJ referred to the requirement that there must be 'an adequate or sufficient connection between the equitable compensation claim and the breach of fiduciary duty' (at p.473). In O'Halloran v. R T Thomas & Family Pty. Ltd. (1998) 45 NSWR (sic) 262 Spigelman CJ & Meagher JA held, applying Target Holdings Ltd. v. Redferns [1996] 1 AC 421, that in Australia a 'commonsense view' of causation ought to be applied in determining whether a loss was caused by a breach of trust. See also Beach Petroleum v. Abbott Tout (unreported, NSW Court of Appeal, 5/11/99). 20. However in O'Halloran , Priestley JA was of the view that Brickenden should be applied in Australia (at p. 281) and in Maguire , Kirby J held that Brickenden applied where the non-disclosure was 'material' (at p. 494-495). Significantly in Maguire , the majority left open for further consideration the authority of Brickenden in Australia. 21. The Trial Judge found that Grogan's knowledge of the McAlpine guarantee was 'the sort of material information which requires disclosure' (J. 132, Red 86). In this circumstance, White contends that she is entitled to equitable compensation pursuant to Brickenden . Negligence and breach of retainer by Grogan ……… 25. The Trial Judge erred in find that the negligence and breach of retainer by Grogan was not causative of any loss because there was evidence from which it could be inferred that White's trust in Maggio was not near nigh unshakeable until 1994. There was also evidence from which it could be inferred that had White been fully advised by Grogan in the absence of Maggio she would not have gone ahead and would have have (sic) disclosed the existence of the commodities deal. As thorough advice on Grogan's part involved the disclosure by him of Maggio's McAlpine guarantee, the submission in paras. 13-16 above is relevant to the argument that White's trust in Maggio was shakeable and that she would not have proceeded in the face of complete advice. ……… 28. Notwithstanding the advantage the Trial Judge enjoyed from seeing White in the witness box, the evidence outlined in paras. 26, 27 is consistent with a finding that White would not have gone ahead if she had been interviewed separately and advised thoroughly. Her trust in Maggio whilst naïve was not unshakeable. She was a woman of reasonable intelligence who was seeking to raise money to leave her husband. In these circumstances her Honour erred in finding a lack of causation. 29. Pursuant to s.75A of the Supreme Court Act, White invites the court to make a finding of causation arising from the Grogans' negligence and breach of retainer and to award her damages equal of the monies under the IMB mortgage." Discussion Contracts Review Act 1980 116 Notwithstanding that, as I have earlier (para. 109 (above)) pointed out, the Amended Grounds of Appeal did not contain any assertion that Bell J erred in failing to find that the mortgage was unjust in the circumstances at the time when it was granted or in failing to find that, in seeking to enforce the mortgage, IMB's conduct was unconscionable, no point was taken in the written submissions filed on behalf of the IMB that it was not open to Mrs. White to argue on the hearing of the appeal that her Honour erred in not finding that the mortgage was unjust in the circumstances existing at the time of it being granted. That being so, I turn now to consider that question. 117 Insofar as is relevant, the Act provides as follows: " Definitions 4(1) In this Act except insofar as the context or subject matter otherwise indicates or requires: ……… 'unjust' includes unconscionable harsh or oppressive; and 'injustice' shall be construed in a corresponding manner. ……… Principal relief 7(1) Where the Court finds a contact or a provision of contract to have been unjust in the circumstances relating to the contract at the time it was made, the Court may, if it considers it just to do so, and for the purpose of avoiding as far as practicable an unjust consequence or result, do any one or more of the following: (a) it may decide to refuse to enforce any or all the provisions of the contract; (b) it may make an order declaring the contract void, in whole or in part; ……… (2) Where the Court makes an order under sub-section 1(b) … the declaration … shall have effect as from the time when the contract was made … . ……… Matters to be considered by Court 9(1) In determining whether a contract or a provision of a contract is unjust in the circumstances relating to the contract at the time it was made, the Court shall have regard to the public interest and all the circumstances