New South Wales Supreme Court IBRAHIM & Ors v PHAM & Ors [2005] NSWSC 246 CITATION : This decision has been amended. Please see the end of the judgment for a list of the amendments. HEARING DATE(S) : 12-16 July; 19-23 July; 26-29 July; 2-6 August; 9-11 August 2004 JUDGMENT DATE : 30 March 2005 JUDGMENT OF : Levine J DECISION : 1 I find verdicts for the defendants and enter judgment accordingly; 2 The plaintiffs are to pay the costs of the defendants including all reserved costs; 3 I order the return of the exhibits and MFI 21 CATCHWORDS : Professional negligence - solicitors - Froggy.com - limited retainer - fiduciary duty - managed investment schemes Civil Liability Act 2002 Corporations Act 2001 (Cth) Corporations (Repeals, Consequentials and Transitionals) Act 2001 (Cth) Fair Trading Act 1987 LEGISLATION CITED : Financial Services Reform Act 2001 (Cth) Legal Profession Act 1987 Managed Investments Act 1998 (Cth) Trade Practices Act 1974 (Cth) Treasury Legislation Amendment (Application of Criminal Code) Act (No 3) 2001 (Cth) ASIC v Atlantic 3 Financial (Aust) Pty Limited (2003) 47 ACSR 52 ASIC v Chase Capital Management Pty Limited (2001) 36 ACSR 778 ASIC v Commercial Nominees of Australia Limited (2002) 42 ACSR 240 ASIC v Hutchings (2001) 38 ACSR 387 ASIC v IP Product Management Group Pty Limited (2002) 42 ACSR 343 ASIC v Koala Quality Produce Limited (2002) 41 ACSR 628 ASIC v Pegasus Leveraged Options Group Pty Limited (2002) 41 ACSR 561 ASIC v Vines [2003] NSWSC 1095 ASC v Woods and Johnson Developments Pty Limited (1991) 6 ACSR 191 Astley v Austrust Ltd (1999) 197 CLR 1 Australian Softwood Forests Pty Limited v A-G (NSW); Ex rel CAC (1981) 148 CLR 121 Beach Petroleum NL v Abbott Tout Russell Kennedy (1997) 26 ACSR 114 Beach Petroleum NL v Kennedy (1999) 48 NSWLR 1 Bonn Corporation Pty Limited v Thiess Contractors Pty Limited (1987) 14 FCR 215 Breen v Williams (1996) 186 CLR 71 Brickenden v London & Loan Savings Co [1934] 3 DLR 465 Bristol and West Building Society v Mothew [1998] Ch 1 Brophy v NIAA Corporation Limited (in liq) (1995) ATPR 41-399 Capital Brake Service Pty Ltd v Meagher [2003] NSWCA 225 Churchill v Connolly [2004] NSWCA 212 Citicorp Australia Limited v O'Brien (1996) 40 NSWLR 398 Clark Boyce v Mouat [1994] 1 AC 428 Collier v Morlend Finance Corporation (Victoria) Pty Limited (1989) 6 BPR 13,337 Commonwealth Bank of Australia v Smith (1991) 42 FCR 390 Cvetanoski v Filaria Pty Limited (2002) 171 FLR 194 Demagogue Pty Limited v Ramensky (1992) 39 FCR 31 Dovuro Pty Limited v Wilkins (2003) 77 ALJR 1706 DPC Estates Pty Limited v Grey and Consul Development Pty Limited [1974] 1 NSWLR 443 Duchess of Argyll v Beuselinck [1972] Lloyd's Rep 172 Grey v Australian Motorists & General Insurance Limited [1976] 1 NSWLR 669 Goldcorp Exchange Limited, Re [1995] 1 AC 74 CASES CITED : Gore v Montague Mining Pty Limited [2000] FCA 1214 Haira v Burbery Mortgage Finance & Savings Limited; sub nom Koya v Kaira [1995] 3 NZLR 396 Hawkins v Clayton (1988) 164 CLR 539 Henville v Walker (2001) 206 CLR 459 Heydon v NRMA Ltd (2000) 51 NSWLR 1 Hospital Products Limited v United States Surgical Corporation (1984) 156 CLR 41 Jennings v Zihali-Kiss (1972) 2 SASR 493 Karl Suleman Enterprises Pty Limited (in liq) v Babanour [2004] NSWCA 214 Life Association of Scotland v Siddal (1861) 45 ER 800 Maguire v Makaronis (1997) 188 CLR 449 March v Stramare (E & MH) Pty Limited (1991) 171 CLR 506 Metcash Trading Pty Limited v Hourigan's IGA Umina Pty Limited [2003] NSWSC 683 Moage Limited (in liq), Re; Moage Limited (in liq) v Jagelman (1998) 153 ALR 711 NZ Netherlands Society "Oranje" Inc v Kuys [1973] 2 All ER 1222 O'Brien v Gillespie (1996) 41 NSWLR 549 O'Halloran v R T Thomas & Family Pty Ltd (1998) 45 NSWLR 262 Oceanic Life Ltd v HIH Casualty & General Insurance Ltd [1999] NSWSC 292 Our Lady's Mount Pty Limited (as trustee) v Magnificat Meal Movement International Inc (1999) 33 ACSR 163 Pauling's Settlement Trusts, Re [1961] 3 All ER 713 Parker v McKenna (1874) LR 10 Ch App 96 Peninsula Balmain Pty Ltd v Abigroup Contractors Pty Ltd [2002] NSWCA 211 Pilmer v The Duke Group Ltd (in liq) (2001) 207 CLR 165 Semrani v Manoun [2001] NSWCA 337 Spellson v George (1992) 26 NSWLR 666 Sunpost Pty Limited v Alsons Pty Limited (unreported, NSW SC, 8 September 1994) Tracy v Mandalay Pty Limited (1953) 88 CLR 215 Trust Co of Australia v Perpetual Trustees WA Limited (1997) 42 NSWLR 237 Unioil International Pty Ltd v Deloitte Touche Tohmatsu (1997) 17 WAR 98 Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 Warner v Elders Rural Finance Ltd (1993) 41 FCR 399 White v Illawarra Mutual Building Society Ltd [2002] NSWCA 164 Youyang Pty Limited v Minter Ellison (2003) 77 ALJR 895 RIMA IBRAHIM (First Plaintiff) SARGON NAJORIAN BADAL (Second Plaintiff) BADAL INVESTMENTS PTY LIMITED (Third Plaintiff) v PHILIP PHAM (First Defendant) PHAM ATIC PTY LIMITED PARTIES : (Second Defendant) FRED DAVID (Third Defendant) SUZIE DAVID (Fourth Defendant) PAUL MANUELPILLA DOMINIC (Fifth Defendant) LINDA JOAN GLORIA ROMANO (Sixth Defendant) FILE NUMBER(S) : SC 20483 OF 2002 BHK Donovan QC / D Baran (Plaintiffs) D Pritchard COUNSEL : (First and Second Defendants) R Darke SC / M Dicker (Third, Fourth, Fifth and Sixth Defendants) Barclay Benson (Plaintiffs) Ebsworth & Ebsworth SOLICITORS : (First and Second Defendants) Acuiti Legal (Third, Fourth, Fifth and Sixth Defendants) LOWER COURT JURISDICTION : [2005] NSWSC 246 IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION PROFESSIONAL NEGLIGENCE LIST JUSTICE DAVID LEVINE WEDNESDAY 30 MARCH 2005 20483 OF 2002 RIMA IBRAHIM (First Plaintiff) SARGON NAJORIAN BADAL (Second Plaintiff) BADAL INVESTMENTS PTY LIMITED (Third Plaintiff) v PHILIP PHAM (First Defendant) PHAM ATIC PTY LIMITED (Second Defendant) FRED DAVID (Third Defendant) SUZIE DAVID (Fourth Defendant) PAUL MANUELPILLA DOMINIC (Fifth Defendant) LINDA JOAN GLORIA ROMANO (Sixth Defendant) JUDGMENT ( Professional negligence - solicitors - Froggy.com - limited retainer - fiduciary duty - managed investment schemes) 1 The causes of action by the three plaintiffs, Rima Ibrahim (Ibrahim), Sargon Badal (Badal) and Badal Investments Pty Ltd (Badal Investments) are pleaded in the Fourth Amended Statement of Claim filed in Court on 4 August 2004. The defence of the first and second defendants is that filed on 2 August 2004, and that of the remaining defendants is that filed on 27 July 2004. 2 The first defendant, Philip Pham (Pham), is a solicitor of this Court. The second defendant Pham Atic Pty Ltd (Pham Atic) is a company registered on 13 June 2001 and a solicitor corporation pursuant to the provisions of the Legal Profession Act 1987 (NSW) – collectively the Pham defendants. The third to sixth defendants are collectively a firm of solicitors known as Dominic David Stamfords (DDS). 3 The claim by the plaintiffs against the Pham defendants arises out of a $70,000 loan from the Bank of Adelaide, which led to a $50,000 investment agreement between Badal Investments and Karl Suleman Enterprises Pty Ltd (KSE) dated 11 September 2000. 4 As against the Pham defendants, the plaintiffs claim in negligence (paragraphs 3 – 31 of the pleadings); a Fair Trading Act 1987 claim against Pham (paragraph 32 of the Statement of Claim), a Trade Practices Act 1974 (Cth) claim against Pham Atic (paragraph 33 – 36 of the pleadings) and breach of fiduciary duty against the Pham defendants (paragraphs 48 – 54 of the Statement of Claim). 5 The plaintiffs' claim against the third to sixth defendants DDS is in negligence, breach of fiduciary duty and contravention of the Fair Trading Act. The allegations in respect of negligence are set out in paragraphs 37 – 46 of the Fourth Further Amended Statement of Claim; the allegations in respect of breach of fiduciary duty are set out in paragraphs 55 – 59 of that pleading, and the allegations in respect of the Fair Trading Act are contained in paragraphs 47 and 47A. 6 The claim against DDS arises out of the discharge of the loan from the Bank of Adelaide, and a refinancing with Perpetual involving a further $50,000 investment with KSE. 7 The sums of money are relatively small compared to the resources devoted to the litigation of the claims. The hearing lasted approximately 16 days with four days of submissions. The evidence in the usual fashion for this kind of case was constituted by many affidavits with substantial annexures and exhibits, by way of evidence-in-chief and lengthy cross-examination. 8 From the point of view of the plaintiffs, the strategic approach is identified as first being two factual bases upon which the plaintiffs must succeed: first, the evidence for the plaintiffs is correct and express representations were made to them by Pham, the solicitor in connection with the first transaction and Ms Jajoo, the solicitor in respect of the second. Secondly, it is contended, that on the defendants' own "scenario" and evidence, the defendants are nonetheless liable. 9 At the outset I should state that the strategic approach for the plaintiffs is flawed by my having quickly formed the view that neither Ibrahim nor Badal was a reliable or credible witness. 10 The nub of the case advanced by Ibrahim is set out in paragraph 15 of her affidavit sworn 17 August 2003. She swears that at the end of the first meeting between her, Badal, Pham and a Mr Varda, Badal asked Pham, "is this investment good?" to which Pham replied, "yes, I am a solicitor. I am involved in the investment. This is a good investment. Read the contract and there is a guarantee." 11 In his affidavit sworn 18 August 2003, Badal says, paragraph 13: "Before we departed the office, I said to Pham words to the effect of: 'Pham, is this a good investment?' Pham responded with words to the effect of: 'Yes. There are solicitors involved in this investment. Read the contract and there is a guarantee.'" 12 As observed in the plaintiffs' summary of evidentiary material, there is no reference in Pham's affidavit to Mr Varda. 13 Mr Varda should have been called by the plaintiffs. That is the Jones v Dunkel ruling I make. He, more probably than not – indeed the evidence is almost overwhelming – was the person who made any representation in the interests of Mr Suleman, whose agent for the gathering together of members of the Assyrian community to invest, he appears to have been. 14 By way of the briefest of examples, Ibrahim was not aided in seeking to have her testimony as a whole accepted as reliable and honest by the elevation of a representation said to have been made by Pham to her in terms that "you will be a millionaire, rich" (T75.25). 15 Even making an allowance for the use of a translator, the emotional overlay associated with these proceedings and the financial self interest, Ibrahim was a poor and obviously unreliable witness. Ibrahim refused to answer direct questions (even through the translator), was unresponsive, forced evidence and made increasingly extravagant claims as exemplified above throughout the course of her cross examination. 16 Initially, Ibrahim said that before the events involving Pham she had not borrowed any money with Badal (with whom she had been residing since widowhood), that she did not provide any assistance to Badal in respect of the loan from the bank (Esanda Finance) for the purchase of the motor vehicle; that she did not sign any loan contract in respect of the motor vehicle in her own name as a borrower. When confronted with the loan document (exhibit 1), Ibrahim agreed that she was described as a borrower in that document, but she could not remember what happened when she signed the April 1999 loan document with Esanda because "It's a long time ago, 99". Notwithstanding that it was only 16 months prior to the events concerning Pham, Ibrahim said in respect of the Esanda loan (exhibit 3) that she could not remember properly. Ibrahim understood that she was signing the loan document with Esanda because she was actually sharing the motor vehicle with Badal; yet said that she did not know what the word "borrower" means now, notwithstanding that in these proceedings the words were being translated to her in her own language (T23.33-.40). 17 Further, before seeing Pham in August 2000, and with the exception of the Esanda loan document, she had made no applications for finance in her own name. Despite initially agreeing that she had made an application on 29 May 2000 to Community First Credit Union for a loan, Ibrahim then said that she had not placed an application. She said that she thought that she was being asked about the loan the subject of these proceedings. Ultimately, she agreed that she did make an application in May 2000 and on 25 May 2000 and also made an application to St George Bank (T26.30-.55) (exhibit 24). 18 There are extraordinary similarities in the precise words used in the affidavits of Ibrahim and Badal (T45.5-52.1). I am satisfied that Badal and Ibrahim could not have had materially identical recollections (that is, the exact same words, punctuation and the like) in relation to a series of conversations which occurred some 3 years prior to the swearing of their affidavits. The identical and incorrect use of the words "(pointing at Badal)" at paragraph 15 of Badal's affidavit and paragraph 20 of Ibrahim's affidavit make it a nonsense to suggest otherwise. I have no confidence in the reliability of the affidavit evidence of the plaintiffs. Inconsistencies in recollections (of the type which have occurred in affidavits in relation to peripheral aspects of the defendants' cases) are to be expected and is a hallmark of honest evidence giving. It is not to be expected that affidavits containing materially identical conversations (precise words, punctuation and the like) by different but financially interdependent witnesses be put before the Court. 19 Ibrahim was uncertain as to the duration of the first meeting with Pham; she gave various time estimates. Notwithstanding there was no reference in her affidavit, she said that Pham said that the whole loans had to be put into one so then he could actually get another loan for her. Notwithstanding being asked direct questions, through a translator, Ibrahim refused to agree that there was nothing in her affidavits concerning the allegation that Pham insisted on a consolidation of the loan. 20 Ibrahim appeared to refuse to be able to agree that in her affidavit, there was no reference to any translation by Mr Varda occurring during the meeting with Pham. The only explanation that Ibrahim could give as to why that matter does not appear in her affidavit was that she did actually say she had a problem in remembering things, but the more "I am asking her the more things are becoming real" (T64.20). After the question was re-read on 2 occasions, Ibrahim did acknowledge that she had said that she had a problem in remembering things (T65.49/64.17). She had a problem remembering things because of an operation she had "on a haemorrhage" in May 1993 which, as she understands it, affects her recollection. Sometimes, that is a reason for her forgetting things. 21 Ibrahim said that Pham did not give her an investment contract at the first meeting, acknowledged that Pham did not say "read the contract" at the first meeting, but immediately changed her evidence when her attention was drawn to paragraph 15 of her affidavit. Ibrahim alleged Pham in effect corroborated Mr Varda's pronouncements as to the investment being good. I did not believe her. 22 Quite unprompted, Ibrahim said that Pham said "You'll be a millionaire, rich", "I will give you my guarantee that this investment will go for 10 years, even more", "This will make you into a millionaire", "I've also done for other people apart from you and they're all very happy", "They're all happy with the amount of income that they're getting in, we'll all be millionaires." (T71.25-.45). Her only explanation as to why these extravagant remarks by Pham do not appear in her affidavit was because she was now being asked. Again I was unpersuaded by her efforts to extricate herself. 23 She said that a lot of people in the Assyrian community were saying "If you want more information, you go to Philip Pham" and they were also "giving him a very good reputation". Then, she said that people were only saying that after the transaction had gone ahead. She then said that people who had already done it said that it was a very good business and that you will succeed in it and Philip Pham is a very good solicitor. Ibrahim alleged that she said these things to Pham, namely, that other people had told her that they had gone with Philip Pham and that he was good and the people which he had done work for were happy. 24 Ibrahim at first did not recall Pham making a phone call in her presence at the meeting on 30 August 2000 (T88.2). She then said the phone call was actually made in a different language, so that is why she did not know if it was in relation to her and Badal or not. She said that he did not make a phone call in front of "us" but he did say "if you just hang on for a minute" and then he went out and came back and said he had made a call. 25 As to the meeting with Mr Nguyen, she said he did not say "Are you guys investing in the trolley businesses?" (T91.54). When shown paragraph 20 of her affidavit, Ibrahim then did say that that bit he was saying and then Sargon said yes then the other bit was if I was a guarantor and I said yes and that's it. These were the words which were being spoken. Ibrahim denied that Mr Nguyen asked her to produce her Medicare card to identify herself (T95.20). However, Mr Nguyen provided a photocopy of it from his file (exhibit 11). 26 Ibrahim alleges that she told Ms Jajoo in July 2001 that "we have done it once before with another solicitor who Jesse George had actually sent us and Jesse George is now sending us to you." (T98.50). 27 The evidence of Ibrahim was materially contradicted by the evidence of each of Pham, Nguyen and Ms Jajoo. Aspects of the evidence of Ibrahim were contradicted by the evidence of Badal. 28 Badal presented somewhat better than Ibrahim. However, I cannot accept his alleged recollection of relevant events as satisfactory or reliable. He was present in Court during the entirety of the evidence given by Ibrahim including her cross-examination. He seemed incapable of answering, even through an interpreter, a simple question of how often or frequently he heard about Mr Suleman after the first time he heard about Mr Suleman. 29 Oddly, he did not require an interpreter regularly after the short adjournment on the first day of his cross-examination. Badal seriously said that, before seeing Mr Varda, he did not understand that the higher the amount of interest usually meant the better return for the person lending the money (T203.10). Badal would not agree that everyone could do with a bit of extra income (T205.52). Badal could not remember when he alleged that Pham told him that he would get $1,350 every 2 weeks (T211.20). 30 He forced evidence and alleged that at the first meeting Pham said (at T216.15): "I am Karl's solicitor and I can do these things and that I have done this business for other people that I have done contracts for other people and be rest assured that I will help do it for you as well and then when your loan does get approved, I will notify you so you can come here so we can start the actual contract." 31 He said that he now remembered things as they were being said and that is why he was telling the Court: because they have come to mind. He said that his recollection has come back to him since swearing the affidavit. 32 Badal was intending to have a "good time" with $1,350 every 2 weeks. Badal seriously said that he did not want to share that "good time" with Ibrahim (T226.55). Badal, I find, had no credibility in his series of answers when he denied he wanted to share the benefit of his money with Ibrahim, notwithstanding she had put up her house and they had lived together for 10-11 years. Badal asserted that Pham was a representative of the Government so he took his word for it (T232.45). Badal ultimately agreed that he did believe that it was important to his case to win his case that he alleged that 2 solicitors told him on separate occasions that to invest with Karl Suleman would be a good or very good investment. 33 Badal swore that, before being cross-examined on 15 July 2004 (on day 4 of the case), no one had ever told him that he had borrowed $70,000 and not $67,000. That is notwithstanding he was in Court throughout Ibrahim's cross-examination, and that Ibrahim did not dispute that they were actually telling her for every document which she was signing that that is for the $70,000 loan and the investment with Karl Suleman. She knew at the time she granted the mortgage that the loan was for $70,000 (T97.42). Badal seriously could only say "maybe" in answer to the question as to whether he had any real doubt that he received the money to pay out the Esanda loan from Pham (T271.6). 34 Badal insisted that no one had ever explained in his presence to Ibrahim the mortgage on the property notwithstanding they went to two sets of solicitors, that is, Mr Nguyen and Ms Jajoo, and notwithstanding that Badal, on both occasions, acknowledged that he knew what it meant to provide security over the property (T255.25). Badal gives his explanation as to the similarity in the precise words in the affidavits of Ibrahim and Badal as either he was not sure why or that it was because he and Ibrahim had spoken about the matters. The evidence of Badal was materially contradicted by the evidence of each of Pham, Nguyen and Ms Jajoo. 35 Mr Cornelius, solicitor, was called as an expert and expressed opinions which he obviously genuinely held. It was somewhat regrettable that he had completely forgotten the factual bases for the views that he had expressed in his report, notwithstanding the report had only been prepared some 6 weeks previously. Mr Cornelius said it would be "very dangerous" for him to try to remember the detail of his evidence when asked to list the commercial relationships referred to in paragraph 17(a) of his Report (T358.30). 36 It is submitted that I could not escape the conclusion that, no matter how genuinely held Mr Cornelius' opinions were, they really only reflected his views as to what he would have done in precisely the same circumstances as the circumstances he believed confronted Pham (c.f. O'Brien v Gillespie (1996) 41 NSWLR 549). 37 This conclusion about Mr Cornelius' opinions is substantially reinforced by the total absence of cross examination of Pham's expert, Mr Bluth, on anything other than acting pursuant to a limited retainer and a solicitor knowing of an unlawful purpose or only suspecting an unlawful purpose. It is to be noted that Mr Bluth (para 6 of his report) expressly had regard to the same paragraphs of Pham's affidavit which Mr Cornelius stated, in the witness box for the first time (T358.30), he had regard to in forming the view that Pham was too close to Mr Suleman to have acted, even on a limited retainer, for the plaintiffs. 38 Philip Pham impressed me as a witness during the course of his intense cross-examination. He responded directly and gave considered answers to the questions asked. 39 He was prepared to make admissions against possible perceived self interest. He acknowledged (albeit over objection from his counsel: c.f. Grey v Australian Motorists & General Insurance Limited [1976] 1 NSWLR 669 at 676 per Glass JA, also see Dovuro Pty Limited v Wilkins (2003) 77 ALJR 1706 at [25], [40] and [71]) that, with the benefit of hindsight, he should have independently checked the licence; he took full responsibility for the Isho & Associates letter (exhibit D – see below); he acknowledged that the letter dated 21 March 2001 to Mr Suleman (page 84 of exhibit 8), confirming in writing that Mr Suleman had previously advised him that a licence had been obtained, was to protect himself; and he acknowledged that, of course, he wanted to keep Mr Suleman's work. 40 Mr Pham was accused of deliberately lying to the Court. He was accused of giving an explanation that was just a fabrication on his part (T530.35). He was asked whether he was making up his evidence. The Court was told it was going to be put to Pham that in September 2001 in respect of PAL (an investment/mortgage entity), he was a party to drawing up loan agreements that were "deliberately a fiction to avoid the managed [investments] provision" and "that he deliberately was involved in this sort of activity" (T476.50-.60). 41 Notwithstanding that the "deliberate fiction" allegation had to be resiled from by the plaintiffs, the cross-examination persisted. The cross examination was allowed on credit only (T478.50) and on the basis of reliability. 42 Neither Mr Pham's credit nor reliability was adversely affected by the range of matters concerning PAL, its purpose, the management fee, and the like. 43 Each of Dr Robinson, Mr Nguyen and Ms Locke materially corroborated Pham's evidence. 44 The following matters were the subject of particular and close attention during cross-examination. The letter dated 29 March 2000 to Wilkinson Throsby & Edwards in which it was stated, "On the advice we have received, the transaction is not a prescribed transaction pursuant to Chapter 5 of the Corporations Act" (T518.10). The transaction was for $1 million. Accordingly, on any view, it was not a prescribed transaction for the purposes of the managed investment provisions (see the Appendix to these reasons). Pham said he knew that and that is why he wrote in those terms in the letter of 29 March 2000. This displayed an appreciation and adequate knowledge by Pham of the relevant management investment provisions. 