New South Wales Court of Appeal CITATION: Dominic v Riz [2009] NSWCA 216 HEARING DATE(S): 4 May 2009 JUDGMENT DATE: 29 July 2009 JUDGMENT OF: Allsop P at 1; Hodgson JA at 118; McColl JA at 119 1. Appeal allowed. DECISION: 2. Set aside the orders made on 13 and 29 November 2007 against the appellants as third, fourth and fifth defendants and in lieu thereof order judgment for the third, fourth and fifth defendants with costs. 3. Respondents pay the appellants' costs of the appeal. 4. Direct any application by the respondents for a certificate under the Suitors Fund Act 1951 be made within 10 days by notice of motion accompanied by an affidavit. The Court will deal with the application, if made, on the papers. CATCHWORDS: TORTS – negligence – duty of care – solicitor retained to advise on mortgage and loan documents – loaned moneys to be applied to investment – solicitor not retained to advise on the underlying investment transaction – solicitor knew clients were aware of high risk of investment – solicitor advised clients to seek independent legal and financial advice – whether advice of solicitor that the clients should seek independent advice was adequate – whether solicitor could reasonably conclude that clients understood the advice – no breach of duty - TORTS – negligence – causation – no causation on the facts - LEGAL PRACTITIONERS – solicitors – conflict of duty and duty – no conflict in context where not advising on the underlying investment transaction LEGISLATION CITED: Contracts Review Act 1980 Civil Liability Act 2002 (NSW) CATEGORY: Principal judgment Bester v Perpetual Trustee Co Ltd [1970] 3 NSWR 30 Brickenden v London Loan & Savings Co of Canada [1934] 3 DLR 465 Citicorp Australia Ltd v O'Brien (1996) 40 NSWLR 398 Credit Lyonnais Bank Nederland NV v Burch [1997] 1 All ER 144 Cumuck v Nitschke [2001] NSWCA 176 David v David [2009] NSWCA 8 Fox v Percy [2003] HCA 22; 214 CLR 118 Heydon v NRMA Ltd [2000] NSWCA 374; 51 NSWLR 1 CASES CITED: Imbrahim v Pham [2007] NSWCA 215 Kowalczuk v Accom Finance [2008] NSWCA 343 O'Halloran v R T Thomas & Family Pty Ltd (1998) 45 NSWLR 262 Permanent Trustee Co of New South Wales Ltd v Bridgewater [1936] 3 All ER 501 Pilmer v Duke Group Limited (in Liquidation) [2001] HCA 31; 207 CLR 165 Riz v Perpetual Trustee Australia Ltd [2007] NSWSC 1153; NSW ConvR 56-198 Royal Bank of Scotland v Etridge (No 2) [2001] 4 All ER 449 Stivactas v Michaletos (No 2) [1994] ANZ Conv R 252 Waimond Pty Ltd v Byrne (1989) 18 NSWLR 642 White v Illawarra Mutual Building Society Limited [2002] NSWCA 164 Paul Manuelpillai Dominic (1st Appellant) Suzy David (2nd Appellant) PARTIES: Fred David (3rd Appellant) Omar Riz (1st Respondent) Amal Riz (2nd Respondent) FILE NUMBER(S): CA 40843/2007 COUNSEL: R Darke SC, M Dicker (Appellants) C Leggat SC, B Zipser (Respondents) SOLICITORS: Middletons (Appellants) Legal Aid Commission of NSW (Respondents) LOWER COURT JURISDICTION: Supreme Court - Common Law Division LOWER COURT FILE NUMBER(S): 20591/2002 LOWER COURT JUDICIAL OFFICER: Brereton J LOWER COURT DATE OF DECISION: 18 October 2007 LOWER COURT MEDIUM NEUTRAL CITATION: Riz & 1 or v Perpetual Trustee Australia Ltd & 4 Ors [2007] NSWSC 1153 IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL 40843/2007 ALLSOP P HODGSON JA McCOLL JA Wednesday 29 July 2009 PAUL MANUELPILAI DOMINIC v OMAR RIZ Headnote The first to third appellants were the solicitors retained by the respondents to advise on loan and mortgage documents. The loaned funds were used to finance a high risk business investment and security was taken over the family home. The appellants were not retained to advise in relation to the underlying investment transaction. The investment scheme subsequently failed and the respondents lost the vast majority of their money. The respondents (plaintiffs below) sued their solicitors alleging breach of fiduciary duty and professional negligence. The claims were heard in the Supreme Court of NSW. The primary judge held that the appellants, through a solicitor employed by the firm, had breached their duty of care to their clients by not advising them to seek independent legal and financial advice about the proposed investment in adequately firm terms. The primary judge also found that the solicitor was not reasonably entitled to be satisfied that the clients would follow up the advice or that they understood the importance of it. Given the findings on negligence the primary judge did not go on to examine whether there was a breach of fiduciary duty. The issues on appeal were: (i) whether the solicitor's advice to the clients that they should seek independent legal and financial advice about the proposed investment was adequate in the circumstances; (ii) whether it was reasonable for the solicitor to think that the clients understood the advice that they should seek independent legal and financial advice about the proposed investment; (iii) whether a solicitor retained by a borrower/mortgager is required to give consideration to the purpose of the loan and the reasonableness or providence of the transaction, including the proposed application of loaned funds; (iv) whether there was a causal connection between the solicitors alleged failure to provide adequate advice and the investment by the clients into the high risk investment. A notice of contention was filed alleging breach of the solicitor's fiduciary duty to the clients. Held upholding the appeal: Allsop P (Hodgson JA and McColl JA agreeing): 1. There was no negligence by the solicitor advising on the loan and mortgage transactions: (i) The advice given by the solicitor was adequate in the circumstances to discharge the duty of care to the client. The solicitor was not retained to advise on the underlying investment transaction and did not know the details of the investment. The solicitor thought that the investment involved large risks, however the solicitor also knew that the clients themselves thought that the investment was risky. The solicitor gave clear advice about necessity of receiving independent legal and financial advise about the proposed investment. (ii) The solicitor was reasonably entitled to believe that the clients had understood her advice that independent legal and financial advice about the proposed investment was required. (iii) To the extent that a solicitor who when executing a retainer learns of facts which put him or her on notice that the client's interests are at risk may be required to bring to attention the aspect of concern and advise of the need for further advice, that duty was discharged. 2. Even if the solicitor had been negligent by failing to give adequate advice about the need to seek further advice it was not proved on the balance of probabilities that adequate advice would have influenced the clients to take independent advice about the underlying transaction. 3. The retainer did not extend to advising on the underlying investment transaction and therefore there was no breach of fiduciary duty in the circumstances. IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL 40843/2007 ALLSOP P HODGSON JA McCOLL JA Wednesday 29 July 2009 PAUL MANUELPILAI DOMINIC v OMAR RIZ Judgment 1 ALLSOP P: This is an appeal from orders made by a judge of the Court (Brereton J) sitting in the Common Law Division that the appellants, who were the respondents' solicitors, pay damages by reason of their found professional negligence in failing to advise the respondents adequately against investing money borrowed on the security of their home with Karl Suleman Enterprises Pty Ltd ("KSE"). (See Riz v Perpetual Trustee Australia Ltd [2007] NSWSC 1153; NSW ConvR 56-198.) 2 For the reasons expressed below, the appeal should be allowed, the orders of the primary judge set aside and in lieu thereof there should be judgment for the third, fourth and fifth defendants (the appellants) with costs. The facts 3 The respondents (plaintiffs below), Omar and Amal Riz, are husband and wife who were married in 1976 and came to Australia from Lebanon in 1977 and 1981 respectively. Mr and Mrs Riz's first language is Arabic, which they speak, but cannot read or write. Their grasp of English is not good; but at the conferences in question an interpreter was present. 4 In September 2001, Mr and Mrs Riz borrowed $275,000 from Perpetual Trustees Australia Limited ("Perpetual") on the security of their home at Condell Park, with Direct Mortgage Solutions Pty Ltd ("DMS") acting as mortgage broker and introducer. Ms Sabrina Jajoo, an employee at the firm of solicitors of Dominic David Stafford, (the appellants, referred to by the primary judge as "DDS") acted as Mr and Mrs Riz's solicitor in the loan and mortgage transaction. $111,000 of the borrowed money was used by Mr and Mrs Riz to discharge an existing Citibank mortgage over the Condell Park property and $150,000 was applied to an investment with KSE. That company has since failed and Mr and Mrs Riz lost the money they invested. 5 Mr and Mrs Riz (plaintiffs below and the respondents to the appeal) brought proceedings against: (a) Perpetual (first defendant below) claiming relief from the loan and mortgage under the Contracts Review Act 1980 (NSW); (b) DMS (second defendant below), although ultimately this claim was not pressed at trial; and (c) the appellants (third to fifth defendants below) claiming damages for breach of fiduciary duty and/or negligence. 6 This appeal relates only to the claims against the third to fifth defendants below, who became the first to third appellants respectively in these appeal proceedings. The facts in detail 7 The primary judge made some important observations about Mr and Mrs Riz early in his reasons, saying at [3] and [4]: "[3] It is very difficult to ascertain with precision the events which culminated in Mr and Mrs Riz borrowing from Perpetual and investing in KSE. The evidence of Mr and Mrs Riz was imprecise, to the point of often being very uncertain, and sometimes contradictory, as to the sequence and detail of events. Their evidence manifested confusion and poor recollection of events, and demonstrable errors. While I accept that due allowance must be made for their linguistic difficulties and lack of commercial sophistication, I do not accept that all the deficiencies in their evidence can be so benignly explained. They appeared very guarded, particularly in respect of their financial resources and the status of their relationship (including whether or not they were separated). Given the rate at which they reduced the Citibank mortgage, the circumstance that they had six children to support, the funds available to them from time to time for a deposit on their home and other expenditures, including overseas travel, I am confident that they must have had sources of income that they have not disclosed, and which would have disqualified them from unemployment benefits and required lodgement of tax returns. In my view their evidence is strongly coloured by their perception that they have been let down by many on whom they relied – including those who solicited their investment on behalf of KSE, and Ms Jajoo. They were determined to attribute as much responsibility for their predicament as they could to Ms Jajoo, and this affected the evidence of their son Mohammed also; yet in some respects at least they were demonstrably incorrect in this endeavour. Mohammed was determined to implicate the solicitors in everything that his father had done, including in matters which it is highly improbable if not impossible that DDS had any involvement; in this respect his evidence probably reflects what Mohammed was told in 2004 and subsequently, in connection with the preparation of his affidavit, as distinct from what he recalls of the events of 2001. [4] Moreover, Mr and Mrs Riz often gave evidence inconsistent with their earlier affidavit and oral evidence on material issues, advancing first one and then another version of an event, the second version typically being more favourable to their case than the first; and not infrequently, one or other of Mr Riz, Mrs Riz and Mohammed was contradicted by another of them. Their evidence must be treated with great caution. What follows summarises what I am prepared to accept, having regard to their evidence, the documentary record, and the evidence of Ms Jajoo and Ms Hanna – which, as I will explain below, was ultimately implicitly accepted on behalf of Mr and Mrs Riz, whose submissions proceeded on that basis." 8 Though the respondents were lacking education they did not lack a degree of acumen. They were not naïve. Neither Mr or Mrs Riz ever lodged a tax return in Australia. From 1989 to 1995, they owned and operated a pizza shop in Newtown. From 1996 to 2002, Mr Riz was employed two days per week for four to five hours each day at another shop called the Kebab House in the same area. From 1989 until at least 2001, Mr and Mrs Riz applied for and received Centrelink Family Assistance benefits from the Australian Government. 9 The primary judge described the purchase of the Condell Park home in [6] of his reasons as follows: "[6] In December 1999, Mr and Mrs Riz completed the purchase of their home at Condell Park for a price of $243,000, of which Mrs Riz's mother advanced about $90,000, and they borrowed $145,000 from the St George Bank, secured on their home. The St George loan required repayments of $965 per month. At the time, Mr and Mrs Riz were in receipt of Centrelink benefits, and Mr Riz was earning about $4,000 per annum from his part-time employment. In order to obtain the loan, Mr Riz procured a letter from his employer at the Kebab House, to the effect that he was in full-time employment. Although Mr Riz, in answer to one question, apparently admitted that he knew the letter to be untrue, he subsequently asserted that he did not know what was in it, and reading his evidence as a whole and making due allowances for his language difficulties I am not persuaded that he intended any such admission. However, he plainly did accept that he had understood that he would not be able to obtain a loan unless he appeared to be in fulltime employment, and requested his employer to provide confirmation of availability of full-time employment for that purpose." 