of the case, including such consequences or results as those arising in the event of: (a) compliance with any or all of the provisions of the contract; or (b) non-compliance with, or contravention of, any or all of the provisions of the contract. (2) Without in any way affecting the generality of subsection (1) the matters to which the Court shall have regard shall to the extent to which they are relevant to the circumstances, include the following: ……… (d) whether or not any provisions of the contract impose conditions which are unreasonably difficult to comply with or not reasonably necessary for the protection of the legitimate interests of any party to the contract; ……… (h) whether or not and when independent legal or other expert advice was obtained by the parties seeking relief under this Act; (i) the extent (if any) to which the provisions of the contract and their legal and practical effect were accurately explained by any person to the party seeking relief under this Act, and whether or not that party understood the provisions and their effect; ……… (l) the commercial or other setting, purpose and effect of the contract. ……… (4) In determining whether a contract or a provision of a contract is unjust, the Court shall not have regard to any injustice arising from circumstances that were not reasonably foreseeable at the time the contract was made. ………" 118 It will be apparent that, when an application for relief under the Act is made, two questions will, or may potentially, arise, they being: (a) whether it the circumstances relating to it at the time it was made, the relevant contract was, or some one or more of its provisions was or were, unjust; and (b) whether, and, if so, in what manner, the Court should exercise one or other of the powers conferred on it by s.7(1) of the Act. 119 So far as the first of these questions is concerned, as has been pointed out, (West v. AGC (Advances) Ltd. (1986) 5 NSWLR 610, 621 per McHugh JA (as he then was); see also Elders Rural Finance Ltd. v. Smith (1996) 41 NSWLR 296, 309-310 per Handley JA), it is the contract rather than the transaction or investment which must be examined. 120 As is established (see Nguyen v. Taylor (1992) 27 NSWLR 48, 57 per Kirby P (as he then was), 62) even in a case in which the Court has found that the contract was unjust, the Court may, in its discretion, withhold relief and, further, (Esanda Finance Corporation Ltd. v. Tong (1997) 41 NSWLR 482) in a case in which it is not a contract but only a term of it which is unjust, it is not open to the Court to do more than remedy the injustice caused by that term. 121 As a general rule, a contract will not be unjust as against a party unless the contract or one of its provisions is the product of unfair conduct on his part either in the terms which he has imposed or in the means which he has employed to make the contract (West v. AGC (Advances) Ltd. supra at 622). 122 Where it is said that there was something in the circumstances relating to the contract at the time when it was made which made the contract unjust, it is not a condition of relief that the party against whom relief is sought was aware of it (West v. AGC (Advances) Ltd. supra at 520 per McHugh JA, Beneficial Finance Corporation Ltd. v. Karavas (1991) 23 NSWLR 256) - particularly so where the circumstance in question involved conduct on the part of that party's agent (Antonovic v. Volker (1986) 7 NSWLR 151) - but his lack of knowledge may render the circumstance of less materiality than if he were aware of it (West v. AGC (Advances) Ltd. supra at 620 per McHugh JA; Nguyen v. Taylor supra ; Esanda Finance Corporation Ltd. v. Tong supra). 123 The question then is, whether, in the circumstances in which they were made, the loan agreement and mortgage were unjust. 124 At the outset, it is to be observed that at no time has there been advanced on behalf of Mrs. White any submission to the effect that any of the provisions of either the loan agreement or the mortgage was of such a nature as to be, in the circumstances, unjust. Nor, in my view, could any such submission, if made, have been sustained. IMB made a loan at what appear then to have been ordinary commercial rates of interest to be repaid over a period of 25 years - the purpose of that loan being said to be to enable the discharge of an existing mortgage over the property - and security for that loan was a first mortgage over the property. 