MURRAY -v- MYDOMAINE PTY LTD [2016] WADC 109 (28 July 2016)

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA

CITATION : MURRAY -v- MYDOMAINE PTY LTD [2016] WADC 109

Negligent misrepresentation - Fraudulent misrepresentation - Breach of fiduciary duty - Jurisdiction of the District Court of Western Australia - Breach of contract - Unconscionable conduct - 'Similar fact' evidence - Contributory negligence - Damages - Exemplary damages

Civil Liability Act 2002 (WA) s 5AK

District Court of Western Australia Act 1969 s 50

Banditt v The Queen [2005] HCA 80; (2005) 224 CLR 262

Barescape Pty Ltd v Bacchus Holdings Pty Ltd (No 9) [2012] NSWSC 984

Briginshaw v. Briginshaw [1938] HCA 34; (1938) 60 CLR 336

Brookfield Multiplex v Owners Corporation Strata Plan 61288 [2014] HCA 36; (2014) 254 CLR 185

Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 592

Casinos Austria International (Christmas Island) Pty Ltd v Christmas Island Resort Pty Ltd [1998] WASC 387

Cassell & Co Ltd v Broome (No 2) [1972] AC 1136

Commercial Developments Pty Ltd (t/as Don Rogers Motors Pty Ltd) v Mercantile Mutual Insurance (Workers' Compensation) Ltd (1991) 5 WAR 208

Derry v Peek [1889] UKHL 1; (1889) 14 App Cas 337

Dominelli Ford (Hurstville) Pty Ltd v Karmot Auto Spares Pty Ltd [1992] FCA 550; (1992) 38 FCR 471

Duke Group Ltd (in liq) v Pilmer [1999] SASC 97; (1999) 153 FLR 1

Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95

Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89

Fazio v Fazio [2012] WASCA 72

Gjergja v Cooper [1987] VicRp 15; [1987] VR 167

Harvela Investments Ltd v Royal Trust Co of Canada (CI) Ltd [1986] AC 207

Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41

Huntsman Chemical Co Australia Pty Ltd v International Pools Australia Pty Ltd (1995) 36 NSWLR 242

Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563

Lawless v Mackendrick [No 4] [2013] WASC 272

Magill v Magill [2006] HCA 51; (2006) 226 CLR 551

Mutual Life & Citizens Assurance Co Ltd v Evatt [1968] HCA 74; (1968) 122 CLR 556

Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; (1992) 67 ALJR 170

Neilsen v Hempston Holdings Pty Ltd (1986) 65 ALR 302

Pappas v Soulac Pty Ltd [1983] FCA 3; (1983) 50 ALR 231

Phipps v Boardman [1966] UKHL 2; [1967] 2 AC 46

San Sebastian Pty Ltd v Minister Administering Environmental Planning & Assessment Act 1979 (1986) 162 CLR 341

Shaddick v JDV Ltd [2012] WASC 120

Sternberg v The Queen [1953] HCA 15; (1953) 88 CLR 646

Sutton v A J Thompson Pty Ltd (In liq) (1987) 73 ALR 233

Tallenford Pty Ltd v Gilete G & B Civil Pty Ltd [2012] WASC 156

Taylor v Johnson [1983] HCA 5; (1983) 151 CLR 422

Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165

Vale v TMH Haulage Pty Ltd (1993) 31 NSWLR 702

Vantage Systems Pty Ltd v Priolo Corporation Pty Ltd [2015] WASCA 21

Watson v Foxman (1995) 49 NSWLR 315

Williams v Natural Life Health Foods Ltd [1998] UKHL 17; [1998] 2 All ER 577 (HL)

1 In or about early 2009 Mrs Lynda Murray (first plaintiff) heard a radio advertisement promoting a business called MyPortfolio. The advertisement represented that MyPortfolio could help clients to create wealth by purchasing investment properties.

2 In March 2009, in response to the radio promotion, Mrs Murray telephoned the number provided for the business known as MyPortfolio. She spoke with Mrs Shelley Mae Clack (second defendant). Arrangements were made between Mrs Murray and Mrs Clack for Mr Bradley Richard Denton (fourth defendant) and his wife, Mrs Raelene Joy Denton (fifth defendant) to meet with Mrs Murray and her husband Mr Daniel Murray (first plaintiff) to discuss the services of MyPortfolio. Mr and Mrs Denton were to attend as representatives of MyPortfolio.

3 On or about 16 March 2009 Mr and Mrs Denton attended the home of Mr and Mrs Murray in Safety Bay. During the course of the meeting, Mr and Mrs Denton recommended two properties to Mr and Mrs Murray for the purposes of investing. One of those properties was an apartment within the Cowrie complex in Palm Cove, North Queensland (the Cowrie Apartments). The Dentons also produced documents relating to investing in property.

4 The plaintiffs claim that during the first telephone call between Mrs Murray and Mrs Clack in March 2009, a contract was formed between them whereby the first defendant agreed to provide services to the plaintiffs through the business known as MyPortfolio. The plaintiffs claim that the first defendant breached that contract.

5 Furthermore, the plaintiffs claim that, in reliance upon the various representations made to them by the first to fifth defendants, they subsequently entered into a contract for the purchase of Apartment 216 being Lot 53 at Cowrie Apartments, Coral Coast Drive, Palm Cove, North Queensland ('Cowrie Apartment 216') for the sum of $365,000 with a $15,000 rebate from the vendor at settlement. The plaintiffs claim that the true market value of Cowrie Apartment 216 at the relevant time was $220,000 and that the first to fifth defendant's well knew that it was not worth $365,000.

6 The plaintiffs claim against the first defendant for:

7 The plaintiffs claim against the second, third, fourth and fifth defendants for:

8 The hearing of the matter was listed to commence before me on 1 December 2015. On the plaintiffs' application, the matter was adjourned to the following day.

9 On 2 December 2015 the plaintiffs made an application to amend their statement of claim. I note that an earlier application to amend their statement of claim had been brought before Her Honour Judge Wager in this Court on 23 November 2015. On 25 November 2015 Wager DCJ had allowed the application to amend the statement of claim. The further application to amend the plaintiffs' statement of claim was effectively brought on the second listed day of trial. The application to amend the statement of claim was partly opposed by the defendants.

10 Ultimately, I allowed the amendments but it necessitated the plaintiffs providing further particulars to the defendants. The defendants were necessarily required to consider their defence and file an amended defence.

11 The trial proper commenced on 2 December 2015. A Minute of Further Re-Amended Statement of Claim was not ultimately finalised until after the trial commenced. Understandably, the defendants did not file further amended defences until well into the trial. The first to third defendants filed a minute of their further amended proposed defence on 9 December 2015. The fourth and fifth defendants filed their further amended defence on 8 December 2015.

12 The trial ultimately ran for seven hearing days. The plaintiffs gave evidence and called a further four witnesses including Mr Craig Rodney Myers, a property valuer. Mr Myers gave expert opinion evidence. The second, fourth and fifth defendants gave evidence in their own defence. The third defendant did not give evidence.

13 At the conclusion of the trial, due to the court's concern as to the likely costs of these proceedings to the parties, I invited counsel to file written closing submissions and to dispense with oral closing submissions. That proposal was adopted by all parties.

14 The court subsequently received detailed and comprehensive written closing submissions from all parties. Consequently, where necessary I have referred to those closing submissions in these reasons.

15 In 2009 Mr Murray and Mrs Murray were relatively unsophisticated investors. Apart from limited share investments, they had little knowledge or experience as investors.

16 The plaintiffs were both in their mid-thirties and had two very young children. Mrs Murray completed school to Year 12. Thereafter, she worked for a number of employers in various clerical roles, including accounts and bookkeeping. In the course of her work she completed a number of certificates in bookkeeping and accounting. Mr Murray was a waterside worker.

17 By March 2009 the Murrays owned a home in Safety Bay which was subject to a mortgage of about $200,000. Although of relatively modest means, the Murrays had built up equity in their property and were considering investing in either shares or real estate. To that end, they had arranged a line of credit but had not used it for the purposes of investing. Although Mrs Murray had read a number of books on the subject of investing, she lacked the confidence to take the next step of actually entering the investment market.

18 Mrs Murray lost her job in December 2008. Consequently, the Murrays rented out their home in Safety Bay and moved into cheaper accommodation. As at March 2009, Mrs Murray believed that her home in Safety Bay was worth about $470,000.

19 MyDomaine Pty Ltd, the first defendant, is a company which was formed by Mrs Clack and her husband Mr Clack. The company operated under the business name MyPortfolio. Collectively, the first defendant and MyPortfolio were referred to as the 'Mydomaine Property Group'. The first defendant, under the name MyPortfolio, traded as a property investment and portfolio management service company.

20 Mr and Mrs Clack owned 49% of My Domaine Pty Ltd. According to Mrs Clack, MyPortfolio had been created because she and Mr Clack wanted to 'help clients invest in property' (ts 453).

21 Mrs Clack was also a licensed real estate agent and also traded under the name Mydomaine Prestige Property. Mrs Clack had worked as a licensed real estate agent in her own right, as well as having previously worked under other licensed real estate agents. According to Mrs Clack, the entity known as MyDomaine Prestige Property was the business entity through which she sold properties as an agent on behalf of vendors.

First to third defendants agreement with Indigo Real Estate Pty Ltd to market and promote the Cowrie Apartments

22 In 2007, Mr and Mrs Clack were approached by a Queensland property developer, Mr. Peter Marshall, to see whether they would be interested in marketing and promoting in Western Australia, apartments that had been redeveloped in Palm Cove, Far North Queensland. The re-development had been undertaken by a group of companies called the 'Indigo Group' which included Indigo Real Estate Pty Ltd. The apartments that had been redeveloped were within a complex known as the Cowrie Apartments. The Cowrie Apartments comprised four separate apartment blocks named Cowrie Spindle, Cowrie Tiger, Cowrie White and Cowrie Red. All four blocks had been built in the 1980s. The apartments that had been redeveloped by the Indigo Group were within the Cowrie Spindle apartment block. These apartments had been refurbished with modern fit-outs. This ultimately included Cowrie Apartment 216.

23 In relation to these refurbished apartments, the Indigo Group had entered into leases with Novotel Hotel. These apartments were to be sold subject to these leases. The legal arrangement was that the apartments were owned by a company called Palm Cove Apartments Pty Ltd which was part of the Indigo Group. Palm Cove Apartments Pty Ltd then leased them to Drift Palm Cove (Management) Pty Ltd, another company within the Indigo Group, which in turn sublet the apartments to Novotel.

24 On 17 April 2008 MyDomaine Pty Ltd entered into a commercial arrangement with Indigo Real Estate Pty Ltd to market specific Queensland properties, including apartments at the Cowrie complex in Palm Cove, North Queensland to prospective purchasers (see exhibit 74).

25 Mrs Clack and MyDomaine subsequently sold a number of the Indigo Group's properties in the latter half of 2008. The Indigo Group set the asking price at $360,000 for these properties. Each property was sold at or over that price.

26 In about August 2008 the Clacks were asked by Cameron Price Lawyers if they could assist a client of theirs to sell some other apartments in the Cowrie Tiger block (next door to Cowrie Spindle). Mrs Clack contacted the vendor Mr Mike Kubblins who told her that he had 10 apartments to sell. They were all in original condition from the early 1990s. In January 2009 Mrs Clack sold one of those apartments on behalf of Mr Kubblins for $260,000.

27 Towards the end of 2008 the Clacks were introduced to Mr and Mrs Denton. In about January or February 2009 the Dentons began working with MyDomaine. The Clacks trained the Dentons in the business.

28 In the period between February and April of 2009 the Dentons and the Clacks travelled to Palm Cove, Far North Queensland. They met with Mike Kubblins and inspected the Cowrie Spindle and Cowrie Tiger apartments (the evidence relating to this travel is explored later and is directly relevant to the reliability and credibility of the second, fourth and fifth defendants).

29 At about this time, the Dentons decided to buy some of the Cowrie Tiger apartments which were being sold by Mr Mike Kubblins. The apartments were un-renovated. The apartments were owned by a company associated with Mr Kubblins, namely QES-HW.COM Pty Ltd. The Dentons intended on renovating the apartments and selling them at a profit. The Dentons purchased six apartments through their company called RJR Investments (see separate table of purchases and sales by RJR - Table 1 at pages 80 - 82). The Dentons paid $220,000 for each apartment.

30 The Dentons and the Clacks then entered into an agreement for MyDomaine to market the apartments purchased by RJR Investments after they had been renovated. The agreement was that if any apartment marketed by MyDomaine was sold, the Clacks would receive 40% of the profit from each sale. The Dentons would receive 60% of the profit. Pursuant to their agreement, the Clacks also contributed some money to the Dentons for the purposes of renovating the apartments.

31 As already noted above, the Clacks were involved in the running of the business called MyPortfolio operated through the first defendant. This is evidenced by facts including that both Mr and Mrs Clack:

(a) were involved in discussions, negotiations and meetings with Mr Peter Marshall on behalf of the Indigo Group which resulted in the agreement between the first defendant and Indigo (exhibit 74);

(c) gave presentations and seminars to property investment clients and met with clients (ts 622); and

(d) trained Mr and Mrs Denton in the business (ts 622).

32 The Clacks were, for all intents and purposes, the controlling minds of MyDomaine and the business MyPortfolio. In her evidence at trial, Mrs Clack did not draw any real distinction between her actions and that of her husband as individuals on the one hand, as distinct from the actions of the company. At times Mrs Clack struggled to explain the differences between the various business names used by the first to third defendants (see for example ts 551 in relation to the reference to MyDomaine Property Group). Ultimately, it was apparent that MyDomaine was part of the corporate structure through which the Clacks chose to operate their business.

33 As noted at [27] above, in early 2009 Mr and Mrs Denton began working with Mr and Mrs Clack.

34 The Dentons characterised themselves as servants or agents of the first defendant. The first to third defendants accept that, at all material times, Mr and Mrs Denton were providing services to the first defendant as consultants and that MyDomaine was vicariously liable for the acts or omissions of Mr and Mrs Denton in their dealings with Mr and Mrs Murray.

Were the second to fifth defendants in partnership?

35 A question arose as to whether Mr and Mrs Denton were in partnership with Mr and Mrs Clack. The plaintiffs say they were. Mr and Mrs Denton deny the claim and submitted that the nature of the relationship did not 'satisfy the requirements prescribed by section 8 of the Partnership Act 1895'.

36 The starting point for consideration of this issue is s 7(1) and s 7(2) of the Partnership Act 1895 which defines a partnership as 'the relationship which subsists between persons carrying on in business in common with a view of profit'. Section 7(2) requires a court, in deciding whether a partnership does or does not exist in any particular case, to 'have regard to the true contract and intention of the partners as appearing from the whole facts of the case'.

37 In Fazio v Fazio [2012] WASCA 72 [53] Murphy JA summarised the law of partnership in the following terms:

Partnership is the relation which exists between persons carrying on business in common with a view to profit: s 7(1) of the Partnership Act 1895 (WA). Partnership is a relation springing from agreement, express or implied: Booth v Booth [1935] HCA 15; (1935) 53 CLR 1, 27. Under the general law, the agreement may be inferred from the circumstances proved in evidence: Peacock v Peacock [1809] EngR 130; (1809) 2 Camp. 45; the court may impute to the parties a tacit agreement to operate a business as partners: Booth v Booth (27). The general law principle is reflected, in this State, in s 7(2) of the Partnership Act, which provides that in deciding whether a partnership does or does not exist, the court may have regard to the contract and intention of the parties as appearing from the whole of the facts of the case. See also s 29 of the Partnership Act, which provides that the mutual rights and duties of partners, whether ascertained by agreement or defined by the statute, may be varied by the consent of all the partners, and such consent may be either express or inferred from a course of dealing.

38 The plaintiffs submit that the partnership that existed between the second to fifth defendants can be inferred from the circumstances. It is submitted that the fourth and fifth defendants held themselves out as being partners in the business with the consent of the second and third defendants as evidenced by the fact that:

(a) the Dentons gave Mrs Murray a business card which included the term 'partner' and held themselves out to the Murrays as being 'partners' in the business of MyPortfolio;

(b) the Dentons sent emails using the term 'partner';

(c) the Dentons contributed to the expenses incurred by the business through their company Denton Trading Pty Ltd as Trustee of the Bunbury Unit Trust trading as Westview Business Consulting; and

(d) the Dentons participated in the profits of the business through their company Denton Trading Pty Ltd as Trustee of the Bunbury Unit Trust trading as Westview Business Consulting.

39 Mrs Clack, in her evidence, was vague about the nature of the relationship as between the second to fifth defendants. For example, in evidence-in-chief she could not recall whether there were discussions 'about the financial arrangements as between [the first to third defendants] and the Dentons on the other' (ts 474). During cross-examination, whilst not conceding that the Dentons were partners, she accepted that they were more than agents and suggested that they were 'more consultants' (ts 531).

40 Mr Denton's evidence was that, despite referring to himself as a 'partner' on the business card, he was not actually a partner in the business.

41 None of the above facts, either alone or in combination, would necessarily lead to the conclusion that a partnership existed between the second to fifth defendants. The fact that parties used the title 'partner' does not prove that a partnership in fact existed (Duke Group Ltd (in liq) v Pilmer [1999] SASC 97; (1999) 153 FLR 1 [402].

42 As has already been noted above, the Clacks were the controlling minds of the first defendant. They trained the Dentons and arranged for them to attend upon Mrs Murray.

43 The evidence from both Mr and Mrs Denton was that the commercial arrangements by which the Dentons provided their services to the first defendant was through Denton Trading Pty Ltd trading as Westview Business Consulting. It was Denton Trading Pty Ltd who contributed to the expenses of MyDomaine and to whom income was paid.

44 Significantly, the fee payable and applicable to the Murrays' purchase of the Cowrie Property was paid pursuant to an invoice issued by Denton Trading Pty Ltd trading as Westview Business Consulting (exhibit 87). Denton Trading Pty Ltd trading as Westview Business Consulting was not a party to these proceedings.

45 When regard is had to the arrangement in place between the second to fifth defendants and to the true intention of the parties as appearing from the whole of the facts of the case, it is clear that the Dentons were servants or agents of the first defendant providing services to the first defendant as consultants.

46 Following the agreement made between the first defendant and Indigo Real Estate Pty Ltd to market specific Queensland properties, including apartments at the Cowrie complex in Palm Cove, MyPortfolio commenced to promote the Cowrie apartments to potential investors in Western Australia.

47 Further to the marketing agreement, the first defendant broadcast advertisements on commercial radio in Perth. In or about early 2009 Mrs Murray heard one of the radio advertisements promoting MyPortfolio. There is no dispute that these advertisements represented that:

1. MyPortfolio could help clients create wealth through investment property;
2. MyPortfolio would help clients source a property for investment; and
3. MyPortfolio would help clients utilise equity within the client's existing properties for wealth creation.

48 Nothing was said nor implied by the content of the radio advertisements that would lead a prospective investor to believe that MyPortfolio was acting on behalf of any vendors of property.

49 On or about 5 March 2009, in response to the radio promotion, Mrs Murray telephoned the number provided for MyPortfolio and spoke with Mrs Clack. Arrangements were made between Mrs Murray and Mrs Clack for Mr Denton and Mrs Denton to meet with Mrs Murray and her husband Mr Murray to discuss the services of MyPortfolio. Mr and Mrs Denton were to attend as representatives of MyPortfolio.

50 Prior to meeting with the Dentons, the plaintiffs provided to MyPortfolio brief details as to their financial circumstances. Prior to the Dentons attending upon the Murrays, they had some understanding of the Murrays' financial position. In addition, Mrs Denton, if not Mr Denton, had conferred with Mrs Clack and agreed that two properties to be presented to the Murrays as being suitable would be an apartment in Melbourne (the Merriview apartment) and a renovated Cowrie apartment listed for sale at $365,000 (Mrs Denton's evidence at ts 658).

51 On or about 16 March 2009 Mr and Mrs Denton attended the home of Mr and Mrs Murray in Safety Bay. During the course of the meeting Mr and Mrs Denton produced documents relating to investing in property. One document related generally to the services of MyPortfolio (the Gold Document). The other document related to the Cowrie Apartments which included Cowrie Apartment 216 (the Purple Document). The evidence and details relating to that meeting, specifically what representations may have been made by the Dentons to the plaintiffs, is set out at [106] - [126] below.

52 It is not in dispute that the Dentons, acting on behalf of MyDomaine Pty Ltd, recommended two properties to the plaintiffs and that one of those properties was Cowrie Apartment 216.

53 In recommending Cowrie Apartment 216 to the plaintiffs, the plaintiffs allege that the fourth and fifth defendants did not disclose:

(a) that MyPortfolio was acting for the vendors of the Cowrie apartments;

(b) that MyPortfolio had entered into a commercial arrangement to promote the Cowrie Apartments;

(c) the defendants' own interest in the purchase and sale of the RJR Apartments; and

(d) that other apartments at the Cowrie complex had recently been sold and were regularly selling for significantly less than those promoted by MyPortfolio.

54 The plaintiffs claim that, in reliance upon the various representations made to them by the first to fifth defendants they subsequently entered into a contract for the purchase of Cowrie Apartment 216 for the sum of $365,000 with a $15,000 rebate from the vendor at settlement.

Claim for breach of contract by the first defendant

55 The plaintiffs' damages claim for breach of contract is advanced solely against the first defendant.

56 The plaintiffs claim that a binding legal contract between the plaintiffs and MyDomaine Pty Ltd was formed during a telephone conversation between Mrs Murray and Mrs Clack which occurred in March 2009, after Mrs Murray had heard the radio advertisement for MyPortfolio. On this occasion Mrs Clack arranged for the Dentons to attend upon the plaintiffs at a later date. The plaintiffs claim that the terms of the contract, referred to by the plaintiffs as the 'Engagement Contract', included express terms which are set out at par 12A of the plaintiffs Further Re-Amended Statement of Claim (the 'statement of claim'), namely that:

(a) The first defendant would provide services to the plaintiffs upon matters referred to in the radio promotion; and

(b) The first defendant would provide such and other services as would be agreed at or after further discussions between the parties when the Dentons attended upon the plaintiffs.

57 The plaintiffs further claim (par 45 of the statement of claim) that it was an implied term of the Engagement Contract that the first defendant would take reasonable care in provision of services to the plaintiffs to avoid loss and damage to them.

58 It is common ground that there was a telephone conversation between Mrs Clack and Mrs Murray on or about 5 March 2009 during which Mrs Clack told Mrs Murray that MyDomaine could provide property investment and portfolio management services. However, the first to third defendants deny that any legally binding contract was formed during that telephone conversation.

59 The question of whether a contract was formed during the telephone conversation, as pleaded, requires a determination as to whether there was an intention by the parties to create legal relations. This requires an objective assessment of the context of the discussion and actions and the surrounding circumstances known to the parties. In Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41, 120 Deane J said, in relation to statements made in earlier conversations:

... The test for determining whether any, and if so which, of those statements in fact constituted an express term of the contract is whether the proper inference is that the relevant statement or representation was, when viewed objectively and in context, offered and accepted as, or as part of, a contractual promise.

60 Since the express terms of the Engagement Contract are alleged to have arisen during the telephone conversation, the question of whether a contract was formed must be determined by an objective assessment of what was said by Mrs Clack and Mrs Murray during the conversation: Taylor v Johnson [1983] HCA 5; (1983) 151 CLR 422. Whilst the surrounding circumstances, including the dealings and communications between the parties over a period of time may be relevant to determining the intention of the parties (see Vantage Systems Pty Ltd v Priolo Corporation Pty Ltd [2015] WASCA 21 Buss JA with whom McLure P agreed [96] - [111]); subsequent events and statements by the parties directed to the performance of an erroneously assumed contractual obligation cannot be used to create a contract which did not previously exist: Harvela Investments Ltd v Royal Trust Co of Canada (CI) Ltd [1986] AC 207, 226, 234-235; Gjergja v Cooper [1987] VicRp 15; [1987] VR 167, 213.

Mrs Murray's evidence about the telephone conversation with Mrs Clack

61 Mrs Murray had little recollection of precisely what was said during the telephone conversation but agreed that the conversation may have been about five minutes in duration. She agreed with questions put to her by counsel for the first to third defendants that it was likely that she told Mrs Clack about the equity available in her home and what her goals were in terms of where she wanted to live (ts 159).

62 Mrs Murray's evidence about the things discussed during the telephone conversation lacked any precision and provided little if any support for the pleaded Engagement Contract. The following evidence, given during her evidence-in-chief, illustrates her inability to recall the detail of the conversation (ts 120 - 121):

Mr Offer: Okay, so you rang the office of what?

Mrs Murray: My Portfolio.

Mr Offer: And you spoke to Shelley. What did you discuss?

Mrs Murray: I don't recall the exact conversation but it was about being interested in what they had to offer.

Mr Offer: Did you have a discussion about what was being offered?

Mrs Murray: I don't recall. I just remember them saying they would send Brad and Raelene out to us because I couldn't go into the office. I had two small kids and I didn't have a carer.