45 I turn to the response to the Isho & Associates letter dated 15 June 2000 (exhibit D). The letter stated "On our instructions the company is not a Management Investment Scheme". Pham's evidence was that he did not believe that the particular transaction was caught under the managed investment scheme provisions at the time because of his belief that there were, at the time, less than 20 investors in the scheme. The factual basis of that belief was not challenged. It is true that, in mid 2000, it now appears that Mr Suleman started to distribute investment contracts from his own office, and it may have been difficult to ascertain precisely the number of members from time to time. However, Pham's belief is consistent with the evidence that, by 11 December 2000, only approximately 30 investment contracts had been entered into. It was not shown that the letter was signed by Pham (although to his credit he "took responsibility" for it: T524.10) or was actually sent. In any event, the explanation that Pham would not have looked at the letter carefully after it was typed up by Ms Locke (T525.27) and the possible/probable mistyping by Ms Locke of what had been told to her by Pham (T525.5) was credible. Pham had some familiarity with the MIS provisions. There is no such thing as a "management investment scheme". Further, a company cannot, of itself, be a managed investment scheme. A "scheme" is, by definition, not a company. His evidence is corroborated by Ms Locke (para 11-12 of Locke 2) and is consistent with Pham's answer given in the liquidator's examination that "I assume I must have" given instructions to Ms Locke about the letter (T526.52). This is especially so in circumstances where the first time after 20 July 2000 when Pham saw the letter was when he was shown it in the witness box during the liquidator's examination (T622.145) (exhibit AG or AH). 46 Mr Nguyen, to whom the plaintiffs were sent by Pham, presented as a knowledgeable and pragmatic practitioner. Despite Ibrahim's denial, he took proper identification from the plaintiffs. His firm, Teakle Ormsly George, had its own "Acknowledgment" which he completed and had Ibrahim sign. He obviously appreciated the importance of his task. He quickly acknowledged that his recollection about insurance, in the context of a home unit, was incorrect and would not have been said by him. He responded candidly to the lengthy questions concerning the quantification of the disbursements of $77 in his memorandum of fees dated 31 August 2000 to the plaintiffs and the $1 a page photocopy rate (T648.15). 47 His version of events is inherently credible and, significantly, is corroborated by his contemporaneous file note dated 31 August 2000 (page 1 of exhibit 10) which states, inter alia: "She owns the above unit, now obtaining $70,000 loan through Adelaide Bank with Sargon Badal to do business. Terms: 25 years. Repayments: $523 p.c.m I've gone through the contract (loan) and explained to her why it is required for her to obtain independent legal advice and there are risk factors involved. She may lose the property if the business fails. Could not be able to make loan payment to bank – client said okay." 48 Mr Nguyen swears (paragraph 12 of his affidavit) that a materially identical conversation to that effect took place. It was never put in cross-examination to Mr Nguyen that the materially identical conversation (paragraph 12) did not take place. More importantly, it was never put to Mr Nguyen that the file note was not, in fact, created on 31 August 2000 or that the file note was not accurate in its contents as to what was said at the meeting. This is notwithstanding other aspects of the file note were read out to Mr Nguyen during cross-examination (T633) (page 1 of exhibit 10). 49 The late evidence from Mr Isaac (Day 16: T989 to 992) as to his alleged telephone conversation with Mr Nguyen, about which Mr Nguyen could not recall (T645.48), is of no significance and I ignore it. 50 While there are some immaterial inconsistencies between the evidence of Pham and Dr Robinson and (irrelevant to the case against the Pham defendants) inconsistencies between the evidence of Dr Robinson and Ms David, Dr Robinson presented well. The substance of her material evidence, which is corroborative of the evidence of Pham, should be accepted by the Court. 51 Ms Locke is not a party to the proceedings. She presented as an honest witness giving evidence of her recollection as best she could. She had no involvement with the plaintiffs; her evidence materially corroborates the evidence of Pham. Pham's office was not Mr Suleman's office. She asked Mr Suleman for a copy of the licence. She was told by Mr Suleman on a number of occasions that it had been obtained (including her file note of 7 February 2001: page 1 of exhibit 13) (paras 15 to 23 of Locke 1). Pham was told by Dr Robinson that "You can't go behind your client's instructions. You cannot prove he doesn't have a licence. You have to take their instructions on good faith" and first became aware that there was no licence on or around 7 November 2001. Ms Locke was present on 15 or more occasions when Pham said to investors "I cannot give you advice concerning this investment as I am Karl's solicitor. You should go and get your own legal or accounting advice concerning this investment". 52 Pham told her on a number of occasions "Debbie, because we act for Karl, we can never comment on Karl's business to these investors. If they ask you about the investment, you must tell them that we cannot comment. You should tell them to get their own legal and accounting advice in relation to the investment". 53 Other subjects dealt with in the evidence of Ms Locke were: the setting up of PAL; the operation of PAL; the retention of the 1.5% to 2% PAL management fee and, after PAL ceased operating, the distribution of the management fees which had been earned and retained by PAL (paras 2 to 10 of Ms Locke's second affidavit sworn 27 July 2004); and the possible/probable mistyping by Ms Locke of what had been told to her by Pham in relation to a response to the Isho & Associates letter dated 15 June 2000 (exhibit D) (paras 11 to 12 of Ms Locke's second affidavit). Ms Locke was an impressive witness. 54 Mr Bluth, solicitor, was an obviously qualified expert. He was both thoughtful and to the point. 55 As submitted above, it is unfortunate that there was no proper cross examination of Mr Bluth in relation to the factual bases upon which both he and Mr Cornelius expressed their differing views: para 6 of Bluth and T358.30 for Cornelius (other than the limited issue about which he was cross examined, namely, knowledge or suspicion of an unregistered investment scheme). In the circumstances, I accept the substance of his evidence where it conflicts with that of Mr Cornelius and find that the plaintiffs have failed to discharge their onus on the issue of the fact of any relevant common practice. 56 Ms Jajoo of DDS was also an impressive witness; while she is married to a defendant, she is a solicitor of this Court and is not a party to the proceedings. Her evidence (aided by contemporaneous notes) further damaged the general credibility and reliability of each of the plaintiffs, the content of her evidence as to the statements made to Ibrahim at the meeting in 2 July 2001 (particularly paragraphs 35, 37 and 48 of her affidavit) is material to the case against the Pham defendants. 57 In her affidavit sworn 7 November 2003, Ms Jajoo swears as follows in relation to the meeting she had with the plaintiffs on 2 July 2001. After she explained the loan contract documentation including the need to see a solicitor and that you're signing freely and voluntarily, Ibrahim says: "They really make you sign in blood, don't they? But don't worry, this is not the first time we've taken out a loan. All the banks are the same. They all have the same requirements in one form or another"; that Ibrahim said: "My sweetheart, there is no his or mine. We've always borrowed against this property. We've been together for a long time. That's not a problem. This is not our first time. All of this has been explained to me before. Just tell me, what is the name of our lender now?" (para 48). Ibrahim further said: "We know it's a big risk" and, after being told to see an independent lawyer and financial adviser, says: "Sabrina, you don't know Karl as well as I do. God give him everything he desires [which was acknowledged by Badal to be a saying or expression used in the Assyrian community (T256.5)]. We love him. We are very close to him. I have even asked him for extra money before and he's given it to me without any questions. Don't worry about us and Karl – we've been in business with Karl before. This is not our first time investing with him. We've made a lot of money and if it wasn't for all the fun we've been having because of this silly man's influence [Ibrahim then pointed to Badal], we would have lots of money now. Sabrina, even if we're gambling, we don't care." This testimony rang true. Overview and Conclusions as to Plaintiffs and First and Second Defendants 58 The plaintiffs had a degree of relevant prior commercial dealings and experience. Before seeing Pham in August 2000, Ibrahim had executed the Esanda loan document as a borrower (exhibit 1) (T25.50) and had the vehicle registered in her name (T124.50). Despite initially agreeing that she had made an application on 29 May 2000 to Community First Credit Union for a loan (T25.55), Ibrahim then said that she had not placed an application. She said that she thought that she was being asked about the loan the subject of these proceedings (T26.10-.20). Ultimately, she agreed that she did make an application in May 2000 and on 25 May 2000 also made an application to St George Bank (T26.30-.55). Ibrahim also made applications for and obtained finance from Bing Lee Finance and AGC Credit in 1997 (T27.15-.30) (also exhibit 24). On 3 September 2000, a week before the investment contract was entered into on 11 September 2000, Ibrahim entered into a personal guarantee in favour of St George (exhibit 27). Badal agreed that, apart from this loan and the Esanda loan, he had applied for loans with AGC, Bing Lee and Community First Credit Union (T229.50). 59 In respect of the 1986 workers compensation proceedings against Micos Aluminium, Ibrahim was represented by solicitors and received $22,000 or $25,000. She was represented by Suzy David (T27.45-58.57). In respect of 1991 District Court proceedings, Ibrahim was represented by Stephen Burke of Phillip Goldman & Co and obtained $40,000 (being in addition to the $100,000 she had received in 1988) (T29.12-.55). Ibrahim had a solicitor for the purchase of her home unit in 1988, a Mr Lily (T30.17). 60 While employed with Plastune Projects, Badal was a AMWU union representative and, in his own words, used to have meetings with the workers and the management and used to defend their rights with the management (T183.2). Badal negotiated for and on behalf of union members with the management in relation to salary and working conditions. He was a member of the consolidated committee in respect of enterprise bargaining agreements and was involved, perhaps with others, in formulating how the conditions should be improved. At least with management, all this was done in the English language over a number of years. Badal attended Industrial Relations Commission proceedings involving his employer and the union and did so as a union delegate (T183). In mid 2000, Badal told Ibrahim that his company was closing down and that he was worried about ending up unemployed (T251.15). One of the reasons he entered into the loan was to keep an income coming in (T251.25). Badal's understanding and command of English, I find, was better than he would have the Court believe. 61 The plaintiffs were members of the Assyrian community who believed in and were proud of Karl Suleman. Assyrians are people of Christian faith originally from Iraq but also Iran, Syria and Turkey. The community has come to Australia since the 1970s. The community is largely in New South Wales and predominantly around the Fairfield area of the city of Sydney. The community has its own churches and radio and newspaper in the Assyrian language. The community is tight-knit, loyal and supportive of one another. The Assyrian community is proud of any member of the community who achieves in the wider Australian community (T30.25-31.10). Most of Ibrahim's friends and acquaintances are within the Assyrian community (T30.54). 62 Ibrahim first became aware of Karl Suleman in around 2000, understood that he was a member of the Assyrian community (T31.20), and heard that he was doing some sort of business, some sort of investment (T32.1). The Assyrians were actually talking very highly about Mr Suleman; not just Ibrahim's circle of friends and acquaintances but the whole Assyrian community said that he is "pretty good" and that he was "to go with the business very well" (T32.15). 63 Ibrahim's view was that the whole of the Assyrian community had actually invested (T32.25; 33.50). She believed that everyone in the Assyrian community was speaking very highly of Karl Suleman at this time (T98.10). Some people she had spoken with herself had themselves invested with Karl Suleman (T112.45). Before her first investment in 2000, Ibrahim heard that some people had invested $500,000, $1 million (T113.35). Numerous members of the community had invested significant sums of money with Suleman and that many people who were investing with Karl Suleman borrowed money to do so (T113.45). 64 Badal could not be more precise as to when he first heard about Karl Suleman other than it was "in or about 2000" (T194.55). He had heard that Mr Suleman was doing well (T155.42) and also heard people at the shopping centre speaking about Mr Suleman (T197.17). He had heard that a lot of people had invested with Mr Suleman and were succeeding in their lives (T197.25). Before Badal saw Pham, he heard about Mr Suleman at work, at the shopping centre and on the radio (T199.1). 65 I am satisfied that before seeing Pham, Badal and Ibrahim had already decided to invest $50,000 with Karl Suleman, believed that they would be receiving a return of $1,350 every two weeks and had decided that Ibrahim would put up her unit to obtain the necessary loan to invest. She had been told people were investing figures like $100,000 and $250,000 (T32.35). This was all before she went to see Pham (T32.40). She had also been told that investors were getting from Mr Suleman $1,000, $10,000 over a month (T32.47). She heard radio advertisements in the Assyrian language (T34.20) advertising loan applications with a contact number and the person who should be approached and an address. 66 Ibrahim first heard Mr Suleman on the radio before she saw Pham in August 2000 (T34.45). The radio advertisement spoke of how much to invest, both loan and investment (T34.55). She rang the telephone number she heard on the radio the next day. She spoke to one lady and then to David Varda during the same telephone call (T35.5-.25). When she rang Mr Varda she says that she was not interested in a loan or investment for herself but she "just wanted to be a guarantor for Sargon" (T36.25). She volunteered that she did not want to borrow the money herself because, first, she didn't have enough money and, second, she was on a pension (T36.28). One of the reasons she did not want to borrow the money was that she was on the pension "because I couldn't have received an income." Notwithstanding that she tried to deny that she did not even think about it (37.10), these were her own words (T36.47). While she denied it to be so, I find that this is why Ibrahim only wanted to be a borrower and not an investor, that is to protect her pension. 67 During the telephone conversation between Ibrahim and Mr Varda, Mr Varda said that the amount of return actually depends on how much was invested and that "we have done it for so many people that's why I know about everything". He gave examples of investments: if you invest $50,000 how much return you get; if you invest $100,000, how much return you get. Mr Varda said "On a $50,000, the return would be $1,350 every 2 weeks" (T40.50). Ibrahim believed that it was a good investment (T70.35). She said that she did not know what she understood by the expression a "good return" but that people were saying it is actually a very good income (T86.20). This was quite disingenuous in my view. She was aware that the return on investments actually depended on how much was invested (T118.42) and knew that people who borrow money are obliged to pay it back (T120.50). 68 Badal clearly did not have $50,000 to invest and in order for such an investment to be made, there would have to be a borrowing of $50,000 and it would be necessary for Ibrahim to put up her unit to support the borrowing (T115.50). She knew it was a necessity (T115.55). She said that she did know or understand at the time the people were mortgaging their houses in order to borrow money to invest with Karl Suleman (T140.42), a proposition I found difficult to believe. 69 Badal had heard the Assyrian language advertisement for the Karl Suleman investment on the radio (T199.34) and said Ibrahim telephoned the telephone number (T199.45). She told Badal after the telephone call that David Varda had explained everything (T200.1). When Badal went to see Varda, it was his idea to invest $50,000 (T200.16/.35). Badal had heard about other people investing $50,000, $100,000, $150,000, $200,000, $250,000, $300,000, $400,000, $450,000, $500,000, $1 million (T201.10) with Karl Suleman (T201.40). He had spoken to 4 or 5 people about the investment (T201.46), and had in his mind that he would get around $1,000 a week or something like that (T204.36). He had said to Ibrahim "I heard from my work that there's a person under the name Karl Suleman is doing such investments and I wish I had some money to invest with him." Ibrahim said "I will help you get the $50,000". She said "We'll see, we'll find out, we will make enquiry, see if we can get some money, $50,000 we can invest" (T204.30). Before seeing Mr Varda, Badal had said to Ibrahim "If I want to invest I need that money. I need someone to help me to have a house to help me to get that loan." (T207.10). Badal said that Ibrahim had said "We go see and talk first, see if we can get some loan and see what we can do and I will help you" to borrow some money (T203.9). 70 Badal was the one who raised with Mr Varda the fact that he didn't have any money but that Rima had a house. He said to Mr Varda "I want to invest with Karl Suleman but I don't have any money but Rima has a house. We need to obtain finance, I am just here to make enquiries" (T206.40). Badal said to Ibrahim "I want you to be a guarantor for me so I can get the $50,000 loan and to put up your house" (T208.25). He knew it was best to have someone as a guarantor who owns a house because if you cannot repay the money the bank can take the house (T207.26). He also knew that if something happened to him or the investment and he could not pay, the guarantor would have to pay; that, he knew, was the whole idea of a guarantor (T209.10). When Badal went to see Mr Varda, he believed it was necessary for Ibrahim to be a guarantor and to put up her house if she was going to invest (T209.50). Other members of the Assyrian community had put up their house to borrow money on (T210.15). 71 Before attending Pham's office, Mr Varda had already told Ibrahim that it was a good investment (T71.17). Mr Varda told her that she should invest, that it was a very good business, that she would not be sorry and that she would get a good amount of income from it (T35.35). Ibrahim believed Mr Varda (T35.40). When Ibrahim went into Pham's office she believed, because of what Mr Varda had told her outside, there would be a return of $1,350 per fortnight (T44.45). 72 Wherever Ibrahim had borrowed to share with Badal, she thought it proper to sign the document together (T22.20). She thought she was getting the benefit of something together and thought it proper that both Badal and herself sign the borrowing document (T22.25). 73 Ibrahim knew, I find, that she was to be a guarantor (T37.42). Mr Varda had told her that she could be a guarantor both on the phone and when she went to see him (T38.10). Outside Pham's office, Mr Varda told Ibrahim about the business, how good it was and how people were making this kind of investment and this kind of return (T42.20). At the meeting outside Pham's office, Mr Varda told Ibrahim that in certain circumstances what had happened was that people come forward where they did not have equity but could actually have a guarantor: this, she said, was the first time she learnt about the word "guarantor" (T43.40). Ibrahim said she knew that if you had house, you could actually proceed (T43.50). 74 I find that before attending Pham's office for the first time, Ibrahim believed from what she had heard in the Assyrian community, from what she had heard on the radio, from what she had heard from David Varda and the telephone call (with David Varda) that it was a good investment to invest with Karl Suleman (T70.47). 75 The plaintiffs, I am satisfied, only ever went to see Pham for his assistance in raising finance for the investment which they had already decided to make. As Ibrahim understood it, that was the reason Badal and she went to Pham (T52.55), and Pham was told this. Pham said he would try to get Ibrahim the finance, saying he would need to talk to her to find out whether she would qualify for finance (T58.15). Ibrahim said that Pham said that "I can assist you in obtaining finance" (T60.45). She admitted that she told Pham that she had a unit that she had paid off and that Pham said that she could probably borrow money from the bank using the unit as security (T58.40). Notwithstanding that there was nothing in her affidavit about the subject, Ibrahim said that Pham spoke to her of what amounted to consolidation of loans (T59.40) – that is for the car and the unit. 76 She acknowledged that Pham told her that he was acting for Karl Suleman (T60.45). When it was initially put to her that Pham said to her that he could not act for her in providing independent advice about the mortgage or your investment with Karl, Ibrahim answered "yes, no" (T60.52). While there is an ambiguity, she appeared initially to agree that Pham said that he could not act in providing independent advice about the mortgage and her investment with Karl (T61.10). She contended for the first time during the course of her evidence that David Varda was actually telling them by translating what Pham was saying (T62.30). She did say that Mr Varda was translating everything Pham was saying in essence (T64.40), and that Badal did not need an interpreter, his English being a bit better than her own; but it is not that good with things like this (T65.1). 77 Ibrahim said that she told Mr Varda to ask Pham how much the cost would be (T66.35). She asked Varda to ask about the cost to arrange the loan, for the whole cost of him working for them (T66.50). She agreed that Pham said to her "To arrange the loan I will charge nothing because the bank pays me a commission of about $350." He actually said that (T66.55). She acknowledged that Pham said that in addition to the bank commission, she will have to pay the bank application fee plus disbursements (T67.15). She acknowledged that Pham said "I will charge you for the time I spend setting up the loan and this involves liaising with the bank, signing the mortgage documents, attending on settlement and all that sort of thing." (T67.30). She acknowledged that Pham said something like "This will be around $500 plus disbursements" and that she said "Alright" (T67.37). 78 She further acknowledged that Pham gave her a list of documents to bring in (T67.45), but denied that she was given a blank loan application form (T67.55). She said that Pham did not give her an investment contract at the first meeting, acknowledged that Pham didn't say "read the contract" at the first meeting but immediately changed her evidence when her attention was drawn to paragraph 15 (set out above) of her affidavit (T70.15). 79 At the first meeting, Ibrahim said she did not know what type of documents she was being asked to sign, but Varda did tell her to sign these documents which meant that she was actually giving Pham the authority to proceed with the loan (T80.55). 80 Ibrahim said that Pham said to David Varda, "have you notified them, they need to go to an accountant?" (T82.15). She ultimately agreed that Pham said nothing to her, nor did Pham say anything to her to the effect that the money she would get would cost her a lot in tax and she would need to go to an accountant in order to set up a company to minimise her tax. She said that it was David Varda who told them that, but then said that when they went in, Pham told David "have you notified them about the accountant?" He reminded David "tell them they need to have an accountant." (T82.20-.37). Finally, Ibrahim acknowledged that the conversation did happen between herself, David and Pham but that Pham did not know that David had already told them (T83.30-.45). Ibrahim agreed that if Pham had told her, in effect, to spend money to obtain independent legal advice, she would have done so (T87.32). 81 Ibrahim acknowledged that she was told that she would have to put her house up in order to obtain the loan (T95.35) and that she was told that she would have to hand over her title deeds (T95.50). She said that Pham told her he needed the title deed to actually prove that she did have a unit and the unit is in her name (T95.55); this is implausible and obviously incorrect. 82 After first denying that she did not know that the unit was valuable at the time, she did acknowledge that if she had wanted to sell it, she would "receive money". As at September 2000, she believed that her property was worth more than $93,000 (T96.25). She said that because Sargon's income was too low, he would not be able to obtain a loan and thus she would have to put her house up as a guarantor (T96.30). She knew that her help was by providing her property (T96.40). Having decided on the course (of helping with the investment by putting up her unit as security), Ibrahim went with Badal to the office (Pham's), which he understood to be that of Karl Suleman (but was not) (T119.20). At this stage, she had decided that if the loan could be obtained, then she would go ahead with the investment (T115.25). 83 Ibrahim agreed that she listened closely to the conversation involving Varda, Pham and Badal because it was a matter of some importance to her (T121.42). She listened to what was said in English (T122.5). Badal agreed that Ibrahim did more talking at the meeting than he. She spoke in Assyrian and David Varda explained things to Pham (T220.50). She agreed that she asked Mr Varda to explain to her what valuation meant (T125.5), however, denied that she knew the bank was interested in the unit because it was to be taken as security for the bank (T126.17). Ibrahim, in my view disingenuously, said that she did not know why the bank was so interested in her unit that it would send someone out to measure up every room (T126.22). Badal acknowledged that he understood that someone was coming out to value the unit (T230.20) and said that the bank may be interested in the unit cost because if he didn't pay the loan they might take the unit (T231.1). Badal, importantly, said that Ibrahim said to him "The bank's come to value the unit". (T231.25). 