125 The circumstances upon which reliance is placed in order to render the loan agreement and mortgage unjust are said to have been: (a) Mrs. White's financial position was not such as would enable her to make payments due under the loan or ultimately to discharge it; (b) as between Mrs. White and Mr. Maggio, the obligation to make payments under the mortgage and ultimately to discharge the loan rested solely with Mr. Maggio; (c) by virtue of his having guaranteed the McAlpine superannuation trust mortgage, Mr. Maggio's capacity to make payments due under the mortgage and ultimately to discharge the debt was, to say the least suspect; (d) that Mr. Grogan was aware of that fact; and (e) that as Mr. Grogan acted for IMB in relation to the loan agreement and mortgage IMB should be fixed with Mr. Grogan's knowledge of that fact. 126 It seems to me that, in order that that submission might be made good, it must appear either: (a) that it was part of Mr. Grogan's retainer to advise IMB of any matter within his knowledge which related to the ability of an intended borrower to repay the loan which was sought; or (b) that the information relating to Mr. Maggio's guarantee of the McAlpine Superannuation Trust loan came to him while he was acting for IMB in relation to the loan which had been sought by Mrs. White and Mr. Maggio. 127 So far as the first of these matters is concerned, the position is put in Bowstead on Agency in the following way: "Where any fact or circumstance, material to any transaction, business, or matter in respect of which an agent is employed, comes to his knowledge in the course of such employment, and is of such a nature that it is his duty to communicate it to his principal, the principal is deemed to have notice thereof as from the time when he would have received such notice if the agent had performed his duty, and taken such steps to communicate the fact or circumstance as he ought reasonably to have taken". 128 The extent of a duty undertaken by a solicitor to a client depends upon the terms of his retainer (see, for example, National Home Loans Corporation Plc v. Giffen Couch & Archer [1998] 1 WLR 207, 213-214 per Peter Gibson LJ; Beach Petroleum NL v. Kennedy (1999) 48 NSWLR 1). The fact that a client might be accustomed to retain the services of a particular solicitor or firm of solicitors in matters of a particular type does not constitute that solicitor or that firm of solicitors the client's standing agent to receive notice of material facts (Saffron Walden Second Benefit Building Society v. Rayner (1880) LR 14 Ch D 406). The terms of Mr. Grogan's retainer in the present case are indicated by the form of loan approval delivered to his firm (Blue AB 218) which commences: "You are instructed to act for the Society and to make such searches and inquiries and obtain such certificates and reports as you consider appropriate to enable you to report before settlement that the property is a good and acceptable security for the Society as mortgagee." Mr. Grogan's duty to IMB was thus to ensure that it obtained in exchange for the loan a registered first mortgage over the property which had been offered as security. 129 Section 164 of the Conveyancing Act 1919 provides (inter alia) as follows: "164 Restriction on constructive notice (1) A purchaser shall not be prejudicially affected by notice of any instrument, fact, or thing, unless: (a) it is within the purchaser's own knowledge or would have come to the purchaser's knowledge, if such searches as to instruments registered or deposited under any Act of Parliament, inquiries and inspections have been made as ought reasonably to have been made by the purchaser, or (b) in the same transaction with respect to which a question of notice to the purchaser arises, it has come to the knowledge of the purchaser's counsel as such, or of the purchaser's solicitor or other agent as such, or would have come to the knowledge of the purchaser's solicitor or agent as such, if such searches, inquiries, and inspections had been made as ought reasonably to have been made by the solicitor or other agent." ("Purchaser" includes a mortgagee.) 