New South Wales Supreme Court CITATION : DJZ Constructions Pty Ltd v Paul Pritchard trading as Pritchard Law Group and Ors [2010] NSWSC 1024 HEARING DATE(S) : 10 March 2009, 11 March 2009, 12 March 2009, 13 March 2009, 29 April 2010, 30 April 2010, 3 May 2010, 4 May 2010, 5 May 2010, 7 May 2010, 10 May 2010, 11 May 2010 JUDGMENT DATE : 10 September 2010 JUDGMENT OF : Schmidt J CATCHWORDS : PROFESSIONS AND TRADES - lawyers - duties and liabilities - whether negligence in advising client in relation to guarantee in deed under which interest in real estate business acquired - in relation to terms of second deed settling certain disputes - in relation to agreement selling interest in business - nature of duty of care - duty of care owed - negligence established in part - questions of credit - advocate's immunity - section 5O of the Civil Liability Act 2002 - causal connection - inherent risk and contributory negligence - s 5I and s 5R of the Civil Liability Act 2002 - contributory negligence established - cross claim - concurrent wrongdoers - negligence established - were damages established - claimed damages established in part - TORTS - negligence - general matters - lawyers negligence - damages - EVIDENCE - admissibility and relevancy - witness not available for cross examination - s 135 of the Evidence Act 1995 - statements received - admissions - s 87 of the Evidence Act 1995 - admissions not established Evidence Act 1995 LEGISLATION CITED : Civil Liability Act 2002 Law Reform (Miscellaneous Provision) Act 1946 Trade Practice Act 1974 (Cth) CATEGORY : Principal judgment Attard v James Legal Pty Limited [2009] NSWSC 811 Bennett v Minister of Community Welfare [1992] HCA 27; (1992) 176 CLR 408 Capebay Holdings Pty Ltd v Sands [2002] WASC 287; [2003] ANZ ConvR 170 Capital Brake Service Pty Limited v Meagher & 8 Ors t/as Sparke Helmore [2003] NSWCA 225 David v David [2009] NSWCA 8 Dean v Allin & Watts [2001] 1 Lloyd's Rep 249 D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12; (2005) 223 CLR 1 Dobler v Halverson [2007] NSWCA 335; (2007) 70 NSWLR 151 Fox v Everingham and Anor (1983) 50 ALR 337 Giannarelli v Wraith [1988] HCA 52; (1988) 165 CLR 543 Hawkins v Clayton [1988] HCA 15; 164 CLR 539; Waimond Pty Ltd v Byrne, Heydon v NRMA Limited (1989) 18 NSWLR 642 Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd (no 4) [2006] NSWSC 90 James & Ors v Surf Road Nominees Pty Ltd & Ors [2004] NSWCA 475 Lucantonio v Kleinet [2009] NSWSC 853 Macindoe and Anor v Parbery (1994) Aust Torts Reports 81-290 at 61,534 Murphy v Miller [1998] NSWCA 150 CASES CITED : Nikolaou v Papsavas Phillips & Co [1984] HCA 11; (1989) 166 CLR 394 Ordukaya v Hicks [2000] NSWCA 180 Pegrum and Pegrum v Fatharly [1996] 14 WAR 92 Podrebersek v Australian Iron & Steel Pty Ltd [1985] HCA 34; (1985) 54 ALR 529 Rogers v Whitaker [1992] HCA 58; (1992) 175 CLR 479 Surf Road Nominees Pty Ltd & Ors v Tass James & Ors [2004] NSWSC 61 Surf Road Nominees Pty Limited & Ors v Tass James & Ors [2004] NSWSC 223 Stringer v Flehr & Walker [2003] QSC 370; (2003) Aust Tort Reports 81-718 Tabet v Gett [2010] HCA 12; (2010) 265 ALR 227 Teachers Health Investments Pty Ltd v Julian [2001] NSWSC 231; ANZ ConvR 449 Unity Insurance v Rocco Pezzano [1998] HCA 38; (1988) 192 CLR 603 Watson v Foxman (1995) 49 NSWLR 315 WCW Pty Ltd v Bolster & Company [1993] FCA 2 Wilkinson v Daley [2004] NSWCA 331 Windy Construction UK Limited v Poole [1984] 2 Lloyds Rep 499 at 506-7 Woolcock Street Investments Pty Limited v CDG Pty Limited [2004] HCA 16; (2004) 216 CLR 515 Young v Commissioner of Taxation [2010] NSWSC 288 DJZ Constructions Pty Ltd - Plaintiff Paul Pritchard t/as Pritchard Law Group - First Defendant/Cross Claimant PARTIES : Joseph John Gilles - Second Defendant/First Cross Defendant Gregory George Eliades - Third Defendant/Second Cross Defendant David McGovern SC - Fourth Defendant/Third Cross Defendant FILE NUMBER(S) : SC 2005/269375 Mr C Birch SC with Mr M Cleary - Plaintiff COUNSEL : Mr A McInerney with Mr P Livingston - First Defendant/Cross Claimant Ms KJ Williams - Second and Third Defendants/First and Second Cross Defendants Mr Gibb SC - Fourth Defendant/Third Cross Defendant Pryor Tzannes & Wallis - Plaintiff SOLICITORS : Yeldham Price O'Brien Lusk - First Defendant/Cross Claimant Sparke Helmore - Second and Third Defendants/First and Second Cross Defendants McCabe Terrill Lawyers - Fourth Defendant/Third Cross Defendant 128 IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION PROFESSIONAL NEGLIGENCE LIST SCHMIDT J FRIDAY, 10 SEPTEMBER 2010 2005/269375 DJZ CONSTRUCTIONS PTY LTD v PAUL PRITCHARD TRADING AS PRITCHARD LAW GROUP AND ORS JUDGMENT 1 HER HONOUR: These proceedings were commenced in June 2005. An amended statement of claim was filed in February 2006 and a defence in May 2006. 2 The plaintiff, DJZ Constructions Pty Ltd ('DJZ'), claimed damages for breach of retainer and/or negligence on the part of the defendant, Paul Pritchard trading as Pritchard Law Group, DJZ's former solicitor. Two areas of complaint were advanced. The first in relation to advice given by Mr Pritchard in 1999 about the terms of a July 1999 deed, under which DJZ invested in a real estate business, known as Chris Burke Real Estate, by acquiring units in a unit trust known as the Surf Road Unit Trust ('SRUT'). 3 The second complaint, advanced in the alternative, concerns guarantees given under the 1999 deed and advice given by Mr Pritchard as to the basis upon which the plaintiff settled certain disputes with the ultimate purchasers of the real estate business and related entities, pursuant to a deed dated 1 February 2001 and later sold its interest in the business, under a sale agreement dated 5 November 2003 and their impact upon those guarantees. 4 These proceedings followed what had transpired in other proceedings earlier brought in this Court in August 2001 by DJZ, amongst other plaintiffs, in which they sought to enforce guarantees provided in the 1999 deed. Those proceedings were decided in favour of the plaintiffs by Einstein J (see Surf Road Nominees Pty Ltd & Ors v Tass James & Ors [2004] NSWSC 61 and Surf Road Nominees Pty Limited & Ors v Tass James & Ors [2004] NSWSC 223). There was, however, a successful appeal brought by certain of the defendants, decided in James & Ors v Surf Road Nominees Pty Ltd & Ors [2004] NSWCA 475. 5 DJZ's original complaint in these proceedings was that it was as the result of Mr Pritchard's negligence in advising in relation to the 2001 deed and/or on the terms of the 5 November 2003 sale agreement, that it lost the appeal and thereby, the opportunity to sue Mr and Mrs James, (both defendants in the Supreme Court proceedings), on the guarantees given under the 1999 deed. Those rights had been compromised in the 2001 deed and the sale agreement. The joinder of other parties 6 There was an unsuccessful mediation between the parties and on 3 March 2009 a motion was filed by the plaintiff, seeking leave to file a further amended statement of claim. On the first day of the hearing, 10 March 2009, after discussions between the parties, it appeared that further amendments were necessary to the pleadings, which they continued to discuss as the hearing proceeded. Those amendments were finally not pursued and, there being no objection, leave to proceed on the further amended summons was given. The hearing was later adjourned as the result of consequences which flowed when the defence to the amended statement of claim was filed. 7 Mr Palmieri was then giving his evidence. The defence raised certain allegations against the solicitors who practice in partnership as Giles Payne & Co ('Giles Payne') and Mr McGovern SC. They were then representing DJZ in these proceedings. The result of this development was that initially Mr McGovern and later Giles Payne ceased acting for DJZ and the proceedings were adjourned, so that new representation could be obtained by DJZ. 8 A cross claim was later brought by Mr Pritchard against Giles Payne and Mr McGovern under s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946. They were also eventually joined as defendants, but it was made clear for DJZ that its case was that the primary cause of its loss was Mr Pritchard; that he is liable for the whole of that loss; and that DJZ was entitled to recover from him. Giles Payne and Mr McGovern were only joined as defendants to the extent that Mr Pritchard established that they were co-wrongdoers. DJZ did not assert that they were. The Issues 9 As finally identified by the parties, they were: 1 July 1999 Deed 1. Was Mr Pritchard retained by DJZ prior to late June 1999 to advise it upon a proposed acquisition of an interest in the Chris Bourke & Co real estate business by way of a unit trust. 2. Did Mr James agree with Mr Palmieri that there would be a guaranteed return to Mr Palmieri's company of $2,200.00 per month from the unit trust and that this would be guaranteed by Mr and Mrs James and Mr and Mrs Christian. 3. Did Mr Palmieri instruct Mr Pritchard to ensure that the alleged return of $2,200.00 per month from the unit trust would be guaranteed by Mr and Mrs James and Mr and Mrs Christian and that this guarantee be included in the 1 July 1999 Deed. 4. Was there any departure by Mr Pritchard from competent professional practice in respect of the 1 July 1999 Deed. 5. Did Mr Pritchard fail to advise Mr Palmieri that the documentation for DJZ's acquisition of an interest in the unit trust did not contain an obligation on the trustee to pay $2,200.00 per month or that such return was not guaranteed by Mr and Mrs James and Mr and Mrs Christian. 6. If so, did this amount to a breach of retainer or negligence on the part of Mr Pritchard. 7. Did Mr Palmieri believe, at the time he signed the 1 July 1999 Deed and/or invested capital of $700,000.00 and further payments as pleaded, that the documentation imposed a legal obligation upon the trustee to make a payment of $2,200.00 per month from the unit trust and that this obligation was guaranteed by Mr and Mrs James and Mr and Mrs Christian. 8. Was it the case that Mr Palmieri would not have entered into the transaction and invested his initial capital of $700,000.00 and further payments as pleaded, if he had not believed that the documentation imposed a legal obligation upon the trustee to make a payment of $2,200.00 per month from the unit trust and that this obligation was guaranteed by Mr and Mrs James and Mr and Mrs Christian. 9. If Mr Pritchard was in breach of his retainer or was negligent, whether this breach caused DJZ any loss. 10. If yes, was the loss suffered by DJZ in consequence of the breach the $700,000.00 initially invested in the unit trust, and further sums contributed as pleaded. February 2001 Deed 11. Was Mr Pritchard's retainer in relation to the February 2001 Deed with: a. DJZ; or b. all the directors of Surf Road Nominees. 12. Was there any departure by Mr Pritchard from competent professional practice in respect of the February 2001 Deed. 13. Did Mr Pritchard fail to advise DJZ that the February 2001 Deed could bring about a release of the James' from their guarantee contained in clause 5 of the July 1999 Deed. 14. If so, did this amount to a breach of retainer or negligence on the part of Mr Pritchard. 15. Is Mr Pritchard protected from any liability by reason of the advocate's immunity at common law. 16. Has DJZ suffered any loss as a consequence of the February 2001 Deed operating to release the James' from their guarantee contained in clause 5 of the 1 July 1999 Deed. 17. If Mr Pritchard was in breach of any duties to DJZ, was the breach by Mr Pritchard the cause of DJZ's loss? 7 August 2003 Deed and 5 November 2003 Sale Agreement 18. Was there any departure by Mr Pritchard from competent professional practice in respect of the 7 August 2003 Deed or the November 2003 Sale Agreement. 19. Did Mr Pritchard fail to advise DJZ that the 7 August 2003 Deed or the November 2003 Agreement for Sale could bring about a release of the James' from their guarantee contained in clause 5 of the 1 July 1999 Deed. 20. If so, did this amount to a breach of retainer or negligence on the part of Mr Pritchard. 21. Is Mr Pritchard protected from any liability by reason of the advocate's immunity at common law. 22. Has DJZ suffered any loss as a consequence of either the 7 August 2003 Deed or the November 2003 Agreement for Sale operating to release the James' from their guarantee contained in clause 5 of the 1 July 1999 Deed. 23. Was any loss of DJZ suffered not by reason of either the 7 August 2003 Deed or the November 2003 Agreement for Sale, but rather by reason of the February 2001 Deed. 24. If Mr Pritchard was in breach of his duties to DJZ, was the breach by Mr Pritchard the cause of DJZ's loss? General issues in relation to loss 25. Did DJZ pay, or incur any liability with respect to the payment, of: a. its own legal costs in Equity Division Proceedings 50108/01 or the appeal from those proceedings; or b. the legal costs of Mr & Mrs James as a result of the Court of Appeal decision; or were those amounts paid by other companies controlled by Mr Palmieri in circumstances where those other companies have no legally enforceable right of recovery in respect of such payment from DJZ. 26. If DJZ has suffered any loss as a consequence of any breach of retainer or negligence by Mr Pritchard, has DJZ proved the quantum of that loss. 27. If any loss was suffered by DJZ by reason of any breach of retainer or negligence, should any damages be reduced by reason of DJZ's contributory negligence. 28. would enforcement against Mrs James be fruitful. 29. To the extent recovery of costs depends upon establishing the result of assessment, should the determination be referred out. Cross-Claim against Gilles Payne 30. What was the scope of the retainer of Gilles Payne by DJZ or Mr Palmieri in relation to: a. prospective claims by the Palmieri interests against the James interests; b. Equity Division Proceedings 50108/01; c. the 1 February 2001 Deed; d. the 7 August 2003 Deed; and e. the 5 November 2003 Sale Agreement. 31. Did Gilles Payne act negligently and/or in breach of retainer to DJZ or Mr Palmieri by: a. failing to advise or warn DJZ or Mr Palmieri of the effect of DJZ's entry into the 1 February 2001 Deed, as found by the Court of Appeal, namely that it operated to discharge the James interests from any liability they may otherwise have had under the 1 July 1999 Deed; b. failing to advise or warn DJZ that, by entering into the February 2001 Deed, DJZ lost the opportunity to maintain a cause of action against Mr or Mrs James under the 1 July 1999 Deed; c. failing to advise or warn DJZ that clause 2.7 of the 7 August 2003 Deed would operate to release Mr and Mrs James from any liability they may otherwise have under the 1 July 1999 Deed and that DJZ, by agreeing to clause 2.7, would lose the opportunity to maintain a cause of action against Mr and Mrs James in respect of such liability; d. failing to advise or warn Mr Palmieri or DJZ that entry into the 5 November 2003 Sale Agreement would or might: i. (by reason of clause 25) operate to release Mr and Mrs James from any liability they may otherwise have under the 1 July 1999 Deed; ii. amount to a breach of the implied covenant to maintain security under the 1 July 1999 Deed and therefore discharge Mr and Mrs James from any liability they may otherwise have under the 1 July 1999 Deed; or iii. iii. cause DJZ to lose the opportunity of maintaining a cause of action, or otherwise impair any right of recovery, against Mr and Mrs James for any liability they may otherwise have under the 1 July 1999 Deed; e. failing to advise DJZ as to an alternative form of agreement to the 5 November 2003 Sale Agreement that would have avoided the consequence of Mr and Mrs James being released or discharged from any obligation under the 1 July 1999 Deed. f. failing to advise or warn DJZ that Equity Division Proceedings 50108/01 should not be pursued because the plaintiffs in those proceedings were unlikely to succeed and were likely to be subject to be the subject of an adverse costs order in addition to having to pay their own costs. 32. There is no dispute that Gilles Payne did not give the advice or warnings referred to in paragraph 31 above. 33. There is a further issue in dispute as to whether: a. Gilles Payne gave advice that encouraged DJZ to pursue, and not to settle, Equity Division Proceedings 50108/01 (and to defend the subsequent appeal): i. on the basis that the plaintiffs' claims in those proceedings were reasonably arguable; and/or ii. without giving any advice as to any risk in respect of the 1 February 2001 Deed; and b. if so, whether that amounted to a breach of retainer and/or duty of care by Gilles Payne. 34. Are Gilles Payne liable, by way of contribution or indemnity, for any part of any damages for which Mr Pritchard may be found liable to DJZ. 35. For what proportion of any such damages should Gilles Payne be liable. Cross-Claim against Mr McGovern SC 36. What was the scope of the retainer of Mr McGovern SC by Gilles Payne on behalf of DJZ or Mr Palmieri in relation to: a. prospective claims by the Palmieri interests against the James interests; b. Equity Division Proceedings 50108/01; and c. the 1 February 2001 Deed. 37. Did Mr McGovern SC: a. fail to advise or warn DJZ or Mr Palmieri of the effect of DJZ's entry into the 1 February 2001 Deed, as found by the Court of Appeal, namely that it operated to discharge the James interests from any liability they may otherwise have had under the 1 July 1999 Deed; b. give advice to Mr Palmieri and DJZ which encouraged DJZ to pursue, and not to settle, Equity Division Proceedings 50108/01 and did Mr McGovern SC do so without giving any advice as to any risk in respect of the 1 February 2001 Deed. 38. Is Mr McGovern SC liable, by way of contribution or indemnity, for any part of any damages for which Mr Pritchard may be found liable to DJZ. 39. For what proportion of any such damages should Mr McGovern SC be liable. Evidentiary rulings Statements 10 During the course of the hearing, I admitted statements made by Mr Osterberg and Mr Christian to Giles Payne, over objections advanced for Mr Pritchard. The issue arose after Mr McGovern's brief was tendered for Mr Pritchard, apart from these statements. They had been taken in 2003 by Giles Payne and Mr Christian's statement was later provided to Mr Pritchard, when advice was given in relation to the bringing of a misrepresentation claim against Mr James. Mr Pritchard briefed counsel appearing for DJZ, Mr Alexis SC, with the statements other than that of Mr Osterberg and also used them when instructing another solicitor to advise on the possibility of a misleading and deceptive conduct claim being advanced in the proceedings then on foot before Einstein J. 11 Neither Mr Christian nor Mr Osterberg were called to give evidence. Mr Osterberg was clearly available and there was no suggestion that Mr Christian was not. 12 The objection taken for Mr Pritchard was that it would be unfairly prejudicial to admit the statements, because there was no opportunity to cross examine Mr Osterberg and Mr Christian and accordingly, they should be excluded under s 135 of the Evidence Act 1995, or admitted only for a limited basis, that is, other than as evidence of truth. Their admission was pressed on the basis that it would be unfair to permit Mr Pritchard to rely on the brief provided to Mr McGovern in his case, absent the statements which formed a part of the brief. 13 It is settled that 'unfair prejudice' in s 135 of the Evidence Act means a risk that evidence will be misused in some way. That was not a possibility in this case. The lack of any opportunity to cross examine had to be weighed in the balancing exercise which the section requires, but was not decisive of the question of whether the statements should be admitted. (See for example Ordukaya v Hicks [2000] NSWCA 180 at [35] - [ 40].) I came to the conclusion that in this case this difficulty was one which went to the weight to be given to the statements, once received, rather than to their admissibility. 14 In reaching that conclusion, I took into account that there would be no opportunity to cross examine Mr Osterberg or Mr Christian; that Mr McGovern had been briefed with the statements; that Mr Pritchard had himself later been provided with Mr Christian's statements during the proceedings before Einstein J in 2003, when consideration was being given to amending the pleadings in those proceedings to bring claims for misleading and deceptive conduct; that Mr Pritchard had himself relied on Mr Christian's statements when seeking further advice on whether a misleading and deceptive conduct case could then be brought; and that in advancing his cross claim Mr Pritchard sought to rely on what Mr McGovern had been briefed with, but sought to deny Mr McGovern and Giles Payne the opportunity to rely on those statements, in defending the case brought against them. 15 I came to the view that all of those factors balanced in favour of the statements being received. Admission 16 An affidavit sworn by Mr Denis Fitzpatrick a solicitor employed by Mr Pritchard at the time of the hearing before Einstein J, was sought to be tendered for Mr Palmieri. In that affidavit he deposed to the value of certain property owned by Mrs James. Annexed to the affidavit was a valuation of the property prepared by a valuer. The tender was objected to on the basis that it was inadmissible hearsay and that the valuer had not complied with the requirements of Schedule 7 of the Evidence Act. 17 The basis of the tender was said to be s 87(1)(b) of the Evidence Act which provides: 87 Admissions made with authority (1) For the purpose of determining whether a previous representation made by a person is also taken to be an admission by a party, the court is to admit the representation if it is reasonably open to find that: ... (b) when the representation was made, the person was an employee of the party, or had authority otherwise to act for the party, and the representation related to a matter within the scope of the person's employment or authority, or 18 What was in issue was whether what Mr Fitzpatrick had said in the affidavit was an admission which fell within the section. 'Admission' is defined in the dictionary to the Act as: "admission means a previous representation that is: (a) made by a person who is or becomes a party to a proceeding (including a defendant in a criminal proceeding), and (b) adverse to the person's interest in the outcome of the proceeding." 19 'Previous representation' is defined in the Dictionary to the Act as: " previous representation means a representation made otherwise than in the course of giving evidence in the proceeding in which evidence of the representation is sought to be adduced." 20 Clause 6 of Part 2 of the Dictionary, provides: " Representations in documents For the purposes of this Act, a representation contained in a document is taken to have been made by a person if: (a) the document was written, made or otherwise produced by the person, or (b) the representation was recognised by the person as his or her representation by signing, initialling or otherwise marking the document." 21 It was argued that the affidavit fell within the section as an admission, Mr Fitzpatrick having been Mr Pritchard's employee at the time the admission was made and the admission relating to a matter within the scope of his employment. 22 For Mr Pritchard it was argued that the valuation was not an admission made within the scope of Mr Fitzpatrick's employment. Employed solicitors did not value property. The representation made in Mr Fitzpatrick's affidavit was that a particular valuation had been provided to DJZ by a valuer, in terms annexed to the affidavit. Mr Fitzpatrick did not himself make representations as to value. 23 I take the view that the representation sought to be relied on is not an admission falling within s 87. 24 The opinions expressed by the valuer in the valuation annexed to the affidavit were not representations made by Mr Fitzpatrick. By his affidavit he did not recognise the representation as his. That was no doubt because valuation of property did not fall within the scope of Mr Fitzpatrick's employment. He was an employed solicitor acting for DJZ in the Supreme Court proceedings. He was DJZ's agent in those proceedings. It was within the scope of his employment to swear an affidavit attesting to the fact that a valuation had been obtained by DJZ, which valued the property at a particular price. It was not within the scope of his employment himself to make representations as to what the value of the property was. His were representations about the existence of opinions reached by the valuer, not about the value of the property itself. 25 Nor was a representation that such opinions existed, representations adverse to Mr Pritchard's interests in these proceedings. 26 The valuation was not made or produced by Mr Fitzpatrick. Noting its existence and what it provided, cannot amount to Mr Fitzpatrick recognising the valuation and the opinions there expressed as his, so that it became an admission on which DJZ could rely in these proceedings, against Mr Pritchard's interests, to establish the value of the property in question. 27 Even if the representations did fall within s 87, I am satisfied that in the circumstances they had to be excluded under s 135. (See Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd (no 4) [2006] NSWSC 90 at [28]). Justice would not permit the value of the properties in question being so established. These were valuations obtained by DJZ itself in circumstances where the requirements of schedule 7 had not been complied with. That is not a reliable way of establishing value. Even if the evidence were not excluded on that basis, the valuation could be given but little weight. The factual circumstances 28 Mr Palmieri was a director of DJZ and its controlling mind. He is a property developer who conducts his business activities through various corporate entities, including DJZ. He has long been a client of Mr Pritchard and also of an accountant Mr Osterberg, who have advised and acted for his companies on various business matters for many years, in Mr Pritchard's case since the early 1980s. Mr Osterberg also acted in relation to the venture here in issue. He was an obvious, available witness to be called in DJZ's case, but he was not called. No explanation for his absence was given. Mr Palmieri had also long known Mr James, the promoter of the real estate venture in which DJZ invested in 1999. Mr Palmieri was involved in a number of business ventures with Mr James and entities associated with him, before DJZ entered into the real estate venture. Some $840,000 was finally invested to acquire DJZ's interest in that venture. 29 The circumstances which ultimately resulted in these proceedings being brought are exceedingly complicated. They are conveniently summarised, in part, in the judgment of Beazley J in the Court of Appeal's judgment. Her Honour said: " Factual overview 6 The background to this matter is complicated and is set out in detail at [14] in the trial judge's reasons. The facts relevant to the issues on the appeal may be considered more briefly. Mr. James and Mr. Christian were real estate agents who, in about 1990, formed a company, James Christian Pty. Limited (James Christian) which carried on business as Raine & Horne Caringbah. 7 In late 1996, James Christian Pty. Limited, purchased a small real estate agency, I.G. Martyn Real Estate Pty. Limited (I.G. Martyn), borrowing approximately $1 million from Macquarie Bank to fund the purchase. In 1999, Messrs. James and Christian decided to purchase a large real estate agency in Cronulla known as Chris Burke & Co. Pty. Limited (Chris Burke & Co) for $1.7 million. At that time, James Christian was still indebted to Macquarie Bank for the moneys borrowed in 1996 to purchase I.G Martyn. 8 As Messrs. James and Christian were unable to finance the proposed purchase of Chris Burke & Co, they decided to seek the interest of other investors in the proposal. Three investors were attracted: Mr. Palmieri, Mr. Mortimer and Mr. Wilson. These persons and/or their companies are referred to as the investors. An agreement was reached, whereby, through their various corporate entities, the investors would join with Messrs. James and Christian (who, with the investors, will be called the venture parties) to purchase the business of Chris Burke & Co through a new corporate vehicle, Surf Road Nominees. This will be referred to as the new venture. Messrs. James and Christian were to contribute the assets of James Christian which, in essence, comprised the rent roll of I.G. Martyn, to the new venture. The investors were to contribute cash in amounts proportionate to the asset contribution of Messrs. James and Christian. 9 The legal structure of the new venture was somewhat complicated. In addition to the new company Surf Road Nominees, in which the venture parties held shares, a unit trust, the Surf Road Unit Trust, was established, Surf Road Nominees being the trustee. The venture parties also held units in the Surf Road Unit Trust. 10 Surf Road Nominees acquired all the shares in Chris Burke & Co, which remained the operating company conducting the real estate businesses. Surf Road Nominees also held all the shares in I.G. Martyn. The intention was that any profits in Chris Burke & Co were to be funnelled into Surf Road Nominees and thence into the Surf Road Unit Trust for distribution. 11 This exercise required that the business of I.G. Martyn be valued so as to determine the amount of cash contribution required by the investors. The existing debt of James Christian to Macquarie Bank was quarantined from the valuation exercise. 12 The financial arrangements between James Christian, I.G. Martyn and the Macquarie Bank were also restructured. Under the new arrangements, I.G. Martyn took over responsibility for the $1 million debt owed by James Christian by way of a fully drawn advance facility granted on 25 June 1999 for the amount of the debt. The terms of the fully drawn advance required the payment of monthly instalments and the repayment of the outstanding balance on 30 June 2002. The advance was secured by fixed and floating charges over the assets of I.G. Martyn; James Christian and Surf Road Nominees in its own capacity and in its capacity as trustee for the Surf Road Unit Trust; and Chris Burke & Co in its own capacity and in its capacity as trustee for the Burke Unit Trust. In addition, personal guarantees were given by the James and the Christians and Deeds of Covenant and Indemnities entered into with the Surf Road Unit Trust and the Burke Unit Trust. 13 Thirty-six units were issued in the Surf Road Unit Trust, valued at $110,000.00 per unit. That amount represented the amount to be contributed by the venture parties in cash or kind in accordance with their unit entitlements. The initial unit holdings, after one rearrangement not relevant for present purposes, were: (i) New South Head Road Nominees Pty. Limited (New South Head Road Nominees) as trustee for the J. James Trust (Mrs. James' trust) – 13 units. (ii) Cottenham Nominees Pty. Limited (Cottenham) as trustee for the M & K Christian Family Trust – 13 units. (iii) DJZ Constructions Pty. Limited (DJZ) – a Palmieri interest – 7 units. (iv) WIT Investments Pty. Limited (WIT) - a Wilson interest – 1 unit. (v) D & A Mortimer Pty. Limited (Mortimer) - a Mortimer interest – 2 units. 