Mr Offer: Okay. Before we get to that, did you have any discussion about how you came to be contacting My Portfolio?

Mrs Murray: I'd said it was through the ad, the advertisement.

Mr Offer: And did you have any discussion about the content of the ad?

Mrs Murray: I can't recall.

Mrs Clack's evidence about the telephone conversation with Mrs Murray

63 Mrs Clack's evidence of the telephone conversation, like that of Mrs Murray, lacked precision. Mrs Clack had some difficulty recalling what was discussed with Mrs Murray during the telephone conversation on 5 March 2009. Mrs Clack's evidence in chief relevantly included as follows (ts 480):

Dr Heenen: Do you remember what day that was?

Mrs Clack: That was 5 March.

Dr Heenen: Do you remember what you said during that telephone conversation?

Mrs Clack: I thanked Lynda for her inquiry or her call and - and asked her how we could help with her inquiry.

Dr Heenen: Do you remember what she said?

Mrs Clack: No, I don't recall.

Dr Heenen: Do you remember if you said anything else?

Mrs Clack: I asked her general questions about the market value of her home. She said she didn't have a home at the time, they were renting and they had an investment property.

Dr Heenen: Did you ask her anything else?

Mrs Clack: Just what the market value was of the property, she said around 470, and how much - I asked her how much she owed on the property which she said around 200 and also what their incomes were. She only told me Daniel's income at the time which was about 80,000. I then asked her, does she have any - or do they have any other debts, credit cards, personal loans. I can't recall what she said on - on that. But I did ask her if she had children and she said two. And I also asked her how much her rental gave over for rent, and - but I can't recall how much that was.

Dr Heenen: And did you say anything else to her?

Mrs Clack: Not that I can recall.

Dr Heenen: Did she say anything else to you?

Mrs Clack: No.

Dr Heenen: And how is that - do you recall anything else about that telephone conversation?

Mrs Clack: I just let her know that I would have Brad and Rae give her a call - our consultants to give her a call to set up an appointment to meet with them.

Dr Heenen: And did she say anything in response to that?

[o]n or about 15 March 2009, on the occasion pleaded by the Plaintiffs at paragraph 11 of the claim, the Second Defendant orally advised the Second Plaintiff of the property investment and portfolio management services which the first defendant could provide to the Plaintiffs.

(See par 5.1 of the first to third defendants Third Amended Defence).

65 Whilst the defence refers to a date of 15 March 2009 and the evidence at trial suggested the conversation took place on 5 March 2009, nothing turns on that fact. Whatever the correct date is, it is clear that a conversation between Mrs Clack and Mrs Murray occurred in March 2009. The precise date is of no consequence.

66 In Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95 [24] Gaudron, McHugh, Hayne and Callinan JJ said:

It is of the essence of contract, regarded as a class of obligations, that there is a voluntary assumption of a legally enforceable duty,' (Australian Woollen Mills Pty Ltd v The Commonwealth [1954] HCA 20; (1954) 92 CLR 424 at 457, per Dixon CJ, Williams, Webb, Fullagar and Kitto JJ). To be a legally enforceable duty there must, of course, be identifiable parties to the arrangement, the terms of the arrangement must be certain, and unless recorded as a deed, there must generally be real consideration for the agreement. Yet '[t]he circumstances may show that [the parties] did not intend, or cannot be regarded as having intended, to subject their agreement to the adjudication of the courts' (South Australia v The Commonwealth [1962] HCA 10; (1962) 108 CLR 130 at 154, per Windeyer J).

(emphasis added)

67 The plaintiffs submit that given the context of the conversation as a whole, it is reasonable to infer that the discussion between Mrs Murray and Mrs Clack about the proposed meeting between the plaintiffs and the Dentons related to the provision of property investment and portfolio management services by MyPortfolio.

68 In Vantage Systems Pty Ltd v Priolo Corporation Pty Ltd [2015] WASCA 21 Buss JA said [99]:

... the search for an intention to create contractual relations is not a search for the uncommunicated subjective motives or intentions of the parties.

69 When the evidence of both Mrs Murray and Mrs Clack is objectively analysed, whilst the evidence of both witnesses is generally consistent, neither recalled much of the conversation. What each recalled was limited in detail and vague at best.

70 Despite the admissions made by the first to third defendants, on the available evidence, it would not be possible to conclude that their conversation was anything other than a preliminary inquiry by Mrs Murray to investigate whether MyDomaine might be able to assist the plaintiffs in finding suitable investment properties.

71 Furthermore, it is significant to note that no consideration for the alleged contract was pleaded by the plaintiffs. There was no evidence of anything promised by the plaintiffs during the conversation. The services to be provided by the first defendant, as pleaded (see statement of claim par 12A), is too vague to constitute consideration. In any event, there is no evidence that during the telephone conversation there was any certainty or discussion as to what services MyDomaine might provide at the time the contract was allegedly formed.

72 Without an exchange of promises no binding contract could be formed. Consequently, the only available conclusion is that no contract was formed between the plaintiffs and the first defendant during the telephone conversation.

73 In light of the conclusion that there was no contract, and since the plaintiffs do not raise any other allegation of formation of a contract, the alleged implied term of the Engagement Contract pleaded by the plaintiffs cannot be sustained.

Claim for breach of fiduciary duty against first to fifth defendants

74 The District Court's civil jurisdiction is derived from s 50 of the District Court of Western Australia Act 1969. That section, reproduced below, does not confer on the Court equitable jurisdiction. Section 50(1) reads:

Subject to section 51 the Court has the same jurisdiction to hear and determine and may exercise all the powers and authority that the Supreme Court has and may exercise from time to time, in relation to -

(a) all personal actions, other than those of the kind referred to in subsection (2), where the amount, value or damages sought to be recovered is not more than the jurisdictional limit, whether on the original claim or demand or a balance after allowing payment on account, or the amount of any set off admitted by the plaintiff.

75 Section 50(1) of the District Court of Western Australia Act 1969 was considered by the Full Court in Commercial Developments Pty Ltd (t/as Don Rogers Motors Pty Ltd) v Mercantile Mutual Insurance (Workers' Compensation) Ltd (1991) 5 WAR 208. Malcom CJ said (217):

In my opinion, the claim by the appellant against the respondent by the third party notice is an equitable claim for a declaration of an entitlement to an indemnity which should be regarded as a claim for principal relief. The question of the jurisdiction of the District Court should be determined in the same way as if it had been contained in a separate writ issued by the appellant. The District Court does have limited jurisdiction to grant equitable relief pursuant to the provisions of ss 55 and 57 of the Act and, in particular, by virtue of s 25 of the Supreme Court Act in relation to a matter which is within jurisdiction. Thus, the power to grant such equitable remedies is in the nature of an ancillary or auxiliary power to be exercised in the determination of claims otherwise within the jurisdiction of the court. ... Apart from this provision and the provisions relating to partnerships in par (b) and deceased estates in s 50(1)(ba), claims for other equitable relief as principal relief in the District Court are beyond jurisdiction.

An action on a contract of insurance claiming a declaration of entitlement to an indemnity by way of equitable relief is not a personal action of a kind described in s50(1)(a). Such an action is not one by which any amount is sought to be recovered.

77 The plaintiffs seek to distinguish the decision in Commercial Developments Pty Ltd v Mercantile Mutual (Workers' Compensation) Ltd ) on the basis that they are not seeking a 'declaration', but are instead claiming damages for breach of fiduciary duty. Consequently, it is submitted on the plaintiffs' behalf that this is therefore a 'personal action' and that there is no jurisdictional impediment to the hearing and determination of this aspect of the claim. This submission ignores the words in s 50(1) (a) of The District Court of Western Australia Act which confer jurisdiction, namely 'all personal actions, other than those of the kind referred to in subsection (2)'.

78 Leaving aside the decision in Commercial Developments Pty Ltd v Mercantile Mutual (Workers' Compensation) Ltd, _a_s the plaintiffs point out and acknowledge, the term 'personal action at law' was considered by the Court of Appeal of the Supreme Court of New South Wales in Vale v TMH Haulage Pty Ltd (1993) 31 NSWLR 702. The New South Wales Court of Appeal found that the phrase 'personal action at law' excluded proceedings in equity.

79 The case of Vale v TMH Haulage Pty Ltd involved a question as to whether the District Court of New South Wales had jurisdiction to entertain an action for recovery of a debt. The Court was there considering s 44(1) of the District Court Act 1973 which provided that that court had jurisdiction to hear and dispose of any 'personal action at law' where the amount claimed did not exceed $100,000. Prisetly JA, with reference to the phrase 'personal action at law' as it appeared in the District Court Act (NSW), said (707 - 708):

In my view, parliament must have intended in legislating in 1973 in regard to the District Court, whose jurisdiction had become steadily more important throughout this century, to describe its jurisdiction in the legal language of the present day; and, in my opinion the way the term 'personal action at law' was understood in 1973 in New South Wales was substantially that described in The Oxford Companion to Law, (Professor DM Walker, (1980)) as follows (at 949):

'Personal action. At common law in England, personal actions were distinguished from real actions (qv) and mixed actions (qv). They were claims against persons arising out of contracts or out of torts, the former comprising the actions of account, assumpsit, covenant, debt, and certain others, the latter comprising attaint, case, deceit, champerty, conspiracy, detinue, replevin, trespass, trover, and certain others. All these were abolished in the nineteenth century together with their individual original writs and distinct forms of procedure. The term is now frequently given to an action in personam, where the judgment of the court is a personal one, normally for payment of money, as contrasted with an action in rem, where the plaintiff seeks to make good a claim to or against certain property in respect of which, or in respect of damage done by which, he alleges that he has an actionable demand.'

On this approach the term would exclude proceedings for possession of land, in respect of which the court is given jurisdiction under s 133 of the District Court Act 1973, proceedings in equity, some jurisdiction in which is conferred upon the court by s 134 and the quasi equitable proceedings dealt with in s 134A, ss 134B and 135, but not the present proceedings.

Put another way, I see no reason for reading the words 'at law' in s 44(1) of the District Court Act 1973 in a particular sense in which they were sometimes used in the Courts of Westminster immediately before the commencement of the Supreme Court of Judicature Act 1873 (UK). The present claims are founded upon a statute of the Victorian Parliament creating rights enforceable against persons resident in New South Wales, the enforcement of which, if the claims are upheld, will be expressed by a money judgment. They are not claims of an equitable kind, or claims in rem. This seems to me to be quite sufficient for them to be accurately regarded today as personal actions at law.

80 There is no basis in the present case to distinguish the reasons of the New South Wales Court of Appeal in Vale v TMH Haulage Pty Ltd on the basis that s 50(1) of the District Court Act (WA) does not include the words 'at law'.

81 The District Court does not have jurisdiction to hear or determine the claim of breach of fiduciary duty. Nonetheless, many of the issues raised under the claim of breach of fiduciary duty are generally relevant to the circumstances surrounding the claims against the defendants in negligence where a relevant duty of care is pleaded. Those issues are addressed below.

Claim in negligence - first to fifth defendants

82 The plaintiffs advance four separate cases in negligence. They are:

• Negligent misstatement.
• The defendants' failure to advise the plaintiffs of the risks associated with property investment.
• The defendants' failure to provide any or any adequate advice to the plaintiffs to avoid loss and damage.
• The defendants' failure to make any or any adequate enquiries as to the true market value of the property.

First case in negligence - negligent misstatement (statement of claim par 49)

83 In San Sebastian Pty Ltd v Minister Administering Environmental Planning & Assessment Act 1979 (1986) 162 CLR 341, Gibbs CJ, Mason, Wilson and Dawson JJ at 357 [23], with reference to a number of American authorities said:

[W]here a statement is made for the purpose of inducing the plaintiff, or the members of a limited class including the plaintiff, to commit themselves financially upon the basis that the statement is true, and the plaintiff acts in reliance on the statement, the law will impose a duty of care on the maker of the statement.

84 In order to succeed in a claim for negligence, the plaintiffs are required to demonstrate a number of things. The plaintiffs must prove to the requisite standard that:

(a) the pleaded representations were made by the defendant or defendants; and

(b) that a relevant duty of care was owed to them by one or more of the defendants at the time of making the representations. If no duty of care exists, then they would fail to make good a claim in negligence: Brookfield Multiplex v Owners Corporation Strata Plan 61288 [2014] HCA 36; (2014) 254 CLR 185 [19]; and

(c) that the representations were made with an intention that they would be relied upon and that the maker of the representation was aware , or ought reasonably be aware that the recipient would rely upon the information or advice: Mutual Life & Citizens: Assurance Co Ltd v Evatt [1968] HCA 74; (1968) 122 CLR 556, 571 (per Barwick CJ); and

(d) the representations must have had a causative effect upon the recipient's decision making process. In this case, that it had a material effect on the plaintiffs' decision to purchase the property.

85 It is not sufficient for the plaintiffs to merely establish that representations which were made, were false. The plaintiffs must also establish that any misrepresentation established on the evidence was made negligently. In this regard it is important to note that the first defendant concedes that it is liable for the acts of the fourth and fifth defendants who were acting as its agents in their dealings with the plaintiffs (see First to Third Defendants' Submissions dated 7 December 2015 at par 3 and ts 410).

86 Whether any defendant has assumed a tortious duty of care in respect of any of the representations established on the evidence is to be determined objectively and all aspects of the dealing between the parties are relevant: Williams v Natural Life Health Foods Ltd [1998] UKHL 17; [1998] 2 All ER 577 (HL), 582.

87 In assessing the circumstances to determine whether a duty of care exists, the objective context in which each alleged representation falls to be considered will include conclusions as to the existence and extent of any contractual or fiduciary relationship between the parties. This requires a careful analysis of all the relevant circumstances that existed as between the parties**.** In Mutual Life & Citizen; Assurance Co Ltd v Evatt Barwick CJ, in considering the question of whether the nature of the relationship imports in a law a duty of care on a party, noted that:

... it is this element of trust which the one has of the other which is at the heart of the relevant relationship. I should think that in general this element will arise out of an unequal position of the parties which the recipient reasonably believes to exist. The recipient will believe that the speaker has superior information, either in hand or at hand with respect to the subject matter or that the speaker has greater capacity or opportunity for judgment than the recipient. But I do not think it can be said that this must always be so, that inequality in these respects must necessarily in fact be present or be thought to be present if the special relationship is to exist.

88 The objective circumstances of the dealings between the plaintiffs and the defendants relevantly includes, but is not limited to such facts as:

(a) the level of property knowledge that the various parties held, particularly their experience in the areas of property investing;

(b) whether the plaintiffs had bought property previously and in what capacity;

(c) the nature of the contact between the parties -

• there is no evidence of any contact between the plaintiffs and the third defendant Mr Clack
• the only direct contact between the plaintiffs and Mrs Clack was during the first telephone conversation on about 5 March 2009 (ts, 481)
• there was direct contact between the plaintiffs and the second, fourth and fifth defendants;

(d) whether the plaintiffs obtained further assistance and advice from other sources, and whether the defendants expected they would. (Mrs Murray, in her evidence, admitted an expectation that the lending bank would be obtaining an independent valuation of Cowrie Apartment 216 before it would agree to provide finance);

(e) what the defendants, in particular Mrs Denton, expected the plaintiffs would do prior to purchasing any property, namely that an independent valuation would be performed at the behest of the plaintiffs' financier before the contract of sale became unconditional: (Mrs Denton's evidence at ts 638 - 639, ts 649);

(f) the effect of the statutory warning given to the plaintiffs by the defendants which was required by the Property Agents and Motor Dealers Act 2000 (Qld). The document warned them to obtain independent legal advice and an independent valuation of the property before proceeding with the purchase (exhibit 5); and

(g) whether the plaintiffs had independent legal advice.

89 In relation to the factors set out at par 88 above, it is of note that the plaintiffs were introduced to a mortgage broker by the fourth and fifth defendants. The mortgage broker, 'All About You Finance', was not only recommended by the fourth and fifth defendants, but clearly had an ongoing relationship with the first defendant and at least Mrs Clack. Indeed, the relevant disclosures made by Mrs Clack required by the Property Agents and Motor Dealers Act 2000 (Qld) and set out in PAMD Form 27C (exhibit 13) detailed her relationship with the mortgage brokers as well as solicitors Cameron Price lawyers.

90 Furthermore, in relation to the question of whether the plaintiffs had independent legal advice, the plaintiffs followed the fourth and fifth defendants' recommendation and appointed Cameron Price Lawyers to act for them in respect of the purchase of Cowrie Apartment 216. Again, like the mortgage brokers, the solicitors were recommended by the fourth and fifth defendants. In addition, the solicitors - Cameron Price Lawyers, were the same lawyers that had a relationship with first to third defendants having introduced them to Mr Kubblins on whose behalf a number of Cowrie Apartments were sold. The solicitors clearly had an ongoing relationship with at the very least, the first to third defendants.

91 It is necessary to consider separately each of the representations pleaded by the plaintiffs at paragraph 21 of the statement of claim. For this purpose, I have adopted the categories in which they are pleaded in the statement of claim.

92 It is not disputed by any party that Mrs Murray heard the radio advertisement and that MyDomaine represented that:

(a) it could help clients create wealth through investment property;

(b) it would help clients source a property investment; and

(c) it would help clients use equity within their existing properties for wealth creation,

although the fourth and fifth defendants say, in any event, that it does not concern them.

93 Whilst the first to third defendants admit that the representations were made, they argue that these statements are mere 'puffery designed to entice prospective clients to contact MyDomaine and make further inquiries'. Additionally, the first to third defendants argue that there is no evidence that would support a claim that the plaintiffs relied upon these statements when entering into the contract for the purchase the property.

94 I do not accept the first to third defendants' submission to the effect that the words conveyed by the Radio Promotion amounted to puffery. The words of the radio promotion were clear in their meaning and purpose. The words conveyed to the listener that MyDomaine had certain skills or knowledge that could help their clients to create wealth. The statements were not merely laudatory and could not be categorised as mere puffery. I am satisfied that the first defendant caused the Radio Promotion.

95 It was only Mrs Murray that heard the radio promotion. There is no evidence that she conveyed the words of the Radio Promotion to Mr Murray. There was nothing said by either Mrs Murray or Mr Murray in their evidence that would necessarily lead to the conclusion that these representations alone materially caused either of them to enter into the contract.

96 Recognising that there may be a real difference between taking some preliminary steps in the process towards purchasing an apartment, as against the words materially causing the plaintiffs to purchase the apartment, the words clearly caused Mrs Murray to call Mrs Clack. That led to the meetings that subsequently took place between the plaintiffs and Mr and Mrs Denton. The Radio Promotion is clearly part of the relevant background. As already noted, the words of the radio promotion were clear in their meaning. Consequently, the Radio Promotion is relevant when considering the nature of the relationship between the plaintiffs and the defendants, how it developed and whether in fact a duty of care did exist as between them.

97 The plaintiffs claim that following the Radio Promotion, there were a number of representations made to them by the defendants. These representations arose in the context of a meeting between the plaintiffs and the fourth and fifth defendants on 16 March 2009. These representations were in the form of oral and written representations.

98 So far as the representations relied upon are said to have been made orally, the plaintiffs must prove them with a sufficient degree of precision. In Shaddick v JDV Ltd [2012] WASC 120 Allanson J, with reference to Watson v Foxman (1995) 49 NSWLR 315, 318 - 319, summarised the law relating to the level of precision required to be proved by a party where oral representations are alleged. His Honour said [39]:

... It is not necessary for the plaintiff to prove the precise words spoken on each occasion. The court needs to be satisfied that it is more probable than not that words were spoken that would reasonably have conveyed the representation alleged. I can reach that satisfaction if I am satisfied that the substance or effect of what was spoken conveyed the misleading representations: James Hardie Industries NV v Australian Securities and Investments Commission [2010] NSWCA 332 [269].

The second to fifth defendants' trip to Palm Cove to inspect apartments

99 Prior to considering the meeting that took place between the plaintiffs and Mr and Mrs Denton on 16 March 2009, it is relevant to consider the evidence relating to the second to fifth defendants' travel to Queensland for the purposes of inspecting properties in Palm Cove. That evidence came from Mrs Clack, Mrs Denton and Mr Denton.

100 Mrs Clack said that in about late February 2009, upon her suggestion, she and her husband Mr Clack, together with the Dentons, travelled to Palm Cove. They stayed there three to four nights. They all met and discussed with Mr Kubblins the Tiger Cowrie apartments that he had for sale in Palm Cove. Arrangements were made for them to inspect the apartments, which they did. Mrs Clack also took photos of the apartments. The asking price by Mr Kubblins for the Tiger Cowrie apartments was $220,000 each. Mrs Clack made no mention of travelling to Melbourne during this trip.

101 Mrs Denton's evidence about the trip to Queensland included that, in the course of learning about the business, she took steps to familiarise herself with the properties that were being offered by MyPortfolio. According to Mrs Denton, towards the end of February or the beginning of March 2009, she together with Mr Denton and Mr and Mrs Clack, travelled to Queensland and Melbourne and inspected most of the properties that they were presenting. They 'inspected Drift, Palm Cove and also the Cowrie property, Cowrie Apartments in Palm Cove and also there was some house and land packages in Palm Cove'. They also 'went to Melbourne and had a look at the properties they had available in Melbourne' (ts 623). Mrs Denton's evidence differed from Mrs Clack's evidence in that, according to Mrs Denton, the Dentons and the Clacks also travelled to Melbourne together for the purpose of inspecting other properties.

102 According to Mr Denton, in either late March or early April 2009 (this date was qualified in cross-examination to be February 2009), he travelled to Palm Cove Queensland to look at the properties that MyPortfolio were presenting. Prior to that date, he had also become aware that Mr Kubblins had a number of apartments for sale in the Tiger Cowrie complex. His travel to Palm Cove resulted in him also inspecting the Tiger Cowrie apartments. He travelled to Palm Cove with his wife Mrs Denton and the Clacks (ts 682 - 683). He made no mention of the trip also involving travel with the Clacks to Melbourne to inspect the properties that were available there. This was a curious omission in both his and Mrs Clack's evidence if it in fact had occurred. It is difficult to accept that this detail was simply overlooked in their evidence. The omission strongly points to a conclusion that Mrs Denton was either not honest or reliable in relation to her account that they had travelled to Melbourne during this trip. It tends to suggest that Mrs Denton was exaggerating this aspect of her evidence to enhance the level of research that she claimed that they had undertaken in determining the true value of the properties they were promoting.

103 On the other hand, the second to fifth defendants' trip to Palm Cove is relevant for a number of other reasons. The trip obviously included the Clacks and the Dentons inspecting the Tiger Cowrie apartments that were available for sale by Mr Kubblins as well as inspecting the complex in which Cowrie Apartment 216 (Cowrie Spindle apartments) was situated. Consequently, not only were the Clacks and Dentons aware of the location and state of the various apartments, but were involved in discussions with Mr Kubblins who ultimately wanted to sell his un-renovated apartments.

104 It is of note that on or about 7 April 2009, that is about three weeks after the meeting between the Dentons and the Murrays which took place on 16 March 2009, Mr and Mrs Denton, through their company RJR Investments, agreed to purchase five apartments in the Tiger Cowrie complex from Mr Kubblins. RJR Investments purchased the apartments for $1,170,248.76. The purchase price including associated expenses (see exhibit 88). Subsequently they spent approximately $200,000 renovating and refurbishing the apartments (see exhibit 88). The Clacks, or at the very least the first defendant, contributed funds towards the expenses associated with the project. The agreement between the Dentons and the Clacks was that the Dentons would market the apartments on behalf of RJR Investments and in return would receive 40% of the profits. The total cost involved in the venture involving the five apartments, including the purchase price, renovation and fit-out of the apartments was $1,400,642.93. The net profit after sale of the apartments was $380,665.50. This was divided between the Dentons and the Clacks on a 60/40 basis. (see ts 687 and 688; exhibit 88).

105 The negotiations for the purchase of the apartments by RJR Investments from Mr Kubblins was what Mr Denton described as 'a team effort' involving the Clacks and the Dentons (ts 690, 700). Interestingly, despite Mr Denton referring to the negotiations for the purchase of the five apartments as being a 'team effort,' Mrs Clack claimed that although she became aware of the Dentons' purchase of the five apartments, she had no involvement in the purchase (ts 480). Mrs Clack's evidence on this issue lacks credibility in light of all the surrounding evidence including the fact that she and her husband had inspected the apartments, met with Mr Kubblins in Palm Cove, contributed funds towards the venture and ultimately received 40% of the profit for the sale of these apartments.

The meeting involving the plaintiffs and the fourth and fifth defendants on 16 March 2009 - Mrs Murray's evidence about the meeting

106 Both the plaintiffs and the fourth and fifth defendants gave evidence about the meeting that took place at the plaintiffs' home on 16 March 2009. Mrs Clack gave evidence about the arrangements for and the lead up to the meeting. For the reasons already articulated and those that follow, where there is a dispute between the evidence of the various witnesses, the evidence of Mrs Murray is preferred to that of the other witnesses.