10 The property was refinanced on 3 October 2000, with Citibank. The primary judge discussed some of the relevant circumstances of this loan at [7] and [8] of his reasons as follows: "[7] … At the time of this refinance, Mr and Mrs Riz remained on Centrelink benefits, and Mr Riz's income from his part-time employment remained about $4,000 per annum. Mr Riz says that no questions were asked by the mortgage broker about his employment or income, and claims that he did not know that Citibank was unlikely to lend him money without knowing those things. A falsified letter from a purported employer for whom he had never worked and with whom he had had no contact was used in connection with the application; Mr Riz denied any knowledge of it, but his attitude to this is illustrated by the following excerpt from his evidence: Q. And you knew from that experience [with St George] that you would need to say something about your employment? A. When you tell someone that you are on Centrelink benefits and you are not working and your money is limited and you have children and it is not possible to get a loan, he tells you, he answers 'You don't worry about anything, I will take charge', what would you say to him? Q. Did you know that he was going to tell a lie about your employment? A. No, I don't know. I don't know how he brings the money, how he deals with the banks or what sort of connections he has got, I don't know. [8] The Citibank loan, on which the regular repayments commenced at in excess of $1000 per month, was serviced in accordance with its terms, and in addition significant additional reductions were made – according to Mr Riz, largely from moneys provided by relatives from overseas – so that by September 2001 the balance had been reduced to about $111,000, and the monthly repayments to the high $600s." 11 In October 2000, Mr Riz learned of a possible investment with Karl Suleman. A fellow employee at the Kebab House, Lilly, told him what was recounted in [9] of the primary judge's reasons: "[9] … Lilly, told Mr Riz that he should talk to Karl Suleman, that investments with Mr Suleman generated a lot of money, that many people were doing so and making a lot of money through such investments and receiving interest every fortnight. Lilly suggested that it would be to his benefit to invest with Mr Suleman; she gave at least some indication of the potential returns, and said that he could invest as much money as he wanted. When Mr Riz told her that he did not have any money to invest, Lilly told him that he could get a loan and repay it quickly. Mr Riz says that while it sounded like a good investment if he had the money, he was at first reluctant to invest and did not want to borrow to do so, and told Lilly as much. Lilly said she would bring some friends to talk to Mr Riz. Lilly also said that she wanted to meet his wife and children." 12 Whilst the suggestions of Lilly apparently stirred Mr Riz's interest to a degree, Mrs Riz was initially firmly against any such proposal. At [10] of his reasons, the primary judge recounted the following: "[10] At some stage Mr Riz mentioned to his wife what Lilly had said, and she replied that she did not want Lilly to visit them at home. He asked Mrs Riz whether she thought that borrowing some money and investing with KSE would be a good idea (chiefly, to raise funds for renovating and extending their home); but she was categorically against the idea and did not want to discuss the proposed investment at all." 13 The persuasions of Lilly were persistent, involving the introduction of an apparently successful investor, a Mary Daniel and an employee of Karl Suleman, as described by the primary judge at [11]-[14] of his reasons: "[11] Lilly persisted, pursuing Mr Riz many times over the ensuing year, and saying that such an investment would provide an opportunity to buy a bigger house and have a better life. Lilly continued to tell him that all those who had invested with KSE had received a lot of interest, and some who had had only one house now had two or three houses. Mr Riz was told that Mr Suleman was very wealthy and successful. On a couple of occasions Mr Suleman himself purchased a kebab from Mr Riz at the Kebab House, and gave Mr Riz generous tips. [12] An acquaintance of Lilly, Mary Daniel, (although Mr Riz did not know her surname) attended at the Kebab House on a number of occasions, and Lilly mentioned that she had invested with KSE and was making a lot of money. Mary Daniel asked whether he wanted to invest with KSE; Mr Riz was equivocal, but ultimately replied that he would make further inquiries. Mr Riz's evidence was that he was not convinced by Lilly directly, because Lilly did not herself invest, and wanted to enquire from people that had already invested with KSE directly. [13] Lilly took Mr Riz to see Mary Daniel at her home at Canley Vale. He did not tell Mrs Riz that he was going to see Mary Daniel; as far as he was aware she was still opposed to any investment. Mr Riz says that at this stage he was simply making enquiries and gathering information. Mary Daniel told Mr Riz that KSE was a very good investment that would enable him to improve his life and his house. She said that for each $50,000 invested there would be a return of $5,000 every fortnight. She said that Mr Suleman was good, and was paying the interest on her investment on time. It occurred to Mr Riz that the return being offered seemed too good to be true. [14] On the same day of the visit to Mary Daniel, Lilly took him to see Esher, apparently an employee of KSE, at Smithfield; Esher told him that Mr Suleman was paying him $1,200 per week for doing nothing, and that Mr Suleman was a good person and that it was good to invest with him. Mr Riz did not ask any questions about Mr Suleman's business and his operations. Mr Riz remained unresolved. Then, in Mr Riz's presence, Lilly asked a number of people sitting in a coffee shop, who said that they had invested with Mr Suleman and were making lots of money." 14 The primary judge concluded that, at this point, Mr Riz was inclined to invest subject to persuading his wife and to raising the funds. Before speaking to his wife, Mr Riz, in company with Lilly and Mary Daniel, went to the office of Mary Haider and Zia George who operated a business called Quick Loan Services ("QLS"). 15 Mr Riz's discussion with QLS on this occasion was described by the primary judge at [17] of his reasons as follow: "[17] … Mr Riz told them that he might be able to get $50,000 from Citibank, but he thought that this would involve formalities, including a requirement to provide details of his employment income, and he knew that if he told Citibank the truth about his employment and income he would not get a loan from them. He told Mary Haider that he had a casual part-time job. Mary Haider commenced to complete a form by asking questions about Mr Riz's assets, and he was given a list of documents to provide (telephone bills, electricity bills, council rates and documents relating to his then mortgage payments). He denied that there was discussion about raising $150,000 for investment in KSE, but having regard to evidence later given by his son Mohammed I am satisfied that a loan in that amount was discussed." 16 Mr Riz then took further steps with QLS as described in [18] of the primary judge's reasons: "[18] Mr Riz returned to QLS with the documents requested by Mary Haider. On this, if not the previous, occasion, he told Mary Haider that his family was living on Centrelink benefits, and asked whether they would be affected; she said that he should open an account in the name of their son Mohammed to receive the payments from KSE (and I infer, though he did not concede it, that he understood that this was to avoid Mr and Mrs Riz's Centrelink benefits being affected by income from the investment). Elsewhere Mr Riz sought to attribute the advice to open an account in Mohammed's name to Ms Jajoo, but the chronology makes this impossible." 17 The winning over of Mrs Riz to the investment was dealt with briefly by the primary judge. That is not said by way of criticism of him. No doubt much was communicated between Mr and Mrs Riz as a married couple that was not addressed at length in the evidence. At [19] of his reasons the primary judge said: "[19] Up to this point, Mr Riz had been rather coy with his wife as to where he had been and what he had been doing. He had told her he had been enquiring how Mr Suleman was offering such high interest. He told her that KSE was a good investment and would enable them to make the house bigger and that in seven months the loan would be paid off. At this point, when he was taking the documents to QLS, he told her that he was going to invest, and she acquiesced in the proposal to borrow moneys and invest them with Mr Suleman." 18 The preparation of the loan application documentation, the signing of it and the various falsities in it were set out by the primary judge at [20]-[22] of his reasons: "[20] Mr Riz received a telephone call from Mary Haider, who told him that the loan application papers were complete and asked him to bring his wife in to sign them. He returned to QLS a third time – this time with Mrs Riz, who remained in the car with their baby child and did not enter QLS's office –the loan documentation was brought out to her and she signed it in the car. The documents which Mr and Mrs Riz signed on this occasion comprised a loan application form of DMS, and a 'declaration form'. The dates on the loan application enable this occasion to be fixed as 8 August 2001. The loan application form was a six page document, which Mr Riz signed at the foot of the third page, and Mr and Mrs Riz signed on the fourth page (twice), the fifth page and the sixth page (twice). It stated that Mr and Mrs Riz were (and had been for four years) self-employed in the business of 'blinds installation', from which they each derived income of $38,000; Mr and Mrs Riz say they were unaware of that statement in the form and never gave anyone instructions to that effect. The application stated that the purpose of the loan was 'refinance and further investment', showing that $115,000 was to be applied to refinance, $10,000 to costs, and $150,000 for 'others', implicitly the proposed further investment. The declaration was in the following form (italics represent handwriting on the form): DECLARATION FORM I, We OMAR RIZ & AMAL RIZ Of 148 EDGAR ST. BANKSTOWN in the state of NSW Declare and affirm that the information (personal particulars, I/D, assets & liabilities and annual tax returns) that I (we) provided to the brokers and financiers are true and correct. OMAR RIZ AMAL RIZ applicant signature applicant signature [21] QLS submitted the loan application to a mortgage originator, KBL. On 13 August 2001, Mr Peter Zhao of KBL forwarded the loan application to DMS, accompanied by a body of supporting documentation, some of which (such as copy driving licences and certificates of citizenship) were plainly authentic; there were also rate notices, a statement of the mortgage account from Citibank, and a valuation of the Condell Park property apparently obtained by KBL. However, it was also accompanied by a bundle of income tax returns and financial statements for a purported partnership of Mr and Mrs Riz, and for each of them individually, for the financial years ending 1999 and 2000. The copy tax returns were unsigned by either Mr or Mrs Riz but apparently signed by a tax agent, Mark A Thompson, for whom a contact phone number was provided. The partnership returns described the main business activity as 'Venetian blinds installation', and that for the year 2000 referred in the statement of distribution to the partners' names as being Saddi, Elia and Saddi, Nawal. [22] From the facts (1) that the occupation 'blinds installation' and the income of each of Mr and Mrs Riz of $38,000 – corresponding with what appears on the tax returns – is stated in the loan application signed by Mr and Mrs Riz at QLS, in the same handwriting as the balance of the loan application, and (2) that when received by DMS from KBL, the returns (but not most other documents in the bundle faxed) bore not only the imprint of transmission from KBL (the so-called Sanctuary Windows imprint) but also another, earlier (but undesignated) imprint, I infer that the false tax returns were procured, and included in the loan application, by QLS." 19 DMS assessed and approved the loan on 17 August 2001. 20 At this point, the appellants appeared in the unfolding of events. Once the loan application approval had been communicated to QLS, the primary judge found (at [23] of his reasons): "[23] … QLS sent a facsimile to DDS [the appellants], covering a copy of the formal loan approval and purporting to convey the instructions of Mr and Mrs Riz 'to proceed with their formalities, our client has been advised to contact your esteemed office'." 21 Before coming to the steps taken by Ms Jajoo in her dealings with Mr and Mrs Riz, it is appropriate to set out some of the findings and the evidence concerning what Mr and Mrs Riz appreciated about this transaction, including its risk and possible consequences. 