14 The shareholding in Surf Road Nominees Pty. Limited was: (i) Mr. Wilson – 1 share. (ii) Mr. Christian – 6 shares. (iii) Mr. James – 6 shares. (iv) Mrs. Christian – 7 shares. (v) Mrs. James – 7 shares. (vi) Mr. Mortimer – 2 shares. (vii) Mr. Palmieri – 7 shares. 15 The investors held A Class units which entitled them to preferential distributions from the Trust. 16 At the time that the new venture was established, a Deed of Guarantee, dated 1 July 1999, was entered into between the parties. As already mentioned, the principal issue on the appeal is whether Mrs. James remains liable under the Deed of Guarantee. 17 Difficulties soon arose in the management of the business and Messrs. James and Christian were accused of fraud and misappropriation. Mr. James was dismissed as manager of Surf Road Nominees. In February 2001 the Christians and their family company, Cottenham, entered into a Deed (the February 2001 Deed) whereby any liability they might have under the Deed of Guarantee was varied. It appears that immediately prior to that agreement being entered into, Mortimer transferred its 2 units in the Trust: one to DJZ to hold as trustee for Silvano Sicuro (Sicuro) and the other to Cottenham. Sicuro had been brought in as a financial adviser when Palmieri, Wilson and Mortimer became concerned about the conduct of the business affairs of Surf Road Nominees. It was his investigations into the business' financial affairs that led to Mr. James' dismissal. 18 The February 2001 Deed was entered into with Surf Road Nominees, Chris Burke & Co, I.G. Martyn, WIT and Wilson, and DJZ and Palmieri. The absence of the Mortimer interest is explained by the transfer of its shares and units. The Deed recited that allegations of fraud and misappropriation had been made against Messrs. James and Christian and that it would be in the best interests of the parties and the Surf Road Unit Trust if Mr. Christian was given a release in relation to the allegations against him. The Deed also recited that the investors were entitled to exercise their power of sale under cl.8 of the Deed of Guarantee over the New South Head Road Nominees and Cottenham units in the Trust. 19 It should be noted however that at that time the investors had not given a Notice of Default under the Deed of Guarantee to New South Head Road Nominees or Cottenham. That was not given until 4 May 2001 and was addressed to both. 20 On 3 August 2001, Surf Road Nominees, Chris Burke & Co, I.G. Martyn, WIT and DJZ commenced the subject proceedings against Mr. and Mrs. James (the James) and New South Head Road Nominees seeking to enforce the Deed of Guarantee. Essentially three claims were made: (i) Surf Road Nominees claimed that the James and New South Head Road Nominees were liable to Surf Road Nominees as trustee for the Surf Road Unit Trust for the Macquarie Bank debt of $1 million – see cl.5(1)(a) of the Deed of Guarantee; (ii) WIT and DJZ claimed that the James and New South Head Road Nominees were liable to WIT and DJZ for the preferential distributions – see cl.5(1)(b) of the Deed of Guarantee (iii) WIT and DJZ claimed that the James and New South Head Road Nominees were liable to WIT and DJZ for the loss and damage suffered by them in consequence of the failure to ensure payment of the Macquarie Bank debt – cl.5(2) of the Deed of Guarantee. 21 The monthly payments on the Macquarie Bank debt were not being met and the advance was not repaid in accordance with the provisions of the draw down facility. On 22 October 2002 the investors exercised the power of sale in respect of the New South Head Road Nominees units. In December 2002, Surf Road Nominees sold the rent roll of Chris Burke & Co and on 28 February 2003 it discharged the Macquarie Bank debt. The loss and damage thereby suffered by the investors from the failure to repay the Macquarie Bank debt crystallised at that time in the sum of approximately $1 million. 22 Subsequently, on 5 November 2003, the Christians and Cottenham entered into another agreement (the 5 November 2003 Agreement) whereby Cottenham purchased the remaining real estate business of Chris Burke & Co. Under cl.25 of the agreement, the Christians and Cottenham were given a "release" of any liability they might have to the investors to Surf Road Nominees and to others who were parties to the 5 November 2003 Agreement or referred to in it. 23 The question, raised by the release issue and the security issue, as to whether Mrs James was discharged from liability under the Deed of Guarantee, requires consideration of the terms of the Deed of Guarantee, the February 2001 Deed and the 5 November 2003 Agreement." 30 The evidence in these proceedings showed that Mr Palmieri had been discussing the possibility of investing in the real estate business with Mr James for some time before approaching Mr Pritchard. He initially took advice from Mr Osterberg, who counselled him against the investment. 31 Mr Osterberg accompanied Mr Palmieri and Mr Pritchard to two meetings with Mr James and Mr Christian and other investors, where a presentation about the proposed venture was made by Mr Goman, an accountant of BDO Nelson Parkhill. Mr Palmieri believed that before or at the first meeting, Mr James gave him a draft of the 1999 deed. Mr Palmieri could not recollect any detail of what was discussed at this meeting, only that there was a general conversation about the proposed venture. Mr Pritchard recollected discussion of distributions and how A class shareholders such as Mr Palmieri were to receive dividends in preference to ordinary unit holders, to offset the repayment of their existing debts. He understood that Mr Osterberg was then advising Mr Palmieri on financial matters. He did not discuss the financial aspects of the transaction with Mr Palmieri, but appreciated the legal complexity of what was being proposed. 32 The second meeting at BDO Nelson Parkhill took place some time in June 1999. It was also attended by Mr Christian and other investors, Mr Wilson, Mr Mortimer and by Mr Dennis Bowles, a solicitor acting for Mr James and Mr Christian. It was Mr Bowles who had drafted the 1999 deed. Documents were provided at these meetings dealing with structure, unit price and projected cash flows. 33 The evidence showed that at the time of this meeting, Mr Palmieri had already decided to proceed with the investment. Mr Pritchard then had no formal instructions to act in relation to the venture. He had long acted for Mr Palmieri and had agreed to attend these meetings when approached by Mr Palmieri, even though he had not been instructed to act. His evidence was that he was conscious that Mr Palmieri would need legal advice about the venture, but he did not assume that it would be he who would be instructed. Nevertheless, he considered the concept which was being advanced at the meetings. 34 Shortly afterwards Mr Pritchard was instructed to act in relation to the loan which was taken out in order to fund DJZ's participation in the venture. Later he was also instructed to act in respect of the venture itself. There was no costs agreement, but eventually Mr Pritchard charged for his attendance at the earlier meetings. 35 On 30 June, Mr Pritchard attended to the settlement, when DJZ's investment in the venture was paid. The venture commenced on 1 July 1999, before the 1999 deed was executed by anyone. The investors did not execute the deed until late 1999 or early 2000. 36 Before that execution Mr Pritchard was involved in a due diligence exercise, undertaken after he was provided with the deed which had been executed by the James and Christian interests in August. He reported to the investors on that exercise, by letter of 23 November 1999, when he also forwarded the executed deed for their execution, providing an explanation of what it provided for. In that correspondence the advice which Mr Pritchard gave was inconsistent with the guarantee which Mr Palmieri claims he had instructed should be provided in the 1999 deed. 37 It was Mr Palmieri's evidence that his reading, understanding and speaking of English was at that time limited and that it was his practice to have Mr Pritchard explain letters and documents to him. He did not, however, recall then discussing the 23 November letter, or the deed, or any other document relevant to the transaction with Mr Pritchard. Indeed, he claimed that he did not read Mr Pritchard's letter of advice and that Mr Pritchard never contacted him, or explained this advice or the deed to him, even though he was aware of his limited command of English. 38 By this time the real estate business was being conducted on a basis quite inconsistent with the claimed guarantee. DJZ was not receiving any dividends. Mr Palmieri apparently first pursued his concern about the failure to pay dividends in September 1999 with Mr Osterberg, but not with Mr Pritchard. The first payment was not made until December. The deed was executed in late 1999 and early 2000. 39 Mr Palmieri and the other investors raised no concern with Mr Pritchard about his November letter, or about the failure of the business to provide the returns it was here claimed they had been promised and were to be guaranteed in the deed. The investors all executed the deed without complaint or question, even though the returns which Mr Palmieri and Mr Wilson claim had been guaranteed and which they had instructed Mr Pritchard to ensure were secured by the deed, were not being delivered. 40 A dispute arose about the management of the real estate business in late 2000, or early 2001. Mr Pritchard was then instructed to advise Mr Palmieri and other directors, when Mr James' misappropriation came to light. He acted in relation to the February 2001 deed, which was prepared by Pryor Tzannes and Wallis, who were acting for the Christian interests. Mr Pritchard also later acted for the investors in the proceedings brought in the Supreme Court, as well as in relation to an August 2003 deed and the November 2003 sale of the business to the Christians. 41 Mr Palmieri, or entities associated with him, made a payment of $200,000 in 2002, in order that Macquarie Bank would not close the real estate business and call in its loan, as well as loaning the business other monies, in an endeavour to keep it afloat. 42 It was in January 2002 that Mr Palmieri instructed Giles Payne to advise about a possible misrepresentation case, at a meeting with Mr Gilles at which Mr Osterberg was present. Mr Palmieri instructed that he been promised returns of $2,200 per unit per month as a return on his investment, which he was not receiving. Giles Payne initially advised in relation to whether Mr Palmieri had a claim against Mr James for misleading and deceptive conduct in relation to the real estate venture the subject of the Supreme Court litigation. It was also instructed in relation to a joint venture agreement between one of Mr Palmieri's other entities, Palmieri's Developments Pty Ltd, Mr James and James Christian Pty Limited. 43 In order to give advice Giles Payne obtained from Mr Pritchard copies of various documents, including the 1999 deed, an unexecuted, undated and incomplete version of the 2001 deed, which was understood however to have been entered by the parties, as well as pleadings and other documents in the Supreme Court proceedings. In December 2003, Mr McGovern was briefed with six volumes of documents to advise DJZ on bringing the misrepresentation claim and, if it were thought that there were reasonable prospects of success, drafting the necessary originating process. 44 Mr Palmieri pursued this advice because he had come to have a concern that Mr James, with whom he had an interest in certain property, ('the joint venture property'), might seek to use that interest to further settlement negotiations in the ongoing Supreme Court proceedings. Mr Palmieri sought to preclude this possibility eventuating. He wanted to ensure that the other investors such as Mr Wilson, also plaintiffs in those proceedings, would not gain an interest in the joint venture property. Thus he sought independent advice from Giles Payne and Mr McGovern, as to other claims which might be pursued against Mr James. 45 Consideration was given by Giles Payne and Mr McGovern as to whether a misrepresentation claim could be pursued; whether it could be pursued separately to the Supreme Court proceedings, or whether that might involve an abuse of process; whether there was a conflict between Mr Palmieri's interests and those of other investors; and whether DJZ should be separately represented in the ongoing Supreme Court proceedings. Mr Palmieri was advised in a conference with Mr McGovern and his solicitors in March 2003, that the misrepresentation claim should be brought in the Supreme Court proceedings. 46 While Mr Gilles denied this, the evidence, including that given by Ms Becker, a solicitor employed by Giles Payne, also advising Mr Palmieri, as well as correspondence which Giles Payne sent Mr Palmieri, showed that Mr Palmieri then instructed Giles Payne to separately represent DJZ in the Supreme Court proceedings, in accordance with Mr McGovern's advice. Steps were taken by Giles Payne to act on these instructions, including obtaining a copy of pleadings and other documents filed in the Supreme Court proceedings; and seeking further advice from Mr McGovern. 47 Amongst other things, by letter of 15 April 2003, Mr McGovern advised that: "... the present Supreme Court proceedings, relying as they do upon the deed of 1 July 1999, offer the most reasonable prospect of being able to secure the reasonably arguable claims of Surf Road Nominees Pty Ltd and the investors." 48 After further consideration and advice from Mr McGovern, it was later decided that DJZ would not be separately represented in the Supreme Court proceedings, but that Giles Payne would keep a watching brief on the proceedings; it would continue to advise Mr Palmieri as the need arose; and would be ready to step in, if his interests required separate representation in the proceedings. That never eventuated. Advice was also given that a misrepresentation claim required further work to be undertaken, in order to determine the true value of the units acquired, by way of comparison to what had been represented by Mr James. This was discussed with Mr Palmieri at a meeting on 24 April with Mr Gilles and Ms Becker, attended by Mr Osterberg. That work was not pursued. 49 Offers of settlement of the Supreme Court proceedings, made on a walk away basis, were rejected by Mr Palmieri, despite advice from Mr Alexis that they should be accepted. Mr Palmieri was concerned about Mr James' interests in the joint venture properties and wanted to ensure that any settlement be on the basis that Mr James gave up that interest. He also wanted to ensure that the other investors did not gain an interest in those properties, as the result of any settlement. 50 Mr Palmieri took other steps to ensure that he gained control over the conduct of the 2003 proceedings, in which Mr Pritchard and Mr Alexis continued to act. 51 In October 2003, Mr Pritchard acted on the sale of the real estate business to the Christian interests. Mr Palmieri initially approached Giles Payne to act on this transaction, but the firm declined the instructions, given the state of the relevant documentation. The vendor was Chris Burke & Co Pty Limited. Mr Palmieri then instructed Mr Pritchard. 52 The purchasers were represented by Dibbs Barker Gosling, who prepared the sale agreement. It was Mr Pritchard's written advice that this transaction was being pursued with such haste that there were commercial risks being taken, in not tying up a number of identified 'loose ends', before settlement. The potential results were identified to include ongoing dispute and financial loss. Mr Palmieri gave written acknowledgement on behalf of Chris Burke & Co Pty Limited and himself, of the advice given that the transaction should not be settled unless 'all documentation to reduce liability on your part is in place'. There was no advice given that the terms of the proposed sale agreement would jeopardise DJZ's further pursuit of the Supreme Court proceedings. 53 Even though it had declined to act on the sale, Giles Payne continued to advise on matters which Mr Palmieri raised with them from time to time about the Supreme Court proceedings, including in relation to whether or not the 2003 proceedings should be settled, as Mr Alexis again advised in December 2003. 54 By this time the James' interests had become aware of the 2003 sale agreement and had amended their defence to rely on that agreement and the 2001 deed. Mr Alexis advised DJZ that the matter should be settled and that it potentially had a claim against Mr Pritchard in relation to the sale agreement and should seek independent advice as to its position. Mr Palmieri sought Giles Payne's advice. The views which Giles Payne took differed to the advice given by Mr Alexis. Mr Palmieri decided to proceed. 55 Mr Palmieri was then also given advice by Mr Pritchard and Mr Alexis about a misleading and deceptive conduct claim being pursued in the Supreme Court proceedings, which were then part heard, a possibility raised by Mr Fizpatrick. They were provided with the statements Mr Palmieri, Mr Wilson, and Mr Christian had given Giles Payne. Mr Alexis advised against such a claim being pursued. That advice was accepted. 56 The hearing concluded with DJZ succeeding before Einstein J. Mr James went into bankruptcy and Mrs James and other defendants appealed the decision. That appeal did not touch on orders made against Mr James. Further proceedings were then commenced in the Supreme Court by the James' interests, in relation to the joint venture property. 57 After the Court of Appeal gave its judgment, upholding Mrs James' appeal, Mr Palmieri's interests entered into a settlement in relation to the first instance proceedings, (the orders made by Einstein J against Mr James not having been disturbed); the Court of Appeal proceedings; and the joint venture proceedings, amongst other things. Parties to that settlement included Mr James and his trustee in bankruptcy, as well as the parties to the various proceedings the subject of the settlement. 58 DJZ then instructed Giles Payne and Mr McGovern to bring these proceedings, commenced in 2005. The nature of the legal practitioners' duty of care 59 There was no issue as to the nature of Mr Pritchard's duty, or indeed that of Giles Payne and Mr McGovern. It required them to exercise reasonable care and skill in the provision of their legal advice, to the standard which may reasonably be expected of legal practitioners (see Rogers v Whitaker [1992] HCA 58; (1992) 175 CLR 479 at 483; Heydon v NRMA (2005) 51 NSWLR 1.) 60 In this case there was no expert evidence led as to the question of whether the required level of skill was exercised. For DJZ it was argued that this was unnecessary (see Lucantonio v Kleinet [2009] NSWSC 853). 61 For Mr Pritchard, reliance was placed on the observations of Simpson J in Attard v James Legal Pty Limited [2009] NSWSC 811 at [59], but it was accepted that in accordance with s 5O of the Civil Liability Act 2002, the defendant bore the onus of calling an expert to give any relevant opinions. No evidence was called, but written advice given by Mr Wales QC to DJZ, before the Supreme Court proceedings were commenced, as well as advice given by Giles Payne and Mr McGovern, was relied on. 62 When determining whether a legal practitioner has breached his or her duty to a client, consideration must also be given to the way in which the advice is given. That may be affected by the type and experience of the client for whom the practitioner is acting (see Capebay Holdings Pty Ltd v Sands [2002] WASC 287; [2003] ANZ ConvR 170 at [94]). Thus in this case both Mr Palmieri's command of spoken and written English and his business acumen are relevant matters to consider, in resolving the issues lying between the parties. 63 This case also raises questions as to the extent of the retainers of Giles Payne and Mr McGovern. In David v David [2009] NSWCA 8 it was observed by Allsop P, Hodgson JA and Handley AJA agreeing: "76 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." 64 Also to be born in mind is what was observed by the Court of Appeal in Capital Brake Service Pty Limited v Meagher & 8 Ors t/as Sparke Helmore [2003] NSWCA 225 at [30]: "30 All these matters are matters of hindsight. There is a great danger, particularly in professional negligence matters, of applying an unrealistic hindsight judgment. Any fool can be wise after the event. That is not the test. The Court must be careful to judge the conduct of a defendant, where negligent failure to warn is asserted, by reference to what the defendant reasonably knew at the relevant time. Not after the loss has been suffered." Mr Palmieri's command of English and questions of credit 65 It is convenient at this point to deal with evidence which Mr Palmieri gave about his command of English and his business acumen. Regrettably, I have come to the conclusion that his evidence about these matters was not given in a way consistent with a strict adherence to the truth. 66 In his affidavit it was Mr Palmieri's evidence that: "1. I am one of the directors and an ordinary class shareholder of the plaintiff. 2. I came to live in Australia in 1962 from Italy. When I arrived in Australia I could not speak, read or write English. I subsequently learnt to speak English. However, I have never formerly learned to read and write English. 3. I have only been able to read English from about mid-2001. In 2001 I was involved in litigation in this Court and it was around that time that I learned to read English. I can only now write very basic English." 67 Mr Pritchard's evidence was that in his dealings with Mr Palmieri, he had found that he had a good grasp of his business dealings and a sufficient grasp of English, to conduct that business. Ms Haas was a paralegal who worked for many years for Mr Pritchard and had various dealings with Mr Palmieri before her employment came to an end in 1996, in relation to a number of conveyancing transactions, including when he attended to execute such contracts, or to deliver or collect documents. Her evidence was that on occasions Mr Palmieri asked for explanations, but his questions, when she explained documents to him, were no different to those asked by other clients. He gave her no indication that he was not himself reading such documents. 68 Ms Becker's evidence at one point was that when she was acting for Mr Palmieri in 2003, she met with and spoke to him about the progress of the Supreme Court proceedings and that he sometimes brought documents to her, which she explained. He was not always able to accurately understand written documents, but he would understand the essence of the documents, when they were explained to him. Later, when being cross examined as to advice which she had given Mr Palmieri in October 2003, when she reviewed the draft 2003 sale agreement, Ms Becker said that Mr Palmieri had great difficulty understanding certain legal concepts and that the English involved in them would escape him and a great deal of time was required to explain various matters to him. She believed however, that he understood the explanation which Mr Gilles had given him of Mr McGovern's written advice in March and April 2003. 69 In his oral evidence, Mr Palmieri repeatedly said that in 1999 and subsequently, he had read various documents, including documents from the Arab Bank, but that he could not remember exactly when. He also said that he could not understand their significance, and thus had relied on Mr Pritchard, or others such as bank managers, to explain them to him. His evidence later altered. 70 At one point, when his attention was drawn to a document, a cash flow statement for the 12 months to 30 June 2000, Mr Palmieri indicated that he could read what he was taken to under the heading 'capital outflows'. He agreed that he had seen this document after a meeting, but said that he then relied on Mr Pritchard and Mr Osterberg to look at it for him. He was taken to a number of other documents, which he also identified as documents he had seen. He indicated other documents which he had not seen. He was able to read the parts of the documents to which he was taken, without apparent difficulty. In relation to a deed of trust of May 1999, Mr Palmieri said after examining the document that the front cover looked familiar, but that he could not remember its contents. 71 Later in the cross examination, when taken to another deed and asked about allegations there recounted, there was an objection. I then observed that there did not appear to be any necessity to read the document to Mr Palmieri, because he had been having no difficulty in reading documents to which he had been taken, although he had repeatedly said that he didn't understand them. When the examination then continued, Mr Palmieri interrupted and asked what he said was a question: 'When he tells me to read all of this, for a start, it would take me half a day, so the best way for to answer the question, to oral questions.' 72 Mr Palmieri was interrupted by his counsel at this point. It was said by counsel that he would not object to the passage in question being read to Mr Palmieri. That invitation was later taken up. 73 Mr Palmieri's suggestion that he was having a difficulty at this point was rather implausible, given his cross examination to that point. It had been conducted by reference to numerous documents in a number of lever arch folders. Consistently with his affidavit evidence, he had no apparent difficulty in following that cross examination, or being able to read the parts of the documents to which his attention was drawn. He repeatedly explained that he could not necessarily understand what parts of the documents to which he was taken meant, and that he could not remember the time at which events to which he was being taken had occurred, or when he had first been made aware of certain things. Nevertheless, he recollected the events having occurred and having had relevant matters drawn to his attention at some point. 74 The documents to which Mr Palmieri had been taken included documents which he had signed, indicating that he had read them. He was a director of the plaintiff, as well as a director of a number of other companies. He had made his living, not as a blue collar worker, as he claimed at one point in his cross examination, but as a property investor and developer, since the early 1990's. In 1999, he and entities associated with him owned commercial property worth millions of dollars. He had arranged lending facilities for very large amounts with the Arab Bank of Australia, having provided security for the advances made over various properties, as well as fixed and floating charges over corporate entities with which he was associated. He was involved in joint venture investments with Mr James and was pursuing an investment by DJZ in a substantial real estate business. 75 When the cross examination turned to the basis of an agreement reached with Mr and Mrs Christian and the entities associated with them in late 2000 and early 2001, Mr Palmieri's evidence became entirely implausible. He was asked if he had read the February 2001 deed before he signed it. His evidence was that: "A. I wouldn't be able to read it. This deed or whatever it is would have to go to Pritchard and he would have explained it to me. Q. Mr Palmieri, the position is, isn't it, that you did your best to read this document before you signed it in February 2001? A. Of course I did, but I wouldn't understand it, as I keep saying. My limit in English is very limited, so that's when I realise with my solicitor or with the accountants. For me I can read a few words of it, but all the important part of it I wouldn't know what I am reading. Q. Mr Palmieri, are you saying to the Court that you would sign a legal document of this type without reading it? A. If I can't read it, it is not going to help me, that's why I go to the experts. Q. You are able to read it now, aren't you, Mr Palmieri? A. No. Q. You are not able to read it now? A. If I did, I wouldn't waste the court's time." 76 I am unable to accept this evidence as entirely truthful. 77 Mr Palmieri went on to give evidence as to matters dealt with in the February 2001 deed, which recorded the agreement reached by the plaintiff and other investors with Mr and Mrs Christian and the entities associated with them. He claimed that he had nothing to do with matters dealt with in the deed, particularly borrowings by Surf Road Nominees Pty Limited on behalf of the SRUT of $300,000 from Macquarie Bank. This was despite the fact that DJZ, Mr Palmieri himself and his wife were each parties to the deed. He was also a director of the trustee company, Surf Road Nominees Pty Limited, which was also a party to the Deed. In that capacity, he was one of those involved in the matters which had led to the agreements which the deed reflected. He had been intimately involved in the decision to act in relation to Mr James' misappropriation; to terminate Mr James' employment with the real estate agency; to have him removed from the Board of Surf Road Nominees Pty Limited and to ensure Mr Christian's continued involvement, which permitted the real estate agency to continue to operate. 78 The distinct impression which Mr Palmieri gave by this stage of his cross examination was that he had become frustrated and was giving the evidence which he thought would best advance DJZ's claims, rather than giving evidence which was strictly truthful. At this point, Mr Palmieri's memory diminished markedly. He repeatedly said either that he could not remember matters to which he was taken, or that he had nothing to do with them. 79 When the hearing resumed a year later and Mr Palmieri's cross examination resumed, these impressions were reinforced. Either various answers then given were not truthful, or Mr Palmieri had suffered some medical condition which had seriously impaired his memory. No such suggestion was made in DJZ's case. 80 By way of contrast to Mr Palmieri's evidence as to the difficulties which flowed from his limited command of English, his evidence did not suggest that he experienced such difficulties in relation to advice which he received from Giles Payne or Mr McGovern. Given the matters with which that advice was concerned, the time at which it was given, and that in part it was given in writing, the absence of the suggestion of similar difficulties with understanding this advice, by way of comparison to the difficulties Mr Palmieri claimed he had an understanding Mr Pritchard's advice, also leant support to the view that Mr Palmieri's evidence was not being entirely truthful, in his evidence. 