107 Mrs. Murray was the first witness to give evidence about the meeting. Mrs Murray was obviously anxious and appeared to be a person that was not used to public speaking. Nonetheless, she impressed as being an honest and generally reliable witness. Mrs. Murray said that prior to the Dentons attendance on 16 March 2009, Mrs Clack asked her to provide the plaintiffs' 'financials to the office so they could see what equity and assets and liabilities [they] had, and our income' and do an analysis (ts 121 - 122). This evidence is consistent with the evidence of Mrs Clack, and both Mr and Mrs Denton.

108 Mrs Murray's evidence was that it was Mrs Denton that did most of the talking at the meeting. Mrs Murray said that the fourth and fifth defendants advised her that, based upon their financials, they could afford to purchase two properties (ts 122).

109 According to Mrs Murray, early in the conversation Mr Denton suggested a house in Queensland that had a pool. She had rejected that suggestion because she did not favour a property with a pool due to previous experience (ts 123). Mrs Murray said that the subject of the Cowrie Apartment came up shortly thereafter. Brochures were then shown to the plaintiffs. The first was a document contained in a purple folder (Purple Document). The second was contained in a gold folder (Gold Document). The plaintiffs were taken through the Purple and Gold Documents (exhibits 1 and 2 respectively) by the fourth and fifth defendants. (These documents will be addressed as separate representations in the reasons that follow).

110 In terms of the Gold Document, Mrs Murray remembered being taken through the slides contained therein, but did not specifically remember the conversation that occurred around these slides. According to Mrs Murray whose evidence I accept, they did not go through all the various properties displayed in the document 'because it was already decided which property [they] should be buying' (ts 128). She identified slide number 37 in the Gold Document because that was the point at which MyPortfolio was explained in the brochure. According to her, with reference to the Gold Document (exhibit 2), it was mostly the page captioned 'POSITIVE CASHFLOW DIAGRAM' that they discussed because that was the document that detailed how the investment was to work (ts 129 - 130).

111 With reference to the Purple Document, which was specifically about the Cowrie apartments, Mrs Murray remembered being shown a picture of the apartments.

112 Hardcopies of both the Purple Document (exhibit 1) and the Gold Document (exhibit 2) were left with the plaintiffs. Mrs Murray thought that she may have browsed through them at a later date.

113 In terms of specific things said by either the fourth or fifth defendant during the course of the meeting, Mrs Murray said:

• she was told by them that 'we could obtain two properties with the equity we had in our home' (ts 122);
• she remembered ' a conversation about the five-year guarantee' (ts 125);
• she was 'advised that it was a great opportunity' and that they (the fourth and fifth defendants 'had been there and it was a lovely location and that we should buy in there'(ts 125);
• she recalled something 'about the three-year lease and it was a great opportunity' and that there were two options of five years after the initial five-year period (ts 130); and
• they were told that 'this was the last one with five years' (ts 130).

114 Although there was no discussion about what the lease options meant, according to Mrs Murray it was 'a selling point [to them because it meant] that we wouldn't need to worry about the rent because we had guaranteed rental income' (ts 130).

115 Mrs Murray said that there was no real discussion about the asking price of $365,000 for the Cowrie apartment. She noted that that was the price listed in the Purple Document (exhibit 2).

116 It is clear that following the meeting with the Dentons, the plaintiffs subsequently signed two separate expressions of interest and paid two separate deposits of $1,000 in relation to each of the Cowrie Apartment and the Merriview Apartment. These documents were both dated 18 March 2009 (exhibits 4.1, 4.2 and 10).

117 Mrs Murray said that she signed the expression of interest in relation to the Cowrie property because it was the only property that was shown to them and that she acted on the fourth and fifth defendants' recommendation as they appeared knowledgeable in property investing. So far as the Cowrie property being the 'only' property shown to them, that could not be the case since as at that time they were clearly considering purchasing the Merriview apartment as well.

118 The reasons given by Mrs Murray as to why she signed the expression of interest to buy the Cowrie Apartment need to be considered in light of all the evidence about what was then known to Mrs Murray, including:

• The Radio Promotion;
• Mrs Murray's conversation with Mrs Clack; and
• the meeting with and presentation conducted by the fourth and fifth defendants on 16 March 2009.

The meeting involving the plaintiffs and the fourth and fifth defendants on 16 March 2009 - Mrs Denton's evidence about the meeting

119 Mrs Denton agreed that they discussed two properties with the plaintiffs, namely the Cowrie property and the Merriview property. However, Mrs Denton said that the suggestions were couched in terms of their suggestions being on the basis that 'if it was deemed to be suitable and that the Murrays were interested in looking at properties that they [the Cowrie Apartment and the Merriview apartment] would be two properties that would fit in with their equity and income and their situation': ts 658.

120 Mrs Denton claimed to be able to recall some of the specific details about the meeting with the plaintiffs. Her evidence included that:

• she said to the plaintiffs 'a couple of times' that 'it was very important that they were on the same page', and at the end of the meeting she said 'they needed to really look and think about whether that - it was something that they were both wanting to do and that they would need to do their own research and ... due diligence and that they needed to make sure that it was something that they both wanted': ts 633;
• they talked to the plaintiffs about the rental yield that the Cowrie apartment was achieving and that it was much higher than the property that the plaintiffs had in Safety Bay, and was also a much higher yield than we were achieving in our rental properties in Perth': ts 658;
• In response to the question: 'And you told the Murrays that based on the information that you had that the Cowrie property was suitable to their needs?' Mrs Denton said: '--We - we said that they would have to have their finance capacity verified by a financial broker ... -- but that given the details that - the brief details that had been given to Shelley that these two properties seemed to fit in with their financial capacity and their needs, correct.' (ts 658);
• she denied saying that the Cowrie Apartment was 'perfect', but agreed that they had discussed the lease guarantee and that 'it fitted in with Lynda's needs [to have] ... regular and reliable income': ts 659; and
• Mrs Murray was sometimes absent from the presentation while she was attending to the plaintiffs' children: ts 664.

The meeting involving the plaintiffs and the fourth and fifth defendants on 16 March 2009 - Mr Denton's evidence about the meeting

121 Mr Denton said that the meeting lasted two hours. It was he that conducted the presentation to the plaintiffs.

122 In relation to his understanding of what the plaintiffs' financial position was, he said that: ' -- We had a - a very broad brush overview of their position.' (ts 717).

123 According to Mr Denton, based on what he understood to be the plaintiffs' financial position, he recommended the investments in Cowrie and Merriview, but qualified that by saying that it had to be approved by a finance broker (ts 717).

124 According to Mr Denton, he gained the impression that the meeting was really for Mr Murray's benefit rather than Mrs Murray. This was because at times during the meeting Mrs Murray was distracted by her children and consequently, according to Mr Denton, 'she would not be listening or not be participating in the - in the discussion. She wasn't concerned about that' (ts 680). This evidence is at odds with Mrs Murray's evidence about the meeting.

125 Mr Denton was generally an unimpressive witness. At times I formed the view that he was neither credible, nor reliable. In evidence-in-chief, despite not having taken contemporaneous notes at the meeting (ts 704), he was apparently easily able to remember specific details of Mrs Murray's involvement in the approximately two hour long meeting that took place on 16 March 2009. For example, he was able to recall that during this meeting, at a point he nominated as being no more than two thirds of the way through his power-point presentation, Mrs Murray 'interjected to ask what property we had available, Can - can we go to the property section?' (ts 689).

126 He also gave evidence that Mrs Murray had made clear to him that she was knowledgeable about property investing. Again, this evidence is inconsistent with Mrs Murray's evidence and inconsistent with the objective evidence that whilst she may have read some literature on the subject, at that stage Mrs Murray had not ventured into the property investment market.

127 It is of note that when Mr Denton was asked questions by counsel for the plaintiffs that related to his travel to Queensland for the purposes of inspecting various apartments including the apartments at Palm Cove which he and Mrs Denton ultimately purchased, he was unsure of the month of the initial visit and could not say precisely how many times he actually travelled to Queensland for this purpose. This was despite the fact that he acknowledged that his investment in these properties was a significant event.

128 Furthermore, the conduct of Mr and Mrs Denton during the trial caused some concern. It appeared to me that while Mr Denton was being cross-examined by counsel for the plaintiffs and at a time that he had some difficulty answering some of those questions, Mr Denton looked to Mrs Denton for some assistance. Mrs Denton was seated at the back of the court room. Whilst I cannot conclusively say that Mrs Denton was providing the answers from the back of the court room, their conduct suggested she was. When the issue was raised, Mrs Denton voluntarily left the courtroom. Their behaviour at this time did not assist either in terms of their credit.

The Attendance Representations (Statement of claim par 16)

129 As already noted above, following the call between Mrs Murray and Mrs Clack, Mrs Clack arranged for the Dentons to attend upon the Murrays at their home. They attended on or about 16 March 2009.The Dentons attendance was as agents on behalf of the first to third defendants. According to Mr Denton, by February 2009 he was already aware of the plaintiffs because he had heard the name from his wife and Mrs Clack (ts 704).

130 Prior to the Dentons attending that meeting, Mrs Denton, either alone or together with Mr Denton, had discussed with Mrs Clack what properties they were going to present to the plaintiffs as being suitable for their needs and financial position (Mr Dentons evidence was that he had discussed with both Mr and Mrs Clack what properties were to be presented. They had agreed that the Cowrie Apartment and the Merriview Apartment would be presented to the plaintiffs (ts 704)).

131 Mr Denton was at that time also aware that the first defendant had entered into a commercial arrangement with Indigo Real Estate Pty Ltd to market the Cowrie complex in Palm Cove to prospective purchasers. He knew that the first defendant represented the seller of both the Cowrie apartment and the Merriview apartments at the time that he promoted it to the plaintiffs. He was aware that the first defendant stood to receive a payment upon a sale of those apartments (ts 704 - 705).

132 By this stage, Mrs Murray had provided some information about the plaintiffs' financial position to at least the first and second defendants. Some of that information was noted by Mrs Clack in her evidence in relation to the telephone call (see par 63 above). At least some of this information had been conveyed to the Dentons. According to Mrs Denton, the information provided by the plaintiffs amounted to 'brief details' about their financial capacity and needs (ts 658). Mr Denton described the information he had about the plaintiffs' financial position as amounting to a 'very broad brush overview of their position' (ts 717).

133 Despite having very limited information about the plaintiffs' financial position, it is clear that Mr and Mrs Denton, following consultation with at least Mrs Clack, attended upon the plaintiffs with the intention of recommending two separate properties. These properties were the Cowrie Apartments in Palm Cove and the Merriview apartment in Victoria. The Dentons came armed with the Purple and Gold Documents. The Purple Document was a document specifically promoting the Cowrie Apartments. Other than a similar purple document relating to the Merriview Apartment (Mrs Denton, ts 632), the Dentons did not produce any other promotional documents that highlighted other properties during their meeting with the plaintiffs.

134 Whilst it is clear that the Gold Document contained many other properties then being marketed by the defendants, and that Mr Denton made reference to another property in Queensland, the Dentons' clear intention was to promote the Cowrie apartments (which included Cowrie Apartment 216) and Merriview apartments. This is the only reasonable inference available when regard is had to the totality of the evidence relating to the meeting on 16 March 2009.

135 So far as the 'attendance representations' are concerned, the plaintiffs' pleaded representations at par 16 of the statement of claim (leaving aside par 16(i) which the plaintiffs now concede is not sustainable on the evidence) are;

(ii) that the first defendant had undertaken an analysis of the plaintiff's financial position ('the Financial Analysis');

(iii) that the first defendant had undertaken an analysis of property for investment Australia wide ('the Property Analysis'); and

(iv) based upon the Financial Analysis and the Property Analysis the first defendant had a number of recommended investments for the plaintiffs ('the Attendance Representations').

136 There are a number of difficulties with the pleaded 'attendance representations' which the plaintiffs did not address in either the evidence or the final submissions.

The evidence relevant to the Attendance Representations

137 The first issue relates to the plaintiffs' failure to prove the falsity of the pleaded Attendance Representations. On the evidence, the fourth and perhaps the fifth defendant had in fact undertaken a financial analysis of the plaintiffs' position. Mrs Denton said that she had used a software program to produce a property investment analysis using the financial information available about the plaintiffs' position. Using that information, the fourth and fifth defendants used the software program to determine financial projections relevant to the plaintiffs. That information was then used to determine what properties to recommend to the plaintiffs. There is no evidence to suggest that the recommended properties did not match the financial analysis performed by the fourth and fifth defendants.

Did the plaintiffs rely upon the Attendance Representations?

138 In addition to failing to prove the alleged falsity of the Attendance Representations, there is no evidence that the plaintiffs' specifically relied upon these representations. The closest that the evidence comes to satisfying the pleadings at par 16 of the statement of claim is Mrs Murray's evidence that the plaintiffs were told that they could obtain two properties with the equity they had in their home (ts 122) and in all the circumstances they accepted the fourth and fifth defendants' recommendation with respect to the purchase of the Cowrie apartment. There was nothing said by either Mrs Murray or Mr Murray in their evidence that would necessarily lead to the conclusion that these representations alone materially caused either of them to enter into the contract.

139 Nonetheless, as with the Radio Promotion, what occurred during the attendance on 16 March 2009 is relevant when considering the totality of the circumstances involved. It is relevant when considering the nature of the relationship between the plaintiffs and the defendants, in conjunction with all the other surrounding evidence, to determine whether in fact a duty of care existed as between them. The pleaded representations at par 16 do not stand alone. They need to be considered together with the Gold Representations (statement of claim 18) and the Purple Representations (statement of claim 19).

The Gold Representations (Gold Document - exhibit 2) - statement of claim 18

140 Although the plaintiffs originally relied upon 12 separate representations set out in the Gold Document (exhibit 2), only seven were ultimately pursued (statement of claim 18 (v) - (vii); (ix - xii). These representations, referred to as the 'First to Seventh Gold Representations' are as follows:

First Gold Representation - Slide 4 - MyPortfolio 'represent[s] You not the seller' (statement of claim 18(v))

Second Gold Representation - Slide 4 - MyPortfolio 'Source[s] acquisition targets with comprehensive research' (statement of claim 18(vi)

Third Gold Representation - Slide 4 - MyPortfolio 'Negotiate[s] keen Pricing & Conditions of Sale' - (statement of claim 18(vii))

Fourth Gold Representation - Slide 5 - 'We [My Portfolio] provide you an unbiased consultative service' (statement of claim 18(ix))

Fifth Gold Representation - Slide 11 - residential property is a 'Safe' Low Risk Investment - retains its underlying value' and that it's 'Value DOUBLES every 7-10 years'- Statement of claim 18(x)

Sixth Gold Representation - Slide 28 - 'Cowrie' Apartments [were the] Lowest Entry Point into Palm Cove; Complete from $360,000 - Statement of claim [18(xi)]

Seventh Gold Representation - Slide 41 - 'Uncompromised Selection Criteria'(statement of claim 18(xii)).

141 All of the defendants admit that the Gold Document contained the pleaded representations. The first to third defendants submit, amongst other contentions, that:

(a) the representations were either puffery and/or statements of opinion; and

(b) given the Gold Document was presented to the plaintiffs by the Dentons, neither the second nor third defendant is liable in tort for making any of the representations contained in it; and

(c) in any event any, the representations were subject to a written disclaimer (Slide 2 on the third page of the document after the cover page); and

(d) that if the representations were made, they were cured at the time that the contract was entered into by the plaintiffs.

142 The fourth and fifth defendants submit that the claims by the plaintiffs need to be assessed in context. They deny that the representations were all intended to be relied upon. Some are either mere 'puffery' or 'statements of opinion'.

143 Each of the Gold Representations will be considered separately.

First Gold Representation - Slide 4 - MyPortfolio 'represent[s] you not the seller' (statement of claim 18(v))

144 The plaintiffs' case is that this representation was false and therefore negligently made because MyPortfolio on behalf of MyDomaine 'represented the seller, not the [plaintiffs]' (statement of claim 49(v)).

The evidence relevant to the First Gold Representation

145 The Gold Document was one of two folders presented to the plaintiffs. The cover page of the Gold Document contained the title - 'SMART PROPERTY INVESTMENT' (in large capital letters). It also had a heading - 'MYPORFOLIO' - and the words - 'PASSIVE WEALTH CREATION THROUGH RESIDENTIAL INVESTMENT' (in small capital letters) written directly beneath the word 'MYPORTFOLIO'. The words 'mydomaine' and 'PROPERTY GROUP' (in smaller font) also appear at the bottom of the cover page.

146 During the course of her evidence, Mrs Clack sought to draw a distinction between the role of the first defendant as acting for investors under the MyPortfolio 'banner', as distinct from her role as agent for vendors under the MyDomaine Prestige Property. In reality, it was apparent that the lines between MyPortfolio on the one hand, and Mrs Clack's other business known as Mydomaine Prestige Property were blurred at best. Given the fact that Mrs Clack was clearly acting for both the vendor of the property and purporting to act separately in the interests of the plaintiffs as potential investors, care had to be taken to ensure that potential conflicts were avoided, and if necessary, disclosed to relevant people.

147 Mrs Clack, if not Mr Clack, failed to properly draw a distinction between her roles. This was obvious from the apparently arbitrary manner in which she resorted to the use of the different business names. The artificiality of the distinction between the various businesses and the second defendant's roles within them was revealed in the following evidence which arose in the course of cross-examination of Mrs Clack (ts 515 - 516):

Mr Offer: Can the witness be shown exhibit 13?

Mrs Clack: 13, yes.

Mr Offer: When you're referring to the PAMD 27c this is the document we're referring to, isn't it?

Mrs Clack: Yes.

Mr Offer: And under 'Selling agent details' you have: Shelley Mae Clack trading as Mydomaine Prestige Property.

Mr Offer: So again, this is the selling entity?

Mrs Clack: Yes.

Mr Offer: And you are to disclose who's receiving monies, is that correct?

Mrs Clack: Yes.

Mr Offer: Now, you haven't disclosed in that document Mydomaine Prestige Property as receiving any money, have you?

Mrs Clack: No.

Mr Offer: In fact you've had it as Mydomaine Pty Ltd?

Mrs Clack: Yes because we're introducing the property.

Mr Offer: Now, you're getting a commission there of $10,120?

Mrs Clack: Yes.

Mr Offer: And you're getting that because you have acted as the agent of the vendor, haven't - aren't you?

Mrs Clack: Yes.

Mr Offer: So it's not for introducing them it's for selling the property on behalf of the vendor?

Mrs Clack: Yes.

Mr Offer: And the portfolio management fee there, Mydomaine Pty Ltd, $12,980, what's that referable to?

Mrs Clack: It was just the way it was broken up. It's Queensland law, they had to put marketing fees in there so - - -

Mr Offer: But what is the portfolio management fee there?

Mrs Clack: It's for - portfolio management fees are for services ongoing after settlement.

148 Later in cross-examination Mrs Clack said that the first defendant (MyDomaine Pty Ltd) was part of MyDomaine Property Group. When asked about the differences between the business names she struggled to explain the difference between them. So far as My Domaine Property Group was relevant, she said 'it was a name that we put on the folder. That's all I can recall' (ts 551).

149 According to Mrs Clack, the Gold Document was a document that they provided to investment clients for the purposes of informing them of the advice and services that MyPortfolio could provide to them (ts 545). This was somewhat at odds with her later evidence that they did not generally hand out the Gold Document to clients because they used the slides to present the information to clients in a PowerPoint presentation (ts 558 - 559). The slides, according to Mrs Clack, were prepared by Mr Clack.

150 As noted above, both Mr and Mrs Denton gave evidence that Mr Denton used the information contained in the Gold Document in a PowerPoint presentation that he spoke to on his laptop during the meeting with the plaintiffs on 16 March 2009.

151 Irrespective of whether the information was conveyed via a document or via a PowerPoint demonstration, it is clear from Mrs Clack's evidence that both she and her husband were aware of what was contained in the Gold Document. More importantly, it was the second and third defendants that trained Mr and Mrs Denton for the purposes of the business.

152 Whilst the second and third defendants may not have directly presented the Gold Document to the plaintiffs, in the circumstances where Mrs Clack had made the appointment for the plaintiffs to meet with the Dentons, and Mr Clack had created the Gold Document for the purposes of marketing the properties, the only reasonable inference to draw is that both Mr and Mrs Clack must have been aware that there was a real likelihood that the Gold Document would be used and relied upon by the Dentons in the course of their presentation to the plaintiffs.

153 Although it is not clear how much time was spent on them or to what degree they were discussed, despite Mr Murray's evidence that he did not know who MyPortfolio were acting for, it is clear from the evidence of Mrs Murray that the plaintiffs were taken through the first 20 slides set out in the Gold Document.

154 The words on slide 4 (as they appear on the slide including underlining), include:

(Heading) - MYPORTFOLIO WORK FOR YOU AS YOUR PORTFOLIO MANAGER

155 The heading and first line of Slide 4 could not be clearer. Despite the words, Mrs Denton initially did not accept the proposition put to her that this statement was wrong. Ultimately she did agree that MyPortfolio did not only act for the seller, but were being paid by the seller (ts 649).

156 Whilst Mrs Denton was prepared to admit that as at 16 March 2009 she knew that MyPortfolio was being paid by the seller of the property they were selling, she was reluctant to concede that she knew that MyPortfolio acted for the seller (ts 650). This is despite her evidence that she had already travelled to Palm Cove and met with Mr Kubblins and had been trained by Mr and Mrs Clack in the business of MyPortfolio. Her evidence on this issue was another example of her lack of candour which is relevant to the court's assessment of her credibility as a witness.

157 In relation to the slides shown to the plaintiffs during the meeting, Mr Denton said that they went through what MyPortfolio could offer the plaintiffs. Unlike Mrs Denton, Mr Denton thought the slides were 'self-explanatory' (ts 680). There is no doubt they were.

158 In relation to the representation that MyPortfolio represented 'you, not the seller', Mr Denton's evidence was that this statement was made in the context of MyPortfolio being a portfolio manager (ts 709). Mr Denton accepted that a fee was paid by the seller to MyPortfolio for introducing the buyer to the seller and that in doing so, MyPortfolio acted for the seller (ts 709). Mr Denton said that as at 16 March 2009, he knew that MyPortfolio received a fee to introduce a buyer to the property (ts 709).

159 Whilst neither Mr Clack nor Mrs Clack attended the meeting with the plaintiffs on 16 March 2009, at least Mrs Clack was aware that the meeting was to occur and had discussed with the fourth and fifth defendants what properties to present to them. Mrs Clack was clearly aware of the contents of the Gold Document.

160 In relation to whether Slide 4 was correct in the sense that it represented that MyPortfolio did not represent the seller, Mrs Clack prevaricated on the issue. As already discussed above, during the course of her evidence Mrs Clack sought to draw a distinction between the role of the first defendant as acting for investors under the MyPortfolio 'banner', as distinct from her role as agent for vendors under the MyDomaine Prestige Property. In reality, Mrs Clack was clearly acting for both the vendor of the property and purporting to act separately in the interests of the plaintiffs as potential investors. I have previously noted that Mrs Clack, if not Mr Clack, failed to properly draw a distinction between her roles.

161 Apart from her inability to properly explain the fees that My Domaine was charging, the disclosures made by Mrs Clack which were required by Queensland law were meaningless in the context of this case. This was confirmed in later cross-examination of Mrs Clack (ts 560 - 561) as follows:

Mr Offer: You had a relationship with the vendor in this case?

Mrs Clack: -I - I - I didn't have a - well, I was working for the - for the agent, Indigo Real Estate.

Mr Offer: And you were representing the seller?

Mrs Clack: Yes.

Mr Offer: And so when it says here that you don't represent the seller, it's wrong?

Mrs Clack: Not in this case, because I didn't meet with the client.

Mr. Offer: The document is wrong?

Mrs. Clack: Maybe it was a mistake made, then.

Mr Offer: No, you have to answer the question. Is the document correct when it says that you don't act for the seller?

Mrs Clack: I believe in this case it is, because I was the agent.

Mr Offer: So you're separating yourself out - - -?

Mrs Clack: Yes.

Mr Offer: - - - from - - -?

Mrs Clack: In this case I am.

Mr Offer: - - - Mydomaine Pty Ltd. Is that correct?

Mrs Clack: Yes, because it was Mydomaine Prestige Property. That's what was on the PAMD 27c. That was what's on the contracts.

162 As is illustrated by the above exchange, Mrs Clack at first agreed that My Portfolio did represent the seller, but then sought to draw a distinction between her personally acting for the vendor as agent for Indigo Real Estate, as distinct from the first defendant acting for a party to the contract. This suggestion, in light of her evidence, was artificial at best. Mrs Clack's evidence lacked credibility on this issue.

163 All of the defendants accept that the representation appeared in the Gold Document.

164 The first to third defendants submit that the above representation must be looked at in context, including what appears on Slide 5. The words on slide 5 (as they appear on the slide including underlining), include:

(Heading) - Where does MYPORTFOLIO 'Get its Drink'

Our Fees are Performance based and charged only when you purchase an investment Property through us:

No Extra charges - Your Contract Price is inclusive of our Fees.