22 Mrs Riz was fearful of losing the house and appreciated that risk: T513; T515 (transcript references in these reasons refer to the page number of the first instance transcript, not the page number of the Black Appeal book). She communicated this to her husband: T516. Mohammed Riz (the respondents' son) discussed the investment in KSE with his father and the magnitude of the returns: T559. It did not seem like a secure investment to him: T560. He discussed with his father the lack of security in the investment. It appeared too good to be true to both of them: T559. While Mr Riz was considering the investment he (Mr Riz) said to his son on a number of occasions that the investment seemed too good to be true: T562. When Mohammed discussed the investment with his father in the above conversations, Mrs Riz was present and participated in them: T562-563. Mrs Riz also said the investments seemed to good to be true and that it sounded probably insecure and risky: T563. Nevertheless, despite these considerations and family discussions about the apparent unreality of the transaction, its risk and insecurity, Mr Riz and Mrs Riz became persuaded by their enquiries that they should invest with KSE. It is clear from the evidence that these deliberations took place before seeing Ms Jajoo. 23 The first step taken by Ms Jajoo was to ring the home of Mr and Mrs Riz on 17 August. She spoke to Mohammed and asked for certain documents to be brought in to her in the next few days. These were provided. On 29 August Mr and Mrs Riz attended the appellants' offices and executed a discharge authority for Citibank. 24 On 30 August 2001, a necessary step was undertaken, as recounted in [25] of his Honour's reasons: "[25] On 30 August 2001, before Mr Riz had met Sabrina Jajoo, an account was opened with the St George Bank in the name of Mohammed in readiness for the investment. This refutes the persistent assertion of Mohammed and Mr Riz that it was the recommendation of Ms Jajoo that this account be opened, to avoid potential loss of Centrelink benefits for Mr and Mrs Riz if the investment were in their names; it is far more probable that (as Mr Riz first asserted) the suggestion was that of Mary Haider at QLS." 25 Various steps occurred in September, including the forwarding, by an agent of Perpetual, of the loan documentation to Mr Riz. Mr Riz and his son made an appointment to see Ms Jajoo on 21 September for an explanation and execution of the documentation. The primary judge described this meeting on 21 September in [28]-[32] of his reasons: "[28] Mr Riz saw Ms Jajoo at DDS' office on 21 September. Mrs Riz did not accompany him. Ms Hanna was present to interpret, but Ms Jajoo and Mr Riz conversed in English. Ms Jajoo explained that it would be necessary for Mrs Riz to attend, but at Mr Riz's request explained the documentation to him. According to Ms Jajoo, in the course of the discussion, Mr Riz said: We're thinking of investing with Karl Suleman in a trolley business with Karl Suleman Enterprises, so we'll be making repayments of $10,000 every two weeks. [29] She answered: I'm not advising you in relation to Karl Suleman Enterprises. I'm only advising you on your obligations to the bank under the loan contract. We don't advise on any Karl Suleman matters. We don't approve of Karl Suleman contracts in the way that they were structured. Other lawyers set up his business structure and contracts. Suzy David from our office was trying for a while together with a large firm of lawyers in the city to change everything but before Mr Suleman brought all the information and documents they needed he went back to his own lawyer and said it was all being fixed by his lawyers. But this was a few months ago. We don't know where it got up to or what happened. [30] Mr Riz replied: I know many people in it with Karl. I wanted to see what to do with the loan first. [31] Ms Jajoo responded: You should see an independent lawyer and a financial adviser when you decide to invest in whatever you want to invest in. You need to take your paperwork and the contract to a lawyer and a financial adviser so they can properly advise you. [32] Ms Jajoo produced and provided to Mr Riz a form of cost agreement. Mr Riz wanted to take the documents with him to be signed by his wife if they decided to proceed, but Ms Jajoo would not allow this and insisted that she attend to have the documents explained, and retained the documents for that purpose." 26 Mr Riz returned to see Ms Jajoo on 25 September in company with Mrs Riz. The question of language, and implicitly linguistic understanding, was dealt with by the primary judge at [33] of his reasons: "[33] … Again, Ms Hanna [the interpreter] was present, although Mrs Riz said that interpretation would be unnecessary, and often when Ms Hanna commenced to translate a sentence Mrs Riz responded to the effect: 'It's alright, I understand'." 27 The primary judge's findings about the meeting were set out by him at [34]-[43] of his reasons: "[34] In the course of the consultation with Mr and Mrs Riz on 25 September 2001, Ms Jajoo explained that the first repayment was due 28 days after settlement, and the minimum monthly repayment was $1,796.61. Mr Riz interjected: '$10,000 every fortnight'. Mrs Riz said: 'No, we want to pay $10,000 every fortnight from the beginning'. Ms Jajoo altered her file note accordingly. [35] Mr and Mrs Riz executed the loan contract, the mortgage, and various associated authorities. They also signed a certificate that they had obtained legal advice and understood the documents and did not require them to be translated. [36] Ms Jajoo explained that the lender required references from an acceptable referee; Mrs Riz said that the family doctor would complete them, and Ms Jajoo gave her the two reference forms for that purpose. Ms Jajoo completed the direct debit authority, except for the details of the account from which repayments were to be made, which had not yet been decided. She wrote on the form, as requested, '*Please direct debit the minimum monthly repayment for the first monthly repayment and thereafter $10,000 every fortnight?'. Mr and Mrs Riz signed and dated the authority, which was left with Mr Riz for completion and return when it had been decided from what account the repayments would be made. [37] Later in the course of the consultation, Mrs Riz again instructed Ms Jajoo: But you tell the bank we want to pay $10,000 every fortnight like we talked about before. [38] Mrs Riz continued: We want a cheque to Karl Suleman. Omar's told me what you've told him. This is a big risk. [39] Ms Jajoo answered: I did have a conversation with Omar and I told him that we don't advise on anything to do with Karl Suleman. We don't approve of it. Karl previously had a solicitor who set up his whole business structure. Then Suzy David from our office had referred him to a firm of lawyers and trying for a few months to change the whole structure. However, Karl Suleman did not provide all the requirements, and Susie doesn't know details of the structure. Karl Suleman went back to his own lawyer some time in May this year and said it was all being fixed up by his own lawyer. But we don't know where it is up to. So if you are taking the risk of investing in whatever it is you are wishing to invest in, then you must see an independent solicitor and also a financial adviser in relation to any Karl Suleman contracts. [40] Mrs Riz replied: 'You recommend someone', and Ms Jajoo responded: 'No I can't recommend, but you should go to your own accountant and also see another lawyer'. Mr Riz concluded: 'Okay, we continue with the loan for now'. [41] When it came to discussing how the proceeds of the loan were to be drawn down, Ms Jajoo said: After paying out Citibank you will be left with approximately $159,800. How do you want that drawn? [42] Mr Riz said: We want a cheque to Karl Suleman Enterprises for $150,000 we will get about $24,000 per month and that means $12,000 per fortnight. So that's why if we go ahead we can put $10,000 per fortnight towards payment of the loan. But if we don't want to go ahead can we cancel that cheque? [43] Although Mr and Mrs Riz maintained that Ms Jajoo spoke glowingly of Mr Suleman in response to inquiries they claimed to have made of her about the prudence of their proposed investment in KSE, no submission to that effect was pressed and I do not accept that any such conversation took place." 28 As can be seen in these findings: whatever the Rizs had been told, they believed that they would receive $24,000 per month or $12,000 per fortnight, permitting a repayment schedule of $10,000 per fortnight; Mrs Riz and Mr Riz understood that the investment with KSE was a "big risk"; the question of risk was understood by Mrs Riz (and implicitly, Mr Riz) to be related to what Ms Jajoo had already told Mr Riz in plain terms some days before – of the "need" to see, and that they "should" see an independent lawyer and financial adviser; Ms Jajoo repeated this to both of the respondents. She used the words "must" see an independent solicitor and financial adviser. Mr Riz said they would continue "for now". 29 Some debate took place on appeal by reference to the evidence as to what Ms Jajoo was told by Mr and Mrs Riz as to the expected return on the investment. The finding in [42] was, however, not challenged. Whatever else Ms Jajoo was told by the Rizs, she was told at one point in this conversation that they had a belief as to this return, though it was unclear from this conservation whether the amount of $24,000 or $12,000 they said they would "get" was a return on capital by way of interest or profit or interest or profit together with some return of capital. 30 The primary judge rejected the version of this meeting put forward in evidence by Mr and Mrs Riz. The Rizs (including their son) claimed in their evidence that Ms Jajoo had persuaded them to invest by representations as to the prudence and wisdom of the investment. They also said that her explanation of the loan documentation was deficient and they did not understand much of what she said. This was rejected by the primary judge. One aspect of his Honour's resolution of the competing evidence about the meeting is important to note because it contains a finding as to Mr and Mrs Riz's understanding. At [45] the primary judge said: "… despite their denials of being given documents to take away for completion and of understanding what was said, in fact Mr and Mrs Riz must have received and taken away a direct debit request and referee forms and subsequently had them completed and returned, which not only undermines the reliability of Mr and Mrs Riz's recollection, but also demonstrates understanding and compliance with requests made and instructions given in the course of the consultation …" 31 Another important finding by the primary judge at [90] was that: "… Ms Jajoo was reasonably entitled to think that Mr and Mrs Riz could understand what she said to them." 32 By 4 October, the appellants were in possession of the references and a direct debit request (for Mohammed's account). The mortgage was stamped on 4 October. The appellants returned the executed documentation to Perpetual's agent on 4 October. 33 Ms Jajoo became involved again on 8 and 10 October, as recounted by the primary judge at [46] of his reasons: "[46] On 8 October, Mr Zia George of QLS spoke to Ms Jajoo, advising that he had been endeavouring to contact Mr Riz to explain that the brokerage fee was $5,000, whereas Marie had mistakenly told him it was $3,000. Ms Jajoo then telephoned Mr Riz and explained the difficulty, and he replied that he would sort it out with Mr George. On 10 October, Ms Jajoo had a telephone conversation with Mr Riz, who was at QLS with Mr George, and Mr Riz gave instructions to pay $150,000 to KSE, and $5,000 to QLS." 34 These findings reveal that Ms Jajoo was aware at this time that the Rizs were proceeding with the investment in KSE. 35 Settlement occurred on 15 October, when the appellants: "… received on behalf of Mr and Mrs Riz a cheque payable to Mr and Mrs Riz for $3,353.68, a cheque payable to KSE for $150,000, and a cheque payable to Zia George for $5,000." (See [47] of the reasons.) 36 On the following day, 16 October: "… Ms Hanna handed the first two cheques to Mr Riz, in the presence of Mary Haider who collected the cheque in favour of Zia George." (See [47] of the reasons.) 37 Mr and Mrs Riz finally committed themselves to KSE on 17 October as explained in [48] of the primary judge's reasons: "[48] On or about 17 October, Mohammed and Mr Riz attended at KSE's office at Liverpool. Mr Riz handed over the cheque for $150,000, and Mohammed executed a 'Preliminary Loan Agreement' with KSE for a principal sum of $150,000, with fortnightly repayments of $9,555 for a term of three years. Mr Riz and Mohammed returned on 23 October to execute a more comprehensive loan agreement. Although Mohammed is literate in English, Mr Riz sought no translation or explanation of the loan agreement or its provisions, and Mohammed did not read it." 38 Bad news was not long in coming, as explained in [49] of the primary judge's reasons: "[49] A fortnight later, Mohammed received, into the St George account in his name, the initial payment of $9,555, but that was the only payment received. Mr and Mrs Riz continued to service the Perpetual loan for about a year, they say from funds that they borrowed for that purpose from acquaintances." 