Supreme Court New South Wales Medium Neutral Citation: Glenice Bailey v Warwick La hood [2017] NSWSC 1354 Hearing dates: 28 August – 1 September 2017 Date of orders: 19 September 2017 Decision date: 19 September 2017 Jurisdiction: Common Law Before: Rein J Decision: See [41] - [52], [70]. Catchwords: NEGLIGENCE – complex and extensive history of litigation between the plaintiff and family members and by the plaintiff against several former lawyers – in the original transaction the plaintiff became registered as owner of a rural property in 1979. In 1990 her father brought proceedings against the plaintiff and the plaintiff was represented in those proceedings and at the settlement of those proceedings by firm No 1. Later the plaintiff retained firm No 2 to bring proceedings against firm No 1 in connection with their handling of the original matter, and firm No 3 was retained to attempt to resolve those proceedings against firm No 1. After resolution of the proceedings against firm No 1, the plaintiff was advised by firm No 3 (i.e. the defendants) that she did not have "high prospects" of success against firm No 2 for the manner in which firm No 2 had conducted the proceedings against firm No 1. The plaintiff alleged that the defendants' advice was negligently given and that the defendants had breached a fiduciary obligation to the plaintiff, including a duty to act in her best interests and that the defendants had engaged in misleading and deceptive conduct – whether the advice given was negligent – whether the advice was relied on by the plaintiff – whether there was any breach of fiduciary duty or any misleading and deceptive conduct – discussion of other issues impacting on the quantification of damages if liability had been established, including matters relating to Crown Lands Consolidation Act 1913 (NSW). Legislation Cited: Competition and Consumer Act 2010 (Cth) sch 2 ('Australian Consumer Law') Crown Lands Consolidation Act 1913 (NSW) Trade Practices Act 1974 (Cth) Civil Liability Act 2002 (NSW) Cases Cited: Sidmouth v Sidmouth (1840) 2 Beav 447; 48 ER 1254 Charles Marshall Pty Ltd v Grimsley (1956) 95 CLR 353 Trustees of the Property of Cummins (a bankrupt) v Cummins (2006) 227 CLR 278 Napier v Public Trustee (WA) (1980) 32 ALR 153 Baumgartner v Baumgartner (1987) 164 CLR 137 Swettenham v Wild [2005] QCA 264 Roach v Bickle (1915) 20 CLR 663 Butts v O'Dwyer (1952) 87 CLR 267 OXS Pty Ltd v Sydney Harbour Foreshore Authority [2016] NSWCA 120 Strang v Strang [2009] NSWSC 760 Harvey v Harvey (1970) 120 CLR 529 Commonwealth v Amann Aviation (1991) 174 CLR 64 NCON Australia Ltd v Spotlight Pty Ltd [2012] VSC 604 Malabar RSL Sub-Branch Club Pty Ltd v RSL Custodians Pty Ltd [2014] NSWSC 1016 Category: Principal judgment Parties: Glenice Bailey (Plaintiff) Warwick La Hood (First Defendant) Gerrard Toltz (Second Defendant) Representation: Counsel: Self-represented (Plaintiff) J. Emmett & H. Grace (Defendants) Solicitors: Yeldham Proce O'Brien Lusk (First & Second Defendants) File Number(s): 2013/312794 Publication restriction: Nil Judgment 1. These proceedings involve a claim by the plaintiff, Ms Glenice Bailey ("Ms Bailey"), against Mr Warwick La Hood ("Mr La Hood"), and Mr Gerald Tolz ("Mr Tolz"). Mr La Hood and Mr Tolz are solicitors who practice under the name Tolz La Hood Lawyers ("TLH") in Neutral Bay. Ms Bailey claims that TLH failed in their professional duty to her and she also seeks to advance a case based on alleged related breaches of fiduciary duty and of the Competition and Consumer Act 2010 (Cth) sch 2 ('Australian Consumer Law'), to which I shall later refer. 2. Ms Bailey represented herself throughout the hearing before me. Mr James Emmett and Mr Harrison Grace of counsel appeared for Mr La Hood and Mr Tolz. From the commencement of these proceedings until March 2017 Ms Bailey was represented by Mr Nigel Hill of Australegal. Due to the fact that Mr Hill had been advised by senior counsel that he had a conflict of interest because the TLH defence, filed in March 2014, alleged contributory negligence on the part of Australegal, in March 2017 Mr Hill sought to be given leave to withdraw, following a lengthy period in which the defendant solicitors had raised that conflict issue with him. The hearing date of 3 April 2017, on Ms Bailey's application, was vacated and Australegal was replaced by Messrs Sweeny Tiggemann as Ms Bailey's solicitors. Sweeney Tiggemann sought leave on 9 August 2017 to withdraw as it had become apparent that Ms Bailey could not provide funds for future costs: see the judgment of Wilson J of 9 August 2017 in which this history is recorded. The Second Further Amended Statement of Claim ("SFASTOCL") was drafted by Mr Hill and possibly with some input from Sweeney Tiggemann. The affidavits of Ms Bailey and her sister Annette Mavis Bailey ("Annette") were prepared at a time when Ms Bailey had legal representation. 3. The legal work on which TLH were engaged, and which is the subject of Ms Bailey's claim against TLH, concerned Ms Bailey's claim that another firm of solicitors, Doherty Partners, engaged by her previously, had breached their duty to her. The work of Doherty Partners itself related to the work of another firm, whom I shall refer to as Moffatt Sullivan. Moffatt Sullivan had acted for Ms Bailey in a dispute that she had with her father, the late Mr Henry Bailey ("Henry"). 4. In March 1979 a rural property known as Hazeldene was purchased in Ms Bailey's name for $216,235. Hazeldene is located at Boomi in North Western New South Wales. Hazeldene was purchased for agricultural purposes, principally cotton farming. At some time after Hazeldene was purchased a partnership consisting of Henry, Ms Bailey's mother Mary, her brothers Bruce and Neil and her sisters Janet, Annette and herself was created in respect of the farming operation at Hazeldene. Only Henry, Mary and Bruce actually worked on the property. 5. There are some matters in respect of the purchase of Hazeldene which are not in dispute: 1. The deposit monies for the purchase were provided by Henry, either wholly, or with some contribution from Mary. 2. The balance of the purchase price came from a loan made by a Mr Stocks to Ms Bailey but arranged by Henry. Ms Bailey gave a mortgage over Hazeldene as security for the loan, but she did not make any loan or interest payments to Mr Stocks; those payments were made by Henry. Henry also provided a second mortgage to Mr Stocks over Titania, the rural property at Oberon which he had owned for a number of years and which, until then, had been utilised as the property for the family farming business. Later in 1979 Henry managed to sell Titania and by December 1979 he had repaid the entire loan to Mr Stocks. 3. Some years after selling Oberon (and repaying Mr Stocks) Henry sought to have Ms Bailey transfer Hazeldene to him. 4. After the request by Henry was not met by Ms Bailey, Henry commenced proceedings in this Court against Ms Bailey (1724/1990), "the 1990 proceedings", claiming that she held the property on trust for him. 5. The 1990 proceedings brought by Henry were fixed for 4 February 1991 and were settled on 4 February 1991 ("the Hazeldene Settlement"). By that settlement: 1. Ms Bailey agreed to transfer Hazeldene to Henry; 2. Henry agreed to leave, by his will, Hazeldene to Bruce (as to 50%) and 50% to the other siblings i.e. Ms Bailey, Annette, Neil and Janet, giving, Ms Bailey a 12.5% interest in Hazeldene on Henry's death in 1994; 3. Ms Bailey agreed to provide a statutory declaration confirming that she had provided none of the purchase monies and that they were all provided by Henry, who had arranged the purchase, and that she had held Hazeldene on trust for her father. 1. Ms Bailey made the statutory declaration requested and she declared "at all times it was my intention that I would be holding the property upon trust for my said father" (see: Exhibit A2 Tab 58). 2. Henry did, by his will, as he had promised he would, leave Hazeldene to Bruce, Ms Bailey and the other siblings in the proportions agreed under the Hazeldene Settlement, which included 12.5% to Ms Bailey. Henry died on 5 February 1994. 3. In 1991 Ms Bailey and her sister Annette commenced proceedings seeking the winding up of the family farming partnership. The partnership was wound up by order of this Court on 3 March 1994. Hodgson J (as his Honour then was) noted (inter alia) that Ms Bailey had indicated that she might wish to challenge the Hazeldene Settlement. 4. Prior to the 1979 contract between Ms Bailey, as purchaser, and the then owner of Hazeldene, as vendor, a contract had been entered into between Henry and the vendor. It was amended to name Mary and Bruce as additional purchasers, but nothing turns on that change. Hazeldene comprised, at least in part, Crown land and to purchase Hazeldene Henry needed ministerial approval under the Crown Lands Consolidation Act 1913 (NSW) ("the CLCA"). The Minister gave his permission, but imposed a condition that Henry must sell Titania because it too consisted of, at least in part, Crown land. Titania did not sell at auction and Henry could not complete the contract due to the ministerial condition. There is material which indicates that Henry decided, with input from his family (including Ms Bailey) and his solicitor that, if Ms Bailey was the purchaser of Hazeldene, the transaction could proceed without breach of the CLCA. Hazeldene was to be the farming property in replacement of Titania and it was envisaged that cotton farming would be conducted on it by Henry, Mary and Bruce, as had been the case with Titania. 5. Whether Henry was entitled to call for the transfer to himself has assumed considerable importance in the case, although, as I shall explain, it is not necessary to express a concluded view on his entitlement to the beneficial ownership of the property for the purposes of this case. 1. In October 1994 Ms Bailey and Annette retained Doherty Partners solicitors and Mr David Smallbone of counsel in connection with partnership proceedings commenced in relation to their father's estate, the possible setting aside of the Hazeldene Settlement deed, and consideration of whether proceedings should be commenced against Moffatt Sullivan. 2. There was in 1995 a mediation between Ms Bailey, Bruce on behalf of Henry's estate and his own behalf, Neil and the other siblings at the conclusion of which, on 3 July 1995, it was agreed, inter alia, that Hazeldene would be sold in the proportions set out in Henry's will or, so far as Ms Bailey was concerned, in fact a little more – Ms Bailey obtaining 14.875% of the net proceeds of sale ("the 1995 Family Settlement") (see: Exhibit A2 Tab 93 and T143.2 – T143.47). Amendments were made to certain aspects of the arrangements following another mediation but the essential nature of the 1995 Family Settlement was left intact. Later Bruce sought to set aside the 1995 Family Settlement in proceedings that were finally resolved at a mediation in 2009, without any impact on the 1995 Family Settlement. 3. Ms Bailey attacks, by her SFASTOCL in these proceedings, the conduct of Doherty Partners in relation to the 1995 Family Settlement. That attack has a number of components, but in relation to the breach of duty of care it contains the following: 84B Doherty Partners breached their duty of care by failing to: a. provide proper legal advice, including advice on evidence, having regard to the instructions given by the Plaintiff, particularly the instructions to advise in connection with the Interim Judgement of Hodgson J referred to in paragraph 27A b. properly review and consider the advice of Mr Moffatt that Hazeldene was held by the Plaintiff on trust for herself and her four siblings; c. properly consider the facts relating to the several different forms of express trust discussed and negotiated between the Plaintiff and her father Henry in connection with Hazeldene between the period April 1985 to 3 July 1987 (as set out in paragraphs 17B to 17D) and the other forms of trusts maintained later (as set out in paragraphs 19A, 191 and 19K, and how these impacted on the "trust for five" analysis d. properly consider the relevant provisions of the CLC Act and related case-law specifically on whether any trust for five could have come into existence; e. properly consider whether a resulting trust could properly be claimed by the Plaintiffs father Henry, in circumstances where he only partially contributed the purchase price for the property and he was prevented by the CLC Act from having any interest in the property. f. properly consider the equitable presumption of advancement and its applicability to the Plaintiff g. properly consider: i. the conflict of duties of Mr Moffatt and Mr Jessop in providing the MSJ Advice and in subsequently acting respectively for the Plaintiff and her father in the Hazeldene Proceedings ii. the inadequate preparation of the Plaintiffs case by Mr Moffatt in the Hazeldene Proceedings iii. the advice from Mr Moffatt to settle the Hazeldene Proceedings in light of the conflict referred to above iv. the improper pressure from Mr Moffatt on the Plaintiff to settle the Hazeldene Proceedings in light of the said conflict; and v. in light of the above, whether there were grounds to set aside the Hazeldene Settlement Deed and consequent transfer of Hazeldene to Henry; (see: paragraph 84B (a) – (g) of the SFASTOCL) The "MSJ Advice" in (g) is not defined, but it would appear to be a reference to a letter from Moffatt Sullivan Jessop (as the firm was known at the time) dated 9 July 1987: see Exhibit A2 Tab 100 pp 1629 – 1632. 