130 Section 164 appears ultimately to have been derived from the provisions of s.3(1) of the Conveyancing Act 1882 (Imp). The report of the decision of Chitty J in In re Cousins (1886) LR 31 Ch D 671 contains the following supra at 676-677: "I then come to sect. 3 of the Conveyancing Act, 1882, which was clearly intended for the protection of purchasers to some extent – the question is to what extent – against that refined doctrine of imputed notice which had been found to work very grievous injustice to honest men, the notice being implied in a very refined manner, and brought home to a man who knew nothing about the matter, and who found that though he had acted perfectly and honestly he was postponed by reason of the doctrine of the court. His Lordship after reading the section, and observing that in the first part 'notice' was used in the strict legal sense, said with respect of (i): It did not come within his (Pepper's) knowledge and it is not suggested that it would have come to his knowledge if he had made such inquiries and inspections as are mentioned in the first sub-section. Then the argument really turns on (ii). I have no doubt that the words 'as such' which occur, both with regard to his counsel and his solicitor equally, were like the word 'knowledge' used advisedly and have a meaning. The meaning is 'come to the knowledge of the solicitor in the transaction as solicitor for the purchaser' (which of course includes mortgagee) 'or would have come to the knowledge of his solicitor or other agent as such, if such inquiries and inspections had been made as ought reasonably to have been made by the solicitor or other agent'. Now that section was intended to remedy what was considered to be the evil consequences of such a doctrine, as was well illustrated by Hargreaves v. Rothewell (1 Keen 154, 160). A solicitor is employed who has had a considerable number of other transactions, and amongst them he has had a dealing with the particular estate which is under sale. He may or may not have had a good memory, but according to the doctrine of that case notice was imputed to the client if there was such a distance only between the former transaction and the present transaction in which he was engaged as left the Court under the impression – it could not be much more than an impression – that the solicitor had actually remembered the former transaction; and in that way knowledge was imputed to the solicitor, and then through the solicitor notice was imputed to the client. That was too refined, and it is quite plain that the section put an end to that doctrine altogether, and I think, as far as this case is concerned, it has put an end to that suggestion which has been made that as Banks was acting for the mortgagor, and might be presumed to know what his client the mortgagor knew, notice of such knowledge must be imputed through him again to his other client the mortgagee. That suggestion I think cannot stand; the words of this section are, I think, sufficiently clear. There must be something which comes to the knowledge of the solicitor as such, and in this transaction, the words 'come to his knowledge' are not unimportant, and seem to me to afford the true answer to the argument that Banks had knowledge because he formerly knew. The sections says 'come to the knowledge' and I cannot impute to him that the knowledge had come to him in this transaction because he knew it on the former occasion. To do that would be to destroy the section. Every word of it requires careful weighing, and the result is, 1, that it must be in the same transaction; 2, the matter must come to his knowledge, and 3, must come to the knowledge of the solicitor as such, viz, as solicitor for the mortgagee. Now I am of opinion that there is no ground for saying that it did come to the knowledge of Mr. Banks in this transaction within the meaning of the first part of this sub-section, and I so hold." (see also Taylor v. London & County Banking Company; London & Country Banking Company v. Nixon [1901] 2 Ch D 231 .) 131 In the circumstances, therefore, I conclude that Bell J was correct in holding that knowledge of Mr. Maggio's having guaranteed the McAlpine Superannuation Trust loan was not to be imputed to IMB. 132 In all the circumstances, therefore, I conclude that Bell J did not err in holding that the loan agreement and the mortgage were not to be regarded as having been unjust. Mrs. White's claim against the solicitors 133 As what I have earlier recorded makes clear, Bell J held: (a) that the solicitors had been guilty of a breach of retainer or negligence in two respects: (i) in not explaining to Mrs. White the legal effect of the transaction with IMB; and (ii) in not seeking to confer with Mrs. White in the absence of Mr. Maggio in order to ensure that Mrs. White was acting free of any improper influence; and (b) the solicitors were guilty of a breach of their fiduciary duty to Mrs. White in not disclosing to Mrs. White the fact that Mr. Maggio had guaranteed the McAlpine Superannuation Trust loan. 134 But for the matters to which I will shortly refer, I would have had considerable doubts as to the correctness of Bell J's conclusions in these respects. That this is