39 Before turning to the primary judge's disposition of the case against the appellants, some additional findings made by his Honour in the case against Perpetual should be noted. At [57] of his reasons, the primary judge said: "[57] … Although I accept that Mr and Mrs Riz were commercially unsophisticated, I do not accept that Mr Riz – who was the moving party and had the conduct of the transactions on behalf of them – was naïve. He had previously borrowed funds from financial institutions on three occasions – from the National Bank to finance the purchase of the Beirut Pizza Shop, from St George to finance the purchase of the home, and from Citibank to refinance. The last two involved giving mortgage security over the home. Ultimately it was conceded that Mr and Mrs Riz understood the fundamentals of a mortgage, in that if they defaulted they would lose their home. In my assessment, Mr Riz also knew that he ought not have been able to obtain the loans from St George and Citibank if he was living on Centrelink benefits, and he was at best indifferent to what his agents might say or do on his behalf to obtain loan approvals. It took him some considerable time – perhaps a year – to be persuaded to invest in KSE and to borrow funds for that purpose, and he undertook considerable investigations before deciding to do so. When the investment was made, it was made in the name of their son Mohammed, plainly so that the income received would not affect Mr Riz's social security entitlements; I am unable to accept Mr Riz's professed ignorance as to that being the reason for the arrangement (which, according to his son, he told Mohammed at the time). Nor, in the light of Mohammed's evidence, can I accept that when Mr Riz went to QLS and completed the loan application, he had contemplated investing not $150,000, but only some lesser amount." The case against the appellants and its disposition by the primary judge 40 It was first necessary for the primary judge to dispose of some aspects of the evidence of Mr and Mrs Riz. As already indicated their case had been put more extravagantly than it ultimately was in address. This is important. The case of Mr and Mrs Riz was not that some things had been explained to them, but the risk of the investment had not been brought home to them. They claimed, in evidence that was rejected, that Ms Jajoo had persuaded them to invest. The assessment of Ms Jajoo's conduct proceeded substantially on the basis of the evidence given by her. As I have already said, in [90] of the primary judge's reasons, his Honour made a clear finding that Ms Jajoo was reasonably entitled to think that Mr Riz and Mrs Riz could understand what was said to them. 41 At [91] of his reasons, the primary judge identified the only two complaints ultimately pressed (and pressed implicitly accepting Ms Jajoo's evidence): " Breach of fiduciary duty, by failing to cease to act for Mr and Mrs Riz, in circumstances that the firm had 'multiple allegiances' arising from a complicated web of business and professional associations between them and Mr Suleman. This is put on the dual bases of conflict of duty and duty, and conflict of interest and duty. As to conflict of duty (to Mr Suleman) and duty (to Mr and Mrs Riz), it is said that DDS had an overriding duty of undivided loyalty to Mr and Mrs Riz, which required DDS to cease acting for Mr and Mrs Riz when the firm became aware that the proceeds of the loan were likely to paid to KSE, in circumstances where it was known that the KSE investment was risky, and that Mr and Mrs Riz had not obtained financial or legal advice in relation to it. It is said that DDS had conflicting duties to Mr and Mrs Riz (to warn them against imprudent transactions) and to Mr Suleman (to secure further investment funds). As to conflict of interest (of DDS) and duty (to Mr and Mrs Riz), it is said that, DDS having advanced $170,000 to a Suleman entity, the firm had an interest in Mr and Mrs Riz obtaining the loan, in order to enable them to make a payment to KSE, which would indirectly facilitate repayment of the advance (although there is no suggestion that it was contemplated that it would be repaid from the Riz investment), retain favour with Mr Suleman, and secure his ongoing business; which conflicted with their duty to Mr and Mrs Riz to deter them from imprudent investments. Breach of their professional duty of care (in tort and/or contract), by failing to cease to act for Mr and Mrs Riz unless and until they had obtained financial advice, or – as refined in the course of submissions – failing at least to warn Mr and Mrs Riz that their proposed investment was imprudent." 42 As to the case based on conflicts between duty and duty and between duty and interest, the primary judge made the following findings at [93] and [94]: "[93] Mr and Ms David, and Ms Jajoo, are of Assyrian decent. A good portion of their clientele, though not the majority, are Assyrians. Ms Jajoo agreed that in 2000 and 2001, everyone in the Assyrian community was talking about Mr Suleman, and she had heard that some of his ventures included investment opportunities which produced high returns. Ms Jajoo explained that although during 2000 and 2001 she handled about 95 matters in which clients invested in KSE, in most cases the intention to invest in KSE did not come to her attention until the time of cheque direction. She explained: I know at the moment it is obvious that all those people invested in some kind of a scheme, but at the time it wasn't like that. It was some people were investing in some kind of an investment. Some people were buying trolley runs, and I would see them in the shopping centres around the area pushing trolleys and managing those. Some people were saying they are in some limousine business with him. Some people were saying they were in, they were in the internet business with him. Some – I really had no idea at the time what people were investing in or what business venture they were entering. [94] DDS had undertaken a considerable amount of work for Mr Suleman before September 2001. In early 2001, questions had arisen concerning the legality of his investment scheme, and that was thereafter to be addressed by Mallesons. The partners in DDS, Mr Fred David and Ms Suzy David, had invested in an enterprise with Mr Suleman. Ms Jajoo was Mr David's wife and Ms David's sister-in-law. On 25 September 2001, Ms Jajoo believed that in a couple of weeks' time she would be sitting at a table with Mr Suleman and President Clinton of the United States of America." 43 As the case was argued on appeal it was not in dispute that at the time of Ms Jajoo dealing with Mr and Mrs Riz the appellants no longer acted for KSE or Mr Suleman. 44 The primary judge dealt with the case adversely to the appellants on negligence, and did not need to deal with the fiduciary aspect of the claim. 45 The respondents raised the fiduciary aspect in a notice of contention. 46 If, as the primary judge found, further steps were required to be taken to fulfil the retainer, the so-called "conflict point" does not arise. If the retainer was fulfilled by conduct that was adequate in the circumstances, it is difficult to see what role this fiduciary argument has. Neither Mr Suleman nor any of his companies was a current client and there was no apparent impropriety in assuming the retainer for the Rizs. I will return to this issue after dealing with the primary judge's conclusion as to the appellants' conduct of the retainer through Ms Jajoo. 47 The primary judge dealt with Ms Jajoo's knowledge and understanding at [95]-[99] of his reasons, as follows: "[95] Ms Jajoo accepted that at the 25 September consultation she knew that Mr and Mrs Riz probably had not obtained advice from a lawyer or financial adviser on the investment, and received no information between then and settlement on 15 October 2001 to suggest that they had obtained any such advice. [96] Ms Jajoo knew that Mr and Mrs Riz were contemplating mortgaging their family home in order to raise the money for that purpose; she appreciated that they were risking their home for a business venture. When asked whether – from Mrs Riz's statement to the effect 'this is a big risk' it was apparent that Mrs Riz was concerned about the risk of an investment in KSE, Ms Jajoo said 'I wouldn't put it that way. … she appreciated that she was entering a business venture and there's risks involved and that is the reason I told her to go and obtain advice from somebody who would advise her in relation to those risks, if any risks'. [97] One does not need expert evidence to conclude that the return which Mr and Mrs Riz told Ms Jajoo they were expecting was so extraordinarily high as to strain credulity. Ms Jajoo understood that they were telling her 'they are contemplating some kind of a business venture and they will be making enough money out of it to be making repayments of $10,000 every two weeks towards the loan'. She thought, 'That's a very high return and he should go and obtain some advice in relation to that business venture'. Tested, she said that she considered it a 'high return' but not absurd, she then conceded that it was a 'very high return', but would not adopt 'an absurdly, a patently absurdly high return'. Then she was asked: Q. In your thirty-one years of life had you ever heard of an investment in New South Wales, Australia, returning something like $260,000 in one year on a $275,000 investment? A. I hadn't looked at investments but I considered this investment as a very high return, a very high risky return. [98] In fact, the investment was $150,000, not $275,000, so the return was even more extraordinary. Subsequently Ms Jajoo gave this evidence: Q. Did it or did it not occur to you that the return being spoken of sounded too good to be true? A. It was a high return. I did not make that assessment, but that was definitely the reason that they should have gone to somebody who should have advised them on that aspect of their transaction, but that didn't affect the transaction that I was advising them on. Your Honour, I need, I wanted to make sure that they could make, or they understood that they had to make the minimum repayments, which were $1,780 I think a fortnight, and if they didn't make those repayments that would be an act of default and they would lose the house. [99] She said that she did not have any understanding as to what the employment of Mr and Mrs Riz was, and did not ask, but 'comfortably assumed that there would be some employment for them to be able to obtain a loan'. She had no understanding and formed no impression as to their education. She said she formed a view that they both knew that whatever they were getting themselves into had risks, some kind of risks associated with it, like any other business. She said: 'On that basis I told them, "you should go and obtain the advice of somebody who could tell you if there is any risks or not". Now I was satisfied that they understood that, and they would follow that up at some stage whenever time came for them to enter that business transaction'." 48 The essence of the criticism of Ms Jajoo made by the primary jduge is found in [100] of his reasons, as follows: "[100] While generally I accept Ms Jajoo's evidence, and I accept that she told Mr and Mrs Riz that they should obtain separate legal and financial advice in respect of the proposed KSE investment, I do not accept that she was reasonably entitled to be satisfied that they would follow up that advice, or that they understood its importance. The context was that not only did Mr and Mrs Riz (without having any prior opportunity of first seeking such advice) go ahead and there and then execute the loan contract and mortgage; they also gave instructions for the inclusion of $10,000 per fortnight on the direct debit authority, and for the settlement cheques to include one for $150,000 in favour of KSE. In those circumstances, it ought to have been apparent to Ms Jajoo that she had not done enough to bring home the importance to Mr and Mrs Riz [of] obtaining independent advice." (emphasis added) 49 The primary judge then referred to the expert evidence of Mr Fisher. His Honour described the essence of Mr Fisher's evidence in chief at [102] of his reasons as follows: "[102] It was his opinion that it would not accord with standard practice for a solicitor, having been advised of the nature of an intended investment and the very high returns expected by the client, and having indicated that the firm does not approve of the structure of the investments, to simply make it known to the client that there was a distinct element of risk and that the client should not proceed without obtaining independent advice from an accountant or investment adviser. He opined that in such circumstances it would be standard practice for the solicitor to take additional steps to ensure that the client was independently advised, or to obtain written instructions that the client did not wish to be independently advised despite the solicitor's warning, or to refuse to act. He said that a competent and prudent solicitor following standard practice would be greatly concerned at a client expecting a return of about $312,000 per annum on an investment of $150,000, because such a return was so much higher than prevailing interest rates and prevailing investment returns in 2001." 