Our Education & mentoring, Property Services & Portfolio

Management underpin our commitment to you as a lifelong Client

• We provide you an unbiased consultative service
• We DON'T charge for mentoring & on-going service/support
• Offer a Full Disclosure of our Portfolio Management Fee (Tax Deductible expense)

165 Contrary to the First to Third Defendant's Outline of Closing Submissions, Slide 5 does not represent ' that 'MyPortfolio' gets a fee from the purchase of an investment property which is not charged to the purchaser' (par 53(a)). Whilst it does represent that MyPortfolio was to receive a fee when an investment property is purchased, it suggests that the fees payable to MyPortfolio were included in the 'Contract Price'. This inference arises in the context of the words: 'Your Contract Price is inclusive of our Fees.'

166 In the context of the agreement that existed between the first defendant and Indigo Real Estate Pty Ltd (exhibit 74), the first to third defendants sought to draw the distinction between the first defendant providing services to Indigo Real Estate, as distinct from representing the owner of the Property (Palm Cove Apartments Pty Ltd).

167 The commercial arrangement with Indigo Real Estate Pty Ltd was to market specific Queensland properties, including the apartments at the Cowrie complex in Palm Cove, North Queensland to prospective purchasers. Consequently, the term 'seller' used in Slide 4 is wide enough to include Indigo Real Estate who represented the vendor. In any event, it is clear that the first to third defendants were 'acting for' Indigo Real Estate Pty Ltd by providing the services it had agreed to provide under their agreement. Indigo Real Estate was a 'seller' of the property.

168 The fourth and fifth defendants submit that the statement appears under the heading 'MyPortfolio work for you as your portfolio manager' and therefore the 'representation referred to on that slide is in the context of portfolio management not property acquisition.' This submission cannot be sustained in light of the fact that Slides 4 and 5 are in reference to purchasing property through MyPortfolio and that the slides represent that MyPortfolio did not represent the seller.

169 When Slide 4 is viewed in conjunction with Slide 5 the unambiguous representation is that MyPortfolio would represent the purchaser of property acquired through them and that they did not represent the 'seller' of the property. As already noted, Mr Denton was of the view that Slide 4 was 'self-explanatory'. The message conveyed to the reader was one that made it clear that MyPortfolio was there to advance the interests of the purchaser and not those of the seller.

170 The plaintiffs sought to rely upon evidence they submitted was admissible as 'similar fact evidence'. Prior to the evidence being called, counsel for the plaintiffs submitted that the evidence would be relevant as the witnesses' evidence would demonstrate that:

• 'their dealings [with the defendants] were substantially similar if not identical in many respects';
• '[t]hat they received the promotional material [the gold and purple documents];
• 'that they received recommendations from either the Clacks or the Dentons about the suitability of properties at Palm Cove';
• '[t]hat they purchased properties for amounts largely similar to that of the plaintiffs in this case';
• 'that there was no disclosure of [the defendants' interests] contrary to that of Ms Riddell and the other witnesses ...';
• That the evidence was relevant to business practices; and
• '[i]t also had some peripheral relevance in terms of things such as the unconscionable conduct'.

171 It should be noted that the plaintiffs ultimately do not pursue any claim for unconscionable conduct. That aspect of the plaintiffs' proposed reliance on this evidence must necessarily fall away.

172 Ultimately, the plaintiffs seek to rely upon the proposed 'similar fact' evidence to support their contention that the defendants did not disclose to them that MyPortfolio acted for the seller. The evidence was objected to by all of the defendants. The evidence of the witnesses was provisionally taken on the basis that the court would later rule on the admissibility of that evidence. That evidence was from the following witnesses:

• Ms Kim Riddell - who dealt with the Dentons and purchased one of the Indigo properties. Her evidence was that the Dentons did not tell her that MyPortfolio acted for the vendors of the property she purchased.
• Mrs Claire Byrne - who dealt with the Clacks and purchased one of the RJR Apartments. Ms Byrne's evidence was to similar effect to that of Ms Riddell, namely that the she was not told that MyPortfolio was acting for the vendor of the property she purchased. However, unlike Ms Riddell, Mrs Byrne dealt with the Clacks, not the Dentons.
• Mr Sundersan Ramiah - who dealt with the Dentons and purchased one of the RJR Apartments. Mr Ramiah's evidence was that the Dentons did disclose to him that they were acting for the seller of the RJR Apartment he purchased (ts 389 - 390).

173 Not surprisingly, the objection to the evidence of Mr Ramiah was withdrawn by the defendants after it was given.

174 Similar fact evidence is admissible in civil proceedings if it is logically probative of the existence or non-existence of a fact in issue in the sense that the similar fact evidence makes the occurrence of the contentious fact more or less likely: Ailakis v Olivero (No 2) (2014) 100ACSR 524 [62(3)] per Martin CJ.

175 The first question is whether the evidence would qualify as 'similar fact' evidence. Only two of the three witnesses had dealings with the fourth and fifth defendants. They were Ms. Riddell and Mr Ramiah. Mr Ramiah's evidence was that the Dentons did disclose to him that they acted for MyPortfolio. His evidence was therefore not 'similar' to what the plaintiffs allege occurred in their meeting with the Dentons on 16 March 2009 and could hardly assist their case.

176 I am not satisfied that the evidence of Mr Ramiah qualifies as 'similar fact' evidence. Whilst the objection to his evidence was withdrawn, since its only basis for admission on the plaintiffs' case was as similar fact evidence, it is neither relevant nor admissible for the purposes of determining whether the defendants failed to tell them that MyPortfolio was acting for the seller. The evidence does not assist in determining the fact or facts in issue. Mr Ramiah's evidence was however relevant in relation to the sale price of the apartment he purchased from RJR Investments. That issue will be discussed later.

177 Mrs Byrne dealt with the Clacks, not the Dentons. Her evidence could therefore not be said to be 'similar fact evidence'. It is therefore not admissible for the purposes sought to be relied upon by the plaintiffs.

178 As noted above, Ms Kim Riddell did deal with the Dentons and purchased one of the Indigo properties. Like Mrs Murray, she said that the Dentons did not tell her that MyPortfolio acted for the vendors of the property she purchased. In that regard, I am satisfied that her evidence could amount to 'similar fact' evidence. I am satisfied that her evidence is logically probative of the existence or non-existence of a fact in issue in the sense that the similar fact evidence makes the occurrence of the contentious fact more or less likely. The facts to be considered in this regard are whether the fourth and fifth defendants failed to disclose to the plaintiffs that they were acting for the seller which the plaintiffs allege amounted to a false or negligent misrepresentation.

179 I am mindful of the fact that merely because the fourth and fifth defendants did not disclose that fact to Ms Riddell does automatically lead to the conclusion that they falsely or negligently misrepresented that fact when they dealt with the plaintiffs. The similar fact evidence is relevant because it increases the objective probability that, when the Dentons dealt with the plaintiffs, they fraudulently or negligently failed to disclose to them that they were acting for the seller. The evidence goes to the issue of how the fourth and fifth defendants acted in the presentation in the sense that they failed to disclose relevant facts to a prospective purchaser. In this regard, the evidence of Ms Riddell supports the plaintiffs' case against the fourth and fifth defendants.

180 The question of whether a statement is false is to be decided by objectively considering whether the statement was 'contrary to fact': Sternberg v The Queen [1953] HCA 15; (1953) 88 CLR 646.

181 Given all of the above, the only conclusion is that the First Gold Representation was false. My Portfolio, on any interpretation of Slide 4, did represent the seller. I do not accept that the representation is mere 'puffery' or a 'statement of opinion'. The representations were the sort that a reasonable person might rely upon when considering to use the services of MyPortfolio. They were not merely laudatory. The words clearly conveyed that MyPortfolio would act in the interests of the purchaser, not the seller.

Were any of the defendants liable for the First Gold Representation?

182 On all the available evidence all of the defendants are liable for the representation made to the plaintiffs in Slide 4. This is because:

(a) the fourth and fifth defendants took the plaintiffs through the slide and knew at the time that MyPortfolio did in fact represent the seller; and

(b) the fourth and fifth defendants were acting as agents on behalf of the first defendant;

(d) the second defendant was aware of the content of the Gold Document;

(e) the second and third defendants trained the fourth and fifth defendants, including allowing them to attend presentations to other prospective clients of My Portfolio. They must have been aware of the real risk that Slide 4 would be used in a presentation given by the fourth and fifth defendants, there is no evidence that he specifically knew that it would be presented to the plaintiffs at the meeting on 16 March 2009.

Did the plaintiffs rely upon the First Gold Representation?

183 Neither of the plaintiffs gave any direct evidence of reliance upon this representation in entering into the contract of sale. Nonetheless, this representation was part of the overall circumstances that caused the plaintiffs to ultimately enter into the contract to purchase the property. Consequently, I am satisfied that this representation causally contributed to the plaintiffs' decision to purchase Cowrie Apartment 216.

Second Gold Representation - Slide 4 - MyPortfolio 'Source[s] acquisition targets with comprehensive research' (statement of claim 18(vi))

184 In simple terms, the representation properly understood was that MyPortfolio would undertake comprehensive research to locate appropriate properties for prospective purchasers.

185 Based upon what is pleaded by the plaintiffs at statement of claim 49(vi), the plaintiffs' case is that this representation was false and therefore negligent because the defendants did not undertake 'extensive research to source acquisition targets'. In order to determine whether the claim was in fact false and therefore negligently made, it is necessary to make an assessment of the available evidence.

Evidence relevant to the Second Gold Representation (research undertaken by the defendants)

186 The evidence relating to whether any of the defendants did in fact undertake any research has already been touched upon at par 137 in relation to the research undertaken by the fourth and fifth defendants. Mr Denton said that research had been done and that 'extensive research' existed on the first defendant's server (ts 710). Mrs Denton's said that, to her knowledge, MyPortfolio researched various areas (ts 650).

187 Mrs Clack gave evidence that she did her own 'due diligence' but had no record of what she actually did. On her account, she:

• looked at the various properties (ts 465);
• attended upon real estate agents and made enquiries about the market including rental returns in 2007 or 2008 (ts 466);
• checked RP Data in or about March of 2008 (ts 523 - 524); and
• took into account bank ordered security valuations to establish market value.

188 There is no evidence to suggest that the defendants did not do what they claimed to have done.

189 The plaintiffs submit that even taking the defendants' evidence at its highest, it could hardly be termed comprehensive (or extensive as claimed at statement of claim 49(vi)) and that the flowery language of this representation really meant nothing more than that which the plaintiffs already knew about MyPortfolio, namely that MyPortfolio could help clients to create wealth by purchasing investment properties**.**

190 As to the question as to whether or not the research was either 'comprehensive' or 'extensive', in my view nothing ultimately turns on that question. The statement is the sort of 'puffery' commonly associated with advertising brochures or introductory presentations used for the purposes of attracting the interest of a potential client. It has all the hallmarks of the type of statement considered in Pappas v Soulac Pty Ltd [1983] FCA 3; (1983) 50 ALR 231, 238 where by Fisher J concluded that statements of this sort are statements of opinion incapable of being proven to be correct or incorrect. Consequently, I am not satisfied that it could amount to a material representation of fact.

191 It is not necessary to consider whether there was any direct or indirect reliance upon this representation.

Third Gold Representation - MyPortfolio 'Negotiate[s] keen Pricing & Conditions of Sale' - Statement of claim 18(vii): Slide 4

192 As with the earlier representations, the plaintiffs' case is that this representation was false and therefore negligently made because MyDomaine 'did not negotiate keen pricing and conditions of sale' (see statement of claim 49(vii)).

The evidence relevant to the Third Gold Representation

193 Mrs Clack's evidence was that prior to presenting the property to the plaintiffs, she had already negotiated a rebate of $15,000 which was to be offered to the purchaser (ts 567).

194 Leaving aside questions such as what the rebate actually was and how it was factored into the costs of purchasing the property, there is no evidence to contradict Mrs Clack's evidence that she had negotiated a $15,000 rebate on the purchase price of Cowrie Apartment 216 before it was offered to the plaintiffs (ts, 567).

195 I accept the first to third defendants' submission to the effect that whether what MyDomaine had done could be characterised as negotiating 'keen' pricing and conditions of sale, is clearly a matter of opinion. This aspect of the plaintiffs' case must necessarily fail.

Did the plaintiffs rely upon the Third Gold Representation?

196 Given the conclusion above, it is not necessary to consider whether there was any direct or indirect reliance upon this representation.

Fourth Gold Representation - Slide 5 - 'We [My Portfolio] provide you an unbiased consultative service' (statement of claim 18(ix))

Seventh Gold representation - Slide 41 - 'Uncompromised Selection Criteria' (statement of claim 18(xii))

197 The plaintiffs' case is that both of these representations were false and therefore negligently made because:

• MyDomaine 'did not provide an unbiased consultative service' (statement of claim 49(ix)); and
• MyDomaine's 'selection criteria was in fact compromised': (Statement of claim 49(xiii).

The evidence relevant to the Fourth and Seventh Gold Representations

198 The wording on Slide 5 has already been set out in full at par 164 above. The wording included the heading: 'Where does MYPORTFOLIO 'Get its Drink' and the words 'We provide you an unbiased consultative service'.

199 As has already been noted above, Mrs Clack in her evidence sought to draw a distinction between the role of the first defendant as acting for investors under the MyPortfolio 'banner', as distinct from her role as agent for vendors under the MyDomaine Prestige Property.

200 I have already concluded that Mrs Clack was acting for both the vendor of the property and purporting to act separately in the interests of the plaintiffs as potential investors. Mrs Clack accepted that she did in fact have a 'bias' in that she was trying to sell properties in relation to which she stood to receive a commission when the property settled (ts 569).

201 Mr Denton accepted in cross-examination that it was possible to draw the conclusion that the statement that MyPortfolio provided 'an unbiased consultative service' was not an accurate description (ts 711).

Were the Fourth and Seventh Gold Representations false?

202 Given the concessions made by the second and fifth defendants above, together with the unequivocal evidence of the agreement between the first defendant and Indigo (exhibit 74) which meant that MyDomaine had an interest in receiving a fee from Indigo Real Estate Pty Ltd calculated as a percentage of the purchase price, I am satisfied that the statements were false in that the services provided by MyPortfolio were neither free from bias nor uncompromised.

Were any of the defendants liable for the Fourth and Seventh Gold Representation?

203 For the reasons given above in relation to the First Gold Representation, I am satisfied that all of the defendants are liable for making the Fourth and Seventh Gold Representations.

Did the plaintiffs rely upon the Fourth Gold and Seventh Gold Representations?

204 Although the evidence from Mr Denton was that he took the plaintiffs through the PowerPoint presentation, his evidence was that the process was 'a little ad hoc' and to his recollection, they 'did not completely finish or go through the - the presentation slide by slide' (ts 680).

205 Mrs Murray said that they were taken through up to Slide 20 (ts 129). Consequently, the Fourth Gold Representation was brought to the attention of the plaintiffs.

206 Although both Mrs Murray and Mr Denton said that hardcopies of the presentation, namely the Purple and Gold Documents, were left with the plaintiffs and Mrs Murray said that she thought that she had browsed through them at a later date, there is no evidence that either of the plaintiffs read or were shown slide 41 or that it otherwise came to their attention before entering into the contract. There is no basis to conclude that the Seventh Gold Representation was relied upon by the plaintiffs.

207 In relation to the Fourth Gold Representation, whilst there is no direct evidence that any reliance was placed upon this representation, I am satisfied that this representation contributed to the combined effect of the totality of the representations made to the plaintiffs causing them to enter into the contract to purchase Cowrie Apartment 216.

Fifth Gold Representation - Slide 11 - residential property is a 'Safe' Low Risk Investment - retains its underlying value' and that it's 'Value DOUBLES every 7-10 years'- Statement of claim 18(x):

208 The plaintiffs' case is that these representations, which were set out on slide 11, were false and therefore negligently made because 'residential property was not a safe, low risk investment' and 'residential property does not retain its underlying value' (statement of claim 49(x), 49(xi) & 49(xii)).

The evidence relevant to the Fifth Gold Representation

209 Mr Denton's evidence was that whilst the statement that property doubled its value every seven to ten years may not be true for every property, it was based upon the historical long term average. He also noted that the statement was qualified on the slide by the reference to a source at the bottom of the relevant slide being the 'ABS Census 2001' (ts 711- 712).

210 Mr Myers, the plaintiffs' expert witness said that the statement that residential property doubled in value every 7 - 10 years was 'an old real estate cliché' (ts 293) and 'you could find examples where it was accurate and you could find examples where it was 100% incorrect ... I don't think there's enough information provided there to test the proposition' (ts 296). Mr Myers' evidence was to the effect that the statement was a matter of opinion.

211 All of these representations are clearly the sort of commendatory puffery commonly seen in advertising brochures or introductory presentations produced for the purposes of attracting the interest of a potential client. Consequently, it is not necessary to consider whether the plaintiffs relied upon the representation.

Sixth Gold Representation - Slide 28 - 'Cowrie' Apartments [were the] Lowest Entry Point into Palm Cove; Complete from $360,000 - Statement of claim[18(xi)]:

212 The plaintiffs' case is that this representation was false and therefore negligently made because 'there were lower entry price points to Cowrie Apartments than $360,000': Statement of claim 49(xiii).

1. The relevant words on Slide 28 of the Gold Document are set out below (the slide also included photographs, presumably of the Cowrie apartments and Palm Cove ):

Cowrie' Apartments

Lowest Entry Point into Palm Cove

[photos]

Complete from $360,000

2 Bedroom Fully Furnished Apartment + Swimming Pool

Just a 600 metre tropical boardwalk to the Beach

The evidence relevant to the Sixth Gold Representation

213 In terms of what the defendants said was meant by the words 'lowest entry point into Palm Cove', both Mrs Clack and Mr Denton said that the phrase had to be looked at in context. In that regard it is necessary to consider not only this representation, but all of the Gold Document representations together with what was contained in the Purple Document. Both witnesses qualified the words by reference to the type of property being offered and its precise location.

214 When Mrs Clack was asked whether the phrase 'lowest entry point into Palm Cove', was accurate, she said '[i]t depends on what you mean accurate' (ts 571). According to Mrs Clack, the statement had to be read as meaning it was the lowest entry point into Palm Cove for that type of property being a property that was in the area of Ocean's edge and had been fully redeveloped (ts 571). Mrs Clack's evidence on this issue was disingenuous.

215 Although Mrs Clack knew there were cheaper properties in Palm Cove, she said they were not comparable. Consequently, the defendants sought to distinguish them on the basis that they were different to the apartment offered to the plaintiffs. The adjacent Tiger Cowrie apartments that the fourth and fifth defendants bought through RJR Investments (in Palm Cove and in the same area as Cowrie Apartment 216) were all purchased for $220,000.

216 Mr Denton, like Mrs Clack, sought to qualify the statement. His evidence was that the statement was true in the context of the Gold Document, being where it appeared in the document and that the properties presented by MyPortfolio were for 'a turnkey investment property with a lease with Novotel in the Ocean's Edge development, Palm Cove' (ts 716).

217 When the words contained in the Purple Document are taken into account in order to consider the proper context of the Gold representations, it is apparent that the Cowrie Apartments were being marketed on the basis that they were part of a far more expensive part of Palm Cove, namely the Oceans Edge estate. This is clear from the Purple Document (exhibit 1) which included the following statements with reference to the Cowrie Apartment set out on page 2 of 13:

To hold a fully furnished $365,000 apartment, in the $400 million exclusive residential neighbourhood of $1 million plus properties, is an exceptional opportunity. It is Oceans Edge's only entry price product offering.

A Brief Summary of this Proposition

A $365,000 fully furnished apartment, refurbished to Novotel specifications - Oceans Edge only entry price product.

218 To suggest, as the Purple Document clearly did, that the Cowrie Apartments were part of Ocean's Edge was misleading in itself. In fact, the Cowrie Apartments were not part of the Oceans Edge estate. Mrs Clack conceded that they were not. Her evidence was that they were 'on the border of it' (ts 575). Whilst this was not pleaded as a separate representation by the plaintiffs, the manner in which the second and fifth defendants sought to portray this representation was relevant to my assessment of their credit generally. Further consideration of the two documents (Gold and Purple Documents) is dealt with below at pars 250 - 256.

219 Whilst Slide 28 needs to be considered in the context of the Purple Document (exhibit 1), there was nothing about the surrounding information that properly qualified the representation.

220 The words of Slide 28 being the fifth Gold representation were not mere puffery. They were clear and unambiguous. On the objective evidence they represented a falsehood, namely that the Cowrie Apartments for sale 'from $360,000' were not the lowest entry point into Palm Cove.

Did the plaintiffs rely upon the Sixth Gold Representation?

221 There is no direct evidence of any reliance by the plaintiffs on this representation in entering into the contract of sale. Mrs Murray's evidence was that they didn't use the Gold Document to discuss the Cowrie Spindle apartments, and she did not look at Slide 28 at all (ts 129). Consequently, despite the falsity of the representation, the plaintiffs have failed to prove any reliance upon it.

Slide 2 - The disclaimer. If it was shown to the plaintiffs, does that affect whether the representations were false?

222 The issue as to whether any of the defendants assumed a duty of care in respect of any of the statements in the Gold Document was raised by the first to third defendants in the context of the disclaimer on Slide 2. The words on Slide 2 (as they appear on the slide), include:

(Heading) - Disclaimer

(small font) MYPORTOLIO and the Presenter is NOT a licensed investment adviser or planner; a licensed financial planner or advisor; a qualified or practicing accountant; a qualified or practicing finance professional.

MYPORTFOLIO Director, Shelley Clack trading as mydomaine Prestige Property is a licensed real estate agent.

All information in this seminar has been obtained by the Presenter solely from his own experiences as an investor and property developer and is provided as general information only No-one should rely solely on the information contained in this seminar as it does not purport to be comprehensive or to render specific advice. As such it is not intended for use as a source of investment advice.

You are advised to retain competent counsel from legal, accounting and investment advisers to determine your own specific investment needs.

(large font) ASK QUESTIONS - DO YOUR RESEARCH

SEEK YOUR OWN PROFESSIONAL ADVICE

223 It should first be pointed out that apart from the words 'Disclaimer', 'MYPORTFOLIO', 'ASK QUESTIONS - DO YOUR RESEARCH' and 'SEEK YOUR OWN PROFESSIONAL ADVICE', the rest of the writing on the slide (as produced in exhibit 2) is almost impossible to read due to the size of the font. Whether it was legible on the PowerPoint presentation is unknown. The evidence from Mr Denton was that the plaintiffs were taken through the slides. There is no evidence to contradict that evidence. I am therefore prepared to accept that the plaintiffs were made aware of what was contained in Slide 2.

224 The fact that the plaintiffs may have discovered the true position in relation to the representation had they asked questions, done some research or made proper inquiries, does not absolve the maker of a false representation from liability: See Neilsen v Hempston Holdings Pty Ltd (1986) 65 ALR 302, 309 and Sutton v A J Thompson Pty Ltd (In liq) (1987) 73 ALR 233, 241.

Were the misrepresentations cured by other documents by the time the plaintiffs entered into the contract?

225 The defendants contend that if any of the misrepresentations were made to the plaintiffs, they were cured prior to execution of the contract by:

(a) the Expression of Interest ('EOI') (exhibit 4.2);

(c) the cover page of the contract of sale (exhibit 7); and

226 For the reasons that follow, none of the documents, either individually or in combination, overcome the effect of any of the representations that I find were made and relied upon by the plaintiffs.

227 Not only do the defendants submit that the disclaimer on Slide 2 absolved them from any liability, but that any misrepresentation was cured by the further documents namely: the completed expression of interest form (exhibit 4.2); the PAMD Form 27c (exhibit 13) being the selling agent's disclosure to the buyer; and PAMD Form 30c (exhibit 14) which they claim effectively warned the plaintiffs to obtain their own independent valuation of the property.

228 In the alternative, and contrary to their first contention in relation to statement of claim par 18(v) with respect to Slide 4, the first to third defendants submit that the first page of the contract of sale (exhibit 7), which was provided to the plaintiffs by Mr and Mrs Denton at the same time as the PAMD Form 27c, represented that the first defendant (MyDomaine Pty Ltd) was acting as agent for the seller. In this respect the first to third defendants point out that the agent nominated on the form is 'Mydomaine Prestige Property'. The first to third defendants submit that whilst it does not list MyDomaine Pty Ltd as the agent, nonetheless the same ABN number as the first defendant is used. Furthermore, they point to the definition of 'Agent' contained in cl 10.1 of the 'Terms of Contract' which includes: 'The Agent is appointed as the Seller's agent to introduce a buyer' (exhibit 14). Consequently, the first to third defendants submit that the form represented that Mrs Clack and MyDomaine were acting as 'selling agent' for the vendor. As to the fee that they were to receive, the contract the plaintiffs entered into was for the sum of $365,000 with a $15,000 rebate from the vendor at settlement. Strangely, both the purchasers (the plaintiffs) and the vendor were invoiced for the fee of $15,000 although the plaintiffs were not required to pay it.