84 Badal said that Mr Varda said "Philip can you help these people to obtain finance to invest with Karl Suleman?" (T213.15), because that was the reason for seeing Pham (T213.25). Badal did not think that Pham was going to lend him the money himself (T213.32), and acknowledged that Pham said that he acted for Karl Suleman as his solicitor and Badal assumed that meant for Karl's businesses as well as for Mr Suleman personally (T215.55-216.1). Badal agreed that Pham told him that he should speak to an accountant (T217.16). 85 Badal regarded the sum of $1,350 every 2 weeks as a good return on $50,000 investment (T226.40). He said that at the first meeting and not the last meeting (as per para 16 of his affidavit), Pham said "This is a very good business which you will be entering into" and "it's a very good investment" and "you'll be very happy with it" (T230.15). Badal was obliged to acknowledge that it was Mr Varda who said to him it was a good investment (in the Assyrian language) (T236.24). Badal believes Pham said these words because Mr Varda translated them into the Assyrian language (T236.30). Ibrahim said that David Varda explained the investment contract to them and said "You were going to get a guarantee for 10 years." (T70.20). Pham said that to the best of his recollection, there was no translation (T566.31). There could not have been any translation in his presence (T566.35). 86 I myself have no doubt that Mr Varda was the source of the promotional material. 87 While Pham did not have any file notes, he did have the benefit of the documents in relation to the loan application of Ibrahim and Badal (T567.40). Credibly, Pham said that there would not have been any conversation about Ibrahim being a guarantor because that was not how the finance application works (T568.10). At the time of the transaction, Pham did not know about the experience of the plaintiffs in borrowing money (apart from the Esanda loan) and did not learn about their experience until the hearing of these proceedings (T598.30). Pham was adamant that it was never said that Sargon wanted to invest in the trolley business but he didn't have any money, that Rima has owned a house but she will help in getting the money to invest (T557.10). Pham's recollection was that both of them wanted to invest with Karl and they came in as a couple, they were introduced to him as a couple. There was no mention that the investor was just Badal (T557.40). 88 While it is true that Pham has no file note of the meeting with Badal and Ibrahim in late July/early August 2000, I am mindful of the statement by Bryson J in Sunpost Pty Limited v Alsons Pty Limited (unreported, NSW SC, 8 September 1994 at page 3). When dealing with professional negligence proceedings against a legal practitioner, a Mr Paul, his Honour said: "There were some notes and records in Mr Paul's file which establish, very briefly, the dates and some circumstances of relevant events, but he did not have file notes which recorded the relevant conversations, instructions and advice. He was much criticised for this in counsel's submissions, but I do not regard it as adverse to his credit; obviously there would have been advantages if he had made such notes, and if he had they would have been admissible as business records of the firm, but the fact that he did not make any does not seem to me to tend against his credit. There is no suggestion that he suppressed any notes or deliberately invented anything. The probabilities also appear to me to support Mr Paul's evidence at points where he and Mr Patterson [the client] are in conflict." I adopt and apply his Honour's remarks here. 89 When asked how much of the conversation with Pham on the first occasion was translated by Mr Varda from English into Assyrian, Ibrahim said from the time that she, Sargon and Mr Varda "came out of Philip Pham's office, during that whole time once we were leaving, David was explaining these things to us." (T55.17). She thought Mr Suleman would use the money how he thought best in any business provided she and Mr Sargon got $1,350 every 2 weeks (T75.50). She would not have minded what was going to happen with the money provided she got her $1,350 every 2 weeks (T76.5). 90 Ibrahim acknowledged that there were a few documents which actually came to her home address but what type of documents they were, she did not know (T79.45). She went to see an accountant (T62.42). She acknowledged that Pham did not give her the details of Mr El Gamal, the accountant. The card was given by David Varda (T81.45). Between the first and last times she saw Pham, Ibrahim went to see Mr El Gamal. When she met with Mr El Gamal she decided on the company name "Rima Investments Pty Limited" (T104.32). Badal and Ibrahim had a discussion with Mr El Gamal about the proposed investment when they first saw him at his office (T290.10). 91 After gathering together the information needed to make a loan application, the plaintiffs returned to Pham and completed the application dated 9 August 2000 (pages 93 to 95 of exhibit 8 and paras 135-136 of Pham's first affidavit, 12 November 2003). At this second meeting on 9 August 2000, Ibrahim wanted to proceed with the loan (T73.5). Pham's explanation as to why he did not say, at the second meeting, that the loan had been approved was because he had not even filed the application for finance at that stage (page 93 of exhibit 8, loan application form): a compelling reason (T577.45). On 9 August 2000, Pham made the application for finance on behalf of the plaintiffs (page 96 of exhibit 8). 92 After the plaintiffs received the loan documents from Phillips Fox at their home on 29 August 2000 (page 103 of exhibit 8), they attended on Pham on 30 August 2000. Ibrahim agreed that at the third visit to Pham, she said words to the effect "I have spoken to a lot of people in the community and we believe in Karl" (T86.10). Ibrahim alleges that all Pham said to her was "Here are all the legal documents. Take these to Mr Nguyen and just sign them in front of him" and that "He has to sign them all as well" (T62.12). She denied that Pham said that "You'll find that this is money well spent if you go and seek independent legal advice. Please go seek advice." (T87.31). Ibrahim denied Pham said "I found a solicitor, Mr Nguyen who is prepared to provide you with independent advice". (T89.15). Badal knew what legal advice meant: "It mean I see another solicitor to give me advice and explain the documents" (T340.30; see also Pham's affidavit of 12 November 2003, paras 139 – 141). 93 What Pham in fact witnessed was Ibrahim's execution of the mortgage before they attended upon Mr Nguyen (page 107 of exhibit 8), and this was something noted in Mr Nguyen's file note (page 1.8 of exhibit 10). However, Mr Cornelius agreed that, in relation to the execution of the mortgage, the issue is advising not so much as mere physical signing (T383.20). 94 Ibrahim then went with the documents to Mr Nguyen on 31 August 2000 in the belief that Mr Nguyen would explain them to her (T61.48). Badal ultimately agreed that it "could be" that the documents being taken to Mr Nguyen were to get the loan from the bank (T241.40). He knew it was the investment contract with Karl (T241.55). Ibrahim alleged that the meeting with Mr Nguyen took about 10 minutes (T89.50); she ultimately agreed, however, that the conversation with Mr Nguyen occurred in the English language (T90.30). Badal agreed with this (T292.35). Ibrahim alleged that she said to Mr Nguyen "papers for you to have a look at and to actually sign them". (T90.42). That is all she can recall about the conversation with Mr Nguyen apart from when he actually spoke to Philip Pham about money (T90.50). Ibrahim said that Mr Nguyen was turning the pages (of the documentation) having a look at them, signing them and asking for us to take them back (T93.15). Ibrahim denied that Mr Nguyen asked her to produce her Medicare card to identify herself (T95.20). However, Mr Nguyen produced a photocopy of it from his file (exhibit 11). 95 Ibrahim said that she did not tell Mr Nguyen that she wanted to get a $70,000 loan. Mr Nguyen did not ask her whether she was going to invest in the trolley business (T92.15). She said that no one in the entire meeting said anything about $70,000 (T91.50). When shown paragraph 20 of her affidavit, Ibrahim then said that that he did ask her about the trolley business and that "Sargon said yes then the other bit was if I was a guarantor and I said yes and that's it". These were the words which were being spoken (T92.25). This equivocation did assist Mrs Ibrahim. 96 Ibrahim denied that she later got a bill for $250 from Mr Nguyen (T92.55). When shown Mr Nguyen's invoice (page 246 of exhibit 29) Ibrahim acknowledged that paperwork did arrive but she did not know which paperwork (T100.40). Badal also acknowledged its receipt (page 246) on or shortly after 31 August 2000 (T258.5). 97 Badal agreed that he knew at the time he saw Mr Nguyen that you may lose your property if the business failed and you are not able to make the repayments to the Bank (T247.50). Badal agreed it would not have been a surprise if those words had been said (T248.10). Badal knew that there was a risk of Ibrahim losing her property the subject of the transaction with the Bank; he knew that at September of 2000. He knew that the business failing was a possibility: that is of Karl Suleman's business failing (T248.20). Badal believed that if he was still working he would be able to make the repayments if Mr Suleman's business collapsed (T250.35). 98 I am satisfied that there was no meeting between Pham and the plaintiffs after 30 August 2000. Ibrahim insisted that she met with Pham on the last occasion (T101.20), that is, after 30 August 2000. Pham said he definitely did not have a conversation with the plaintiffs after the meeting on 30 August 2000 (T589.43). In fact, Badal confirms that there were only 3 meetings with Pham (T211.27;212.15). As set out above, those 3 meetings were late July/early August 2000 (inter alia, give list of documents to get together), 9 August 2000 (when loan finance application was signed and dated) and 30 August 2000 (when the plaintiffs were sent to Mr Nguyen). 99 Ibrahim was asked to explain how the investment agreement dated 11 September 2000 had the name of a company that did not come into existence until 2 weeks later (T105.15). She said there was a document signed on or about 11 September which was subsequently destroyed and replaced by a document also dated 11 September with Badal Investments as the investor (T101.55). She said that Mr Varda had said that the investment agreement was a replacement contract (T106.17). Badal gives his explanation for the fact that it wasn't until 19 September 2000 that there was a resolution in the records of Almet Roofing Pty Limited to change its name to Badal Investments Pty Limited (T265.15) Badal doesn't remember the date he signed the agreement (the original of which is Exhibit 3) (T268.37). 100 Ibrahim said that she didn't care what Badal did with the money (T45.2). In fact she denied that she had "fun, a good time" with the income received from Karl Suleman (T77.30). She acknowledged that she had told Mrs Jajoo that it was their second time investing with Karl Suleman but denied saying "we've made lots of money". She did not dispute that after 11 September 2000 she was aware that Badal and subsequently Badal Investments were receiving $1,350 every two weeks (T107.5). She said that they did not speak about the monies (T77.45). I disbelieve her. 101 At the meeting in late July/early August 2000, I am quite satisfied that Pham made it a condition of his assisting the plaintiffs in obtaining finance that he could not act for them in terms of providing independent legal advice about the mortgage or investment with Karl. He strongly recommended that they seek independent legal advice in relation to the mortgage and the investment before entering into any agreements (para 132 of his affidavit referred to above). 102 On 30 August 2000, Pham arranged for independent legal advice from Mr Nguyen. There is no suggestion that Mr Nguyen was not independent. In Collier v Morlend Finance Corporation (Victoria) Pty Limited (1989) 6 BPR 13,337, Meagher JA said (at 13,341): "There is no principle in law which debars a solicitor from being independent simply because he was chosen by the stronger party to the transactions in question. Nor can it be suggested that if a solicitor is nominated by one party to a transaction to give independent advice to the other party he will have regard to his nominator's interest at the expense of his nominee's interest." 103 The plaintiffs had all the loan and mortgage documentation. Even on their case (para 15 of Ibrahim/para 13 of Badal), they had a copy of the investment contract. It had been given to them and explained to them by Mr Varda (T70.20-.30). Pham, I find, told the plaintiffs to seek advice about the loan and investment with Karl, that is, "everything" (T586.55). The plaintiffs were to talk about whatever they wished with their independent legal adviser. Pham believed that Mr Nguyen could give advice about the investment to the plaintiffs; he expected Mr Nguyen to do his job and that he could ask the plaintiffs about the investment (T588.10). To the best of Pham's recollection, he had sent clients to Mr Nguyen once, before the plaintiffs, for independent advice. However, that does not necessarily mean that Mr Nguyen knew of or recalled that matter (T620.15). 104 As at August/September 2000, Pham was a competent solicitor and had an honest and reasonable belief that any Suleman scheme was relevantly registered. In this respect I have regard to the following matters. He had been working for Mr Suleman since late August/early September 1998 (para 19 of Pham's affidavit of 12 November 2003). He had prepared various forms of commercial documentation relevant to these proceedings based on Law Society precedents (T433.50). 105 Further, he had recognised the need to seek the advice of appropriately competent counsel and had consulted Dr Robinson in February 2000 because Mr Suleman told him of his intention that "I have a lot of people who want to give me money who want to invest in the business and I want you to advise me how to best structure my business." Pham was not sure how he could do it so he told Mr Suleman that he needed counsel's advice and retained Dr Robinson (T499.50). Pham conferred with her (para 53 of Pham's affidavit), and he sought and obtained on 27 February 2000 her written advice (page 128 of exhibit 8). 106 Before 15 March 2000, he provided the written advice to his client, Mr Suleman, and went through it with him (para 59 of Pham's affidavit). He had also, prior to 15 March 2000, arranged for and attended a conference with counsel and Mr Suleman (para 60 of Pham's affidavit). He retained counsel to advise upon and settle relevant contract documentation (page 21 of exhibit 8), and had engrossed contract documentation in accordance with the version settled by counsel (para 64 of Pham's affidavit). 107 He approached ASIC on 21 March 2000 (para 67 of Pham's affidavit) and was informed they did not provide advisory opinions, but was told "Your client's scheme does not seem to be within the definition of a prescribed transaction…." (emphasis added) (page 41 of exhibit 8). Again he conferred with counsel (page 42 of exhibit 8 and para 71 of Pham's affidavit) and sought his client's instructions. 108 In late March 2000, Pham told Mr Suleman about the ASIC contract and Dr Robinson's further advices (para 72 of Pham's affidavit). Mr Suleman said "I'll get a licence." Pham said "How?" Mr Suleman said "Don't worry. I'll get my boys in town to take care of this. Rabbi Pinchus knows a retired solicitor who used to work for Kerry Packer and he will get a licence for us." Pham said "Fine, but you better hurry up and get on top of the matter". 109 Further, in early April 2000 (that is a couple of weeks after 22 March 2000), Pham and Mr Suleman had a conversation. Pham said "How did you go with getting a licence?" Mr Suleman said "Don't worry about the licence". Pham said "But you need to get a licence if you want to operate the scheme because it falls within the MIS provisions of the Corporations Law". Mr Suleman said "Everything's taken care of. Rabbi Pinchus referred me to some big boys in town to care of it. It's not your concern anymore. You suburban lawyers would not know what to do. Just do what I have instructed you to do. Just prepare contracts" (emphasis added) (para 73 of Pham's affidavit). Pham could not recall but agreed that Mr Suleman probably said words to the effect "I want to make sure that everything is according to the law and above board and that people putting money in are protected" (T508). 110 Pham provided one contract in March 2000 (the $100,000 investment involving Wilkinson Throsby & Edwards which did not require registration: see Appendix hereto) and provided some contracts from May onwards on the instructions of Mr Suleman that he had attended to obtaining the licence (T511.20). Those instructions were received first in early April 2000 (para 73 of Pham's affidavit). Pham confirmed that up to mid 2000 he estimated he prepared 15 to 20 purchase (that is, not investment) contracts for Mr Suleman (T438.55). 111 In April/May 2000, Mr Suleman gave Pham plausible explanations as to the circumstances surrounding the obtaining of the licence/registration (using a large firm in town) and Mr Suleman's continuing desire to use the services of Pham to prepare contracts notwithstanding another firm had obtained the registration/licensing (para 76 of Pham's affidavit). 112 In May 2000, Ms Locke heard Mr Suleman tell Pham that the licence "is all taken care of" and Pham requested a copy of the licence for the file (para 16 of Locke's affidavit, 18 June 2004). 113 In July 2000, he obtained advice from counsel that he could not "go behind" those instructions (para 99 of Pham's affidavit). This was confirmed by Ms Locke in her evidence (paras 24 and 27 of Locke's affidavit). Dr Robinson confirmed that it sounded right that in about July 2000, Pham told her "Karl told me he doesn't require me to take care of getting his licence. He says he has got a boy in town to get everything set up. My instructions are not to worry about the licence, but to prepare the agreements but everything else will be taken care of. What do you think?" and Dr Robinson said "If that's your client's instructions, you can't go behind them." (T666.30, also T606.20/604.4). 114 Pham was told by his client on a number of occasions that the licence/registration had been obtained (T473.55, paras 73, 100, 101 and 107-109 of Pham's affidavit). 115 After May 2000, Pham asked Ms Locke to ask Mr Suleman for a copy of the licence (T618.20; para 17 of Locke's affidavit). Ms Locke told Pham that Karl Suleman had said everything was okay, that he did have a licence and that he would provide a copy (T618.25; paras 18-19 of Locke's affidavit). 116 After conferring with Dr Robinson, Pham had an appreciation of some of the important relevant exclusionary provisions concerning management investment schemes (for example, a minimum of 20 investors, sophisticated investors and the like) (para 65 of Pham's affidavit). 117 Dr Robinson confirmed that when she spoke to Pham about Mr Suleman going to Mallesons after her November 2000 conference with Mr Suleman and Ms David, Pham might have said something like "Well, I thought it was registered already" or "He told me had had got it registered already." (T669.27). 118 There is no suggestion that Pham was ever told (by anyone) about the letter dated 8 November 2000 from ASIC to Mr Suleman, nor that Pham was ever told (by anyone) about Malleson's advices. 119 Pham confirmed, in writing, his client's instructions that licensing and registration had been obtained. The letter dated 1 March 2001 (page 84 of exhibit 8) was, inter alia, in the following terms: "You then instructed us to obtain expert advice from Dr Ludmilla K. Robinson, barrister. In her advice, she shared the concern and advised you to obtain a licence from ASIC. This office subsequently discussed the matter with Mr Graeme Platts of ASIC from Canberra. He advised that ASIC did not provide legal advice or rulings although in his opinion your scheme did not seem to be within the definition of "prescribed transaction" as defined in the Corporation Act. We confirm that we communicated same to you and received no further instructions to proceed with the matter, instead we were advised by you that you had taken care of everything and had the investment licence ." (emphasis added) 120 He did not learn that a prospectus had to be provided until about mid 2001 (T511.32). Dr Robinson could only presume that Pham knew about a prospectus because he had looked at the website (T666.50), but couldn't recall whether Pham indicated that he was aware of those requirements (T666.57). Pham said he did tell Dr Robinson that Karl had told him he had a license (T598.40). Pham couldn't recall that Dr Robinson mentioned a website (T601.45). He had an appreciation of the need to tell investors that he was Mr Suleman's solicitor (para 132 of Pham's affidavit; para 35 of Locke's affidavit). In cross-examination, the plaintiffs did not dispute that he told them that. He had an appreciation of the need to tell investors to retain independent legal advice about the mortgage and investment before entering into any agreements and to limit his retainer in that way with the agreement of, in this case, the plaintiffs (para 132 of Pham's affidavit, T557.55; 561.25); and his practice in that regard was corroborated by Ms Locke (para 32-33 of Locke's affidavit). 121 The fact that Pham did (despite the denial of the plaintiffs) actually recommend independent legal advice to the plaintiffs is demonstrated by the very fact that the plaintiffs did obtain legal advice from Mr Nguyen and accounting advice from Mr El-Gamal. 122 If Pham had any belief or even concern that the scheme was not registered, why would he have a practice of recommending independent legal advice or, as is the case here, virtually insist on the independent legal advice? 123 I am satisfied he appreciated the need to avoid providing or purporting to provide any investors with any investment advice or encouragement to invest. His practice in that regard was corroborated by Ms Locke (para 34 of Locke's affidavit). Additionally, he was not aware of any problem concerning moneys received being part of the managed investment scheme until after November 2001 (T472.35). Pham became aware that no application was made to ASIC for an exemption in November 2001 because Mr Suleman was claiming to have a licence (T505.5); and Pham did not recall Dr Robinson saying in September 2001 that he should steer clear of Karl but did not deny that, at that time, he probably said words to Dr Robinson to the effect that Karl was alright; he was a good man and was trying to do his best (T595.50). 124 I have no reason to believe that as at August/September 2000 Pham did not have an honest and reasonable belief as to the solid financial circumstances of Karl Suleman Enterprises. 125 Mr Suleman was highly regarded by the Assyrian community. He was a charismatic figure (T685.21). Pham had an honest and reasonable belief that any scheme was registered (see above) and believed that the source of Mr Suleman's money was from his business and the money people were investing with his business (T592.5). 126 Pham accepted that Mr Suleman could provide the returns that he promised (T443.52) and there is nothing to suggest that there was ever any default by Mr Suleman with any payments to anyone prior to November 2001 (the payments subsequently made to the plaintiffs of $62,325 were regular). Pham saw a bank statement of Mr Suleman's with a balance of millions of dollars in it (T446.25) in the early part of 2000 (T447.42) and believed that the reason Mr Suleman had a bank balance of millions of dollars was because people were placing funds with him on the contracts he was drawing up and income from the trolley businesses (T445.50-447.5). Mr Suleman had told Pham that he had been doing the trolley businesses for many years (T447.10). The evidence is that he had started the trolley business as a sole operator in about 1991 (page 22 of exhibit 15). Pham was also shown Mr Suleman's personal tax return which showed an income of about $250,000 per year (T448.5). 127 When Mr Suleman instructed Pham to act on a particular sale, the trolley business, the subject of the sale was on a list given by Mr Suleman to Pham (e.g. page 7 of exhibit 8 to Pham's affidavit) (T450). Pham denied that the returns on the list given to him by Mr Suleman were significantly less than the amounts which Mr Suleman was promising to various purchasers per fortnight (T452.17). 128 Pham was cross-examined about the Woolworths Ballina agreement dated 27 March 2000 (T464.50). Pham said that there was an amount of payment that was promised to an investor (purchaser); and the particular store was allocated to the particular investor because the income from the particular store would cover the payment to the investor (T464.27). Pham said that the sole purpose of allocating a store, according to his instructions, was that the particular investor has an allocation to a store where there would be sufficient payment to be made to the investor (T465.5). I do not consider Mr Pham's conduct undue, negligent or the document itself misleading. 129 Pham's dealings with Karl Suleman were regular (T550.15), as was demonstrated by the list of files handed over by Pham to DDS (exhibit F). 