81 The result was that while I accept that Mr Palmieri required assistance to understand the legal ramifications of various documents which were prepared for him and his companies from time to time, he had an adequate understanding of matters then explained to him. When giving his evidence, he had no real difficulty in reading documents to which he was taken. While Mr Palmieri was no doubt truthful when he said on some occasions that he could not remember various events, I came to the view that he had a better memory of the events to which he was taken, than he was prepared to admit and that the evidence which he gave about what he remembered of those events, was not always entirely truthful. 82 The investments in which Mr Palmieri and his companies were involved required a relatively sophisticated understanding of financial and legal concepts. Mr Palmieri had an understanding of his affairs and took steps to take advice as to his interests, when he perceived that he and DJZ needed it. While he denied ever rejecting Mr Pritchard's advice, or that of his other legal advisers, the evidence showed that he made commercial decisions on a number of occasions which involved a rejection of legal and other professional advice which he had received. He was strategic about seeking advice from separate advisers, when he believed that it was in his interests to do so. 83 It finally appeared that adherence to the truth remained Mr Palmieri's approach only when he believed that it would advance, or not hurt DJZ's claims. I have concluded that his evidence must be approached with caution. In the case of conflict, I am not able to accept his evidence over that of other witnesses, other than where it is corroborated. 84 I did not have reservations such as this in relation to any other witness. The 1999 Deed 85 In order to consider the issues lying between the parties, it is necessary to consider the terms of the 1999 deed. There was disagreements to its effect. 86 The 1999 deed provided in clauses 2 - 5: "2. The Investors as A Class unit holders in the Surf Road Unit Trust shall be entitled and shall receive a preferential distribution from the profits of the Surf Road Unit Trust equal to the amount paid by Surf Road Unit Trust to the bank in accordance with clauses 12.10 of the Surf Road Unit Trust Deed ("the preferential distribution"). 3. The preferential distribution shall be paid in whole on a monthly basis during each year of income until the Surf Road bank debt has been repaid in full. 4. Until otherwise resolved by the Trustee, the Trustee shall pay to all unit holders in the Trust, an amount of $2,200.00 per unit per month by way of an interim distribution of the anticipated annual net income of the Trust provided always that the preferential distribution to the Investors and any amount paid to the bank in respect of the Surf Road bank debt or the IGM bank debt shall be deducted respectively from the interim distribution to the Investors and to the unit holders. 5. (1) The guarantor, unit holders and the indemnifying parties jointly and severally guarantee: (a) payment of the IGM bank debt and the Surf Road bank debt; (b) that the Trustee will pay the preferential distribution to the Investors. (2) The Indemnifying parties, the guarantor and the unit holders jointly and severally indemnify the Investors for any loss or damage suffered by the Investors should the Indemnifying parties, the guarantor and the unit holders fail to ensure payment of the bank debts and the preferential distributions." 87 The construction of these clauses is not without difficulty. They must be understood in the light of the definitions of the terms 'the investors' the 'unit holders', the 'guarantor' and the 'indemnifying parties'. DJZ was one of 'the investors'. James Christian Pty Limited was 'the guarantor'. 'The indemnifying parties' were Mr and Mrs James and Mr and Mrs Christian. 'The unit holders' were Cottenham Nominees Pty Limited as trustee for M & K Christian Family Trust and New South Head Road Nominees Pty Limited as trustee for the Janet Margaret James family Trust. 'The trustee' was Surf Road Nominees Pty Limited. 88 It was Mr Palmieri's complaint in these proceedings that clause 5 of the deed did not ensure that the interim dividend provided in clause 4 of the deed was guaranteed. A difficulty, it seems to me, with the case so advanced, is that clause 4 did not apply to investors such as DJZ. It was concerned with the rights of the unit holders, entities associated with Mr James and Mr Christian. It was Mr Pritchard's evidence that this structure had been a part of the presentation made by Mr Goman at the meetings he attended with Mr Palmieri. There was nothing said to him by Mr Palmieri then to indicate that he did not understand the proposal, or that he understood that the transaction worked in a way different to that which Mr Goman had explained. 89 The construction of clause 5 was in issue before Einstein J. In construing that clause his Honour had to consider what was provided in the clauses to which the guarantee was directed, which as his Honour observed at [140] of his judgment, distinguished between the obligation to pay the bank debt (referred to in clause 4 of the deed) and the obligation to make the preferential distribution (dealt with in clauses 2 and 3). The rights of the investors are not dealt with in clause 4, which is concerned with distributions to the unit holders. This led his Honour to conclude: "149 In the result the plaintiffs' submissions are accepted and adopted. Those submissions were as follows: "1.5 The promise of guarantee of the preferential distribution by the guarantor, unit holders and the indemnifying parties, upon the proper construction of the Deed and clause 5(i)(b), was a promise to the Investors. This is clear from clause 2 and the express terms of clause 5(i)(b) itself. 1.6 Accordingly, but subject to the question of discharge of the guarantee dealt with below, the Fourth and Fifth Plaintiffs are prima facie entitled to declaration 2, as follows: A declaration that the Defendants are jointly and severally liable pursuant to clause 5 (i) of the Deed, to guarantee the obligations of the First Plaintiff as trustee for the Surf Road Unit Trust, in relation to the payment of the preferential distributions, for the benefit of the Fourth Plaintiff and the Fifth Plaintiffs."" 90 DJZ cannot distance itself from the case which it successfully advanced before Einstein J as to the construction of this deed, as it has now sought to do in these proceedings. That case accorded with Mr Pritchard's evidence in these proceedings, as to his understanding of the transaction, consistently with Mr Goman's explanation. Did Mr Pritchard fail in his duty of care to DJZ? Mr Palmieri's instructions in relation to the 1999 deed 91 Each of the allegations of negligence must be determined having in mind the provisions of the Civil Liability Act. The first complaint necessary to be considered is that pursued in relation to Mr Palmieri's instructions in relation to the 1999 deed. 92 Consistently with Einstein J's conclusion, there was no issue between the parties in these proceedings that the provisions made in the 1999 deed for investors such as DJZ, did not include a guarantee of the kind which DJZ now claims Mr Palmieri instructed Mr Pritchard to ensure the deed contained. DJZ complains that there should have been such a guarantee. That was not a claim advanced in the earlier proceedings. 93 Mr Palmieri's evidence was that the proposed transaction was a complex one, and so he had relied on Mr Pritchard to ensure that he got the return which Mr James had promised investors would receive. He instructed Mr Pritchard to ensure that the deed reflected what he had been guaranteed in the negotiations with Mr James and others involved, namely, that DJZ would receive as a guaranteed return on its investment in the business, a monthly dividend of $2,200 per unit. Mr Pritchard denied that those were his instructions, or the basis of the agreement documented in the deed. 94 This is the allegation which lies at the heart of the case which DJZ brings. I have come to the conclusion that DJZ has not made out the case which it so advances. In explaining why I have reached that conclusion, it will be necessary to refer to a deal of evidence. 95 Mr Palmieri's evidence was that he clearly recollected Mr James saying at the second BDO Nelson Parkhill meeting that: "There will be a guaranteed monthly dividend of $2,200.00 per unit for all investors. 96 Mr James also said: " I will guarantee a monthly dividend of $2,200 per unit for all investors if the Unit Trust does not pay the dividend. " 97 This recollection is important to DJZ's case. Mr Pritchard denied such a statement being made. To his knowledge there were no guaranteed monthly dividends proposed for investors. Such a guarantee would have been contrary to his understanding of how the venture was to operate. He understood that dividends would only be paid from profits and that the investors were assuming a business risk that there would be sufficient profits to pay dividends. 98 Neither Mr Palmieri nor Mr Pritchard made any notes at this meeting. 99 Mr Palmieri's recollection of the guarantee which Mr James promised at the meeting was inconsistent with the terms of the deed which the parties later entered, long after the venture commenced on 1 July 1999. Whether the draft of the deed which Mr Palmieri was originally given was in the same terms as the deed finally executed, is unknown. On Mr Pritchard's evidence he was not provided with that draft. He first received the deed after it had been executed by the James and Christian interests, after the venture had already commenced. 100 No evidence was called from others present at the BDO Nelson Parkhill meetings, such as Mr Mortimer, Mr Goman, Mr Osterberg or Mr Christian. Mr Wilson's affidavit evidence was that he had attended and remembered Mr James saying: "Mr James: " There will be a guaranteed monthly dividend of $2,200.00 per unit for all investors no matter what." 101 Mr James also said: "I will guarantee your monthly dividend." 102 Mr Wilson had earlier made a statement, when Giles Payne was preparing a misrepresentation case, as had Mr Palmieri, Mr Christian and Mr Osterberg. There Mr Wilson said that Mr James had said at this meeting that: "You will not be out of pocket." and "you will get your $2,200 per month per share no matter what'." 103 In Mr Osterberg's statement to Giles Payne he said that either Mr James or Mr Goman or both said at the meeting that each unit will receive a distribution of $2,200 per month from the trust; that Mr Osterberg's understanding was that this distribution was against future profits; and that he had later told Mr Palmieri, Mr Mortimer and Mr Wilson that this was his understanding, after he learned that they were not receiving such distributions. 104 Mr Christian also provided a statement to Giles Payne where he said that while he could remember Mr James making statements to investors at various times that he would 'guarantee a minimum of $2,200 per month for each unit you own', he could not remember any discussion about guarantees at the meeting with the solicitors and accountants. 105 Mr Palmieri's statement to Giles Payne also made no mention of any guaranteed payment of $2,200 being discussed at the meeting. 106 Mr Palmieri's evidence in these proceedings as to the instructions which he gave Mr Pritchard was that: "35. I recall either during the meeting or shortly after the second meeting, saying to Mr Pritchard words to the following effect: I said: " The guaranteed monthly dividend is important as far as I am concerned, it is the main reason why I am interested in making this investment. I will want you to look at this proposal for me and advise me on it - I will need to ensure that the guarantees are included in the deal no matter what. I don't understand this document I can't read it [pointing to the document I had been given at the second meeting]." Mr Pritchard said: "I understand. I will look at it and advise you about the proposal. Ensuring the inclusion of the guarantees will not be a problem. I said: "I will arrange to come and see you." " 107 Mr Palmieri also gave evidence that he met after the second meeting with Mr Pritchard, Mr Wilson and Mr Mortimer when he instructed Mr Pritchard that: "I am going to borrow money to invest in this business - it is an investment I am making for my children. Any income I receive I will be giving to my daughters." and "I said: "Make sure I am protected. Make sure the monthly $2,200 dividend is guaranteed. I don't have any experience in this type of thing. This is the first time I have invested in a Unit Trust. Make sure you also get the monthly guarantee from Michael and Tass no matter what." Mr Pritchard: "Don't worry I will read over this deed and make sure you are protected [pointing to the draft deed he had in his hands]. You will recall also that as a part of the deal Mr James owes money. I will make sure he is responsible for it." 108 Mr Wilson's evidence was that the instructions Mr Palmieri gave were: "Mr Palmieri: "Make sure I am protected. Make sure the $2,200 monthly dividend is guaranteed. Make sure you get the monthly guarantee from Michael and Tass." Mr Pritchard: " Don't worry. I will ensure you are protected." 109 These instructions are crucial to DJZ's case. In their earlier statements to Giles Payne, neither Mr Palmieri nor Mr Wilson made any mention of having given Mr Pritchard such instructions. 110 For his part, Mr Pritchard did not remember having received such instructions, or having then been given the deed. Such instructions were contrary to his understanding of the arrangement. His evidence was that he received the deed later, after the venture had commenced. His role then was to review various documents to ensure that they were satisfactory, from a legal perspective, and to undertake a due diligence exercise in relation to the assets of the business. Mr Palmieri took financial advice on the transaction from Mr Osterberg. Mr Pritchard did not remember receiving any direct instructions from Mr Palmieri about the topic of A class shares, or preferential distributions, but he agreed that there were ongoing discussions and it was likely that this topic was discussed. In cross examination, he explained that if he had received the instructions which Mr Palmieri claimed he had given, he believed that he would have remembered them, because in his experience a declaration of dividends, whether profits had been earned or not, would have been outside normal business practice. 111 Mr Pritchard agreed that a problem of dividends normally only being extracted from profits could be overcome by the provision of a guarantee that they would be paid, whether there were profits or not. He also agreed that there were many business transactions in which guarantees were given by third parties. Still, he disagreed that such a guarantee would not have involved a major departure from business practice, which in his view involved a normal commercial business carrying normal commercial risk. 112 Mr Pritchard also agreed that Mr James was keen to attract investors, so that the real estate business could be acquired. He did not, however, form a view that Mr James was offering what he could, in order to induce investors like Mr Palmieri to come into the venture. 113 Mr Wilson also agreed that the discussions which he had with Mr James before he made the investment were nothing more than Mr James assuring him that he was good for the money, because it was going to be a good investment. Mr Wilson also agreed that he was taking Mr James at face value, having known him for 7 years. He explained that they didn't know that there was nothing in the trust fund which Mr James said he was putting up. He assumed that when the deed was done up, 'we were covered', no matter how it went. 114 In cross examination, Mr Palmieri said that he could not remember the details of what Mr Goman or Mr James had said at the meetings which Mr Pritchard attended, but that he was 'very very clear that he said he would guarantee the dividend which was the $2200 per month per share no matter what'. He could not remember anything more specific. Mr James 'might have said some more things, but I only remember what was interest in me the rest of it didn't matter to me.' He could not remember when he later met again with Mr Pritchard, but he could remember saying to Mr Pritchard 'make sure that guarantee, right, is in place because I got my children's future on the line and Mr Pritchard knows that' and further: '... look, we'll have to make that the guarantee stands and it's enforced. I don't know how can I explain. To his credit Mr Pritchard, he always looked after me but this particular case something went wrong somewhere along the line. I don't know I am not an expert in this thing. I'm a blue collar worker, so.' 115 The complexity of the 1999 deed is reflective of the complexity of the arrangement which was devised by BDO Nelson Parkhill as the basis for the venture. That arrangement had been the subject of negotiation well before Mr Pritchard became involved when Mr Palmieri, was taking advice from Mr Osterberg. The deed was drafted by solicitors representing the James and Christian interests. The structure was devised by their accountants. Mr Palmieri thought that he had received a draft of the 1999 deed before the first meeting which Mr Pritchard attended, but it was first provided to Mr Pritchard, after the venture had commenced in July 1999. He was not involved in any negotiations as to its terms. It had been executed by the James and Christian interests, when he received it in August. 116 The ambit of a solicitor's duty to advise clients has been repeatedly revisited. It depends on the solicitor's retainer and includes an obligation to explain provisions which might affect the client's interests. A client's attention must be drawn to the question of whether, from their point of view, the document contains adequate provisions to protect their interests (see Fox v Everingham and Anor (1983) 50 ALR 337 at 341-2). Solicitors do not, however, give business or financial advice (see Pegrum and Pegrum v Fatharly [1996] 14 WAR 92). Attention has to be drawn, however, to unusual risks which the client should weigh (see Macindoe and Anor v Parbery (1994) Aust Torts Reports 81-290 at 61,534) 117 No guarantee of the kind which Mr Palmieri claims should have been included appears in the deed, as was apparent from Mr Pritchard's 23 November 1999 letter to DJZ and the other investors for whom he acted. There he advised: "In coming into the arrangement, the value of companies/businesses belonging broadly to Tass James and Michael Christian did not take into account borrowings by those companies from Macquarie Bank of $1,044,000.00 and also did not take into account the further borrowings which were made of $300,000.00, plus an overdraft of $200,000.00. These borrowings had to be secure by loans against the assets of I.G. Martin Real Estate Pty Limited which form part of the assets of the Unit Trust. To provide you with some protection in regard to this, the Deed of Trust creating the Unit Trust created A Class units and ordinary units. The A Class units entitled the holders to a preferential share in the net income of the Trust at the end of each year equal to the amount of interest or other money paid by the trustee in respect of loans secured over the Trust assets in favour of Macquarie Bank Limited. Such preferential distribution is to be made in priority to and before any distribution of the net income. After this preferential payment is made, then there is to be a distribution or income between all the unit holders. Your three companies each have A Class units." 118 That advice appears to have accorded with the construction of the deed which was later successfully advanced by DJZ and accepted by Einstein J. His Honour concluded: "143 I do not see that there can be any issue as to the proper construction of clause 5 (1) (b). The promise here is to the investors. 144 Subject to the question of the discharge of the guarantee dealt with below, the investors who sue, namely the fourth and fifth plaintiffs, were clearly entitled to sue on the guarantee comprised in clause 5 (1) (b). 145 Clause 2 of the Deed provides for the investors to be paid a sum, described as a "preferential distribution" being a sum "equal to the amount paid by Surf Road Unit Trust to the bank in accordance with clause 12.10 of the Surf Road Unit Trust Deed." Clause 12.10 is found at page 47 of PX volume 1 and defines the preferential distribution as the amount: "…….…..equal to the amount of interest or any other money paid by the Trustee in respect of the loan advanced………...in favour of Macquarie Bank Limited in an amount of $300,000. Such preferential distribution to be made in priority to and before distribution of the net income as envisaged by the said clause 12.1 hereof." …. 147 In my view the plaintiffs' submissions in relation to this issue are of substance and are correct. In short: · the evidence demonstrates that James Christian Pty. Limited never paid the IGM bank debt. Mr and Mrs James and/or NSHR (who together with others were joint and several guarantors of this obligation) failed to honour their guarantee of performance of that primary obligation. In the event, all of the principal repayments, interest and charges had to be made by the SRUT; · the priority that should have been afforded to the payment of the preferential distribution is therefore plain. The amount was to be calculated on the basis of monies paid to Macquarie Bank in relation to the Surf Road bank debt, without reference to profit. The investors never received a preferential distribution from the SRUT, although they did receive from time to time monies on account of the "interim distribution" , that is, a distribution of the anticipated annual net profit of the SRUT: clause 4 of the Deed; · the principal of the Surf Road bank debt, namely the sum of $300,000, was reduced by the sum of $98,629 to $201,371, before its discharge, and the interest paid to Macquarie Bank on the Surf Road bank debt to 30 September 2002 totalled the sum of $71,410. The value of the preferential distribution to 28 February 2003, therefore, was $172,698; · there is no substance in the propositions: - that the obligation of the SRUT to pay the preferential distribution to the investors required the SRUT to derive a net profit from which to make the distribution; and - that absent such a profit, there was no liability of the SRUT to pay the preferential distribution and no liability, therefore, on Mr and Mrs James and/or NSHR to guarantee that obligation. 148 Such a literal construction would in my view render the guarantee a nonsense because its provision must have anticipated circumstances where the SRUT would generate a sufficient net profit from which to pay the preferential distribution, with Mr and Mrs James and/or NSHR guaranteeing payment of the preferential distribution, if it did not." 119 The guarantee here claimed was not an issue which arose for consideration in the proceedings in the Supreme Court, or before the Court of Appeal, because representations of the kind here claimed were not advanced by DJZ in those proceedings. 120 In cross examination, it was put to Mr Pritchard that his November 23 letter did not adequately explain the deed and that it did not reflect its terms. Having in mind the use of defined terms in the deed and the conclusions which Einstein J reached as to its construction, that criticism may not readily be accepted. As Mr Pritchard explained in cross examination, pursuant to clause 2 of the deed, the preferential distribution to investors such as DJZ could be more or less than $2,200 per unit per month, depending on the amount of interest paid by the unit holders. 121 Even Mr Palmieri conceded in his cross examination that the above explanation in Mr Pritchard's letter, reflected his understanding of the deal. Relatively early in his cross examination, Mr Palmieri was taken to Mr Pritchard's November 1999 letter. His evidence was that he read it at the time, but could not now remember it. He was asked: "Q. It was part of Mr Pritchard's practice from your dealings with him before November 1999 that he would write letters to you reporting to you in respect of matters he had acted for? A. Yeah, he used to write to me and then either explain to me over the phone or sometime I used to go and see him and he explain to me, because he knew I couldn't understand everything of it. Q. Mr Palmieri, if you could look at page 591 of MFI 4. Do you see the paragraph halfway down the page which commences "in coming into the arrangement", and states: "In coming into the arrangement the value of the companies/businesses belong broadly to Tass James and Michael Christian did not take into account borrowings by Macquarie Bank of $1,044,000 and also did not take into account the further borrowings of which were made $300,00 plus an overdraft of $200,000. These borrowings had to be secured by loans against the assets of IG Martin Real Estate Pty Ltd which form part of the assets of the unit trust. To provide you with some protection in regard to this the deed of trust creating the unit trust created A class units and ordinary unit. The A class units were told the holders get preferential share from net income of the trust at the end of the each year equal to the amount of interest or other money paid by the trustee in respect of loans secured over the trust assets in favour of Macquarie Bank Ltd. Such preferential distribution is to be made a priority too before any preferential distribution of net income. After this preferential payment is made then there is to be a distribution of income between the unit holders. All three companies each have A class unit." You see that? A. Yes. Q. Was it sometime what Mr Pritchard has set out in the paragraph I just read to you does that accord with your understanding of the position with respect to A class units under the deed of trust? A. No, the way I understand A class units that's what you were just saying before, they have a preferential distribution, that's the way I understand it. Q. Was that your understanding before 1 July 1999? A. Yeah, Mr Pritchard explain to us that." 122 This evidence, that Mr Pritchard explained the position of preferential distributions, which he outlined in his November letter before July 1999, was inconsistent with DJZ's case. Mr Palmieri later said that he could not remember this being discussed at the meeting he had attended with Mr Pritchard at BDO Nelson Parkhill. 123 What neither the 23 November letter nor the deed dealt with, was the guarantee DJZ now claims always ought to have formed a part of the deed. 124 Mr Pritchard was given written instructions by Mr Osterberg on 19 July 1999, after Mr Osterberg, not Mr Pritchard, had met with the other side's solicitors to resolve loan balances and contributions. No instructions were given in relation to the guarantee now claimed by DJZ. Mr Pritchard did not receive the deed until about 4 August, after it had been executed by the James and Christian parties. Mr Pritchard then pursued the due diligence exercise he had been instructed to undertake and in November reported in writing to the investors, including the deed for DJZ's initial execution. 125 Mr Pritchard said that his usual practice was then to explain documents to Mr Palmieri, but he no longer had a specific recollection of what had occurred in 1999 in relation to this deed. Mr Palmieri collected the letter and the deed from Mr Pritchard, but he claimed that the deed was not explained to him, and that he never understood that it did not provide the guarantee he had been promised. If that is correct, it seems that contrary to the usual practice which they both described, Mr Palmieri sought no explanation of the deed, or the letter from Mr Pritchard, notwithstanding his limited command of English at the time. That is a conclusion difficult to reach, in the face of Mr Palmieri's evidence that he had to have Mr Pritchard explain letters and documents to him, given his then limited command of English. That evidence makes it more likely that Mr Palmieri adhered to his usual practise and that he was provided with an explanation, consistent with Mr Pritchard's letter. 126 Mr Osterberg appears to have later discussed his understanding of the arrangement with Mr Palmieri, when expected payments were not made to the investors during the latter half of 1999, before the deed was executed by DJZ and other investors. 127 Whether Mr Osterberg was involved in the drafting of the deed is unclear, but he was also present at the BDO Nelson Parkhill meetings which Mr Pritchard attended. Mr Palmieri having a similar understanding to Mr Osterberg, or accepting Mr Osterberg's advice as to his understanding of the deal in relation to guaranteed returns, would explain why Mr Palmieri sought no further explanation from Mr Pritchard about the absence of the guarantee he now claims that he wanted to have guaranteed in the deed. Having had Mr Pritchard's letter and the deed explained to him in the usual way and having Mr Osterberg's advice as to his understanding, before DJZ executed the deed, is consistent with Mr Palmieri never having given Mr Pritchard the instructions he now claims he gave in relation to the deed. 128 That he made no complaints at all, even though DJZ was not receiving the payments he now claims were to be guaranteed by the deed, is entirely inconsistent with Mr Palmieri's evidence as to the instructions he had given Mr Pritchard after the meetings they attended together. That evidence provides powerful support for the view that Mr Palmieri was not in truth expecting DJZ to receive such payments, or that they would be guaranteed in the deed. 129 DJZ received no payments at all from the venture until December 1999. The business was not generating profits. It was Mr Palmieri's evidence that in total, between 1999 and 2001, DJZ received dividends of only $41,500. On his case, DJZ ought to have been receiving $2,200 per month, per unit. DJZ had 7 units for which it had already paid $110,000 per unit, $770,000 in total. Accordingly, it ought to have received $15,400 per month, a total of $184,800 per annum, a 24% return. 130 On Mr Palmieri's case, by late December 1999 when he appears to have executed the deed, DJZ ought already to have received some $92,400. Yet he raised no concern with Mr Pritchard that the guaranteed return was not being met, before DJZ executed the deed. To the contrary, he explained in his evidence that he accepted Mr James' advice at the time that the business was new and that required returns were not yet being generated. Furthermore, on 8 August 1999 the directors of Surf Road Nominees Pty Limited, including Mr Palmieri, had resolved that monthly distributions were to be reduced to $1,000 per unit, but even payments at that reduced level were not made. That also does not support what is claimed in these proceedings. 