229 It is also relevant to consider the context in which the contract came to be signed by the plaintiffs. In that regard, the evidence of Mrs Murray and Mrs Denton needs to be considered.

230 Mrs Murray's evidence about the process was that Mrs Denton had sat next to her and showed her where to sign the documents. She did not previously have an opportunity to look at the documents. Nor did Mrs Murray 'go through the documents other than to have indicated to her where she was to sign'. According to Mrs Murray, 'Raelene was showing me each page and saying, 'Sign there and sign there' (ts 140).

231 Mrs Denton's evidence was to the effect that as Mrs Murray was shown each page, she and Mr Denton were explaining what each page meant or referred to (ts 668 - 669).

232 For the reasons already given, I prefer the evidence of Mrs Murray to that of Mrs Denton on this issue. I do not accept that the fourth and fifth defendants did explain to the plaintiffs what each page meant or referred. There is certainly no evidence that they explained that the first defendant represented the seller or pointed to any information that would have done so.

233 The cover page of the contract of sale clearly identifies 'Mydomaine Prestige Property' as the 'Agent'. Mrs Clack' suggested in her evidence that Mydomaine Prestige Property was a separate entity to the first Defendant. It does not identify whether my 'Mydomaine Prestige Property' is an agent for the buyer or seller.

234 The contract cover page on its face does not identify that either MyPortfolio or the first defendant acted for the seller. It did not operate to cure any misrepresentation as to that fact.

235 The EOI identifies 'MyDomaine Prestige Property' as receiving a 'Portfolio Mgt Fee' from the seller. Nothing in the document identifies MyPortfolio or MyDomaine Pty Ltd as receiving anything, much less a commission from the vendor. Nothing on the face of the document identifies the first defendant as representing the seller. This document did not cure any misrepresentation made by any of the defendants.

The PAMD Form 27c - Exhibit 13 (the selling agent's disclosure to the buyer)

236 The Defendants rely on Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 to argue that 'a person who signs a document which is known by that person to contain contractual terms, and to affect legal relations, is bound by those terms, and it is immaterial that the person has not read the document.'

237 However, the High Court in Toll (FGCT) Pty Ltd v Alphapharm noted:

If there is a claim of misrepresentation, or non est factum, or if there is an issue as to whether a document was intended to affect legal relations or whether, on the other hand, it was tendered as a mere memorandum of a pre-existing contract, or a receipt, or if there is a claim for equitable or statutory relief, then even in the case of a signed document it may be material to know whether a person who has signed it was given sufficient notice of its contents.

238 Neither the PAMD Form 27C nor PAMD Form 30C were contractual documents. They were documents required to be provided to the purchaser of property pursuant to the Queensland Property Agent and Motor Dealers Act.

239 Even if I am wrong about whether PAMD Form 27C or PAMD Form 30C were contractual documents, the provision of these documents to the plaintiffs did not cure any misrepresentation made to them.

240 Despite arguing that the first to third defendants did not act for the vendor of the property and therefore the representation to the effect that they did not act for the seller was true, the first to third defendants rely upon the PAMD Form 27c (exhibit 13) to prove the contrary. This document, according to the first to third defendants, disclosed to the plaintiffs not only that the fee that the first defendant was to receive in respect of the sale of the Cowrie Apartment 216, but also 'that MyDomaine and Shelley Clack were to act for the vendor' (see First to Third Defendants' Outline of Closing Submissions, par 25) . The two propositions are impossible to reconcile. I note that they are put in the alternative.

241 If the information disclosed in the document called PAMD Form 27c (the selling agent's disclosure to the buyer) is relied upon to potentially to correct any misrepresentation created by Slide 4, in my view all it does is create confusion.

242 As with the EOI (exhibit 4.2) and the cover page of the contract (exhibit 7), the selling agent's details were given as 'Shelley Mae Clack Trading as mydomaine [sic] Prestige Property'. Under Pt 3.2 of the form requiring the 'selling agent's disclosure' relating to 'benefits other than by referral', the information contained therein discloses that the first defendant was to receive a 'commission' of $10,120.00 and a 'Portfolio Management Fee' of $12,980.00. Indigo Real Estate Pty Ltd was listed as receiving a Real Estate Fee of $3,850.00. Mrs Clack signed the disclosure declaration. There is no information disclosing who would be making these payments.

243 To state the obvious, neither the commission of $10,120.00 nor the Portfolio Management Fee of $12,980.00 equates to the $15,000 rebate. Precisely what fees were payable and by whom was something that was raised at various times during the trial. Mrs Clack's evidence on the issue has already been referred to and set out at par 147 above. At the end of the trial those issues were still substantially unanswered. Whether anything ultimately turns on that point is questionable. However, the fact that no witness in the trial was able to explain how the fees were calculated or who was ultimately responsible for them demonstrates the difficulty that the defendants have in relying upon the PAMD Form 27c (exhibit 13) in the manner that they do.

244 Neither the fact that the PAMD 27C was signed nor the contents thereof can lead to the conclusion that the plaintiffs were notified that MyPortfolio or the first defendant acted for the seller (vendor) of the property.

PAMD Form 30c (exhibit 14) warning to the plaintiffs to obtain their own independent legal advice and an independent valuation of the property

245 In addition to relying upon PAMD Form 27c as curing any of the Gold Representations, the defendants also rely upon the provision to the plaintiffs of PAMD Form 30c (exhibit 14) which they claim effectively warned the plaintiffs to obtain their own independent legal advice and an independent valuation of the property.

246 The defendants consequently claim they cannot be liable for any breach of a duty of care as the two documents are an effective disclaimer of liability in terms of any claim against them for any duty of care. This includes the claims for failure to warn or give advice (statement of claim 46(a) and failure to make adequate enquiries as to the true value of the property (statement of claim 46(b)) which are considered below.

247 In this regard, the mere fact that the plaintiffs were subsequently provided with documents advising them to obtain their own independent legal advice and valuation (exhibit 14) does not mean that therefore the defendants cannot be liable for any false representations made by them and relied upon by the plaintiffs: See Neilsen v Hempston Holdings Pty Ltd and Sutton v A J Thompson Pty Ltd (In liq). It may however, give rise to a question of whether the plaintiffs' failure to obtain an independent valuation means that the issue of contributory negligence arises. This issue is considered further below. The provision of this document did not cure any misrepresentation made by the defendants to the plaintiffs. Nor did the fact that Mrs Denton may have expected the plaintiffs to have obtained their own independent advice or valuation cure any misrepresentation made by the defendants to the plaintiffs.

The Purple Representations (Statement of Claim [19])

248 Statement of claim 19 originally pleaded 6 separate representations which were said to be set out in the Purple Document (exhibit 1). Ultimately the plaintiffs only rely upon 3, being:

(i) The Cowrie Apartments provide a unique and highly limited opportunity that was safe, affordable, desirable and had excellent upside growth potential;

(ii) At $365,000 the opportunity provided the only entry price product which in the context referred to the Cowrie Apartments Complex; and

(iii) The Cowrie Apartments offered the lowest local entry price point.

249 All of the defendants accept that the above representations were contained in the Purple Document (exhibit 1), or at the very least, statements similar to those pleaded appear in the Purple Document do. However the defendants submit that the statements are all puffery.

250 In addition, the defendants submit that the representations have been taken out of context by the plaintiffs. Properly construed, the defendants submit that they are neither false nor negligently made. The defendants submit that the representations contained within the Purple Document need to be considered in the context of what was contained in both the Gold Document and the Purple Document. This includes the disclaimer set out in Slide 2 of the Gold Document which has already been addressed above.

251 An analysis of some of the things contained in the Gold Document with reference to statements contained in the Purple Document, has already been addressed at pars 216 - 217 above. The position does not assist the defendants.

252 Adopting the first to third defendants' submissions and setting out the relevant parts of the Purple Document (see below) in order to properly consider the context in which they appear, it is readily apparent that the document represents that Cowrie Apartment was part of the more expensive Ocean's Edge estate. This is the only reasonable inference to be drawn when the following statements, all reproduced from the Purple Document, are considered:

• 'To hold a fully furnished $365,000 apartment, in the $400 million exclusive residential neighbourhood of $1 million plus properties, is an exceptional opportunity. It is Oceans Edge's only entry price product offering'
• 'A $365,000 fully furnished apartment, refurbished to Novotel specifications - Oceans Edge only entry price product'
• Cowrie at Oceans Edge, Palm Cove
• Cowrie is an existing residential apartment complex within the Oceans Edge environs
• It enables investors to secure guaranteed income, on-site management, and tenancy access to all Oceans Edge facilities and amenities.

253 Whilst Cowrie Apartment 216 was nearby or 'neighbouring' the Ocean's Edge development, it was not in fact part of it. That much was conceded by Mrs Clack (ts 457). As has already been noted, to suggest that Cowrie was part of Ocean's Edge was misleading in itself.

254 The proper approach to be taken when considering individual presentations is to look at them in the context of the document as a whole: Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 592 [39]. It is nonetheless easy to distinguish which parts of the Purple Document are more than mere commendatory puffery.

255 Whilst the first pleaded Purple representation:

• 'the Cowrie Apartments provide a unique and highly limited opportunity that was safe, affordable, desirable and had excellent upside growth potential (Statement of claim 19(i));
• Is the sort of commendatory puffery one would expect of a brochure or introductory presentation made for the purpose of attracting the interest of a potential client, the other two representations, set out below, are not:
• at $365,000 the opportunity provided the only entry price product which in the context referred to the Cowrie Apartments Complex (Statement of claim 19(ii)); and
• the Cowrie Apartments offered the lowest local entry price point (Statement of claim 19(iii)) are not. They are representations of fact.

256 I am not satisfied on the evidence that the Cowrie Apartments (of which Cowrie Apartment 216 was one) were either 'the only entry price product' or the 'lowest local entry price point'. Consequently these statements were false.

Did the plaintiffs rely upon the Purple Representations?

257 Despite submitting that the Gold and Purple Representations needed to be assessed in context, the defendants sought to distance themselves from the representations contained within the Purple Document by pointing out the brochure was not produced by them.

258 There does not seem to be any dispute that the Purple Document was presented to the plaintiffs by Mr and Mrs Denton. It was given to the second and third defendants by Peter Marshall of the Indigo Group (ts 467). The only reasonable available inference is that the Purple Document must have been provided to the Fourth and fifth defendants for the purposes of promoting the Cowrie Apartments to the plaintiffs. At the very least, Mrs Clack must have known that it would be used by them for that purpose. The Purple Document was used in the Dentons' presentation to the plaintiffs and a hardcopy of the Purple Document was left with the plaintiffs.

259 However, there is no evidence that the plaintiffs relied upon these representations. The only direct evidence with respect to the Purple representations came from Mrs Clack in cross-examination. Her evidence was to the effect that representations similar to those pleaded at statement of claim 19 were contained in the Purple Document. As already noted, that much is conceded by all the defendants.

260 The claim in relation to the Purple representations cannot be sustained by the plaintiffs. When Mrs Murray's evidence in relation to the Purple Document is carefully considered, there is no evidence that she or Mr Murray relied upon the Purple representations. Unlike the Gold representations, there is no evidence that these representations were even shown to her or discussed in her presence. Mrs Murray remembered being taken to the Purple Document by the Dentons and its general use in relation to 'talk about Cowrie', (ts 129) but was otherwise unable to remember the exact details of the conversation that took place. Specifically she recalled:

• 'about the three-year lease and it was a great opportunity.'

• 'That there was five years with an option of another five and five.'

• '(the lease) was a selling point to [them because they] wouldn't need to worry about the rent because [they] had guaranteed rental income'.

261 Consequently no reliance has been established by the plaintiffs in relation to any of the defendants with respect to the Purple representations. It is therefore unnecessary to consider any of the other issues that were raised by the defendants in defence of these claims.

The Financial Projections (Statement of claim[17(b)])

262 The plaintiffs ultimately conceded that there was no evidence to support this claim and it does not need to be considered.

The Verbal Representations (Statement of claim[20])

263 The plaintiffs ultimately only pursued two of the four verbal representations originally pleaded at statement of claim 20. The ones that were pursued are as follows:

• 'the Cowrie Apartments proposal referred to in the Purple Representations and the Gold Representations was the best property for the Plaintiff' (statement of claim20(i)); and
• 'that the Cowrie Apartment proposal was perfect due to the lease guarantee over the property' (statement of claim 20(iii)).

264 The plaintiffs' case is that these representations were false and therefore negligently made because:

• 'The Cowrie Apartments proposal was not the best property for the Plaintiffs': Statement of claim [49(xvii)]; and
• 'It was incorrect that the Cowrie Apartment proposal was perfect due to the lease guarantee over the Property': Statement of claim[49(xix)].

265 The above verbal representations were alleged to have been made by Mr and Mrs Denton at the meeting at the plaintiffs' house on or about 16 March 2009.

266 Neither Mr Clack nor Mrs Clack were at that meeting. The first to third defendants do not admit what the plaintiffs alleged was said to them by the fourth and fifth defendants. Nor is there any evidence that they were aware of what exactly was going to be said by the fourth and fifth defendants.

267 Given that neither Mr Clack nor Mrs Clack were present and there is no evidence to conclude that they assumed any duty of care in respect of anything said by Mr and Mrs Denton, there is no basis for holding them liable for any of the pleaded verbal representations made at the meeting.

The evidence in relation to the verbal representations

268 Much of the evidence of what was said at the meeting on 16 March 2009 was given by the plaintiffs and the fourth and fifth defendants and has already been set out at pars 106 - 124 above.

Mrs Murray's evidence in relation to the verbal representations

269 Mrs Murray's account of the meeting, whilst at times lacking in specific detail, was nonetheless given honestly and with sufficient reliability. She candidly conceded that she could not recall the exact conversation at the meeting in great detail (ts, 215). Her evidence included:

• Mrs Denton telling the plaintiffs that investing in Western Australia 'wasn't an ideal situation': ts 123;
• that either Mr or Mrs Denton suggested 'to go for the Cowrie - there was the Cowrie Apartments and it was ideal. They had a unit and it was the last one with a five-year guaranteed lease which would be perfect for us': ts 123;
• with reference to the Purple Document, she remembered 'a conversation about the five-year guarantee': ts 125;
• she remembered 'being advised that it was a great opportunity' and that Mrs Denton said 'they had been there and it was a lovely location and that we should buy in there': ts 125;
• that the Cowrie property 'was the property that was recommended by them to us': ts 129;
• she recalled 'about the three[sic]-year lease and it was a great opportunity': ts 130;
• that the lease was a selling point to them as it meant 'that we wouldn't need to worry about the rent because we had a guaranteed rental income': ts 130;
• she could recall Mrs Denton saying that the Cowrie Apartment proposal was the best property for the plaintiffs: ts 216; and
• she could recall Mrs Denton saying that better returns could be obtained in the [sic] Queensland property investment than in Perth property investment: ts 216.

Mr Murray's evidence about the verbal representations

270 Mr Murray's evidence of what was said at the meeting was fairly limited. He said that he tried to keep the dog away from the meeting for the first hour and was quite distracted (ts 233). Furthermore, he could not recall 'a great deal' about the conversation: ts 233. What he did recall was:

• In response to saying that he wanted to invest in the south west of Western Australia, Mrs Denton said 'Forget about the South West. In fact forget about Western Australia. We have a property for you': ts 233; and
• Mrs Denton said, in reference to the Cowrie Apartment '... that we better get on it quick' because 'it was the last property that had this five-year deal attached to it, a five-year guaranteed return deal' (ts 233 - 234).

Mrs Denton's evidence about the verbal representations

271 Mrs Denton denied making either of the pleaded verbal representations. On her evidence, the closest she came to making the representations was to admit that:

• they discussed that 'if it was deemed to be suitable and that the Murrays were interested in looking at properties that they [the Cowrie apartment and the Merriview apartment] would be two properties that would fit in with their equity and income and their situation': ts 658; and
• either she or Mr Denton said that 'they [the plaintiffs] would have to have their finance capacity verified by a financial broker but that given the details that - the brief details that had been given to Shelley that these two properties seemed to fit in with their financial capacity and their needs': ts 658; and
• she did 'discuss the lease guarantee and said that it was - it fitted in with Lynda's needs to want to have, I guess, regular and reliable income': ts 659.

272 Mrs Denton's evidence about what was otherwise said and discussed at the meeting included:

• there were some general discussions regarding what Mr and Mrs Murray did, why they wanted to invest in property and what their goals were ts 630;
• that she said to the plaintiffs 'a couple of times' that 'it was very important that they were on the same page', and at the end of the meeting she said 'they needed to really look and think about whether that - it was something that they were both wanting to do and that they would need to do their own research and ... due diligence and that they needed to make sure that it was something that they both wanted': ts 633;
• she did not 'recall whether [they] had a conversation about whether it was advisable to invest in Queensland over Western Australia', but did recall 'that we talked about the fact that the rental yield that the Cowrie apartment was achieving was much higher than the property that the plaintiffs had in Safety Bay, and was also a much higher yield than we were achieving in our rental properties in Perth': ts 658;
• she did not say that better returns could be obtained in Queensland property than in Perth: ts 659;
• she could remember Mrs Murray explained 'that they were living in that rental property because from the - the research that she'd done it was better to be - it made financial sense to be living in that property and negative gearing the property that they were living in': ts 662;
• that whilst Mrs Murray was sometimes absent from the presentation while she was attending to the plaintiffs' children, for the most part, she was speaking to Mrs Murray and Mr Murray did not have 'a huge amount of input': ts 663 - 664; and
• she did not make any comment about the worth of the Property: ts 673.

Mr Denton's evidence about the verbal representations

273 Like Mrs Denton, Mr Denton did not admit that either he or Mrs Denton had made the verbal representations pleaded.

274 Mr Denton's said that the meeting lasted for two hours and there were many discussions during it. His evidence generally corroborated that of Mrs Denton's. For example that:

• there were times during the presentation that Mrs Murray was dealing with the plaintiffs' children and was not listening or participating in the discussion: ts 680, 689; and
• that the plaintiffs appeared to have different objectives, Mrs Murray said her goal was to buy five properties within five years and Mr Murray said he wanted to build a home in the country in Denmark to which the family could relocate: ts 681.

275 According to Mr Denton, Mrs Murray said to him and Mrs Denton that she had quite a bit of knowledge on what they were talking about (ts 680 - 681). On Mr Denton's evidence, his evidence about Mrs Murray's interjections during the conversation tended to confirm this. According to him, on one occasion Mrs Murray interjected to explain to Mr Murray how negative gearing worked: ts 688. On another occasion, Mrs Murray interjected to ask if Mr and Mrs Denton could go to the property identification section of the presentation: ts 689.

276 Mr Denton conceded that he and Mrs Denton presented the Cowrie apartment and the Merriview apartment to the plaintiffs and 'talked about' them: ts 690, but denied saying to the plaintiffs that the Property was 'the best property': ts, 717. He also denied saying that the Cowrie property was perfect due to the lease guarantee, but 'did say that it met their criteria of ... being able to budget': ts 717.

Were the Verbal Representations made to the plaintiffs?

277 Where oral representations are relied upon, the plaintiffs must prove with some precision the words used: Watson v Foxman (1995) 49 NSWLR 315, 318; Lawless v Mackendrick [No 4] [2013] WASC 272 [136] - [137]; Tallenford Pty Ltd v Gilete G & B Civil Pty Ltd [2012] WASC 156 [164] - [165] (Allanson J); Shaddick v JDV Ltd [2012] WASC 120, [38] - [39], [150].

278 As already noted, I find that the plaintiffs, particularly Mrs Murray, to be honest and reliable. Whilst I do not accept that she could remember the various conversations with absolute precision suggested, nonetheless I am satisfied to the civil standard of proof on the evidence of Mrs Murray that the representations alleged were, to a substantial degree, made as alleged by the plaintiffs.

279 Whilst Mrs Murray did not use the word 'perfect' when recalling what either Mr or Mrs Denton had said to the plaintiffs, nonetheless she could recall that either Mr or Mrs Denton suggested 'to go for the Cowrie - there was the Cowrie Apartments and it was ideal. They had a unit and it was the last one with a five-year guaranteed lease which would be perfect for us'

280 I find that the relevant words were spoken by either Mr or Mrs Denton and that they substantially conveyed the representations alleged by the plaintiffs. Consequently, I am satisfied on the balance of probabilities that either the fourth or the fifth defendants made the representations and that they were aided or supported by the other. In essence, the representations were jointly made by the other acquiescing by their presence, words and support.

Were these representations false? Were they relied upon by the plaintiffs

281 Whilst I am satisfied that both the representations, namely:

• 'the Cowrie Apartments proposal referred to in the Purple Representations and the Gold Representations was the best property for the Plaintiff': statement of claim [20(i)]; and
• 'that the Cowrie Apartment proposal was perfect due to the lease guarantee over the property': statement of claim [20(iii)],

were not only made, but were relied upon by the plaintiffs, there is no evidence that they were false. Consequently it is not necessary to consider any of the other issues raised by the defendants as this aspect of the plaintiffs' case must necessarily fail.

Negligence - the defendants failure to provide any advice (statement of claim 46(a) & [49(xxii)) and failure to make adequate market enquiries as to the true market value of the property (statement of claim 46(b))

282 The plaintiffs' case in relation to the failure to warn or provide advice claim (statement of claim 46(a)) is to the effect that the defendants failed to provide any or any adequate advice to the plaintiffs to avoid loss and damage. The plaintiffs allege that the defendants knew or ought to have known that the purchase price exceeded the true market value of the property and were therefore negligent in not advising the plaintiffs that:

(i) they had failed to do any or any adequate market enquiries into property investment in Palm Cove;

(ii) the information possessed by the defendants suggested that there were investment units on the market in Palm Cove substantially cheaper than $365,000; and

(iii) it would not be prudent to invest in Palm Cove without further enquiry.

283 In addition, the plaintiffs allege that the defendants breached their duty of care to the plaintiffs by failing 'to make any or any adequate enquiries as to the true market value of the property' (Statement of claim 46(b)).

284 All the defendants deny that they owed the plaintiffs a duty of care.

285 The defendants submit that the allegations of breach of a duty of care by reason of a failure to warn are unsustainable in light of the evidence that the plaintiffs received and signed the PAMD Form 30c warning attached to the contract of sale for the property (exhibit 5). In this regard they point to the fact that Mrs Murray acknowledged that she had read the form, although she could not remember reading the warning to obtain an independent valuation. However, given her recollection of reading the warning to obtain independent legal advice (ts 141) and the prominence of both warnings on the page, I accept that the only available inference is that she did see it.

286 However, for the reasons already discussed above, I do not accept that the warnings printed on PAMD Form 30c meant that they could not be accountable for a breach of duty of care.

287 It is of note that some of the particulars set out under statement of claim 46 (a) and 46(b) are somewhat at odds with each other. On the one hand it is alleged that:

46(a) i. The [the defendants] were property developers utilizing the corporate structure of RJR Investments (WA) Pty Ltd who purchased apartment units within the Cowrie Apartment Complex for the sum of $220,000 and on sold those units to purchasers for sums in excess of $360,000; [and therefore]

1. The [defendants] were aware or ought to have been aware that the purchase price exceeded the true market value of the Property; ...

46(a) iii. The [defendants] should have advised the Plaintiffs:

1. That [none of the defendants] had done any or any adequate market enquiries into property investment in Palm Cove;
2. That the limited information held by the [defendants] suggests that there are (sic) investment units on the market in Palm Cove substantially cheaper than $365,000; ...

289 Despite the claim by the plaintiffs that the defendants had not 'done any or any adequate market enquiries into property investment in Palm Cove' and that they only held 'limited information', it is clear from all the evidence that the second to fifth defendants had made and were aware of significant information in relation to the Palm Cove property market.

The evidence relevant to the negligent failure to warn or advise claim

290 Mrs Clack did make enquiries into the property market in Palm Cove and she continued to keep aware of market trends. According to Mrs Clack, in addition to the fact that she had travelled to Palm Cove and, together with her husband Greg Clack and Mr and Mrs Denton, had inspected various properties, she:

• 'did her own due diligence while she was over there looking at properties' (ts 465);
• looked at long -term trends through 'RP Data' (ts 519);
• was 'constantly looking at how the market was going' (ts 519); and
• knew that there were other properties on the market (ts 526).

291 It should be noted that counsel for the plaintiffs objected to much of this evidence being led on the basis that it had not been pleaded by the first to third defendants. However, not only is the evidence relevant, but some of the evidence was the subject of cross-examination and was ultimately relied upon in support of both claims the subject of statement of claim 46(a) and 46(b). The plaintiffs rely upon the fact that the defendants' state of knowledge was such that they were aware, or ought to have been aware, that the purchase price of the property exceeded the true market value of the property. Consequently, all of the evidence is relevant and admissible.

292 The fourth and fifth defendants contend that even if the plaintiffs could establish a duty of care which required them to make enquiries as to the true market value of the property, the evidence from the Dentons is that enquiries were undertaken by them.