so is due to the following: (a)(i) the initial approach to Mr. Grogan by FMC on behalf of Mrs. White and Mr. Maggio was for Mr. Grogan's firm to act on their behalf in connection with an application to IMB for a loan to Mrs. White and Mr. Maggio on the security of a mortgage on the property, the proceeds of that loan to be applied in discharging what was said to be an existing mortgage on the property; (ii) it is clear that Mrs. White understood that, if the loan which as sought were approved, it would be on condition that IMB be given the security of a mortgage on the property; (iii) it is clear that it was no part of Mr. Grogan's retainer, either in the first instance or at the conference held on 18 December 1992, to advise either or both of Mrs. White or Mr. Maggio as to the wisdom or otherwise of proceeding with the application for the loan which was sought; (iv) it is equally clear, as it seems to me, that Mrs. White and Mr. Maggio appreciated that if the loan were to be approved and the advance made by the end of the year, Mr. Grogan would not be in a position to discuss the terms of any relevant documents with them; (b) given that it was no part of Mr. Grogan's retainer to advise either or both of Mrs. White and Mr. Maggio as to the wisdom of entering into the mortgage which was contemplated, it does not seem to me that Mr. Grogan was under any duty to Mrs. White to disclose the fact that Mr. Maggio had guaranteed the McAlpine Superannuation Trust loan. As was said by Lord Jauncey of Tullichettle when delivering the advice of the Judicial Committee in Clark Boyce v. Mouat [1993] 3 WLR 1021, 1029 : "A fiduciary duty concerns disclosure of material facts in a situation where the fiduciary has either a personal interest in the matter to which the facts are material or acts for another party who has such an interest. It cannot be prayed in aid to enlarge the scope of contractual duties. Thus, there being no contractual duty on Mr. Boyce to advise Mrs. Mouat on the wisdom of entering into the transaction, she cannot claim that he nevertheless owed her a fiduciary duty to give that advice. Furthermore any duty of disclosure can only extend to the solicitor's knowledge of facts and not to his lack of knowledge thereof. ……… It only remains to say a further word about Mr. Boyce's alleged failure to disclose his lack of knowledge as to Mr. R.G. Mouat's ability to service the mortgage. It is implicit in this allegation that Mrs. Mouat should have been advised to investigate her son's financial affairs. Such an allegation might be the basis for a breach of contract but could not for the reasons already stated found a claim for breach of fiduciary duty. However even if it had amounted to a breach of contract there was evidence neither that Mrs. Mouat would have accepted the advice nor that if she had she would have acted differently. It follows that she has failed to establish that she suffered a loss as a result of any such breach." 135 However, as no Notice of Contention raising those questions was filed on behalf of the Second Respondents, I set my views on them to one side and turn to consider whether Bell J erred in holding, as she did, that Mrs. White had failed to demonstrate any causal connection between the breach of retainer/negligence and breach of fiduciary duty which she had found and the loss which Mrs. White claimed to have suffered. 136 As will be apparent from what I have recorded above, Mrs. White submits that Bell J erred in two respects they being: (a) it was not open to her Honour, once she had held that Mr. Grogan had failed in his fiduciary duty to Mrs. White, to hold that, even if there had been no such breach, Mrs. White would have proceeded with the loan agreement and the mortgage – the submission was founded on the statement of Lord Thankerton in Brickenden v. London Loan & Savings Co. supra ; and (b) in any event, her Honour's finding to that effect was contrary to the evidence. 