130 Pham's move into his own office was not very much influenced by the amount of work that Mr Suleman was providing him (T553.40). He acknowledged that one of the reasons that he had moved was his belief that he would get Froggy work to support his office but denied that, without that work, he would not have had enough income to maintain his office (T553.45). Pham was not reliant upon Mr Suleman to continue to provide work to him (T553.55). The work that he did for Mr Suleman was something extra. During the year 2000, Pham opened about 300 files and during 2001 600 files, and was not relying on Mr Suleman's work at all (T554.5). Pham candidly said that he did want to keep Mr Suleman's work (T554.7). Pham said that whatever work Mr Suleman could provide, Pham could provide a service (T554.7). However, Pham did not mind one way or another whether Mr Suleman kept providing him with work because Pham was having a new focus in his practice. He had a new practice partner (Mr Atic) and they wanted to go into litigation and did very well with that (T554.15). In 2000 after Pham moved into the new office, Mr Suleman was not providing the bulk of the work (T554.17). Pham was not reliant in the months up to September/October 2000 upon Mr Suleman to keep his practice going (T555.25). Putting aside the $75,000 (or $100,000) he received in respect of Froggy, in the calendar year 2000, Mr Suleman and his companies only accounted for 10% to 15% of Pham's income in his practice (T555.53). Pham reserved 35% of the shares in Froggy Holdings for no consideration but for setting up and assisting Mr Suleman run the business (T553.25). In September or October 2000, Pham ceased to be involved in the active management of the companies in the Froggy Group (T554.40). 131 The plaintiffs have failed to satisfy me that Pham would have made and did make the "good investment" representation as alleged. That he should do so is inherently improbable. His evidence I prefer to that of the plaintiffs. Further the plaintiffs, from the Assyrian community generally, believed that investing with Karl would be a good investment before they even spoke to Mr Varda. I have found that Mr Varda told them that it would be a good investment. 132 I accept that Pham recommended that the plaintiffs obtain independent legal and accounting advice; indeed, the plaintiffs put forward no other explanation as to why they would otherwise have seen Mr Nguyen and/or Mr El-Gamal. The fact that Pham did recommend independent legal advice makes it less likely that he would have gone on to represent that there was a "good investment". 133 I accept Pham's denial as to making the alleged representation and his statements as to his practice of not making any such representations. Ms Locke confirms that she was present on 15 or more occasions when Pham said to investors "I cannot give you advice concerning this investment as I am Karl's solicitor. You should go and get your own legal or accounting advice concerning this investment" (para 32 of Locke's affidavit). Further, Pham told Ms Locke on a number of occasions "Debbie, because we act for Karl, we can never comment on Karl's business to the investors. If they ask you about the investments, you must tell them that we cannot comment. You should tell them to get their own legal and accounting advice in relation to the investment" (para 34 of Locke's affidavit). 134 I turn to the issue of retainer which is, of course, material to the determination of any breach, the extent, content of and breach of any duty of care, and the extent, content of and breach of any fiduciary duty. 135 At paragraphs 17 and 18 of the FFASC, the plaintiffs plead that the first defendant (Pham): "…later to become the servant or agent of the second defendant [Pham Atic], was retained to provide [the plaintiffs] with legal services including advice but not limited to explaining to the first plaintiff the nature and effect of a guarantee and the consequences of any default by either the second plaintiff, or in the event that the loan was taken out by the third plaintiff, that corporation. Also, to explain and provide legal advice/representation to the second and third plaintiffs as to their rights and liabilities relating to the principal loan between the ultimate lender and them using the first defendant's property as security and their rights and liabilities in respect of the said loan; and, The plaintiffs were all owed a duty of care by [Mr Pham], later to become [Pham Atic], to be given proper legal advice as to the nature and effect of the scheme, the rights, obligations and liabilities arising pursuant to the Investment Contract and to make proper disclosures to them in respect of any conflict of interest or economic benefit that the first defendant was directly or indirectly receiving which would give rise to a conflict of interest as a result of any actual economic involvement with Karl Suleman Enterprises Pty Limited or any related entity." 136 The Pham defendants say that there never was a retainer between the plaintiffs and the Pham defendants and all that Pham was doing (as he in fact disclosed) was acting as a finance broker and assisting them in obtaining finance. Mr Cornelius said that it was not uncommon for solicitors to provide mortgaging broking services alongside his or her practice as a solicitor (T385.20-386.4). It is true that Pham rendered a memorandum of fees tax invoice (page 117 of exhibit 8) in the sum of $823 (being $400 fees and $423 in disbursements – primarily stamp duty). If there was any retainer, it is submitted, it was one limited to "settling the loan", the physical lodgement of registration papers in respect of the mortgage and attendance at settlement and distribution of funds received on settlement. 137 A retainer is, of course, a contract. Like any other contract, the existence and terms of the contract is to be determined objectively having regard to the surrounding facts, matters and circumstances. The uncommunicated subjective intention or belief of parties is irrelevant to the determination of the fact or terms of a contract: Beach Petroleum NL v Kennedy (1999) 48 NSWLR 1 at 48 [208]. 138 In this case, the evidence of Pham (para 131 of Pham's affidavit) (which the Court accepts) was as follows: "Mr Varda said: "Philip can help these people obtain finance to invest with KSE?" I said: " I will try. I'll talk to them and find out whether they qualify. How much do you want to borrow?" Badal said: "$70,000." I said: "Do you have a house?" Ibrahim said: "No, I have a unit which I have paid off." I said: "You probably can borrow money from the bank using your unit as security." Pham asked Ibrahim and Badal about their financial position, whether they were working, what other assets or liabilities they had and other details of the loan they wanted. Badal said: "I also have a car loan that Rima is going to help me out with because the interest repayments are very high. We want to borrow money to invest with Karl Suleman and also pay off my car loan." I said: "I can assist you in obtaining finance, but I can't act for you in terms of providing independent legal advice about your mortgage or your investment with Karl. I am acting for Karl. I strongly advise you to seek independent legal advice in relation to the mortgage and your investment before you enter into any agreements. If you agree that I can help you on that basis, we can proceed." Either one of them said: "Yes, that's fine. " Ibrahim said: "How much will it cost to arrange the loan?" I said: " To arrange the loan I will charge nothing because the bank pays me a commission of about $350 but you have to pay the bank application fee plus disbursements on top of that. I will charge you for the time I spent settling the loan and this involves liaising with the bank, signing the mortgage documents, attending on settlement and all of that sort of thing. This will be around $500 plus disbursements." Ibrahim said: "All right." I said: "Well, if you want to proceed then this is what you have to bring in." At this time, Pham provided a list of the documents they needed to provide for the loan application such as the certificate of tiel, council rate notices, 100 points of identification, employment details and details of Badal's loan with Esanda. Pham also provided them with a blank loan application form. I said: "Fill in what you can and bring it back to me and I will help you complete it. " " (emphases added). 139 This was not, I find, a case of a solicitor with a general retainer seeking, subsequently, to limit or restrict that retainer. It was limited from the outset. It expressly excluded the giving of any advice on the mortgage or investment, and contained the strong recommendation to seek independent legal advice in relation to the mortgage and investment before entering into agreements. On the facts, the plaintiffs did obtain independent legal advice and they obtained accounting advice. The only relevant implied term would be that Pham would exercise reasonable skill, care and competence in the settling of the loan, that is, the physical lodgement of registration papers in respect of the mortgage and attendance at settlement and distribution of funds received on settlement. I am of the opinion that Pham did not breach that implied term on the facts of this case. 140 Both Mr Cornelius and Mr Bluth gave expert opinion in relation to what a solicitor in "common practice" would have done in circumstances materially identical to the circumstances in which Pham found himself in August/September 2000. Mr Cornelius and Mr Bluth both use the same definition of "common practice". 141 As stated above, no matter how genuinely held Mr Cornelius' opinions were, they really only reflected his views as to what he would have done in the same circumstances as the circumstances he believed confronted Pham (T374.20). Probably inadvertently and/or subconsciously, Mr Cornelius crossed the "fine line between evidence by a professional of what a reasonably competent and careful professional would do in specified circumstances and evidence of what the witness would do in those circumstances": ASIC v Vines [2003] NSWSC 1095 at para [32] per Austin J. Mr Cornelius put nothing before the Court, other than himself, (for example journals, articles, texts or the like) to confirm or add any weight to his personal and obviously strongly felt views (T374.15). 142 There is no dispute about the qualification and experience of Mr Bluth. Mr Bluth was familiar to Mr Cornelius as a solicitor providing expert opinions in these types of matters (T388.15). The import of Mr Cornelius' opinion is that a solicitor in common practice could not have acted and would have declined to act for the plaintiffs. The thrust of Mr Bluth's view is that a solicitor in common practice could have acted and would have acted with a limited retainer. 143 The plaintiffs bear the onus of establishing the existence, if any, of the fact of a common practice as alleged by Mr Cornelius. They have failed to discharge that onus having regard to: the fact that Mr Cornelius and Mr Bluth are equally qualified and hold opposite views; that Mr Bluth's view is equally credible; that Mr Cornelius' view is not supported by anything other than his own personal opinion; and that Mr Cornelius effectively acknowledged that this is a matter about which experts would legitimately differ and "if that is the case, it's really not a matter for experts to decide" (T388.45). Further, there was no cross-examination of Mr Bluth on anything other than acting pursuant to a limited retainer and a solicitor knowing of an unlawful purpose or only suspecting an unlawful purpose. Mr Bluth expressly had regard (para 6 of Bluth's affidavit of 21 July 2004) to the same paragraphs of Pham's affidavit to which Mr Cornelius stated, in the witness box for the first time (T358.30) and about which Mr Cornelius was cross-examined at some length, he had regard to in forming his view that Pham was too close to Mr Suleman to have acted, even on a limited retainer, for the plaintiffs. 144 I find it difficult to conclude with any confidence that the opinions of Mr Cornelius do, in fact, reflect common practice. In any event, ultimately, Mr Cornelius did agree that there is no common practice as to what a solicitor would do in these circumstances, only general principles (T375.25). 145 Mr Cornelius acknowledged that it would be possible for the retainer to be limited in certain circumstances and the limitation of that retainer may affect the decision to act or not (T355.5). His view was that a solicitor in common practice would simply have said "I will not act for you". (T357.20). However, with a qualification of obtaining informed consent, Mr Cornelius agreed that the other usual way (other than declining to act) of dealing with a conflict of interest is to limit the retainer (T357.34). Mr Cornelius agreed it is common practice that a solicitor could limit a retainer with the client and that solicitors may do this for a variety of good reasons and depending what the job is (T384.45-385.30). 146 Unusually, Mr Cornelius' definition of "commercial relationship" referred to in paragraph 17(a) of his affidavit of 2 June 2004 included a simple conveyancing transaction (T361.17). Mr Cornelius said that "every contract with a client is a commercial relationship; it establishes a commercial relationship" (T262.15). In answer to my question, Mr Cornelius stated that it would be commercial relationships for a solicitor to act for a person when he first buys his house and also sells his house 30 years later (T362.50/363.20). Equally unusually, Mr Cornelius had difficulty even accepting that company searches and property searches could be free from a conflict of interest (T256.30-.40). Mr Cornelius agreed that what he was saying was that conflicts are always something a solicitor has to be careful about. How a solicitor deals with conflicts depends on the facts confronting the solicitor. Often, it is the case that those facts are best known to the solicitor and there are a number of ways for dealing with any conflict that may arise: one was not to act; another was (subject to the qualification of informed consent) to limit the retainer (T370). In the end Mr Cornelius, eminent a solicitor though he is, did not advance the plaintiffs' case. 147 The relevant standard of care is that of a qualified competent and careful lawyer in the given circumstances in the practice of his or her profession: Hawkins v Clayton (1988) 164 CLR 539 at 580 per Deane J. His Honour stated: "It is neither necessary nor desirable to attempt to define, in the abstract, the precise content of the firm's duty of care or the precise extent to which the firm was required to take positive action. The relevant question is whether the failure of the firm to take any positive steps at all to locate Mr Hawkins during the period of more than 6 years after it became aware of the testatrix's death constituted, as a matter of fact, a breach of the duty of care which the firm, as a matter of law, owed Mr Hawkins as the testatrix's legal personal representative. That question must be answered by reference to the standard or measure of care which was reasonable in the circumstances. In the present case, that standard or measure of care was that indicated by Windeyer J in Voli (1963) 110 CLR 74 namely, the care and skill to be expected of a qualified and ordinarily competent and careful solicitor in the exercise of his profession." 148 It has been said by Bray CJ in Jennings v Zihali-Kiss (1972) 2 SASR 493 at 512: "A professional man is only liable for the use of ordinary care and skill. He is not bound to guarantee against all mistakes or omissions or to be gifted with powers of divination or the exercise of extraordinary foresight, learning or vigilance". 149 Further, in respect of duties and liabilities of a solicitor when advising a client, McLelland CJ in Eq in Trust Co of Australia v Perpetual Trustees WA Limited (1997) 42 NSWLR 237 at 247D said: "Not every mistake by a solicitor founds a liability in negligence. There are many uncertain and difficult areas of the law and the expression of an opinion by a solicitor does not normally constitute a promise that the opinion is correct. The duty of care by a solicitor to his client is to exercise reasonable skill and care. What is required of this duty in a particular case depends on the scope of the solicitor's retainer, the scope of any additional responsibility assumed by the solicitor and relied on by the client, the nature of the task in trust to or undertaken by, the solicitor, and the circumstances of the case. As it has been said: • "a solicitor who brings a reasonable degree of skill and knowledge to a task and exercises reasonable care in carrying it ... out will not be liable for an error of judgment": Ormindale Holdings Limited v Ray (1982) 36 BCLR 378 at 387 per Taylor J. • "a lawyer ... is not ... normally required to warn experienced business clients of the possibility that [his] opinion, although firmly held, may not, in fact, prevail": Ormindale Holdings [at 389]; affirmed on appeal [at 392]. • "a solicitor is not liable for mistake in a nice and difficult point of law": Bannerman & Co v Murray [1972] NZLR 411 at 422 per North P and at 429 per Woodhouse J, quoting from Stevenson v Rowand (1830) 2 Dow & Clark 104". 150 Finally, regarding hindsight as a determinant of the standard, Megarry J in Duchess of Argyll v Beuselinck [1972] Lloyd's Rep 172 at 185 observed: "In this world there are few things that could not have been done better if done with hindsight. The advantages of hindsight include the benefit of having a sufficient indication of what of many facts present are important and which are unimportant. But hindsight is no touchstone of negligence. The standard of care to be expected of a professional man must be based on events as they occur, in prospect not in retrospect". See also Capital Brake Service Pty Ltd v Meagher [2003] NSWCA 225 per Ipp JA at [30]. 151 No case for breach of any retainer is expressly pleaded against the Pham defendants. The particulars of negligence as pleaded against them (paragraph 31) and my conclusions thereon are as follows: 152 (a) Failing to immediately decline to act on behalf of the first plaintiff and ensure that the first plaintiff had her own independent legal adviser/solicitor. In all the circumstances (limited retainer and surrounding circumstances), this was not (or did not constitute a breach of) a relevant duty or term of retainer. Pham limited the retainer from the outset and ensured that the plaintiffs did obtain independent legal advice (Mr Nguyen). He also told them to obtain accounting advice (which they did from Mr El-Gamal). 153 (b) Negligently influencing Mr Nguyen and speaking to him regarding the first plaintiff such that Mr Nguyen did not provide independent legal advice as to the meaning of the guarantee and the first plaintiff's rights, obligations and liabilities under the guarantee, guaranteeing the performance of the third plaintiff. There is no evidence to support the allegation. Mr Cornelius did not suggest that there is any evidence of anything in paragraph 23 of his report (namely, influencing Mr Nguyen) (T383.20). The allegation was never put to Pham or Mr Nguyen. 154 (c) Failing to state that he acted on behalf of Karl Suleman and was in truth and fact Karl Suleman's solicitor and the solicitor acting on behalf of a number of Karl Suleman entities including Karl Suleman Enterprises Pty Limited. Notwithstanding the sworn affidavit evidence of the plaintiffs (para 18 of Badal/para 26 of Ibrahim), both the plaintiffs acknowledged that Pham told them that he was Karl Suleman's solicitor (T60.2/215.55-261.1) and, further, both the plaintiffs assumed that Pham was acting for Mr Suleman in his various businesses (T108.10/215.55-216.1) and expected Pham to be paid for so acting (T108.10-.17/T272.25). This particular has not been made out. 155 (d) Failing to disclose that the trolley business was a front for a number of other investments on behalf of Karl Suleman which were not disclosed. Whatever "front" means, in the circumstances of the limited retainer, this was not (or did not constitute a breach of) a relevant duty or term of retainer. In any event, Badal did not mind how Mr Suleman used the money invested for his business purposes (T272.2). Ibrahim would not have minded what happened to the money provided she got the $1,350 every two weeks (T76.5). Further, there is no evidence to support this allegation. This allegation was never put to Pham. 156 (e) Failing to disclose that he had a substantial economic interest in promoting the scheme to investors such as the plaintiffs because in truth and fact Philip Pham was a director of Pal Holdings a corporation that was incorporated for the purposes of paying returns back to investors who had invested in the scheme and for every investor was receiving a 2% management fee from Karl Suleman Enterprises Pty Limited such that Pham placed his own interests ahead of those of his own clients as a result of the benefit he would obtain from being a director and shareholder of Pal Holdings Pty Limited in a substantial conflict of interest position between him and the three plaintiffs. Again, in the circumstances of the limited retainer, this was not (or did not constitute a breach of) a relevant duty or term of retainer. Furthermore, PAL Holdings Pty Limited was not registered (that is, did not exist) until 14 September 2001, that is, 12 months after any dealings with the plaintiffs (page 965 of exhibit AN). 157 (f) Negligently advising a principal borrower and surety in the same room. Pham did not provide and did not purport to provide any advice to the plaintiffs or either of them and whether alone or together. As was acknowledged by Mr Cornelius (T383.20), it was a matter for Mr Nguyen as to whether or not Ibrahim and Badal were advised in the same room or not. In any event, it is to be recalled that Ibrahim and Badal were both the principal borrowers from the Bank of Adelaide. 158 (g) Failing to disclose that the first defendant had received a cheque for $100,000 for work he did in respect of the Froggy group of companies. Again in the circumstances of the limited retainer, this was not (or did not constitute a breach of) a relevant duty or term of retainer. In any event, on 2 August 2000, Pham received a cheque in the sum of $75,000 for services rendered to Froggy Holdings Pty Limited. At some other currently indeterminate time, Pham may have received a further cheque for $25,000 for services rendered to Froggy Holdings Pty Limited. There was nothing to suggest that this was not a fair and proper fee for work actually done by Pham. Badal and Ibrahim both said that they expected Pham to get paid by Mr Suleman for the work he did for Mr Suleman and his businesses (T108.10-.17/T272.95): see Pilmer v The Duke Group Ltd (in liq) (2001) 207 CLR 165 at [83]. 159 (h) Failing to disclose that he had received $77,000 direct from Karl Suleman. This is a meaningless particular. 160 (i) Failing to disclose that the first defendant and later the second defendant acted regularly on behalf of Karl Suleman in respect of litigation and conveyancing matters. Pham did act for Mr Suleman in respect of litigation and conveyancing matters, but the failure to disclose these matters I hold not be a breach of any retainer or breach of a duty of care. In any event, notwithstanding the sworn affidavit evidence of the plaintiffs (para 18 of Badal/para 26 of Ibrahim), both plaintiffs acknowledged that Pham told them that he was acting for Karl Suleman (T60.2/215.55-261.1) and, further, both plaintiffs assumed that Pham was acting for Mr Suleman in his various businesses (T108.10/215.55-216.1). 161 (j) Negligently preparing the Investor Contracts which were drawn in such a fashion that they contravened the Corporations Law, namely the managed investment scheme provisions. In the circumstances of the limited retainer, this was not (or did not constitute a breach of) a relevant duty or term of retainer. The contracts did not contravene the Corporations Law: Karl Suleman Enterprises Pty Limited (in liq) v Babanour [2004] NSWCA 214 at [51] and see the Appendix to these reasons. They created enforceable legal obligations. The Pham defendants rightly submit, in my view, that in any event they do not understand that the plaintiffs even allege that the activities of Karl Suleman and KSE were or could have been anything other than an activity which was or could have been caught by or subject to the managed investment provisions of the Corporations Law . In those circumstances, it is difficult to understand how this particular of breach of retainer or negligence is pressed, let alone made out. Any complaint about the preparation of the contracts would presumably be from KSE and not the plaintiffs. There is no allegation made out that the contracts themselves contravened any other law or were otherwise defective. 162 (k) Providing advice to enter into the scheme in circumstances where the first defendant had no idea as to how Karl Suleman Enterprises Pty Limited, Karl Suleman or any other related entity would be in a position to actually honour payments back to investors as inflated amounts and further had no knowledge as to how the funding of the scheme operated. Pham did not provide advice to enter into the scheme. The allegations of the plaintiffs that Pham told them that it would be a " good investment " to enter the scheme I have rejected. It is not part of a solicitor's retainer (absent any express terms, of course) for a solicitor to take such steps: Citicorp Australia Limited v O'Brien (1996) 40 NSWLR 398 at 418 per Sheller JA. In any event, Pham, I am persuaded, had an honest and reasonable belief that the scheme was registered and as to the solid financial circumstances of KSE. 163 (l) Failing to disclose that in truth and fact the Investor Contracts and investments by persons such as the plaintiffs were in fact a capital raising exercise. This particular fails for the reasons set out in relation to (d) and (e) above. Further, the plaintiffs have failed to prove that the investor contracts and investments by persons such as the plaintiffs were, in fact, a capital raising exercise or that Pham knew that. 164 (m) Failing to ever take any reasonable steps to question Mr Suleman as to how the scheme operated in terms of its funding and what provisions were put in place to ensure that investors would receive their money back and be paid pursuant to the Investor Contracts. In the circumstances of the limited retainer, this was not (or did not constitute a breach of) a relevant duty or term of retainer. It is not part of a solicitor's retainer (absent any express terms, of course) for a solicitor to take such steps: Citicorp Australia Limited at 418 per Sheller JA. In any event, Pham had an honest and reasonable belief that the scheme was registered and as to the solid financial circumstances of KSE, as I have held. 165 (n) Acting in circumstances where the scheme was put forward as a trolley business when the first defendant know or ought to have known that the money was not in fact being used for a trolley business but was being used for a number of other purposes including but not limited to injections of capital into other Karl Suleman businesses under the title of "Froggy" such as Froggy Music Pty Limited, Froggy Wheels and Froggy.com. Again I am of the view that in the circumstances of the limited retainer, this was not (or did not constitute a breach of) a relevant duty or term of retainer. Froggy Music Pty Limited was not registered (that is, did not exist) until 23 February 2001. Its directors were Fred David and Karl Suleman. There is no evidence of any association between Pham and " Froggy Wheels " and " Froggy.com ". As stated above re (d), Badal did not mind how Mr Suleman used the money because it was being invested for his business purposes (T272.27). Ibrahim would not have minded what happened to the money provided she got $1,350 every two weeks (T76.5/T76.50). There is no evidence that Pham knew or ought to have known that the money was not in fact (if it be the fact) being used for a trolley business. 