131 As was argued for Mr Palmieri, the inclusion of the claimed guarantee in the deed would have made the deal commercially a very attractive one, indeed a deal almost too good to be true, given the rate of return allegedly to be guaranteed, even in the absence of any profits being generated by the business. That Mr Palmieri did not pursue that promise, or even complain to Mr Pritchard when such returns did not materialise, but simply accepted that he would have to wait for business to improve before dividends were paid, strongly suggests that the claimed guarantee was never intended to form a part of the deed. 132 While Mr Wilson, another investor, gave evidence supportive of that given by Mr Palmieri, also to be considered is that other investors, including Mr Wilson, appear to have taken a similar approach in making no complaint about not receiving the dividends now claimed to have been guaranteed. Mr Wilson eventually made an arrangement with Mr Palmieri to assume control of his investment, but he had, nevertheless, lost the $110,000 which he had paid for his unit. As he explained, he would not receive anything as the result of these proceedings. 133 For his part Mr Wilson did not execute the deed until January 2000. Yet, he too, raised no concerns with Mr Pritchard, either before or after receiving the 24 November letter, or even before executing the deed, notwithstanding that he was receiving no return on his investment. While his evidence was that the deed was complex, and he had difficulty in understanding it and the transaction, it was not suggested that he had any problems with reading or understanding English. He certainly knew that he was not being paid what he claimed he had been promised and was to be guaranteed by the deed, when he executed the deed. 134 When he gave his oral evidence Mr Wilson had no clear recollection of what was said by Mr James at which meeting. Nor could Mr Wilson remember when he first saw a draft of the deed. He said that when he saw it, it was all 'mumbo jumbo'. He still found the deed difficult to understand even now, when giving his evidence, but said that when he now read it, he could see that it did not contain a guarantee of the kind which he claimed Mr James had promised to give. What he clearly remembered was Mr Palmieri instructing Mr Pritchard 'Just make sure you cover us, that we get our money'. Later he said Mr Palmieri's instruction was 'Paul make sure we are guaranteed with our monies'. Then he said that it was 'Cover us, make sure that the $2,200 we receive, there is no loopholes or anything like that in it, we are guaranteed our money'. 135 Mr Wilson insisted that while he could not remember anything more that was discussed, he could remember figures and money and disagreed that it was doubtful that the memory which he claimed to have, was accurate. 136 Mr Wilson confirmed, however, that he had never complained to Mr Pritchard, even though he never received the payments which he believed the deed guaranteed. He claimed that even before he signed the deed, he was very concerned not to be receiving the promised return. Yet he said nothing at all to Mr Pritchard about his concerns. He thought that Mr Palmieri had done so. Mr Palmieri had more shares and did most of the work. Mr Wilson also explained that at the time he was told that things were a bit short and that 'we'll work things out and it will get back on track'. Who told him this was not clear, but it was not suggested that it was Mr Pritchard. 137 For his part Mr Pritchard denied ever understanding that DJZ had been given the claimed guarantee, or that he had received the instructions it was claimed Mr Palmieri had given him in relation to the deed being drafted so as to reflect such a guarantee. 138 In cross examination, Mr Pritchard was also asked about the consideration which he gave in 2003 to the possibility of bringing a misrepresentation case. That had been raised with him by Mr Fitzpatrick the employed solicitor who then had day to day carriage of the Supreme Court proceedings. Mr Pritchard was doubtful about the claim at the time, but it was raised with Mr Palmieri and considered with Mr Alexis. Mr Pritchard also sought advice from another solicitor who practised in the area, at the firm Watkins Tapsell. Mr Pritchard was then supplied with the statements which Giles Payne had taken from Mr Palmieri, Mr Christian, and Mr Wilson, to which I earlier referred. All of this evidence suggests that neither Mr Palmieri nor Mr Wilson claimed in 2003 that they had given Mr Pritchard instructions to ensure that the guarantee here claimed was included in the deed. That was certainly not said in the statement which Mr Palmieri made to Giles Payne, as to which Mr Pritchard noted in his letter to Watkins Tapsell that Mr Palmieri 'is unable to say much more than he has already said in his statements'. 139 As was conceded for Mr Palmieri, this statement was 'pretty vague'. By way of contrast, in his affidavit evidence in these proceedings he has remembered considerably more of relevance to his claim, evidence to which he largely adhered in cross examination. The situation thus is that a long time after making his original statement about these matters, in circumstances where Mr Palmieri's memory in almost every other respect has considerably worsened, he now clearly remembers Mr James speaking of the guarantee at the meetings Mr Pritchard attended and subsequently instructing him to ensure that it was contained in the deed. Mr Wilson claims a similar memory. Despite this, their conduct subsequently is entirely inconsistent with them having had such an understanding at the relevant time, or giving the claimed instructions. 140 Also to be considered is that Mr Osterberg's statement to Giles Payne was seemingly not then supplied to Mr Pritchard. It would have supported Mr Pritchard and Mr Alexis' views. There was no explanation for this. Mr Osterberg's statement seemingly came to light only when Mr McGovern's brief was produced during these proceedings. 141 Mr Pritchard explained that he didn't himself test the statements with which he was supplied in 2003. In his letter of instructions to Watkins Tapsell he did say: "After reviewing the old purchase file and thinking long and hard about the matter Mr Prichard is of the firm view that none of the principals of the incoming investors, namely Vince Palmieri, Andy Mortimer or Terry Wilson indicated that they had been promised a guaranteed return on their investment. They may well have had these promises made to them but did not discuss this aspect with Mr Prichard. The document which was prepared and signed by the parties was discussed with Vince Palmieri, Andy Mortimer and Terry Wilson. They raised no issue as to any lack of guaranteed return provisions. On this point I believe that the investors were handpicked by Tass James in that they were all followers and not leaders and relied entirely upon him as far as the value of the investment and running of the business. Tass James portrayed an image of the all-knowing, successful and driving force." 142 Mr Pritchard denied that his claimed doubt in relation to a misrepresentation claim reflected a concern which he had in 2003, as to his part in the drafting of the deed. At the time he did not think that what the statements contained reflected poorly on him. I am satisfied that evidence may be accepted. The claim that he had been instructed in 1999 to ensure that the deed contained the claimed guarantee only emerged much later. 143 In 2003, Mr Alexis was also briefed with statements, other than that of Mr Osterberg. His advice was that: "Mr Palmieri has never said that the "interim distribution" in the sum of $2,200 per month (as distinct from the "preferential distribution") was to be guaranteed, in the sense that it was to be paid to the Fifth Plaintiff by the Surf Road Unit Trust, whether there was a sufficient profit from which to pay it or not. such a suggestion is inconsistent with the Deed and our principle claim that the "preferential distribution", unlike the "interim distribution", is calculated without reference to profit, so that if there was insufficient profit to pay the "Preferential distribution", the Defendants would be liable to guarantee the payments. Thus, the "interim distribution" was payable out of profit and was not guaranteed." 144 The case which was being advanced in the Supreme Court proceedings was clearly inconsistent with that which DJZ advances in these proceedings, as to the basis of the deal. 145 The question of whether or not Mr Palmieri had been promised the return he now claims and whether in 1999 he gave Mr Pritchard the instructions he now claims he did, thus turns on questions of credit. How is the conflict to be resolved? 146 The answer lies in Mr Palmieri's evidence. I am unable to accept his evidence as to the instructions which he claims he gave Mr Pritchard, over that of Mr Pritchard, despite Mr Wilson's corroboration. 147 Given his evidence as to his command of English and how he needed assistance to understand written documents, that Mr Palmieri would have signed a document of such critical importance as the 1999 deed, if it was to contain such an important guarantee, without either reading it or first discussing either the deed or Mr Pritchard's November letter with him, was implausible. Mr Pritchard's evidence was that while Mr Palmieri collected the November letter enclosing the deed from him, he did not see him read the letter and did not remember discussing it. If that is what occurred, then that approach on Mr Palmieri's part is consistent with him not having given instructions to Mr Pritchard to ensure that the deed contained the important guarantee which he here claims and that Mr Pritchard was not involved in the drafting of the deed. 148 As I earlier explained, if Mr Palmieri's evidence as to the assistance he required is to be accepted, it is more likely that he did discuss the letter and the deed with Mr Pritchard, as was his normal practice, than his claim that he never discussed either with Mr Prichard. If he did not have such a discussion, that too supports the conclusion that he gave Mr Pritchard no instructions as to the drafting of the deed, or any guarantee. 149 I have concluded that the way in which Mr Pritchard approached his instructions from Mr Palmieri was reflective of Mr Palmieri's approach to his business matters and how he took advice. Mr Pritchard not taking notes at the BDO Nelson Parkhill meetings which he attended in 1999, has certainly worked to his detriment. That approach appears to reflect the fact that at the time, Mr Palmieri was being advised by Mr Osterberg and that Mr Pritchard was attending as a courtesy to Mr Palmieri, given their longstanding relationship and not because he had received instructions to act for DJZ. I accept Mr Pritchard's evidence about those matters. Mr Pritchard, it seemed to me, was a truthful witness. Unlike Mr Palmieri, he was frank as to what he could and could not remember and when cross examined, he was prepared to make concessions, even when he appreciated that they were against his interest. 150 Also to be considered is that Mr Palmieri's approach seemed consistent with that which he later adopted, when he instructed Giles Payne. This resulted in that firm refusing to act for him at all in relation to the 2003 sale agreement, because of his approach to documentation and the provision of instructions. 151 What the evidence showed was that Mr Palmieri's approach to seeking and accepting professional advice was different to that which a prudent businessman might ordinarily adopt. He already had a draft of the deed which had been prepared by solicitors acting for the James and Christian interests, before he invited Mr Pritchard to come to the first meeting with him and Mr Osterberg. Those solicitors and BDO Nelson Parkhill had already devised and documented the complex structure of the venture, which the deed reflected. This was an investment opportunity which Mr Palmieri had by then already decided to pursue, even though Mr Osterberg, his long term financial adviser, from whom he had been taking advice about the proposed venture before Mr Pritchard was approached, had counselled him against it. 152 Consistently with Mr Pritchard's evidence that he attended the two meetings, without having been instructed to act for DJZ, Mr Palmieri did not give him a copy of the draft deed which he already had. No doubt Mr Pritchard hoped to get the work and charged for his attendance at the meetings when he was later instructed, but he did not assume that he would be at the time that he attended the meetings. This was not a situation where there was already a tacit understanding or agreement that Mr Pritchard was retained (see Stringer v Flehr & Walker [2003] QSC 370; (2003) Aust Tort Reports 81-718 at [72] - [74]). 153 Even if this conclusion were not reached, the evidence showed that Mr Palmieri had already decided to enter into the transaction on the basis of the structure which the James and Christian interests had devised, before he approached Mr Pritchard. That structure was explained at the meetings. What was then being still negotiated was unit price, given developments in relation to the assets which were being acquired for the real estate business. Mr Osterberg was involved in those ongoing negotiations, not Mr Pritchard. 154 Mr Palmieri did not seek Mr Pritchard's advice about the structure of the arrangement, or the terms of the deed. Mr Palmieri had already decided to make the investment on the basis proposed, before he instructed Mr Pritchard. Even when he was instructed, Mr Pritchard was not engaged to be involved in any drafting exercise in relation to the deed. There do not appear to have been negotiations about any terms in which he was involved. Mr Pritchard was only provided with a copy of the deed, some weeks after the venture had commenced. It was already executed by the James and Christian interests. Mr Pritchard was instructed to undertake a due diligence exercise in relation to the corporate entities and trusts involved, which was completed before the deed was executed by the investors. Mr Pritchard was then advising on whether the legal requirements for the companies and the assets of the organisation involved, were in order. 155 While Mr Palmieri could not remember when he signed the 1999 deed, on the correspondence in evidence, it cannot have been until after 24 November 1999. The deed was sent to him for execution with the letter of 23 November. He did not return it until shortly before Christmas and the other investors, for whom Mr Pritchard was also acting, including Mr Wilson, executed the deed in early 2000. 156 I do not accept, as was argued for DJZ, that in the circumstances, it was up to Mr Pritchard to ensure that the deed was executed, before any money was paid over, or to advise that there should be no settlement before the deed was executed. 157 The evidence suggests that even if that advice had already been given, Mr Palmieri would not have accepted it. Mr Osterberg had advised against the venture and that advice was rejected. Mr Pritchard later gave advice that the 2003 sale should not proceed until other relevant and important matters were attended to and Mr Palmieri also rejected that advice. 158 Nor do I accept, as was submitted for DJZ, that the approach which was adopted made the situation worse for Mr Pritchard, because he knew when he was instructed that Mr Palmieri was looking to him to ensure that his legal rights were properly looked after. 159 The evidence showed that Mr Palmieri required Mr Pritchard to undertake a much more limited role. Mr Palmieri, an experienced property developer with a substantial commercial property portfolio, was entirely content to enter into a business with Mr James, a real estate agent with whom who he already had other business dealings and with whom he owned property together. The deal was done on the basis of terms negotiated and agreed before Mr Pritchard was retained. Mr Palmieri had made that decision, even in the face of his financial adviser's advice against the venture, on terms which had been agreed and were explained at the BDO Nelson Parkhill meetings. 160 This complex deal had as one of its elements, guarantees by the James interests and indemnities by them and the Christian interests for investors such as DJZ. Mr James appears to have made promises as to the returns which the investment would generate, as was Mr Christian's statement. Under the structure devised by BDO Nelson Parkhill, it was plainly not intended, however, that such representations form a part of the deed. Mr Palmieri not bothering to read Mr Pritchard's November letter, or the deed which he later executed and asking Mr Pritchard no questions about either, is entirely consistent with this view of Mr Pritchard not having the role here claimed by DJZ in relation to the deed. 161 The evidence does not support the case advanced for DJZ, that if Mr Palmieri had been advised that the deed did not contain the guarantee which he here claims, it would not have entered into he deed. 162 None of the documents in evidence, including the statements taken by Giles Payne, reflected Mr Palmieri and Mr Wilson's evidence in these proceedings as to what had occurred at the meetings at which Mr Pritchard was present, or when they gave him instructions. When advice was later sought from Mr Alexis, who represented the plaintiffs in the proceedings before Einstein J, as to the possibility of bringing a misrepresentation claim in those proceedings, Mr Alexis advised against that course, because Mr Palmieri had never made claims of the kind here advanced in relation to the guarantees. Even then it was not suggested that the instructions here claimed had been given to Mr Pritchard. 163 DJZ unquestionably took a significant commercial risk when it entered into the real estate venture promoted by Mr James, being content for the venture to commence, long before any due diligence exercise was undertaken and the parties' complex agreement, as reflected in the deed, was executed. Significant funds had been borrowed from the Arab Bank and invested before that occurred. The venture was never operated in accordance with the understanding Mr Palmieri claims in these proceedings that he had as to the dividends which were to be paid to DJZ. Given the view which it appears that Mr Osterberg took, it is not surprising that Mr Palmieri did not pursue any concern with Mr Pritchard about the guarantee which he claims was so important to him, before executing the deed. On Mr Osterberg's understanding, DJZ was only ever entitled to receive dividends out of profits, which were not being generated. 164 Mr Osterberg was not called. I am satisfied that this is a case where it must be inferred that his evidence would not have assisted DJZ's case. 165 On his own evidence, Mr Palmieri's concern about the failure to pay dividends was not raised with Mr Pritchard until late 2000, when Mr James' misappropriation of funds from the real estate agency business was uncovered. It was then that he sought advice as to Mr James' conduct from Mr Pritchard, as well as that of other solicitors and PriceWaterhouse Coopers, who conducted certain investigations, which gave rise to allegations of misappropriation being pursued against Mr James. 166 Even then, the basis of the arrangement which DJZ now advances in its negligence claim were not raised with Mr Pritchard. Nor were they raised in the proceedings before Einstein J. Nor were the instructions now claimed to have been given to Mr Pritchard, which would have supported a misrepresentation claim about which advice was later taken from Giles Payne, seemingly raised in 2002 with Giles Payne. Had Mr Palmieri done so, Giles Payne and Mr McGovern would undoubtedly have then advised DJZ of its claim against Mr Pritchard. 167 On all of the evidence I am simply unable to come to the conclusion that DJZ has met the onus which falls upon it to establish what it now claims, notwithstanding the evidence given by Mr Wilson, which provides some support for that of Mr Palmieri. Returns of $2,200 per month were undoubtedly discussed with Mr James. Nevertheless, the claim that the sum was to be guaranteed as DJZ now claims and that Mr Palmieri and Mr Wilson instructed Mr Pritchard to ensure that such a guarantee was contained in the deed, is simply not plausible in the face of all of the evidence, particularly the evidence of what they and others did at the relevant time. 168 Human memory is fallible, as McLelland CJ in Eq discussed in Watson v Foxman (1995) 49 NSWLR 315. Mr Palmieri and Mr Wilson's evidence on the crucial factual questions in issue simply cannot be accepted in the face of all of the other evidence to which I have referred. Had they given the instructions which they now claim, DJZ's complaint would have emerged long before it eventually did. In that event, Mr Palmieri and Mr Wilson would certainly have said something to Mr Pritchard about the failure to honour the guarantee they claim they received from Mr James, which had occurred even before they executed the deed, given that the substantial returns which they now claim were to have been guaranteed under the deed, had never been paid. Had there been such a guarantee, a different course to the one which was taken in the Supreme Court proceedings, would undoubtedly have been pursued. 169 For all of these reasons, it may not be concluded that the breach of retainer and negligence claimed was established. The claimed instructions were not given; Mr Pritchard did not fail to give necessary advice about the absence of the claimed guarantee from the 1999 deed; and he did not fail to adhere to instructions to ensure that the deed contained the claimed guarantee. This aspect of DJZ's case must fail. Mr Pritchard and the 2001 deed and the 2003 sale agreement 170 While I have concluded that there was no breach of duty established in relation to the 1999 deed, I have not reached the same conclusion in relation to this aspect of DJZ's case. 171 DJZ's claim is based on the drafting of the 2001 deed and the 2003 sale agreement, not the conduct of the litigation. On Mr Pritchard's own evidence he gave no consideration to what impact the 2003 sale agreement might have on the claims DJZ was advancing against Mr James and others in the proceedings commenced in the Supreme Court in August 2001, until the matter was raised with him by Mr Alexis in December 2003, after the James' interests amended their pleadings to rely on the sale agreement. The evidence, including evidence given by Mr Pritchard himself in cross examination, establishes that there were available steps which could have been taken to ensure that the drafting of the 2001 deed and the 2003 sale agreement did not give rise to the problems which led to the Court of Appeal's decision. 172 The February 2001 deed was drafted before litigation was commenced and at a time when there is a question as to whether or not Mr Pritchard was acting for DJZ. There is no question that he was acting for DJZ when the litigation was commenced and when the 2003 sale agreement was later entered. The conclusion that Mr Pritchard breached his duty to DJZ in relation to the 2003 sale agreement is unavoidable. 173 The clause in question in the November 2003 sale agreement provided: "25 COURT CASE AGAINST TASS JAMES 25.1 The parties to the Agreement acknowledge New South Wales Supreme Court proceedings 50108 of 2001 ("Supreme Court proceedings") is on foot and involves the parties to the Agreement. 25.2 Subject to the Purchaser paying to Pritchard Law Group the sum of Fifty Two Thousand Dollars ($52,000.00) pursuant to Clause 9.1 and Schedule 11, the Vendor, Vincent Palmieri and Silvano Sicuro acknowledge and agree that they are liable and responsible for all fees, disbursements and any other monies past, present and future owing on any account in respect of the Supreme Court proceedings to the Vendor's Solicitor and any Counsel, Accountant or Expert retained by either or all of the Vendor, Vendor's Solicitor, Silvano Sicuro and Vincent Palmieri and that the Purchaser shall have no responsibility or liability for the payment of any such monies. 25.3 The Vendor, Silvano Sicuro, Vincent Palmieri and DJZ Constructions Pty Limited release the Purchaser, Michael Christian and Katherine Christian from any and all claims, debts, costs, damages, judgments, orders, awards or liabilities they may have or had against the Purchaser, Michael Christian or Katherine Christian arising directly or indirectly out of the Supreme Court proceedings subject to the Purchaser paying to Prichard Law Group the sum of Fifty Two Thousand dollars ($52,000.00) pursuant to Clause 9.1 and Schedule 11." 174 Earlier, in the February 2001 deed, clauses 4 and 5 provided a release in the following terms: "4. In consideration of the payments to be made to the SRUT pursuant to the preceding 3 clauses, WIT, DJZ, SRN, Chris Burke & Co., I.G. Martyn, Silvano, Vince, Mary and Terry jointly and severally release Michael, Katherine and Cottenham from any and all claims, actions, suits, demands, costs, damages and/or expenses which they or either of them now have or at any time hereafter may have had but for the execution of this Deed by reason of or arising out of Michael's involvement as a Director of SRN, Chris Burke and Co., and I.G. Martyn and/or Michael, Katherine and/or Cottenham as the recipient of funds improperly or unlawfully paid to them or either of them from Chris Burke & Co., I.G. Martyn or the SRUT. 5. In consideration of the payments to be made pursuant to Clauses 1, 2 and 3 hereof, WIT, DJZ, Cottenham, Michael Christian and Silvano agree not to take any action to sell the thirteen (13) Units in the SRUT held by Cottenham and not to take any action against Michael, Katherine and/or Cottenham arising out of the breach of those parties or any one of them of their obligations pursuant to the July 1999 Deed except as hereinafter appears and the provisions of this Clause may be used as a bar to any proceedings by the aforementioned parties against Michael, Katherine and/or Cottenham but preserving always the rights hereinafter reserved." 175 Not long after the sale agreement was made and shortly before the hearing before Einstein J commenced, Mr and Mrs James, who had not been parties to either the sale agreement or the 2001 Deed, amended their defence. How they became aware of what had been agreed with the Christian interests was not apparent. Nevertheless, Mr and Mrs James argued that clause 25 of the sale agreement had the effect of releasing them from any liability which they may have had under the 1999 Deed. 176 At the hearing, Mr Newlinds SC, appearing for the James' interests conceded that the 2001 deed's release was properly construed as a covenant not to sue. Before Einstein J, the plaintiffs succeeded. 177 Orders were made in favour of the plaintiffs in relation to this and other claims, including as to costs. Mr James soon became bankrupt. Mrs James however appealed, relying on the 2003 sale agreement. The Court of Appeal upheld the appeal, concluding at [62] that: "That leaves the final matter for consideration. At the time the 5 November 2003 Agreement was entered into, the present proceedings were on foot. This is expressly referred to in cl.25.1. Of the respondents who brought the proceedings, only two were parties to that Agreement: Chris Burke & Co and DJZ, although, we indicate later, they were the only parties who had any ongoing interest in matters arising out of the new venture. The fact that clause 25.1 expressly stated that the proceedings were on foot (and impliedly that they were to continue) indicates that those parties intended to reserve their rights against the co-guarantors; that is, against the James. That consideration has to be weighed against the fact that unless cl. 25.3 is construed as a release, it has no work to do as the Christians already had the benefit of a limited covenant not to sue from all the respondents. An agreement will usually be construed so as to give it some operation. Having regard to the principles which govern in this area, and on slight balance, the Court considers that properly construed, cl.25.3 released the Christians from their obligations under the Deed of Guarantee. That being so, Mrs James was also released." 178 There was a second reason for upholding the appeal, a failure to maintain security, the sale of the James' units having been achieved other than by exercise of the power of sale under the 1999 deed. It was concluded by the Court of Appeal at [81]: "It follows that by requiring that the Cottenham units be transferred as part of the sale of Chris Burke's real estate business under the 5 November 2003 Agreement, and not pursuant to the exercise of the power of sale under the Deed of Guarantee, Mrs James was completely discharged from her obligations under the Deed of Guarantee." 179 DJZ was ordered to pay Mrs James' costs of the appeal, as well as of the proceedings below. DJZ seeks to recover each of these sums from Mr Pritchard, as well as a sum to reflect the orders made in its favour by Einstein J, on the basis that they were each losses reasonably foreseeable from Mr Pritchard's negligence in the preparation of the sale agreement and the 2001 deed. For whom was Mr Pritchard acting in relation to the February 2001 deed? 180 Mr Pritchard denied any breach of duty to DJZ, with respect to the release contained in the 2001 Deed and argued that, in any event, no loss flowed, even if such a breach were established. 181 It was DJZ's case that Mr Pritchard advised it in relation to this deed. 182 I am satisfied that this case was not made out. Mr Palmieri was the controlling mind of DJZ, but he gave no evidence that he had retained Mr Pritchard to advise it on the terms of the 2001 deed. His evidence was that he could not even recall discussing the deed with Mr Pritchard, he received it from Mr Christian and signed it some time in February 2001. No evidence was called from Mrs Palmieri, also a party to the deed, to support the submission advanced against Mr Pritchard, that he was also retained to advise her in relation to this deed. 183 Mr Pritchard accepted that while in 1999 he had not entered into a costs agreement with DJZ, he had been instructed to act for it by Mr Palmieri in relation to the real estate agency venture which became the subject of the 1999 deed. It was Mr Pritchard's case that in January 2001 he was again instructed, on this occasion to advise the directors of Surf Road Nominees Pty Limited, including Mr Palmieri, in relation to various matters, including the 2001 deed. He did not receive instructions to act for DJZ until after the 2001 deed was executed. 184 The evidence showed that Mr Palmieri approached Mr Pritchard in December 2000 about difficulties which had emerged in relation to Mr James misappropriating funds. In January 2001, Mr Pritchard entered a written retainer agreement with Mr Palmieri and other directors of Surf Road Nominees Pty Limited, Mr Wilson, Mr Sicuro and Mr Christian. Mr Pritchard regarded the work which he undertook in relation to the February 2001 deed to have been the subject of this agreement. This 'non litigious costs agreement' was expressed to be in relation to: 1. The Work To advise you from time to time and to work with you to resolve the difficulties presently being faced by Surf Road Nominees Pty Limited as trustee for the Surf Road Unit Trust and conduct of their business known as Chris Burke & Co Pty. Limited as result of the activities of Tass James and generally. 