1. It appears that at the heart of the complaint by Ms Bailey against Doherty Partners is the contention that Doherty Partners proceeded in the Moffatt Sullivan proceedings on the basis that Ms Bailey's claim against Moffatt Sullivan was that she had a 20% interest in Hazeldene (and had received only 12.5% interest under her father's will) whereas, on her case, they should have pursued a 100% interest (with recognition, however, of the 12.5% received under Henry's will). I shall, in the balance of these reasons, refer to the claim advanced by Doherty Partners against Moffatt Sullivan as "the 20% claim" and the claim that Ms Bailey contends they should have advanced as "the 100% claim". The 20% claim is sometimes referred to as "the trust for five claim" or "the trust for five basis" because there were five siblings including Ms Bailey. 2. Ms Bailey and Annette commenced the Moffatt Sullivan proceedings on 29 January 1997. The Statement of Claim in the Moffatt Sullivan proceedings claimed damages based on Ms Bailey receiving only 12.5% of the Hazeldene proceeds rather than 20% of the proceeds. 3. In June 2000 Ms Bailey wrote to Doherty Partners indicating that, in her opinion, they should have sought to set aside the Hazeldene settlement deed and that the pleadings against Moffatt Sullivan should be amended to claim 100%. It will be observed that she did not claim that they should set aside the 1995 Family Settlement, but that could well reflect a recognition that the Hazeldene Settlement could not be set aside and that there was no point in seeking to set aside the 1995 Family Settlement Deed aside if the Hazeldene Settlement remained effective. 4. Ms Bailey claims that Doherty Partners failed to advise her on a conflict of interest in acting for Annette as well as herself. The problem, she says, arose when the solicitors for Moffatt Sullivan pointed out that there could be no presumption of advancement if Ms Bailey was a trustee for herself and her siblings and Ms Bailey says that Doherty Partners did not inform her of the queries raised by the solicitors acting for Moffatt Sullivan, nor did they warn her that because the 1995 Family Settlement had proceeded on the basis that the plaintiff did not own 100% of Hazeldene, she could not advance, or would have difficulties advancing, such a case. 5. On 14 February 2002 Doherty Partners filed a Notice of Ceasing to Act in the Moffatt Sullivan proceedings. They claimed a lien over their files due to unpaid amounts of $42,382 for fees. 6. On 25 June 2003 Ms Bailey retained TLH to act for her in the Moffatt Sullivan proceedings. That was the day of the commencement of the hearing in the Moffatt Sullivan proceedings. Ms Bailey claims that on 26 June 2003 she told Mr La Hood that she believed Doherty Partners had been negligent in their advice to her and in the conduct of her case in relation to the 'trust for five', i.e. the 20% claim, and the quantum of damages: see paragraph 324 of her affidavit of 22 January 2016 ("the main Bailey Affidavit"). 7. The Moffatt Sullivan proceedings were settled on 27 June 2003 on the basis that the plaintiff would receive $600,000 plus costs to be agreed or assessed (see: Exhibit A3 Tab 140). Ms Bailey asserts that the settlement was on the basis that there was a 'trust for five'- that is on the basis that she was claiming she was entitled to a 20% share of Hazeldene. There is evidence, however, that Doherty Partners had, on 5 June 2000, (see: Exhibit A2 p 104) advised the solicitors acting for Moffatt Sullivan that Ms Bailey would be contending that she had lost the opportunity to claim 100% of the property, and see letter of 14 September 2001, where this was repeated: see Exhibit A2 tab 110. It is not at all clear that Moffatt Sullivan was settling the case having regard to the 20% claim and not the 100% claim. Mr La Hood says that the solicitors acting for Moffatt Sullivan indicated to him that they would not go beyond the $600,000 plus costs offered. 8. Mr La Hood's evidence is that his retainer on 25 June 2003 was to endeavour to secure as favourable result for Ms Bailey and Annette in the Moffatt Sullivan proceedings as he could. That, he says, was the scope of his first retainer and he obtained a further adjournment of the hearing before Grove J to that end and he achieved settlement on 27 June 2003. He says that Ms Bailey expressed her satisfaction with the outcome and thanked him for achieving that in the three days that he was involved. Ms Bailey disputes that she expressed any happiness with the outcome. 9. Mr La Hood says that the second period of retainer was in September 2005 until March 2006. There is no dispute that Mr La Hood ceased to act for Ms Bailey and Annette in March 2006 or that he handed over four boxes of documents to them on 3 April 2006 (see: paragraphs 66 – 67 of Mr La Hood's affidavit and Exhibit A4 tab 2.4 p 11 - 60). The second retainer, according to Mr La Hood, commenced as Ms Bailey and Annette asking for his assistance in preparing a new defence or answering particulars and assessing privileged documents in connection with the proceedings brought by Bruce in connection with the partnership proceedings. Ms Bailey and Annette then requested him to advise them on whether they could set aside the 1991 Hazeldene Settlement and whether they had a claim against Doherty Partners. As I have noted, Ms Bailey says she raised the question of Doherty Partner's negligence with Mr La Hood in the course of the three days in which he acted for her and her sister in June 2003. It will be observed that Ms Bailey did not see any difficulty in asking TLH to act for both herself and her sister in relation to the possible claim against Doherty Partners, notwithstanding that Doherty Partners had informed her, in November 2001, that a claim by Annette based on a loss of a 20% interest was inconsistent with a claim by Ms Bailey that she had lost 100% of Hazeldene: see Doherty Partners' letter of 1 November 2001 Exhibit A3 Tab 117 p 2067. 10. In respect of the tasks which Mr La Hood understood he was retained to perform, he set out his understanding in a number of letters, dated 30 June 2003 (see: Exhibit A4 p 4 – 6 tab 2.7), 13 September 2005 (see: Exhibit A4 pp 11- 21), and 9 November 2005 (see: Exhibit A4 p 26 tab 2.4). 11. I set out the advice which was contained in Mr La Hood's letter to Ms Bailey and Annette of 16 February 2006: 6. It was made clear to you in conference by Senior Counsel, Junior Counsel and myself that it is highly unlikely that you will succeed in rolling back the transfer from you to the Estate of the Hazeldene property. As I informed you in a conference, I am required to execute a certificate to the Court stating that there are "reasonable prospects of success" of your claim. In the circumstances, I will not execute the Certificate and so cannot act for you in your proposed Cross Claim. 7. As to the claim against your former solicitors, Doherty Partners, likewise, I do not believe there to be high prospects of success in prosecuting the claim of negligence. The basis of my belief is a number of documents I have viewed in the documents before the Court and in your handwriting being letters of instruction to Doherty Partners that you held the property as trustee for your brothers and sisters. It appeared reasonable to me that Doherty Partners acted on your written instructions but your views changed. (see: paragraphs 6 and 7 at p 48 of tab 2.4). 1. Only the advice given in paragraph 7 was the subject of the claim in the SFASTOCL (see: paragraph 6 and 60 of the SFASTOCL), and indeed, at T183 Ms Bailey confirmed it was only that paragraph in respect of which she was making a claim and see also T181.15 – T181.33. I do not think that the omission of a complaint about paragraph 6 of Mr La Hood's advice was accidental. It was advice given, not only by Mr La Hood, but also Mr Harper SC and a junior barrister Mr A. Gee, albeit in a very qualified way (see: paragraph 54 of Mr La Hood's affidavit). The difficulties of bringing a claim against the estate of Henry, particularly after the distribution of proceeds pursuant to the 1995 Family Settlement, would have presented a considerable obstacle to such a claim against Doherty Partners. 2. The advice that Mr La Hood gave in paragraph 7 of his letter of 16th February 2006 was couched as an opinion that Ms Bailey and Annette did not have "high prospects" of success in a claim against Doherty Partners for launching the claim against Moffatt Sullivan as the 20% claim as opposed to the 100% claim. He also noted that Ms Bailey had indicated that she would, after hearing the views of Mr Harper, Mr Gee and Mr La Hood on 16 December, obtain a second opinion and he enquired whether she had done so. On his evidence he also gave Ms Bailey and Annette, on 3 April 2006, when they picked up their files from him, the name of Mr Neville Moses, whom he described as a solicitor very conversant with issues of professional negligence in property matters. Ms Bailey and Annette deny that Mr La Hood did mention the name of Mr Moses. Whilst I prefer the evidence of Mr La Hood whenever it is in conflict with Ms Bailey and Annette for reasons to which I shall refer the discrepancy in evidence does not matter because Mr La Hood did advise Ms Bailey and Annette to obtain a second opinion, and on their own evidence they did seek a second opinion from many sources. In November 2008 Mr Hill of Australegal lawyers agreed to act for them, both in the proceedings brought by Bruce, but also in respect of the claim against Doherty Partners. In the latter connection, Ms Bailey asserts that she told Mr Hill that she wanted him to advise on a claim against Doherty Partners and that she thought the Limitations Act might be running, but she says Mr Hill told her that he had to concentrate on the Bruce Bailey proceedings, which she accepted: see T190.27 – T191.2. 3. In reaching his view that Ms Bailey's contention that up to February 1991 she held Hazeldene for no one but herself did not have high prospects of success, Mr La Hood had regard to the contents of notes and letters written by Ms Bailey and Annette, and affidavits of Ms Bailey. These documents are annexed to his affidavit and found at Exhibit A4 tab 2.4 pp 62 – 263. Some examples from the material are: 1. Paragraphs 9, 11 and 18 of the affidavit of Ms Bailey filed in the proceedings brought by Henry against her (see: Exhibit A4 Tab 2 pp 87 – 91): During these discussions [in 1979] my father expressed the view that because of his age, because of experiences within his family and because death duties were still payable, that Hazeldene should be acquired as a family owned property as all family members were expected to contribute to its working. My father had to my knowledge received advice that if the property was acquired in the name of the children then this would minimise taxation and stamp duty liabilities" (see: paragraph 9 of the affidavit) In February 1979 I was nominated as purchaser of "Hazeldene" and as such executed all such documents to effect the Contract, Transfer and Mortgage. To the best of my knowledge the initial purchase price was provided partly from the Bank account of my parents for the Oberon property and by way of a mortgage arranged by Mr. Dalziel with a Clarence Raymond Stocks. At all times I expressed a view to Mr. Dalziel and the Plaintiff that I was acting as Trustee for my siblings only and would not participate in any sham transaction for the benefit of the Plaintiff only. (see: paragraph 11 of the affidavit) It is my view that the parents gave to the give children equally the proceeds of the sale of Titania and other monies to enable both the Coonabarabran property and Hazeldene to be acquired as by Joint Tenants. (see: paragraph 18 of the affidavit) (Emphasis added) 1. "During the course of the weekend I suggested that in view that the farm was being purchased 'for the kids' why couldn't us three girls [hold] the farm for the five of us?" (see: p 62) 2. Ms Bailey's handwritten instructions to Doherty Partners: "After Annette and I suggested that the property be bought in the three girls' names [due to the] existing land-holding in Dad's, Bruce and [indecipherable] names. Bruce went to Mr Dalziel at McIntosh, McPhillamy who agreed with the concept [indecipherable] trusteeship for the children. There were several family discussion [indecipherable] was discussed that the property was to [indecipherable] behalf of the five children… in view of my parents age and health (Dad's age 68 in 1979 and Mum's age 57) consideration was given to the means test for aged pensions" (see: pp 71 – 72). 3. "You and Mum made me swear (make an oath) verbally and hold true that I was to undertake the ownership of Hazeldene on behalf of my four siblings and myself (in equal portions dur to your 1950s will) due to the Crown Lands Act requirements. I continued to do that to the time of my disposition!" (see: p 124). This comes from a letter sent by Ms Bailey to her father on 13 August 1997 (see: Exhibit A4 Tab 2.4 pp 124 – 141). 1. To these should be added matters which would have reinforced his conclusion and which are in the evidence before me: 1. "So far as I am concerned I held the property on behalf of myself and my brothers and sisters equally": see paragraphs 439 - 440 of Ms Bailey's signed 2000 statement given to Doherty Partners in connection with her claim (with Annette as co-plaintiff) against Moffatt Sullivan. 