166 (o) Continuing to provide Investor Contracts in circumstances where the first defendant had briefed a barrister, namely Ms Lucy Robinson, to provide an advice to the effect that the scheme would fall within the managed investment scheme provisions of the Corporations Law and was in contravention of those provisions. I am unpersuaded as to proof of breach. Ms Robinson's advice was that a scheme (if implemented in accordance with draft documentation) may contravene the managed investment scheme provisions of the Corporations Law if more than 20 members were involved, if sophisticated investors were not involved, if an exemption was not obtained or if registration was not obtained. By August/September 2000, Pham honestly and reasonably believed that the scheme was registered – of this I am satisfied. 167 (p) Failing to take any steps whatsoever to act on the advice of Ms Robinson. Pham, I find, acted on Ms Robinson's advice by providing it to Mr Suleman and seeking his instructions; arranging for a conference between Ms Robinson and Mr Suleman; contacting ASIC and ascertaining their attitude, namely, that they did not give advice (page 41 of exhibit 8); conferring again with Ms Robinson (page 42 of exhibit 8); and not issuing any relevant contracts (that is, to more than 20 members or to other than sophisticated investors) until he had been informed by Mr Suleman in April 2000 and honestly and reasonably believed that the scheme was registered. See generally my observations above in paras 98 – 134. 168 (q) Receiving advice from ASIC on 23 March 2000 regarding managed investment schemes such as that Pham was on notice that his Contracts did not apply with the provisions of the Corporations Law and failing to take any reasonable steps whatsoever to ensure that the scheme complied with the legislation. As I have said, I accept that Pham honestly and reasonably believed that the scheme was registered. It is not for a solicitor of an informed commercial client, such as Mr Suleman, to take steps when he has been expressly instructed not to do so. 169 (r) Failing to take any reasonable steps whatsoever to ensure that Karl Suleman or any of his related entities involved in the scheme had a dealer's licence such that the provisions of the Corporations Law relating to managed investment schemes was follows and met with substantial compliance. In the circumstances of the limited retainer, I have found this was not (or did not constitute a breach of) a relevant duty or term of retainer. Pham honestly and reasonably believed that the scheme was registered. He had experienced counsel's advice that he could not go behind his client's (plausible) instructions (para 99 of Pham's first affidavit; paras 24/27 of Locke's affidavit and T666.30; T606.20/604.4). 170 (s) Failing to make any disclosures that the first defendant was indeed a shareholder of Froggy (Western Sydney) Pty Limited and Froggy Holdings Pty Limited which were corporations that were funded as a result of the investments being made by persons such a the plaintiffs whereby the first defendant stood to make an economic gain. Froggy Holdings Pty Limited was registered on 4 May 2000. Froggy Mobiles (Western Sydney) Pty Limited was registered on 8 June 2000. Pham held 35% of the shares in Froggy Holdings Pty Limited and 15% of the shares in Froggy (Western Sydney) Pty Limited (para 86 of Pham's first affidavit). In September/October 2000, Pham ceased to be involved in the active management of any of the companies in the Froggy Group (para 91 of his affidavit). In September 2000, Pham signed transfers of those shares for no payment back to Mr Suleman (para 94 of his affidavit). There is no evidence that Pham knew or ought to have known that Froggy (Western Sydney) Pty Limited and/or Froggy Holdings Pty Limited were funded as a result of the investments being made by persons such as the plaintiffs. It was not put to Pham. In fact, there is no evidence of the alleged fact. Further, and as has been said above, Badal would not have been troubled if he had known that Pham had invested with Mr Suleman or had shareholding interests in Mr Suleman's companies (T273.45) and Ibrahim would not have been concerned if Pham had held some shares in Mr Suleman's companies as she took the view that that was his personal business (T109.1-.15). 171 The plaintiffs' Fair Trading Act claim against the Pham defendants invokes the express representation and the "silence" representation: paragraph 32 of the FFASC. 172 The plaintiffs must establish that Pham's conduct was "in trade or commerce". While there are situations where giving advice can be in trade and commerce (Bonn Corporation Pty Limited v Thiess Contractors Pty Limited (1987) 14 FCR 215), the giving of advice by a solicitor in respect of a purchase or sale of a business is, ordinarily at least, not one of them: Metcash Trading Pty Limited v Hourigan's IGA Umina Pty Limited [2003] NSWSC 683 at para [54] per Young CJ in Eq. I am not satisfied that the plaintiffs have established that Pham's conduct was in trade or commerce. 173 Further, in a case of silence only, a plaintiff must establish that the defendant had actual knowledge of a matter which he intentionally refrained from disclosing in circumstances where there was either a duty to disclose or where the plaintiff had a reasonable expectation that such information would be disclosed to him: Semrani v Manoun [2001] NSWCA 337 at para [62] per Beazley JA with whom Mason P and Ipp AJA agreed. The plaintiffs have failed to establish Pham intentionally refrained from telling the plaintiffs any matter about which they now complain and that it was not inadvertence: Metcash (supra). 174 While that should be the end of the claim, it is desirable to go through the plaintiffs' particularised allegation, otiose to some extent though it might be: (a) The plaintiffs plead that during the first meeting with the first defendant he made the following representations in trade and commerce: a. that he was a solicitor and could help the plaintiffs get a loan; b. that the investment was good, that he was a solicitor involved in the investment, that it was a good investment. I have found that no representation about the investment being good was made by Pham. Further, he was not just " a solicitor ". He was and disclosed that he was Mr Suleman's solicitor and could not assist them except on a limited basis. 175 (b) In the second meeting, the first defendant represented that it would take 2 to 3 weeks to finalise the matter and that Badal ought to incorporate a company to minimise his tax. Pham did not represent that Badal ought to incorporate a company to minimise tax. In fact, the plaintiffs conceded that Pham only recommended that they see an accountant and it was Mr Varda who recommended Mr El-Gamal who gave him that advice (T62.45, 81.45, 82.5-83.45, 240.45). 176 (c) At the third meeting, Pham represented to the plaintiffs that he was surprised because he was able to get the papers early, being the loan documents. This is a nonsensical particular in my respectful view. 177 (d) That the third defendant (Badal Investment Pty Limited) would receive $1,350 every 2 weeks for 10 years. Pham did not make the representation. He last saw the plaintiffs on 30 August 2000. There was no company called Badal Investment Pty Limited until after settlement on 8 September 2000. Pham had no idea that any company would be involved. It was Mr El-Gamal's idea to minimise tax. Finally, the plaintiffs do allege a conversation about " $1,350 every 2 weeks for 10 years " with Pham on or about 11 September 2000 (para 24 of Ibrahim/para 16 of Badal). The conversation did not occur. There was simply no meeting after 30 August 2000 with Pham. It was acknowledged that it was Mr Varda who informed them of the amount of receipt/return (T40.50, 44.45, 70.20-.30). 178 In relation to the particular allegations as to the "subject matters" of the defendants' silence made at paragraph 32(f) of the fourth Further Amended Statement of Claim: (a) The scheme was illegal. The scheme was not illegal: Karl Suleman Enterprises Pty Limited (in liq) v Babanour , supra, at [51]; and see the Annexure hereto. 179 (b) The first defendant was a director, officer and shareholder of Pal Holdings which was receiving a 2% management fee on each and every Investor Contract whereby returns would be paid back through his corporation Pal Holdings which would receive the 2% management fee. PAL Holdings Pty Limited was not registered (that is, did not exist) until 14 September 2001, that is, 12 months after any dealings with the plaintiffs (page 965 of exhibit AN). The plaintiffs concede this. 180 (c) That he was Karl Suleman's lawyer. As the defendants submit, notwithstanding the sworn affidavit evidence of the plaintiffs (para 18 of Badal/para 26 of Ibrahim), the plaintiffs both acknowledged that Pham told them that he was Karl Suleman's solicitor (T60.2/215.55-216.1) and, further, the plaintiffs assumed that Pham was acting for Mr Suleman in his various businesses (T108.10/215.55-216.1) and expected Pham to be paid for so acting (T108.10-.17/T272.25). 181 (d) That he was the lawyer for Karl Suleman Enterprises Pty Limited. Again, notwithstanding the sworn affidavit evidence of the plaintiffs (para 18 of Badal/para 26 of Ibrahim), the plaintiffs both acknowledged that Pham told them that he was Karl Suleman (T60.2/215.55-216.1) and, further, the plaintiffs assumed that Pham was acting for Mr Suleman in his various businesses (T108.10/215.55-216.1) and expected Pham to be paid for so acting (T108.10-.17/T272.25). 182 (e) That he had received $100,000 for work in respect of the Froggy group of companies. As has been stated above, on 2 August 2000 Pham received a cheque in the sum of $75,000 for services rendered to Froggy Holdings Pty Limited. At some other currently indeterminate time, Pham may have received a further cheque for $25,000 for services rendered to Froggy Holdings Pty Limited. There is nothing to suggest that this was not a fair and proper fee for work actually done by Pham. Badal and Ibrahim both said that they expected Pham to get paid by Mr Suleman for the work he did for Mr Suleman and his businesses (T108.10-.17/T272.95). 183 (f) That he continued to provide legal services to Karl Suleman Enterprises Pty Limited, Karl Suleman and the related entities. Notwithstanding the sworn affidavit evidence of the plaintiffs (para 18 of Badal/para 26 of Ibrahim), the plaintiffs both acknowledged that Pham told them that he was Karl Suleman's solicitor (T60.2/215.55-216.1) and, further, the plaintiffs assumed that Pham was acting for Mr Suleman in his various businesses (T108.10/215.55-216.1) and expected Pham to be paid for so acting (T108.10-.17/T272.25). 184 (g) That the Investor Contracts he had drafted contravened the Corporations Law. The investor contracts did not contravene the Corporations Law : Karl Suleman Enterprises Pty Limited (in liq) v Babanour , supra at [51]. They created binding legal obligations. 185 (h) That he had received advice from a barrister, Ms Lucy Robinson, that the Investor Contracts contravened the Corporations Law or were Contracts failing within a managed investment scheme such that the scheme in its present state contravened the legislation. The investor contracts did not contravene the Corporations Law: Karl Suleman Enterprises Pty Limited (in liq) v Babanour, supra at [51]. They created binding legal obligations. In any event, by August/September 2000, Pham had an honest and reasonable belief that the scheme was registered and as to the solid financial circumstances of KSE. 186 (i) That he did not have any information before him to show that Karl Suleman or any of his related entities held a dealer's licence for the purposes of the managed investment scheme provisions of the Corporations Law and was thus illegal. The scheme was not illegal: Karl Suleman Enterprises Pty Limited (in liq) v Babanour, supra at [51]. By August/September 2000, Pham had an honest and reasonable belief that the scheme was registered. He did have information, that is, his instructions from April 2000 about which he had counsel's advice in July 2000 he could not go behind. 187 I turn to the particular allegations that the conduct of Pham was misleading or deceptive or likely to have misled or deceived the plaintiffs, made at paragraph 31(j): (a) Representations by Pham objectively seen gave the plaintiffs the impression that the scheme was legal. Pham did not make the representations alleged. The scheme was not illegal. The plaintiffs did not give any evidence that they had such an impression. Such an impression would not have reasonably been formed by the plaintiffs or foreseen by Pham (see below). 188 (b) The representations by Pham and his silence gave the impression objectively that the scheme was a good investment which would offer higher returns. Pham did not make the representations alleged. The scheme was not illegal. The plaintiffs did not give any evidence that they had such an impression. Such an impression would not have reasonably been formed by the plaintiffs or foreseen by Pham. 189 (c) The representations and conduct of Pham gave the plaintiffs the impression objectively that the scheme was safe, reliable and so good that he was involved in it. Pham did not make the representations alleged. The scheme was not illegal. The plaintiffs did not give any evidence that they had such an impression. Such an impression would not have reasonably been formed by the plaintiffs or foreseen by Pham. 190 (d) The conduct of Pham was misleading or deceptive or likely to have misled or deceived the plaintiffs into believing that Pham was giving objective legal advice when in truth and fact he directly and indirectly stood to gain an economic benefit as a result of his shareholding and directorship of PAL Holdings which took a 2% management fee from the very transaction he was advising the plaintiffs to adopt. PAL was not registered (that is, existed) until 14 September 2001. In relation to Pham Atic Pty Limited, it was not registered (that is, existed) until 13 June 2001. There was no dealing whatsoever between the plaintiff and Pham Atic Pty Limited. It did not exist until some 9 months after the last dealing between Pham and the plaintiffs. Again, I have taken it that the plaintiffs in the end do concede this. 191 I am satisfied that no representations as alleged by the plaintiffs were made by Pham. That is the end of that claim. 192 To the extent that silence alone is relied upon, it is not disputed that silence may sometimes constitute or convey a representation or be misleading or deceptive when the circumstances are such that either there is a duty to speak or a reasonable expectation that another will speak: Demagogue Pty Limited v Ramensky (1992) 39 FCR 31 at 41 per Gummow J/at 32 per Black CJ; Brophy v NIAA Corporation Limited (in liq) (1995) ATPR 41-399 at 40,410 per Handley JA; Metcash Trading Limited v Hourigan's IGA Berrima Pty Limited supra, at para [60] per Young CJ in Eq. 193 I have concluded that there was no duty to speak because any information would have been confidential to Karl Suleman: Brophy v NIAA Corporation (supra). There was no reasonable expectation that another will speak in circumstances where the plaintiffs were of some relevant prior commercial experience having retained solicitors and made finance applications previously; where Pham did not know of their personal circumstances other than as investors (T568.25); where Pham was not a member of the Assyrian community (a factor relied upon heavily by the plaintiffs in the case against DDS (T1039.38); where the plaintiffs had already decided to invest when they saw Pham; where the plaintiffs had already decided to borrow money to invest when they saw Pham; where the plaintiffs had already decided to put up Ibrahim's unit as security for the loan whey they saw Pham; and where the plaintiffs already had the existing Esanda loan which they wished to repay when they saw Pham. 194 Further, the plaintiffs had already relied on representations made to them by, inter alia, Mr Varda (and not Pham) as to the $1,350 every two weeks; Mr Varda had explained the KSE investment contract to the plaintiffs (T70.20-.30), not Pham; the investment agreement had a cover page which was entitled with KSE's address, Pham's address (exhibit 3; RI7 of exhibit A); the plaintiffs only went to see Pham to obtain finance; and the obtaining of finance and attending to settlement was all that was discussed at any of the 3 meetings as being what Pham would do. 195 Pham had expressly stated that he was Suleman's lawyer (para 132 of Pham's first affidavit) and the plaintiffs assumed that he also acted for Mr Suleman's companies (T108.10/215.55-216.1) and would be paid by Mr Suleman for so acting (T108-10-.17/272.25); Pham expressly stated that he could not act for the plaintiffs in terms of providing independent legal advice about the mortgage or investment (para 132 of Pham's affidavit); he strongly advised the plaintiffs to see independent legal advice about the mortgage and investment (para 132 of Pham's affidavit); and said that he was only prepared to assist on that basis (para 132 of Pham's affidavit). 196 Pham obtained the plaintiffs' agreement to proceed on that basis (para 132 of Pham's first affidavit), made disclosure of relatively modest fees (para 132 of Pham's affidavit), and to Pham's knowledge, the plaintiffs did actually obtain independent legal advice before investing (that is, Mr Nguyen on 31 August 2000) and the plaintiffs did actually obtain accounting advice before investing (that is, Mr Nguyen on 31 August 2000). 197 Pham honestly and reasonably believed that the scheme was registered. The plaintiffs had ample time (about 6 weeks) to consider their position between first meeting with Pham in late July/early August 2000 and investing on 11 September 2000, and they made no statement to Pham to indicate that they were relying on him for anything else than arranging finance and gave no evidence that they were actually/did rely on him. 198 For the above reasons, this component of the plaintiffs' case fails. 199 I turn now to the allegation of breach of fiduciary duty against the Pham defendants. 200 This is pleaded in paragraphs 48 – 54 in the FFASC. In a portmanteau sort of way the pleader embraces everything, or almost everything, thitherto pleaded to found the antecedent causes of action. 201 The plaintiffs have sought to assist me by quoting at length from the third edition of Meagher et al, Equity – Doctrines and Remedies (1992). The parties have also supplied extensive written submissions, which I will adapt and adopt where appropriate. 202 The Pham defendants' submissions are as follows. 203 In Hospital Products Limited v United States Surgical Corporation (1984) 156 CLR 41, Mason J said: "The accepted fiduciary relationships are sometimes referred to as relationships of trust and confidence or confidential relations viz trustee and beneficiary, agent and principal, solicitor and client, employee and employer, director and company, and partners. The critical feature of these relationships is that the fiduciary undertakes or agrees to act for or on behalf of or in the interests of another person in the exercise of a power or discretion which will affect the interests of that other person in a legal or practical sense. The relationship between the parties is therefore one which gives the fiduciary a special opportunity to exercise the power or discretion to the detriment of that other person who is accordingly vulnerable to abuse by the fiduciary of his position. The expressions "for", "on behalf of" and "in the interests of" signify that the fiduciary acts in a "representative" character in the exercise of his responsibility, to adopt an expression used by the Court of Appeal." (at 96-7) "The categories of fiduciary relationships are infinitely varied and the duties of the fiduciary vary with the circumstances which generate the relationship. Fiduciary relationships range from the trustee to the errand boy, the celebrated example given by Fletcher-Moulton LJ in his judgment in Re Coomber, Coomber v Coomber [1911] 1 Ch 723, in which, after referring to the danger of trusting to verbal formulae, he pointed out that the nature of the curial intervention which is justifiable will vary from case to case ([1911] 1 Ch 723 at 728-729). In accordance with these comments it is now acknowledged generally that the scope of the fiduciary duty must be moulded according to the nature of the relationship and the facts of the case ….The often repeated statement that the rule in Keech v Sandford (1726) Cas temp King 61; 25 ER 223 applies to fiduciaries generally tends to obscure the variable nature of the duties which they owe." (at page 102) (emphasis added) 204 Gaudron and McHugh JJ have warned against the superimposition of fiduciary relationships on common law remedies merely to improve the nature or extent of the remedy: Breen v Williams (1996) 186 CLR 71 at 110 (albiet in the context of a doctor-patient relationship outside the well established categories). It is a warning which, however, in my view must also be heeded in actions such as the present. 205 Even where the fiduciary relationship arises within a well established category, it is necessary to analyse the circumstances in order to arrive at specific ascertainment of the particular obligations owed and of what acts or omissions amount to breach: Hospital Products at 73 and 102; Re Goldcorp Exchange Limited [1995] 1 AC 74 at 98; Breen at 82-3; Maguire v Makaronis (1997) 188 CLR 449 at 464. In Beach Petroleum NL v Kennedy (1999) 48 NSWLR 1 at [188]-[189], the Court said: "Even in the case of a solicitor client relationship, long accepted as a status based fiduciary relationship, the duty is not derived from the status. As in all such cases, the duty is derived from what the solicitor undertakes, or is deemed to have undertaken, to do in the particular circumstances. Not every aspect of a solicitor client relationship is fiduciary. Conduct which may fall within the fiduciary component of the relationship of solicitor and client in one case, may not fall within the fiduciary component in another. "The relationship of solicitor and client has as its core an element of confidence and influence which equity will preserve and protect. Nevertheless, the confidence and influence are not always so pervasive as to require equitable intervention in every facet of the relationship." 206 Conduct in breach of a solicitor's duty not to prefer the interests of one client to those of another need not be dishonest, but it has been said that it must be intentional; an unconscious omission is insufficient: Bristol and West Building Society v Mothew [1998] Ch 1 at 19; [1996] 4 All ER 698 at 713; Re Moage Limited (in liq); Moage Limited (in liq) v Jagelman (1998) 153 ALR 711 at 719; see also Beach Petroleum NL v Abbott Tout Russell Kennedy (1997) 26 ACSR 114 at 270-40 per Rolfe J. 207 If a fiduciary wishes to enter into a transaction which would be a breach of duty, there should be disclosure to the person to whom the duty is owed and that person must consent to the proposal: Parker v McKenna (1874) LR 10 Ch App 96; DPC Estates Pty Limited v Grey and Consul Development Pty Limited [1974] 1 NSWLR 443; NZ Netherlands Society "Oranje" Inc v Kuys [1973] 2 All ER 1222 at 1266-7. 208 Consent need not be given expressly: Our Lady's Mount Pty Limited (as trustee) v Magnificat Meal Movement International Inc (1999) 33 ACSR 163 at [128]. What is required for a fully informed consent is a question of fact in all the circumstances of each case and there is no precise formula: Life Association of Scotland v Siddal (1861) 45 ER 800 at 806; Re Pauling's Settlement Trusts [1961] 3 All ER 713 at 730; Spellson v George (1992) 26 NSWLR 666 at 669-70, 673-75 and 680; Maguire v Makaronis supra, at 466. There may be the need for independent advice: Commonwealth Bank of Australia v Smith (1991) 42 FCR 390 at 393; Maguire v Makaronis at 466-7. 209 In determining whether sufficiently full disclosure has been made to justify the conclusion that informed consent has been obtained from a fiduciary acting for parties with conflicting interests, it is essential to determine what services are required of a fiduciary. Thus what is required by way of disclosure to a client whose only demand on a solicitor is that the solicitor carry out the conveyancing and related aspects of the transaction may be less than is required where the client also wants advice about the wisdom of the transaction: Clark Boyce v Mouat [1994] 1 AC 428 at 436-437; Haira v Burbery Mortgage Finance & Savings Limited; sub nom Koya v Kaira [1995] 3 NZLR 396 at 406. Solicitors, when retained to act on a purchase or mortgage for their skill in the law, have no duty (unless it is part of their retainer or within the ambit of any assumed responsibility relied on) to inform their clients of their views about the financial prospects of the purchase even if they feel or ought reasonably to feel that there is a risk of loss: Citicorp Australia Limited v O'Brien, supra, at 412-413. See also Clark Boyce v Mouat at 437. 