185 It was at this time that Mr James was removed from his role in the business by the directors. An arrangement was then made with Mr Christian to take over the management role Mr James had previously performed in the business. What was agreed with Mr Christian, Mrs Christian and the entities associated with them was reflected in the 2001 deed, prepared by their solicitors, Pryor Tzannes & Wallis and settled with Mr Pritchard. Mr Palmieri and Mrs Palmieri were also parties to the deed, as were Surf Road Nominees Pty Limited, DJZ, Chris Burke & Co Pty Ltd, WIT Investments, Mr Wilson and Mr Sicuro. There were no other solicitors involved in the negotiations over the terms of the deed. 186 Mr Pritchard's evidence was that he was not acting for Mrs Palmieri or for DJZ in relation to the February 2001 deed, even though they then had no solicitor separately acting for them, as far as he was aware. In cross examination, Mr Pritchard said that he made no assumptions in his dealings with Mr Palmieri. As far as he knew, DJZ could have been obtaining advice elsewhere, from Giles Payne, for example. He accepted, however, that if that had been the case, he would have expected Giles Payne to contact him about the terms of the deed. 187 Mr Pritchard's case was that he later received instructions from DJZ in June 2001, when he entered into a costs agreement with it, other investors, Surf Road Nominees Pty Limited, SRUT, Chris Burke & Co Pty Limited and Mr Christian. The work covered by this agreement was: 1. The Work To act for all parties to resolve the difficulties arising out of defaults by Tass James in his role as Director of Surf Road Nominees Pty Limited and Chris Burke & Co Pty Limited and as a participant in the management of the business conducted by the Surf Road Unit Trust and to attempt to obtain for you a transfer of the units held by New South Head Road Nominees Pty Limited in the Surf Road Unit Trust to other unit holders in the Unit Trust and to defend on your behalf any resistance to this step and to obtain the advice of Counsel generally and to take such steps as may be required to implement the advice of Counsel and in that regard, if so advised, to initiate proceedings against Tass James and New South Head Road Nominees Pty Limited and to negotiate a settlement, if possible appropriate to you and generally to act for you towards a satisfactory resolution of the difficulty. 188 It was DJZ's case that it would be concluded from the evidence that there was an implied retainer between Mr Pritchard and DJZ and that he was representing all parties to the February 2001 deed, apart from the Christian interests (see Dean v Allin & Watts [2001] 1 Lloyd's Rep 249 at 256). It was argued that it would have been preposterous to think that DJZ or Mrs Palmieri could act for themselves. Mr Pritchard well knew that Mr Palmieri was DJZ's controlling mind and that he was not acting for him only in his personal capacity, in relation to the deed. It was also submitted that the January costs agreement did not cover the work performed in relation to the deed, given its terms. 189 I cannot accept the case so advanced, given the work covered expressly by the January costs agreement and the absence of any evidence of DJZ or Mrs Palmieri instructing Mr Pritchard to act for them. The agreement reached with the Christians, in consequence of the dispute which had arisen with Mr James and the release, encompassed by the February deed, was unquestionably work of a kind contemplated by the express terms of the January retainer. 190 The deed also had other parties, in addition to those who had retained Mr Pritchard in January. There was no evidence that Mr Pritchard took steps consistent with an understanding that he had a retainer for DJZ, or Mrs Palmieri, or any of the other parties to the deed, such as, for example, seeking payment from them for work undertaken in respect of the deed. The payments sought were in accordance with the written retainer. In March 2001, Mr Pritchard gave an extensive report to the directors of Surf Road Nominees Pty Limited in relation to the work he had undertaken and what future actions they had to consider, enclosing an invoice for the work performed, including in relation to the February deed. Subsequently Mr Pritchard received a wider retainer, from DJZ and others, to pursue various matters, including the Supreme Court litigation later instigated against Mr James. That retainer was also reduced to writing. 191 It was entirely consistent with the evidence of his approach to matters involving his business interests, that Mr Palmieri did not retain Mr Pritchard to advise DJZ, or indeed his wife, in relation to the matters covered by the January retainer, or the 2001 deed, given that he himself was already receiving advice from Mr Pritchard in his personal capacity. That Mr Palmieri was to Mr Pritchard's knowledge the controlling mind of DJZ and married to Mrs Palmieri, does not mean that Mr Pritchard was either obliged, or entitled to proceed on the basis that they had also retained him to act for them. The evidence does not support the existence of a contract whereby DJZ retained Mr Pritchard to advise it in relation to the matters dealt with in the 2001 deed. Nor does the evidence establish an implied retainer. That requires evidence permitting an intention to enter into such a contractual relationship to be imputed to both DJZ and Mr Pritchard. Such evidence is absent. 192 Mr Pritchard did not receive instructions from DJZ until June 2001, when litigation was contemplated and the June retainer agreement was entered. It follows that this aspect of DJZ's case must fail. Mr Pritchard did not act for DJZ in respect of the 2001 deed and did not depart from competent professional practice, in failing to give it advice about the effect of the deed. There was no breach of retainer or negligence on Mr Pritchard's part in relation to the deed, as DJZ claimed. 193 After Mr Pritchard was retained by DJZ and others in June 2001, he retained Mr Wales SC to advise on the pleadings in the Supreme Court proceedings, amongst other things. Mr Wales was briefed with the 2001 deed and instructed that it was possible that it gave rise to arguments against DJZ. Mr Wales advised: "The general principle is stated in the following terms in Rowlatt on Principal and Surety, 4 th edition, page 184, as follows: "If a surety, whose liability is an essential condition of the liability of another surety, signs the instrument, but is afterwards released, or becomes entitled to his discharge by virtue of any equitable principle, the other surety is discharged in the same way as if the first had never become bound." However, the same principle does not, so far as I am are, apply to an indemnity, which is a different thing from a guarantee or surety, Clause 5(2) of the Deed of Guarantee provides that "the indemnifying parties, the guarantor and the unit holders jointly and severally indemnify the Investors for any loss or damages suffered by the Investors should the indemnifying parties, the guarantor and the unit holders fail to ensure payment of the bank debts and the preferential distributions." It seems to me that this obligation survives any release of the Christian family interests." 194 No advice was given to DJZ or Mr Palmieri that there was a possibility that the February 2001 deed might have brought about a release of the James' interests in relation to the matters intended to be pursued in the Supreme Court proceedings, either before or after Mr Wales was briefed to give this advice. The litigation was commenced in August. 195 I have accepted that at the time that the deed was prepared, Mr Pritchard was not retained to advise DJZ. When the Supreme Court proceedings were commenced, however, he was acting for DJZ and it then plainly occurred to Mr Pritchard that the deed might pose a problem, hence the advice sought of Mr Wales. It was not, however, a problem to which he ever alerted DJZ. 196 In cross examination, Mr Pritchard accepted that he was then obliged to advise DJZ of anything in the 2001 deed which might affect its prospects of success and that this was a continuing obligation. That obligation was plainly not met. Ultimately, for reasons which I will explain, given the course which the appeal proceedings took, nothing turns on this. The August 2003 deed 197 Mr Pritchard was also later obliged to consider the effect of the August 2003 deed and the later sale agreement on the proceedings DJZ was pursuing, when instructed to act for DJZ in relation to those transactions. 198 By March 2003, Mr Palmieri found that he was being out voted by the other investors, as to the conduct of the Supreme Court proceedings. He sought control. In an August 2003 deed, Mr Palmieri bought out the interests of Mr and Mrs Christian and Cottenham in SRUT. Clause 2.7 included a release in their favour in relation to the proceedings. 199 Mr Pritchard agreed that he was then obliged to advise DJZ and the other plaintiffs, if there was anything in the deed which might affect their prospects of success in the Supreme Court proceedings. Mr Pritchard did seek to raise a concern about this deed with Mr Palmieri and Mr Sicuro, but was instructed not to pursue this matter, as there was already a release agreed in the February 2001 deed. 200 I take the view that no departure from competent practice was established in relation to this deed. 201 Even if the conclusion were reached that there was any negligence or breach of retainer on Mr Pritchard's part, so far as DJZ was concerned, that this deed provides a complete answer to any breach of retainer by Mr Pritchard, in relation to the 2003 agreement, as was argued on his behalf, may not be accepted. This deed was never relied on by the James' interests, nor did the Court of Appeal's decision turn on its terms. 202 That Mr Pritchard considered that the August 2003 deed might create difficulties for the litigation, but failed to consider or advise on terms in the 2003 sale agreement, which had the result that the James' appeal to the Court of Appeal succeeded, supports the conclusions which I have reached as to Mr Pritchard's negligence in relation to the drafting of that agreement. The 2003 agreement – negligence established 203 Mr Pritchard acted for DJZ in relation to this agreement. Mr Palmieri had approached Giles Payne to act, but it refused to do so, given its concerns about matters such as the state of the business records and the haste with which the transaction was being pursued. Mr Palmieri then retained Mr Pritchard. 204 In February 2001, he had advised the directors, including Mr Palmieri, that in the circumstances, Mr James had breached the 1999 deed, allowing the exercise of rights of sale under the deed, after giving notice. The guarantees had been given on a joint and several basis by the James and Christian interests. The 2001 deed was entered, but it was not until May 2001 that notices were given under the deed. The Christian's solicitors then disputed the exercise of that right of sale, given what had been agreed with them in the 2001 deed. 205 In 2003, while the Supreme Court proceedings were on foot, it was agreed that the Christian interests would resign, would transfer their shares and unit holdings in SRUT and would be given a release. This was given effect by the 2003 sale agreement. 206 The possibility that the February 2001 deed and the 2003 sale agreement might amount to a release was first raised with DJZ by Mr Alexis, after the James' interests amended their defence. In his letter of 23 December Mr Alexis noted that Mr Pritchard had acknowledged in their discussion that he had not appreciated that what had been agreed in the sale agreement and the 2001 deed could have affected the defendants' liability under the 1999 deed and that Mr Palmieri had not been warned of the consequences, before the documents were executed and performed. DJZ was then advised of the potential claim which lay against Mr Pritchard and that independent advice should be sought. 207 In cross examination Mr Pritchard confirmed that he had never earlier turned his mind to the issue of whether the drafting of these documents and the steps taken in relation to the giving of notices under the 1999 deed could have affected a release, as the James' then claimed. 208 The failure to raise this possibility with DJZ in February 2001 did not amount to a breach of retainer. Mr Pritchard was not then advising DJZ. It might have involved a breach of the retainer which he then had with Mr Palmieri, given Mr Pritchard's knowledge of Mr Palmieri's interest in DJZ, but that is not a claim advanced in this case. 209 The failure to advise DJZ of the problem when the Supreme Court proceedings were commenced, is a different matter, as is Mr Pritchard's advice in relation to the 2003 sale agreement. To my mind there can be no question that Mr Pritchard's failure to consider and advise DJZ as to the effect of the sale agreement on DJZ's pursuit of its rights under the 1999 deed, involved a breach of his duty to DJZ. 210 In cross examination, Mr Pritchard agreed that he was aware of the release contained in the 2003 agreement in favour of the Christian interests and that it was his obligation to be on the lookout for any terms which might adversely affect DJZ's interest in the Supreme Court proceedings. At the least he was obliged to provide a warning as to any risk, so that DJZ could obtain advice. He was not aware that DJZ was then already taking separate advice about the litigation from Giles Payne. It was not until December 2003, when Mr Alexis raised the potential claim which flowed against Mr Pritchard from this agreement, that DJZ was advised by Mr Pritchard to seek such separate advice. 211 In the Court of Appeal, 'on slight balance' the conclusion reached was that there had been a release given by the sale agreement. As to security, it was observed that: "77 The investors however, dealt with the securities other than by way of exercise of their power of sale. In the February 2001 Deed, it was agreed that the investors would not exercise any right of sale pursuant to the Deed of Guarantee in respect of Cottenham's units in the Surf Road Unit Trust. In the 5 November 2003 Agreement, the investors agreed to the disposal of those units as part of the sale agreement and not by way of the exercise of the power of sale. There was thus a breach of the implied covenant to maintain the security. In my opinion, the breach first occurred under the terms of the February 2001 Deed, although Mrs. James did not rely upon that breach. But in any event, there was an independent breach arising out of the provisions of the 5 November 2003 Agreement." 212 These were matters which Mr Pritchard should have considered and advised DJZ about. He was required to use the knowledge which he actually possessed (see Windy Construction UK Limited v Poole [1984] 2 Lloyds Rep 499 at 506-7.) Under the 1999 deed, all of the guarantors had charged their units with the performance of their obligations under the deed. The disposal of the Christian's units, other than in accordance with the terms of the 1999 deed, breached the implied obligation to maintain the securities for the benefit of all of the guarantors. 213 The 1999 deed itself permitted the sale of the Christian's units in accordance with its terms, as Mr Pritchard had advised earlier in 2001. Why that course was not pursued, is not apparent, especially given the advice which he had earlier given in relation to the August 2003 deed, which became a schedule to the agreement. The release clauses were not in identical terms and the agreement also provided for the sale of the units. On his evidence, Mr Pritchard was well familiar with settling guarantees for his clients. He accepted that the principles concerning guarantees which came into operation and on which the Court of Appeal's judgment later turned were well known and that it was his responsibility to give them consideration (see Teachers Health Investments Pty Ltd v Julian [2001] NSWSC 231; ANZ ConvR 449 at [57] - [77]). 214 That what resulted from the release given in the 2003 agreement on which the James' interests relied, was not beyond argument is apparent, given that Einstein J reached one view and the Court of Appeal another. 215 So far as this claim is concerned, however, what must be considered is Mr Pritchard's evidence that he had not turned his mind to these questions at all, when acting in relation to the 2003 agreement and earlier when bringing the proceedings for DJZ, after the 2001 deed was entered. The result was that the risk of the James interests having been released from their guarantees was not considered, or addressed. Nor was the problem with the release of the security. There were ways in which the difficulties with the 2003 agreement which came to be further litigated on appeal might have been addressed. They included exercising the power of sale under the 1999 deed and utilising an express covenant not to sue, rather than providing a release. At the least, Mr Pritchard should have alerted DJZ to the risks which could arise from the course taken. 216 While Mr Pritchard alerted DJZ in October 2003 to risks of not tying up various 'loose ends', before finalising the sale, he did not alert it to the much greater risk which the release posed to DJZ's pursuit of the ongoing litigation. In November, other risks were identified and raised, but not these ones. I am satisfied that in these circumstances, the negligence and breach of retainer alleged against Mr Pritchard in relation to the 2003 sale agreement were established. 217 In the face of Mr Pritchard's own evidence, that Mr Wales gave the advice which he did in relation to the 2001 deed and that neither Giles Payne nor Mr McGovern identified the problems on which the Court of Appeal's judgment later turned in relation to the 2003 agreement, does not lead to the conclusion that there was no departure from competent professional practice in relation to the 2003 agreement. For reasons which will become apparent, there were other problems with the approach which Mr McGovern and Giles Payne adopted to the advice which they each gave DJZ. Mr Wales' advice ought to have alerted Mr Pritchard to the necessity to take care with the drafting of the 2003 sale agreement. 218 For Mr Pritchard it was also argued that it was necessary to assess whether, if Mr Pritchard had turned his mind to these matters and had advised upon them, that Mr Palmieri would have accepted his advice, with the result that a different course would have been pursued by DJZ and accepted by the Christian interests (see WCW Pty Ltd v Bolster & Company [1993] FCA 2). 219 In a case where there has been a complete failure to give consideration to obvious difficulties, I am not convinced that such considerations arise in the way argued. Even if they do, it is difficult to see that it may be concluded that readily available means by which the obvious and serious difficulties in question could have been dealt with, without apparent detriment to either DJZ or the Christians, would not have been taken. The approach taken by Mr Palmieri in relation to the August 2003 deed may not be overlooked, but the situation in respect of the 2003 sale agreement was quite a different one. That agreement could readily have been drafted on the basis of a covenant not to sue, rather than by way of a release and the discharge of the security could also have been avoided, by a sale under the 1999 deed. It was not suggested that any adverse consequences would have flown, had that been done. In those circumstances, had advice been given as to the risks posed by the course which was in fact adopted, it seems entirely likely that DJZ and the Christians would have pursued a course which avoided the risk of undermining the litigation, to DJZ's detriment and to the advantage of the James' interests. After all, the Christian interests were also resisting the James' interests in the litigation. 220 The result was that the basis on which the 2003 agreement was drafted, on which the James interests successfully relied, removed the foundation for the case being advanced for DJZ, no matter what the earlier deeds had provided. 221 On the evidence, I am satisfied that the negligence and breach of retainer alleged against Mr Pritchard in relation to the 2003 agreement was established. In the circumstances, a reasonably competent solicitor would have given the consideration which Mr Pritchard conceded he simply failed to give in relation to the matters from which DJZ's loss of the Court of Appeal proceedings later flowed. Such consideration concerned principles and matters with which he was well versed and ought to have considered. Advocate's immunity 222 It is unnecessary to say much about this argument. I cannot accept that the work which Mr Pritchard performed in relation to the two deeds and the sale agreement falls within the scope of the advocate's immunity at common law. 223 The question is governed by authorities such as Giannarelli v Wraith [1988] HCA 52; (1988) 165 CLR 543 at 559-60; D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12; (2005) 223 CLR 1. The immunity extends to solicitors. While the immunity does not cease at the court room door and extends to preparatory activity, it does not extend beyond work which leads to decisions affecting the conduct of the case in Court. The work undertaken by Mr Pritchard in relation to the deeds and the 2003 sale agreement was not work of that kind. 224 The documents gave effect to commercial arrangements necessitated by the business situation in which DJZ found itself and what Mr Palmieri perceived to be in his commercial interests, as well as those of DJZ. The 1999 deed dealt with the establishment of the real estate venture in which DJZ invested. The 2001 deed dealt with the commercial arrangements entered by a number of parties to the 1999 deed, including DJZ, in order to deal with the situation in which the real estate business became mired, which resulted in Mr James' expulsion from the business. It varied the 1999 deed. There was then no litigation on foot, but the deed limited the liability of various of the parties to the 1999 deed, litigation against Mr James then being contemplated. That litigation was commenced in August 2001, but the work undertaken in connection with the February 2001 deed, was plainly not concerned with the conduct of the litigation intended to be pursued against Mr James. 225 The August 2003 deed and the November 2003 sale agreement resulted from Mr Palmieri's ongoing pursuit of his concern to protect his commercial interests in the joint venture properties, from being used by Mr James to settle the litigation, as well as the management of the ongoing commercial problems which the business was continuing to face. 226 No convincing basis was established for concluding that the advocate's immunity could extend to the deeds and the sale agreement, in these circumstances. Mr Pritchard's own evidence, that he gave no consideration to what impact these transactions and the documents which gave effect to them, might have on the pursuit of the litigation, does not support a claim for advocate's immunity. The evidence that counsel briefed for DJZ in the litigation was also never consulted about what impact the 2003 agreement might have on the litigation, further confirms this conclusion. The impact of the terms of the deeds and the agreement on the litigation was unintended and not the result of decisions affecting the conduct of the case. Section 5O of the Civil Liability Act 227 The section provides: 5O Standard of care for professionals (1) A person practising a profession (a professional) does not incur a liability in negligence arising from the provision of a professional service if it is established that the professional acted in a manner that (at the time the service was provided) was widely accepted in Australia by peer professional opinion as competent professional practice. (2) However, peer professional opinion cannot be relied on for the purposes of this section if the court considers that the opinion is irrational. (3) The fact that there are differing peer professional opinions widely accepted in Australia concerning a matter does not prevent any one or more (or all) of those opinions being relied on for the purposes of this section. (4) Peer professional opinion does not have to be universally accepted to be considered widely accepted. 228 In Dobler v Halverson [2007] NSWCA 335; (2007) 70 NSWLR 151 the Court of Appeal held that the section provides a defence and does not define the content of the duty of care of a professional. 229 There is no onus on the plaintiff to adduce expert evidence to address the matters dealt with in the section. Mr Pritchard did not call such evidence. It is difficult to see that it would have helped him. This defence was not established Causal Connection - s 5D of the Civil Liability Act 230 It was argued for Mr Pritchard that any loss which DJZ suffered had no causal connection with any breach of duty on Mr Pritchard's part, for various reasons, including that the 2003 sale agreement was not the cause of DJZ's losses. 231 For reasons which follow, I am satisfied that the losses established were reasonably foreseeable and caused by Mr Pritchard's breach of his duty to DJZ . The February 2001 Deed 232 Given the views which I earlier expressed, it may not be accepted that the true cause of the losses which DJZ seeks to recover, rested on the February 2001 deed. While I have concluded that Mr Pritchard was not then acting for DJZ, he did have a duty to advise it in relation to any difficulties which it might create, once instructed to advise and act for it in relation to the Supreme Court proceedings. 233 Notwithstanding Mr Pritchard's failures in that respect, the 2001 deed was not the basis upon which the Court of Appeal reached its conclusions. It upheld Mrs James' appeal because of the views to which it came in relation to the 2003 sale agreement. That may not be overlooked, reflecting as it does the way in which Mrs James' case was conducted. Why reliance on the 2001 deed was not pressed, is not apparent. Perhaps there were concerns as to its efficacy or effect, given that it was a deed entered by only some of the parties to the 1999 deed, which purported to vary the rights and liabilities of the parties to that deed. It is unnecessary to speculate as to the reason for the approach adopted, or what might have resulted, had a different course been pursued. 234 It follows that the view that it was the drafting of the February 2001 deed now urged for Mr Pritchard, that was the cause of DJZ's loss, may not be accepted. The 2003 agreement was the cause of the loss in issue, that being what the Court of Appeal's judgment turned on. As the High Court discussed in Tabet v Gett [2010] HCA 12; (2010) 265 ALR 227 at [66] and [69]: "66 For the purposes of the law of negligence, "damage" refers to some difference to the plaintiff. The difference must be detrimental. What must be demonstrated (in the sense that the tribunal of fact must be persuaded that it is more probable than not) is that a difference has been brought about and that the defendant's negligence was a cause of that difference. The comparison invoked by reference to "difference" is between the relevant state of affairs as they existed after the negligent act or omission, and the state of affairs that would have existed had the negligent act or omission not occurred ( Gregg v Scott [2005] 2 AC 176 at 181-182 [9]). 69 It may be that other cases in which it might be said that, as a result of medical negligence, a patient has lost "the chance of a better medical outcome" (for example, a diminution in life expectancy) differ from the present case in significant respects. These are not matters that need be further examined in this case. It need only be observed that the language of loss of chance should not be permitted to obscure the need to identify whether a plaintiff has proved that the defendant's negligence was more probably than not a cause of damage (in the sense of detrimental difference). The language of possibilities (language that underlies the notion of loss of chance) should not be permitted to obscure the need to consider whether the possible adverse outcome has in fact come home, or will more probably than not do so." 235 In this case Mrs James successfully relied on the 2003 agreement to overturn the conclusions reached by Einstein J. In Bennett v Minister of Community Welfare [1992] HCA 27; (1992) 176 CLR 408, McHugh J discussed the principle that when separate and independent acts of negligence directly cause injury, each may be sued upon. 236 Here Mr Pritchard was negligent in the work undertaken for DJZ in respect of the 2003 agreement, irrespective of any earlier negligence. It was the conclusions reached on the matters argued on appeal in respect of that agreement, which led to the loss of the orders made by Einstein J. That this was the cause of the damage now pursued by DJZ, so far as Mr Pritchard was concerned, must follow. Rejection of the settlement 237 In December 2003, Mr Alexis advised DJZ of the difficulties which arose from the 2001 Deed and the 2003 sale agreement, as well as other problems in the proceedings. He advised that the matter should be settled. 238 By that time Mr Palmieri had long been taking advice from Giles Payne, because he was anxious to obtain a basis upon which he could protect his interests in the joint venture properties. He did not want an outcome whereby the other investors obtained an interest in the joint venture properties, as a consequence of a settlement of the proceedings with Mr James. 239 Initially he sought to achieve this by pursuit of a misrepresentation case. He was anxious to ensure that Mr James not use his interest in those properties, in negotiations to settle DJZ's Supreme Court proceedings. On Mr Wilson's evidence, if DJZ had such a claim, so did the other investors, including him, but it appears that the existence of such a claim was not ever raised by Mr Palmieri with Mr Pritchard, who was acting for all of the investors, including DJZ, at least until after DJZ had acquired their interests in the litigation. It was after this time that Mr Pritchard raised the possibility of a misrepresentation case with Mr Palmieri, after Mr Alexis' December 2003 advice that the Supreme Court proceedings should be settled. That possibility was one raised with Mr Pritchard by Mr Fitzpatrick, who then had day to day carriage of the matter. It was not a claim for which Mr Pritchard could see a ready basis. Mr Alexis advised against the pursuit of such a claim, which in his view was inconsistent with the case being advanced by DJZ in the proceedings which were then part heard and to have no foundation, given the statements Mr Palmieri and others had made to Giles Payne about such representations, with which he was then briefed. 