2. Paragraph 13 and 13(a) of the Statement of Claim in the proceedings against Moffatt Sullivan (see: Exhibit A2 p 1535), which was verified by Ms Bailey and Annette at Exhibit A2 p 1550: 13. In relation to the said dispute, the First Plaintiff gave to the First Defendant, the Second Defendant, the Third Defendant and the Fourth Defendant instructions that: a. it was agreed between the First Plaintiff and her father, mother, sisters and brothers at the time of acquisition of the said land, that the land would be purchased by the First Plaintiff and held on trust by the First Plaintiff for the First Plaintiff, the Second Plaintiff, Janet Beatrice Shafik Bailey, Bruce Clyde Bailey and Arnold Neil Bailey. 1. Her statement that "in the event of my death my portion of the land" (see: Exhibit A2 tab 14). 2. The Moffatt Sullivan letter to Henry on 9 July 1987 (see: Exhibit A2 tab 100 pp 1629 - 1630), which purports to record what was said at a conference between Mr Jessop, Mr J.A Moffatt, Bruce and Ms Bailey. 3. Moffatt Sullivan letter of 24 November 1988 to Henry: We have been consulted by your daughter Glenice Bailey whom we are instructed holds the aforementioned property on trust for yourself. It is our view that the trust was created when the property was initially purchased and primarily on the basis that you contributed the total purchase price. Glenice had indicated that she no longer wished to continue as trustee and intends to submit her resignations forthwith. (Emphasis added) Ms Bailey received a copy of that (and similar letters written to her siblings) on 7 December 1988. There is no evidence of any response from Ms Bailey contradicting the assertion that she had given those instructions to Moffatt Sullivan. 1. In a letter of 8 February 1989 Moffatt Sullivan informed Mr Jessop, who was the solicitor acting for Henry: We have your letter of 20 December 1988 and have had an opportunity [of] discussing the contents thereof with our client. From the outset we should point out that our client is not refusing nor will she refuse to transfer the title of the subject property but believes that certain matters should be considered carefully by your client. Firstly, our client alleged that when the property was originally acquired it was really the intention of the family that the property would ultimately vest in Glennys and Janet, the reason being that at the time of acquisition the parents owned the Oberon property, Bruce Neil owned a property at Barradine and Annette owned units at Byron Bay. At that time Glennys and Janet held no property. However, if this is not the case then our client advises that the ultimate beneficiaries of the Trust were the family and not the parents (or the survivor thereof). It also seems to us that if your client, the father, wished to have the property transferred to him as suggested then the legality of the original transfer may be questioned bearing in mind the provisions of Part VIII Division 13 of the Crown Land Consolidation Act. Similarly, an implied Trust in favour of all the children and/or the parents may also be tainted. (See: Exhibit A1 Tab 1.24 p 99) It will be observed that it appears from the letter that Ms Bailey was alive to an argument that her father might have been in breach of the CLCA and that she asserts that it was the intention that the property could ultimately vest in her and Janet, notwithstanding the indication that she would transfer Hazeldene to her father. It became clear, however, that Ms Bailey had decided not to transfer the property in accordance with her father's request – she set about seeking advice in relation to the CLCA and she sought material relating to the purchase of Hazeldene (see: Exhibit A1 Tabs 126, 127 and 130 - 134) and she did not do as her father had requested. 1. There are also handwritten notes of Annette and instructions to lawyers which undermine Annette's evidence that she has always held the view that Ms Bailey had, and was intended to have, the full beneficial ownership of Hazeldene: 1. Paragraph 13 of the Statement of claim referred to in [23(2)] and verified by Annette. 2. "What I want you to know that I am a beneficial owner of Hazeldene and the cotton crop to be delivered to the Co-op is a great deal to do with me" (conversation related by Annette with a Mr Wagg Exhibit A4 p 102). 3. "When it appeared all was lost, [because Henry could not complete the purchase of Hazeldene] I phoned my family and suggested that he should explore other options; Seeing that the change of family farms was for our long term benefits could any of us hold the ownership on behalf of the other children? This was undertaken by Glenice Margaret Bailey for the children" (see: Exhibit A4 p 79). 4. In her affidavit in the 1990 proceedings, she said "it is my view that the parents give to the five children equally in proceeds of the sale of Titania and other moneys to enable both the Coonabarabran property and Hazeldene to be acquired as five joint tenants." 5. See also Exhibit A4 p 78, p 107 and pp 164- 170. 6. Annette's letter to her father of 9 February 1991 (see: Exhibit A4 Tab 2.4), in which she said that Mary died believing Ms Bailey held Hazeldene on behalf of Annette and her siblings and that Ms Bailey was acting on a pledge given to hold Hazeldene on behalf of Annette and her siblings and see: T235 – T236. 1. Whilst there are some documents which are entirely inconsistent with the 100% claim, there are other documents, or parts, which might be thought to offer some support for that claim. At some point in time Ms Bailey has advanced the claim that she had only a moral obligation to ensure that the property would be available on her death to other members of the family and, indeed, she and Annette advanced that proposition in the witness box. Indeed, the duality of Ms Bailey's position is reflected even in her main affidavit in these proceedings. I set out paragraphs 36, 201 – 207, 439 – 440, 723 and 765 of her main affidavit: I recall that I was chosen among the kids to be the registered proprietor of Hazeldene because: a. my father owned the Crown Land 'Titania' property b. Janet was going through marriage problems at the time c. Bruce and Neil owned Crown Land at Yahringerie; and d. Annette owned a property at Suffolk Park. (see: paragraph 36 of her main affidavit) Apart from telling me that I had to be fair, my parents did not give me any other instructions about how I was to carve up the property. Mum said, "You know that Dad has made his will and you five are to share equally. Now that Dad cannot own Hazeldene, I expect you to do the right thing." Dad was there and he either nodded or said "Yes." I said to Dad, "I intend to do the right thing by you and Mum and the family." When I was speaking to Mum, I would say, "I intend to do the right thing by you and Dad and the family." I said to Mum and Dad, "I know why I got the farm, due to the Crown Lands Act and I can't forget that. I've already given my promise to you, that I am to be fair to you, to let you come and go, and be fair to my brothers and sisters and keep the farm. I know I am one of five." (see: paragraphs 201 – 203 of main Bailey affidavit) So far as I was concerned I was the registered proprietor of the property. So far as I was concerned I held the property on behalf of myself and my brothers and sisters equally. (see: paragraphs 439 – 440 of main Bailey affidavit) I said to him, "The intention originally was that Hazeldene would be for the five children. At the time of the purchase, Dad had land at Oberon, Bruce and Neil had land at Yahringerie. Annette had residential flats at Suffolk Park and Dad thought that ruled her out. Janet and I had no property. Dad and Mum told me that there was no way they were putting it in Janet's name because she was erratic. So it came down to the fact that the property could only be in my name." (see: paragraph 723 of the main Bailey affidavit) …It was agreed that the property would be bought by me for those reasons. I always understood I was buying for the 5 children ultimately in equal shares, in accordance with Dad's will at the time. All discussions with Mum and Dad and whoever else was present were that the property was to be bought for the 5 children to minimise death duties, taxes and stamp duty… (see: paragraph 765 of the main Bailey affidavit). (Emphasis added) and Ms Bailey was forced to admit that her position had changed: see T79.35 0 T79.42, T80.10 – T80.15, T113.24 – T113.36, T124.45 – T125.1, T125.48 – T124.49, T130.28 – T130.50, T131.10 – T131.18, T66.29 – T66.34, T67.23 – T67.31, T68.44 – T68.49 and T165.43 – T165.50. 1. I received after Court, on the third day of the hearing, Ms Bailey's written opening submissions ("POS"). Much, of what is contained in that document was presented orally in Ms Bailey's opening on the first day of the hearing. In the afternoon of the fourth day of the hearing, I received Ms Bailey's written closing submissions ("the PCS"), and also a document headed Statement of Issues prepared by Mr Hill on Ms Bailey's behalf. 2. The POS and the PCS contain much that can be described as accusations and complaints against lawyers generally, not simply TLH, and are, in a number of instances, emotionally charged and not germane to the real issues of this case. I do not propose to descend into the detail of the documents, but shall summarise, insofar as they are relevant, or potentially relevant, to her claim the following matters: 1. Ms Bailey maintains that she has been robbed or deprived of Hazeldene, which she contends was rightfully hers, both legally and beneficially. 2. She, at all points in her case, seeks to blame lawyers for that loss, contending, for example, a barrister retained by them, pressured her to sign the settlement deed in February 1991 that led to Hazeldene being transferred to her father. 3. At the heart of her case, as presently formulated, are advanced these propositions: 1. That her father could not hold Hazeldene whilst he owned Titania; 2. That he made a gift to her of Hazeldene because she was a daughter who, up till then, had received nothing, supporting a presumption of advancement, a presumption long recognised in relation to purchases by a father in the name of a child: see Sidmouth v Sidmouth (1840) 2 Beav 447 454- 455 and 48 ER 1254 at 1257 and Charles Marshall Pty Ltd v Grimsley (1956) 95 CLR 353 at 364 and see also Trustees of the Property of Cummins (a bankrupt) v Cummins (2006) 227 CLR 278 at 297 – 298; 3. That the transaction by which she became registered owner was legal if she was the beneficial owner as well as the legal owner of Hazeldene and illegal if she was not the beneficial owner, this is "the illegality point" based on s 272 of the CLCA. Wrapped up in this is the contention that her father had no right to demand back Hazeldene because he must be presumed to have been acting legally when he arranged for the 1979 contract to be entered into in her name; 4. That she was always entitled to 100% of Hazeldene until she transferred the property to her father in 1991, and always had a claim against Moffatt Sullivan because they had lost her the right to retain 100% of the beneficial interest in Hazeldene; 5. That she had a claim against Doherty Partners because the claim which they advanced in her name (and that of Annette) against Moffatt Sullivan was limited to the loss of the 20% claim; 6. That TLH advised her that she did not have high prospects of success against Doherty Partners for not advancing the 100% claim (or for undermining the 100% claim); 7. That TLH did not advise her to sue Doherty Partners for failing to set aside the 1991 Hazeldene Settlement Deed and, rather, entering into the 1995 Family Settlement Deed. 1. The last position in (g) is, as I have noted, not pleaded and cannot be advanced. 2. These components are placed under severe strain by the following matters: 1. Ms Bailey and Annette have, over the years, signed statements, sworn affidavits, made assertions by verified pleadings and to their lawyers, which are entirely inconsistent with the assertion that Ms Bailey was to hold, or understood herself to hold, the entire beneficial interest in Hazeldene. I have detailed examples of those matters above. Ms Bailey, when confronted with some of those documents, has given explanations which include that she was told amendments would be made later: see T149.20. I shall deal with such matters in connection with my assessment of the credit of both Ms Bailey and Annette. 2. The involvement of Annette in the Moffatt Sullivan proceedings is and of itself a most significant matter undermining the claim that Ms Bailey believed that she held Hazeldene for no-one but herself. Ms Bailey could only advance that claim in the Moffatt Sullivan proceedings jointly with Annette if Annette had an interest in Hazeldene. Doherty Partners specifically raised the problem of the 100% claim and the position of Annette in a letter of 1 November 2001, pointing out that Annette's instructions in her October 2001 letter that Ms Bailey was entitled to all of Hazeldene beneficially meant that Annette could have no claim against Moffatt Sullivan (see: Exhibit A3 Tab 117 p 2067). Ms Bailey claims that it was the lawyers acting for Moffatt Sullivan in the Moffatt Sullivan proceedings who raised the point (and they may well have done so), but the problem had been drawn to Ms Bailey's attention by Doherty Partners. 