210 In the present case, no real or substantial possibility of conflict has been demonstrated by the plaintiffs. In Pilmer at para [83], McHugh, Gummow, Hayne and Callinan JJ said: "The conflicting duty or interests must be identified. Conflict is not shown by simply pointing to the fact that there have been past dealings between the appellants and interests associated with the Kia Ora directors. The fact that dealings are completed will ordinarily demonstrate that any interest or duty associated with those dealings is at an end and no continuing duty or interest was identified here. Nor is it sufficient to say generally that there is a hope or expectation of future dealings. That will often be so. Most professional advisers would hope that the proper performance of the task at hand will lead the client to retain them again. No real or substantial possibility of conflict was demonstrated." 211 As I have found, the retainer between the plaintiffs and Pham (which would otherwise create a fiduciary duty) was limited from the outset by what was said and agreed and in the circumstances surrounding the first meeting. Pham disclosed that he was Mr Suleman's solicitor and could not act for them in providing independent legal advice. He recommended independent legal advice. To the extent that there was any obligation to ensure the plaintiffs obtained independent legal advice (that is, even if the retainer was not limited and having regard to Pham's lack of actual knowledge that or even suspicion that the scheme was not registered) that obligation was discharged by ensuring that the plaintiffs did, in fact, obtain independent legal advice and accounting advice prior to entering into the transaction. Finally and alternatively, I am of the view that there was, on the facts, sufficient disclosure by Pham at and after the first meeting to justify the conclusion that informed consent had been obtained. In any event, the plaintiffs have not established any required intentional, rather than unconscious, omission by Pham. 212 As to the particulars of lack of disclosure relied upon by the plaintiffs at paragraph 50 of the statement of claim, they range from an assertion that the scheme was illegal to that he was the lawyer for Karl Suleman Enterprises Pty Limited, that he had received $100,000 for work in respect of the Froggy group of companies, and that he continued to provide legal services to Karl Suleman Enterprises Pty Limited, Karl Suleman and the related entities. 213 These have been dealt with in substance above and I will not repeat my observations. The plaintiffs here again fail. 214 Causation is always a question in litigation of this kind – even if, as here in the light of my findings, there has been, to put it shortly, no proved breaches or misconduct. 215 The Pham defendants submit that Badal knew that businesses can go broke for all sorts of reasons, large businesses and small businesses (T281.25). He acknowledged that he raised with Ibrahim the risks of Mr Suleman's business failing or not lasting very long (T287.10) and that it was mentioned that, if something unfortunate happened with Mr Suleman's business, the returns might stop (T287.20). If that happened, the unit might be at some further risk of being lost (T287.25). 216 Ibrahim was allegedly emphatic when saying that, if she was aware of the slightest risk, she would not have put the unit up to enable the investment with Karl Suleman to take place (T116.55). However, I do not doubt that she was told that by Mr Nguyen and, subsequently, Ms Jajoo of the risk and still proceed on both occasions. Ibrahim and Badal otherwise give no evidence as to what they would have done or not done in relevant circumstances. The problem for the plaintiffs is they have not actually articulated what they say they would have done had Pham declined to act (as they and Mr Cornelius say he should have done). Accordingly, the plaintiffs do not say what they would have done. The Court is left to "speculate". As these proceedings were started before the commencement of the "causation" amendments to the Civil Liability Act, 2002 (NSW), such evidence would have been admissible and of right. 217 If Pham had declined to act, Mr Cornelius acknowledged that is all that Pham could have said was "I cannot act for you" (T357.20). Accordingly, the plaintiffs would have been none the wiser in relation to the status of any scheme. On the basis of the evidence set out in detail above, presumably, they still would have been very keen to invest. 218 The Pham defendants postulate four scenarios. First, they could have done nothing and forgot about the whole thing. This is most unlikely having regard to their keenness and the enthusiasm within the Assyrian community. Secondly, they could have proceeded with the investment without the intervention of any solicitors. From mid 2000, investment contracts were being issued directly by Mr Suleman. Presumably, if this had occurred, they still would not have learnt about the status of any scheme. 219 Thirdly, they could have gone to another solicitor who did not advise on the status of the scheme. After all, that is exactly what happened with Mr Nguyen and Ms Jajoo. 220 Fourthly, they could have gone to another solicitor who could have ascertained the status of the scheme (just how it would have been ascertained is not articulated by the plaintiffs) and who was able to advise on the status of the scheme. What would the advice have been? Would the plaintiffs have still invested? The plaintiffs need to establish (if I were to find that this is the most likely scenario) that they would not have proceeded in any event. The starting point to this analysis is, of course, that, if Ibrahim had been told that there was a risk of her losing her unit, that of itself and alone would not have caused the plaintiffs not to proceed. 221 As to the fourth scenario, what first must be identified is what would the advice have been. Mr Cornelius was not asked to express any views about what advice a solicitor in common practice (that is, a solicitor without any prior dealings with Karl Suleman and/or the scheme) would have given in those circumstances. For the sake of this analysis only the advice may well be, founded in the analysis set out in the Appendix hereto: "You are considering investing in an unregistered management investment scheme. It appears to have been operating for a short period. It appears to be profitable and has significant community support. An investment contract with Karl Suleman would still be a binding legal contract. The scheme itself is not illegal but those promoting it are liable for an offence under the Corporations Act. If the scheme is not registered, a number of people could apply to the Court to have the scheme wound up. It is not possible to tell, if the scheme is wound up, whether you will have all or any part of your initial investment return and although you may be able to retain the benefit of moneys received by you prior to it being wound up. The returns are high, you may well be able to recover your initial investment and more before the scheme is wound up. The scheme may still be able to be registered but it may not. If it is not, you have an election to void the investment contract before any winding up occurs. What do you want to do?" 222 On the evidence before me, I simply cannot be satisfied that the plaintiffs (even if the fourth scenario applied) would not have proceeded with the investment in any event, either before or after attempting to negotiate different terms with KSE. The whole Assyrian community believed in Karl Suleman. A large number of people in that tight knit community had made significant investments and achieved significant returns. Badal knew that there was a risk of Ibrahim losing her property because of the transaction with the Bank and he knew that at September of 2000. He knew that a business failing was the possibility of Karl Suleman's business failing (T248.20). Badal believed that, if he was still working, he would be able to make the repayments if Mr Suleman's business collapsed (T250.35). 223 Further, as to the $50,000 investment, Ibrahim thought Mr Suleman would use it how he thought best in any business provided she got and Mr Sargon got $1,350 every 2 weeks (T75.50). Ibrahim wouldn't have minded what was going to happen with the money provided she got her $1,350 every 2 weeks (T76.5). Badal did not mind how Mr Suleman used the money invested for his business purposes (T272.2). 224 Finally, Ibrahim was anxious to assist Badal in the investment (see paras 65-67, 69, 72, 73 and 82 above). She could not participate in the investment because of her pension but I infer she would be pleased to enjoy the fruits of the investment. 225 In respect of the claims based on breach of retainer/duty, even if a client/plaintiff has been able to establish that a defendant/solicitor has breached his or her retainer/duty (which I have found not to be the case), the client/plaintiff must establish what the plaintiff would have done, if he had been given the proper advice that he alleges should have been given by the defendant/solicitor, and that the breach has caused the plaintiff particular loss or damage. See generally Gore v Montague Mining Pty Limited [2000] FCA 1214 (Full Court of Federal Court of Australia, unreported, 30 August 2000). The concept also applies in respect of misleading and deceptive conduct: March v Stramare (E & MH) Pty Limited (1991) 171 CLR 506; Wardley Australia Limited v Western Australia (1992) 175 CLR 514 at 525; Henville v Walker (2001) 206 CLR 459 at [136]. 226 At best I can only speculate the plaintiffs have not discharged the onus upon them. 227 In relation to the equitable compensation claim founded in breach of the fiduciary relationship, the plaintiffs' rely on Brickenden v London & Loan Savings Co [1934] 3 DLR 465 at 469 in support of the proposition that "speculation as to what course the constituent, on disclosure, would have taken is not relevant." However, there is "no equitable by-pass of the need to establish causation": Youyang Pty Limited v Minter Ellison (2003) 77 ALJR 895 at 903; Churchill v Connolly [2004] NSWCA 212 at para [96]. There is no breach of fiduciary duty and this need not further be explored. The Plaintiffs' Action against the Third to Sixth Defendants (DDS) 228 The first observation I make is that when it came to the plaintiffs dealing with DDS, on their own admissions, if not as a matter of boasting, they had had experience in investing with Mr Suleman. The second observation I make is, conformably with the view I formed of the plaintiffs vis-à-vis the first and second defendants, that that same view applies as between the plaintiffs DDS and any conflict in testimony will be resolved in favour of what I can now generally state to have been a range of far more impressive witnesses called for these defendants. 229 Many of the matters set out in the submissions prepared for the plaintiffs as against DDS, if not all, have been dealt with by me hitherto. 230 It is to be noted that Suzie David had acted for Ibrahim's husband and on behalf of Mrs Ibrahim in personal injury proceedings. In addition to those matters, I am of the view that there is a generality of coincidence between the matters of fact asserted in terms of the Assyrian community's awareness of Karl Suleman and the allegations at least as to state of knowledge in the two plaintiffs at the time that they first dealt with the first and second defendants. 231 DDS's submissions are as follows: I will adapt and adopt them as I consider appropriate. 232 As DDS rightly submits, the determination of each of the claims depends in large measure on the conclusions drawn as to the events of the meeting which took place on 2 July 2001 between the first and second plaintiffs and Ms Jajoo, an employed solicitor of DDS. It is submitted that Ms Jajoo's version of events ought be accepted and preferred to that of both the first and second plaintiffs wherever there is conflict. I have indicated my approach in this regard already. The plaintiffs' claims in negligence and under the Fair Trading Act will therefore fail. Similarly, it is submitted the breach of fiduciary duty case ought fail in circumstances where DDS's retainer did not extend beyond the loan and mortgage transaction to a retainer to act on the proposed investment transaction. It is submitted that the plaintiffs have in any event failed to establish that they have suffered any loss as a consequence of any alleged breach of duty or misleading or deceptive conduct on the part of DDS. 233 As I have remarked, at the end of May 2001 the plaintiffs had previous experience of borrowing money together and had relatively recent experience of borrowing money from the Adelaide Bank, secured against Ibrahim's property, to fund an investment with Karl Suleman Enterprises Pty Limited ("KSE"). In addition, each of them had previous experience of making applications for finance (T136.8, 229.40 and Exhibits 24, 25 and 27). 234 As has been discussed above, in August 2000, Ibrahim appreciated that it was necessary, in order to obtain the loan from the Adelaide Bank, for her to make the property available. She knew that people who borrow money are obliged to pay it back. The circumstances of Ibrahim's involvement with the valuation of her unit in August 2000 I accept suggested an appreciation of the role her unit would play in that transaction. When Ibrahim and Badal met Mr Nguyen in August 2000 they obtained an explanation of the Adelaide Bank loan and mortgage documents and were told that if the payments to the bank were not able to be made the property may be lost (see affidavit of Mr Nguyen, paragraph 12 and T642.52). 235 By late May 2001 the experience of investing with KSE had proved to be most satisfactory, in that the fortnightly payments of $1,350.00 received in full and on time greatly exceeded the amount necessary to make the monthly payments to the Adelaide Bank. The plaintiffs were aware of other investors who were similarly well pleased with their investments with Mr Suleman who enjoyed a very good reputation in the community, including that of a highly successful businessman (T132.10, 133.35, 134.46, 286.40, 293.55). The opportunity to invest a further amount with KSE was received by both Badal and Ibrahim with some enthusiasm (T138.38-138.47). Neither Badal nor Ibrahim obtained further information concerning Mr Suleman or KSE, or even to speak to their accountant Mr El Gamal (T134.25, 135.40-135.54, 294.24). It seems that Badal spoke only with Mr Varda before discussing the matter with Ibrahim (T293.48). 236 I am satisfied that Ibrahim was happy to assist in the making of the further investment by way of using her property to support the loan (T135.56-136.2), and that she understood that her property was to be used as a security and that if the loan could not be repaid the property may be lost to the lender. 237 The enthusiasm with which the plaintiffs approached the possibility of a further investment is revealed by the fact that within about two days of their discussion of the proposal they had attended upon Quick Loan Services and met with Mr Jesse George (T136.41, 294.48). Ibrahim made the appointment (T294.51). After obtaining necessary documents overnight, they attended the office again the following morning (T139.17, 145.49). On that occasion (1 June 2001) they met with Mr Zia George, and an application for finance was completed (Exhibit 2). Ibrahim told Zia George that she owned the unit and that it had been put up for a previous loan (T141.14). It seems that such application was approved unconditionally on the same day (see Exhibit 14, page 5). 238 I accept that, contrary to the evidence of both the plaintiffs, no appointment was made for them by Mr George to attend upon Ms Jajoo (see affidavit of Ms Jajoo paragraphs 65 and 70 and T756.41). Rather, Zia George told them to contact DDS (T145.43, 296.20) and told them that documents would be sent by Quick Loan Services to DDS (T145.56, 296.24). Ibrahim accordingly telephoned the office of DDS late in the afternoon of 1 June 2001 and spoke with Ms Jajoo (see affidavit of Ms Jajoo paragraph 6 and Exhibit 14, page 3; compare T147.18-147.53). 239 The general principles as to the fact and scope of a retainer as have hitherto been set out are also advanced for DDS: see Beach Petroleum NL v Kennedy supra, at paragraphs 208 and 227. Ascertaining the scope of the retainer is of central importance given the statements made in the joint majority judgment in Astley v Austrust Ltd (1999) 197 CLR 1 at paragraph 47 to the effect that statute, criminal law and public policy apart, there is no reason why the contract for professional services should not declare completely and exclusively the legal rights and obligations of the parties in relation to their contractual dealings. 240 The plaintiffs do not explicitly plead the existence of a retainer of DDS. Nonetheless, it is accepted that the first and second plaintiffs retained DDS to act for them as borrowers and mortgagor in respect of the loan and mortgage transaction proposed to be entered into with Perpetual Trustees Australia Ltd. This appears to be recognised by Mr Cornelius (see paragraph 38 of his report), and, it is submitted, is amply demonstrated by the relevant conduct of the parties. 241 If the evidence of Ms Jajoo is accepted (it must be), it is plain that DDS neither expressly accepted a retainer to act or advise on any proposed investment, and nor did it assume any responsibility to so act or advise. For reasons which will be expanded upon below, the evidence of Ibrahim (affidavit paragraphs 33 and 35) and Badal (affidavit paragraph 26) to the effect that advice was sought and given concerning the merits of investing with Karl Suleman or KSE ought not be accepted (it has not been). 242 The contract of retainer between DDS and the first and second plaintiffs contains an implied term that the firm exercise reasonable care in providing the services pursuant to the retainer (see Astley v Austrust Ltd, supra, at paragraph 47). In this case, the professional services to be rendered pursuant to the retainer included advising the first and second plaintiffs as to the loan and mortgage agreements and associated documents they were contemplating signing, and the carrying out of the related conveyancing tasks so as to bring the transaction to a conclusion in accordance with the instructions of the client. Such a retainer does not ordinarily require a solicitor to advise concerning the financial merits or wisdom of the transaction (see Citicorp Australia Ltd v O'Brien, supra, at 418E-F). 243 No responsibility, in the end, I find, was assumed by DDS additional to the obligations imposed by the retainer to act on the loan and mortgage transaction. In particular, no responsibility was assumed to act or advise in relation to the proposed investment in KSE. In fact, at the point when Ms Jajoo became aware that one of the purposes of the refinance was to make some form of investment with KSE, Ms Jajoo expressly stated that she would not be advising about any such investment (see affidavit of Ms Jajoo paragraph 48, page 22 and T748.20, 775.05, 781.08). (Indeed, at an earlier stage of the 2 July 2001 conference Ms Jajoo informed the first and second plaintiffs that her only obligations to them were in relation to explaining the legal effects of the mortgage, the loan contract and the other documents sent by the lender's solicitors (see affidavit of Ms Jajoo paragraph 46, pages 20-21 and T774.58). Ibrahim agreed that this was said (T168.58). 244 The standard of care required of a solicitor is that which may be reasonably expected of practitioners practising in the relevant area of expertise (see Heydon v NRMA Ltd (2000) 51 NSWLR 1 at paragraphs 146, 362 and 649). In this case, the relevant standard is that which may be expected of a reasonably skilled solicitor acting for mortgagors and borrowers in mortgage lending transactions. The content of the duty of care in each case is determined by reference to the particular circumstances of the case, notably the scope of the retainer and the extent (if any) to which the solicitor assumes responsibility beyond the specifically agreed task. A solicitor retained to act on a particular transaction is ordinarily under no obligation to proffer advice on the wisdom or financial merits of the proposed transaction (see Clark Boyce v Mouat, supra, at 437; Citicorp Australia Ltd v O'Brien, supra, at 418E-F) but will be obliged to warn of material risks inherent in the proposed transaction (see Heydon at paragraph 145). 245 The evidence given by Ms Jajoo on the one hand, and by Ibrahim and Badal on the other, differs markedly both in relation to the conference on 2 July 2001 and also in relation to other contacts between the first and second plaintiffs and DDS. 246 For the reasons which follow, I accept Ms Jajoo as a credible and reliable witness, I generally accept her version of events, and prefer her evidence to that of both Ibrahim and Badal wherever there is conflict, as I have said. The evidence given by both Ibrahim and Badal was unreliable in numerous respects and important aspects of their evidence lacked credibility. 247 Ibrahim's evidence is undermined by her admitted memory difficulties (T64.19 and 65.50), the claimed recollection in the witness box of significant matters not contained in her affidavit (eg T154.44-155.16), numerous inconsistencies in her evidence (eg as to whether she signed the investment agreement in 2000 and as to the number of meetings and conversations she had with Ms Jajoo) and substantial differences between her affidavit version of events of the 2 July 2001 conference and the concessions she made in cross examination as to what was said at that conference. On a number of occasions she appeared to have the capacity to comprehend English, even when relatively complex matters were put to her (eg T22.50, 32.33-32.54, 80.34 and 115.47). 248 As far as Badal is concerned, his reliability is affected by the circumstance that whilst he claimed not to be able to read English (T182.27 and 199.04) it seems that his affidavit was not translated and read to him in the Assyrian language. Further, in the early stage of his cross examination he gave the appearance of having very little ability to speak English, but following the morning tea adjournment (T199) he appeared to dramatically improve in that regard. 249 As has already been observed, it is also noteworthy that significant parts of the affidavits of the plaintiffs are in identical terms yet both of them claimed not to have discussed with each other the details of the events in question (T112.15, 274.15). I have not accepted these claims. Indeed, it is inherently unlikely that following the collapse of KSE they would not have extensively discussed the problems they thereby faced. 250 I consider the plaintiffs' versions of the events of the conference of 2 July 2001 as inherently unlikely. The suggestion that Ms Jajoo merely placed the numerous documents in front of them and obtained their signatures, without offering any explanation at all, may be regarded as extravagant. This is particularly so in circumstances where Ibrahim in particular eventually made numerous concessions in cross examination to the effect that Ms Jajoo was providing an explanation of the various documents which were signed. I accept Ms Jajoo's assertion that her affidavit version of events was correct (T153.23-154.23). 251 Ms Jajoo, in giving her evidence, I found to be a careful, thorough and reliable witness with a good recollection of the relevant events. In substance, her evidence was only challenged in two significant respects, namely, that the 2 July 2001 meeting was short and involved no explanation of the documents, and that positive recommendations were given by her as to investing with Karl Suleman. In all the circumstances I accept her denials. 252 As far as the circumstances of the 2 July 2001 conference are concerned, the contents of Ms Jajoo's file note (Exhibit 14 pages 40-43) coupled with the numerous concessions made in cross examination by Ibrahim strongly point in favour of acceptance of Ms Jajoo. A useful table was provided with submissions which aided coming to this view. 253 As to the allegation of the making of positive recommendations is concerned, Ms Jajoo's evidence that she said she did not advise and was not in a position to approve or disapprove of any investment, I accept (see affidavit of Ms Jajoo paragraph 48, page 22; and see T748.17, 749.12, 773.23 and 781.08). The making of such a statement is consistent with the limited knowledge possessed by Ms Jajoo as to the details of Mr Suleman's business activities generally and the details of any investment proposed to be made by the first and second plaintiffs (see T744.50 – it is noteworthy that there is no evidence that Ms Jajoo ever saw an investment contract involving KSE, let alone one proposed to be entered into by any of the plaintiffs). Further, the making of such a statement was consistent with Ms Jajoo's practice not to advise refinancing clients as to any investments they may be contemplating making using the proceeds of the finance (see T749.57-750.08, 770.50-771.04). It was not suggested to Ms Jajoo that she did not have such a practice. In short, Ms Jajoo stated that she did not advise as to the proposed investment, neither approved nor disapproved of it, and recommended that independent legal advice and financial advice be obtained about it: this I accept on the probabilities. 