293 Mrs Denton's evidence was that she personally did research into the Palm Cove property market and identified a range of documents which comprised research she had done into the Palm Cove market in February 2009 (exhibit 84) and that MyDomaine also did research into potential properties (ts 650).

294 Mrs Denton, as did Mrs Murray herself, expected that an independent valuation would be undertaken at the behest of the plaintiffs' financier before the contract of sale became unconditional: (Mrs Murray ts 186 - 188; Mrs Denton ts 638 - 639, 649).

295 Mr Denton gave evidence that there was extensive research located on the MyDomaine server (ts 710) which included statistics about Palm Cove and other matters (ts 724).

296 None of the defendants denied that that there were other units on the market at Palm Cove for less than $365,000, but they contended that the other properties were not comparable to the apartments at Cowrie Spindle.

297 The plaintiffs concede that these apartments were not, at the time of purchase, of the same standard as the subject property. However, the fact that they were available for purchase at the time is relevant to the issue of what the true market value of the property was at the time.

298 The only reasonable available inference is that the second to fifth defendants were aware of the market value of Palm Cove apartments at the relevant time. At the very least, the third and fifth defendants were acutely aware of the values of Palm Cove apartments at the time that the plaintiffs signed their contract to purchase the property. This conclusion is compelled by the fact that they were then negotiating the purchase of a number of the apartments through RJR Investments (WA) Pty Ltd which ultimately resulted in them purchasing those apartments for $220,000 each.

299 Furthermore, MyDomaine was involved in the sale of at least nine apartments in either the Cowrie Tiger or Cowrie Spindle complex. Six of those sales pre-dated the sale to the plaintiffs (see Table 1 below).

300 The plaintiffs contend that the discrepancy between the purchase price of these apartments for $220,000, as opposed to the $350,000.00 net proposed to be paid by the plaintiffs, must have, or at least should have, alerted the defendants to at least the possibility that the property being marketed to the plaintiffs was overpriced and well above market value.

301 In order to consider either of these claims it is necessary to consider what 'market value' means in the context of this case.

302 Mr. Craig Rodney Myers gave expert opinion evidence on behalf of the plaintiffs in relation to property values in Palm Cove in the relevant period. Mr Myers is a property valuer. He had a business degree majoring in property from the University of Queensland. He had been registered as a property valuer by the Queensland Valuers Registration Board in Queensland since about 2000. He was a member of the Australian Property Institute.

303 Mr Myers was familiar with the area of Palm Cove in Queensland. He had worked in property for the firm of Herron Todd White, Cairns in Far North Queensland for his entire career. As at 11 November 2015 he had completed approximately 210 valuations in the Palm Cove area (par 5 of exhibit 46).

304 Apart from approximately 15 years of experience as a qualified and registered valuer, he had been employed by Herron Todd White since 1993. In total, he had been employed by Herron Todd White for approximately 23 years. The defendants did not take issue with his qualifications or experience as a property valuer.

305 Mr Myers was engaged by the plaintiffs to provide an expert report. His expert report became exhibit 46 in the trial. That report sets out the process, materials and information that he relied upon to arrive at his valuation of Cowrie Apartment 216. The material that he considered included a valuation report prepared by Propell National Valuers as at 6 May 2009 in relation to the property. That report valued the property at $350,000. The defendants did not rely upon the Propell National Valuers report.

306 Mr Myers initially undertook a 'desktop valuation' of the property and arrived at an estimate of 'a value in the range of $270,000 to $285,000(ex-furniture) as at the date of the Propell valuation' (see page 31 of Mr Myers expert report). The 'desktop valuation' involved a process of considering relevant sales evidence from data resellers such as PriceFinder or RP Data as well as Herron Todd White's own in-house database (ts 247). Mr Myers explained that his wide range for the valuation was because although he was aware that the property had been renovated, he was not sure of the standard of the renovation. He was not at that stage prepared to give a single figure without a full inspection of the property (ts 248).

307 Mr Myers subsequently undertook a full valuation of the property. On 29 April 2015 he attended the property to inspect it. Mr Myers ultimately valued the property at $280,000. This figure was contained in his Valuation Report annexed to his expert report (pages 8 - 20 of exhibit 46). In that report, Mr Myers made reference to five comparison properties in Palm Cove. None of the Cowrie Spindle properties sold MyDomaine on behalf of either Palm Cove Pty Ltd or RJR Investments Pty Ltd were relied upon in that report. Three of the properties referred to by Mr Myers in arriving at his valuation were contained in the QVAS data.

308 Mr Myers' opinion that the market value of the property as at 6 May 2009 was $280,000 was arrived at on the basis that the property was unfurnished and without the benefit of any value for the lease. The figure of $280,000 included an allowance of $35,000 for the renovation and fit-out costs of the apartment. The figure of $35,000 was derived from information prepared by RJR Investments setting out the costs associated with purchase, renovation and fit-out of the Tiger Cowrie apartments (page 46 of exhibit 46).

309 Mr Myers subsequently accepted in cross examination by counsel for the first to third defendants that:

• if sold furnished, at least $10,000 should be added to the value of the Property (ts 309); and
• since the property was sold subject to a lease to Drift Palm Cove (Management) Pty Ltd (exhibit 14) that would have resulted in a 'profit rent' to the plaintiffs, a further sum of about $18,200 could be added to the value of the property (at ts 308 - 315 Mr Myers' evidence in relation to how a figure for the 'profit rent' was calculated is set out).

310 Consequently, the first to third defendants submit that on Mr Myers' evidence the property was worth at least $308,000 ($280,000 + $10,000 + $18,200). Mr Myers accepted this would take the value of the property to $308,200 (ts 315).

311 Following the trial, the first to third defendants in their written closing submissions contend that when the correct calculations of the net profit rent based upon Mr Myers evidence and exhibit 14 is factored in, the evidence suggests that the value of Cowrie Apartment 216 was is in fact between $317,957.05 and $321,066.18. This issue is further considered at pars 370 - 375 below under the heading of Loss and Damage.

312 The defendants also submit that Mr Myers' opinion of the value of the property should only be treated as a lower range of the value and that in fact the true value of the property, at the time of sale to the plaintiffs, 'comfortably' exceeded the sum of $321,066.18. That submission was based on a number of matters that the first to third defendants submit undermined the valuation provided by Mr Myers. Those matters included:

• Mr Myers did not visit the properties he relied upon as comparable sales.
• two of the transactions he relied upon were sales of Cowrie Tiger apartments by Mr Kubblins via QES-HW.com (see exhibits 40 and 41) which were un-renovated apartments that were furnished to a lower standard than the property being a renovated Cowrie Spindle apartments.
• Mr Myers had not relied upon any of the sales of Cowrie Spindle apartments by Palm Cove Apartments Pty Ltd (each of which was sold for around the same price as the price that the plaintiffs paid for their property) in assessing the value.
• Mr Myers had relied upon 'undisclosed hearsay in the form of undiscovered and unproduced 'file notes' and 'additional information' to exclude the sales of Cowrie Spindle apartments by Palm Cove Apartments Pty Ltd.

313 Mr Myers accepted that, 'in general terms', a sale of an apartment in the same building, which had been fitted out exactly the same, between arms-length transactors would be a good indication of the market value of the Property (ts 318).

314 During the trial the plaintiffs floated the notion that the defendants had deliberately set out to create a false market. Mr Myers had noted that the sale of the Cowrie Spindle apartments had not been marketed to local buyers. Whilst he accepted that he did not know whether any of the sales of the Cowrie Spindle apartments by Palm Cove Developments Pty Ltd were engineered so as to create a false market (ts 316 - 317), he said:

I think there's enough concern with the purchasers all coming from the same place and the contracts of sale being in such a close proximity and it's on the other side of the country (ts 322).

315 It is clear that Mr Myers had formed the view that there was something untoward about the sale of the Cowrie Spindle apartments (ts 323). Mr Myers ultimately described the sales of Cowrie Spindle apartments by Palm Cove Apartments Pty Ltd for about $365,000 as 'outliers' (ts 302). Mr Myers, as a qualified and very experienced property valuer with specialist knowledge of the Palm Cove market was well placed to know whether these prices were anomalies in the market.

316 Exhibit 39, being the information from the Queensland Department of Environment and Resource Management being the sales data report (QVAS data), included sales records for sales of properties being part of BUP70885: PAR SMITHFIELD on Coral Coast Drive, Palm Cove, Queensland. The table below (Table 1) sets out most, if not all of the relevant properties. Most of the 23 properties listed in Table 1 measured between 77 - 78 sqm. The sales were in the period between 11 January 2008 and 27 August 2009. Those properties ranged in price between $202,500 and $365,000. They are listed in Table 1 below:

317 As has already been noted, on 17 April 2008 MyDomaine Pty Ltd entered into a commercial arrangement with Indigo Real Estate Pty Ltd to market Queensland properties, including apartments at the Cowrie complex in Palm Cove, North Queensland.

318 Mrs Clack and MyDomaine sold a number of the Indigo Group's properties in the latter half of 2008 (see properties 4, 5, 7 & 9 in the table above). The Indigo Group set the asking price at $360,000 for these properties. Each property was sold at or over that price.

319 In January 2009 the Clacks were involved in the sale of one of the adjacent un-renovated Cowrie Tiger apartments on behalf of the vendor Mr Mike Kubblins. The sale price was $260,000 (see property 10 above).

320 Mrs Clack's said that 9 of the 18 available Cowrie Spindle apartments were sold by MyDomaine to Western Australians. This included the five properties sold on behalf of RJR Investments Pty Ltd the company (ts 492 - 493).

321 An analysis of the properties listed in the table above reveals that on 7 April 2009 RJR Investments purchased five properties for $220,000 each. Apart from properties sold by either Palm Cove Apartments or RJR Investments, all other 11 apartment sales were for under $260,000.

322 Each of the sales by either Palm Cove Apartments, or RJR Investments was for either $360,000 or $365,000. Each of those sales was to an interstate purchaser - seven in Western Australia (the sale to the plaintiffs recorded their address as being Brisbane which was the address of their appointed solicitor, not their residential address), one in Cannon Hill, Queensland (a suburb of Brisbane) and one in Berowra, New South Wales. The only sale to a purchaser in Far North Queensland (Clifton Beach) was for the purchase price of $225,000.

Conclusion as to the 'true market value' of Cowrie Apartment 216

323 In the circumstances, the mere fact that nine properties were sold for at or above $360,000 does not lead to the conclusion that they represented what the true market value for renovated apartments in Palm Cove was at the time. Each of those sales was through a specific marketing agreement and every one of the purchasers came from either interstate or Brisbane. They were not local purchasers.

324 Mr Myers was qualified and very experienced in his area of property valuation. He was generally an impressive witness who made relevant concessions when appropriate. The defendants did not call any expert opinion evidence to contradict Mr Myers.

325 Given the stark contrast between the sale price of properties sold by MyDomaine as opposed to those sold by others, it is not surprising that Mr Myers was reluctant to rely upon the properties sold by MyDomaine. In my opinion a prudent valuer such as Mr Myers was right to exclude the properties sold by MyDomaine as 'outliers' when arriving at his opinion of market value.

326 I am satisfied on the balance of probabilities, based upon Mr Myers evidence (leaving aside the calculations appended to the third and fourth defendants' closing submissions to the effect that the true market value based upon Mr Myers evidence was between $317,957.05 (10% discount) and $321,066.18 (6% discount)) that the true market value of Cowrie Apartment 216 was $308,200.00.

Were any of the defendants aware of the true market value of Cowrie Apartment 216?

327 Given each of the defendants' role in purchasing, renovating and marketing the apartments, and the evidence relating to the information, research, involvement and knowledge of the price of the Cowrie Apartments, I am satisfied that all of the defendants were aware that the true market value of Cowrie Apartment 216 was well below the asking price of $365,000.

Conclusion as to the claims for negligent failure to provide advice (statement of claim [49(xxii)] & [46(a)]) and the failure to make adequate market enquiries as to the true market value of the property (statement of claim [46(b)])

328 I am not satisfied that the defendants failed to make adequate market enquiries as to the true market value of the property (statement of claim [46(b)]). On the contrary, all the evidence satisfies me that their enquiries and the state of their knowledge was that all the defendants were generally aware of the true market value of the property.

329 I am satisfied that they had a duty of care to the plaintiffs to provide advice to the plaintiffs in circumstances where they held themselves out to be acting for them. That advice included the information, contrary to what they had represented to the plaintiffs, that there were investment units on the market in Palm Cove substantially cheaper than $365,000.

330 In the circumstances all the defendants had a duty of care to the plaintiffs to ensure that they avoided loss and damage and that they breached that duty of care by failing to provide any or adequate advice to avoid loss or damage (statement of claim 46(a) and 49 (xxii)).

331 For the reasons already stated, I am not satisfied that the breach of the duty of care was cured by the provision of any of the documents being PAMD Form 27c or PAMD Form 30c.

Conclusions in relation to the plaintiffs' claim in negligence

332 I am satisfied to the requisite standard being on the balance of probabilities that all of the defendants are liable in negligence in relation to the following claims:

• their failure to warn or provide adequate advice to the plaintiffs to avoid loss or damage (statement of claim 46(a)); and
• Gold Representations• First Gold Representation - statement of claim 18(v): Slide 4 - MyPortfolio 'represent[s] You not the seller'; and
• Fourth Gold Representation - statement of claim 18(ix): Slide 5 - 'We [My Portfolio] provide you an unbiased consultative service'.

333 Whilst it is true that there was no direct evidence that the plaintiffs relied upon the representations, direct evidence of reliance is not always necessary. A conclusion that the plaintiffs relied upon the representations can be reached by way of inference: see the decision of Owen J in Casinos Austria International (Christmas Island) Pty Ltd v Christmas Island Resort Pty Ltd [1998] WASC 387 (16 December 1998) with reference to Dominelli Ford (Hurstville) Pty Ltd v Karmot Auto Spares Pty Ltd [1992] FCA 550; (1992) 38 FCR 471, 482 - 483; Huntsman Chemical Co Australia Ltd v International Pools Australia Pty Ltd (1995) 36 NSWLR 242, 263, 266.

334 In relation to the Gold Representations above, Mr and Mrs Clack were aware, or ought to have been aware of what was contained in the Gold Document. Mr Clack had created the Gold Document. The Clacks had also trained Mr and Mrs Denton for the purposes of the business.

335 On all the available evidence, I am satisfied that all of the defendants knew, or ought to have known, that what was contained in each of these representations was false. The first, fourth and fifth defendants are directly liable for the false representations made to the plaintiffs in the slides (First Gold Representation on slide 4 and Fourth Gold Representation on Slide 5) which were presented to the plaintiffs. The second and third defendants are liable as they knew the relevant representations were false and were negligent as to whether they would be presented to the plaintiffs. The first defendant accepts it is liable for the acts of the fourth and fifth defendants.

336 Although a number of the Purple Representations found in the Purple Document were clearly false, there was no evidence that any reliance was place on them by the plaintiffs.

337 The combination of factors that causally contributed to the plaintiffs' purchase of Cowrie Apartment 216 included their reliance upon the representations made to them by the defendants. This is to be inferred from all of the available evidence including the fact that the plaintiffs, on the evidence of Mrs Murray, were induced to do so. No one fact should be looked at in isolation. This decision to ultimately purchase Cowrie Apartment 216 was one that the plaintiffs made at the end of a series of events that included:

• the Radio Promotion;
• Mrs Murray's conversation with Mrs Clack; and
• the meeting with and presentation conducted by the fourth and fifth defendants on 16 March 2009.

338 Mrs Murray ultimately relied upon those representations as part of a matrix of facts presented to her by the defendants. This lead the plaintiffs to form the view that MyPortfolio, represented by the Dentons, were 'knowledgeable in property investing' and that they were acting in the plaintiffs' best interests. Consequently, they accepted the fourth and fifth defendants' recommendation with respect to the purchase of Cowrie Apartment 216.

339 In all the circumstances all the defendants owed the plaintiffs a duty of care which was breached by all of them.

Deceit - fraudulent misrepresentation (statement of claim 53)

340 The plaintiffs' claim for fraudulent misrepresentation, pleaded generally against each of the defendants at par 53 of the statement of claim, is referrable to all the preceding paragraphs. The paragraph also generally pleads an alternative claim of unconscionable conduct which is no longer pursued.

341 There is some force in counsel for the first to third defendant's submission that the plaintiffs have failed to 'properly plead and particularise their allegations of fraud' (par 105 of the First to Third Defendants' Outline of Closing Submissions). However, despite the manner in which it is pleaded, it is clear that the claim for fraudulent misrepresentation is limited to those representations and matters set out at pars 10 - 21 and par 48 of the statement of claim.

342 I have already set out at par 332 above the two Gold Representations which I am satisfied were false, made negligently by the defendants and relied upon by the plaintiffs.

The law relating to fraudulent misrepresentation or recklessness

343 In order to prove fraudulent misrepresentations, the plaintiff must not only prove that the statement was false, but also that that the defendant had no honest belief in the truth of the representation in the sense in which the defendant intended it to be understood: Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563, 576 and 578.

344 The plaintiffs' case on fraudulent misrepresentation is alternatively put on the basis of recklessness. To establish recklessness, it must be established that a defendant had no reasonable grounds for believing the relevant statement to be true: Derry v Peek [1889] UKHL 1; (1889) 14 App Cas 337.

345 In Australia, what was said by Lord Herschell in Derry v Peek was adopted by the High Court in Magill v Magill [2006] HCA 51; (2006) 226 CLR 551 [113], and in Banditt v The Queen [2005] HCA 80; (2005) 224 CLR 262 by Gummow, Hayne and Heydon JJ. In Banditt the High Court said that in order to sustain an action in deceit, three things must be proved. They are:

(1) that the false representation was made knowingly, and

(3) recklessly, careless whether it be true or false.

346 The court went on to say that (3) is but an instance of (2), because one who makes a statement under the circumstances in (3) can have no real belief in the truth of what he or she states.

347 In Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; (1992) 67 ALJR 170, 171 , Mason CJ, Brennan, Deane and Gaudron JJ, made it clear that although the ordinary standard of proof onus in civil litigation is proof on the balance of probabilities, 'the strength of the evidence necessary to establish a fact or facts on the balance of probabilities may vary according to the nature of what it is sought to prove. Where a serious a matter such as fraud is alleged, a tribunal of fact is required to have clear or cogent evidence of that fact before being so satisfied: Briginshaw v. Briginshaw [1938] HCA 34; (1938) 60 CLR 336, 362. Furthermore the High Court in Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (at page 172) went on to say:

When an issue falls for determination on the balance of probabilities and the determination depends on a choice between competing and mutually inconsistent allegations of fraudulent conduct, generalisations about the need for clear and cogent proof are likely to be at best unhelpful and at worst misleading. If such generalisations were to affect the proof required of the party bearing the onus of proving the issue, the issue would be determined not on the balance of probabilities but by an unbalanced standard. The most that can validly be said in such a case is that the trial Judge should be conscious of the gravity of the allegations made on both sides when reaching his or her conclusion. Ultimately, however, it remains incumbent upon the trial Judge to determine the issue by reference to the balance of probabilities.

Have the plaintiffs made out their case in fraudulent misrepresentation against any of the defendants?

348 I am conscious of the gravity of the allegations made. In order to make a finding of fraudulent misrepresentation against any defendant, the plaintiffs would have to satisfy me to the requisite standard that any or all of the defendants had either no honest belief in the truth of the representations in the sense in which the defendants intended it to be understood, or no reasonable grounds for believing the relevant statement to be true. The consideration of these issues requires an objective assessment of what each of the defendant's subjective state of mind was at the time. This assessment needs to be done separately in relation to each of the two Gold Representations I have found were negligently made and separately in relation to each defendant.

349 The second and third defendants were directors of the first defendant. Whilst the second, fourth and fifth defendants gave evidence during the trial, the third defendant did not. Consequently there is no direct evidence of the third defendant's state of mind in relation to the representations. Mr Clack's state of mind in relation to these representations needs to be inferred from the facts that I find proved on the balance of probabilities with reference to the test in Briginshaw v Briginshaw.

350 I have already dealt with the objective evidence that lead to my findings that the First and Fourth Gold Representations were negligently made by each of the defendants. An assessment of the roles played by each defendant is important when considering their respective states of mind. In that regard, the following circumstances which I find proved are relevant and significant:

• On 17 April 2008 the first defendant signed a marketing agreement with Indigo Real Estate.
• The fourth and fifth defendants presented the Gold Document to the plaintiffs during their meeting with them.
• Mrs Clack made the appointment for the plaintiffs to meet with the Dentons.
• Mr Clack had created the Gold Document for the purposes of marketing the properties.
• Mrs Clack was aware of the contents of the Gold Document.
• The Dentons were trained by Mr and Mrs Clack in the business of MyPortfolio.
• The second, third, fourth and fifth defendants had travelled to Palm Cove together and met with Mr Kubblins.
• Prior to the meeting on 19 March 2009, the second to fifth defendants had discussed with Mr Kubblins the purchase of apartments within the Cowrie Complex with a view to renovating them and re-selling them for profit.

351 Whilst the second and third defendants may not have directly presented the Gold Document to the plaintiffs, in all the circumstances the only reasonable inference to draw is that both Mr and Mrs Clack were aware that there was a real likelihood that the Gold Document would be used and relied upon by the Dentons in the course of their presentation to the plaintiffs. The purpose of preparing the Gold Document was to present it to prospective clients.

352 Mrs Clack made a number of attempts to draw a distinction between her role as an agent as against the second and third defendants' role acting through MyPortfolio. I have previously set out above some of her evidence. Specifically in relation to Slide 4 and the First Gold Representation, Mrs Clack's evidence (at ts 560) included that:

• Although Mrs Clack conceded that she was acting for the seller, she did not meet with the plaintiffs.
• She did not agree that the statement 'We represent you, not the seller' was false, because:
  • the fourth and fifth defendants met with the plaintiffs; and
  • that the fourth and fifth defendants 'were working as their portfolio manager'; and
  • Mrs Clack was working for the agent Indigo Real Estate representing the seller.
• She (Mrs Clack) was 'the agent' who 'helped facilitate any documents to get to a settlement'.
• That perhaps the document (Slide 4 of the Gold Document) was a mistake.

353 I have already previously noted that Mrs Clack's evidence lacked credibility. In my view her attempts to draw the distinction between her role as an agent for Indigo Real Estate and the roles of the fourth and fifth defendants were motivated in part by the fact that she knew that some of the representations made in the Gold Document were false, particularly the First Gold Representation. Mrs Clack was anxious to distance herself from the meeting between the fourth and fifth defendants and the plaintiffs. I am mindful that Mrs Clack's evidence was given some time after the events and that I am considering her state of mind at the time the representations were made.

354 In relation to the First Gold Representation, namely that MyPortfolio represented 'you, not the seller', Mr Denton's evidence was that this statement was made in the context of MyPortfolio being a portfolio manager (ts 709). He candidly conceded that MyPortfolio did represent the seller.

355 Mrs Denton's evidence included that she knew that MyPortfolio was receiving a fee from the seller.

356 Whilst the evidence of the second, fourth and fifth defendants was generally unimpressive, I am left in some doubt in relation to the question of whether each of the defendants had no honest belief in the truth of the representations (both the First and Fourth Gold Representations) in the sense in which each of the defendants intended it to be understood. Consequently, I am not satisfied that the plaintiffs have proved that any of the defendants did not have an honest belief in the truth of the First and Fourth Gold Representation in the sense in which any of the defendants intended it to be understood.

357 I am however satisfied to the requisite standard that the first to third defendants had no reasonable grounds for believing that the representation on Slide 4, namely 'MyPortfolio 'represent[s] You not the seller', was true (First Gold Representation) . Nothing said by the second defendant in neither her evidence nor any document tendered in the trial, or any other evidence could lead to a conclusion that there were reasonable grounds for the first to third defendants to believe the statement to be true. At all times they knew that the first defendant was acting for the seller of the property.

358 I am not satisfied that the same conclusion can be reached in relation to the fourth and fifth defendants. Unlike the second and third defendants, they were not the controlling minds of the business. Most significantly, they did not prepare the Gold Document and I am left in some doubt about whether or not they had reasonable grounds to believe the representation to be true.

359 Consequently, I find that the first, second and third defendants are liable in relation to the plaintiffs claim in fraudulent misrepresentation as they knew the First Gold Representation was false, were recklessly indifferent as to whether it would be presented to the plaintiffs and had no reasonable grounds for believing that the representation on Slide 4, namely MyPortfolio 'represent[s] You not the seller', was true.

Did the plaintiffs consent to the conflict and profit?

360 The defendants argue that since the plaintiffs signed the PAMD Form 27c, it binds them to their acknowledgement and consent to the potential conflict and profit by MyDomaine, notwithstanding they may not have read the form: Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165, [42] - [47].

