Queensland Judgments
Authorised Reports & Unreported Judgments
  • sclq logo
  1. Caselaw
  2. QSC
  3. 2021
  4. Tycho Pty Ltd v Trustworthy Nominees Pty Ltd (No 2) - [2021] QSC 302

Authorised Reports & Unreported Judgments
Exit Distraction Free Reading Mode
  •  Notable Unreported Decision

Tycho Pty Ltd v Trustworthy Nominees Pty Ltd (No 2)[2021] QSC 302

Tycho Pty Ltd v Trustworthy Nominees Pty Ltd (No 2)[2021] QSC 302

SUPREME COURT OF QUEENSLAND

CITATION:

Tycho Pty Ltd & Anor v Trustworthy Nominees Pty Ltd & Ors (No 2) [2021] QSC 302

PARTIES:

TYCHO PTY LTD

ACN 010 154 944

(first plaintiff)

RAYMOND LESLIE VINCENT

(second plaintiff)

v

TRUSTWORTHY NOMINEES PTY LTD

ACN 005 092 624

(first defendant)

REGISTRAR OF TITLES

(second defendant)

STATE OF QUEENSLAND

(third defendant)

COLLECT 2 PTY LTD

ACN 609 158 607

(second defendant by counterclaim)

MARK MADAFFERI

(third defendant by counterclaim)

MICHAEL AJZENSZTAT AND MYER JERUZALSKI (TRADING AS AJZENSZTAT JERUZALSKI & CO)

(first third party)

FRASER LAWYERS PTY LTD

ACN 165 251 543

(second third party)

FILE NO:

BS 1546 of 2018

DIVISION:

Trial

PROCEEDING:

Interlocutory Application

ORIGINATING COURT:

Supreme Court of Queensland

DELIVERED ON:

2 December 2021

DELIVERED AT:

Brisbane

HEARING DATE:

20 October 2021

JUDGE:

Bradley J

ORDER:

THE ORDER OF THE COURT IS THAT:

  1. Paragraphs 30 and 32 to 40 (inclusive) of the third party notice, filed on behalf of the first defendant on 31 May 2019, (the third party notice) are struck out pursuant to rule 171(2) of the Uniform Civil Procedure Rules 1999 (Qld);
  2. The first defendant has leave to replead its claim against the second third party previously pleaded in paragraphs 30(1), 34, 35, 37, 38 and 40 of the third party notice; and
  3. The first defendant pay the second third party’s costs of the application.

CATCHWORDS:

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – PLEADINGS – STRIKING OUT – DISCLOSING NO REASONABLE CAUSE OF ACTION OR DEFENCE – where the second third party (Fraser) seeks to strike out certain parts of the first defendant’s (Trustworthy) third party notice – where Fraser was engaged as solicitors for Trustworthy in respect of the preparation of a mortgage instrument – where the mortgage instrument and loan agreement was executed fraudulently and declared void by the Court in a previous decision – where Trustworthy’s failure to comply with s 11A of the Land Title Act 1994 meant the mortgage did not obtain indefeasibility under the Act – where Trustworthy claims Fraser breached a duty of care and breached a statutorily implied guarantee in the drafting of the mortgage instrument – where Trustworthy contends that but for Fraser’s alleged breach, they would be secured repayment of a fixed sum advanced under the loan agreement and on the security of the mortgage – whether Fraser’s alleged breach was a sufficient cause of the damages claimed by Trustworthy – whether the pleading fails to disclose a cause of action, in light of the Court’s previous decision, and ought to be struck out

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – PLEADINGS – STRIKING OUT – EMBARRASSING, TENDENCY TO CAUSE PREJUDICE, SCANDALOUS, UNNECESSARY ETC OR CAUSING DELAY IN PROCEEDINGS – where Trustworthy claims Fraser breached a duty of care and breached a statutorily implied guarantee to provide advice on the effect of particular provisions of the Land Title Act 1994 – where Fraser was not retained to provide advice – where a solicitor may owe a client of particular standing and experience a positive duty to advise – where it is unclear how providing advice on the particular provisions would have exposed the forged documents – where the third party notice has not been amended since the Court’s previous decision and other factual matters have not been pleaded – whether the paragraphs have a tendency to prejudice or delay the fair trial of the proceeding and ought to be struck out