3. The contention that there was a presumption of advancement upon which Ms Bailey could have relied ignores the fact that the presumption is rebuttable and the fact that material was available to suggest, and very likely establish, that Henry's action in arranging for Ms Bailey to be the registered proprietor was intended as a temporary measure, not to advance Ms Bailey, but to enable Hazeldene to be purchased and held until after he could sell Titania. That Henry permitted the deposit money to be used for the purchase by Ms Bailey and that he paid off the mortgage debt are equally consistent with advancement, or Ms Bailey holding the property in her name until he was able to hold it in his. However, those facts, taken together with the fact that the contract for sale had previously been in his name and the change to Ms Bailey after Henry was unable to sell Titania at auctions, points in the opposite direction. That the arrangement was not motivated by a gift of advancement and not so understood by Ms Bailey is reinforced by the fact that she was initially prepared to transfer the property: see Exhibit A1 Tab 1.22 and Tab 1.24 and her own earlier statements. Ms Bailey denies that she gave instructions to Mr Sullivan of Moffatt Sullivan in preparing a declaration of trust in favour of her father in 1984 and 1985: see Tabs 1.04, 1.05 and 1.07 and see Tab 1.02 where Ms Bailey is recorded as having told Moffatt Sullivan on 8 August 1984 that Hazeldene "(really belongs to father Henry Neil B)" and that she was making her way in with the Public Service and "cannot afford time to work property correctly." In my view these documents themselves undermine her denials; see also T76.48 – T78.8 of the transcript of the hearing of this matter. 4. The illegality argument proceeds on the basis that, for her father to encourage her to enter into the Hazeldene purchase contract, was an attempt to evade the strictures of the CLCA. That contention is contested by Mr Emmett and I shall say more about it below. If it were correct it would mean that she might have had a basis to resist the claim of her father, but having transferred Hazeldene to him pursuant to the Hazeldene Settlement Deed in 1991, she would have had to face the risk of a finding that she was privy to an attempt to defeat the legislation, and yet seek to recover the property. If she had a claim against Moffatt Sullivan based on the assertion that Moffatt Sullivan wrongly advised her not to plead, and rely on, illegality, that claim expired, at the latest, 1 February 1997 i.e. 6 years after the Hazeldene Settlement Deed, executed on 1 February 1991. Any claim that Doherty Partners should have sued Moffatt Sullivan (or recommended suing) on that basis would have expired at the end of six years from that date: i.e. 1 February 2003. TLH were not asked to consider a claim against Doherty Partners until, on Mr La Hood's evidence, November 2005, and on Ms Bailey's evidence, in late June 2003. On either basis the time for such a claim against Doherty Partners had expired. 5. There are two further strands in Ms Bailey's submissions on illegality to the effect that the "trust for five" case was flawed because trusts were not permitted by the CLCA and because Bruce owned Crown land which required him to obtain Ministerial approval for the acquisition of an interest in Hazeldene as well. Ms Bailey has not pointed to any evidence that Bruce in fact owned Crown land, and she maintained in her submissions that her application for approval to purchase Hazeldene was made in good faith, but the contention that the trust for five was itself a breach of the CLCA opens up the possibility that the result obtained by Ms Bailey in the Moffatt Sullivan proceedings was a better, not worse, result than that which she should have obtained. Indeed there are reasons (dealt with below) including Ms Bailey's credibility which strengthen that possibility. 1. The parties in these current proceedings are in agreement that any claim Ms Bailey had against Doherty Partners became statute barred on 27 June 2009, because that is six years after the Moffatt Sullivan proceedings were settled. 2. One matter which is raised in the PCS is Mr Emmett's involvement in the case for the defendants. Mr Emmett is Sir Laurence Street's grandson and Sir Laurence, having a number of years before that retired as Chief Justice of New South Wales, was the mediator in the 1995 and 1996 Bailey family mediations. Not only was this complaint (and some related assertions for which there is no evidence at all) made in closing submissions, and hence far too late for the consequences to be considered, the contention that a barrister is in a conflict position when his grandfather mediated a dispute between the plaintiff and her brother and other members of the family is completely baseless. Nor did the PCS explain what the consequence of the contention being upheld should be. 3. I received from Mr Emmett detailed written opening and closing submissions, "DOS" and "DCS" respectively, and also a schedule in relation to the oral evidence of Ms Bailey, and another in relation to the oral evidence of Annette, which I have subsequently had marked as MFI 2 and MFI 3. I also received from Ms Bailey a schedule of allegations in the SFASTOCL, responses of the defendant and references to the plaintiff's evidence prepared by Mr Hill, which I have subsequently had marked MFI 4. 4. Once it is clear that Ms Bailey gave instructions to Moffatt Sullivan in 1990 that it had been agreed that the property was held by her in trust for five, the question of whether it was truly so held becomes unimportant. Moffatt Sullivan cannot be criticised for acting on Ms Bailey's instructions. They were not required to posit alternative cases based on other facts of which they were not informed. The illegality case is such an example. The illegality case was inconsistent with the trust for five case- it did not need to be considered given Ms Bailey's instructions. The allegation of a presumption of advancement in favour of Ms Bailey was inconsistent with Ms Bailey's instructions verified in the Cross Claim in the 1990 proceedings that it was agreed between herself, Henry, Annette, Neil, Bruce and Janet that she would hold Hazeldene on trust for herself and her siblings. 5. Mr Emmett attacked the credit of both Ms Bailey and Annette and gave considerable detailed references to the evidence in support of that contention. I accept his submission that neither Ms Bailey nor Annette are credible witnesses who can be believed on their oath. 6. My reasons for that conclusion in relation to Ms Bailey are as follows: 1. She contends in these proceedings that her father gave her Hazeldene as a gift and that she always believed and understood that Hazeldene was not only legally, but also beneficially, hers alone: see, for example, T70.36 - T71.39. That assertion is made in the context of extensive evidence that she did not regard herself as beneficially entitled to Hazeldene and to much of which I have referred in [22] – [24] above and at T130 – T131 she agreed at the time she wrote to her father in 1991 she believed that she was made to swear to undertake the ownership on the basis of the trust for five. 2. When confronted with the affidavit filed in the 1990 proceedings, in which she had made statements that were clearly inconsistent with the 100% case, she asserted that she told the solicitor who prepared the affidavit that she wanted changes made, but could not produce any record of any request to make such changes, nor is there any evidence of a subsequent amended affidavit having been filed in those proceedings. 3. When confronted with the verified pleading in the Moffatt Sullivan case, she asserted that she wanted to have it amended but was told there was no time due to the expiration of the limitation period. She has produced no evidence of any amendment being made subsequent to the Statement of Claim or any written request or note of an oral request for amendment. 4. Ms Bailey has made some extraordinary claims about the conduct of her lawyers. She says, for example, that her barrister in the 1990s proceedings threatened to drag her hand across the page if she did not sign the Hazeldene Settlement and that Mr Moffatt was present and remained silent: see paragraphs 165 – 168 of her main affidavit. I have referred to her claims that she told Doherty Partners that the contents of the Statement of Claim in the Moffatt Sullivan proceedings were incorrect, which they did nothing about. Her assertion that she mentioned her concerns about the incorrect pleadings every time she spoke to Doherty Partners is extremely difficult to believe, particularly when she is unable to point to any file note of Doherty Partners or letter from her to Doherty Partners addressing the issue. She makes similar assertions against Moffatt Sullivan: see T93.9 – T93.34. 5. Ms Bailey constantly failed to answer the questions asked of her and/or was evasive, for example at T67.10, T73.4 – T73.16, T79.30 – T80.15, T114.40 – T114.44, T117.9 – T117.20, T122.45 – T122.50, T125.11 – T125.43, T127.11 – T127.35, and T131.28 – T132.19. 6. She admitted to having signed a false statutory declaration: see T130.5 – T130.16, and to having verified pleadings in the Moffatt Sullivan proceedings that she asserts were false: see T129.4 – T129.27 and see T119.31 – T119.44; T149 – T150. 7. In a letter to the Law Society in March 1990 seeking information about solicitors she asked for a recommendation of someone who could advise on a "minority interest". To rebut the proposition that she clearly thought she had only a minority beneficial interest in Hazeldene, rather than a 100% beneficial interest, she said that she was thinking about the situation if she lost the case her father had commenced. Cross examination on that point led her to assert that a minority interest includes a zero interest: see T98 – T99, which is not credible. 8. She denied that she told Mr Moffatt that she wanted to bring a cross claim on the basis of the trust for five: see T99- T100, notwithstanding his file note that, she agreed, reads as if she did so instruct him. 9. I am unable to accept her explanation for her repeated failure to answer Mr Emmett's questions at T132.14 – T132.24, namely that his questions were unclear or imprecise, as none of the questions which she failed to answer were unclear or imprecise. 10. Another example of the inconsistency of her evidence can be seen in paragraphs 804 – 827 of her very lengthy 2000 statement given to Doherty Partners. She agreed that when dealing in that statement with inaccuracies she did not identify as an inaccuracy in the documents, sworn and signed for the 1990 proceedings, that she had said she held Hazeldene on behalf of herself and her siblings, but she denied that she did believe these statements to be correct: T123 – T124.21. 11. When it was pointed out that at Tab 73 she had told Mr Wowk and Mr Smallbone that she wanted an order that she and Annette get a portion of the land she says she was talking about the distribution of her father's estate: see T133.35 – T134.8, which I do not accept. There is no record of her having said in 1994 that she should have 100%, and, indeed, even after she became aware of the presumption of advancement in 1996, because Mr Wowk told her about it, she did not assert that she was entitled to 100%. 12. On 4 December 1996 Mr Wowk wrote to Ms Bailey noting that Mr Smallbone had advised that the limitation period for a claim in respect of negligence was February 1991 and that "basically, on your evidence you were entitled to the whole of Hazeldene as trustee for the five children in equal shares" (see: Exhibit A2 Tab 99). She claims that she corrected Mr Wowk concerning her evidence (see: T146.15 – T146.25) but there is no evidence of any such 'correction' in 1996 or 1997, and there is no diary note or support for that assertion, and she did not make any relevant corrections to the draft Statement of Claim in the Moffatt Sullivan proceedings: see Exhibit A2 tab 98 p 1519, and she claimed that she did not "know the logics of the lawyers": see T148.5. Ms Bailey's own evidence is that she enquired of Mr Wowk whether her claim should be based on the trust for five, and that he replied "any claim by you that is inconsistent with your often stated position that you held the property on trust for the 5 children would impinge on your credibility in a case where your credibility may be an issue": see paragraph 261 of her affidavit. She says that she thinks that what the note of Mr Chapman of 24 January 1996 was a record of her asserting a claim to 75% and she says that it was saying was that the loss she and Annette were seeking was 75%: see T147.35 made up of two lots of 12.5% that she and Annette accepted had to be deducted. A claim for 75% of Hazeldene is not consistent with a claim to 100% but, in any event, the paragraph which Mr Chapman and Ms Bailey appear to have been addressing at p 1519 is what became paragraph 34 of the Statement of Claim in the Moffatt Sullivan proceedings. The 70% referred to in the draft statement of claim appears to be the total of what the five siblings' "expectations" were under the will, that would have been 62.5% for the five children, but Ms Bailey asserted it should be 75%. It was not a correction relevant to the 100% claim. 