50 The primary judge then set out at [103]-[107] some of the debate between the cross-examiner and Mr Fisher, which because of the way the primary judge approached the matter it is helpful to set out: "[103] In cross-examination, Mr Fisher accepted that where a solicitor was not retained to advise in respect of a particular transaction and does not assume an obligation to advise on it, the solicitor is not obliged to give advice on that transaction; but he did not accept that a solicitor retained in respect of a loan and mortgage transaction was not obliged to give 'financial advice' about it in any circumstances: Well, no. If there was, let's say, an extraordinary interest rate or some other condition of the loan which was out of the ordinary, I would feel it is the responsibility of the solicitor to bring that clearly to his client's attention. [104] However, he accepted that unless the solicitor assumes the responsibility of giving financial advice, the solicitor was under no duty to do so. But while he generally accepted that the scope of the solicitor's responsibility was defined by the retainer, he insisted that this was not always so: But I keep saying there are other factors. If it becomes apparent that what a client is doing is imprudent or unreasonable at some point that solicitor, I believe, has a duty to that client. So that would extend the assumed, the assumed retainer. [105] Elsewhere he said: Q. You would say that in the ordinary mortgage lending situation, where a solicitor acts for the mortgagor and borrower, do you say that the solicitor would be under a duty to advise the client about transactions other than the loan transaction itself? A. No, not to advise the client but to take care for the client. And if it is made known to the solicitor that the client was, say, to engage in an illegal transaction or if the solicitor became, in his judgment, aware that the client was, had diminished responsibility, say, or was doing something extreme it is incumbent on the solicitor to look into that further. [106] In the course of cross-examination about the information which Ms Jajoo had as to the proposed investment and anticipated return, he was asked what he had assumed about the scope of her retainer and answered: I don't know that I had assumed the retainer was extended. But the use of those words to any ordinary reasonable competent solicitor would have the effect of ringing some alarm bells. [107] This was a reference to the anticipated return of $10,000 per fortnight. However, Mr Fisher had some difficulty in formulating what was standard practice for a solicitor confronted by a relatively unsophisticated client in a borrowing transaction when it was intended to apply the proceeds to an investment in respect of which the client harboured what appeared to be totally unrealistic expectations. He said that it would be standard practice 'to send that client off for financial advice'. When it was suggested that the client might be told 'that sounds an impossibly high return, too good to be true, and I would not recommend you go into any such investment', he said 'that may be appropriate, but if the client is unsophisticated they may not hear that statement'. When asked why they would hear it any better form a financial planner than from a solicitor, he suggested that the different qualifications may be significant, but then added that in this case, a solicitor would be confident that a 200% return was ridiculous and would advise the client not to proceed." 51 It is important to understand the primary judge's reasoning process. First, he accepted that the appellants' retainer was to advise on the loan and mortgage transaction and that they were not retained to advise on the proposed investment in KSE: see [108]. His Honour then referred to the judgment of Sheller JA (with whom Meagher JA and Abadee AJA agreed) in Citicorp Australia Ltd v O'Brien (1996) 40 NSWLR 398 at 418 E-F where Sheller JA said: "In my opinion the difficulties faced by the O'Briens which his Honour considered were so great and, to professional persons, so obvious that a solicitor could not reasonably leave them unstated, did not impose the duty his Honour held Mr Eliades to be under. Stated bluntly, such a duty would require solicitors, retained to act on a purchase or mortgage for their skill in the law, to inform every client for whom they so acted of their views about the financial prospects of the purchase or mortgage where they felt or ought reasonably to have felt that there was risk of loss. One consequence of this would be to require solicitors to give opinions, which they were not qualified to give, with the obvious consequence that if they were wrong and the client had acted on the basis of those views, they would be liable in negligence. For good reason such a proposition is contrary to authority. The solicitor's duty is found in the terms of the retainer and the ambit of any additional assumed responsibility relied upon." 52 At [109] the primary judge said that while the scope of the retainer was of considerable significance in identifying the extent of the solicitor's duty of care, the scope of the solicitor's duty of care to a client was not confined to the contract of retainer but may extend in the circumstances of a particular case to require the taking of positive steps beyond the specifically agreed task or function where such steps are necessary to avoid a real and foreseeable risk of economic loss being caused to the client: Waimond Pty Ltd v Byrne (1989) 18 NSWLR 642. (I note at this point, as I did in David v David [2009] NSWCA 8 at [76], that in Kowalczuk v Accom Finance [2008] NSWCA 343 at [267]-[294] Campbell JA undertook a detailed analysis of the precedential status of Waimond. I will return to this topic and my comments in David at [76] in due course.) 53 At [111] the primary judge said that Waimond had not been expressly overruled or disapproved in Citicorp. His Honour noted that since Citicorp critical views have been expressed as to the authority of Waimond in Heydon v NRMA Ltd [2000] NSWCA 374; 51 NSWLR 1, though his Honour noted that Davies AJA (with whom Meagher JA concurred) in Curnuck v Nitschke [2001] NSWCA 176 had said that Waimond remained good law. 54 The primary judge then expressed what he saw as the prevailing position at [113] of his reasons as follows: "[113] Accordingly, the prevailing position is that the scope of a solicitor's duty of care is not limited to the terms of the retainer but, depending upon the circumstances of the particular case, may require the taking of positive steps beyond the specifically agreed professional task or function, where these are necessary to avoid a real and foreseeable risk of economic loss being sustained by the client." 55 His Honour then turned to the question of solicitors giving advice in relation to financing and mortgage transactions raising money as the appellants were here. His Honour then examined solicitors providing so-called "independent advice" and stated the following at [115] after referring to Citicorp: "[115] … solicitors providing 'independent advice' are expected to warn clients against improvident transactions, and while they are not required to provide the type of financial analysis that might be expected of accountants or stockbrokers or financial planners, they are expected to form a view as to the fairness of a transaction and whether it is reasonable for the client to enter into it, and if it is beyond their capacity to do so, to obtain appropriate specialist assistance." (emphasis added) 56 His Honour then discussed the role of independent advice under the Contracts Review Act and in the context of undue influence and unconscionable bargains, referring to the extent to which independent legal advice will act "as an antidote to the invalidating presumptions which otherwise arose in those contexts": [116] of his Honour's reasons. His Honour then looked at the necessity for a solicitor giving such advice (that is, for there to be an antidote) to ensure that the client comprehends the contents, nature and effect of the relevant documentation and as to the advice as to the propriety of the transaction (by which term the primary judge was referring to the underlying transaction). His Honour referred to Permanent Trustee Co of New South Wales Ltd v Bridgewater [1936] 3 All ER 501 at 507-508, Bester v Perpetual Trustee Co Ltd [1970] 3 NSWLR 30 at 35, Stivactas v Michaletos (No 2) [1994] ANZ Conv R 252; Credit Lyonnais Bank Nederland NV v Burch [1997] 1 All ER 144, Royal Bank of Scotland v Etridge (No 2) [2001] 4 All ER 449: see generally [116]-[126] of the primary judge's reasons. 57 His Honour said, at [127], that none of these authorities were cited in Citicorp (which was correct) and were not overruled. 58 His Honour then, at [128], expressed the effect of the so called independent advice cases, saying the following: "[128] In my respectful view, the position was correctly stated by Danckwerts LJ (with whom Sachs LJ concurred) in the Court of Appeal in Neuschul v Mellish & Harkavy (1967) 111 SJ 399, that although the duty normally owed by a solicitor to a client only extends to legal advice, it is often difficult in a given situation to disentangle legal and business or practical advice, and a solicitor who is carrying out a transaction for a client is not justified in expressing no opinion when it is plain that the client is rushing into an unwise, not to say disastrous, adventure. The cases that state that it is not the function of a lawyer to give financial advice mean that a lawyer is not expected to bring to his or her task the knowledge and expertise of a stockbroker, an accountant or a financial planner. But a lawyer giving independent advice is required to address the fairness or reasonableness of a proposed transaction, so that the client can appreciate its disadvantages; if this involves matters beyond the lawyer's expertise, then the lawyer should seek specialist assistance. That is not to say that the solicitor is to be expected to give financial advice – of the type that a stockbroker might – about the proposed investment. But where it is evident that the borrower is relying on the investment to generate the income to service the loan which is secured over the family home, and where at first sight the expectation appears utterly unrealistic, a solicitor acting reasonably would, as Mr Fisher explained, take steps for the protection of the client's interest." 59 Returning to the facts of this case, at [129], his Honour expressed his criticism of Ms Jajoo and his conclusion of negligence of the appellants in the following terms: "[129] In this case, it was or ought to have been plain to Ms Jajoo that Mr and Mrs Riz were putting their home at risk for the purpose of raising funds for an investment in respect of which they had expectations that objectively were absurd, such that (as Ms Jajoo conceded) it appeared to involve a very high risk. In my view, it was insufficient to tell Mr and Mrs Riz that she was not advising on the proposed investment (or anything else to do with Mr Suleman) and that they should seek and obtain legal and financial advice elsewhere, yet continue to act on and facilitate the loan transaction, all the more so where, as I have concluded, it ought to have been evident that they did not appreciate the importance of obtaining such advice and did not intend to do so. What was required was advice that firmly brought home the apparent improvidence of the proposed investment. I would not go so far as to hold that Ms Jajoo was on that account alone bound to cease to act, but in my view reasonable care required that she bring home to her clients forcefully the improvidence of their proposed course. That might have been achieved by forceful oral advice, or preferably by insisting on written instructions to proceed notwithstanding. If because of a conflicting duty to Mr Suleman Ms Jajoo could not give that advice, then she ought to have declined to act further; I do not accept that a solicitor acting as she was on a loan transaction can avoid the consequences of what would otherwise involve a conflict of duties by disavowing responsibility to give advice which she was otherwise bound to give, on the topic which would otherwise give rise to the conflict – here, the apparent improvidence of the proposed investment. In any event, more than mere advice to obtain independent advice was required. In my opinion the minimum requirement was forceful advice to bring home the improvidence of the transaction, and that did not occur. It follows that Ms Jajoo was in breach of her duty of care." 60 At [130]-[137] his Honour distinguished Imbrahim v Pham [2007] NSWCA 215 and David v David [2007] NSWSC 855 (the first instance decision of Patten AJ). Importantly, at [132], the primary judge distinguished the facts in Ibrahim from those here by saying: "[132] The evidence before me is not the same as the evidence in Ibrahim . There does not appear to have been any suggestion in Ibrahim's case that Ms Jajoo should have appreciated that the Ibrahims had unrealistic expectations as to the return they would gain and thus their ability to service the loan. It does not appear that the Ibrahims informed Ms Jajoo of the return they expected, but if they had, though apparently very high, it would not have been nearly so alarming as that expected by Mr and Mrs Riz. Campbell JA expressly recorded that Ms Jajoo had no reason to believe there was any unusual financial risk concerning the investment. And, the Ibrahims disclosed not only that they knew the investment was a 'big risk', but said 'even if we're gambling we don't care'." 