254 The first contact between the plaintiffs and DDS occurred late on the afternoon of 1 June 2001 when Ibrahim had a telephone conversation with Ms Jajoo (see affidavit of Ms Jajoo paragraph 6, Exhibit 14 page 3). Ibrahim's denials of this conversation (T147.16-147.53, compare 151.41) I do not accept. During that conversation Ibrahim informed Ms Jajoo that she was refinancing her existing loan, and she inquired as to whether DDS had received any paperwork (Zia George of Quick Loan Services had informed Ibrahim and Badal that papers would be forwarded to DDS (T145.56, 296.24 – I infer that he was referring to the Royal Guardian Mortgage Corporation loan approval). The approval, which was apparently given on 1 June 2001 (Exhibit 14 page 5), was not forwarded to DDS until the afternoon of 4 June 2001 (Exhibit 14 pages 4 and 5).). On 5 June 2001 Ms Jajoo telephoned Ibrahim to inform her that DDS had received the unconditional loan approval letter. She also requested that Ibrahim bring in a current loan statement so that the discharge of the existing mortgage could be organised (affidavit of Ms Jajoo paragraph 10; Exhibit 14 page 6; T148.02, 148.18). It appears that Ibrahim then had a telephone conversation with Vivian Joseph of DDS on 19 June 2001 concerning the loan documents, the discharge of the existing mortgage and title to the property (affidavit of Ms Jajoo paragraph 11, Exhibit 14 page 7; T149.19-150.06). About half an hour later Ibrahim telephoned Ms Jajoo (affidavit of Ms Jajoo paragraph 12, Exhibit 14 page 8; T148.29-149.17). In this conversation, Ibrahim said that the loan papers had still not been received and that she had been telephoning Quick Loan Services about them. Ms Jajoo reminded Ibrahim to bring in a loan statement so that the discharge of the existing mortgage could be organized. Ibrahim agreed to bring the loan statement in to Vivian Joseph. 255 Shortly thereafter the plaintiffs attended the offices of DDS and signed a Discharge Authority (Exhibit 14 page 10 and Exhibit A-RI11 page 332; T150.28-150.58, 297.11-297.57). Ibrahim and Badal did not meet with Ms Jajoo on this occasion. I accept Ms Jajoo's evidence that there was only one meeting with them (T757.12-757.50). The likelihood is that they dealt with Vivian Joseph or perhaps Lena Moward in relation to the Discharge Authority. On 19 June 2001 DDS wrote to Home Loans Centre Management Pty Ltd enclosing the executed Discharge Authority (Exhibit 14 page 11). 256 I note that Ibrahim conceded in cross examination (T147.10) that she was probably mistaken about her claim contained in paragraph 33 of her affidavit, that about two days after meeting with Zia George on 1 June 2001 she attended the office of DDS without Badal, met with Sabrina Jajoo, and had a conversation with her concerning investing with Karl Suleman. 257 On 22 June 2001 DDS wrote to Ibrahim thanking her for her instructions to act on this refinance (Exhibit 14 page 19 and Exhibit A-RI11 page 324). On 25 June 2001 Ibrahim telephoned Vivian Joseph to ask her about the letter and to inquire about the whereabouts of the mortgage documents (Exhibit 14 page 24; Ibrahim's denials at T151.51-152.23 I reject). The matter was left upon the basis that telephone contact would be made once the documents arrived. 258 On 27 June 2001 Ibrahim had a telephone conversation with Lena Moward of DDS (Exhibit 14 page 31). Ibrahim was told that Heidtman's (the lender's solicitor) were sending documents in the next few days (T152.31). It was at this point that an appointment was made to see Ms Jajoo on Monday 2 July 2001 at 2.00pm (T152.39). During this conversation Ms Moward requested Ibrahim to bring various documents to that appointment (see T152.41-153.21). This conversation must have taken place in the English language (T785.29). It appears that later on 27 June 2001 the loan and mortgage documents were received by DDS from Heidtman & Co (Exhibit 14 pages 26-30). At some stage during that day Ibrahim telephoned the office of DDS to speak with Ms Moward but was not able to do so (Exhibit 14 page 25). 259 On 2 July 2001 the conference between Ms Jajoo, Ibrahim and Badal took place. I accept Ms Jajoo's account of the meeting: the number of documents which were executed at the conference, the detailed information included in Ms Jajoo's file notes (Exhibit 14 pages 40-43) and the fact that Ms Jajoo made three telephone calls during the course of the conference, reveals that the evidence given by Ibrahim and Badal to the effect that the meeting only took 15 minutes is entirely implausible. Ms Jajoo's version of events is corroborated by the terms of her file note. The note was prepared during the conference (T747.58). It provides support for her evidence to the effect that she did not provide any advice concerning the proposed investment, but rather recommended that Ibrahim and Badal obtain independent legal advice and financial advice concerning such investment. The terms of the file note also corroborate her evidence to the effect that Ibrahim and Badal were well aware that the proposed investment was risky but were nonetheless prepared to run those risks due to their faith in Mr Suleman and the high returns which such investments promised. 260 After the 2 July 2001 conference DDS wrote to Heidtman & Co enclosing the executed documents (Exhibit 14 pages 72-73). Only routine conveyancing tasks remained to be performed. These tasks were carried out over the next few days in preparation for settlement which was anticipated to take place on 9 July 2001 (see affidavit of Ms Jajoo paragraphs 53-59). Settlement in fact took place on 10 July 2001 (Exhibit 14 page 85). The next day, Ibrahim and Badal went to the office of DDS to collect various documents including the cheque drawn in favour of KSE (affidavit of Ms Jajoo paragraphs 61 and 62, Exhibit 14 pages 87-92; affidavit of Ibrahim paragraph 37 and T173.57, affidavit of Badal paragraph 28 and T316.20). After receiving the cheque they went together to meet with Jesse George (see affidavit of Ibrahim paragraph 41, affidavit of Badal paragraph 32 and T316.48-317.21). 261 Accepting as I do the evidence of Ms Jajoo, the retainer, I find, was plainly limited to acting and advising on the loan and mortgage transaction. Ms Jajoo I find properly discharged the loan and mortgage retainer. She gave a thorough explanation of the principal obligations to be assumed under the loan and mortgage documents, and did so in a language in which both the first and second plaintiffs were fluent. When they left the conference they must have been in no doubt as to their obligations and their potential liabilities to their new lender. That they at least appreciated that they were borrowers is confirmed by their conduct on 1 August 2001 when they both attended the office of Royal Guardian and signed a payment variation request (see Exhibit 4 and T318.15-319.30). 262 The DDS defendants see the plaintiffs' case appearing to proceed upon the assumption that the scope of the responsibilities assumed by DDS included advising on the proposed investment in KSE (see paragraphs 39 and 40). In the end I hold this not to be so. I do think, however, as with the Pham defendants, the plaintiffs nonetheless contend that, notwithstanding the limited retainer which existed, DDS was under a common law duty to advise in relation to the proposed investment in KSE, and that such a duty included an obligation to disclose to the plaintiffs information which DDS obtained in the course of assisting Mr Suleman and/or KSE to obtain advice concerning compliance with Corporations Law requirements. 263 In this regard it is important to note that such information as DDS acquired in relation to such matters was confidential to Mr Suleman and/or KSE. This is the case whether DDS was acting as the solicitors in the matter or were acting as agents in the conveying of information and advice as between Mallesons Stephen Jaques and its clients. DDS was not in a position to disclose the details of such information or advice to other persons. Although restrictions created by obligations of confidence may be able to be overcome through the obtaining of appropriate consents from a client, there is no obligation upon the solicitor or the firm to do so. 264 I do not see, myself, that the information which DDS possessed concerning KSE's business operations would, in July 2001, have been material for clients being advised about a proposed investment in KSE to know. Such information as was possessed lacked clarity and was somewhat out of date. Whilst it was known that the way in which investment funds had been obtained in relation to trolley collection businesses may have constituted a managed investment scheme which was required to be registered, DDS and in particular Ms David did not know whether that was the current position. She knew that various proposals were under consideration by Mallesons Stephen Jaques in the period up to the termination of DDS's instructions in late May 2001. She did not know what had occurred since that time, including what structure and what type of contracts Mr Suleman and/or KSE was now employing (It seems that by August 2001 KSE was entering into loan contracts with investors. See Plaintiffs' tender bundle Volume 5 page 1805; T498.12-498.39.). There is no suggestion that she knew that any business or investment scheme conducted by Mr Suleman or KSE might be, or be likely to become, insolvent. 265 In any event, the evidence of Mr Cornelius was to the effect that if the solicitor or the firm possessed knowledge which would be material for the clients to know in being advised about a matter, but the solicitor or firm was unable or unwilling to impart that knowledge to the clients, then it would not have been appropriate for the solicitor or the firm to proceed to advise about that matter (T391.33). In those circumstances, the appropriate course for the solicitor to take would be to suggest that the clients obtain advice about the investment elsewhere (T391.35, 397.55). This is what Ms Jajoo did (see affidavit of Ms Jajoo paragraph 48, page 22 and T747.50, 770.05-770.13, 774.01). 266 Even if the knowledge possessed by the solicitor or the firm is not regarded as material for the clients to know in being advised about a matter, but the solicitor or the firm was otherwise unable to advise about a matter because to do so would involve a breach of fiduciary duty, the appropriate course would be to proceed as outlined above. (It would be the same position if the solicitor or the firm, although not precluded by fiduciary duties or obligations of confidence from advising as to the matter, chose not to do so because, for example, the solicitor or the firm did not consider themselves appropriately qualified.) The assumption referred to in paragraph 262 above has not been made out. 267 The particulars of negligence the plaintiffs' rely upon are cognate to those alleged as they arise in relation to the Pham defendants. The responses are the same and I do not propose to elaborate. None is made out. 268 In relation, however, to the particular of negligence contained in paragraph 46(p) of the FFASC, which was added by way of amendment on 3 August 2004, the essence of the allegation is that DDS, through Ms Jajoo, ought to have ascertained from the plaintiffs at the outset the purpose or purposes of the refinance and that if the purpose or any purpose included payment of funds to KSE, DDS should not have accepted any retainer from the plaintiffs. 269 The allegation appears to be in terms of a common law duty of care, although it ought be regarded as an allegation of breach of fiduciary duty. (The plaintiffs appear to recognise this by also including the allegation in paragraph 55 of the FFASC.) No evidence was adduced by the plaintiffs to suggest that it was a common practice amongst solicitors proposing to act on a loan and mortgage transaction, to make any such inquiries. The onus rested upon the plaintiffs in this regard. Indeed, the evidence of Ms Cornelius relevantly proceeds upon the assumption that a solicitor acting on a refinance transaction might not become aware of the purpose or purposes of such refinance until a late stage in the conduct of that retainer (see the report of Mr Cornelius paragraphs 39 and 42(a), and T392.53-394.07, 395.48 and 397.05). Neither was it suggested to Mr Bluth that any such practice existed. Further, it was not put to Ms Jajoo that her practice of asking clients towards the end of the retainer about the destination of funds (T729.35) was in any way inappropriate. 270 I conclude that Ms Jajoo's practice in this regard was not negligent. Again, as Mr Cornelius accepted, a solicitor acting on a refinance who possesses knowledge or has a relationship with a third party can nonetheless properly carry out that retainer at least before becoming aware that one of the purposes of the refinance is to invest with the third party. Indeed, even at that point there would be no reason why the solicitor could not continue with the retainer if only routine conveyancing tasks remained to be performed (see T395.43-396.29). 271 The submissions for DDS on fiduciary duties conform generally with those made for the Pham defendants; nonetheless I shall refer to them. 272 The relationship of solicitor and client is recognised as one in which fiduciary obligations are owed by the solicitor to the client (see Maguire v Makaronis, supra, at 463). Accordingly, the solicitor is under a duty to avoid acting in circumstances where there is any real or substantial possibility of conflict between its duty to serve the interests of the client and its personal interest, or any actual conflict between its duty to serve the interests of the client and duties owed to another client (see, for example, Oceanic Life Ltd v HIH Casualty & General Insurance Ltd [1999] NSWSC 292 at paragraph 40; Pilmer v The Duke Group Ltd (in liq), supra, at paragraph 78). The solicitor is under an overriding duty to ensure that his or her loyalty to the client remains undivided (see Maguire v Makaronis, supra, at 465; Beach Petroleum NL v Kennedy (1999) 48 NSWLR 1 at paragraphs 196-197). In this context, the focus is upon the solicitor who actually does the work for the client as opposed to the firm (see Unioil International Pty Ltd v Deloitte Touche Tohmatsu (1997) 17 WAR 98 at 109). 273 Again, the scope of the retainer is of paramount importance: see Hospital Products Limited at 97 per Mason J. I refer also to the evidence of Mr Cornelius at T357.03 and 399.25 in this regard. 274 It was made clear by the joint majority judgment in Pilmer at paragraph 83 that allegations of breach of fiduciary duty must not be too general. The conflicting duty or interests must be identified. Further, there is a distinction between a case in which a fiduciary acts for separate clients in the one matter and a case in which a fiduciary has, on an earlier occasion, acquired information which is relevant to another matter in which the solicitor acts for a different client (see Beach Petroleum NL at paragraph 204). In Beach the Court of Appeal seemed to accept that the former situation involves a breach of fiduciary duty, it not being possible for the fiduciary to simultaneously act for or against the same client, whereas the second situation does not involve any breach of fiduciary duty but rather falls to be considered under the law of negligence, breach of contract, confidential information, etc. As the Court of Appeal stated at paragraph 206, a breach by a solicitor of an obligation to make information available to its client is not a breach of a fiduciary obligation but is rather a breach of a duty of care. That view accords with the prevailing orthodoxy in Australia that fiduciary obligations are proscriptive rather than prescriptive in nature: see Breen at 113 and 137-8; Pilmer at paragraph 74. 275 With respect to DDS, as far as fiduciary obligations are concerned, two main factual issues arise. First, whether at the time DDS was acting for the first and second plaintiffs it was also acting for another client in circumstances where a conflict existed between its duty to the first and second plaintiffs and its duty to the other client; and secondly, whether at the time DDS was acting for the first and second plaintiffs there was a real or substantial possibility of conflict between the solicitors' own interests and their duty to serve the interests of the first and second plaintiffs. 276 The first and second plaintiffs retained DDS during the period 1 June 2001 to 11 July 2001. During that period, DDS did not act for KSE. Its role in relation to the obtaining by KSE of advice from Mallesons ceased in late May. During the relevant period the firm did, however, have Mr Suleman and some of his related companies as clients pursuant to various retainers (see affidavit of Suzy David 26 July 2004, paragraphs 7-25). None of those retainers concerned KSE or any trolley collection business. As far as any personal interests are concerned, these are essentially confined to the indirect shareholding interests held by Suzy David and Fred David (his interest appears to have been shared with that of his wife, Ms Jajoo) in Froggy Music Pty Ltd. Those interests came about as a consequence of the reinvestment of the proceeds of an earlier investment made with Mr Suleman. There is no evidence that any member or employee of DDS held an interest (whether direct or indirect), in KSE or in any trolley collection business. I agree with this analysis. 277 Further, I see no reason why DDS or Ms Jajoo could not carry out the refinancing retainer with undivided loyalty. No conflict existed between the duties owed to the first and second plaintiffs in carrying out that retainer and any duties owed under any retainer by Karl Suleman or companies associated with him. The duties owed in relation to existing retainers did not conflict in any way with those owed to the first and second plaintiffs under the refinancing retainer. The plaintiffs have failed to establish such conflict. It was not put to any of the DDS witnesses that any conflict of this character existed. Moreover, such personal interests as existed were not such as to give rise to a real or substantial possibility of conflict between those interests and the firm's duties to the first and second plaintiffs under the refinancing retainer: see Pilmer at paragraphs 78 and 79. 278 Accordingly, I hold that there was no breach of fiduciary duty by DDS in accepting and carrying out the refinancing retainer. Indeed, as was recognised by Mr Cornelius, no question of conflict even arose until Ms Jajoo became aware that one of the purposes of the refinance was to make a further investment in KSE (see T393-4, 395.48, 396.1-396.11). This did not occur until the end of the 2 July 2001 conference, by which time all of the advice had been given concerning the documents and the documents had been signed. 279 No breach of fiduciary duty was involved in DDS continuing from that point to carry out the routine conveyancing tasks which remained (see the evidence of Mr Cornelius at T396.13-396.29; and Pilmer at paragraph 131). To suggest otherwise would be to defy commonsense (see Mr Cornelius at T398.25). Ms Jajoo cannot be criticised for carrying out the remaining routine tasks. Her judgment in that regard was entirely appropriate, particularly in circumstances where she recommended independent legal and financial advice be obtained elsewhere as to the proposed investment. Mr Cornelius was clear in his view that the appropriate course was taken, namely, to inform the clients that the firm was not in a position to advise about the proposed investment, and to recommend to the clients that advice be obtained from another solicitor and financial advisor (see T391.35, 397.55). 280 The Fair Trading Act claims are contained in paragraphs 47 and 47A of the Fourth Further Amended Statement of Claim. The claims are expressed to be in the alternative. In relation to paragraph 47, the relevant conduct complained of is described in paragraphs 47(b) and 47(c). Paragraph 47(b) appears to rely upon the contents of paragraph 33 of Ibrahim's affidavit. There is no evidence to support the claim contained in paragraph 33 of her affidavit and, indeed, she conceded in cross examination that she was probably mistaken (see T147.10). 281 Paragraph 47(c) appears to relate to the claims made by both Ibrahim and Badal that at the 2 July 2001 conference, Ms Jajoo made positive recommendations about investing with Karl Suleman. Those claims are not accepted. 282 The conduct alleged in paragraph 47, I find, did not occur and that aspect of the claim made under the Fair Trading Act fails. 283 The allegation in paragraph 47A focuses entirely upon a failure to disclose particular matters. The definition of conduct in section 4(2) of the Act includes a refusal to act; that concept includes refraining from doing an act only where such is other than inadvertent. Accordingly, it is necessary to establish that there was actual advertence to the question of whether the act should be done or not, and the formation of an intention that it not be done (see Peninsula Balmain Pty Ltd v Abigroup Contractors Pty Ltd [2002] NSWCA 211 at paragraph 58 per Hodgson JA). These matters were not established so this claim also fails. 284 Notwithstanding the above, it is to be observed that in determining whether conduct contravenes section 42 of the Fair Trading Act, it is necessary to view the relevant conduct in the light of all relevant surrounding circumstances. Silence, or a failure to disclose information, is to be assessed as a circumstance like any other (see Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 at 32). It is not necessary to establish the existence of a general law duty to disclose such information. However, the existence of a general law duty to disclose information is a relevant factor, as is the existence of circumstances giving rise to an expectation that disclosure of particular information will be made (see, for example, Warner v Elders Rural Finance Ltd (1993) 41 FCR 399 at 404-405). 285 Thus it is said a question therefore arises as to what information the first and second plaintiffs could reasonably expect to be furnished by DDS as their solicitors acting on the loan and mortgage transaction. Certainly they could reasonably expect DDS to disclose all information which would be material for them to know in being advised as to the loan and mortgage transaction. However, unless DDS was acting for them on the proposed investment with KSE, the first and second plaintiffs could not reasonably expect DDS to disclose all information which would be material for them to know in being advised on the proposed investment. This would particularly be the case where any such information was confidential (see Brophy v NIAA Corporation Ltd (in liq) (1995) ATPR 41-399 at 40,411). Clients of a firm of solicitors do not reasonably expect to be furnished with information from the solicitor which is confidential to other parties. In fact, clients of the solicitor expect the solicitor to respect confidences. Thus, had DDS accepted a retainer to act on the proposed investment, the first and second plaintiffs could reasonably have expected either that DDS would disclose all information which would be material for them to know in being advised on the proposed investment or, if DDS was not willing or able to do so, to decline to act for them on the proposed investment (see the evidence of Mr Cornelius at T391.35 and 397.55). 286 However, as I have held, DDS did not accept any such retainer. Rather, Ms Jajoo informed her clients that the firm would not be acting or advising on the proposed investment, and recommended that the clients obtain independent legal and financial advice elsewhere. In those circumstances, the first and second plaintiffs could not reasonably expect disclosure of information which would be material for them to know had such a retainer been accepted, the more so where such information is confidential. 287 Accordingly, there was no failure to disclose any information which the first and second plaintiffs could reasonably have expected to be disclosed to them in the circumstances. Moreover, the statements made by Ms Jajoo in relation to the proposed investment were not misleading because she clearly stated: that the firm could not advise in relation to the proposed investment; that the firm had previously been involved with Karl Suleman in relation to obtaining legal advice concerning the structure of his businesses which may not have been set up properly; and that the clients should obtain independent legal and financial advice about the proposed investment so that its risks are explained. 288 Overall, viewed in the context of what Ms Jajoo was doing (i.e. declining to act on the proposed investment and recommending independent legal and financial advice about it), no misrepresentation or erroneous impression was created. Certainly, the statements made by Ms Jajoo cannot be regarded as providing reassurance concerning the proposed investment. She expressly stated that she was not in a position to either approve or disapprove of the investment and recommended that advice be obtained concerning the risks of such investment. For these reasons, this aspect of the claim made under the Fair Trading Act can also be dismissed. 289 DDS in their submissions deal also with causation to the same purport as those for the Pham defendants. 290 Three different remedies are involved: common law damages for breach of contract, equitable compensation for breach of fiduciary duty, and statutory damages pursuant to the Fair Trading Act. However, in respect of each remedy, the proper approach is to adopt a common sense view of causation in determining whether the losses claimed by the plaintiffs were caused by the relevant wrongful conduct: March v Stramare (1991) 171 CLR 506; O'Halloran v R T Thomas & Family Pty Ltd (1998) 45 NSWLR 262 at 272-3; Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 525; and Henville v Walker (2001) 206 CLR 459 at paragraphs 61 and 95. The plaintiffs bear the onus of proof of causation: see, for example, Gore v Montague Mining Pty Ltd [2000] FCA 1214. 291 As I have earlier said, by the time contact was made with DDS on 1 June 2001, Ibrahim and Badal had already decided upon a course of conduct, namely, the borrowing of further funds secured over Ibrahim's property so as to enable a further investment to be made with KSE. Moreover, they were approaching the proposed further investment with enthusiasm. Ibrahim in particular exhibited keenness for the matter to proceed quickly, and in fact showed signs of impatience as opposed to there being "no rush" (T175.10). 