Australian Consumer Law, s 60, s 267(4)

Land Title Act 1994 (Qld), s 11A, s 185(1A)

Uniform Civil Procedure Rules 1999 (Qld), r 171(2)

ACQ Pty Ltd v Cook (2009) 237 CLR 656, considered

Henderson v Amadio Pty Ltd (No 1) [1995] 62 FCR 1, considered

Henville v Walker (2001) 206 CLR 459, considered

Hunt & Hunt v Mitchell Morgan Pty Ltd (2013) 247 CLR 613, cited

March v E & MH Stramare Pty Ltd (1991) 171 CLR 506, considered

Medlin v State Government Insurance Commission (1995) 182 CLR 1, considered

Robert Bax & Associates v Cavenham Pty Ltd [2013] 1 Qd R 476, considered

Tycho Pty Ltd & Anor v Trustworthy Nominees Pty Ltd & Ors [2021] QSC 95, cited

COUNSEL:

J L Evans QC for the first defendant

S R Lumb for the first third party

G D Beacham QC for the second third party

SOLICITORS:

Basilone Legal for the first defendant

King & Wood Mallesons for the first third party

Carter Newell for the second third party

  1. [1]
    This is a decision on an application brought by the second third party (Fraser), seeking to strike out certain paragraphs in the third party notice (the Notice) filed on behalf of the first defendant (Trustworthy).  Although originally advanced pursuant to rule 293 of the Uniform Civil Procedure Rules 1999 (Qld) (UCPR), at the hearing Fraser pressed the application only pursuant to rule 171.

Background

  1. [2]
    The first plaintiff (Tycho) and the second plaintiff (Mr Vincent) brought their claim against Trustworthy, the second defendant (the Registrar) and the third defendant (the State) alleging that a mortgage (the Mortgage) registered by Trustworthy over the title to various lots at Maryvale (the Land) had been procured by fraud. 
  2. [3]
    On 7 May 2021, Davis J granted final relief to Tycho and Mr Vincent against Trustworthy and the Registrar.  His Honour dismissed the plaintiffs’ claim against the State.[1] 
  3. [4]
    It follows that Tycho, Mr Vincent, the Registrar and the State have no continuing interest in the proceeding.  All that remains “alive” in the proceeding is Trustworthy’s counterclaim against the second defendant by counterclaim (Collect 2) and the third defendant by counterclaim (Mr Madafferi), and Trustworthy’s third party claim against the first third party (AJL) and Fraser.  
  4. [5]
    In addition to Trustworthy and Fraser, AJL was the only other party to appear at the hearing of this application. 

Trustworthy’s third party claims against AJL and Fraser

  1. [6]
    AJL is a law practice operating under the Legal Profession Uniform Law Application Act 2014 (Vic).  Fraser is an incorporated legal practice under the Legal Profession Act 2007 (Qld). 
  2. [7]
    According to Trustworthy, in about March 2017, it engaged AJL to provide legal services and act on its behalf in arranging for Trustworthy to make a loan of $2 million to Tycho and receive a loan agreement (Loan Agreement) and associated mortgage as security for the loan (the Transaction).  AJL prepared the Loan Agreement. 
  3. [8]
    Trustworthy alleges AJL breached duties owed to it by failing do certain things prior to Trustworthy entering the Transaction.  The alleged failures are: to take reasonable steps to verify that Tycho and/or Mr Vincent knew of the existence of the Mortgage and the Loan Agreement; to take reasonable steps to verify that the signature on the Loan Agreement and on the Mortgage was Mr Vincent’s signature; to make any or reasonable enquiries regarding the authenticity and accuracy of certificates of independent legal advice provided to AJL purportedly on behalf of Tycho; and to take reasonable steps to enquire regarding the disbursement of funds, when large amounts were to be paid to persons other than Tycho, or otherwise than in discharge of existing liabilities secured against the Land.  The same conduct is alleged to have breached a statutory guarantee imposed by s 60 of the Australian Consumer Law. Trustworthy claims damages for these alleged breaches of duty and of the statutory guarantee by AJL. 
  4. [9]
    Trustworthy also alleges it suffered loss and damage by reason of another breach of duty by AJL.  Trustworthy says the breach was that the Mortgage as executed did not contain a covenant by Tycho to pay a fixed sum, but rather it contained an obligation to pay amounts “payable pursuant to liabilities of Tycho arising other than under the Mortgage itself.”   Commonly, the Mortgage could be referred to as an “all moneys” mortgage. 
  5. [10]
    Trustworthy’s claim against Fraser, like its claim against AJL, is for damages, including damages under section 267(4) of the Australian Consumer Law.   
  6. [11]
    Trustworthy alleges Fraser breached duties owed to it by failing do certain things prior to Trustworthy entering the Transaction.  The same conduct is alleged to have breached a statutory guarantee imposed by s 60 of the Australian Consumer Law.
  7. [12]
    These duties and the guarantee are alleged to arise from the relationship pleaded in paragraphs 28 and 29 of the Notice:

“28. By agreement made between AJL and Fraser Lawyers on or about 2 May 2017, Fraser Lawyers was engaged on behalf of Trustworthy:

  1. (1)
    to prepare mortgage and associated loan documentation in respect of the proposed loan by Trustworthy to Tycho; and
  1. (2)
    arrange for necessary execution; and
  1. (3)
    arrange and attend at settlement;
  1. (4)
    otherwise assist AJL in the transaction on behalf of Trustworthy;

(the Fraser Lawyers Retainer).

Particulars

The retainer was partly in writing, partly oral and partly implied.

In so far as it was oral it consisted of telephone discussions between Blake Fraser on behalf of Fraser Lawyers and Rochelle Robinson of AJL, for and on behalf of Trustworthy around 2 May 2018.

In so far as it was written it consisted of email correspondence between Blake Fraser on behalf of Fraser Lawyers and Rochelle Robertson of AJL, for and on behalf of Trustworthy. 

In so far as it was implied, it was implied by Fraser Lawyers undertaking the work and invoicing AJL for work done, which fee was passed to Trustworthy.

  1. By reason of the Fraser Lawyers Retainer, Fraser Lawyers gave a statutory guarantee that the services provided pursuant to the Fraser Lawyers Retainer would be rendered with due care and skill.

Particulars

The guarantee is imposed by section 60 of the Australian Consumer Law”

  1. [13]
    In this application, Fraser challenges paragraphs in Trustworthy’s pleading that fall into two distinct clusters.  I will deal with them separately. 

Alleged duty to draft mortgage to secure a specific sum

  1. [14]
    The first challenged paragraphs of the Notice concern the part of Trustworthy’s claim against Fraser made on the basis that Fraser was acting as solicitor for Trustworthy in respect of the preparation of the Mortgage that was registered by Trustworthy over the title to the Land. 
  2. [15]
    Among the allegations Trustworthy makes against Fraser in the Notice, are the following:

“30. Further, at all material times, Fraser Lawyers owed Trustworthy a duty to use reasonable care and skill to ensure that:

…

  1. (2)
    Upon registration of the Mortgage, Trustworthy would receive the benefits of a registered mortgage which secured repayment to Trustworthy of the monies advanced by Trustworthy, even if Tycho’s execution of the Mortgage and any underlying loan agreement was void, invalid or ineffective.             
  1. On or about 4 May 2017, Fraser Lawyers prepared the Mortgage in unexecuted form, and provided it to AJL Lawyers on behalf of Trustworthy.
  2. The Mortgage as drafted by Fraser Lawyers, and as registered, did not contain a covenant to pay a fixed sum by reference to the Mortgage, but rather included an obligation on the part of Tycho to pay only those amounts which were payable pursuant to liabilities of Tycho arising other than under the Mortgage itself.
  3. Further, at no time prior to Trustworthy entering into the Transaction did Fraser Lawyers advise Trustworthy that the Mortgage as drafted by Fraser Lawyers would be ineffective to secure repayment to Trustworthy of moneys advanced by Trustworthy against the security of the Mortgage in the event that the Loan Agreement was void.

….

  1. By reason of the matters alleged in paragraphs 31 to 33 above, Fraser Lawyers breached the duty set out in paragraph 30(2) above.
  2. Further, by reason of the matters set out in paragraphs 31 to 34 above, [Fraser Lawyers] breached the guarantee set out in paragraph 29 above.