13. I have referred to a number of examples of documents in which Ms Bailey is recorded as having made comments and given instructions that are recorded and which instructions were completely inconsistent with her claim that she held Hazeldene in her own right. Ms Bailey responds to these by asserting variously: 1. That she told the lawyers who had prepared the particular document that it was wrong; 2. That she signed the particular document subject to amendment (see for example T119.35 – T120.47 and T122.25 – T122.40; 3. That she was under pressure of time or anxious; 4. That what she was saying was not her own evidence but what she had heard from one or other lawyer. but no letter or file note had been tendered supporting the contention that she wanted affidavits changed or that statements she had previously made were incorrect or that the contents of letters sent on her behalf were incorrect or wrong: see T73.20 – T73.27, T73.39 – T73.48, T82.4 – T82.9, T93, T96.5 – T96.30, T120.2 – T120.4, T155.42 – T156.1, T164.20 – T164.23 and T164.34 – T164.41. 1. I set out the cross examination of Ms Bailey at T113.10 – T118.1, which lengthy as it is, demonstrates the complete lack of credibility of Ms Bailey: EMMETT Q. Let's go back now to your handwritten letter, so if you go back to the beginning of the tab. Do you see you've then got comments and one, two, three, four, five in the handwritten section. Those are your comments about proposed amendments, is that correct? A. Yes, they are. Q. At paragraph 12 in the second paragraph do you see it says: "There were several family discussions where it was discussed that the property was to be held by me on behalf of the five children." That was your belief at the time, wasn't it? A. May I go back to the typed form? Q. No, tell me whether that was your belief at the time, that there were several family discussions in which that was discussed? A. Not in legal or beneficial there. Q. I'm not asking you about legal, I'm asking about your words? A. No they weren't. Q. That wasn't your belief at the time? A. No. Q. Why did you say-- A. There was a family farm to be operated by the family. Q. Why did you say that to Mr Moffatt if it didn't reflect your belief? A. May I go back to the typed-- HIS HONOUR Q. No, just please answer his question. A. I was addressing what was in the typed form. EMMETT Q. You were telling Mr Moffatt about several family discussions that you said occurred. You were telling him facts? A. I - Mr Emmett, I have stated that the farm was to be operated as a partnership. Q. Well, that's not what you've said here? A. In accordance with the Water Resources Commission's advice. Q. That's not what you've said to Mr Moffatt, is it? A. It is what Mr Moffatt said did occur and what he'd been - been being relied (as said) from Mr Jessop through other members of the family. Q. This is you telling Mr Moffatt about family discussions and there's no legalese in it, it's a simple statement, family discussions that you would hold on behalf of the five children-- A. Mr Emmett I can-- Q. Can I finish my question? A. Yes, you can. Q. Family discussions that you would hold on behalf of the five children. Was that true or false? A. It is false. Q. You told Mr Moffatt a lie? A. No, I did not tell him a lie. I can tell you Mr Emmett that on-- HIS HONOUR Q. You're raising your voice, just calm down. A. Okay. Well maybe-- Q. I have to have the evidence given in appropriate fashion. A. Okay, Mr-- Q. Would you just take a moment to calm down and then answer his question? Yes. A. Your Honour, in view of the interference from Mr Jessop there were accusations and allegations being put that were incorrect from the lawyers to the family and being regurgitated and this is one of them. Q. Do you mean regurgitated by you? A. Regurgitated by myself and all of the others saying that that was the legal position. EMMETT Q. You told Mr Moffatt that there were family discussions about you holding the property on behalf of the five children when you knew that to be untrue, is that what you tell his Honour? A. No, I'm not saying that. I'm saying that that is what I was advised by Mr Moffatt that if it could not be held on dad by a resulting trust it had to be held on trust for five. Q. I'm not asking you about trust, I'm not asking about legal characterisation-- A. I am - I am stating that this ended up being a legal damn stupidity entanglement because lawyers would not go and have a look at the Crown Lands Act, would not believe that dad could not own it and that Bruce and Janet - Bruce and Neil already owned Crown land, they were not qualified on trust for five. Q. Do you understand that what I'm asking you about is your statement to Mr Jessop (as said) that there were family discussions about you holding on behalf of five children? A. That past last bit was not my words but he was - I was addressing what he was saying that there had been. Q. Do you understand that my question is not about legal characterisation, it's about your statement that there were family discussions in particular terms. Do you understand that that's my question? A. I am stating part-- HIS HONOUR Q. No, do you understand-- A. Part A-- Q. You have to answer, he's asked you a question. Do you understand that that's his question? A. Yes, that is the question. EMMETT Q. You tell his Honour that there were not family discussions about the property being held by you on behalf of the five children, is that correct? A. There was no discussions about being held on trust for five at that stage. Q. That wasn't my question, and you know it. My question was, were there family discussions about the property going to be held by you on behalf of the five children? A. No, there were not. Q. Can you explain how you came to tell Mr Moffatt that there were several such discussions? A. Mr Moffatt had told me that he had been told by Mr Jessop there had been. Q. This is you telling Mr Moffatt something? A. You know what, Mr Emmett, when you go to a lawyer, (a) you go supposed to be with a problem or to resolve a problem and you are there also to inter react(as said), getting advice and giving instructions, and the worst part is from what I've seen in 30 years dealing with this matter and related matters, lawyers tend to forget that when they give advice they make out they were instructions and this has happened repeatedly in our family and this is not an exception. Q. I'm sorry; these are your words in your handwriting? A. Yes, they are. Q. It's not advice from anybody; it's you telling Mr Moffatt something about family discussions? A. Take it as its word and do not ask me another question about it. HIS HONOUR Q. He's entitled to ask you whatever questions are appropriate. A. Well, he can then. EMMETT Q. Do you have anything further to say, I'll cut through it, about how you came to tell Mr Moffatt that? A. Yes, because Mr Moffatt was insisting that if it was not in trust for dad it had to be in trust for five and that Bruce and Neil were not prohibited by already owned land. Q. You know that's not-- A. And it was persisted with. Q. You know that's not an answer to the question how you came to tell him that there were several family discussions about a particular matter, don't you? A. In your words, no. Q. You told us that some aspects of the statement also did not reflect your instructions, remember when I took you through the typed statement, but you haven't said that here, have you? A. No, I did not. I don't always give instructions in writing. Sometimes I do them verbally. Q. But you gave quite detailed written instructions about what was correct and what wasn't in this document, didn't you? You corrected him about dates? A. Yes, I did attempt to, Mr Emmett. HIS HONOUR Q. You asked him to delete matters, words, didn't you? A. Yes, I did. Q. But you didn't say to him anything about those paragraphs that Mr Emmett took you to before that you say were wrong? A. Your Honour, it would've been an oversight at the time because I was under enough stress as it was with the - with the attack on my ownership. EMMETT Q. You tell his Honour that it was an oversight that you didn't correct him about holding the property for five? A. Yes, it is. Q. Even though in your own handwriting you were telling him about the discussions in which there was a trust for five, sorry, in which you held on behalf of the five? A. Correct. The subject of the cross examination is Ms Bailey's handwritten amendments to the draft affidavit sent to her by Mr Moffatt: Exhibit A1 Tab 1.38. 1. It is clear that the statement prepared by Moffatt Sullivan for Ms Bailey in the 1990 proceedings was based on instructions she gave and amendments she sought in writing. None of the amendments changed the critical assertion in that statement that in all the discussions leading up to the purchase of Hazeldene (it is referred to there as Boomi) it was intended that Hazeldene would "be bought for the five children as a means of avoiding death duties taxation and stamp duty": see Exhibit A1 Tab 1.36 p 149. Whilst it is true that that statement differed to what Ms Bailey had written in her letter of 22 May 1990 (dealt with below), the inconsistency was not in relation to the trust for five, but rather that the reason i.e. the express reference to avoiding death duties taxation and stamp duty was new (see: Exhibit A1 Tab 1.36 p 185). The "death duties taxation and stamp duty" rationale was exactly what Ms Bailey had told Mr Moffatt: see Exhibit A1 Tab 1.36 p 149. I do not accept Ms Bailey's assertion that by what she said to Mr Moffatt at p 185 she was correcting what she had said at p 149 or what is contained in her statement so far as the trust for five basis was concerned: see T123. 2. Ms Bailey attempted to rely on her diary to assert that she had recorded her complaints about the documents (see for example: T90.46 – T91.8, T93.94), but she did not produce the diary when it was called for: see T80.4 – T80.25, T82.4 – T82.9, T90.17 – T90.28 and T92.6 – T92.31. 3. At paragraph 262 of her main affidavit Ms Bailey said that Mr Wowk of Doherty Partners told her about the presumption of advancement prior to commencing the Moffatt Sullivan proceedings, at T152.32 she said that he did not do so, and when the inconsistency was pointed out to her by Mr Emmett she said she found his questions inconsistent, at T153.32 – T153.37 she agreed he did. It was not the questions which were inconsistent, but rather her answers. 1. In relation to Annette I have very similar difficulties with her evidence as to Ms Bailey's evidence, who asserts that she had no interest in Hazeldene (see: T222.23 – T223.7): 1. The matters referred to in [24]. 2. The fact that Annette is closely linked to this litigation and appeared to see herself as an advocate for Ms Bailey's cause: see T216.24 – T217.26 and T218.1 – T218.9. Annette was a co-plaintiff with Ms Bailey in the proceedings against Moffatt Sullivan and she jointly instructed Mr La Hood. She has provided significant funding to Ms Bailey: see T240.26 – T240.41. Annette also failed to answer questions responsively and was evasive in her answers: see for example T225.21 – T225.34, T226.20 – T226.35, T227.24 – T227.44, T234.29 – T234.37 and T245.49 – T236.33. 3. At Exhibit A1 Tab 120 is a letter dated 23 November 1988, which Annette wrote to Mr Moffatt, saying that Ms Bailey had full power of attorney to act in regard to her financial interest in Hazeldene. Her evidence at T225.27 was that the reference was to her share in the business. That is not what the letter says, and I do not accept her contention. 4. When confronted with a draft statement in her name (p 193) that was inconsistent with her current position, she said that it was what Mr Moffatt required (see: T227.20). Having said that Mr Moffatt told her that, she then said that it was Ms Bailey that had told her that was what Mr Moffatt "required": see T227.27 – T227.44, and see T228.18 – T228.48, T229.34 – T229.40, T230.10 – T230.24. 5. Annette was cross examined about what she said to Mr Wowk of Doherty Partners to the effect that she was forced into a settlement of the 1990 proceedings: see Exhibit A4 Tab 2.4 p 218. That note was inconvenient to her case, so she asserted that she had been made to sign the will, that she did not write the notes and that she thought she would have said "we" or "she" not "me" "because I hadn't - my names weren't on the deed of Hazeldene" (see: T244 – T248). She agreed that she would not have made a claim for loss of 20% of Hazeldene if she had not believed she was entitled to make the claim: see T248.45, although she sought to attribute her involvement to what Mr Wowk and Mr Smallbone had told her. This theme continued at T249 and the cross examination at T249.4 – T249.40 is revealing: Q. Can you turn to paragraph 13 on page 4? Do you see there paragraph 13(a) there's an allegation that Glenice, the first plaintiff, gave to the defendants, that is Moffatt Sullivan, instructions that the land was purchased by Glenice and held on trust by Glenice for Glenice and your other siblings. Do you see that allegation? A. Yes, I do. Q. Did you believe that at the time this statement of claim was filed? A. I was told that was the position-- Q. Did you believe that at the time this statement of claim was filed? A. Based on Mr Wowk's-- Q. Did you believe that at the time this statement of claim was filed? A. (No verbal reply) Q. It's an allegation of fact, it's not a question of law. It says, "Glenice gave particular instructions." Do you see that? A. Mm. Q. By, "Mm", do you mean yes? A. Yes. Q. Did you believe at the time the statement of claim was filed that Glenice gave those instructions to Moffatt Sullivan? A. Well based on what I've seen, yes. Q. No, did you believe that Glenice gave those instructions to Moffatt Sullivan? A. Well I have seen the file so this is going to be difficult to answer this. HIS HONOUR Q. At the time that this document was prepared, that's the point of time we're talking about, did you believe that Glenice had given those instructions as set out in 13(a) to Moffatt Sullivan? A. Well I had nothing else to doubt it, so I'd have to say yes. 1. She asserted that she did not give instructions to Moffatt Sullivan in terms of the particulars given in the Statement of Claim to paragraph 13 and that those particulars were false: see T251.33 – T251.34. She asserted that the affidavit verifying the pleading in the Moffatt Sullivan proceedings' Statement of Claim was false and she could not explain how she came to swear that affidavit: see T251.50 – T252.1, later saying that she signed the affidavit "on advice that it was correct": see T252.30 – T252.35 and see T253.20 – T253.23. She said at T253.25 – T253.32 that she was willing to swear to whatever she was told to say: see T253.31. 