292 Even if, contrary to my findings, the position was that Ms Jajoo made positive recommendations concerning investing with Karl Suleman, the plaintiffs have not established that had such statements not been made, they would not have proceeded with the investment. Neither Ibrahim nor Badal gave any evidence to that effect. The only evidence of such character is contained in paragraph 59 of Ibrahim's affidavit where she deposes that she would not have borrowed the funds if she knew that she risked losing the property. That evidence was supplemented in cross examination by evidence to the effect that she would not have proceeded with the transaction if she had known there was even "a slight risk in investing" (T116.45). That evidence, together with her evidence generally to the effect that she was unaware of any risk to her property in the event that the loan could not be repaid, totally lacked credibility. 293 Upon the obtaining of the unconditional loan approval from Royal Guardian Mortgage Corporation, the second investment with KSE was inevitable. Neither Badal nor Ibrahim saw any need to obtain further information concerning Mr Suleman or KSE, or even to speak to their accountant Mr El Gamal (T134.25, 135.40-135.54, 294.24). They went to DDS so that the legal formalities involved in the refinancing transaction would be dealt with. Their attitude is clearly illustrated by the fact that, having received a recommendation from Ms Jajoo to obtain independent legal advice and financial advice concerning the proposed investment, neither of those steps was taken. Instead, the cheque made out in favour of KSE was immediately taken to Mr Suleman's office where arrangements were made for a further investment contract to be entered into. There was no evidence adduced by the plaintiffs that, had they been given any advice about an unregistered managed investment scheme, they would have changed course. The plaintiffs' submission that it was up to the defendants to put such matters to the plaintiffs in cross-examination is incorrect and amounts to an attempt to reverse the onus of proof. 294 There is no evidence that, had DDS declined to act in relation to the refinancing transaction, that the outcome would have been any different. No evidence was adduced to the effect that had Ibrahim and Badal gone to another solicitor they would have obtained advice of a different character which would have caused them to decide not to proceed after all. Indeed, the evidence of Mr Cornelius is relied upon by DDS in support of the contention that DDS, in carrying out the refinancing transaction, acted appropriately, particularly at the point in time when knowledge was acquired that one of the purposes of the refinance was to make a further investment with KSE. 295 In paragraph 227 above I have referred to the plaintiffs' approach to equitable damages. For DDS it is submitted that if it was held that DDS was in breach of fiduciary duty by continuing to act, it would be necessary to consider what would have happened had DDS instead ceased to act. The stricter view of causation, as exemplified in Brickenden v London Loan & Savings Company [1934] 3 DLR 465 does not seem to apply to a case such as the present. Brickenden concerned a transaction between solicitor and client in which the solicitor preferred his own interests over that of the client (see Youyang Pty Ltd v Minter Ellison (2003) 212 CLR 484 at para 42). The Brickenden principle seems to be confined to cases in which the beneficiary is seeking recovery from the fiduciary of an undisclosed benefit, as opposed to cases in which the beneficiary seeks equitable compensation for loss (see Beach Petroleum NL v Kennedy supra, at paragraphs 434-448, especially 444; White v Illawarra Mutual Building Society Ltd [2002] NSWCA 164 at paras 137-139 and 142-146). With this analysis I am also predisposed to agree, though not conclusively to pronounce upon. 296 The making of the second investment was dictated by a combination of the perceived success of the first investment, and the faith reposed in Mr Suleman as a successful businessman and a community leader of high standing. There is no evidence which would justify any conclusions as to the precise reasons why KSE failed. It may have been caused by poor management, commercial misfortune, or even inappropriate or dishonest business practices on the part of Mr Suleman and his agents. It may have been caused by a combination of such factors. That all remains in the realm of speculation. Nonetheless, it seems clear that, upon a common sense basis, the cause of any losses suffered by the plaintiffs was their misplaced faith in Mr Suleman. As referred to earlier in these reasons, it was not part of the role assumed by DDS to discover whether such faith was misplaced or not, or to give any advice accordingly. Conclusion 297 It will thus be seen that the plaintiffs have failed against each set of defendants on each of the causes of action. 298 I have not taken time to refer to the evidence in relation to the quantification of any damages, whether nominal or substantive, given certain curiosities in the evidence relating to the computation of the latter, and upon which no further remark need be made. 299 Nor have I considered what in the end is an irrelevant defence, described as the "Professional Standards Act" defence. The events giving rise to this particular action are notorious in the sense that there is a general knowledge in the community at large of the collapse of the Karl Suleman empire and Froggy.com. That there are multiple actions arising from that financial collapse was made known to me in the course of these proceedings; and that the defendants presently sued are being sued by other complainants is also known. 300 I have sought to restrict myself to the real issues in this litigation which involved, as litigation of this kind always involves, people, and the joinder of issue between them within the context of what their respective legal advisers have informed them to be the structure of the action. 301 The formal orders are: 1. I find a verdict for the defendants and enter judgment accordingly. 2. The plaintiffs are to pay the costs of the defendants including all reserved costs. 3. I order the return of the exhibits and MFI 21. APPENDIX MANAGED INVESTMENT SCHEMES Generally 302 The provisions for regulation of managed investment schemes were originally inserted in the Corporations Law (as it then was known) (primarily in Ch 5C) by the Managed Investments Act 1998 (Cth) which commenced on 1 July 1998. 303 The primary facts relevant to the Pham defendants occurred in August/September 2000. 304 As at 2000, the managed investment scheme component of the Corporations Law was quite recent (T683.30). There were no authorities on the new sections (para 71 of Pham's first affidavit). Effective on 11 March 2002, there were a number of changes to the managed investment scheme provisions pursuant to the Financial Services Reform Act 2001 (Cth) (No 122 of 2001). Effective on 15 December 2001, there were also changes to the managed investment scheme provisions pursuant to the Treasury Legislation Amendment (Application of Criminal Code) Act (No 3) 2001 (Cth) (No 117 of 2001). Finally, effective on 15 July 2001, there were changes to the managed investment scheme provisions pursuant to Corporations (Repeals, Consequentials and Transitionals) Act 2001 (Cth) (No 55 of 2001). 305 "Managed investment scheme" means (section 9(a) – (b)): "(a) a scheme that has the following features (i) people contribute money or money's worth as consideration to acquire rights ("interests") to benefits produced by the scheme (whether the rights are actual, prospective or contingent and whether they are enforceable or not); (ii) any of the contributions are to be pooled, or used in a common enterprise, to produce financial benefits , or benefits consisting of rights or interests in property, for the people (the "members") who hold interests in the scheme (whether as contributors to the scheme or as people who have acquired interests from holders); (iii) the members do not have day to day control over the operation of the scheme (whether or not they have the right to be consulted or to give directions); or (b) a time sharing scheme…" (emphases added) 306 Certain types of arrangements which might otherwise fall within the definition of "managed investment scheme" are expressly excluded (section 9(c) – (n)). 307 Central to the meaning of "managed investment scheme" for the purposes of the Corporations Act 2001 (as it is now known) is the notion of a "scheme". The comments of Mason J in the High Court decision in Australian Softwood Forests Pty Limited v A-G (NSW); Ex rel CAC (1981) 148 CLR 121 at 129, that "all the word 'scheme' requires is that there should be some program, or plan of action" have traditionally been applied to the use of the term "scheme" in the Corporations Act under the present definition of managed investments scheme and its predecessor provisions: ASIC v Pegasus Leveraged Options Group Pty Limited (2002) 41 ACSR 561 at [26] – [27]; Cvetanoski v Filaria Pty Limited (2002) 171 FLR 194 at [22]; ASIC v Chase Capital Management Pty Limited (2001) 36 ACSR 778 at [57]. 308 In Australian Softwood Forests Pty Limited, Mason J said at 133: "The argument is that in order to constitute a "common enterprise" there must be a joint participation in all the elements and activities that constitute the enterprise. I do not agree. An enterprise may be described as common if it consists of two or more closely connected operations on a footing that one part is to be carried out by A and the other by B, each deriving a separate profit from what he does, even though there is no pooling or sharing of receipts or profits. It will be enough that the two operations constituting the enterprise contribute to the overall purpose that unites them. There is then an enterprise common to both participants, and, accordingly, a common enterprise." 309 A scheme which produces financial benefits to some but not all members will not come within the definition of a managed investment scheme: Re Lawloan Mortgages Pty Limited [2003] 2 Qd R 200 at 216-7. 310 In ASIC v Chase Capital Management Pty Limited at 791, the Court rejected an argument that the existence of a committee of members to monitor the investments would constitute "day to day control" by members, for purposes of the definition of "managed investment scheme". 311 The definition of "managed investment scheme" contained in section 9 of the Corporations Act states that the definition does not include the following: (c) a partnership covered by an application order made for the purposes of section 115. The note at the end of the definition of managed investment scheme in relation to paragraph (c) states that a partnership with less than 20 members will usually not require registration because paragraph 601ED(1)(a) and under section 115 a partnership with more than 20 members can only operate if covered by an application order; (d) a body corporate (other than a body corporate that operates as a time sharing scheme); (e) a scheme in which all of the members are bodies corporate that are related to each other and to the body corporate that promotes the scheme; (f) a franchise. " Franchise " is defined (section 9) to mean an arrangement under which a person earns profits or income by exploiting a right, conferred by the owner of the right, to use a trademark or design or other intellectual property or the goodwill attached to it in connection with the supply of goods or services. An arrangement is not a franchise if the person engages the owner of the right, or an associate of the owner to exploit the right of the person's behalf; (g) a statutory fund maintained under the Life Insurance Act , 1995; (h) a regulated superannuation fund, an approved deposit fund, a pooled superannuation trust, or a public sector superannuation scheme, within the meaning of the Superannuation Industry (Supervision) Act , 1993; (i) a scheme operated by an Australian ADI in the ordinary course of its banking business; (j) the issue of debentures or convertible notes by a body corporate; (k) a barter scheme under which each participant may obtain goods or services from another participant for consideration that is wholly or substantially in kind rather that in cash; (l) a retirement village scheme operating within or outside Australia: (i) under which the participants, or a majority of them, are provided, or are to be provided, with residential accommodation within a retirement village (whether or not the entitlement of a participant to be provided with accommodation derives from a proprietary interest held by the participant in the premises where the accommodation is, or is to be, provided); and (ii) which is not a time sharing scheme. (m) a scheme that is operated by a co-operative company registered under Part IV of the Companies (Co-operative) Act, 1943 of Western Australia or under a previous law of Western Australia that corresponds with that Part; and (n) a scheme of a kind declared by the regulations not to be a managed investment scheme. 312 Section 601ED(5) prohibits a person from operating a managed investment scheme that section 601ED requires to be registered under section 601EB unless the scheme is so registered. "Operating" a managed investment scheme does not refer to ownership or proprietorship but rather to the acts which constitute the management of or the carrying out of the activities which constitute the managed investment scheme: ASIC v Pegasus Leveraged Options Group Pty Limited at 574. 313 Section 601ED(2) provides that a managed investment scheme does not have to be registered if all the issues of interests in the scheme that have been made did not need disclosure to investors under Part 6D.2 (see sections 706 and 708) when they were made. Sections 706 and 708 speak of the offer of "securities". Sections 9 and 92(c) define "securities" to mean, inter alia, interests in a managed investment scheme. Accordingly, a managed investment scheme does not have to be registered if all the issues of interests were in respect of one or more of: (a) small scale offerings (20 issues or sales in 12 months to a $2 million ceiling) (section 708(1) – (7)); (b) sophisticated investors (at least, a $500,000 offer of investment) (section 708(8)); (c) professional investors (section 708(11)); or (d) offers to people associated with the body/certain offers to present holders (section 708(12), (13)). 314 Any other managed investment scheme must be registered if (section 601ED(1)): (a) it has more than 20 members; (b) it was promoted by a person, or an associate of a person, who was, when the scheme was promoted, in the business of promoting managed investment schemes; or (c) ASIC has determined under section 601ED(3) that a number of managed investment schemes are closely related and that each of them has to be registered at any time when the total number of members of all the schemes exceeds 20. 315 There is room for debate about the circumstances in which a particular structure will be regarded as constituting a single scheme rather than separate schemes. The fact of being constituted under a single document may not be sufficient to result in otherwise separate schemes being treated as a single scheme. If the document creates separate asset pools to which investors may have exposure in different proportions, it may require close analysis to determine whether each is in substance separate or whether there is a degree of interdependence which binds them into a single scheme. In ASIC v IP Product Management Group Pty Limited (2002) 42 ACSR 343 at 349, Byrne J noted that it was possible to analyse the 26 schemes as one conglomerate scheme or as a series of independent schemes. It appeared that either conclusion was equally open, although his Honour preferred that the schemes be viewed as separate. In ASIC v Pegasus Leveraged Options Group Pty Limited at 571, Davies AJ deemed there to be a single scheme on the basis that from the point of view of the operator, there was only one scheme, which was to persuade investors to pay money into the promoter's bank account. 316 Even if a scheme has 20 or fewer members, it will require registration if it is promoted by a person, or an associate of a person, who is in the business of promoting managed investment schemes. "Promoter" is not a defined term, the previous definition having been repealed with effect on 13 March 2000. The previous definition would not have been satisfactory in this context in any case, because it related specifically to preparation of prospectuses. The question of who is a "promoter" was considered in Tracy v Mandalay Pty Limited (1953) 88 CLR 215. In effect, promoters are persons who engage in exertion for the purpose of getting up and starting a company (or a scheme), and those who assist them: ASC v Woods and Johnson Developments Pty Limited (1991) 6 ACSR 191. 317 Pursuant to its powers under section 601QA(1)(a), ASIC has granted exemptions from the prohibition in section 601ED(5) against operating unregistered managed investment schemes in various circumstances where registration would otherwise be required and in several cases from Ch 5C altogether: ASIC CO (Compliance Order) 02/226, 02/319, 02/1514, 02/171, 02/211, 02/238, 02/303, 02/1598, 02/184, 02/294, 02/295, 02/182, 02/183, 02/273, 02/264, 02/210 and 02/236. New schemes 318 ASIC must within 14 days register the scheme or reject the application: section 601EB(1)(b). ASIC must register the scheme, unless it appears to ASIC that (section 601EB(1)): (a) the application does not comply with section 601EA; (b) the proposed responsible entity does not meet the requirements of section 601FA; (c) the scheme's constitution does not meet the requirements of sections 601GA and 601 GB; (d) the scheme's compliance plan does not meet the requirements of section 601HA; (e) the copy of the compliance plan lodged with the application is not signed as required by section 601HC; and (f) arrangements are not in place that will satisfy the requirements of section 601HG in relation to audit of compliance with the plan. Consequences of failure to register 319 ASIC, any scheme member or the scheme operator can apply to the Court to wind up any unregistered managed investment scheme which operates contrary to the prohibition in section 601ED(5): section 601EE. Orders under section 601EE to wind up schemes were made on ASIC's application in ASIC v Chase Capital Management Pty Limited (2001) 36 ACSR 778; ASIC v Hutchings (2001) 38 ACSR 387; ASIC v Pegasus Leveraged Options Group Pty Limited (2002) 41 ACSR 561. In Chase Capital Management Pty Limited supra, at [74] – [75], Owen J accepted that the exercise of the Court's discretion to wind up a scheme should be guided by the same considerations as are relevant to the discretion to wind up companies on the just and equitable grounds under section 461(1)(k). It was decided that the scheme should be wound up in the public interest notwithstanding that some investors were opposed. Davies AJ adopted Byrne J's reasoning in ordering the scheme to be wound up in the case of Pegasus Leveraged Options Group Pty Limited supra, at [91] – [92]. 320 In ASIC v Atlantic 3 Financial (Aust) Pty Limited (2003) 47 ACSR 52, Mullins J stated at [20] that: "There can be a tension in the winding up process of an unregistered scheme between what is required for protection of investors, as a matter of public interest, and what is perceived to be in the interests of each of the investors, as a matter of private interest. Ultimately, it is a matter of balancing all the factors relevant to the winding up of a particular scheme, in determining who should be the party given the responsibility for winding up the scheme and on what terms." 321 Barrett J noted in ASIC v Koala Quality Produce Limited (2002) 41 ACSR 628 at [5] – [9] and again ASIC v Commercial Nominees of Australia Limited (2002) 42 ACSR 240 at [127] that section 601EE should be interpreted broadly. The section does not attempt to prescribe any general framework according to which winding up under the section is to occur. The gap may be filled by an order by reference to the scheme constitution, but to the extent that the constitution is inadequate, the Court may supply other necessary provisions. 322 The operator of an unregistered scheme that requires registration also commits an offence under section 601ED(5) which involves a fine not exceeding 200 penalty units or imprisonment for five years or both or for bodies corporate, a fine not exceeding 1000 penalty units: Sch 3, section 1312 of the Act and section 5 of the ASIC Act. 323 Under section 1325(1), the Court can make such orders against a person engaged in conduct in breach of Ch 5C as it considers will compensate any party to the proceeding who has suffered, or is likely to suffer, loss or damage because of that conduct. 324 The failure to comply with the registration requirements for the operation of a managed investment scheme does not mean that either the scheme itself or, more importantly, the contracts entered into as a part of an unregistered scheme (that is, investment contracts) are illegal or unlawful. In Karl Suleman Enterprises Pty Limited (in liq) v Babanour [2004] NSWCA 214 (28 June 2004), Beazley JA, with whom Spigelman CJ and Santow JA agreed, said at [51]: "The registration requirement for the operation of a managed investment scheme is for the protection of investors. The legislation does not expressly make an unregistered scheme unlawful. Rather it impugns the conduct of the entity responsible for registration by imposing a penal sanction for a contravention of the registration provisions. The members of an unregistered scheme are protected by the provisions whereby the scheme may be compulsorily wound up. There is nothing, therefore, in the scheme of the legislation whereby an implication of an illegality would arise, nor is there anything that points to a legislative intention that the contracts entered into as part of an unregistered scheme are illegal." 325 There are two circumstances in which a contract to subscribe for an interest in a managed investment scheme (that is, an investment contract) may be made void at the option of the investor. 326 The first circumstance is a subscription in an unregistered managed investment scheme which is required to be registered under section 601ED(5). The second circumstance is where the offer of the interest, or the invitation to subscribe for the interest, is made in contravention of Chapter 6D: section 601MB(1). Where either of those circumstances exist, the subscriber may give notice of intention to treat the contract for subscription as void. The contract will be void at the end of 21 days after the notice is given or when any litigation including any appeals has been finally determined or otherwise disposed of (although presumably not if the subscriber loses): section 601MB(3). Within 21 days after the notice is given (or such extended period as the Court may grant), the offeror may apply to the Court for an order declaring the notice to have no effect: section 601MB(4) and (5). The Court may declare the notice to have no effect "if it is satisfied that, in all the circumstances, it is just and equitable to make the declaration": section 601MB(6). ASIC's powers 327 ASIC is given specific powers with respect to the Ch 5C provisions of the Corporations Act dealing with managed investment schemes. The powers are extensive. ASIC may exempt a person from a provision of the Chapter or declare that it applies to a person as if specified provisions were omitted, modified or varied as specified in ASIC's declarations: section 601QA(1). 328 To make this abundantly clear, the exemption or declaration may apply to all or specified provisions of Ch 5C, to everyone, or specified persons or a specified class of persons, to all securities, specified securities or a specified class of securities or to any other matter generally or as specified: section 601QA(2). 329 Without limiting the comprehensiveness of ASIC's power, section 601QA(1) gives ASIC the specific power to declare that the Chapter applies so that scheme property must be held by a person other than the responsible entity (custodian) as the responsible entity's agent: section 601QA(1). ASIC may grant an exemption unconditionally or subject to specified conditions. Where conditions are specified, the person to whom the condition applies has a statutory obligation to comply with the condition: section 601QA(3). A condition of that kind is only enforceable by a Court on ASIC's application. The Court may order the person to comply with the condition in a specified way: section 601QA(3). Observations (and submissions as to matters to which regard should be had in relation to Pham defendants) 330 During the period relevant to the case against the Pham defendants in these proceedings, that is, August/September 2000, it is apparent that the managed investment scheme provisions of the Corporations Law (as it was then known) were of: (a) relative novelty; (b) some complexity and uncertainty in terms; (c) some factual complexity and uncertainty in the application of the various elements required to constitute a scheme (primarily section 9(a)); (d) factual complexity and uncertainty as to whether or not and, if so, when any scheme had to be registered by reason of no longer involved small scale offerings, sophisticated investors, professional investors or offers to persons associated with the body/certain offers to present holders; and (e) some factual uncertainty as to whether or not and, if so, when any scheme had more than 20 members or was promoted by a person in the business of promoting managed investment schemes. 331 In these proceedings, the plaintiffs have failed to establish that: (a) as at August/September 2000, there was in operation a " scheme " which should have been, but which was not, registered (that is, they have not established the various factual elements referred to in section 9(a) and/or established the non application of the other limiting/exclusionary provisions); (b) if there was an unregistered management investment scheme in operation, that that had any causal link to any loss suffered by the plaintiffs; and (c) any loss suffered by the plaintiffs would not otherwise have been and/or was not suffered by reason of, for example, ordinary commercial trading issues associated with the proper operations of KSE. ********** 30/03/2005 - As per Order of the Court dated 30 March 2005 - Paragraph(s) 301 30/03/2005 - Omission - Paragraph(s) Catchwords 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.