361 The test for the defence of consent is 'fully informed consent' (Phipps v Boardman [1966] UKHL 2; [1967] 2 AC 46).

362 In Barescape Pty Ltd v Bacchus Holdings Pty Ltd (No 9) [2012] NSWSC 984, Black J noted [154]:

Informed consent generally requires that a fiduciary disclose to the beneficiary all information in his or her possession in relation to the proposed transaction which was relevant to the beneficiary's consideration of whether or not to consent to it, and at least the material facts: Boardman v Phipps [1966] UKHL 2; [1967] 2 AC 46 at 93, 98, 112; New Zealand Netherlands Statement of claimiety 'Oranje' Inc v Kuys [1973] 2 NZLR 163; 1 WLR 1126; 2 All ER 1222 at 1227; Spellson v George [1992] NSWCA 254; (1992) 26 NSWLR 666 at 670 per Handley JA; at 685 per Young AJA. It is not sufficient for a fiduciary to disclose information which is sufficient only to "put the principal on inquiry": New Zealand Netherlands Statement of claimiety 'Oranje' Inc v Kuys at 1227. The nature of existing legal rights between the parties may be material circumstances in respect of such consent: Short v Crawley (No 30) [2007] NSWSC 1322 at [619]. In Re McGrath & Anor (In their capacity as liquidators of HIH Insurance Ltd) [2010] NSWSC 404; (2010) 78 ACSR 405, Barrett J referred to that decision in noting that the task of explanation inherent in a request to be excused from a fiduciary requirement is an onerous and exacting one.

363 The relevant level of sophistication and business experience of the persons to whom disclosure must be made will be a factor in determining whether disclosure was sufficient in all the circumstance: Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89.

364 The plaintiffs were clearly and obviously unsophisticated investors. Furthermore, given the findings in relation to the falsity of the two Gold Representations identified above, it is clear that the defendants did not disclose all relevant information to the plaintiffs before they signed the contract of sale.

365 All of the circumstances discussed above (at [222] - [247]) in relation to whether the provision of PAMD Forms 27c and 30c cured the misrepresentations are relevant to this issue. As already noted, the information provided by the second defendant on PAMD 27c created more confusion. Consequently, I am satisfied that the plaintiffs did not provide informed consent when they signed PAMD Form 27c. The defendants have not satisfied me that the plaintiffs consented to the potential conflict and profits of MyDomaine.

366 If any action or inaction on the part of the plaintiffs contributed to them paying more for Cowrie Apartment 216 than it was worth, then any liability for the breach of a duty of care by the defendants may be reduced in an amount that is just and equitable having regard to the plaintiffs' share in responsibility for such loss, pursuant to s 5AK of the Civil Liability Act 2002 (WA).

367 The defendants plead a number of issues which they allege caused or alternatively contributed to the plaintiffs' loss. These include:

(a) The identification of the first defendant as agent for vendor in the Reference Schedule and General Conditions of the contract of sale;

(b) The warning to obtain legal advice on the PAMD 30C;

(c) The warning to obtain an independent valuation on the PAMD 30C;

(d) The appointment of Cameron Price as their solicitors; and

(e) That the Murrays did not obtain legal advice or an independent valuation within the 5 day cooling off period.

368 Whilst I am not satisfied that any of the documents presented to the plaintiffs identified the first defendant as acting for the seller of the property, the PAMD Form 30c (exhibit 5) contained notices in large emboldened font on the front page warning the plaintiffs to obtain independent legal advice and to obtain an independent valuation before signing the contract or during the cooling-off period.

369 Whilst the plaintiffs were entitled in the circumstances to believe that the first to fifth defendants were representing their interests, I am satisfied that the plaintiffs negligently contributed to the loss they suffered by failing to heed the warnings and failing to obtain the recommended advice and valuation. Consequently, in all the circumstances I am of the view that any award of damages that they might be entitled to should be reduced by 10%.

370 I have already concluded that, on the evidence of Mr Myers, the true market value of the property at the time of contract was $308,200.

371 The first to third defendants contend that the over market rent benefit should in fact be between $27,957.05 and $31,066.18. This according to the first to third defendants, takes the value of Cowrie Apartment 216 to between $317,957.05 and $321,066.18. The relevant calculations were set out in a schedule provided to the court which was attached to the First to Third Defendants' Outline of Closing Submissions. Mr Myers made it clear that a number of factors needed to be considered (ts 313) when doing the relevant calculations.

372 I accept the plaintiffs' submissions to the effect that whilst the calculations may be mathematically correct, there may be differences in methodology, caveats or inputs which could potentially affect the extent to which they apply. These calculations were never specifically put to Mr Myers in cross-examination. The correctness of the amounts is not conceded by the plaintiffs. It would not be appropriate to adopt the calculations provided by the first to third defendants after the evidence was completed.

373 On the evidence I am satisfied that at the time of the contract Cowrie Apartment 216 was worth $308,200.

374 Since the plaintiffs paid $350,000 for the apartment, and allowing for a 10% discount for contributory negligence, subject to the further issue of the 'taxation benefits' they received, they are entitled to damages in the sum of $37,620.

375 I note that the parties agree that the issue of the 'taxation benefits' received by the plaintiffs may require a grossing up of the judgement sum and that these issues should be the subject of conferral after judgement but prior to the handing down of final orders.

376 The plaintiffs seek an award of exemplary damages on the basis that the defendants deliberately set out to market properties in a way which represented to prospective purchases that they were being offered services and expertise to their benefit whilst simultaneously concealing the commercial relationship between the defendants and the vendors of such properties. The plaintiffs submit that the defendants conduct 'exhibited the kind of conscious and contumelious disregard of their rights as would justify an award of exemplary damages as both punishment and deterrence per Lord Diplock in Cassell & Co Ltd v Broome (No 2) [1972] AC 1136.

377 Exemplary damages cannot properly be awarded in cases of negligence where there is no conscious wrongdoing by the defendant: Gray v Motor Accident Commission (1998) 196 CLR 1 [22].

378 Since the plaintiffs have not established deliberate or conscious wrongdoing against the fourth and fifth defendants, no damages could be properly awarded against them for exemplary damages.

379 Whilst I am satisfied that the plaintiffs have established that the first to third defendants are liable for fraudulent misrepresentations in the sense that they have established that the first to third defendants had no reasonable grounds for believing that the representation on Slide 4, namely MyPortfolio 'represent[s] You not the seller' was true, nonetheless I am not satisfied that the first to third defendants committed 'conscious wrongdoing in contumelious disregard of another's rights': Gray v Motor Accident Commission (1998) 196 CLR 1 [14].

380 The first to third defendants' conduct falls short of that required to satisfy the court that they have acted deliberately and fraudulently in contumelious disregard of the plaintiffs' rights to cause damage to them. Consequently, there is no cause to award exemplary damages in the present case.

381 Each of the first to fifth defendants is liable in relation to the plaintiffs claim for negligent misrepresentation in relation to the two Gold Representations identified as being the First and Fourth Gold Representations.

382 Each of the first to fifth defendants is liable in relation to the plaintiffs' claim in negligence in that the defendants' failed to advise the plaintiffs of the risks associated with property investment.

383 Each of the first to third defendants is liable in relation to the plaintiffs claim against them for fraudulent misrepresentation in relation to the First Gold Representation.

385 The final amounts of damages and the appropriate orders are to be determined after the parties have conferred in relation to the issue of the taxation benefits received by the plaintiffs. I will hear the parties further on these issues.

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA

CITATION : MURRAY -v- MYDOMAINE PTY LTD [2016] WADC 109 (S)

HEARD : 1 - 4, 7 - 10 DECEMBER 2015 & 21 NOVEMBER 2016

Civil - Damages - Apportionment of damages pursuant to Civil Liability Act 2002 (WA) - Apportionable and non-apportionable damages - Partly successful plaintiffs' costs - Whether a departure from the general rule should be applied - Whether Magistrates Court scale should be applied where damages awarded do not exceed that jurisdictional limit - Whether Special Costs Order appropriate

Civil Liability Act 2002 (WA) s 5AK

Corporations Act 2001 (Cth) s 471B

District Court of Western Australia Act 1969 s 50, s 64(3)

Legal Profession Act 2008 (WA) s 280(2)

Magistrates Court (Civil Proceedings) Act 2004 (WA) s 4

Damages assessed at $37,620 in favour of the plaintiffs

Amaca Pty Ltd (formerly James Hardie & Co Pty Ltd) v Hannell [2007] WASCA 158 (S)

Berrigan Shire Council v Ballerini (No 2) [2006] VSCA 65

Calderbank v Calderbank [1976] Fam 93

Civic Video Pty Ltd v Paterson (No 3) [2014] WASC 321

Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373

Ford Motor Co of Australia Ltd v Lo Presti [2009] WASCA 115

Ghunaim v Bart (No 2) [2006] NSWCA 82

Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298; (2005) 13 VR 435

Heartlink Ltd v Jones as Liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S)

HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd [2004] HCA 54; (2004) 217 CLR 640

Jones v Bradley (No 2) [2003] NSWCA 258

Leichhardt Municipal Council v Green [2004] NSWCA 341

Leighton Contractors Pty Ltd v Public Transport Authority of Western Australia [No 7] [2009] WASC 218

Michael Kellaway International Pty Ltd v Shark Bay Airport Pty Ltd (Unreported, WASC, Library No 980302, 25 March 1998)

Pennington v Norris [1956] HCA 26; (1956) 96 CLR 10

Podrebersek v Australian Iron & Steel Pty Ltd [1985] HCA 34; (1985) 59 ALJR 492; (1985) 59 ALR 529

Potts v Miller [1940] HCA 43; (1940) 64 CLR 282

Selig v Wealthsure Pty Ltd [2015] HCA 18; (2015) 255 CLR 661

SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323

Vella v Ivanovski [1984] WAR 8

1 On 28 July 2016 I handed down my judgment (primary judgment) in relation to the primary issues dealt with at the trial. I found that the 'true market value' of the property at the time of contract was $308,200 and that subject to the further issue of the 'taxation benefits' that the plaintiffs received, they were entitled to damages in the sum of $37,620. Whilst I found all of the defendants were liable, I did not make findings as to how the loss suffered by the plaintiffs should be apportioned between the defendants pursuant to the Civil Liability Act 2002 (WA) ('CLA') and the form of the final orders. Consequently, I was not in a position to make final orders including the question of costs.

2 I note that during the course of the trial all parties requested that the issue relating to the 'taxation benefits' that the plaintiffs received from the property not be resolved until after I had considered issues of liability and damages, excluding the 'taxation benefits' that the plaintiffs received.

3 On 12 August 2016 the matter was again listed before me. Leaving aside the question of the apportionment of the damages between the defendants and the issue of costs, despite the fact that during the trial the only issue that was identified as requiring resolution after the primary issues had been decided was the question of the 'taxation benefits', all counsel for the parties flagged a number of issues that needed to be further ventilated. I consequently made further orders on that day adjourning the further hearing to deal with various matters including the extent to which (if any) consequential issues and tax implications should be taken into account in assessing the quantum of the loss and the damages suffered by the plaintiffs. I required the parties to file and serve any affidavits dealing with the question of costs and further written submissions dealing with the consequential issues being:

(a) the appropriate apportionment between the defendants pursuant to pt 1F of the CLA;

(b) the form of orders necessary to give effect to any apportionment between the defendants pursuant to Part 1F of the CLA; and

4 I subsequently received from the parties the following material:

• Affidavit of Mark Adrian McAuliffe solicitor for the plaintiffs, sworn on 29 August 2016 (18 pages) attaching 256 pages of annexures (McAuliffe Affidavit).
• Submissions dated 29 August 2016 addressing consequential issues, tax implications and costs (10 pages).
• Responsive submissions dated 1 November 2016 (20 pages).

From the second and third defendants (nothing was filed on behalf of the first defendant for reasons that will be elaborated upon below):

5 Affidavit of Katherine Susan Pole, solicitor for the second and third defendants, sworn 30 September 2016 (13 pages) attaching 215 pages of annexures (Pole Affidavit).

• Submissions dated 30 September 2016 in relation to final orders and costs (16 pages).
• Chronology of offers and events relevant to costs (4 pages).

• Affidavit of Charles Robert Cook, solicitor for the fourth and fifth defendants, sworn 14 September 2016 (12 pages) attaching 48 pages of annexures (Cook Affidavit).
• Submissions on final orders dated 14 September 2016 (9 pages).
• Submissions on costs dated 14 September 2016 (6 pages).

6 On 17 August 2016 the Federal Court of Australia, on the application of the Deputy Commissioner of Taxation, ordered that the first defendant (MyDomaine Pty Ltd, ACN 120 016 499) be wound up in insolvency under the provisions of the Corporations Act 2001 (Cth). Consequently, the plaintiffs cannot proceed with this action against the first defendant except with the leave of the Supreme Court of Western Australia or the Federal Court of Australia (Corporations Act, s 471B). At the time of the publication of this decision no order granting leave has been made.

7 On 17 November 2016, the solicitor acting for the first to third defendants sought and obtained leave to withdraw as solicitors for the first defendant. No submissions have been filed on behalf of the first defendant in relation to the issues that are dealt with in these reasons.

8 I note that on 11 December 2015, at the conclusion of the evidence to be relied upon by the parties, I was so concerned about the costs involved in the litigation of this matter that I invited the parties to dispense with oral final addresses and to instead file written submissions. The parties adopted this course.

9 Despite my concerns about the legal costs associated with this case, it is obvious from the voluminous affidavits, annexures and submissions that the legal costs associated with this matter have continued to grow post the trial. I note that at par 50 of the Cook Affidavit, as at the time of the swearing of the affidavit on 14 September 2016, the fourth and fifth defendants alone had incurred approximately $160,000 in costs associated with these proceedings.

10 On 21 November 2016, having received the affidavits and submissions referred to above, I heard further legal argument. The issue relating to the 'taxation benefits' that the plaintiffs received from the property, despite being the only issue previously flagged as being outstanding, was abandoned with the consent of all parties. Instead, the second and third defendants now argues that the consequential issues, following my primary judgment, includes the need for a further assessment of the quantum of loss suffered by the plaintiffs based upon an analysis of what the 'true value' of the property was at the time of the contract, rather than the 'market value'. The fourth and fifth defendants have not only joined issue with the second and third defendants on this submission, but have also raised a further matter that they submit should be taken into account on the assessment of the quantum of damages, namely that as a result of my determination of what the 'true market value' of the property was at the time the plaintiffs acquired it, the plaintiffs have received a 'windfall' in rent received. Consequently, the following issues arise to be dealt with relating to the final orders that should be made following the delivery of the primary judgment:

• the quantum of loss suffered by the plaintiffs;
• the appropriate apportionment between the defendants pursuant to pt 1F of the CLA and the form of orders necessary to give effect to any apportionment between the defendants; and
• costs.

11 The trial was conducted by all parties on the basis that that the quantum of loss suffered by the plaintiffs, if any, would be calculated after the court had determined whether any of the defendants were liable for the plaintiffs' claims and made findings in respect of Mr Myers' evidence.

12 As already noted at [1] above, in my primary judgment I found that 'the true market value of Cowrie Apartment 216 was $308,200.00' (see [326] of the primary judgment). This finding was based upon Mr Myers' evidence (see [326] of the primary judgment) and was the value at the time of the contract (see [373] of the primary judgment) (my emphasis added).

13 The figure of $308,200 was arrived at by adding together the following:

• 'total market value' of the property - $280,000 (see exhibit 46, attachment 'CM1' Mr Myers' evidence at ts 293; 308, 310);
• value of furnishings - $10,000 (see Mr Myers' evidence at ts 310); and
• 'profit rent' for the 5 years of the lease - $18,200 (see Mr Myers' evidence at ts 315).

The second and third defendants' submission that the 'true value' of the property should be reduced by a further sum of $18,200 to take account of the actual profit rent earned by the plaintiffs (adopted by the fourth and fifth defendants)

14 Counsel for the second and third defendants now, correctly, submits that there is a difference between 'market value' and 'true value' and, in reality, although the primary judgment was expressed to be a finding of 'true market value' (which he submitted was an 'oxymoron' - see pars 5 and 6 of the 'Second and Third Defendants' Submissions on Final Orders and Costs' dated 30 September 2016), the expert opinion of Mr Myers was that the market value of the property at the date of the contract was $308,200.

15 The second and third defendants contend that the correct measure of the plaintiffs' loss is the difference between what the plaintiffs' paid for the property and the 'true value' of the property on the date the plaintiffs' became contractually bound to purchase it. Furthermore, the true value, on the first to third defendants' submission, must be assessed bearing in mind post-acquisition events. This submission is said to be based upon the judgment of the High Court in HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd [2004] HCA 54; (2004) 217 CLR 640 [34] - [40].

16 The court in HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd [38] noted what Dixon J said in Potts v Miller [1940] HCA 43; (1940) 64 CLR 282, 299, namely:

[T]he real value of what the plaintiff got must be ascertained in light of the events which afterwards happened, because those events may show, for instance, that what the shares might have sold for was not their true value or that it was a worthless company.

17 However, the High Court in HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd [35] went on to say that this approach, sometimes referred to as the rule in Potts v Miller, 'is not universal or inflexible or rigid'.

18 The post-acquisition events, on the second and third defendants' submission, includes a need to factor in the rent that was guaranteed and actually received by the plaintiffs over all five years of its term. The guaranteed rent was calculated at 6.25% of the purchase price of $350,000 and was indexed for CPI every year. The second and third defendants point to Mr Myers' evidence that anything over a 5% return on the property was a 'profit rent' (ts 309 - 311). Given the second plaintiff's evidence that the plaintiffs received the rent that they were entitled to pursuant to the contract for the purchase of the property (exhibit 14), the second and third defendants submit that the profit rent they earned was actually $36,400, not the sum of $18,200 given by Mr Myers in evidence.

19 On the available evidence, I do not accept the second and third defendants' submission that the sum of $36,400, not $18,200, should be used in determining the 'true value' of the property. Mr Myers was extensively cross-examined by counsel for the second and third defendants. The sum of $18,200 was arrived at after a complicated and hypothetical exercise was put to him as a witness (see ts 309 - 315). At no time was he ever asked to consider the value of the property based upon what was actually known at the time of the hearing. Although I have expressed my findings as being 'true market value', it is clear that the sum of $308,200 took account of not only the 'total market value' of the property together with furnishings, but also the 'profit rent'. There is now no proper basis to reconsider the value of the property beyond that which was the subject of evidence at trial.

The fourth and fifth defendants' submission (adopted by the second and third defendants)

20 The second to fifth defendants submit that, by virtue of the finding that the 'true market value' of the property was $308,200, the plaintiffs received a 'windfall of $13,062.50 being the amount in excess of the rental guarantee that they were entitled to receive under the Contract of Sale' (see pars 12 and 13 of the Fourth and Fifth Defendants' Submissions on Final Orders dated 14 September 2016).

21 This argument is based upon the fact that the Contract of Sale for the purchase of the property included a special condition that the plaintiffs were entitled to a guaranteed rental return for a period of five years calculated at 6.25% of the purchase price. Since the purchase price was $350,000, the guaranteed rental return was calculated at 6.25% of that amount. Consequently, if the 'true market value' was used rather than the purchase price, the defendants submit that the plaintiffs would have received at least $13,062.50 less than they actually did.

22 The defendants' argument proceeds on the basis that the plaintiffs would not have received the rent that they did, if they had in fact only paid $308,200 for the property, instead of the $350,000 they actually paid for it. Whilst there is some logic to this argument, these issues were neither directly raised nor canvassed during the evidence at trial. Instead, the defendants ask me to draw inferences from the available evidence to arrive at a conclusion that the plaintiffs received a 'windfall rent' of $13,062.50.

23 The difficulty with drawing the inferences suggested by the defendants is that there are gaps in the evidence. In that regard, I note that, for example, if you applied the figure of 6.25% to $350,000 (the guaranteed rental return calculated at 6.25%) you arrive at the figure of $21,875. Yet the plaintiffs' tax returns, which were tendered at the trial, disclose that the rent they received for the year ending 30 June 2010 was $18,229. There is no explanation on the evidence for that fact. If the court were to adopt the approach suggested by the defendants, the plaintiffs actually received less than they were entitled to for that year (if you applied 6.25% to the sum of $308,200 = $19,262.50). The second to third defendants point to plaintiffs' tax returns (exhibits 31 - 37 and exhibits 66 - 71), together with the first plaintiff's evidence at trial, to support the inference that they received a 'windfall' in rent. The defendants submit that the actual rent received from the property during the term of the lease (the period of the rental guarantee only applied to the years ending 30 June 2010 through to the year ending 30 June 2014) was as follows:

• for the year ending 30 June 2010 - $18,229
• for the year ending 30 June 2011 - $22,509
• for the year ending 30 June 2012 - $25,288
• for the year ending 30 June 2013 - $22,764
• for the year ending 30 June 2014 - $25,083.

24 It is immediately apparent that the rent for the year ending 30 June 2010 was in fact $3,646 lower than that which was, on the defendants' submission, guaranteed by the lease. The years ending 30 June 2011 - 30 June 2014 were all greater than the rent guaranteed by the lease. On the evidence, there is no direct evidence explaining why the first amount is lower. So far as the subsequent years are higher, the second and third defendants submit that, by inference, the greater amounts are due to indexation of the rent pursuant to the CPI review mechanism in the lease. That explanation alone would not explain why both the fourth and fifth years of the lease yielded rent less than the third year.

25 On the available evidence, in circumstances where this issue was not directly raised at trial and there are gaps in the evidence which would call for a degree of speculation, I cannot conclude that the plaintiffs did receive a 'windfall'.

26 In addition, I accept the plaintiffs' submission that the figure of 6.25% of the purchase price of the property was a guaranteed minimum return. It did not mean that the rent was capped at that amount.

Conclusion of matters raised by the second to fifth defendants in relation to the quantum of damages

27 In my view, the issues now raised by the second to fifth defendants go beyond the consequential issues that were proposed to be dealt with after my primary judgment was delivered. Furthermore, these issues were not directly raised during the trial and call for a degree of speculation. Consequently, the quantum of damages will now be fixed in the sum of $37,620.

The appropriate apportionment between the defendants pursuant to pt 1F of the Civil Liability Act 2002 (WA)

28 In the primary judgment [330]; [332]; [359]; [381] - [383]; I found that:

(a) Each of the first to fifth defendants were liable in relation to the plaintiffs' claim for negligent misrepresentation in relation to the two Gold Representations identified as being the First and Fourth Gold Representations in the Gold Document.

• First Gold Representation - statement of claim 18(v): Slide 4 - Portfolio 'represent[s] You not the seller'; and
• Fourth Gold Representation - statement of claim 18(ix): Slide 5 - 'We [My Portfolio] provide you an unbiased consultative service'.

(b) Each of the first to fifth defendants were liable in relation to the plaintiffs' claim in negligence in that the defendants' failed to advise the plaintiffs of the risks associated with property investment (statement of claim 46(a));

(c) The first, second and third defendants were liable in relation to the plaintiffs' claim in fraudulent misrepresentation as they knew the First Gold Representation was false, were recklessly indifferent as to whether it would be presented to the plaintiffs and had no reasonable grounds for believing that the representation on Slide 4, namely MyPortfolio 'represent[s] You not the seller', was true.

29 Pursuant to s 5AI of pt 1F of the CLA, an 'apportionable claim' means -

(a) a claim for economic loss or damage to property in an action for damages (whether in contract, tort or otherwise) arising from a failure to take reasonable care (but not including any claim arising out of personal injury); or

(b) a claim for economic loss or damage to property in an action for damages under the Fair Trading Act 2010 based on misleading or deceptive conduct;

30 The same section defines the term 'concurrent wrongdoer,' in relation to a claim, as:

a person who is one of 2 or more persons whose act or omission caused, independently of each other or jointly, the damage or loss that is the subject of the claim.

(1) In any proceedings involving an apportionable claim -

(a) the liability of a defendant who is a concurrent wrongdoer in relation to that claim is limited to an amount reflecting that proportion of the damage or loss claimed that the court considers just having regard to the extent of the defendant's responsibility for the damage or loss; and

(b) the court may give judgment against the defendant for not more than that amount.

32 Furthermore, pursuant to s 5AK(3)(a) of the CLA, in apportioning responsibility between defendants in the proceedings, the court is required 'to exclude that proportion of the damage or loss in relation to which the plaintiff is contributorily negligent under any relevant law'. I have already found in the primary judgment that the damages due to the plaintiffs should be reduced by 10% to reflect their contributory negligence. Thus, the sum of $37,620 already recognised that reduction in the damages.

33 Relevant to this case, s 5AK of the CLA needs to be read in combination with s 5AJA (1) of the CLA which provides that:

(1) Nothing in this Part operates to limit the liability of a concurrent wrongdoer (an excluded concurrent wrongdoer) in proceedings involving an apportionable claim if -

(a) the concurrent wrongdoer intended to cause the economic loss or damage to property that is the subject of the claim; or

(b) the concurrent wrongdoer fraudulently caused the economic loss or damage to property that is the subject of the claim.

34 As a consequence of the application of the relevant sections of pt 1F of the CLA set out above:

(a) liability for the claims based upon negligence and negligent misrepresentation must be apportioned in accordance with s 5AK of the CLA; and

(b) liability for the claim founded in fraudulent misrepresentation is not limited by the operation of pt 1F.