2. The following exchange at T230.35 – T230.44 is revealing: Q. May his Honour take it from that that you were willing to swear something that you did not believe to be true or about which you had doubts in order to assist Glenice? A. I was following what I was asked to do. Q. Is the answer to my question, "Yes"? A. Yes, if you want "Yes". Q. I want, "Yes", if that's your evidence. Is your answer, "Yes"? A. Yes. At the time I believed it was correct. 1. When confronted with a prior inconsistent statement about Hazeldene, Annette said that she only had 'future expectations' that she would receive and interest: see T232.26 – T232.35, at which point she accepted that is not what her draft statement said: see Exhibit A1 Tab 1.41 p 197. 1. I am, therefore, unable to accept as truthful any of the evidence of Ms Bailey or Annette unless it is corroborated by contemporaneous documents, other independent testimony, or is an admission against interest. 2. There was no suggestion made that I should not accept Mr Gunning, the valuer who was called on behalf of Ms Bailey, as an honest and credible witness and I do. 3. Mr La Hood was not shown to have been untruthful in any respect. I accept his evidence without qualification. 4. Mr Emmett conceded quite properly that Mr La Hood owed Ms Bailey a duty of care in providing advice, but contended that there are two short answers to Ms Bailey's claim: 1. Mr La Hood's advice was not negligent. 2. Even if, contrary to the first submission, it was negligent, there was no reliance. and that although TLH has other defences it would not be necessary to canvass them if either one of (1) or (2) is accepted. 1. In my view Mr La Hood's conclusion that Ms Bailey and Annette's prior inconsistent statements were very damaging to the case that she wished to advance against Doherty Partners and, therefore, precluded him from being able to advise that her prospects of success were high, was entirely justified. If anything Mr La Hood's advice understated the risk because there were other factors which would impact on the outcome of the prospective case against Doherty Partners for failing to advance the 100% claim. These other factors would include: 1. The matters I have referred to in [29(2)] – [29(4)]. 2. The fact that Bruce, Neil and Janet had all provided affidavits in the 1990 proceedings in support of Henry: see T126.15 – T126.21, and only Annette supported Ms Bailey. 3. That, if Ms Bailey lost the 1990 proceedings, she would have received nothing from the property and would, in all likelihood, have had to pay Henry's costs. 4. That Ms Bailey had no money with which to meet costs in the Moffatt Sullivan proceedings: see T127.15. Mr Smallbone in his advice to Ms Bailey at Exhibit A3 Tab 127 commented on this and said: I wish to stress again that given the difficulties of your financial position, you may not have funds to carry the matter of Bailey v. Moffatt through to completion. If that is so, your best course is to negotiate the best settlement you can with the defendants through a mediation and to avoid any act or omission which would make the defendants in that matter aware that you are without funds or without legal assistance. Therefore, it is imperative, in my opinion that you resolve the concerns of Doherty Partners or engage another solicitor at the earliest possible time. 1. Any claim made against Doherty Partners for failing to advance the 100% case against Moffatt Sullivan would have required an assessment of whether, had Moffatt Sullivan recommended that she not enter into the Hazeldene Settlement because she was, as a matter of law, entitled to retain the property as to 100% beneficial interest, she would have accepted that advice and been able to meet the costs of continuation of that contest and willing to accept the consequence of the threat that her father had made to her that he would disinherit her: see T130. 1 – T130.5 and T233.26 – T233.28. Resisting her father's claim to Hazeldene, even if justified at law, therefore, did not come without consequence. There was also a risk, she was advised, that in addition to disinheritance, she could also be required to pay her father's legal costs and lose her house: see T233.26 – T233.39 and T134.41 – T132.9, T132.40 – T133.2 and T129.49 – TT130.5. Ms Bailey has not provided any information as to what she inherited from the estate of her father beyond her share in Hazeldene of 12.5% - a matter also relevant to the assessment of damages in this case, were that necessary. 2. A second theme of Ms Bailey is the illegality point. The illegality point and the presumption of advancement are closely connected but Ms Bailey asserts that if it is not accepted that her father was providing the funds to advance her in life, then the purchase of Hazeldene would have been unlawful because she was buying the property on trust for her father (and not because he gifted the property to her). If the purchase of Hazeldene by her was unlawful, and she had asserted illegality and been able to rely on that illegality to resist her father's claim in the 1990 proceedings, then she would very likely have faced a cross claim from her father based, not on an express trust, but on a trust based on his having provided the deposit and having met the interest payments and repaid the loan: see Napier v Public Trustee (WA) (1980) 32 ALR 153 at 158, see Baumgartner v Baumgartner (1987) 164 CLR 137, Swettenham v Wild [2005] QCA 264. There would also be issues about the fact that she had permitted the partnership to farm Hazeldene and improve it. Ms Bailey was involved in the planning and obtaining of water licences, only one of which was in her name, and which benefited the property, but also the partnership business of which she was but one of the partners. 3. The ability of Doherty Partners to assert that they had, by letter, raised against Moffatt Sullivan the prospective expansion of the claim to a 100% claim and raised the significance of the presumption of advancement to all children in paragraph 30 of the Statement of Claim (see: Exhibit A2 Tab 100) and that, having ceased to act in February 2002, Ms Bailey could have proceeded with the 100% claim was foreshadowed by them in correspondence with Moffatt Sullivan's solicitors. In other words Doherty Partners, it would very likely be asserted, did not lose Ms Bailey the chance to bring the 100% claim. If it is said that Doherty Partners did lose her that opportunity or weaken the prospect of success on that point, it must have been because they did something before that, for example by assisting Ms Bailey to enter into the 1995 Family Settlement Deed on 3 July 1995 (see: Exhibit A2 Tab 93 paragraph 255 of Ms Bailey's affidavit), or entering into the Hazeldene Settlement in February 1991 with consequent impact on the limitations period. 4. It should be noted that Mr La Hood did not say that Ms Bailey had no prospect of success, or poor prospects of success. Ms Bailey has called no expert evidence to support her implicit contention that she did have high prospects of success against Doherty Partners. Mr Smallbone, her barrister at the time, had, in his letter of 31 January 2002 (see: tab 122), warned Ms Bailey that: In my opinion there is no reasonable prospect of a Judge believing that at the time of acquiring Hazeldene it was the intention of Glenice and your father that Glenice would hold the property free of any moral obligation to share it with her siblings. That is a proposition which is completely inconsistent with the instructions consistently appearing from you in the Moffatt Sullivan file and with the instructions consistently given by you until last year. It is one which flies in the face of your previously sworn and unsworn testimony. It would expose you to criticism as untruthful witnesses. It is capable of completely destroying your credibility in this case. As I see it, there are three possibilities concerning the intention of you and your father in relation to the acquisition of Hazeldene. One is that Glenice was intended to hold it for your father's benefit. A second is that Glenice was intended to hold it for the benefit of the 5 children. A third is that Glenice was intended to hold it for the benefit of herself. If you no longer assert the second proposition and the third proposition is not believed, the first proposition becomes a very attractive proposition. If that were accepted, your case would then depend wholly on the illegality argument, which appears to me to be good but which is very much in contest and on which it would be foolish to assume there is no significant risk. You can still lose the case. 1. Mr Harper SC had told her something very similar to the advice contained in Mr La Hood's letter, although he qualified his view by saying that she should consider obtaining advice from a negligence lawyer: see paragraph 54 of Mr La Hood's affidavit. 2. Further, Doherty Partners had pointed out on 1 November 2001 that what they understood were Annette's instructions (in a fax of 19 October 2001) totally contradicted "all the evidence in the case to date" (see: Exhibit A3 Tab 117 p 2069) and that "if it is now being suggested that Glenice held Hazeldene beneficially absolutely, this is contrary to all previous instructions and assertions made by both of you in relation to the ownership of Hazeldene" (see: Exhibit A3 Tab 117 p 2067). 3. In my view no competent solicitor appraised of the material to which I have referred could have given Ms Bailey advice that she had high prospects of success against Doherty Partners for failing to bring the 100% claim. 4. There is another strand to the assertions made in relation to the claims made by Ms Bailey against Doherty Partners. It is the claim that Doherty Partners acted for her in the 1995 Family Settlement and failed to advise her that that was being dealt with on the basis of the 20% claim, which resulted in a loss to her (see: paragraphs 77 and 78 of the SFASTOCL). There are a number of obstacles in the face of that contention: 1. It is clear that Ms Bailey had given instructions to Doherty Partners that founded the 20% claim and not the 100% claim. Doherty Partners were entitled and indeed required to act upon the basis of the instructions given to them. Their advice could only be assessed as correct or incorrect based upon the factual basis given to them by their client, not by a change of instructions given after the 1995 Family Settlement was entered into. 2. Doherty Partners and Mr Smallbone were aware in October 1994 that there was a need for Ms Bailey to consider whether to seek to set aside the Hazeldene Settlement or, alternatively, to sue Moffatt Sullivan and they indicated to Ms Bailey that they would need to review "all relevant files" in order to be able to advise her on the relative prospects of success of the alternative courses of action available to her and which was the best course of action to pursue". Ms Bailey's evidence is that on 6 March 1995 she and Annette attended at Mr Smallbone's chambers, with Mr Wowk and Mr Chapman (also of Doherty Partners), and that Mr Smallbone advised her as follows (see: paragraph 230 of Ms Bailey's January affidavit): On 6 March 1995, Annette and I attended at Mr Smallbone's Chambers to have conference with Mr Wowk, Mr Smallbone and Mr Chapman at an agreed time. Mr Smallbone said words to the effect of "We have inspected the subpoenaed files, including the files of McPhillamy the solicitor who acted on the purchase and we are in a position to advise you. We don't think it contains evidence that you Glenice owned Hazeldene. The property had to have been either held on trust for your father or on trust for your five siblings. We don't think you can undo what has been done so as to put Glenice back as trustee. You couldn't claim duress because it was not your father who engaged in the duress, but your legal advisors. There are no authorities for duress by third parties. The other option is for a negligence action against Moffatt. We have found that you did have a defence to the action by your father. We think an action in negligence looks like having better prospects. We think the damages that you could claim would be the difference between 20% you would have as a beneficiary under the trust for five and the 12.5% you will get under your father's Will." 1. There is no expert evidence to support the conclusion that that advice (albeit based on the instructions of Ms Bailey) was incorrect. The consequence of that advice i.e. a claim by Ms Bailey and Annette against Moffatt Sullivan did yield a $600,000 settlement, is an outcome with proven success, compared to a highly problematic attempt to undo the Hazeldene Settlement. I would add that, on Ms Bailey's own evidence of what she said to Hodgson J (as his Honour then was) in paragraph 203 of her affidavit concerning the Hazeldene Settlement, was that she had settled because Moffatt Sullivan had stated there was no documentary evidence to support her claim that her father had obtained conditional consent from the Minister for Lands and the vendor had rescinded the contract with her father and Mary and Bruce, saying nothing about duress. Ms Bailey's lack of credibility would be a good reason to anticipate that her claim of 'duress', to which Mr Smallbone referred, might fail at the first step even before considering the problem that the alleged duress came from her own lawyer, not Henry or his legal team, and that she would have additional difficulty establishing that advice to proceed to seek to set aside the Hazeldene Settlement, if acted upon, would have yielded any positive result. 