240 By then, Mr Palmieri had taken steps to ensure that DJZ had control of the proceedings. Thereby, the risk that he was concerned about, other investors obtaining a share of the joint venture properties under a settlement with the James' interests, had been removed. Mr Palmieri had since pursued a settlement of the proceedings with the aim that Mr James would agree to relinquish his interest in the joint venture properties, but without success. 241 That interest had arisen in circumstances, on Mr Palmieri's evidence, where Mr James, a real estate agent, had introduced him to the joint venture properties. In return for that introduction, he agreed to give Mr James an interest in the properties, which was never disclosed to the vendors of the properties. 242 The settlement negotiations which Mr Alexis pursued on Mr Palmieri's instructions were put on a basis concerned to ensure that Mr James' interest in the joint venture properties was acquired. They foundered over how much Mr Palmieri was prepared to pay, in order to acquire that interest. Mr James was then seeking $1.4 million. 243 Mr Palmieri had earlier been advised by Giles Payne and Mr McGovern, before he entered the 2003 sale agreement, that the claims being advanced in the Supreme Court proceedings were reasonably arguable. They had not identified that the 2001 deed posed any difficulty. He again sought advice from Giles Payne in January 2004, after rejecting the settlement Mr Alexis had recommended, given the problems he identified that the 2003 sale agreement and the 2001 deed could cause for the case DJZ was advancing. By then the James' interests were relying on those documents in their case. 244 Mr Palmieri was then still concerned about the joint venture properties. He did not wish to agree to any settlement, unless Mr James agreed to relinquish his interest in those properties. He sought advice from Giles Payne, but did not apparently provide them with a copy of Mr Alexis' December 2003 written advice. Ms Becker was, however, aware of the views expressed. 245 Giles Payne also gave written advice in January 2004, over a wide range of matters, including the pursuit of the Supreme Court proceedings and their settlement. The problem identified by Mr Alexis with the 2003 sale agreement was not dealt with by Giles Payne. It had refused to act in relation to that transaction, but was aware that Mr Pritchard had acted and that the sale had proceeded. It had also been asked to advise on a draft of the agreement, but had also declined to provide such advice. 246 After reviewing parts of the transcript of the hearing before Einstein J, the matter then being part heard, Giles Payne gave a guarded advice that the matter appeared to be progressing reasonably and along expected lines, given what they had been instructed with, but that there were various risks; that considerable expense incurred might be thrown away, if the matter was not settled on terms acceptable to Mr Palmieri, as Mr James was suggesting; and that as the bulk of the costs had been incurred, Mr Palmieri might as well continue, given that it appeared that Mr James was not prepared to accept his minimum settlement conditions. While not stated in the letter, these conditions related to Mr James giving up his interest in the joint venture property. 247 DJZ proceeded and succeeded before Einstein J. A judgment for $647,355 was made against Mr James in relation to misappropriation of monies, as well as other orders and costs. In May 2004, Mr James was made bankrupt. An appeal brought from the decision was not pursued by Mr James or by his trustee in bankruptcy. 248 An appeal was pursued by Mrs James and the James corporate entity. In May 2004, Mr Pritchard gave DJZ written advice as to Mr Alexis' views of the risk of the appeal proceedings and the claim which it could bring against him in negligence. DJZ continued to instruct Mr Pritchard. 249 Mrs James succeeded before the Court of Appeal. The judgment against Mr James was not disturbed. It was in January 2005 that further advice was sought from Giles Payne. It advised that it was not in a position to give the advice sought in the available timeframe, given that settlement was then imminent with Mrs James and other parties. Giles Payne noted Mr Alexis' advice that this might result in DJZ not being able to pursue any claim against Mr Pritchard. 250 Against this background, it is apparent that had Mr Alexis' December 2003 advice been accepted, he having identified the problem which the 2003 agreement posed, the further costs of the litigation and more importantly, the cost of the appeal proceedings, would have been avoided. They are a large part of the losses which DJZ now pursues. 251 Mr Palmieri rejected that advice, weighing in the balance his concern over his interest in the joint venture properties. He wanted to utilise the proceedings DJZ had brought, as a lever in the negotiations with Mr James over these properties, the James' interests having commenced proceedings over that interest. Mr Palmieri then also sought advice from Giles Payne about settlement. Its advice differed from that given by Mr Alexis. Plainly, Mr Palmieri made a commercial decision about these matters, given the legal advice which he had received from both Mr Alexis and Giles Payne. That his interests and those of DJZ did not coincide at this point, is evident. 252 That situation in large part arose as the consequence of the 2003 agreement itself. That Mr Pritchard had not turned his mind at all to the release of the guarantee provided by the 1999 deed and the discharge of the security, is what resulted in the 2003 agreement being drafted as it was, with the conclusion which the Court of Appeal eventually reached, as to its effect upon the rights and liabilities created by the 1999 deed. 253 That having occurred, may it now be concluded that Mr Palmieri not accepting Mr Alexis' advice, but choosing to pursue the litigation, broke the chain of causation, as was argued for Mr Pritchard? 254 Had Mr Pritchard not been negligent, as he was in the drafting of the deed, the difficulty on which the Court of Appeal's decision turned would never have arisen. That problem was identified and DJZ was advised to settle, but for reasons connected with other commercial interests and having regard to the advice which he received from Giles Payne, Mr Palmieri did not settle the proceedings as Mr Alexis advised. That, in my view, cannot break the chain of causation as was argued. At that time Mr Palmieri was also concerned with the other claims being pursued in the proceedings, which included Mr James' substantial misappropriation from the business. His evidence when cross examined was that he did not know what he would have done had Gyles Payne also advised him to settle in January 2004. These are all matters which go to contributory negligence and the matters argued on the cross claim. Inherent risk and contributory negligence – s 5I and s 5R of the Civil Liability Act 255 On Mr Pritchard's case, he was not liable for the materialisation of the inherent risks which DJZ took, when rejecting repeated advice that the litigation should be settled and that DJZ had contributed to its own loss by the course which Mr Palmieri determined that it should pursue. The section provides: " 5I No liability for materialisation of inherent risk (1) A person is not liable in negligence for harm suffered by another person as a result of the materialisation of an inherent risk. (2) An inherent risk is a risk of something occurring that cannot be avoided by the exercise of reasonable care and skill. (3) This section does not operate to exclude liability in connection with a duty to warn of a risk." 256 There had also been contributory negligence, the Act providing in this respect: " 5R Standard of contributory negligence (1) The principles that are applicable in determining whether a person has been negligent also apply in determining whether the person who suffered harm has been contributory negligent in failing to take precautions against the risk of that harm. (2) For that purpose: (a) the standard of care required of the person who suffered harm is that of a reasonable person in the position of that person, and (b) the matter is to be determined on the basis of what that person knew or ought to have known at the time." 257 Given the rejection of Mr Alexis' advice as to the settlement of the matter, it seems to me that Mr Pritchard's arguments in relation to the contributory negligence must be accepted as having force. This was not however, a situation to which the provisions of s 5I were directed. No inherent risk of the kind provided in s 5I(2) was here established. 258 Given Mr Palmieri's ongoing instructions to Giles Payne as to the commercial concerns which were driving DJZ's rejection of Mr Alexis' advice as to settlement of the proceedings and the terms on which it would entertain any settlement, which are discussed further below, it is apparent that considerations other than DJZ's position and its interests in the pursuit of the 1999 guarantees, were motivating the course which DJZ pursued. There was then a clear conflict between Mr Palmieri's other interests and those of DJZ. DJZ preferred Mr Palmieri's interests and those of his other entities, over its own. 259 DJZ's pursuit of the Supreme Court proceedings, was used as leverage in Mr Palmieri's ongoing pursuit of Mr James' interests in the joint venture properties. This unquestionably contributed to the loss which DJZ eventually suffered as the result of the Court of Appeal's decision. The settlement which was entered by DJZ in 2005, after the Court of Appeal's decision, confirms that conclusion. 260 I am satisfied, in accordance with s 5R of the Civil Liability Act, that a person in DJZ's position, acting reasonably in the face of Mr Alexis' advice and knowing the difficulty which had arisen as the result of the 2001 deed and the 2003 agreement, would have accepted the advice given. Thereby the opportunity to pursue the proceedings would have been lost, but the costs incurred in the further pursuit of the litigation would have been avoided. 261 Had Mr Alexis' advice been accepted, DJZ would have avoided a very substantial part of the losses here pursued. The impact of Giles Payne's advice may not be overlooked, but nor may DJZ's pursuit of Mr Palmieri's other interests, at the expense of its own. An assessment of DJZ's contribution requires a comparison to be made of the relative importance of the acts of the parties in causing the damage (see Podrebersek v Australian Iron & Steel Pty Ltd [1985] HCA 34; (1985) 54 ALR 529). DJZ contributed to the losses suffered after 18 December 2003, as the result of the costs incurred in the pursuit of the litigation. In accordance with s 35 of the Civil Liability Act, this must result in a reduction of that damage by 30%. This figure has regard to DJZ's negligence, as well as to the conclusions I have reached in relation to Mr Pritchard's and Giles Payne's contribution to the loss to which I will turn. Enforcement 262 DJZ accepted that it was obliged to show that it had a prospect of enforcing the verdict which it had obtained before Einstein J (Wilkinson v Daley [2004] NSWCA 331 at [21]). Mr James went into bankruptcy shortly after the judgment was given. The evidence did not show any prospects of recovery from him. 263 It was argued for DJZ that it would also be inferred from the evidence, that there were no prospects of enforcement against Mrs James. Mr Pritchard's case was that because there was no evidence as to property valuations at the relevant time, or of the amount of any mortgages over these properties, it could not be concluded that there would have been recovery. 264 I am unable to accept this argument. 265 In Murphy v Miller [1998] NSWCA 150, it was accepted that the broad brush approach discussed in Nikolaou v Papsavas Phillips & Co [1984] HCA 11; (1989) 166 CLR 394 was an appropriate approach to adopt to the resolution of the respondent's chances of recovery of damages. On the evidence in this case, adopting that approach, I am satisfied that it must be accepted that that there were real prospects of recovery from Mrs James. 266 The evidence established that Mrs James was a woman of some substance. She was a natural person, who had never been bankrupt. While there were liabilities to consider, she also had a 50% interest in a property at Rose Bay with Mr James, which was sold in January 2002 for over $3 million. She was one of two shareholders in a company which owned a unit sold in 2004 for $497,000. She also had a four sevenths interest in other property in the State acquired in 1994 and sold in 2009 for $725,000. This evidence does not leave open the conclusion urged. Did DJZ make any payments? 267 Mr Pritchard's case was that his fees and disbursements were not paid by DJZ, nor did it pay the sum agreed in the eventual settlement of the Court of Appeal proceedings. Palmieri Developments Pty Limited later paid $400,000 of the payment agreed under the settlement in favour of Mrs James and Enzo paid the other $50,000. They were not parties to the settlement. There was no evidence of any loan agreement between Palmieri's Developments Pty Limited, Enzo and DJZ in relation to these fees. It followed that DJZ had suffered no losses, because the litigation was always funded by Mr Palmieri's other companies. 268 I am unable to accept the argument advanced. 269 Under the costs' agreement the costs liability was that of DJZ. Mr Palmieri's evidence was that costs had been paid by Palmieri's Developments Pty Limited because DJZ itself had no assets or income. The only asset which DJZ had was its interest in the litigation. It had always been his practice to draw funds from one of his companies, for the benefit of his other companies. He never discussed these borrowings with his accountant and they were not reflected in the relevant corporate records, but he had always intended that if DJZ recovered the moneys claimed in the Supreme Court proceedings, they would be used to repay the other companies. 270 The evidence showed that while money used to pay what was agreed in the settlement was borrowed by other of Mr Palmieri's companies from third parties, the funds were then transferred to DJZ 's cash management account. The $450,000 was then paid by DJZ by bank cheque. 271 I accept that in these circumstances, where Mr Palmieri was the controlling mind of all three companies and he and his wife the directors and only shareholders, it must be concluded that there was an implied loan between the corporate entitles (see Young v Commissioner of Taxation [2010] NSWSC 288.) 272 I am satisfied that it must be inferred that the payments made resulted from an informal agreement or arrangement between the companies, Mr Palmieri being the controlling mind of each of them. The evidence in the case of the settlement moneys is stronger than that in relation to Mr Pritchard's fees, but the evidence permits the conclusion urged, namely that by his conduct Mr Palmieri intended that there be a loan between the companies. While the costs were paid direct by Palmieri's Developments Pty Limited, rather than first being put into the hands of DJZ, that it was intended that the money be loaned rather than gifted to DJZ must be accepted in the face of Mr Palmieri's evidence. 273 The result is that this part of Mr Pritchard's case must fail. The 2005 settlement 274 Whether the settlement reached in December 2005 was reasonable, was in issue. It was argued for Mr Pritchard that the result of the settlement arrived at was that DJZ could not prove that it had incurred any loss in relation to the orders made in favour of Mrs James in the Court of Appeal proceedings. The result was that no order could be made in its favour. 275 Relevant to a resolution of this controversy was evidence called from Mr Hardman, a legal costs consultant and managing director of Hardman's Pty Limited, trading as Australian Legal Costs. He provided a report in relation to the settlement, having been asked by DJZ to give his opinions as to whether the settlement represented a fair and reasonable compromise of the costs which DJZ had been ordered to pay pursuant to the Court of Appeal's orders; and what proportion of Mrs James' costs could reasonably be said to relate to DJZ's liability under the Court of Appeals' orders. No other evidence was led by DJZ to explain the reasonableness of the compromise reached (see the High Court's approach in Unity Insurance v Rocco Pezzano [1998] HCA 38; (1988) 192 CLR 603). 276 It was argued for Mr Pritchard that Mr Palmieri was a man who recklessly rejected legal advice when he believed that it was in his commercial interests to do so. He had earlier rejected advice to settle the proceedings and also rejected Mr Alexis' December 2003 advice in relation to the problems created with the 2003 sale agreement, preferring that of Giles Payne and favouring the interests of Palmieri's Developments Pty Limited and Enzo in the joint venture properties, over those of DJZ. 277 Under the final settlement reached after the Court of Appeal's judgment and the commencement of the litigation over the joint venture properties, DJZ was required to make a payment to the James' interests in the sum of $450,000. In return the Palmieri interests received a release in relation to the costs of the Supreme Court and Court of Appeal proceedings ordered in favour of Mrs James and the $189,326, plus interest ordered to be paid to New South Head Road Nominees by it and WIT; the settlement of the proceedings brought by the James' interests in relation to the joint venture properties; and a release of any claimed interest in the joint venture properties. As a part of this agreement, Mr James was also released from bankruptcy, he owing a debt in relation to the orders made against him by Einstein J. His trustee was also a party to the agreement. 278 Mr Hardman's report noted that total costs of some $713,325 had been incurred by Mrs James. Mr Hardman had analysed what the costs sought to be recovered comprised; what charges were made; the nature of the work undertaken and the disbursements incurred, including counsels' and accounting fees. Mr Hardman assessed that some $419,850 of the 2005 costs' settlement figure related to costs recoverable by Mrs James under the Court of Appeal's orders. It became apparent from Mr Hardman's cross examination that this figure included costs incurred by Mr James before Einstein J. 279 In Mr Hardman's assessment the settlement represented a fair and reasonable compromise of the costs which DJZ was liable to pay under the Court of Appeal's orders and that the sum of $419,850 related to its liabilities under those orders. 280 I am satisfied that Mr Pritchard's case as to the problems with Mr Hardman's opinions providing a foundation for any conclusions to be reached as to the reasonableness of the settlement, must be accepted. 281 In cross examination it emerged that in coming to his conclusions, Mr Hardman had not considered a number of relevant matters, including the effect of the judgment and orders made by Einstein J against Mr James. They were not overturned. Mr Hardman had been instructed with the accounts and legal fees rendered to the James' interests in the Supreme Court proceedings and the Court of Appeal proceedings. He had proceeded on the basis that a part of them would have been recoverable on a party/party basis, under the orders made by Einstein J, which had been overturned by the Court of Appeal in respect of Mrs James' appeal. He had not considered however, that the costs order made against Mr James by Einstein J, had not been disturbed. 282 Mr Hardman applied a 15% deduction from the James' solicitor/client costs to arrive at a party/party figure. He explained that in order to determine what cost assessment would be made by an assessor in such a situation in relation to Mr James' costs, depended on the circumstances. This would require consideration of the issues and the pleadings, to determine what costs were incurred by which parties in the first instance proceedings. Such an exercise was not attempted. 283 It also emerged that Mr Hardman had been provided with the 2005 deed of settlement, but not the pleadings in the Supreme Court proceedings in relation to the joint venture property. The settlement also comprised the settlement of those proceedings, as well as the proceedings before Einstein J and the Court of Appeal. Mr Hardman explained that he had apportioned the costs between those two sets of proceedings. He had not attempted to analyse whether the settlement reflected a reasonable compromise of the issues raised in the joint venture proceedings. 284 It is unquestionable that in considering what the 2005 settlement reflected, the entirety of what the settlement was directed at may not be overlooked. Amongst other things, the settlement achieved the result that Mr James was released from his bankruptcy, another matter not considered by Mr Hardman. In the circumstances, there is simply no way in which any meaningful assessment can be attempted of what Mr James, and perhaps Mrs James, were prepared to give up, in order to achieve Mr James' release from bankruptcy. 285 The end result of the settlement was that Mr Palmieri achieved the aim which had long been driving his ongoing pursuit of the litigation in which DJZ was involved, namely acquiring the James' interest in the joint venture properties. 286 There was no evidence led to explain what had occurred in the settlement negotiations, or what had driven the decisions made by DJZ or Mr Palmieri. On balance, on the material in evidence the settlement appears to have been a reasonable one, overall, from the point of view of Mr Palmieri and his various corporate interests. Whether what was achieved was reasonable from DJZ's perspective, is debatable. It may be that the true effect of what was agreed was that the settlement achieved limited benefit for DJZ. It alone, after all, paid the $450,000. In return it was relieved of payment of Mrs James' costs. The $189,326, plus interest ordered to be paid to New South Head Road Nominees, was also settled, although it was DJZ and WIT which had liability for that sum. DJZ's payment thus achieved substantial befits for Mr Palmieri's other interests, particularly in relation to the joint venture properties, for which they made no contribution. 287 The value of the joint venture properties, or Mr James' share of them, was not established. What evidence there was, suggested that their value was substantial. The James' interest claimed in a mediation position paper, claimed that the value of their interests were some $2,806,000. Despite this, on Mr Palmieri's own evidence, the entire settlement was funded by DJZ alone and not by himself or his other corporate entities. I am unable to conclude that the settlement achieved was reasonable from DJZ's perspective. What appears to have happened is that DJZ funded the entire settlement, substantially for the benefit of Mr Palmieri and his other interests and at the cost of its own, given what Mr James owed. The Cross claims and DJZ's case against Giles Payne and Mr McGovern 288 For reasons which follow, I have concluded that Giles Payne were joint tortfeasors within the meaning of s 5 of the Law Reform (Miscellaneous Provision) Act 1946 and concurrent wrongdoers within the meaning of s 34 of the Civil Liability Act. 289 I am satisfied that certain parts of the losses which DJZ suffered were reasonably foreseeable and caused by Giles Payne breaching the duty which it owed DJZ. Accordingly, Giles Payne must be found liable, by way of contribution to certain of the damages awarded in favour of DJZ. Section 35 of the Civil Liability Act requires that liability be limited to an amount which reflects each concurrent wrongdoer's responsibility for the damage suffered. Any loss or damage for which DJZ was contributorily negligent, must be excluded (s 35(3)(a)). 290 DJZ's case against Giles Payne was also made out. While Giles Payne relied on DJZ's case, that it had only joined it as a defendant in the proceedings, to deal with the eventuality that Mr Pritchard succeeded on his cross claim and did not itself allege that its damages resulted from Giles Payne's negligence. Given what the evidence revealed as to matters of which DJZ could not have been aware, that position is of no real assistance to Giles Payne, in defending the cases brought against it. 291 While I have concluded that Mr McGovern also breached his duty of care to DJZ, I have came to a different conclusion as to his liability for any of DJZ's damages, with the result that no order may be made against him. Giles Payne 292 It was Giles Payne's case that when first instructed by Mr Palmieri in January 2002 to advise in relation to a misleading and deceptive conduct claim, he expressly instructed that he did not want their work to interfere with the proceedings already on foot. The sole focus of Giles Payne's work when initially instructed was the investigation and pursuit of a potential misleading and deceptive conduct claim. Giles Payne were not instructed to act for DJZ in the Supreme Court proceedings and Mr Palmieri never sought a second opinion on the conduct of the proceedings. 293 On the evidence, the case so advanced may not be accepted. 294 The proceedings had been commenced after Mr Pritchard obtained advice from Mr Wales in July 2001 as to the question of the enforceability of the 1999 deed, given the 2001 deed. DJZ was a plaintiff in the proceedings and Mr Palmieri a cross defendant. It was Mr Gilles' evidence that from the outset he regarded the structure of the business to be complex, involving guarantees by the James and Christian interests for certain debts owed, as well as the sale and transfer of a number of units, since the establishment of the venture. 295 Mr Gilles first obtained relevant documents, including Mr Wales' brief, from Mr Pritchard in March 2002. Mr Palmieri obtained other documents from Dennis Bowles, solicitors for the Christian interests. The February 2001 deed and Mr Wales' written advice about that deed were not amongst those documents. In April, Mr Gilles advised Mr Palmieri that he thought a misleading and deceptive conduct case had reasonable prospects of success. Mr Palmieri instructed that he wanted to proceed as soon as possible. They met on 30 April and discussed obtaining statements from witnesses. Mr Palmieri gave instructions to brief counsel and Mr Gilles arranged to inspect Mr Pritchard's and Mr Bowles' files. Mr Palmieri provided a number of draft statements in May, which Mr Gilles regarded as being basic and requiring amplification. Other material concerning the negotiations was obtained from Mr Osterberg. 296 When Mr Gilles inspected Mr Pritchard's file, he obtained an unexecuted copy of the 2001 deed. Mr Pritchard advised that the deed had been entered. Mr Gilles also received instructions that the deed had been executed, but he never obtained an executed copy. In cross examination Ms Becker, a young solicitor who later came to have substantial carriage of the matter, also confirmed that she had been instructed by Mr Palmieri that the deed had been signed. 297 Mr Gilles' evidence was that he did not review the 2001 deed in any depth, because it did not appear to affect any right of Mr Palmieri to sue Mr James in respect of the misrepresentations which induced him to invest in the business. In cross examination he agreed, however, that on reading the deed he appreciated that it varied rights and liabilities under the 1999 deed, releasing the Christian interests from their guarantees. His evidence was that the importance of the deed, from his perspective, was that it allowed Mr Christian to assist in the case Mr Palmieri wished to bring. He did not give any consideration to the legal consequences of the deed, but he assumed that the unexecuted document which he briefed to Mr McGovern, was the document which was executed, although he was not certain. 298 Giles Payne never obtained an executed copy of the 2001 deed until after these proceedings were commenced. For his part, Mr Gilles denied that if he had any doubt as to whether or not the 2001 deed had been executed and was binding, that he ought to have obtained a copy of it. 299 It is apparent from the evidence of Mr Gilles and Ms Becker, that if there was any doubt as to the terms of the 2001 deed, a solicitor acting competently would have obtained a copy of the executed deed, given that by its terms, it varied the 1999 deed. The 1999 deed lay at the heart of the case being pursued in the Supreme Court proceedings. It was also relevant to the misrepresentation case which Mr Palmieri wanted to pursue, particularly in relation to the question of damages. In advising Mr Palmieri, it is unquestionable that consideration had to be given to the question of whether, and how, the 2001 deed varied the 1999 deed. 300 Mr Gilles and other employed solicitors worked on settling statements with Mr Palmieri, Mr Wilson, Mr Christian and Mr Osterberg and preparing counsel's brief. Mr McGovern was briefed to advise in December 2002. His instructions were to: "(1) Consider all statements and all supporting documentation; (2) Advise on the possibilities of success in an action against the James family or any of them for misleading or deceptive conduct pursuant to the Trade Practices Act; (3) Advise on the prospects of success of and against the James family under any other laws in general; (4) If Counsel considers that our client has reasonable prospects of success would Counsel please draft the appropriate originating process." 301 The brief included the pleadings in the Supreme Court proceedings; Mr Wales' brief from Mr Pritchard; and the undated and unexecuted copy of the 2001 deed, which Mr Gilles had obtained from Mr Pritchard. In Mr Pritchard's observations to Mr Wales, a concern about the impact of the 2001 deed was raised and advice sought. 302 In January 2003, Mr Palmieri raised his concern about the possibility of losing the joint venture properties which he shared with Mr James, in any settlement of the Supreme Court proceedings. Mr Gilles discussed the effect of Mr James' bankruptcy with Mr McGovern in February and they met in conference on 28 February and then with Mr Palmieri on 3 March. 303 By March 2003 it was known that it was Mr Alexis' advice that the Supreme Court proceedings should be settled on the basis that each side should bear their own costs. The evidence was that at this time Mr Palmieri's paramount concern was to protect his interests in the joint venture properties. An offer of settlement on a walk away basis was discussed at the 3 March meeting. Mr Palmieri had rejected that offer because of his concerns about the joint venture property. 304 Mr Gilles had another conference with Mr McGovern and Mr Palmieri on 21 March, also attended by Ms Becker. Mr McGovern provided written advice in March and April 2003. His initial advice was that DJZ might have a misrepresentation claim; that it required further investigation; and that it should be pursued in the proceedings already on foot. He also advised that DJZ should be separately represented in those proceedings. 