137 As, in his Written Submissions, Mr. Wilson recognised, it is to be doubted whether, in Australia, the apparently absolute principle indicated in Brickenden v. London Loan & Savings Co would be recognised. Thus, in Maguire v. Makaronis (1996-1997) 188 CLR 449 the following appears in the joint Judgment of Brennan CJ, Gaudron, McHugh and Gummow JJ supra at 471-473: "The reasoning in Brickenden has been applied by intermediate courts of appeal in Australia and by the New Zealand Court of Appeal in cases where the plaintiff has sought to recover loss caused (in most of these cases) by the plaintiff's solicitor having acted in breach of fiduciary duty. Once the true issues on this appeal are perceived, it is apparent that it does not provide any occasion for testing the reasoning in Brickenden . The judgments both in the Supreme Court of Canada and in the appellate division of the Supreme Court of Ontario demonstrate that the Brickenden litigation was concerned with the recovery of compensation for loss suffered as a result of the solicitor having acted in breach of fiduciary duty and with the application of Nocton v. Lord Ashburton . In particular, the case turned upon whether the loss claimed could properly be said, within the meaning of Nocton v. Lord Ashburton to have been sustained 'by' the solicitor having acted in breach of duty. That is not this case. As indicated earlier in these reasons, their fiduciary duty forbade the appellants, in the circumstances of this case, to enter into the transaction and the equity for rescission was immediately generated by breach of that fiduciary duty. ……… Several matters appropriately will be taken into account when there falls for consideration, in an action against a fiduciary arising other than out of breach of trust, the criteria which supply an adequate or sufficient connection between the equitable compensation claimed and the breach of fiduciary duty." As Mr. Wilson also noted, the question of the effect to be given to the decision in Brickenden v. London Loan & Savings Co has been considered by this Court in both O'Halloran v. R.T. Thomas & Family Pty. Ltd. (1998) 45 NSWLR 262 and Beach Petroleum NL v. Kennedy (1991) 48 NSWLR 1 . In the latter case, the Court (Spigelman CJ, Sheller and Stein JJA) said supra at 93 : " Brickenden is not, in our opinion, authority for the general proposition that, in no case involving breach of fiduciary duty, may the court consider what would have happened if the duty had been performed. The reasoning in Brickenden must now be understood in the light of the House of Lords' decision in Target Holdings and the cases which have applied it. ……… The actions of a third party may impinge on a fiduciary's responsibility as a matter of causation. Brickenden was concerned with a chain of events in which the alleged default of the fiduciary was a necessary component. The information which the solicitor was obliged to disclose was the very information upon which the third party had to act. It was such an act, necessarily linked to the performance of the fiduciary duty, about which 'speculation' was said to be inappropriate." 138 As Mrs. White had, in her Second Further Amended Second Cross-Claim alleged (RAB 17): "10. In consequence of the breaches by the second cross-defendants of the said implied term, fiduciary duty and/or duty the cross-claimant has suffered and will suffer loss and damage. Particulars of damage (a) Had the cross-claimant received independent legal advice, it is likely she would not have proceeded with a mortgage for the property at 114 Quarry Road, Ryde and would not be subjected to the risk of the plaintiff obtaining an order for possession of such property in these proceedings (which relief is denied). (b) Had the second cross-defendant's advised the cross-claimant of the matters referred to in particulars (bb), (d), (e), (f), (g), (h), (i) and (j) to paragraph 8 hereof, the cross-claimant would not have proceeded with a mortgage of the property at 114 Quarry Road, Ryde and would not be subjected to the risk of the plaintiff obtaining an order for possession of such property in these proceedings (which relief is denied). ………" She bore the onus of establishing, on the balance of probabilities, that, had there been no breach of retainer/negligence or breach of fiduciary duty, she would not have entered into the loan agreement or granted the mortgage. 139 As what I have earlier (paras. 103, 108 (above)) recorded, Bell J was not persuaded, either, that if Mr. Grogan had sought to speak privately with Mrs. White she would not have proceeded with the loan agreement or mortgage, or, that if Mrs. White had been aware of Mr. Maggio's contingent liability under the McAlpine guarantee she would not have proceeded with the loan agreement and the mortgage. It is, in the passages from her Honour's Judgment to which I have referred, clear that, in coming to the conclusion which she there recorded, Bell J was influenced in no small measure by her assessment of the credibility of Mrs. White as a witness. This being so, the mere fact that, as Mr. Wilson sought to demonstrate, there was evidence which, if accepted, might have justified an inference that, if Mrs. White had been spoken to privately and had been made aware of Mr. Maggio's contingent liability under the McAlpine guarantee, she would not have proceeded with the loan agreement and the mortgage, would not justify this Court in coming to a different conclusion from that which was reached by Bell J (Abalos v. Australian Postal Commission (1990) 171 CLR 167; Devries v. Australian National Railways Commission (1992-1993) 177 CLR 472) Conclusion 140 For these reasons I would propose that the Appeal against each of the Respondents be dismissed with costs. 