2. In any event the issue of whether one course should be taken in preference to another in litigation is, as Mr Smallbone and Mr Wowk put it in October 1994, "a matter of balancing up which cause of action had the better prospect of success and which cause of action gave rise to the potentially largest amount by way of recovery." The balancing of the two alternatives could only be on the basis of the instructions given by Ms Bailey (and Annette) at the time of consideration of the alternatives. 3. All the matters to which I have earlier referred in relation to the Hazeldene settlement would become relevant in any suit against Doherty Partners for not recommending against entry into the 1995 Family Settlement. 1. It follows that Ms Bailey's claim in negligence fails because negligence on the part of Mr La Hood has not been established. 2. Ms Bailey pleads that she relied on Mr La Hood's advice and did not commence proceedings against Doherty Partners. I set out the cross-examination of Ms Bailey at T183. 35 – T184.16: Q. In particular, you read paragraph 6 about the proposed cross claim? A. Yes. Q. You read paragraph 7 about a possible claim against Doherty Partners? A. Yes. Q. Did you also - you also read, may we take it, on page 3 the comment in the third last paragraph about obtaining a second opinion? A. Yes. Q. Now, going back to paragraph 7, that's what you complain about in these proceedings, isn't it? A. Yes. Q. When you received that letter did you agree with paragraph 7? A. I didn't agree with it. Q. You didn't agree with it, is that correct? A. I thought I had very high-- Q. You thought you had high prospects of success, is that right? HIS HONOUR: I thought she said, "very high", there. EMMETT: Very high. Q. You thought you had very high prospects of success of a claim against Doherty Partners, is that correct? A. Yes. Q. Paragraph 7 did nothing to dissuade you from that view? A. No. 1. That pleaded assertion is not supported by Ms Bailey's evidence. Ms Bailey recognised that problem later in cross examination at T198, when she asserted, contrary to her earlier evidence, that she had accepted the advice and then said she "questioned it" and in submissions said that she had made a mistake in her evidence. I think that she realised that the answer she had given at T183 – T184 was detrimental to her case and, therefore, regarded it as a mistake for her to have said what she did. I am persuaded that her answer in the cross examination, at T183 – T184, and set out above, was in fact truthful. It is consistent with the answers she gave in relation to her attitude to Mr Smallbone's advice found at Exhibit A1 Tab 122, see T176.46 – T177.8 (and see T172 – T174) and to Mr Harper's qualified advice at T180.5 – T180.12, T181.15 – T181.33, T182.28 – T182.44 and T183.49 – T184.16. It follows that since Ms Bailey did not rely on the advice from Mr La Hood that is a second reason why her claim in negligence fails. 2. The elements of the claim for breach of fiduciary duty (see: SFASTOCL 93A – 93E) are that Mr La Hood: 1. Should "not have discouraged" her from commencing proceedings against Doherty Partners unless he had properly formed an opinion about the prospects of that case, which, as at 27 June 2003, he had not". 2. "Ought not to have indicated to Mr Wowk that he had discouraged the plaintiff from commencing proceedings against Doherty partners." 3. Ought to have disclosed (and not concealed) that he had indicated to Mr Wowk that he (Mr La Hood) had discouraged Ms Bailey from commencing proceedings against Doherty Partners. 4. Ought to have advised that in the light of what he had said to Mr Wowk on 27 June 2003, it was not appropriate for TLH to provide advice to Ms Bailey on her prospect in an action against Doherty Partners. 1. In relation to [49(1)], Mr La Hood's evidence is that he was not, in the three days that he was working to bring the proceedings against Moffatt Sullivan to a close i.e. 25 – 27 June, retained to advise on Ms Bailey's claims against Doherty Partners – rather part of what he was doing was to organise for release of files held by Doherty Partners, which required securing payment of their outstanding fees. Mr La Hood says that he asked Ms Bailey and Annette if he could call Doherty Partners to obtain information. He says, and I accept, that when he held the telephone conversation he had with Mr Chapman (not Mr Wowk), Ms Bailey and Annette were with him in the room and they therefore heard whatever he said to Mr Chapman. His version of the conversation with Mr Chapman of Doherty Partners is set out at paragraph 16 of his affidavit. Mr Chapman agreed to hold off on pursuing Doherty Partner's fees. Mr Chapman's diary note records Mr La Hood saying that "after what he said to them thinks they are happy not to see another lawyer." Mr La Hood says that Ms Bailey had asked him to negotiate with Doherty Partners about their fees and that she had said to him before he rang Doherty Partners "I am finally finished with this and feel relieved it is over. I can move on and never need to deal with Doherty again" (see: paragraph 15). 2. I accept Mr La Hood's evidence of the conversation with Ms Bailey and Annette and that Ms Bailey and Annette heard Mr La Hood's side of the conversation. In any event, what he said in 2003 before he had the chance to view the many documents in the case is irrelevant because he was asked to express a view in December 2005 and did so, both orally in December 2005 and in writing in February 2006. Even if he had thought on an initial basis in June 2003 that Ms Bailey and Annette were not interested in pursuing Doherty Partners and, on a preliminary basis, thought that was an appropriate decision, he was not precluded by reason of that, or of anything else that he is established to have said, from considering the matter when specifically requested to do so in late 2005/early 2006. The claim of breach of fiduciary duty is not established but, in any event, the alleged breach is not shown to have had any causal effect. 3. Ms Bailey has also pleaded a case based on the Australian Consumer Law and s 52 of the Trade Practices Act 1974 (Cth) alleging misleading and deceptive conduct on the part of TLH. Essentially this claim is that, by accepting the retainer, TLH represented that they would, at all times, act in the best interest of Ms Bailey. The alleged failure to do so combines, effectively, the alleged claim in negligence and the alleged breach of fiduciary duty, and a claim that Mr La Hood, by the advice that he gave on 16 February 2006 (see: paragraph 60 of the SFASTOCL) was representing that he had properly considered the CLCA, whether the trust for five could coexist, the opinion of Mr Officer (see [55] below), and whether Doherty Partners were correct in the advice they had given. I do not think Mr La Hood was, in his advice, expressing any view concerning the CLCA, or the opinion of Mr Officer, but rather he was focusing on the difficulties in Ms Bailey's position to which I have earlier referred. No failure by Mr La Hood to act in Ms Bailey's best interest has been established, indeed Mr La Hood's concerns expressed to Ms Bailey have, in my view, been amply vindicated. I have dealt with the underlying issues of negligence, breach of fiduciary duty and reliance, above. In my view no misleading and deceptive conduct has been made out and nor has reliance on the advice given by Mr La Hood been made out. 4. In view of my conclusion that Ms Bailey has failed to establish that Mr La Hood's advice in respect of her prospects against Doherty Partners was negligent and failed to establish that she relied on that advice and my conclusions in respect of the misleading and deceptive conduct claim, it is strictly unnecessary to consider any of the other points raised by TLH. I shall, however, briefly express my views on those aspects of the case, some of which I have already touched on in discussing the claim against Doherty Partners. 5. An important plank in Ms Bailey's contention that her father had no right to recover Hazeldene from her is that the scheme for her to hold Hazeldene was illegal by virtue of s 272 of the CLCA which precluded transfer of Crown land to a person who already held Crown land unless the Minister's consent had been obtained. 6. In May 2000 Doherty Partners sought advice from Mr Officer QC in relation to the 1987 MSJ letter. Mr Officer, in his advice of 16 May 2000, was critical of the advice contained in the letter and he highlighted what he perceived were errors in relation to the issue of the presumption of advancement and illegality. He drew attention to s 272 of the CLCA, and advised that the transaction in 1979 was illegal and that that illegality would have "provided strong grounds for denying the existence of any resulting trust." Ms Bailey places a great deal of reliance on that advice in this case, but in my view her reliance is misplaced: 1. Mr Officer was not asked to consider whether the facts as asserted by Ms Bailey in her 1996 affidavit in the Moffatt Sullivan proceedings would have precluded any illegality argument from being successfully advanced in those proceedings. 2. It is not correct that Mr Officer was the first legal advisor to draw attention to the presumption of advancement and the issue of illegality – Mr Towk had already raised these matters with Ms Bailey (and Annette in 1996). 3. Mr Officer did not embark on a consideration of whether the presumption of advancement would have been rebutted- his point rather being that the MSJ letter did not consider it and did not consider s 272 of the CLCA. 4. Mr Officer did not consider whether, if illegality could have been successfully relied on by Ms Bailey, Henry would have had a claim to recover the monies advanced by him. 1. Ms Bailey also relies on s 234(1) of CLCA, which as at 1981 provided that: 234(1) No Crown grant issued after the passing of this Act shall be expressed or purport to be in trust for private persons or purposes. And the CLCA as at 1983 provided that: 234(1) No alienation of land under this Act shall be expressed or purport to be in trust for private persons or purposes. And to strengthen the illegality point ss 154, 158(1) s 236 and s 237 of the CLCA (these provisions were the same in both the 1981 and 1983 reprints of the Act): 154. Every application for a holding within a classified area is hereby required to be made in good faith; and an application shall be taken to be made in good faith when the sole object of the application in making the application is to obtain the land or a lease thereof, as the case may be, in order that he may hold and use the land for his own exclusive benefit… 158(1). No person shall be competent to apply for a Crown-lease who- (a) at the date of application owns or holds under any tenure (other than a lease having less than 5 years to run, unless such lease confers a right or power to purchase the freehold, which right or power may still be exercised) –or (b) owner or held under any tenure (other than as aforesaid) at any time previous to the date of application, and divested himself of the ownership thereof by transfer conveyance assignment or otherwise, or purported so to do, in order to evade the foregoing provision- An area of land, which, when added to the area of the holding proposed to be applied for, would in the opinion of the local land board substantially exceed a home maintenance area. 236. Every devise contract lease agreement or security made entered into or given before at or after the date of any application for any holding within a classified area-or a conditional purchase conditional lease or additional conditional purchase lease not within a classified area-with the intent or having the effect of enabling any person other than the applicant to acquire by purchase or otherwise the land applied for shall be illegal and absolutely void both at law and in equity. Subject to the provisions of Part VI, the provisions of this section shall mutatis mutandis apply to holdings within irrigation areas. 237. If any person knowingly and with intent to defeat or evade or commit any fraud upon the provisions or purposes of this Act shall induce or make use of any other person to apply for and acquire any conditional purchase, suburban holding or Crown-lease or execute any will or to enter into any contract lease or agreement declared by this Act to be illegal or to become the purchaser, lessee or licensee the person so offending shall be guilty of a misdemeanour, and shall be liable to be imprisoned for any term not exceeding 2 years and not less than 3 months. Subject to the provisions of Part VI, the provisions of this section shall mutatis mutandis apply to holdings within irrigation areas. 