…

  1. By reason of the breach of duty alleged in paragraph 36 above, Trustworthy has suffered loss and damage.

Particulars

If Fraser Lawyers had not breached the duty, then provided that Trustworthy had obtained an indefeasible mortgage by registration of the Mortgage, it would have been able to enforce the Mortgage against the Land as the Mortgage would have included a valid covenant to pay.

As a result of Fraser Lawyers’ breach, Trustworthy cannot recover the monies paid by it under the Transaction, even if the Mortgage is otherwise enforceable, if the Loan Agreement is void …

  1. By reason of the breach of the guarantee alleged in paragraph 37 above, Trustworthy has suffered loss and damage which it is entitled to recover under section 267(4) of the Australian Consumer Law.

Particulars

Trustworthy refers to and repeats the particulars to paragraph 38 above.”

  1. [16]
    It is common ground that Fraser prepared the Mortgage.  Mr Evans QC appeared for Trustworthy. He explained that this part of Trustworthy’s pleading is a claim that Fraser breached a relevant duty by preparing the Mortgage in the form of an “all moneys” mortgage rather than as a mortgage to secure a specified or fixed sum.  In the form it was prepared, the Mortgage secured the moneys owed under the Loan Agreement, which Fraser was not to draft and did not draft. 
  2. [17]
    On 7 May 2021, Davis J made orders referred to above.  These included declarations that various documents, including the Loan Agreement and the Mortgage, were void and of no force or effect, that the signature on the Mortgage, purporting to be that of Mr Vincent on behalf of Tycho, is not the signature of Mr Vincent and was not signed by a person with the authority of either Tycho or Mr Vincent.  His Honour also declared that Tycho did not execute the Mortgage.  Separately, his Honour ordered the Registrar to cancel the Mortgage registered over the title to the Land.
  3. [18]
    The declarations reflect his Honour’s findings.  His Honour’s order for the cancellation of the Mortgage is based on the finding that Trustworthy, as the relevant mortgagee, failed to comply with s 11A(2) of the Land Title Act 1994 in relation to the instrument of mortgage.  That provision relevantly requires:

“Before the instrument of mortgage … is lodged for registration, the mortgagee under the instrument (the original mortgagee) must take reasonable steps to ensure the person who is the mortgagor under the instrument is identical with the person who is, or who is about to become, the registered proprietor of the lot or the interest in a lot.”

  1. [19]
    Section 11A(3) provides:

“Without limiting subsection (2), the original mortgagee takes reasonable steps under the subsection if the original mortgagee complies with practices included in the Manual of Land Title Practice under section 9A for the verification of identification of mortgagors.”