61 Further, at [133] distinguishing the facts in David v David, the primary judge said the following: "[133] … In David v David , it does not appear that Ms Jajoo had any information that provided reason to think that unusual financial risk was associated with the proposed investment, whereas in the case of Mr and Mrs Riz, the facts are different: the knowledge of the high risk implicit in the extraordinary interest rate was derived from Mr and Mrs Riz, independently from any information that Ms Jajoo might have had access to in confidence. To my mind, the disclosure to Ms Jajoo by Mr and Mrs Riz that they were expecting a return in the order of 200% per annum, and intended to use that return to service the loan, is a striking factual distinction of the present case from Ibrahim v Pham and from David v David. " 62 At [137], the primary judge dealt with the question of negligence and the question of conflict as follows: "[137] Accordingly, DDS's obligations to serve Mr Suleman's interests did not excuse it from warning other clients against entering into transactions if to their knowledge, howsoever derived, the proposed transactions appeared improvident. Because, as I have endeavoured to explain, it is my view that a solicitor's duty can extend beyond the bounds of the retainer, and in the context of a borrowing transaction the solicitor is necessarily required (consistent with Khoshaba ) to give consideration to the purpose of the loan and the providence of the transaction – it was necessary for Ms Jajoo to give some consideration to the purpose and proposed application of the loan. But as soon as that is recognised, the conflict – which Patten AJ accepted would arise if DDS acted on any transaction involving Mr Suleman – could not be avoided." 63 At [139] the primary judge rejected the proposition put by the appellants that Mr and Mrs Riz had made an irrevocable decision to invest with KSE and that there was no reason to think that anything that Ms Jajoo might have said would have made them change their mind. His Honour supported this conclusion with the following comments at [139]: "[139] … Mr Riz had taken quite some time to be persuaded that he should borrow and invest, and Mrs Riz at least initially was not an enthusiastic participant. The period of time over which Mr Riz was persuaded to make such an investment, and the enquiries that he made before doing so, suggests that he was cautious and would not have risked his home had he not believed that the promised return was likely to be attained. Even on Ms Jajoo's version, while Mr and Mrs Riz were minded to invest with KSE, what they said to her did not suggest that it was inevitable that they would do so. On Ms Jajoo's version, what Mr Riz said at least at the 21 September consultation suggested that he was not necessarily committed to proceed to invest with KSE. In my view, strong advice of the type appropriate to bring home to him the unreality of his expectations would probably have deterred him from proceeding with the investment, and with the loan. In my view it is very probable that, properly advised by Ms Jajoo, Mr and Mrs Riz would not have proceeded with the loan or the subsequent investment." Arguments of the parties and the resolution of the appeal 64 The notice of appeal contained nine grounds of appeal. Most of the grounds were inter-related, although ground 6 raised a legal question and ground 9 concerned causation. 65 Grounds 1-9 were in the following terms: "1. The trial judge erred in finding that Ms Jajoo, a solicitor employed by the appellants, was not reasonably entitled to be satisfied that the respondents would follow up her advice that they should obtain legal advice and financial advice about their proposed investment in Karl Suleman Enterprizes [sic] Pty Limited (see judgment at [100]). 2. The trial judge erred in finding that Ms Jajoo was not reasonably entitled to be satisfied that the respondents understood the importance of her advice that they should obtain such legal advice and financial advice (see judgment at [100]). 3. The trial judge erred in finding that it ought to have been apparent to Ms Jajoo that she had not done enough to bring home to the respondents the importance of obtaining legal advice and financial advice about their proposed investment (see judgment at [100]). 4. The trial judge erred in finding that it ought to have been evident that the respondents did not appreciate the importance of obtaining legal advice and financial advice about their proposed investment and did not intend to obtain such advice (see judgment at [129]). 5. The trial judge erred in holding that it ought to have been plain to Ms Jajoo that the respondents had expectations about their proposed investment that objectively were absurd (see judgment at [129]). 6. The trial judge erred in holding that a solicitor retained by a borrower/mortgagor in a borrowing transaction is necessarily required to give consideration to the purpose of the loan and the fairness or reasonableness, or providence, of the transaction, including the proposed application of the loan funds (see judgment at [137], [114], [115] & [128]). 7. The trial judge erred in holding that Ms Jajoo was negligent in failing to firmly advise that the proposed investment was apparently improvident (see judgment at [129]). 8. The trial judge erred in holding that Ms Jajoo was obliged to do more than advise that legal advice and financial advice about the proposed investment was required (see judgment at [29]). 9. The trial judge erred in holding that had Ms Jajoo firmly advised that the proposed investment was apparently improvident the respondents would not have proceeded to borrow or enter into the proposed investment (see judgment at [139])." 66 The appellants emphasised that the primary judge accepted Ms Jajoo's evidence ("generally"). What Ms Jajoo said was tolerably clear: see [29], [31], [39] and [40] of the primary judge's reasons set out at [25] and [27] above. His Honour found that Ms Jajoo was reasonably entitled to think that Mr and Mrs Riz could understand what she said to them: [90] of the primary judge's reasons (at [31] above). Yet, the primary judge found (at [100]) that Ms Jajoo was not reasonably entitled to be satisfied that they would follow up the advice or that they understood the importance of it. His Honour's view was that she had not done enough to "bring home the importance to Mr and Mrs Riz" of obtaining independent advice. 67 The appellants pointed out that it was not part of the respondents' case that they had been given a warning, but that it was expressed in too anodine a fashion "to bring home the importance" of obtaining independent advice. Their case, that Ms Jajoo had encouraged them into the transaction was rejected, in effect, as untruthful. 68 The evidence of Ms Jajoo recounted at [99] of the reasons by the primary judge was from a question asked by his Honour at T798: "Q. Did you in the course of your two conferences or two with Mr Riz, one with Mrs Riz, form a view as to whether there was any differential in their desire to go ahead with this transaction? Did it seem to you that one was more determined or keen than the other, or not? A. I formed a view that they both knew that whatever they were getting themselves into had risks, some kind of risks associated with it, like any other business would. On that basis I told them, 'You should go and obtain the advice of somebody who could tell you if there is any risks or not.' Now I was satisfied that they understood that, and they would follow that up at some stage whenever time came for them to enter that business transaction. " (emphasis added) 69 It was this evidence that his Honour did not accept at [100]. That lack of acceptance has a number of difficulties. First, I do not read his Honour's reasons at [100] as rejecting Ms Jajoo's evidence that she thought Mr and Mrs Riz had understood her advice and that they would seek further advice. Rather, his Honour was making an objective assessment of the evidence of what she said and its adequacy. 70 Secondly, and related to the first point, the evidence was not the subject of any challenge. It was never suggested to Ms Jajoo that she could not have been satisfied that the respondents understood the importance of her recommendations (especially in circumstances in which she was entitled to believe that they could understand what she told them). She was taxed with an otherwise false case. 71 Thirdly, this evidence conformed with the context in which she found herself. It is plain that the Rizs understood that there was "a big risk" to the transaction. Mrs Riz said she understood that. What Ms Jajoo had said to Mr Riz on the first occasion conveyed a notion of risk to them – Mrs Riz's words make that clear. 72 Fourthly, the primary judge's conclusions (at [100]) that Mr and Mrs Riz "there and then" executed the loan contract and mortgage was wrong, this had already been done before Ms Jajoo said what she did to both Mr and Mrs Riz. 73 Fifthly, the complaint of the primary judge was that Ms Jajoo had not done enough to bring home the importance of independent advice. Yet, Mr and Mrs Riz said that they would proceed "for now", indicating to Ms Jajoo that the question of obtaining further advice was available to be considered by them. 74 Sixthly, it is difficult to understand precisely what it is that Ms Jajoo should have said. She used expressions that conveyed the necessity to seek legal and financial advice: "need", "must", "should". If, as his Honour found, this reasonably could be taken to have been understood and if, as they did, Mr and Mrs Riz said they knew it involved a big risk, it is a difficult to understand why Ms Jajoo was negligent in failing to label the underlying transaction as "improvident" or otherwise to "bring home" the importance of the obtaining of advice. 75 One aspect of the difficulties involved in requiring Ms Jajoo to label the underlying transaction as "improvident" or by some equivalent expression was her lack of instructions to examine the matter and her lack of knowledge about it. I will return to this. 76 The assessment made by the primary judge at [100] is one that this Court is obliged to form its own view upon: Fox v Percy [2003] HCA 22; 214 CLR 118 at 126 [25]. No subtle influence of demeanour arose here. The judge in this context was not balancing the evidence of the parties, he was expressing a view on the adequacy of the conduct of this solicitor. The evidence of the Rizs was rejected and did not direct itself to the subtleties of emphasis by reference to which Ms Jajoo was judged. In any event, in circumstances where 14 months elapsed from the last day of the trial to delivery of judgment, if there were to be considered any advantage of some kind, it can be seen to have likely evaporated. 77 The primary judge drew upon the expert evidence of Mr Fisher which I have set out at length. That evidence had a difficulty embedded within much of it of the same kind as revealed by the primary judge's discussions of the "independent advice" cases. That is, his evidence tended to assume that the retainer of Ms Jajoo extended to ensuring that the Rizs understood the underlying transaction. Ultimately, as made clear at [107] of the judge's reasons, the issue was whether a solicitor should "send that client off for financial advice". That is what Ms Jajoo did. I do not understand the primary judge to conclude that Ms Jajoo, to avoid the conclusion that she was negligent, should have told the Rizs not to proceed. Rather, the primary judge concluded at [100] that she was not reasonably entitled to be satisfied that they would follow up her advice or to be satisfied that she had done enough to bring home the importance of the need to obtain independent advice. 78 The primary judge's conclusions in these respects were set out in [129] (see [59] above). This paragraph reiterates his Honour's criticism that Ms Jajoo was not sufficiently forceful in advising of the need for independent advice because of the apparent improvidence of the underlying transaction or by insisting on written instructions. 79 Ms Jajoo knew that there was apparently a big risk; she knew that Mr and Mrs Riz knew that same fact since they said as much. Ms Jajoo's evidence as to what was involved in the transaction was as follows: (a) She accepted that the return was "a very high return". She would not accept the description of "an absurdly, a patently absurdly high return". (See T 770-771.) (b) She gave the following evidence (at T 769, 770, 771): "Q. That is not what I'm asking you. When you heard from Mr Riz that there was an investment with Karl Suleman 'So we will be making repayments of $10,000 every two weeks.' What did that convey to you? What did you understand you were being told? A. That they are getting, they are contemplating some kind of a business venture and they will be making enough money out of it to be making repayments of $10,000 every two weeks towards the loan. Q. And did you say to Mr Riz, 'Can I put my money in as well, because that sounds a pretty good return'. Did you think something like that at the time? A. No. Q. Did you say to him, 'Are you on medication?' Did you enquire as to his mental health, after having heard that? A. No. Q. Did it strike you at the time that Mr Riz was joking with you? He was being a bit of a prankster an pulling your leg? A. No. Q. No? A. No. Q. You listened to him suggest a $10,000 a fortnight return on money from a business venture with Karl Suleman Enterprises and you thought – well, what did you think? A. I thought that's a very high return and he should go and obtain some advice in relation to that business venture. Q. Did you perhaps secretly chuckle to yourself that this is just absurd? Did you check that it wasn't April Fools Day? That someone was having, that your colleagues had sent someone in to play a bit of a joke on you? A. No. Q. Did those thoughts go through your mind? A. No. The thought of being a high return did, but that's about it. Q. Your maths in 2001 would have been reasonably good, wouldn't it? You would have been able to go: 10,000 a fortnight, 26 fortnights in the year, okay, that is $260,000 return in the year on a loan of [$] 275,000. You didn't look for hidden cameras? You know the TV shows where they set people up as a bit of a