1. There is no dispute that: 1. Titania consisted of Crown land and was owned by Henry. 2. Henry sought Ministerial approval to purchase Hazeldene with Mary and Bruce. 3. The Minister approved of the purchase, provided Henry sold Titania first. 4. Henry could not lawfully hold Hazeldene whilst owning Titania. 5. Henry sold Titania before calling on Ms Bailey to transfer Hazeldene to him. 1. Ms Bailey relies on the decision of the High Court in Roach v Bickle (1915) 20 CLR 663 at 670 – 671, in which it was held that there was no valid sub-lease because of the absence of consent of the Commissioner for Water Conservation and irrigation (then required by s 272 of the CLCA). The plurality (Isaacs J and Gavan Duffy J) said at p 671: Where a Statute prohibits a transaction either expressly or by implication, no such transaction can be validly created. The law which forbids its existence cannot consistently recognize it as ever having any binding force. Its existence in fact may be recognized for the purpose of punishing those who disobey the law, but the parties who are both transgressors cannot assert any right under it. It is lifeless from the beginning… This being the true state of the law, and the parties presumably knowing this, the document ought to be construed as not attempting to violate the law, and therefore as not intended to effect a dealing forbidden. In other words the bargain was not absolute, but inchoate only, and as the necessary consent was never obtained, the transaction never emerged from the inchoate stage, and no lease in fact ever existed. 1. The question of whether Ms Bailey could have resisted her father's claim in the 1990 proceedings based on illegality is not easily answered, as Mr Smallbone in his advice to Ms Bailey highlighted (see: Exhibit A3 Tab 122 p 6). Consideration would need to have been given to whether the fact that the ministerial condition could in, and after December 1979, have been met (because Titania had been sold) would, based on Butts v O'Dwyer (1952) 87 CLR 267 (and see OXS Pty Ltd v Sydney Harbour Foreshore Authority [2016] NSWCA 120 at [150]), have defeated the illegality point. Whether s 234 precluded the existence of a trust is also open to doubt: see Strang v Strang [2009] NSWSC 760. I do not think it is necessary to resolve these issues, but they are matters which would have had to be taken into account in considering whether any claim could have been brought against Doherty Partners that they did not recommend a claim against Moffatt Sullivan based on the loss of Hazeldene. In addition to the other considerations, which I have mentioned in [41(6)], there would also be the difficulties that to propound the illegality defence in the 1990 proceedings and to have attacked Moffatt Sullivan for not having advanced it would, very likely , have involved Ms Bailey admitting that she had committed an offence. 2. Ms Bailey asserted that the application for approval of the purchase of Hazeldene in her name was made in good faith (see: T15.35). The application itself is not in evidence, but the approval is found at Exhibit A2 Tab 7. Ms Bailey does not plead that her purchase of Hazeldene was illegal and/or involved a breach of the CLCA, yet she asserts that she could have resisted her father's claims on the basis that the purchase in her name was a breach of the CLCA and Moffatt Sullivan should have advised her to that effect. Nor does Ms Bailey plead that the transfer by her to her father in 1991 itself involved a breach of the CLCA, perhaps because she recognises that by that date there was no impediment to him holding Hazeldene because he had received ministerial approval subject to selling Titania and he had sold Titania in late 1979. 3. Ms Bailey's claim is that Mr La Hood advised her that her prospects of success against Doherty Partners were not high. If, contrary to my conclusion expressed earlier, that led to her not suing Doherty Partners then what she lost was the chance to recover against Doherty Partners the difference between what she would have recovered against Moffatt Sullivan based on the 100% claim and the 20% claim. In assessing that lost claim a number of factors would need to be considered: 1. Whether Moffatt Sullivan would, if the claim of 100% was persisted with, have been likely to have paid more than the $600,000 they did pay, or would have been liable to pay more than $600,000 had the case proceeded to finality and whether she could have met the costs of bringing the Moffatt Sullivan case to finality. We know that Doherty Partners did add a claim for 100% in a draft amended statement of claim and that Moffatt Sullivan were not prepared to pay more than $600,000 once Mr La Hood commenced acting for Ms Bailey. We also know that Ms Bailey had significant financial problems, identified by Mr Smallbone and evidenced by her inability to pay Doherty Partner's fees; 2. Whether, if the 100% claim had been advanced and proceeded to finality, Moffatt Sullivan could have raised the point that all of the benefits Ms Bailey received under the will would have to be deducted. Her father had threatened to disinherit her and he would not have left her 12.5% of Hazeldene (a benefit obtained by the Hazeldene Settlement), but any other benefits which she obtained from the will of Henry would need to be brought to account as well. Ms Bailey has produced no evidence in this case of what those benefits were, so it is not possible to assess whether they were less than, equal to, or more than the amount of the 88.5% differential between the 100% claim and the 12.5% claim, or probably more accurately the 85.15% differential between the 100% claim and the 14.85% benefit Ms Bailey actually received out of the sale of Hazeldene. 3. Whether Moffatt Sullivan could have maintained that the decision to settle with Henry was justifiable and an appropriate outcome given the fact that had Ms Bailey not settled and been entitled to retain ownership of the land, Henry would have had a claim to recover the monies he had invested in Hazeldene (including the deposit and repayment of the loan to Mr Stocks as well as improvements to the land). 1. There was some debate between the parties about how damages would be assessed, and in particular whether the 1991 or 1996 or some later date was the relevant date for the value of Hazeldene. There was also raised the issue of water licenses. The question of the value of Hazeldene arises in the following way: 1. What did Ms Bailey lose by the failure of Doherty Partners to claim against Moffatt Sullivan on the 100% basis? 2. To arrive at a figure for the loss of the chance to succeed against Doherty Partners for failing to sue Moffatt Sullivan on that basis it would be necessary to calculate what was lost by Moffatt Sullivan not resisting Henry's claim on the 100% basis (whether based on illegality or, alternatively, the presumption of advancement) – that is another loss of chance issue, and I have touched on some of the inherent problems in that analysis. 3. To arrive at the loss of chance in the case against Moffatt Sullivan, the value of Hazeldene becomes relevant. If the 100% case could not have been advanced after the settlement on 1 February 1991, then the 1 February 1991 would be the relevant date to value Hazeldene. We know from Mr Gunning that the value of Hazeldene at February 1991 was $3,986,750 of which $2.25 million was for water licenses, $150,000 for buildings, $690,000 for water storage, leaving $896,750 for the property itself. If 1991 is not the relevant date and 1995 or later was the date then Ms Bailey could not have sued Moffatt Sullivan for losing her rights since Doherty Partners commenced acting for Ms Bailey in 1994. 1. I think that the claim against Moffatt Sullivan, based on a loss of the 100% Hazeldene (making all other assumptions in favour of Ms Bailey) had to be based on the outcome of the 1990 proceedings on 1 February 1991, which led to Ms Bailey transferring the title to Henry. As against Moffatt Sullivan the issue of whether Ms Bailey could have set aside the Hazeldene Settlement would only have been relevant to the case against Moffatt Sullivan if Moffatt Sullivan had asserted that the Hazeldene Settlement did not determine Ms Bailey's rights in respect of Hazeldene, but it would not determine what damages would flow from Moffatt Sullivan's failure (on the premise that they could or should have mounted a 100% claim on her behalf) to have maintained the 100% claim. 2. In respect of the water licenses, the question is whether they should be taken into account in what Ms Bailey lost by Moffatt Sullivan's failure to run the 100% claim. This is wrapped up in the many other issues of damages, to which I have referred. Ms Bailey owned only one of the water licenses- other family members owned the other eight. She could not have retained all of the licenses in her own name – the only family member whose support she could presumably count on if she had succeeded in the 1990 proceedings was Annette – the other licenses would have had to be either surrendered or at the least paid out. The question of whether the partnership had no interest in the increased value of Hazeldene because of the work carried out (see Harvey v Harvey (1970) 120 CLR 529 per Menzies and Walsh JJ; relied on Ms Bailey; Barwick CJ contra) raises a number of complexities and if the partnership did not have such an interest, whether adjustments would have had to be made to the respective partnership share based on contributions to the cost of and labour for the improvements. These issues would become pertinent in any assessment of the lost chance of a claim against Doherty Partners based on a lost chance of success in the 1990 proceedings. 3. I have referred to the difficult questions of quantification of the "lost" 100% claim. Whatever amount she would have recovered (assuming she was otherwise successful) would have had to take into account the $600,000 she received in the settlement of the Moffatt Sullivan proceedings. 4. I have pointed out that Ms Bailey has not put before the Court Henry's will, so it is not possible to see what she obtained from that will, in addition to the 14.85%, which she obtained by the 1995 Family Settlement and which would have to be taken into account in assessing what she lost by entry into the Hazeldene Settlement. 5. It is true that difficulties of estimation are not a reason for a Court not to embark on that task, but plaintiffs must prove their damage (see Commonwealth v Amann Aviation (1991) 174 CLR 64 at 80, 99, 118 and 137-138 and see NCON Australia Ltd v Spotlight Pty Ltd [2012] VSC 604, Robson J and Malabar RSL Sub-Branch Club Pty Ltd v RSL Custodians Pty Ltd [2014] NSWSC 1016 at [77] – [83]. In the absence of evidence of what Ms Bailey received from her father's will, it would not be possible to assess what was lost by Moffatt Sullivan not advising her to resist her father's claim, with the prospect of loss of all benefits under that will. 6. TLH contend that if, contrary to their principal contentions, Ms Bailey did have a viable claim against Doherty Partners for not pursuing the 100% claim, if Mr La Hood's advice that she did not have high prospects was negligently given, and if Ms Bailey did rely on that advice and did not bring a claim against Doherty Partners on or before June 2009, then Australegal was also negligent based on Ms Bailey's evidence because it failed to make an assessment of Ms Bailey's case within eight months of having been instructed that Ms Bailey, on her evidence, thought she had a claim against Doherty Partners and mentioned this to Australegal. Mr Emmett also contended that Ms Bailey was negligent in respect of her own interests because if she believed she had a claim against Doherty Partners and, being aware of a potential limitations issue, she did not instruct Australegal to investigate when the limitation period would expire and did not give instructions for the claim to be commenced by Australegal before expiry of any relevant limitation period. 7. To make an assessment of whether Australegal were negligent by not commencing proceedings against Doherty Partners within the limitations period I would have to find that Australegal were in fact retained to advise on the potential claim against Doherty Partners. Ms Bailey's evidence was very vague in this regard and she says that Australegal indicated that they needed to concentrate on defending Ms Bailey from Bruce's claims. TLH does not challenge this evidence of Ms Bailey and indeed relies on it to support the lack of causal connection between the advice given by Mr La Hood and the failure to commence proceedings against Doherty Partners. Given the unreliability of Ms Bailey, and given the findings I have already made above concerning her case against TLH, I do not think it is appropriate to make any findings of fact relevant to a contribution claim for the purpose of the Civil Liability Act 2002 (NSW) as against Australegal, or even Ms Bailey. Conclusion 1. There should be judgment for the defendants on the plaintiff's claim. I will hear the parties on the issue of costs. ********** 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. Decision last updated: 05 October 2017