  1. [20]
    That section of the Manual of Land Title Practice (the Manual) sets out steps that a witness should take to ensure that the person signing the instrument is who they purport to be.  Davis J found that Mr Freer, the person who witnessed the signature, purportedly of Mr Vincent on behalf of Tycho, was not someone acting on behalf of Trustworthy.  As his Honour noted, “there is no basis upon which Trustworthy could have been satisfied that Mr Freer had taken steps to properly identify the signatory to the mortgage.”[2]  His Honour observed that Trustworthy did not contend to the contrary of that conclusion.
  2. [21]
    Two of the parties to the proceeding, AJL and Mr Madafferi, are not bound by the judgment given by Davis J.  This distinction is explained in his Honour’s reasons for decision.
  3. [22]
    Trustworthy is bound by the judgment and by the findings necessary for that judgment.  So is Fraser.  The effect of the findings and the judgment is that the Mortgage was not indefeasible under the Land Title Act.  Therefore, no indefeasibility attached to the covenants in the Mortgage, to the extent that such covenants were necessary to define the extent of the security interest purportedly created by the Mortgage.
  4. [23]
    It is Trustworthy’s case that if Fraser had drafted the Mortgage to secure a specified or fixed sum and if the Mortgage had created an indefeasible interest in the Land, then Trustworthy would have been secured for that specified or fixed sum. The loss of this security is part of the loss and damage Trustworthy says it suffered because of Fraser’s alleged breaches of duty and the statutory guarantee.
  5. [24]
    It is apparent from Trustworthy’s pleading (and the particulars to paragraph 39 of the Notice) that this part of its claim can only succeed on the basis that Trustworthy obtained an indefeasible mortgage by registration of the Mortgage over title to the Land or that the Mortgage was otherwise enforceable.  The Mortgage, like the Loan Agreement, was not executed by Tycho (as mortgagor), but was signed by someone impersonating Mr Vincent.  As an ordinary instrument, the forged Mortgage does not bind Tycho, any more than the forged Loan Agreement.  The only means by which Trustworthy could enforce the Mortgage would be if it had obtained indefeasibility as a dealing registered over the title to the Land.  
  6. [25]
    Both Trustworthy and Fraser are bound by the finding of Davis J that the Mortgage did not obtain indefeasibility by its registration.  It follows that Trustworthy cannot establish the scenario or circumstances necessary for it to succeed in this part of its claim for damages against Fraser.  There has been no appeal by Trustworthy against his Honour’s orders, and so no dispute as to any of his Honour’s findings. 
  7. [26]
    In responding to Fraser’s challenge to this part of its claim, Trustworthy relies on observations in the judgment of Mason CJ in March v E & MH Stramare Pty Ltd about the difficulties in applying the “but for” test “where there are two or more acts or events which would each be sufficient to bring about” the relevant loss. [3]  As the High Court observed in ACQ Pty Ltd v Cook, “Not every lawyer has found the analysis of causation in March v Strathmore helpful.”[4] In ACQ, the Court summarised the effect of the decision in this way: “there can be multiple causes of the damage suffered by a plaintiff”; and “Mason CJ was concerned merely to reject the ‘but for’ test as an exclusive criterion of causation.”[5] 
  8. [27]
    In determining causation, it is necessary to identify the harm allegedly suffered.  Trustworthy’s damage is its inability to recover the moneys it advanced under the Loan Agreement and on the security of the Mortgage.  It cannot recover under the Loan Agreement because the signature on the Loan Agreement was forged.  It is not secured by the Mortgage because, as Tycho proved before Davis J, there was no basis upon which Trustworthy could have been satisfied that Mr Freer had taken steps to properly identify the signatory to the Mortgage.  Owing to this failure to comply with section 11A(2) of the Land Title Act, the Mortgage was not indefeasible.  
  9. [28]
    Trustworthy also relies on the following passage from the reasons of McHugh J in Henville v Walker (2001) 206 CLR 459:

“[105] The corollary of the "common sense" approach to causation, as Mahoney JA pointed out in Barnes, is that it is not reducible to a "test" that can be applied across the spectrum of factual situations that arise from case to case.  Nevertheless, the course of judicial reasoning in this area has produced certain principles that assist tribunals of fact in deciding causation issues.

[106] If the defendant's breach has "materially contributed"[6] to the loss or damage suffered, it will be regarded as a cause of the loss or damage, despite other factors or conditions having played an even more significant role in producing the loss or damage.  As long as the breach materially contributed to the damage, a causal connection will ordinarily exist even though the breach without more would not have brought about the damage.  In exceptional cases, where an abnormal event intervenes between the breach and damage, it may be right as a matter of common sense to hold that the breach was not a cause of damage.  But such cases are exceptional.”

  1. [29]
    In Henville, McHugh J was considering a claim for relief under s 82 of the Trade Practices Act 1974 (Cth) for a contravention of s 52 of that Act.  Following the passage cited by Trustworthy, and extracted above, his Honour drew on the:

“principle … applied in cases where a complicating factor is the intervention of some act or decision of the plaintiff or a third party that allegedly constitutes a more immediate cause of the loss or damage.”[7] 

  1. [30]
    His Honour quoted with approval the following passage from the joint judgment of Deane, Dawson, Toohey and Gaudron JJ in Medlin v State Government Insurance Commission,[8] adding an emphasis by italics:

“The ultimate question must, however, always be whether, notwithstanding the intervention of the subsequent decision, the defendant's wrongful act or omission is, as between the plaintiff and the defendant and as a matter of commonsense and experience, properly to be seen as having caused the relevant loss or damage.”