305 Ms Becker's evidence was that at this time settlement negotiations were still on foot and that Mr Palmieri then sought advice as to how any settlement would impact on the joint venture properties. Mr Palmieri was DJZ's controlling mind. Ms Becker's evidence was that for practical purposes, no distinction was drawn between them, although it was kept in mind that a conflict of interest might arise between them, as well as with the other plaintiffs in the proceedings. 306 While Ms Becker's evidence was that no actual conflict had arisen to this point between DJZ and other investors, by letter of 25 March, Giles Payne advised that DJZ's interests were coming into direct conflict with those of the other investors and required separate representation in relation to both the proceeding and settlement negotiations with the James' interests. 307 Mr Gilles' evidence that Mr Palmieri did not respond, or provide the instructions sought, may not be accepted. Those instructions, to act for DJZ in the Supreme Court proceedings, were given by Mr Palmieri in writing and Ms Becker, who by then had primary conduct of the matter, acted to implement those instructions. 308 Mr Palmieri's instructions to Giles Payne then were that he wanted to recover what he had invested in the real estate business and he did not want to lose the joint venture properties to the other investors, in any settlement of the Supreme Court proceedings. There was also consideration given to whether the SRUT was overvalued, a matter about which DJZ's interests and that of other investors were thought to potentially diverge. 309 The nature of Giles Payne's retainer altered when instructed to represent DJZ in the proceedings. Giles Payne took various steps in pursuit of the new instructions it had received to represent DJZ in the proceedings, but finally never entered an appearance, because the nature of its retainer then altered again. 310 Mr McGovern was briefed with further documents in relation to the 2001 proceedings. Ms Becker's evidence was that a forensic accountant's report was obtained on behalf of the investors, which addressed the value of the debt owed to them by the James and Christian interests. She understood that partly as a result of this report, Mr McGovern formed the view that a claim in respect of the over inflated value of the units, was in reality a part of the Trade Practice Act 1974 (Cth) claims and whether or not there was misleading and deceptive conduct, was tied up with the question of the valuation the units. 311 Mr McGovern was then briefed to draft documentation necessary for an application for DJZ to be separately represented and to pursue misleading and deceptive conduct claims. There was another conference on 15 April, which Mr Gilles also attended. Afterwards Mr McGovern advised in writing, amongst other things: "The present Supreme Court proceedings seek to obtain orders in reliance upon the guarantee and indemnity obligations contained in the deed. In conference Mr Palmieri indicated that if the two bank debts of $1,040,000 and $300,00 payable to Macquarie Bank had been honoured by James Christian Pty Ltd and in default by the indemnifying parties, DJZ would had had [sic] no complaint. In fact the present proceedings in substance seek orders requiring the discharge of those two debts and require the bringing into account of monies fraudulently misappropriated from Chris Burke Real Estate Pty Ltd [sic], bank interest and reimbursement of monies paid to Macquarie Bank under the loans that should have been paid by the guarantor or the indemnifying parties. So understood it seems to me that the present Supreme Court proceedings, relying as they do upon the deed of 1 July 1999, offer the most reasonable prospect of being able to secure the reasonably arguable claims of Surf Road Nominees Pty Ltd and the investors. Essentially the deed of 1 July 1999 was intended to govern the relationship between the parties and to provide a mechanism for creating rights of guarantee and indemnity. Although there is some suggestion that the investors believe that they were guaranteed a monthly income of $2,000 by way of distribution from the Unit Trust, the terms of the Trust Deed do not enable that to be said to be a contractual promise. Relief might be available under the Trade Practices Act or the Fair Trading Act for misleading or deceptive conduct, but the usual rule is that the damages recoverable are 'detriment' damages. I other words one needs to ascertain how much worse off the investors were by reason of acquiring the units on the basis of the representation. That in turn would involve an analysis of whether or not the investors paid too much for the units in the Unit Trust. That would involve accounting and valuation evidence to determine the true value of the units in the Unit Trust on the assumption of actual return for a month rather than the fixed figure of $2,000 per month. I understand that my instructing solicitor will now obtain instructions from DJZ/Mr Palmieri to investigate that aspect of the claim. The other reasonably arguable claims to which I have earlier referred and which derive from the Deed are already before the court. I understand that Mr Palmieri and DJZ wish to obtain separate representation in the Supreme Court proceedings. Both the company and Mr Palmieri have been named as parties either on the claim or the cross claim and they are of course entitled to be separately represented. This may become important in the even that settlement negotiations occur." 312 Ms Becker's evidence was that she understood at this time that the 2001 deed had varied the 1999 deed as to the liabilities of the Christian interests. While she had not seen an executed copy of the 2001 deed, she assumed that it may have been enforceable. She understood that the deed contained a covenant not to sue, but could not remember whether that was a view which had been expressed by either Mr McGovern or Mr Gilles. The 2001 deed was not referred to in Mr McGovern's advice. There was no evidence that Mr McGovern's letter was provided to Mr Palmieri. 313 Ms Becker could not remember herself raising the 2001 deed, with either Mr McGovern or Mr Gilles, at this time. She denied that in considering whether there was any inconsistency between the claimed misrepresentations and the 1999 deed, consideration had to be given to the way in which that deed was amended by the 2001 deed. She explained that this was because no view was ever formed that the version of the 2001 deed which they had was the form of the executed deed. In her view, the subsequent actions of the parties did not have a great significance to the precontract representations. Nor did the 2001 deed seem to be a focus or question in the ongoing proceedings and so, she did not take the deed further. 314 For his part Mr Gilles also appreciated that no reference was made by Mr McGovern to the 2001 deed, but he raised no query about that with Mr McGovern. In cross examination, he accepted that he did not know whether Mr McGovern had considered the deed and agreed that it was possible that he had overlooked it. Mr Gilles denied, however, that a competent solicitor would have ensured that counsel had taken the 2001 deed into consideration in the advice he had given. 315 I am not able to accept Mr Gilles' view. I am satisfied that at a time when Giles Payne had accepted instructions to separately represent DJZ in the proceedings and was actively pursuing those instructions, that a solicitor acting competently would have ensured that the 2001 deed had not been overlooked by counsel advising on the matters dealt with by Mr McGovern in his written advice. Mr McGovern's omission of any reference to the 2001 deed on its face suggested that a deed which had varied the 1999 deed had been overlooked. A solicitor acting competently, having noticed the omission, would have raised it with counsel. 316 Mr Gilles' evidence was that he reviewed the letter and then spoke to Mr Palmieri and that if he had disagreed with anything which Mr McGovern had said, he would first have spoken to him. Mr Gilles' evidence was, nevertheless, that he never considered it to be part of his retainer or duty to reconsider the issues in the Supreme Court proceedings, or to provide any advice on the merits or prospects of success of the claims being there advanced. 317 That evidence revealed the error into which Mr Gilles fell, given the way in which Giles Payne's retainer had altered, from that which it at first had from DJZ and how it then altered further. 318 Ms Becker's evidence was that on about 24 April 2003 she further discussed with Mr McGovern the question of DJZ's separate representation in the proceedings. Mr Gilles then met again with Mr Palmieri and Ms Becker that day, when it was decided that DJZ would not be separately represented in the Supreme Court, but Giles Payne would remain on standby, ready to appear, if the need arose. 319 It was agreed that there was no utility in pursuing separate representation for DJZ, thereby incurring additional costs and duplication of work, with no real advantage, given that Mr Pritchard was still representing the other investors. It was agreed that Giles Payne would keep a watching brief and would provide advice when it was sought by Mr Palmieri. 320 Giles Payne subsequently advised Mr Palmieri on specific issues and developments in the proceedings before Einstein J, when raised by Mr Palmieri. 321 It follows that not only was the 2001 deed relevant to the matters on which Giles Payne was initially instructed to advise, once Giles Payne accepted instructions to act for DJZ in the Supreme Court proceedings, it unquestionably had an obligation to consider the issues being pursued in those proceedings. Later, when accepting a watching brief and providing advice from time to time on issues which arose in those proceedings, Giles Payne also unquestionably had an obligation to consider what was being pursued in the proceedings, in the context of the specific issues about which advice was being sought. All of its advice had to be given in the context of instructions that the 1999 deed had been varied by the 2001 deed, but it appears that consideration to the terms and effect of that deed was never given. 322 Mr Palmieri sought no advice from Giles Payne about the August 2003 deed. It is not necessary to consider it further. 323 In September Mr Palmieri was concerned about the distribution of any proceeds of the proceedings, if they were successful. Ms Becker's evidence was that she then considered that Giles Payne had instructions to protect Mr Palmieri's personal interests, particularly in relation to the joint venture properties. Mr Palmieri subsequently successfully pursued the aquisition of the interests of the other investors in the proceedings. 324 Further advice was given by Giles Payne by letter of 1 October 2003 and on 22 January 2004. One of the issues on which Giles Payne advised was whether a release given by the plaintiff in favour of Mr Christian in the 2001 deed, was binding between Mr James and Mr Christian. Giles Payne still did not have an executed copy of the deed. Ms Becker understood that all parties in the proceedings considered that the release contained in this deed was a covenant not to sue. Despite the advice sought, she did not consider whether the effect of the 2001 deed could be to discharge the James' interests from any of their obligation under the 1999 deed. Nor did Mr Gilles, even though they were aware that from the outset, Mr Pritchard had sought advice from Mr Wales as to a potential difficulty with the deed in DJZ's pursuit of the proceedings. I am satisfied that a solicitor acting competently would have given consideration to this potential difficulty. 325 In October Giles Payne was also instructed to advise on the effect of a cross claim brought by Mr and Mrs James and whether this would result in a reduction of damages in favour of the plaintiffs. It also advised about how any damages award should be distributed between the five plaintiffs. Written advice was given in October, which was settled by Mr Gilles, which advised that: "The Deed of Release between Chris Burke & Co and Michael Christian operates to stop Chris Burke & Co from taking action against Michael Christian but on its face it does not act as a bar to Tass James and/or his family taking action to recover against Michael Christian. There is, however, some case law on the point of joint indemnities which clouds this assumption. If an award of damages is made in your favour, the likelihood is that it would be made against Tass James and/or Janet James. The James' would then be required to pay Chris Burke & Co. Any recovery by Tass against Michael would likely be the subject of a separate and distinct award as between Michael and Tass only. The end result is that any claim Tass may have against Michael should not affect any award made in favour of Chris Burke & Co unless the Deed of Release given by you to Michael Christian and his interests is interpreted otherwise." 326 It was accepted for Giles Payne that even though it was not retained to advise DJZ about all of the matters in respect of which Mr Pritchard was acting, a duty to warn when facts came to their attention, which put them on notice that DJZ's interests were endangered or put at risk, did oblige them to speak, in order to draw DJZ's attention to the concern and the need to obtain further advice (see David v David at [76].) This depended on a real and foreseeable risk that the client will suffer economic loss, if the solicitor does not speak out and the client is vulnerable to suffering the loss, if the solicitor fails to do so. (Hawkins v Clayton [1988] HCA 15; 164 CLR 539; Waimond Pty Ltd v Byrne, Heydon v NRMA Limited (1989) 18 NSWLR 642.) 327 Given that Giles Payne still had no executed version of the 2001 deed and had never considered what impact it might have on the pursuit of DJZ's rights under the 1999 deed, the difficulty with the approach adopted to the advice given in October is apparent. Despite being aware of the potential difficulty with the 2001 deed, raised by Mr Pritchard with Mr Wales, when themselves asked to advise about that deed, the advice Giles Payne gave did not satisfy the obligation to warn DJZ about the potential difficulties which the 2001 deed posed for the ongoing litigation, even when instructed to give advice about the deed itself. Not even the problem on which Mr Wales had advised was adverted to. That Giles Payne ever gave that difficulty any consideration is not apparent. 328 Mr Palmieri also then sought advice on the proposed sale of the business in October 2003. Giles Payne declined to act unless they were provided with the relevant documents. They were not provided and Mr Pritchard was instructed to act. The November 2003 sale agreement eventually resulted. 329 Prior to this, Ms Becker had attended a meeting of Chris Burke & Co Pty Limited directors with Mr Palmieri in October. She met with him beforehand to discuss Mr Palmieri's concern about the joint venture properties and how they might be affected by a dispute which had arisen with Mr Sicuro, one of the other investors, over money he was claiming he was owed. Mr Palmieri was then concerned that if Mr Pritchard was instructed to settle the proceedings, Mr James might use his interest in the properties in the settlement. Ms Becker attended the meeting in order to persuade other investors not to vote against Mr Palmieri. 330 The meeting was heated, described by Ms Becker as having no order and no determination as to which company, trust or entities the meeting related to. Amongst other things, the sale of the business to the Christians was discussed. Ms Becker advised that before any sale, the company's business records needed to be brought up to date. Once that was done, Giles Payne could advise on a sale, but would need to be instructed with all of the documentation. The company's records were then in a state of disarray. Giles Payne finally refused to act because of the state of the company's records. 331 Mr Palmieri then instructed Mr Prichard in relation to the sale. The draft sale agreement was reviewed by Ms Becker at the end of October. After considering the draft, she declined to advise, without the underpinning documentation being provided. The effect of this agreement was what was later relied on by Mr and Mrs James by way of amended defence in the Supreme Court proceedings. 332 Those proceedings were initially heard from 15 to 19 December 2003. Further settlement negotiations pursued during the course of the hearing failed. On 18 December, Mr Alexis and Ms Sainsbury, then acting for DJZ in the litigation, advised about the possible effect of the 2001 deed and the 2003 sale agreement and that Mr Palmieri might have a claim against Mr Pritchard, if a defence by Mr and Mrs James, relying on the agreement succeeded. Mr Pritchard advised Mr Palmieri to seek independent advice. 333 Mr Palmieri consulted Giles Payne. He sought advice about settlement of the proceedings on 12 January. A settlement on the walk away basis offered by Mr James had already been rejected, despite Mr Alexis' advice. 334 Giles Payne were instructed with some parts of the transcript of the hearing, as well as advice Mr Pritchard had obtained from Watkins Tapsell about a possible Trade Practices Act claim. On Ms Becker's evidence, they were aware of Mr Alexis' advice about the problems with the sale agreement and Mr Pritchard's apparent negligence, but were not provided with a copy of Mr Alexis' written advice, which discussed the problems flowing from the 2001 deed and the 2003 sale agreement. Giles Payne had seen a draft of the 2003 sale agreement and had already advised on the 2001 deed. On their instructions, Mr Palmieri's desire to acquire Mr James' interests in the joint venture property, remained his driving concern, in any settlement of the proceedings. 335 Ms Becker's notes show that difficulties caused by either the 2003 sales agreement or the 2001 deed were not discussed at the meeting on 12 January, when she met with Mr Gilles and Mr Palmieri, when the settlement of the proceedings was discussed. It was Ms Becker's evidence that she had not earlier given any detailed consideration to how the 2001 deed might have varied the rights and liabilities of the parties to the 1999 deed, but she agreed in cross examination that she had been asked to review that deed in September 2003, at a time when Mr James had filed a cross claim against Mr Christian. Mr Palmieri always referred to this deed as the covenant not to sue. His question in September had been whether, in the investors agreeing not to sue Mr Christian, Mr James would be stopped from recovering from Mr Christian. 336 The 22 January letter was drafted by Ms Becker and settled with Mr Gilles. This advice gave no consideration to any potential problems flowing from the February 2001 deed, or the 2003 sale agreement. Nor did the letter deal with Mr Alexis' advice. While hedged with qualifications, the advice given was that DJZ should proceed. 337 The letter noted that advice had been sought as to 'whether or not we thought you should proceed'. It was noted that 'our initial advice was that you have brought that matter this far at considerable expense, the expense may very well be thrown away if you were to settle on the terms suggested by James, which were far less favourable than what you require'. The worst and best case scenarios were outlined; observations were directed to what the transcript of the proceedings showed; and while it was said that comprehensive advice could not be given, it was observed that 'it appears to us that your matter is progressing reasonably and along expected lines'. 338 Various observations were made as to Einstein J's apparent reactions to various evidence and how various witnesses held up to cross examination. It was then advised that: "It seems to us that any decision made by you to continue the case will have to be made on the following basis:- (1) Your impression of how the case is proceeding, formed by the impressions of your counsel and the instructing solicitor from Paul Pritchard's office; and (2) Whether or not you think Mr James is likely to agree to your minimum terms of settlement in this matter. From what you have said, it does not appear that Mr James will agree to your minimum settlement conditions and as such your only other options would be: (1) to agree to whatever settlement he proposes (subject to reasonable negotiation by your counsel); or (2) continue with the case and take your chances with the judge. At this state, it appears that the bulk of the costs have been incurred by you and on balance, from a costs perspective, you may as well continue with the case." 339 It must be accepted, as was argued for Mr Pritchard, that by this advice Giles Payne encouraged DJZ to pursue the proceedings without advising as to the risk about which Mr Alexis had advised. The notes kept of this and other meetings show that there was at that time consideration given to DJZ later pursing an action in negligence against Mr Pritchard, if it failed in the case it was pursuing. 340 Advice was also given later in January by Ms Becker as to a notice to produce. The effect of the documents sought on the guarantees in the 1999 deed, which were being pursued in the proceedings was raised for advice, but still no advice was given by Giles Payne that any potential difficulty was caused by what had been agreed. 341 I am well satisfied that a solicitor acting competently in the circumstances would have given such advice. A solicitor has a duty to explain risks, even unusual ones, which are reasonably foreseeable (see Macindoe and Anor v Parbery). The reality was that the risks which Mr Alexis had identified as arising from the 2003 sale agreement were known to Gyles Payne, but no consideration was given to them, or the consequences of DJZ not accepting the advice to settle the litigation. One obvious potential consequence related to any claim later made against Mr Pritchard. More directly, no advice was given as to the impact of the agreement on DJZ's prospects in the proceedings and whether, as a consequence, Mr Alexis' advice to settle the proceedings ought to be accepted. 342 Ms Becker explained that her principal concern then was that in selling the business and transferring shares and units, Mr Palmieri had no idea of what he had done, because he had no idea of the obligations that the business or the corporate entities surrounding it were going to be taking on or the rights they might be relinquishing. That concern was inconsistent with the advice given that the litigation should be pursued, contrary to the advice Mr Alexis had given. This was a concern which ought to have driven advice being given as to the effect of what had been agreed in the 2003 sale agreement upon the 1999 deed and the risks resulting from the rejection of Mr Alexis' advice. 343 I am satisfied on the evidence that a solicitor acting competently, would have identified and advised on the potential problems on which the Court of Appeal's judgment eventually turned. Plainly there were differing views available as to the effect of what had been agreed. The evidence that Mr McGovern immediately appreciated the difficulty which the 2003 sales agreement gave rise to, when the matter was raised with him by Mr Fitzpatrick in December 2003, supports the conclusion that a solicitor acting competently would have identified and advanced on that issue. So does the view which those acting for the James' interests had come to; the view to which Mr Alexis came; and Mr Pritchard's concession that the problems with the 2001 deed and the 2003 agreement were ones which could have been dealt with in drafting the 2003 agreement, had he given the matter any thought. A similar concession was not made by Mr Gilles or Ms Becker as to their own failures. The problem was that like Mr Pritchard, Giles Payne also failed to give the effect of the 2001 deed and the 2003 sales agreement on the guarantees provided by the 1999 deed any thought, despite what they knew of Mr Alexis' advice. 344 The hearing continued before Einstein J in February 2004. There were further unsuccessful settlement negotiations in March, about which Giles Payne were not consulted. The plaintiffs succeeded. Einstein J's judgment was overturned on appeal. 345 In November 2005, Ms Becker became aware that there were settlement negotiations underway. Mr Palmieri approached Giles Payne in January 2005, about the terms of the proposed settlement. Mr Fitzpatrick was then advising DJZ. By letter of 11 January, Giles Payne advised that no advice could be given, in light of the insufficient information Mr Palmieri had provided. Ms Becker told Mr Palmieri to have Mr Fitzpatrick liaise with Mr Alexis. The settlement was finalised in December 2005 and Giles Payne was then retained to bring proceedings against Mr Pritchard. 346 Giles Payne's case was that they were never instructed to advise DJZ on its prospects of success in the Supreme Court proceedings and did not do so. DJZ was represented and advised by Mr Pritchard and senior and junior counsel. While Mr McGovern advised in April 2003 that the claims advanced in the 2001 proceedings were reasonably arguable, that did not amount to advice in relation to DJZ's prospects of success. Giles Payne offered no other view, but argued that it did not follow from the Court of Appeal's judgment that the claims were not reasonably arguable in April 2003. 347 It was argued that the warnings which Mr Pritchard claimed ought to have been given by Giles Payne were beyond its retainer and did not arise, given that DJZ was already represented by other solicitors and counsel in the proceedings and had not provided Giles Payne with information and documents necessary for it to provide such advice. 348 These arguments may not be accepted. 349 Having accepted instructions from DJZ to represent it separately in the proceedings; subsequently to keep a watching brief on the matter; then to provide advice in relation to the 2001 deed; then to advise on the question of settlement, after the James' interests came to rely on the 2001 deed and the 2003 sales agreement, a duty to consider and advise DJZ of the risk that arose in the proceedings from that reliance, certainly arose. I am unable to accept the submission that in the circumstances, there was nothing about the independent advice which Giles Payne was instructed to provide, which could have caused them to have 'stumbled across' the problem which the Court of Appeal ultimately found. 350 Giles Payne was content to be engaged for the very purpose of looking over the shoulders of the other legal advisers representing DJZ in the proceedings, in order to provide advice in relation to those proceedings when sought by Mr Palmieri and to stand by, ready to separately represent DJZ, if the need arose. In giving advice about what course should be taken by DJZ in the proceedings when it was sought from time to time, if it became apparent, or ought to have done, that DJZ was at risk, even because of matters going beyond the scope of its retainer, then Giles Payne was obliged to advise DJZ of that risk and if necessary, of the need to obtain further advice. 351 On the evidence, advice about the risks posed by the terms of the 2001 deed and the 2003 agreement, ought plainly to have been given, particularly when advice about settlement was sought after Mr Alexis gave his advice in December 2003. While Giles Payne relied on Mr Palmieri's evidence, that he could not then remember seeking Giles Payne's advice about any settlement, the documentary evidence shows that such advice was sought and provided. Mr Palmieri's instructions to Mr Alexis and Giles Payne were the same, he wanted to achieve a position where the James interests gave up their claim in the joint venture properties. 352 Undoubtedly what the standard of care required of Giles Payne, must be determined in the circumstances in which Mr Palmieri and DJZ came to instruct a second firm of solicitors to advise on the pursuit of the proceedings and its settlement. Given that DJZ was seeking Giles Payne's advice in circumstances where it was one of a number of plaintiffs in the proceedings, all being represented by Mr Pritchard, that DJZ was vulnerable, as discussed by the High Court in Woolcock Street Investments Pty Limited v CDG Pty Limited [2004] HCA 16; (2004) 216 CLR 515 at [23], must be accepted. DJZ was plainly not able to protect itself from any want of reasonable care by Giles Payne, in giving the advice sought of it. 353 That it was likely that there was a conflict of interest between Mr Palmieri and DJZ at that point, was very apparent. That conflict was one which Giles Payne was alert to. Mr Palmieri instructed Giles Payne to provide its advice in relation to the settlement which Mr Alexis had urged, after the James' interests had placed reliance on the 2001 deed and the 2003 sales agreement to defend the claims DJZ was advancing in relation to the 1999 deed. Mr Palmieri instructed Giles Payne both as to his minimum terms and those of the James' interests and sought advice as to what he should do. That Giles Payne then failed in its duty of care in not considering and advising DJZ of the risks which the 2001 deed and the 2003 sales agreement posed to its claims, on which Mr Alexis' advice rested, must be accepted. 354 On Mr Gilles and Ms Becker's evidence, no consideration was ever given to the effect of the 2001 deed or the 2003 sales agreement on the claims being advanced in the proceedings. Whether or not they had the James' amended defence was not entirely clear. What was clear was that given its retainer at the time, when giving advice on the settlement of the proceedings, it was fundamental that Giles Payne ensure that it was giving its advice in the context of the current pleadings. A solicitor acting competently in advising on settlement would have ensured that it had those pleadings. 355 That the 2003 sales agreement had been entered was well known to Giles Payne, who had been asked, but had refused, to act in relation to the transaction, or to advise on a draft of that agreement, before it was entered. That they had seen Mr Alexis' December letter was not apparent, but it was Ms Becker's evidence that she was aware of what Mr Alexis had advised. That is consistent with the notes in evidence. A solicitor acting competently in the circumstances would have ensured that they had an understanding of the basis of on which that advice rested and would have addressed that matter in their own advice. 356 The advice which Giles Payne gave was said not to be comprehensive, given that it had not been provided with sufficient information. Having accepted instructions to advise, however, in circumstances where it was known that Mr Palmieri had been repeatedly advised by Mr Alexis to settle, Giles Payne had to proceed in the context of the information which it did have, relevant to that advice. That required consideration to be given to the 2001 deed and the 2003 sales agreement. Giles Payne's failure in this regard was revealed by the evidence that when Mr McGovern was approached to act for DJZ in December 2003, when what had been agreed in the 2003 sales agreement was raised with him, he appreciated the potential problem and immediately commented on it, even though he could not accept the brief. 