prank? A. No. Q. No? A. No. Q. Seriously? A. Did I look for cameras? Q. This did not strike you as being just so absurd that someone must be being a bit of a prankster? A. No, I considered it as a high return. Q. Are you seriously saying that? Let's reflect on where we are at at the moment. You are in the Supreme Court, you are a solicitor of the Supreme Court, you are under oath? A. Yes. Q. And are you faced with a return of $260,000 on an investment of some part of $275,000. You knew that the Citibank loan had to be paid back, didn't you? A. Yes. Q. Let's just get that in perspective? A. Yes. Q. And perhaps take a deep breath and let's revisit your answer. You are not seriously suggesting that it struck you as being properly described as a high return, are you? A. Yes, I am. It was a very high return. Q. A very high return? A. Yes. Q. An absurdly, a patently absurdly high return, it must have struck you as? A. A very high return. Q. How old were you in 2001? A. I was 31. Q. Right. In your 31 years of life had you ever heard of an investment in New South Wales, Australia, returning something like $260,000 in one year on a $275,000 investment? A. I hadn't looked at investments but I considered this investment as a very high return, a very high risky return. Q. Dealing with my question, in your 31 years of living? A. Right. Q. Had you ever heard of anyone in New South Wales, Australia, in 12 months having received a return on an investment of $260,000 for an investment of $275,000? It is capable of being answered yes or not? A. Well, I don't think it can because I hadn't heard, I hadn't, I hadn't had any dealings in investments. I considered this as being a very high return but as to what the details of that investment were or how it was or over what period of time it was or what it entailed, I didn't know anything about that investment." (c) She later said (at T 789, 790 and 797) "A. Again, I was only advising them in relation to the mortgage. As far as the investment, I don't know what information would have been relevant to them. I didn't know what business they were getting into with Karl Suleman." … A. I, I did not form a belief at the time because I didn't know what business venture they were entering into. They could have been buying a trolley run or two. I mean, I was not privy to their business venture to know what would be relevant and what would affect their state of mind." … Q. Did it or did it not occur to you that the return being spoken of sounded too good to be true? A. It was a high return. I did not make that assessment, but that was definitely the reason that they should have gone to somebody who should have advised them on that aspect of their transaction, but that didn't affect the transaction that I was advising them on. Your Honour, I need, I wanted to make sure that they could make, or they understood that they had to make the minimum repayments, which were $1,780 I think a fortnight, and if they didn't make those repayments that would be an act of default and they would lose the house. Q. When you were seeing the Rizes, first of all did you have any understanding as to what their employment was? A. No Q. Did you ask? A. No, I did not, but I comfortably assumed that there would be some employment for them to be able to obtain a loan." (d) I have already referred to Ms Jajoo's evidence at T798. 80 This evidence was not otherwise challenged. Ms Jajoo was a 31 year old lawyer charged with the responsibility of explaining the loan and mortgage documentation to Mr and Mrs Riz. She was unaware of the nature of the investment, but the high return made it appear risky, a matter which was appreciated by her clients. She gave them clear advice about the necessity of seeing someone to give them independent advice on the underlying transactions – both legal and financial. She could reasonably apprehend that they understood her advice. 81 Ms Jajoo gave a body of evidence that she was not aware of the nature of the intended investment in Mr Suleman's businesses apart from having a belief that those business were varied. For example, she said at T757, 759, 783: "A. I wasn't aware of what those people did with Karl Suleman Enterprises, if they were purchasing a business investing. I, I wasn't aware of any of that, if that is the question. … Q. Yes. What sort of thing? A. Well, I don't know. Some kind of an investment or, or business venture. I don't know. … Q. Is that a considered answer? A. Yes. I did have some knowledge about Karl Suleman's set up, or his business structure and set up being restructured, but as far as investments were concerned I didn't know. Q. The concerns that you had about Mr Suleman's investments structure, you knew those concerns made the investment contracts liable to being challenged in the court, didn't you? A. I had never seen an investment contract." When asked about the possible effect of passing advice the appellant had been given about the structure of Mr Suleman's companies' on to the Rizs, Ms Jajoo said (at T 788): "A. I can't answer that because I didn't know what they were investing into, or what business venture they were getting into. I was only advising them in relation to the mortgage documents and their obligations to the bank." 82 There was no challenge to this evidence and evidence of this character. 83 Further, though it can be accepted that the return on the investment was apparently very high, there was no basis for Ms Jajoo to conclude, without investigation of the investment, what was interest or profit and what, if any, was a return of capital, or how long the payments of $10,000 (or $12,000) per fortnight were to continue. 84 It was not put to Ms Jajoo that she should have known that by 8 or 10 or 15 October the Rizs had not seen a legal or financial adviser or that there should have been another warning or recommendation on one or more of these later dates. All that was put to her was that she had no basis to conclude at these later times that the Rizs had received legal or financial advice. It was put to Ms Jajoo that she appreciated that the Rizs had not obtained independent legal and financial advice on 25 September and that when they left her office they had not gone to see such persons. Ms Jajoo's answers concerned the time before and immediately after 25 September. The relevant cross examination was at T 781-782: "Q. When the Rizes executed the mortgage and then left your company on 25 September 2001, you knew that they had not left your office and gone and seen an accountant or another lawyer and come back, that hadn't occurred, had it? A. Most likely not. Q. You say, 'Most likely not.' Are you seriously suggesting that the - A. I wasn't sure what inquiries Mr Riz had made, but I knew that they probably haven't taken their business contract to a lawyer or a financial advisor to be advised on the actual contract. Q. That was your state of knowledge when thr Rizes left your office on 25 September 2001, wasn't it? A. Yes. Q. Let me just jump ahead for a moment. Settlement occurred on 15 October 2001 as far as you are aware, you know that now, don't you? A. Yes. Q. At settlement a bank cheque in favour of Karl Suleman Enterprises for $150,000 was received by Dominic David Stamford [sic] on behalf of the Rizes at settlement in exchange for the executed mortgage over the family home? A. Yes. Q. You had no conversations between the end of the conference on 25 September with Mr and Mrs Riz, and settlement occurring on 15 October 2001, which suggested that the Rizes had in fact obtained financial advice or independent legal advice in relation to the investment, that's so isn't it? A. Yes." 85 On 25 September, Ms Jajoo believed that the Rizs had not, at that point, obtained independent advice. She also did not learn of facts thereafter supporting a positive belief that they had seen anyone else. That, however, was not a conclusion that they had not, later, done so; nor was it a conclusion contrary to the possibility that they (fully comprehending her advice) had chosen for themselves to take the risk of the investment with its hoped for returns, without paying for further detailed legal and financial advice. She was not taxed with any failure to speak again after 25 September. 86 It is necessary at this point to say something of the legal test posited by the primary judge because it clearly influenced his factual assessment of the legitimacy of Ms Jajoo's performance of the retainer. 87 The views of the primary judge contained in [109] (see [52] above), [113] (see [54] above), [115] (see [55] above) and [128] (see [58] above) all embody the proposition that a solicitor retained to advise on a loan and mortgage transaction will be obliged to address the fairness or reasonableness of the underlying transaction. With respect, that is going too far. It is unnecessary to examine the so-called independent advice cases. They are concerned with the extent of advice required for there to be an antidote to vitiating circumstances such as unconscionability. They do not provide a sound ground upon which to conclude that a solicitor with a limited retainer must advise beyond the retainer. They were not dealt with in Citicorp, for the reason that they do not address the content of the professional duty of the solicitor. 88 The primary judge's reasons in a number of places, in particular [128], contain a proposition or assumption that Ms Jajoo was obliged to form and express some view upon the fairness or reasonableness of the underlying transaction. This duty can be seen in his Honour's reasons to flow from a duty wider than the retainer which has its source in Waimond. 89 It is unnecessary in order to resolve this controversy to undertake an extended exegesis on the solicitor's duty of care. The analysis of Waimond by the Court of Appeal in Heydon, the discussion of the authorities by Campbell JA in Kowalczuk and the subsisting authority of Citicorp make the issue of the circumstances of the responsibility of a solicitor to act in respect of a matter falling outside his or her retainer less than clear. Part of that lack of clarity is the impossibility and unwisdom of seeking to cover future factual circumstances of an infinite kind with a legal test. The primary judge's formulation of principle was, however, overly broad. This breadth was derived from the misuse of the independent advice cases. 90 In David v David at [76], I said the following (with which Hodgson JA and Handley AJA agreed): "Some reliance was placed on Waimond Pty Ltd v Byrne (1989) 18 NSWLR 642 in argument. In Kowalczuk v Accom Finance Pty Limited [2008] NSWCA 343 at [267]-[294] Campbell JA undertook a detailed analysis of the precedential status of Waimond in particular after Heydon v NRMA Ltd [2000] NSWCA 374; 51 NSWLR 1 and Astley v Austrust Ltd [1999] HCA 6; 197 CLR 1. It is unnecessary to repeat that analysis. It is sufficient to say that the notion that a solicitor may owe a client a 'penumbral' duty that extends beyond scope of the retainer is doubtful. If, however, the solicitor during the execution of his or her retainer learns of facts which put him or her on notice that the client's interests are endangered or at risk unless further steps beyond the limits of the retainer are carried out, depending on the circumstances, the solicitor may be obliged to speak in order to bring to the attention of the client the aspect of concern and to advise of the need for further advice either from the solicitor or from a third party." 91 Neither party submitted that this expression of the matter either involved error or was inappropriate for application here. The passage in David at [76] was not meant, however, to be an operative legal principle. It was intended to do no more than posit the possibility that the performance of the retainer, and what is learnt during it, may affect how the retainer is properly discharged. 92 Applying that test here, in my view, Ms Jajoo executed her retainer and discharged her duty of care without negligence. 93 The judge was persuaded that Ms Jajoo should have said something more forceful or obtained written instructions. I do not agree. To comment on any informed basis about the underlying transaction required a knowledge of it. She did not have that knowledge. She was not retained to advise on it. She told her clients clearly to obtain independent financial advice and that it was necessary for them to do so. She thought that they understood the need for it and that they would act on her advice. In all the circumstances of how the case was fought, the evidence given and findings made I disagree with the primary judge that Ms Jajoo was not entitled to form that view. This is a factual conclusion which I reach recognising the obligation to undertake a rehearing. There was no relevant credit finding, save for those adverse to the respondents. Ms Jajoo's evidence was accepted, but not the reasonableness of her belief and evaluation that the Rizs understood the significance of the need to see other advisers. She was not taxed in cross-examination as to the reasonableness of her view that she had been sufficiently clear and forceful. An entirely different case was run against the appellants. 