  1. [31]
    For Trustworthy, it was submitted that each of “2 separate facts” - the lack of indefeasibility of the Mortgage and that the Mortgage would not secure a sum if the Loan Agreement was unenforceable – was “a sufficient condition of Trustworthy’s loss” and “an operative cause of Trustworthy’s loss.”   According to this submission, either act would have founded a basis for Tycho to avoid the Mortgage.  One on the basis it was defeasible, as Tycho did, and the other on the basis that the Mortgage did not secure any amount.
  2. [32]
    I respectfully reject this submission. 
  3. [33]
    For the Mortgage to be security for a sum not owed pursuant to the forged, unenforceable Loan Agreement, then Trustworthy had to have complied with s 11A of the Land Title Act.  Had Trustworthy done so, on its own case the forged signature on the Mortgage would have been revealed.  Unsurprisingly, there is no allegation that Trustworthy could have registered the Mortgage, had it complied with the Act.  In fact, Trustworthy’s case is that it would not have proceeded with the Transaction had the forgery been revealed.  This is consistent with common sense and experience. 
  4. [34]
    As Trustworthy acknowledges in the particulars to paragraph 39 of its pleading, Trustworthy “would have been able to enforce the Mortgage against the Land” only if “Trustworthy had obtained an indefeasible mortgage by registration of the Mortgage”.  On the internal logic of its own case, Trustworthy could not have obtained an indefeasible mortgage.  Trustworthy could not have enforced the covenants in any mortgage it obtained against Land owned by Tycho.  In this respect it is quite different to the “all moneys” mortgage considered in Hunt & Hunt v Mitchell Morgan Pty Ltd (2013) 247 CLR 613.
  5. [35]
    Once the facts, found by Davis J and binding on Trustworthy and Fraser, are accepted, it must also be accepted that the drafting of the Mortgage as an “all moneys” mortgage did not materially contribute to Trustworthy’s alleged damage.  It follows that it was not a sufficient cause of the damages claimed by Trustworthy against Fraser.  As a matter of common sense and experience, it did not cause the relevant loss or damage.  It cannot be properly seen as having done so.   
  6. [36]
    The allegation in paragraph 33 of the Notice may be conceptually distinct from the allegations in paragraph 32.  However, the cause of action, of which it forms a part, cannot succeed on the present pleading, because it relies on the damages alleged in paragraph 39.
  7. [37]
    In the circumstances, I am satisfied that paragraphs 30(2), 32, 33, 36 and 39 of the Notice disclose no reasonable cause of action.  They should be struck out pursuant to r 171(2) of the UCPR. 
  8. [38]
    This part of the claim by Trustworthy against Fraser has no reasonable prospect of success.  I accept the submission, put for Fraser by Mr Beacham QC, that Trustworthy should not have leave to replead a case against Fraser that relies on the Mortgage being indefeasible.

Alleged duty to advise

  1. [39]
    The second cluster of paragraphs which Fraser challenges are as follows:

“30. Further, at all material times, Fraser Lawyers owed Trustworthy a duty to use reasonable care and skill to ensure that:

  1. (1)
    Trustworthy would receive an enforceable mortgage over the Land, which mortgage would have the benefits of indefeasibility under the Act; and

…

  1. At no time prior to or after providing Trustworthy with the Mortgage in unexecuted form did Fraser Lawyers advise Trustworthy or AJL Lawyers of the existence or application of sections 11A and 185(1A) of the Act as to limited indefeasibility of a forged mortgage, or as to the contents of the Land Title Practice Manual (Queensland) in respect of the verification of identity requirements under those sections.
  2. By reason of the matters alleged in paragraph 34 above, Fraser Lawyers breached the duty set out in paragraph 30(1) above.

…

  1. By reason of the breach of duty alleged in paragraph 35 above, Trustworthy has suffered loss and damage.

Particulars

If Fraser Lawyers had not breached the duty, Trustworthy (by AJL) would have discovered that Tycho and Mr Vincent had not signed the Mortgage or the Loan Agreement, and in the circumstances would have caused the Transaction not to proceed.

In the event that the Mortgage and the Loan Agreement are not effective, then Trustworthy has suffered the loss of the whole of the sum of $2 million, less any amounts which are recovered by it pursuant to the claims articulated in its counterclaim filed in this proceeding.

Trustworthy has also suffered the loss of interest on the moneys lent by it, alternatively the loss of use of the moneys lent by it.

Trustworthy has also incurred legal costs in investigating the issues arising in the proceeding, and its counterclaim.

Full particulars will be provided prior to trial.”