357 Had there been any doubts as to what was driving Mr Alexis' advice, a solicitor acting competently ought to have sought instructions as to its basis. Those instructions could easily have been provided. Mr Palmieri had Mr Alexis' letter. Giles Payne could have spoken to Mr Alexis. 358 In the circumstances in which Giles Payne accepted instructions to advise in relation to the settlement of the ongoing Supreme Court proceedings in January 2004, that a solicitor, acting competently, would not have considered whether that the 2001 deed and the 2003 the sale agreement posed difficulties for the litigation, or at least potential difficulties, may simply not be accepted. 359 Had necessary consideration been given to the 2001 deed and the 2003 sales agreement, it is apparent that quite different advice would have been given by Giles Payne, to that which was given. 360 Whether such advice would have been accepted by Mr Palmieri, given his aims in relation to the joint venture properties, is more difficult judge. Mr Palmieri's evidence that he was concerned both about DJZ's losses, which he was pursing in the litigation, as well as the joint venture properties, must be accepted. He said that he did not know what he would have done had Giles Payne advised him to settle. In that context, that there must have been a real prospect that he would have accepted advice recommending a settlement, had both Mr Alexis and Giles Payne given DJZ advice as to the difficulties posed for the litigation by the 2001 deed and the 2003 agreement, must be accepted. While Mr Palmieri was a businessman who was content to reject legal and other advice, when he judged it appropriate to do so, given his commercial interests, he was also an astute and successful businessman. I doubt that he would have rejected advice to settle, had all of his legal advisers joined in giving DJZ that advice. 361 Giles Payne had no advocate's immunity from suit in the circumstances in which it was advising DJZ. It never took on the role of advocate. That situation does not support the submissions advanced for Giles Payne as to the limited role which it played in advising DJZ. It accepted instructions to provide advice in relation to ongoing proceedings in which other lawyers were already acting. That did not limit its responsibilities in relation to the advice given. I am satisfied that in advising on settlement in January 2004, Giles Payne was negligent and acted in breach of its retainer, by failing to consider and advise DJZ about the potential impact of the 2001 deed and the 2003 sales agreement on the case it was pursuing in the Supreme Court. 362 But for the conclusions which I have reached in relation to the fact that the Court of Appeal's judgment did not turn on the 2001 deed, I would have concluded that Giles Payne was earlier partially responsible for the loss suffered by DJZ. Under s 35 of the Civil Liability Act consideration must be given to what is just, having regard to Giles Payne's responsibility for the damage suffered as the result of tis negligence, by way of comparison to Mr Pritchard's reasonability for the damages which flowed from his negligence. Given the conclusions which I have reached, that Giles Payne were also responsible for the losses suffered by DJZ from 12 January 2004, in relation to the costs thereafter incurred, must be accepted. I assess their contribution at 50%. Mr McGovern 363 Mr McGovern was initially briefed, amongst other things, with the Supreme Court pleadings, Mr Wales' brief; and a copy of the 2001 deed, wrongly described in the observations as being a deed entered in July 2001. The document provided was unsigned and undated, bearing only a fax transmission header dated 13 July 2001. Mr McGovern had also been provided with other material which suggested that such a deed had been entered, including 2001 correspondence from the Christians' lawyers, which disputed the purported exercise of the power of sale of their units under the 1999 deed, given the terms of a deed entered earlier in 2001. 364 When initially advising DJZ, Mr McGovern was considering a possible misleading and deceptive conduct claim in the context of the representations it was claimed had been made prior to the entry into the 1999 deed. He agreed in cross examination that he gave consideration to that claim, in the context of the terms of that deed and any subsequent events which could have had an impact on such a claim. That being so, it is apparent that the 2001 deed, which purported to vary the 1999 deed, including as to the guarantees provided by the Christians under the deed, was a necessary consideration. The effect of the payment of some $287,500 to SRUT by the Christian interests, by way of contribution to capital under the 2001 deed, as well as other aspects of the agreement there reached, also required consideration, particularly in relation to the question of damages. 365 While the version of the 2001 deed with which Mr McGovern was briefed was incomplete, undated and unsigned, the submission that Mr McGovern had not been briefed with any February 2001 deed may not be accepted. If Mr McGovern had any doubts that a deed in the terms of the 2001 deed with which he was briefed had been entered, as he had been instructed, like Giles Payne, he should have sought a copy of the executed deed. Competent practice did not permit Mr McGovern to proceed on the basis of an assumption that such a deed had not been entered, or that a deed in different terms had been entered in 2001, given his instructions. 366 The terms of Mr McGovern's brief are earlier set out. In his first advice he recommended that DJZ should be separately represented in ongoing proceedings. That advice was accepted. Mr McGovern also advised that there should be further investigation as to the value of the units. That was pursued. It was at this time that his retainer altered. 367 Mr McGovern was then briefed to draft documentation necessary for DJZ to be separately represented in the ongoing proceedings and to pursue the misleading and deceptive conduct claim in those proceedings. He then asked for and was provided with a copy of the documents filed in the Supreme Court. He found that those claims relied on the 1999 deed. No defence or cross claim relied on the 2001 deed and there was no suggestion that it would be relied on. Mr McGovern later gave written advice in the terms earlier set out, including: "So understood it seems to me that the present Supreme Court proceedings, relying as they do upon the deed of 1 July 1999, offer the most reasonable prospect of being able to secure the reasonably arguable claims of Surf Road Nominees Pty Ltd and the investors. Essentially the deed of 1 July 1999 was intended to govern the relationship between the parties and to provide a mechanism for creating rights of guarantee and indemnity." 368 Mr McGovern explained in his evidence that he gave this advice in order to reassure Mr Gilles and his clients that on the pleadings as they then stood, and on the evidence filed and served, DJZ had reasonable prospects of success. It was argued that this advice went beyond the scope of his retainer and that it was in any event, correct. 369 Even accepting that Mr McGovern had decided to provide advice which went beyond the scope of his retainer, which I do not, it is apparent that the 2001 deed was a necessary consideration in the advice which he gave, given Mr McGovern's instructions that the 1999 deed had been later varied by that deed, and what DJZ was pursing in the proceedings, which he advised had reasonable prospects of success. Any consideration of DJZ's prospects in the proceedings required a consideration of the impact, if any, of the 2001 deed. Having decided to offer this advice, Mr McGovern was required to exercise necessary skill and care in the advice which he gave. 370 Mr McGovern's evidence was that before he provided this advice, he had closely considered the 1999 deed, noting both the guarantee and indemnity and had revisited certain relevant texts and authorities. He also noted that no one had pleaded that the defendants were relieved of their obligations under the 1999 deed, because of the entry into the 2001 deed. It followed, in his view, given affidavit evidence with which he was also briefed, that the claims advanced by the plaintiffs in the proceedings were reasonably arguable. In his opinion, without further amendment of the pleadings, no claim being advanced was doomed. The possibility of pleading amendment to rely on the 2001 deed, was not addressed. 371 Mr McGovern explained that his view initially was that he needed to have some understanding of what had happened to the units in the unit trust, in order to consider the question of damages for the Trade Practices Act claim. The 2001 deed, which contained an agreement not to sell the units held by the Christian interests, did not marry up with the 1999 deed and a notice of the exercise of the right of sale provided by that deed given in May 2001. Mr McGovern's evidence was that the 2001 deed could be considered to be a covenant not to sell. He thus needed to understand what had happened. 372 Mr McGovern was not certain whether he had read Mr Wales' advice about the 2001 deed, before he gave his own advice. He was briefed with Mr Wales' brief, which included observations from Mr Pritchard, calling for advice in relation to a potential difficulty created by the 2001 deed. Mr McGovern had read this brief. 373 Mr McGovern's evidence was that he asked Mr Palmieri at their conference, if he could tell him anything about the deed which had been entered in 2001. Mr Palmieri could provide no useful information. Despite this, Mr McGovern suggested no further investigation to establish what had happened in relation to the 2001 deed, even though he considered that what had happened to the units held as security under the 1999 deed, to be relevant to the potential Trade Practices Act claim he was advising on. Had that investigation been suggested, Mr McGovern's instruction that the 2001 deed had been entered in the terms briefed would have been confirmed. Instead, Mr McGovern proceeded on the basis of certain incorrect assumptions. 374 Mr Palmieri also told Mr McGovern that the Christians' units had been 'taken', when asked about any sale of those units under the 1999 deed. From this, Mr McGovern assumed that the units had been sold as the result of the exercise of rights under the 1999 deed. This was despite the correspondence from the Christians' solicitors, disputing the right to sell, given the terms of the 2001 deed, with which he had been briefed. 375 Mr Palmieri also said that Mr James' shares had been taken. Mr McGovern assumed from this that Mr Palmieri was referring to the units in the SRUT, which beneficially owned the business, because Mr James' company, New South Head Nominees Pty Limited held units, not shares, in the Trust. Mr McGovern came to the conclusion that there had been a 'wash sale' of the units in the Trust under clause 8 of the 1999 deed. This would not have involved any discharge of the James' interests. That is not, however, what had occurred. 376 Mr McGovern's conclusions rested on Mr Palmieri's instructions at the meeting. His evidence was that Mr Palmieri did not then have any facility in reading English, but he was an experienced businessman. Mr McGovern did not show him the 2001 deed with which he had been briefed. When he asked him about any deed entered in 2001 and Mr Palmieri could provide him with no information, Mr McGovern then simply directed all of his further advice to the 1999 deed. Mr McGovern explained that he proceeded as he did, because he considered that as the pleadings in the Supreme Court made no reference to the 2001 deed, the exercise of the power of sale must have taken a different form. He concluded that whatever had happened in respect of the 2001 deed, it was of no consequence to what he had to advise on. 377 It was argued that Mr McGovern was entitled to proceed on the reasonable belief to which he had come, given what Mr Palmieri had told him. 378 I am unable to accept that submission. Given the complexity of the matters about which advice was being given, that belief, resting as it did on the little Mr Palmieri was able to tell Mr McGovern about what had happened in relation to a deed entered in 2001, was not a basis which competent legal practice permitted such advice to be based. 379 Mr McGovern's evidence was that he himself did consider the law in relation to guarantees, when giving his final advice. When he gave his evidence, he had seen Mr Wales' advice in relation to the 2001 deed. When he first saw that advice is not clear, but it was apparent from that advice that Mr Wales had referred to a deed in the form of the 2001 deed with which Mr McGovern was briefed. Mr Wales seemingly had no difficulty in proceeding on the basis of an instruction that a deed in that form had been entered. Mr McGovern's evidence was that whenever he saw the advice, he agreed with it, but in his own advice he had made no mention of any risk that the 2001 deed could give rise to potential arguments, which could be used against DJZ in the proceedings on foot. 380 Indeed, Mr McGovern's April advice made no reference at all to the February 2001 deed. The chronology which he had prepared for himself, as was his practice, also made no reference to this deed. His evidence was that it was his practice to exclude any undated document from such a chronology and to flag it in his brief. When he came to review the facts, he took account of such documents, in order to work out how, if at all, they might fit into the factual background. 381 In so approaching his instructions and coming to the conclusions which he reached, Mr McGovern obviously erred. By its terms the 2001 deed had amended the 1999 deed. His instructions were that such a deed had been entered. The fact that Mr Palmieri could tell him nothing more about the deed entered in 2001, was not a sound basis for concluding that no such deed had been entered. Mr McGovern knew that the Christian's lawyers had asserted that there was no right of sale under the 1999 deed, given the terms of a 2001 deed and that Mr Wales had been asked to advise on a potential problem posed by such a deed. Yet Mr McGovern took the view that there was no necessity to further investigate whether his conclusion that there had been a sale effected under the 1999 deed was correct. 382 Mr McGovern's advice, that there was no claim being advanced in the Supreme Court proceedings which was doomed to fail, rested on the fact that under the pleadings, no reliance was placed on the 2001 deed. An obvious explanation for the plaintiffs not referring to the deed, was the potential problems it might cause for their claims. An obvious explanation for the defendants not referring to it, was that they were not aware of its existence, not being parties to the deed. 383 Mr McGovern did not consider or advise in relation to any available reliance on the 2001 deed, even though on his instructions a deed in those terms had been entered and it had been considered by Mr Pritchard, that the deed raised a potential problem. Nor did he consider what impact that might have had on the misrepresentation claim. The view which he reached was that the units must have been dealt with by some mechanism other than the 2001 deed, namely the 1999 deed. Neither this assumption, nor the 2001 deed itself, was mentioned at all in Mr McGovern's April advice, nor it would seem at the conference that day, as posing any potential problem, or requiring any further investigation or consideration. Mr McGovern did not even suggest that an executed version of the 2001 deed be obtained, or any other document by which the transaction which he assumed must have occurred by some other means, had been implemented. The advice which he gave Mr Palmieri in conference was directed simply to the operation of the 1999 deed. 384 In December 2003, Mr McGovern was approached about appearing in the Supreme Court proceedings, by Mr Fitzpatrick, but he was not free to accept the brief. Mr Fitzpatrick then mentioned that an agreement had been entered in November, under which some of the guarantors under the deed of guarantee were released from their obligations. Mr McGovern's evidence was that he immediately commented that the agreement might work to release the defendants from their liability under the guarantee. Mr McGovern's consideration of the February 2001 deed, which raised a similar and other issues, was not earlier raised with Giles Payne and Mr Palmieri. It would seem that while Mr McGovern may have appreciated the problems which the 2001 deed potentially gave rise to, he made no mention of this in his earlier written advice, or in conference, because of the view to which he came, that no such deed had been entered. 385 Mr McGovern explained that when he wrote the advice in which he commented on DJZ's prospects, he felt himself at liberty to mention any other matter which might be of potential benefit or comfort to DJZ. Given his instructions, which required him to consider the 2001 deed which had amended the 1999 deed, he plainly ought to have raised any potential difficulty as well. By this stage he had advised DJZ that it ought to be seperately represented in the Supreme Court proceedings and had been instructed to prepare amended pleadings to pursue the misrepresentation claim. That also required consideration of the case being advanced in relation to the 1999 deed, amended as he had been instructed by the 2001 deed. While Mr McGovern did not advise on prospects of success of the claims already being advanced, given that he was commenting on what was reasonably arguable, if there were problems with the claims being advanced, because of the result of what had been agreed in the 2001 deed, DJZ ought to have been alerted to the difficulty, whether or not the defendants had yet relied on such problems. 386 Mr McGovern accepted that it would have been his duty to advise DJZ, if he believed their claims were doomed to fail. Had any other difficulty come to his attention, his duty also required him to draw them to attention. In cross examination, Mr McGovern maintained that the letter sent from the Christian's solicitors, which relied on the 2001 deed, as removing the right to sell their units under the 1999 deed, did not require his attention, because of Mr Palmieri's instructions. Given that his written instructions were that a deed had been entered in 2001 and the deed with which he was briefed, had the effect claimed, that view may not be accepted. 387 Had necessary attention been paid to the effect of the 2001 deed on the 1999 deed, at the least the difficulty which Mr Wales had earlier addressed, ought to have been considered by Mr McGovern and raised with DJZ. 388 Mr McGovern's cross examination showed that he had considered the terms of the 2001 deed, but he did not refer to it in his advice, or draw attention to any potential risk that it might have any impact on the case being advanced in the Supreme Court, because of the view which he reached that the Christians' units must have been dealt with by some mechanism other than the deed with which he had been brief. Given the views which Mr McGovern proffered DJZ as to its 'reasonably arguable claims', there was, at the least, an obligation to explain the conclusion which he had reached. Had that occurred, his error in relation to the 2001 deed would have been revealed. On the evidence, Mr McGovern's view of the 2001 deed was quite different to the understanding of either Mr Gilles and Ms Becker. 389 Mr McGovern expressed the view that his advice would not have differed, if he had been briefed with an executed version of the 2001 deed. This was because he did not perceive it as adverse, or materially so, to DJZ's prospects of success, because it was not being relied on in the proceedings and that he had no duty to speculate about defences which might or might not be relied on. The 1999 deed remained fully enforceable and the defendants had not been discharged. 390 There is an obvious difficulty with that evidence. It was not a question of Mr McGovern speculating about possible defences not yet advanced, but advising about the claims being advanced by DJZ under the 1999 deed, given his instructions that it had been amended by the 2001 deed and whether, as he said in his advice, in that context the claims being advanced were 'reasonably arguable'. Mr McGovern did not give consideration to the 2001 deed, which competent legal practice required be given, if such advice was to be proffered. Nor did he give necessary consideration to the 2001 deed in the context of the misrepresentation case. Had he revealed the basis for his conclusions about the 2001 deed, his misunderstandings would have been revealed. Even if the advice which he gave went beyond his retainer, as was argued in submissions, that was not a licence to advise negligently. 391 Mr McGovern's case was that even if he had given advice as to the problems posed by the 2001 deed, DJZ would have still pursued the litigation, given the concerns then driving Mr Palmieri. It followed that there was no casual link between the advice which Mr McGovern gave and any damages DJZ suffered. 392 Undoubtedly, given Mr Palmieri's concerns about the joint venture properties, DJZ may still have continued with its pursuit of the proceedings, even despite the potential problem which the 2001 deed created. Having alerted DJZ to the problem created by 2001 deed, that Giles Payne would have given different advice to that given about the 2001 deed in October 2003 and the advice given about settlement in January 2004, after Mr Alexis recommended settlement in December 2003, is evident. I am unable to accept the arguments advanced in relation to causation. 393 Mr McGovern gave no advice in relation to the 2003 agreement, although when approached by Mr Fitzpatrick, he then raised the potential problem created by the 2003 sales agreement. 394 Given the views which I have reached in relation to the 2001 deed not having been the causative effect of any damage suffered by DJZ, given what the Court of Appeal's judgment turned on, it is not necessary to further consider whether any order should be made against Mr McGovern. Had I not reached that conclusion, plainly, he too, would have been found partially responsible for the damages suffered by DJZ. Calculation of damages 395 That losses flowed from the negligence established must be accepted; including those flowing from the legal costs DJZ incurred. 396 DJZ sued on the guarantees provided by the 1999 deed. It succeeded before Einstein J, who made orders in its favour, in the sum of $355,870. It lost the benefit of those orders as the result of the Court of Appeal's conclusion that the 2003 sale agreement had discharged the guarantees. Costs orders were made against DJZ, in favour of Mrs James. It was also ordered to pay $189,326 to New South Head Nominees Pty Limited. 397 Einstein J also made orders made against Mr James, of some $647,355, in favour of Surf Road Nominees Pty Limited, Chris Burke & Co Pty Limited and IG Martyn Real Estate Pty Limited. Those orders and the costs order made against Mr James were not disturbed on appeal, but must be considered, given the settlement reached after the Court of Appeal's judgment. Under that settlement, DJZ paid $450,000. 398 DJZ pursued a number of items of damages. Item 1 399 Item 1 in the schedule of damages related to the claims advanced in relation to the 1999 deed. Those claims were not established. Item 2 400 Under item 2, the judgment sum of $355,870 ordered by Einstein J in favour of DJZ, plus interest of some $187,012, a total of $542,882.13, was claimed to have been lost by DJZ as the result of the Court of Appeal's judgment. I am satisfied that this claim was established as against Mr Pritchard. Item 3 401 Party/party costs of $419,850, as assessed by Mr Hardman, were claimed at item 3 as being owed by DJZ in respect of Mrs James' costs of the Supreme Court and Court of Appeal proceedings. In reaching his conclusions, Mr Hardman did not consider that part of these costs were incurred by Mr James, in defending the claims brought against him before Einstein J, which were not challenged on appeal. The problem that Mr Hardman had not considered Mr James' position, was acknowledged in his cross examination. Einstein J had said that the issues which the parties had litigated were inextricably interlinked and did not award costs on an issues basis. Establishing the amount of the costs incurred by Mr James would thus require an assessment which was not undertaken. 402 Also not considered by Mr Hardman was that DJZ, Surf Road Nominees Pty Limited, Chris Burke & Co. IG Martyn and WIT all had a liability for Mrs James' costs of the first instance and appeal proceedings, as the result of the Court of Appeal's orders. 403 In determining whether this aspect of the damages claim was established, consideration must also be given to the $450,000 paid by DJZ under the 2005 settlement, in which a number of claims were compromised. They included what was owed by DJZ to Mrs James under the Court of Appeal's orders; what it and WIT owed New South Head Nominees Pty Ltd and the claims made by the James' interests in relation to the joint venture properties owned by other of Mr Palmieri's interests, as well as what was owed by Mr James. 404 It was argued for DJZ that this settlement involved a mitigation of its losses and that in determining what damages DJZ had established on the evidence under this heading, a broad-brush approach would be adopted. It was accepted that a conservative approach was required in the circumstances. (See Nikolaou v Papsavas at 404). This approach was urged because of the many parties and elements involved in the compromise reached. It was also argued that another available approach was that the Court could direct that the sum to be recovered out of the $450,000 which DJZ had paid under the settlement, be referred for assessment. 405 I am not able to agree with the latter approach. As was argued for Mr Pritchard, an onus fell on DJZ to establish its damages. If it failed to meet that onus, no order can be made in its favour. 406 I have already dealt with the question of whether the settlement was a reasonable one. That was not established. The further difficulty is that the evidence leaves entirely unclear what compromise was made in relation to what aspect of any of the matters dealt with in the settlement, even on the basis of Mr Hardman's assessment as to the costs Mrs James could have recovered from DJZ under the Court of Appeal's orders. Those costs were recoverable from DJZ, Surf Road Nominees Pty Limited, Chris Burke & Co. IG Martyn and WIT, but under the settlement, $450,000 was paid by DJZ, which also had a separate obligation, (together with WIT under the Court of Appeal's judgment), to pay the James' company New South Head Nominees Pty Limited $189,326. 407 Given that what was settled included the interest which was claimed by the James' interests in the joint venture properties and the litigation relating to that interest, it is not apparent to me that any rational conclusion may be reached that DJZ has established any aspect of this part of its claim. 408 In a position paper advanced in the negotiations, an interest in the joint venture properties of some $2,806,000 was being advanced by the James' interests. Given what was the subject of negotiation, the compromise which the parties reached, was very substantial on any view. In return for the payment of $450,000 by DJZ, the interests associated with Mr Palmieri achieved not only a release from the Court of Appeal's orders, under which something like $608,326, was payable, (taking into account Mr Hardman's assessment), but also the James' interest in the joint venture properties. While the James interests gave up those entitlements, they thereby achieved Mr James' release from his bankruptcy, he having been ordered to pay $647,355, plus costs by Einstein J. 409 There was no assessment undertaken as to how much of the costs which had been incurred by the James' interests in the Supreme Court proceedings, reflected costs which only related to Mr James. While Mr Hardman's evidence was that some of the costs would have been incurred on a joint and several basis and were therefore all recoverable by Mrs James, what proportion that was, is entirely unclear. 410 I have come to the conclusion that DJZ has not shown that it incurred the damages claimed. One real possibility, given all that was agreed in the settlement, is that the James interests agreed to settle the whole of what DJZ owed under the Court of Appeal's decision, in order to achieve Mr James' release from bankruptcy and that what DJZ paid was, in reality, a payment for the James' interests in the joint venture properties and the settlement of that litigation. 411 In the circumstances, I am satisfied that a broad brush cannot be adopted to this aspect of DJZ's claim, as it urged. DJZ has not met the onus falling upon it, to establish the loss it claimed that it had suffered under this head. Item 4 412 DJZ's costs of the proceedings brought against Mr and Mrs James are claimed at item 4 of the Schedule, as some $489,022, plus interest. They have been established other than in so far as they relate to costs incurred in relation to the claims advanced against Mr James in the Supreme Court proceedings. 413 The orders made against Mr James were not challenged on appeal, but formed a part of the settlement reached in 2005. What part of the costs claimed relate to Mr James, is not clear. No analysis was undertaken. I accept in the circumstances, that a broad brush approach to an assessment of these costs must be undertaken, as discussed by the High Court in Nikolau. The pursuit of the guarantees under the 1999 deed occupied a substantial part of the proceedings before the Court of Appeal, but a much lesser part of those before Einstein J, where a number of other matters were dealt with. I have assessed that 40% of the costs assessed in relation to the first instance proceedings related to the pursuit of Mr James. Accordingly, only 60% of those costs are recoverable as damages in these proceedings. The sum claimed must be adjusted to reflect that conclusion. 414 I have concluded that DJZ was responsible for 30% of the damages suffered after 18 December 2003 in relation to the costs incurred and that Giles Payne was responsible for 50% of the balance of the costs incurred after 12 January 2004. Mr Prichard is liable for the remaining balance. Orders 415 The parties will need to produce short minutes of orders to reflect the conclusions which I have reached. They should also confer as to costs and approach in the event of disagreement. ********** 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.