94 It can be accepted that Ms Jajoo knew that the Rizs' views on returns were very high, indeed extraordinary, betraying a high degree of risk. That is why she said what she did to clients who themselves expressed an understanding of a big risk. 95 It was submitted on appeal, and in effect the judge concluded, that Ms Jajoo did not tell Mr and Mrs Riz (and should have done) that they should obtain independent legal and financial advice because the transaction was improvident and risky. With respect, high risk was understood by the Rizs, to Ms Jajoo's knowledge. There can have been no doubt that the question of risk was related to her clear advice as to the necessity of seeking advice. She told them that the appellants did not approve of Mr Suleman's contracts. The recognition of high risk was clearly in the context of the high returns. In my view, Ms Jajoo's clear advice amounted to a statement about the high risk in the context of the apparently high returns. I disagree that her advice was inadequate in any way. What occurred here, plainly on the evidence, was that the Rizs (fully aware that the returns appeared too good to be true and that it was a big risk) chanced their investment believing in the returns to follow. They were clearly advised to obtain independent legal and financial advice and chose not to do so. 96 An important question for the assessment of Ms Jajoo's conduct, and for the assessment of the primary judge's criticism of her, is whether or not what she was told by the Rizs about their expectations of return on the investments was such as to make reasonably apparent to her the inadequacy of the advice she had given them. In my view, the evidence of Ms Jajoo reflected a reasonable approach by her. She did not and could not comment on the transactions because she did not understand what they were investing in. It was not part of her retainer so to understand those matters. But she recognised a very high return and a big risk and for that reason clearly advised the Rizs to take independent legal and financial advice. She could reasonably conclude that they understood what she said. In my view, Ms Jajoo fulfilled her retainer without negligence. Causation 97 If I am wrong in the above conclusion and Ms Jajoo should have been more forceful in her views, I cannot agree with the primary judge that the Rizs proved that that would have made the slightest difference. 98 I have already set out the primary judge's finding of causation at [139] of the reasons (see [63] above). 99 The Rizs each gave self serving evidence that was inadmissible under the Civil Liability Act 2002 (NSW), s 5D(3)(b) (a difficulty that was not dealt with at the trial). The evidence was of little or no value. It took its place in a case based on false evidence as to Ms Jajoo encouraging the Rizs to invest. It posited little more than the approach taken by Ms Jajoo. 100 Examining the matter by reference to the objective circumstances the following is to be recognised. First, the Rizs were told to see independent legal and financial advisers. Secondly, no finding was made that this was not understood by the Rizs. Thirdly, there was no finding that this had not been "brought home" to them – though this can perhaps be implied in the negligence and causation findings of the judge. Fourthly, the Rizs had fully discussed the risks and the fact that the return was too good to be true before seeing Ms Jajoo. 101 Although, as was said by the primary judge, it had taken some time for the Rizs to be persuaded and although Mrs Riz had had to be brought around, it was tolerably clear that they had made up their minds to invest before seeing Ms Jajoo. The overwhelming inference is that the lure of the returns was persuasive. 102 They knew the undertaking involved big risks. They had discussed the very possibility of losing the house. 103 Objectively this reveals that, although it took some time to win them over, eventually the promised height of the returns outweighed these appreciated risks. 104 The belief in the fabulous returns was undoubtedly the product of what Mr Riz had been told by numerous people. This evidence included the following from Mr Riz (at T153, 157, 158, 264, 265-266): "Q. By the time you had this conversation with Lily [sic] about going to see Mary, what was it that changed your mind? A. I decided to go because Lily [sic] said repeatedly to me, 'It's a very good option, people are making a lot of money. Look at this one, he has beautiful Mercedes, the other one has two or three houses, other people are making a lot of money out of that. He is an honest person, he has been in this business for four years and if I had money I would invest for sure. Go and give it a go, go ahead with that.' And she was swearing to God that 'if anything wrong happens I would bear the consequences, I will sell my house to cover the loss.' Q. You trusted Lily [sic], did you? A. I didn't trust Lily [sic] herself alone but because I saw many people, four or five people, and they all did say the same, that's why I could trust the whole issue. … Q. You thought, did you, that the interest that Mr Suleman was saying sounded as if it might be too high to be true? A. This is why we went to see Mary because Mary knew him and to see other people that were investing with him and everyone said that he is a good person. And when we, when I went with Lily [sic] to see, to meet with Mary, Mary pointed at the house that she bought. She said 'This house is mine, this one is mine and also she said the other one and the one in Darling Harbour and all these properties are because of the money that is coming from the investment with Karl Suleman. And Karl is very punctual, he gives money on time and I've been with him for four years and he has never been late to give me my money. ... Q. Did you tell her that you were interested in making an investment yourself? A. No, this is afterwards. It was after I saw Esher and after I did the round and to people to see people [sic] and they all said the same. ... Q. Did you tell her that you thought it might be good for the family to invest? A. According to what they said it's a good investment, I told her it's a good investment and we will make the house bigger. In seven months she get, finish all the, lilke all the money that you get, you got on the house, we will finish with that, with this loan in the space of seven months. And I've been told that after the seventh month I will keep receiving the same amount of money for seven, three years, three years. Q. Had you decided after to speaking to Mary and Esher that you would invest with Mr Suleman if you could get your wife to agree? A. Yes. … Q. Mr Riz, you believed that Mr Suleman was very successful, didn't you? A. Yes. Q. And you believed that his success would continue? A. Yes. … Q. What do you think the bank would do if you didn't pay? A. He would sell it, the bank will sell the house. DARKE: Q. Mr Riz, you knew before August 2001 that any investment you made with Mr Suleman would mean you putting your faith in him to be able to repay you the returns that you were speaking about? A. Yes. Q. You were putting faith in Mr Suleman's ability as a successful businessman; is that right? A. Yes. Q. And as far as you were aware many other people had been prepared to put such faith in Mr Suleman by making investments with him? A. I don't know anybody, I didn't know nobody, only Lily [sic] and the people that she introduced me to. Q. And that was Mary and numerous friends of Mary; correct? A. Yes. Q. You thought the success of any investment with Mr Suleman would depend on his reliability; correct? A. Yes, that's what I have been told. Q. And you believed when you had these discussions with Mary and the other investors that high returns on an investment generally mean a higher level of risk? A. We didn't speak about this. Q. But that's what you believed at the time? A. That's what I was hearing from Lily [sic], from her friends, from all the group there, but I didn't inquire about how much and all the details. HIS HONOUR: Q. What were you hearing from them? A. Khaled was giving us money on time and we have been with him for a long time and there was no delay at all." 105 There was also objective evidence of a commitment to proceed before the Rizs saw Ms Jajoo. Mr Riz had already agreed to pay $5,000 brokerage; he had taken steps to open the bank account in his son's name. 106 Overall, I do not think that it was proved on the balance of probabilities that if Ms Jajoo had been more forceful and if she had said that the investment looked improvident and that is why other advisers should be seen that this would have made the slightest difference. With respect to the primary judge the evidence does not support his conclusions on causation. 107 I should make clear that I am not expressing a conclusion that if someone had explained the underlying transaction to the Rizs they would still have gone ahead. In my view, the evidence does not permit a conclusion on the balance of probabilities that anything Mr Jajoo said or did would have influenced the Rizs to take independent legal and financial advice about the underlying transaction. The Notice of Contention 108 It was common ground that the first task involved in considering the noticed contention was to assess the relevant duties said to conflict: Pilmer v Duke Group Limited (in Liquidation) [2001] HCA 31; 207 CLR 165 at 200-201 [83]. 109 It was accepted by the respondents that if Ms Jajoo's duty did not extend to advising on the underlying transaction then there was no conflict of duty and duty. Ms Jajoo's duty did not extend so far. If the circumstances of the performance of the retainer required anything to be said it did not require any more than was said. Therefore that aspect of the case evaporates. 110 Though there had, apparently, been some dealings between some of the appellants and Mr Suleman in the past, both professionally and commercially, this did not impinge upon Ms Jajoo. These relationships had ceased by the time she was seen. She fulfilled the retainer. Neither the antecedent duties or interests placed her in a position of conflict. She was not otherwise required to say more than she did and, on the facts, she was not prevented from saying more than she was required to say by some duty or interest arising from the firm's previous dealings with Mr Suleman. 111 There was no basis in the pre-existing relationships with Mr Suleman and his companies not to act in advising on the loan and mortgages. 112 In these circumstances, the matters raised by the notice of contention do not save the primary judge's orders. 113 If I am wrong about the absence of any breach of fiduciary obligation there would arise difficult questions as to the operation of principles of causation in this area: see Brickenden v London Loan & Savings Co of Canada [1934] 3 DLR 465, White v Illawarra Mutual Building Society Limited [2002] NSWCA 164, in particular at [145] per Hodgson JA; Breen v Williams [1996] HCA 57; 186 CLR 71; O'Halloran v R T Thomas & Family Pty Ltd (1998) 45 NSWLR 262 at 272-3. 114 The importance of this issue is such that it makes it inappropriate to deal with the matter by way of obiter dicta in a case such as this. Relevant to the consideration of the factual underpinnings are what a reasonable solicitor would have said in the circumstances unconstrained by any difficulty of having had any contact with Mr Suleman in the past. That question would not arise in the abstract. If it be the case that Ms Jajoo should have ceased to act it might be thought that the overwhelming likelihood was that Mr Riz would have returned to Mary Haider's office to ask what to do and he would have been sent to another solicitor chosen by Mary Haider. There would also need to be considered in this matrix the evidence of Mr Fisher. Given that, in my view, it is both unnecessary and inappropriate to deal with Brickenden I do not propose to evaluate the probabilities in relation to what would have happened had the Rizs approached another solicitor in the circumstances of this case. 115 Further, if it be the case that Ms Jajoo had a primary duty to Mr and Mrs Riz to say (as she did) something to the effect that DDS did not approve of Mr Suleman's contracts, then there is a possibility that this duty could conflict with a primary duty to maintain confidentiality in relation to communications from Mr Suleman when he was a client, giving rise to a secondary fiduciary duty to avoid this conflict of primary duties. Whether or not such a conflict did arise in this case would require close consideration of what relevant confidential communications there were from Mr Suleman. Ms Jajoo, however, did fulfil any such relevant primary duty to Mr and Mrs Riz by saying what she did, so that the only duty she might have breached was one of confidentiality owed to Mr Suleman. In those circumstances, Mr and Mrs Riz do not make good any case of loss due to breach of fiduciary duty to them. Orders 116 For the reasons above, I would make the following orders: (a) appeal allowed; (b) set aside the orders made on 13 and 29 November 2007 against the appellants as third, fourth and fifth defendants and in lieu thereof order judgment for the third, fourth and fifth defendants with costs; (c) respondents pay the appellants' costs of the appeal, (d) direct any application by the respondents for a certificate under the Suitors Fund Act 1951 be made within 10 days by notice of motion accompanied by an affidavit. The Court will deal with the application, if made, on the papers. 117 It is appropriate to deal with one other issue. The evidence and the primary judge's findings appear to raise a plausible conclusion that the Rizs for some years have misused the taxation or social security system. I would be minded to direct the Registrar to provide the transcript of the trial, the primary judgment and this Court's judgment to the relevant Commonwealth authorities. I would not make that direction for 14 days to permit the Rizs to put anything to the Court contrary to that course. 118 HODGSON JA: I agree with Allsop P. 119 McCOLL JA: I agree with Allsop P. ********** 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.