  1. [40]
    In paragraph 37 of the Notice, Trustworthy also pleads that, by reason of the matters set out in paragraph 34, Fraser breached the guarantee set out in paragraph 29.  These paragraphs are extracted at [12] and [15] above.  
  2. [41]
    Trustworthy does not allege that it engaged Fraser to provide advice, either generally or in relation to the verification of the identity of persons executing the Mortgage.  The retainer is pleaded in paragraph 28 of the Notice, which is set out at [15] above.
  3. [42]
    In Robert Bax & Associates v Cavenham Pty Ltd, Muir JA quoted,[9] with evident approval, a passage from the reasons of Heerey J in Henderson v Amadio Pty Ltd (No 1) to the effect that a solicitor may owe a client a duty to advise “even if the client does not request it or advice is not proffered by the solicitor”.[10]  That decision concerned the preparation of loan agreements and mortgages.  In it, the Court of Appeal said, obiter dictum, that the solicitor:

“could not fulfil his duty without ascertaining the extent of the risk his client wished to assume in the transactions, evaluating the extent of the risks involved in the transactions and advising in that regard.”[11]

  1. [43]
    In expressing that opinion, Muir JA explained that the standing and experience of the client was significant.  As his Honour put it, the solicitor had a “duty to inform himself relevantly in relation to his client with a view to determining what advice needed to be given to sufficiently explain the transactions and protect his client’s interests.”[12]  In Bax, the client lacked legal and commercial knowledge and acumen.  In such circumstances, the solicitor’s duty extended to ascertaining his client’s:

“understanding of the transactions it was proposing to enter, its commercial aims and the degree of risk it was prepared to take. The duty also extended to advising on matters such as the desirability of ensuring that no loan monies were advanced until the loan agreements and mortgages were stamped and the mortgages registered as first mortgages. …  Another obvious matter for advice would have been the desirability of minimising risk by ensuring that each mortgage was security for all loans …”[13] 

  1. [44]
    Ironically in the context of the present matter, in Bax the Court of Appeal found the solicitor breached his duty to the client by preparing a series of mortgages, each of which secured a specific sum, rather than preparing them as all moneys mortgages. 
  2. [45]
    Trustworthy is not alleged to have been in circumstances like those of the client considered in Bax.  There is no allegation that Fraser failed to ascertain Trustworthy’s understanding of the Transaction, its commercial aims, or the degree of risk it was prepared to take. 
  3. [46]
    The relevant failure to advise is pleaded in paragraph 34 of the Notice.  It is a failure to advise of the “existence or application of sections 11A and 185(1A)” of the Land Title Act or “as to the contents” of the Manual “in respect of the verification of identity requirements under those sections”.  The alleged breach of duty is such that the connection between it and the alleged loss, particularised in paragraph 38, is somewhat obscure.  It is not clear how Trustworthy “would have discovered that Tycho and Mr Vincent had not signed the Mortgage or the Loan Agreement” had it been advised that sections 11A and 185(1A) existed and applied and of the contents of the Manual.  It is not alleged that Trustworthy itself (or AJL through whom it is alleged Trustworthy engaged Fraser) was unaware of the existence or application of these sections of the Land Title Act. 
  4. [47]
    The Notice, including the pleaded case against Fraser, was filed on 31 May 2019.  It has not been amended since the findings were made and final relief were ordered by Davis J on 7 May 2021.  Unsurprisingly, it does not engage with his Honour’s findings.  The finding that Trustworthy did not comply with the Manual, in various respects, may be relevant to this part of Trustworthy’s claim against Fraser. 
  5. [48]
    As Mr Evans properly conceded, there are likely to be other “factual matters” as to what would have occurred had Trustworthy been advised correctly, on its case, by Fraser.  If these are part of Trustworthy’s counterfactual, they ought to be pleaded.  Presently they are not. 
  6. [49]
    In the present circumstances, paragraphs 30(1), 34, 35, 37, 38 and 40 have a tendency to prejudice or delay the fair trial of the proceeding.  They should also be struck out pursuant to r 171(2) of the UCPR.  Trustworthy should have leave to replead this part of its claim against Fraser, taking due account of the shortcomings in the present pleading that are identified above, and any relevant findings made by Davis J. 

Costs

  1. [50]
    As Fraser has substantially succeeded, Trustworthy should pay Fraser’s costs of the application. 