141 HODGSON JA: I agree with Powell JA. 142 The case of Brickenden v. London Loan & Savings Co. [1934] 3 DLR 465 concerned a mortgage loan of $13,500.00 from the respondent to certain persons, in relation to which the appellant acted as solicitor on both sides. The loan was applied in part to pay out a $5,000.00 loan from the appellant, and also to pay $800.00 outstanding on a $2,000.00 loan from the appellant and $600.00 outstanding on a $1,200.00 loan from the appellant. The first of these loans was disclosed to the respondent, but not the other two. The trial judge held that the respondent was entitled to damages against the appellant for its losses on the mortgage, on the basis of the appellant's breach of fiduciary duty; and this was ultimately confirmed by the Privy Council. 143 In deciding whether the damages were proved to be a consequence of the appellant's breach of fiduciary duty, Lord Thankerton, delivering the judgment of the Privy Council, made this well-known statement (at 469): When a party, holding a fiduciary relationship, commits a breach of his duty by non-disclosure of material facts, which his constituent is entitled to know in connection with the transaction, it cannot be heard to maintain that disclosure would not have altered the decision to proceed with the transaction, because the constituent's action would be solely determined by some other factor, such as the valuation by another party of the property proposed to be mortgaged. Once the Court has determined that the non-disclosed facts were material, speculation as to what course the constituent, on disclosure, would have taken is not relevant. 144 In my opinion, this statement applies to cases (such as Brickenden itself) where the fiduciary obtains an undisclosed benefit from a transaction, and the question is whether, had the benefit been disclosed, the beneficiary would have given informed consent to the fiduciary having that benefit; and it is authority for the proposition that the fiduciary cannot maintain that the beneficiary would have given that consent. Whether the proposition applies in all such cases is a matter of some controversy, which need not be addressed here: however, I would venture to suggest that it does apply in all cases where the beneficiary is seeking, not damages, but the recovery from the fiduciary of the benefit received (cf. Cole v. Manning [2002] NSWCA 150 at [80]). 145 The present case is not such a case. What was not disclosed to Mrs. White was not a benefit to Mr. Grogan, but a matter relating to another client to whom Mr. Grogan also had a duty: this was a case, not of conflict of interest and duty, but of conflict of duty and duty. Although the Brickenden principle has been applied to such cases (see Beach Petroleum NL v. Kennedy (1999) 48 NSWLR 1 at 92, citing Commonwealth Bank of Australia v. Smith (1991) 42 FCR 390 and Farrington v. Row McBride & Partners [1985] 1 NZLR 83), it is my opinion that, in such cases, the beneficiary must prove that, but for the non-disclosure, he or she would not have entered into the transaction: Beach Petroleum at 93, Target Holdings Ltd. v Redferns [1996] 1 AC 421. 146 In my opinion, as shown by Powell JA's judgment, the appellant has not demonstrated any error in the primary judge's conclusion that this was not proved in this case. 147 It was submitted somewhat faintly during oral argument that, if Mr. Grogan had conferred separately with Mrs. White and explained to her the legal effect of the transaction, and disclosed Mr. Maggio's guarantee, then in all probability Mr. Grogan would have learnt the truth about the transaction and passed this on to IMB; so for that reason the transaction would not have gone ahead. That case was not alleged in the statement of claim, explored before the primary judge, or included in any ground of appeal; so even if there were any substance in it, this Court could not consider it. 148 HAMILTON J: I agree with Powell JA and I also agree with the additional remarks of Hodgson JA. ********** 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.