Final disposition

  1. [51]
    Orders should be made to the effect that:
    1. (a)
      Paragraphs 30 and 32 to 40 (inclusive) of the Notice are struck out pursuant to rule 171(2);
    2. (b)
      Trustworthy has leave to replead its claim against Fraser previously pleaded in paragraphs 30(1), 34, 35, 37, 38 and 40 of the Notice; and
    3. (c)
      Trustworthy pay Fraser’s costs of the application.

Footnotes

[1]Tycho Pty Ltd & Anor v Trustworthy Nominees Pty Ltd & Ors [2021] QSC 95 (Davis J).

[2] Tycho Pty Ltd & Anor v Trustworthy Nominees Pty Ltd & Ors [2021] QSC 95 at [50].

[3]  (1991) 171 CLR 506, 516.

[4]  (2009) 237 CLR 656, 665 at [27].

[5]  665 at [27].

[6]  His Honour cited Bonnington Castings Ltd v Wardlaw [1956] AC 613 at 620 per Lord Reid.

[7]Henville v Walker (2001) 206 CLR 459, 493-494 at [108].

[8]  (1995) 182 CLR 1, 6-7.

[9]Robert Bax & Associates v Cavenham Pty Ltd [2013] 1 Qd R 476 (Bax), 490-491 at [58].

[10]  (1995) 62 FCR 1, 139-140.

[11]Bax 490 at [54].

[12]Bax 493, [66].

[13]Bax 492-493, [65].

Close

Editorial Notes

  • Published Case Name:

    Tycho Pty Ltd & Anor v Trustworthy Nominees Pty Ltd & Ors (No 2)

  • Shortened Case Name:

    Tycho Pty Ltd v Trustworthy Nominees Pty Ltd (No 2)

  • MNC:

    [2021] QSC 302

  • Court:

    QSC

  • Judge(s):

    Bradley J

  • Date:

    02 Dec 2021

  • White Star Case:

    Yes

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
ACQ Pty Ltd v Cook (2009) 237 CLR 656
3 citations
Jump To
Cite 1 - (2009) 237 CLR 656
Cite 2 - (2009) 237 CLR 656
Cite 3 - (2009) 237 CLR 656
Bonnington Castings Ltd v Wardlow (1956) AC 613
1 citation
Jump To
Cite 1 - (1956) AC 613
Henderson & Ors v Amadio Pty Ltd (No 1) & Ors (1995) 62 FCR 1
2 citations
Jump To
Cite 1 - (1995) 62 FCR 1
Cite 2 - (1995) 62 FCR 1
Henville v Walker (2001) 206 CLR 459
3 citations
Jump To
Cite 1 - (2001) 206 CLR 459
Cite 2 - (2001) 206 CLR 459
Cite 3 - (2001) 206 CLR 459
Hunt & Hunt Lawyers (a firm) v Mitchell Morgan Nominees Pty Ltd (2013) 247 CLR 613
2 citations
Jump To
Cite 1 - (2013) 247 CLR 613
Cite 2 - (2013) 247 CLR 613
March v E & MH Stramare Pty Ltd (1991) 171 CLR 506
2 citations
Jump To
Cite 1 - (1991) 171 CLR 506
Cite 2 - (1991) 171 CLR 506
Medlin v State Government Insurance Commission (1995) 182 CLR 1
2 citations
Jump To
Cite 1 - (1995) 182 CLR 1
Cite 2 - (1995) 182 CLR 1
Robert Bax & Associates v Cavenham Pty Ltd[2013] 1 Qd R 476; [2012] QCA 177
5 citations
Jump To
Cite 1 - [2013] 1 Qd R 476
Cite 2 - [2013] 1 Qd R 476
Cite 3 - [2013] 1 Qd R 476
Cite 4 - [2013] 1 Qd R 476
Cite 5 - [2013] 1 Qd R 476
Tycho Pty Ltd v Trustworthy Nominees Pty Ltd [2021] QSC 95
3 citations
Jump To
Cite 1 - [2021] QSC 95
Cite 2 - [2021] QSC 95
Cite 3 - [2021] QSC 95

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

Require Technical Assistance?

Message sent!

Thanks for reaching out! Someone from our team will get back to you soon.

Message not sent!

Something went wrong. Please try again.