35 All parties (save for the first defendant who has not made any submissions) agree that the claim founded in fraudulent misrepresentation is not limited by the operation of pt 1F of the CLA and consequently are not apportionable: Selig v Wealthsure Pty Ltd [2015] HCA 18; (2015) 255 CLR 661.

36 The first to third defendants submit that, in all the circumstances, the fourth and fifth defendants were 'significantly more responsible for the loss suffered by the plaintiffs than either the second and third defendants' and that their proportionate responsibility should not be higher than the plaintiffs' contributory negligence assessed to be 10% (see pars 25 and 26 of 'Second and Third Defendants' Submissions on Final Orders and Costs' dated 30 September 2016).

37 On the other hand, the fourth and fifth defendants submit that the first to third defendants should be held liable for the whole of the damages awarded to the plaintiffs on the basis of the finding of fraudulent misrepresentation (see pars 14 and 30 of the Fourth and Fifth Defendants' Submissions on Final Orders dated 14 September 2016).

38 The structure of any final orders in this case is complicated by the fact that the court's findings include both apportionable and non-apportionable claims.

39 In the joint judgment of Gibbs CJ, Mason, Wilson, Brennan and Deane JJ in Podrebersek v Australian Iron & Steel Pty Ltd [1985] HCA 34; (1985) 59 ALJR 492; (1985) 59 ALR 529 [8], the court said:

A finding on a question of apportionment is a finding upon a 'question, not of principle or of positive findings of fact or law, but of proportion, of balance and relative emphasis, and of weighing different considerations. It involves an individual choice or discretion, as to which there may well be differences of opinion by different minds': British Fame (Owners) v Macgregor (Owners) (1943) AC 197, at p 201. Such a finding, if made by a judge, is not lightly reviewed. The task of an appellant is even more difficult when the apportionment has been made by a jury: Zoukra v Lowenstern [1958] VicRp 94; (1958) VR 594. In the circumstances to which reference has been made, it is not possible to say that it was unreasonable for the jury to place almost the entire responsibility for the damage on the appellant himself, and to make the apportionment that they did.

40 In Pennington v Norris [1956] HCA 26; (1956) 96 CLR 10, it was determined that the court should attempt to arrive at a 'just and equitable' apportionment having regard to who is 'responsible' for the damage. This consideration involves a comparison of culpability, which is the degree of departure from the standard of care of the reasonable man.

41 In determining questions of 'proportion', 'balance and relative emphasis', and 'weighing different considerations' referred to by the High Court in Podrebersek v Australian Iron & Steel Pty Ltd, the actual role played by the relevant parties needs to be considered.

The role played by the first, second and third defendants

42 The second and third defendants ran the business called MyPortfolio which was operated through the first defendant. The second and third defendants were the controlling minds of MyDomaine and the business MyPortfolio.

43 The first defendant was vicariously liable for the actions of the fourth and fifth defendants.

44 The second and third defendants were involved in discussions, negotiations and meetings with Mr Peter Marshall on behalf of the Indigo Group which resulted in the agreement between the first defendant and Indigo Real Estate (exhibit 74);

45 The second and third defendants gave presentations and seminars to property investment clients and met with clients (ts 622); and

46 The second and third defendants trained the fourth and fifth defendants in the business (ts 622).

47 The third defendant created the Gold Document for the purpose of marketing properties including the property the subject of this matter (exhibit 2);

48 The second defendant was aware of what was contained in the Gold Document.

49 The second defendant made the appointment for the plaintiffs to meet with the fourth and fifth defendants. At the relevant time the second and third defendants must have been aware that there was a real likelihood that the Gold Document would be used and relied upon by the fourth and fifth defendants in the course of their presentation to the plaintiffs.

50 I have already set out my findings including the plaintiffs' successful claims against the various defendants. Significantly, whilst the fourth and fifth defendants were not found to be liable in relation to the plaintiffs' claim for fraudulent misrepresentation, the first, second and third defendants were. Each of the first, second and third defendants were found to be liable in relation to the plaintiffs' claim in fraudulent misrepresentation as they knew the First Gold Representation was false, were recklessly indifferent as to whether it would be presented to the plaintiffs and had no reasonable grounds for believing that the representation on Slide 4, namely MyPortfolio 'represent[s] You not the seller', was true.

51 It was the fourth and fifth defendants who presented the Gold Document to the plaintiffs and then took them through relevant parts of the Gold Document, knowing at the time that MyPortfolio did in fact represent the seller. They were, at the time of the presentation to the plaintiffs, in a good position to assess the needs of the plaintiff. In so doing however, they were acting as servants or agents of the first defendant. They provided services to the first defendant as consultants.

The appropriate apportionment between the defendants pursuant to pt 1F of the Civil Liability Act 2002 (WA): Conclusion

52 In my view, whilst the fourth and fifth defendants played a significant role by:

• ultimately meeting with the plaintiffs and actually presenting the Gold Document to them; and
• failing to advise the plaintiffs of the risks associated with property investment,

it is clear that, when considering relative responsibility for the loss suffered by the plaintiffs, the first, second and third defendants' conduct was of greater significance. I note the first defendant accepted at trial that it was vicariously liable for the actions of the fourth and fifth defendants.

53 I am of the view that the claims for negligence and negligent misrepresentation should be assessed at being 60% of the overall damages, in other words the amount of $22,572.

54 Noting all of the factors above, and leaving aside the successful claim against the first, second and third defendants for fraudulent misrepresentation which cannot be apportioned, I am of the view that the appropriate apportionment of responsibility as between the various defendants expressed as a percentage with respect to the claims for negligence and negligent misrepresentation, is as follows:

55 There is obviously some overlap in relation to the successful claims in negligent misrepresentation and fraudulent misrepresentation since they both involved the First Gold Representation - statement of claim 18(v): Slide 4 - MyPortfolio 'represent[s] You not the seller'.

56 The remaining 40% of the loss suffered by the plaintiffs is referrable to the successful claim in fraudulent misrepresentation. Damages awarded for this claim cannot be apportioned. Each of the first, second and third defendants is jointly and severally liable for the balance of the claim being $15,048 such sum being 40% of the amount of $37,620.

Costs: the second and third defendants' submissions generally

57 The second to fifth defendants submit that any costs payable to the plaintiffs, if any, should be reduced by virtue of a number of factors including:

1. The plaintiffs' prima facie loss was $41,800 which is well within the limits of the Magistrates Court Scale. Furthermore, given the content of the McAuliffe Affidavit, the plaintiffs had no reasonable basis to expect that their loss would exceed $75,000. Consequently, the second and third defendants submit that this matter should have been litigated in the Magistrates Court and that the plaintiffs are not entitled to their costs taxed at the applicable Magistrates Court Scale (see Rules of the Supreme Court (RSC), O 66 r 17(1) and District Court of Western Australia Act 1969 (WA), s 64(3)).
2. The plaintiffs were only partly successful, having had the following claims dismissed:
   • breach of contract
   • breach of fiduciary duty
   • misleading and deceptive conduct (abandoned at the start of the trial)
   • unconscionable conduct (abandoned at the end of the trial).

58 The plaintiffs' claims in negligence and deceit involved 22 separate allegations of misrepresentation. They only succeeded in establishing liability in relation to two of the 22 allegations.

59 The claim for negligent failure to provide any or adequate advice was only introduced on the first day of the trial and, in the second and third defendants' submission, occupied little actual time during the trial being premised on an omission rather than an act.

60 Furthermore, the second and third defendants submit that they should have their costs for the claims of:

• breach of fiduciary duty;
• unconscionable conduct;
• wider allegations of fraud.

61 The second and third defendants point to the court's finding that the claim for breach of fiduciary duty was outside of the District Court's jurisdiction; the plaintiffs' abandonment of the claim of unconscionable conduct and the dismissal of the wider allegations of fraud.

62 The plaintiffs' claims in fraud were only successful on the basis that the second and third defendants were liable in relation to the plaintiffs claim in fraudulent misrepresentation as they were recklessly indifferent as to whether the representation would be presented to the plaintiffs (Slide 4, namely MyPortfolio 'represent[s] You not the seller) (see [359] of primary judgment). Furthermore, other wider allegations of fraud were not substantiated and lacked any proper basis given the content of the McAuliffe Affidavit.

63 The second and third defendants also rely upon a Calderbank offer made to the plaintiffs by letter dated 21 August 2015. That offer, which was made on a 'without prejudice save as to costs' basis, was for the second and third defendants to settle the matter by paying to the plaintiffs the sum of $60,000 inclusive of costs. The offer was rejected by the plaintiffs. The second and third defendants submit that the plaintiffs' rejection of the offer was not only unreasonable, but in light of the amount of the assessment of damages, the plaintiffs should be considered to be the unsuccessful party from the date of the offer.

64 In opposing the plaintiffs' application for a special costs order, the second and third defendants adopt the fourth and fifth submissions made in relation to the issue. The second and third defendants also submit that any complexity or unusual difficulty that arose in the action was a product of the plaintiffs' making. In that regard, they point to a combination of factors, all said to be attributable to the plaintiffs, namely:

• poor preparation for trial;
• deficient pleadings; and
• pursuing claims that were without merit or fell outside the jurisdiction of the District Court.

Costs: the fourth and fifth defendants' submissions generally

65 Like the second and third defendants, the fourth and fifth defendants not only submit that where applicable the plaintiffs costs should be reduced, but that the plaintiffs should pay their costs in relation to some of the unsuccessful claims brought against the fourth and fifth defendants. Those unsuccessful claims include claims for:

• breach of fiduciary duty; and
• unconscionable conduct.

66 The fourth and fifth defendants also submit that the ultimate amount of the claim was within the Magistrates Court's jurisdiction and that the majority of the claims brought against them were unsuccessful. In that regard, the fourth and fifth defendants point to the RSC, O 66 r 17(1).

67 In relation to the plaintiffs' successful claim in negligence made out against the fourth and fifth defendants, they submit that the claim was only made after the trial commenced and the plaintiffs should be deprived of those costs despite the fact that the plaintiffs were successful.

68 The plaintiffs' application for a 'special costs order' is opposed.

69 The plaintiffs not only seek their costs, but submit that a 'special costs order' should be made in their favour pursuant to s 280(2) of the Legal Profession Act 2008 (WA).

70 The plaintiffs reject the second to fifth defendants' submissions that any costs awarded to them should be assessed on the Magistrates Court scale, noting that although the ultimate award of damages falls within the Magistrates Court's jurisdiction, the question is not whether the ultimate amount of damages falls within the Magistrates Court jurisdiction but rather whether it was proper at the time the proceedings were instituted to bring it in the District Court.

Costs: Should the general rule that the successful party to an action or matter be awarded costs be displaced? Or, in the alternative, should the plaintiffs have their costs reduced? Are the defendants entitled to some or all of their costs?

71 Relevantly, the general rules as to costs are set out under O 66 r 1 of the RSC and includes:

(1) Subject to the express provisions of any statute and of these rules the costs of and incidental to all proceedings including the administration of estates and trusts shall be in the discretion of the Court but, without limiting the general discretion conferred on the Court by the Act, and subject to this Order, the Court will generally order that the successful party to any action or matter recover his costs.

(2) If the Court is of opinion that the conduct of a party either before or after the commencement of the litigation or that a claim by a party for an unreasonably excessive amount has resulted in costs being unnecessarily or unreasonably incurred it may deprive that party of costs wholly or in part, and may further order him to pay the costs of an unsuccessful party either wholly or in part.

(3) Where a party though generally successful in an action has, by the introduction of some issue or issues on which he has failed, increased the costs the Court may order such party to pay the costs of such issue or issues.

72 Ordinarily, solicitor/client and party/party costs are regulated by determinations made by the Legal Costs Committee.

73 The general rule that the successful party to any action or matter recover his or her costs usually applies notwithstanding that the successful party may have failed in relation to some issues or parts of their case. In Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373 Beazley, McColl and Basten JJA said:

Where there are multiple issues in a case the court generally does not attempt to differentiate between the issues on which the appellant was successful and those on which it failed. Unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed [6].

74 In Leighton Contractors Pty Ltd v Public Transport Authority of Western Australia [No 7] [2009] WASC 218 [19] Le Miere noted that:

In determining the appropriate costs order where a litigant is not successful on each issue in the action, the court must seek to give effect to two policies that are likely to collide. On the one hand, it should not adopt an approach so rigid as to dissuade a party, by the risk of an adverse costs award, from canvassing all issues, however doubtful, which might be material to the decision in the case. On the other hand, in view of extensive court delays and high legal costs, the court should encourage parties to consider carefully the matters they do put in issue in their litigation. Litigants who realise that they will not necessarily recover the whole of their costs where they have unsuccessfully raised a discrete issue are more likely to consider whether the raising of that issue is a justifiable course to take. Which policy should prevail in any given case depends on what, according to the court, the justice of the case requires: see Dal Pont G E, Law of Costs (2003) [8.9].

75 The defendants correctly note that the plaintiffs only succeeded in relation to a small number of claims. The vast majority were dismissed.

76 The mere fact that a large number of claims did not succeed is not, of itself, a reason to depart from the general rule that a successful party is entitled to their costs. In Amaca Pty Ltd (formerly James Hardie & Co Pty Ltd) v Hannell [2007] WASCA 158 (S) the Court of Appeal observed:

[T]he power to adjust an order for costs by reference to particular issues upon which the generally successful party has failed, is properly exercised only where there are discrete and severable issues upon which the generally successful party has failed, and which have added to the cost of the proceedings in a significant and readily discernible way [7].

77 A proper analysis of all of the claims pursued by the plaintiffs at trial reveals that although many claims failed, the evidence relied upon in relation to the failed claims was generally relevant and admissible in relation to all claims. Looking at the separate claims that did not succeed, including the ones referred to below, I note that:

(a) The claim for breach of contract by the first defendant, which was advanced solely against the first defendant, needed to be assessed by an objective assessment of what was said by Mrs Clack and Mrs Murray during the relevant conversation. This was essential background evidence and was relevant to the events that followed.

(b) In relation to the claim for breach of fiduciary duty against first to fifth defendants, whilst the District Court does not have jurisdiction to hear or determine such a claim standing separately, many of the issues raised under this claim were generally relevant to the circumstances surrounding the claims against the defendants in negligence where a relevant duty of care was pleaded.

(c) The Radio Promotion was relevant when considering the nature of the relationship between the plaintiffs and the defendants, how it developed and whether in fact a duty of care existed between them.

(d) What occurred during the attendance on 16 March 2009 (the attendance representations (Statement of claim par 16)) was relevant when considering the totality of the circumstances involved, including the nature of the relationship between the plaintiffs and the defendants. The pleaded representations did not stand alone. They were relevant when considering, together with the Gold Representations (statement of claim 18) and the Purple Representations (statement of claim 19), all of the circumstances leading up to the purchase of the property.

(e) Although the plaintiffs originally relied upon 12 separate representations set out in the Gold Document (exhibit 2), only seven were ultimately pursued (statement of claim 18(v) - 18(vii); 18(ix) - 18(xii), the whole Gold Document needed to be considered in context. Two representations ultimately succeeded, namely:

• First Gold Representation - Slide 4 - MyPortfolio 'represent[s] You not the seller' (statement of claim 18(v));
• Fourth Gold Representation - Slide 5 - 'We [My Portfolio] provide you an unbiased consultative service' (statement of claim 18(ix)).

(f) The plaintiffs claim based upon the Purple Representations (Statement of Claim [19]) failed completely. Nonetheless, all parties submitted at trial that the Gold and Purple Representations needed to be considered together and in context. Consequently all of the representations were relevant irrespective of whether the plaintiffs succeeded in relations to specific claims based upon individual representations contained within each document.

(g) So far as the claim based upon the Financial Projections (Statement of claim [17(b)]) is concerned, the plaintiffs ultimately conceded that there was no evidence to support this claim.

(h) In relation to the Verbal Representations (Statement of claim [20]), the plaintiffs ultimately only pursued two of the four verbal representations originally pleaded at statement of claim 20, both of which failed. They were:

• 'the Cowrie Apartments proposal referred to in the Purple Representations and the Gold Representations was the best property for the Plaintiff' (statement of claim 20(i)); and
• 'that the Cowrie Apartment proposal was perfect due to the lease guarantee over the property' (statement of claim 20(iii)).

The evidence relating to all the verbal representations was part of the background and was generally relevant to all issues at trial.

(i) The claims in negligence that the defendants failed to provide any advice (statement of claim 46(a) and 49(xxii)) and the claim that they failed to make adequate market enquiries as to the true market value of the property (statement of claim 46(b)) were inextricably intertwined. The fact that the plaintiffs failed in relation to the latter says nothing about the relevance of the evidence generally.

78 At [337] - [338] of the primary judgment I found that:

The combination of factors that causally contributed to the plaintiffs' purchase of Cowrie Apartment 216 included their reliance upon the representations made to them by the defendants. This is to be inferred from all of the available evidence including the fact that the plaintiffs, on the evidence of Mrs Murray, were induced to do so. No one fact should be looked at in isolation. This decision to ultimately purchase Cowrie Apartment 216 was one that the plaintiffs made at the end of a series of events that included:

• the Radio Promotion;
• Mrs Murray's conversation with Mrs Clack; and
• the meeting with and presentation conducted by the fourth and fifth defendants on 16 March 2009.

Mrs Murray ultimately relied upon those representations as part of a matrix of facts presented to her by the defendants. This lead the plaintiffs to form the view that MyPortfolio, represented by the Dentons, were 'knowledgeable in property investing' and that they were acting in the plaintiffs' best interests. Consequently, they accepted the fourth and fifth defendants' recommendation with respect to the purchase of Cowrie Apartment 216.

79 So far as the plaintiffs claim against the fourth and fifth defendants for fraudulent misrepresentation failed, it is of importance that I concluded that I was 'left in some doubt in relation to the question of whether each of the defendants had no honest belief in the truth of the representations (both the First and Fourth Gold Representations) in the sense in which each of the defendants intended it to be understood' (see [356] of primary judgment). That was not a finding that there was no proper basis for the claim or that the plaintiffs were unjustified in bringing the claim. They simply failed to satisfy me to the requisite standard.

80 It is not appropriate to now separate the various issues for the purposes of determining costs. Even if, such as the question of whether the District Court had jurisdiction to hear a claim for breach of fiduciary duty, was capable of being dealt with as a discrete and severable issue, all issues and claims were clearly intertwined. The pursuit of the failed claims did not, in a 'significant and readily discernible way', add to the cost of the proceedings (see Amaca Pty Ltd (formerly James Hardie & Co Pty Ltd) v Hannell [7]).

81 Consequently, I see no reason to depart from the usual practice of allowing the plaintiffs in this case to have their costs paid by the second to fifth defendants. The issue of whether the plaintiffs' conduct unnecessarily added the costs in this case is further dealt with below.

Costs: Is the Magistrates Court scale the relevant scale to be applied?

82 It is not in dispute that the ultimate award of damages is well within the $75,000 jurisdictional limit of the Magistrates Court (Magistrates Court (Civil Proceedings) Act 2004 (WA), s 4). The defendants submit that if the plaintiffs had properly considered the issues to be litigated and the likely outcome, the appropriate jurisdiction to determine the matter would have been the Magistrates Court. The defendants also rely upon O 66 r 17(1) and r 17(2) of the RSC set out below:

1. Cases that Magistrates Court could have decided, costs in

(1) If an action is brought in the Supreme Court which could have been brought in the Magistrates Court without the special consent of the defendant, the plaintiff shall recover no greater sum by way of costs than he could have recovered had the action been brought in the Magistrates Court, unless the Court certifies that by reason of some important principle of law being involved, or of the complexity of the issues or of the facts, the action was properly brought in the Supreme Court.

(2) Where this rule applies a solicitor acting for a plaintiff shall not be entitled to charge his client any sum by way of costs in excess of that properly payable on a party and party basis in the Magistrates Court, unless the client has agreed in writing, before the proceedings are commenced, to pay on a higher scale, or the Court has certified that the action was properly brought in the Supreme Court.

83 I do not accept the defendants' submissions on this issue for a number of reasons.

84 Firstly, the question is not whether the ultimate amount of damages falls within the Magistrates Court jurisdiction, but rather whether it was proper at the time the proceedings were instituted to bring it in the District Court (see Civic Video Pty Ltd v Paterson (No 3) [2014] WASC 321 [35] - [38]; Vella v Ivanovski [1984] WAR 8; Michael Kellaway International Pty Ltd v Shark Bay Airport Pty Ltd (Unreported, WASC, Library No 980302, 25 March 1998) (per Kennedy J).

85 In Civic Video Pty Ltd v Paterson (No 3) Chaney J said [37]:

In Michael Kellaway International Pty Ltd v Shark Bay Airport Pty Ltd Kennedy J considered the provisions of s 74(2)(b) of the District Court of Western Australia Act 1969. That section was (prior to its amendment) drawn in terms which, relevantly, reflected the terms of O 66 r 17(1). Citing Vella v Ivanovski, Kennedy J identified the central test as whether the plaintiff in the case, when instituting proceedings, might reasonably have been expected to recover an amount in excess of the maximum of the jurisdiction of the Local Court.

86 In determining whether it was reasonable for the plaintiffs to bring the action in the District Court rather than the Magistrates Court, it is necessary to examine some of the history of the case.

87 The plaintiffs' original writ of summons, dated 18 September 2012, was filed in the District Court on 21 September 2012. It sought, amongst other damages, exemplary damages against the defendants. The original statement of claim was dated 6 November 2012. It claimed that the 'true market value' of the property was $220,000. This was a claim that was maintained right up to the time that the plaintiffs filed the 'Further Re-Amended Statement of Claim' dated 11 December 2015. On the bare face of the statement of claim the amount originally sought was well over the Magistrates Court's jurisdictional limit. The plaintiffs in this case pursued claims for damages well in excess of the jurisdiction of the Magistrates Court. They could not have instituted their claim for that amount in the Magistrates Court.

88 Furthermore, by letter dated 19 February 2015, the plaintiffs advised the defendants that they were seeking damages totalling $461,200, together with interest, equitable compensation, exemplary damages and legal costs (see 'CRC 6' annexed to the Cook Affidavit).

89 As late as 1 September 2015, the solicitors for the plaintiffs offered to settle the matter on the basis that the plaintiffs pay them the sum of $145,000 plus costs. This was put on the basis that a reassessment of damages had been undertaken. The reassessment included a new estimate, said to be between $85,000 - $100,000, based upon the difference between the purchase price and value of the property. This was the value said to have been assessed by Herron Todd White Valuers (see 'MAM 35' annexed to the McAuliffe Affidavit).

90 I note that at the time that proceedings were instituted and for some considerable time thereafter, the defendants maintained a position of bare denials with respect to the claims made against them. Whilst the plaintiffs clearly bore the onus of proving their allegations, I am satisfied on the basis of all the material filed, including: the McAuliffe Affidavit; the Pole Affidavit and the Cook Affidavit - that for a significant period of time the defendants' conduct did nothing to cast doubt on the plaintiffs claim that the value of the property purchased by the defendants was $220,000. In fact, at least one registrar of this court criticised the defendants' failure to provide substantive details of their defence.

91 The plaintiffs themselves also contributed to the delay in the finalisation of this case. I note that both the Pole Affidavit and the Cook Affidavit set out both the defendants' requests for further and better particulars of the plaintiffs' statement of claim, as well as the defendant's correspondence to the plaintiffs setting out why they believed that the plaintiffs' statement of claim was defective.

92 It is also clear that for a considerable period of time the plaintiffs laboured under an erroneous understanding of the importance of the properties purchased by RJR Investments for $220,000 each. This caused the plaintiffs to initially pursue a case based on a belief that the defendants were creating a false market by engaging in a profit-making scheme involving RJR Investments buying and on-selling properties at Cowrie for inflated values.

93 The defendants were required to file an amended defence by 21 February 2014. They failed to do so. The plaintiffs filed an application for a springing order due to the defendants' failure to file amended defences. The defendants were ultimately allowed to file further amended defences in July 2014.

94 By letter dated 24 November 2014, solicitors for the plaintiffs set out their understanding of the relevant facts (see 'MAM 6' annexed to the McAuliffe Affidavit). It was not until after the defendants filed an amended defence that the plaintiffs understood the relationships between the parties. Whilst the plaintiffs cannot blame the defendants for their misunderstanding of the facts relevant to the case, nonetheless the defendants did nothing to assist in the process.

95 Although all the defendants filed an amended defence in July 2014, it was not until September 2015, when the defendants filed minutes of proposed further amended defences, that any substantive defence was in fact provided by any of the defendants.

96 Given the claims they wished to pursue, although the damages ultimately awarded to the plaintiffs is below the amount of the civil jurisdiction of the Magistrates Court, in all the circumstances it was not unreasonable for the plaintiffs to have commenced and pursued their action in the District Court rather than the Magistrates Court. Order 66 r 17(1) does not apply in the present circumstances.

Costs: Should there be a 'special costs' order made?

97 The plaintiffs make application pursuant to s 280(2) of the Legal Profession Act 2008 (WA) (the LPA) to remove the limits on costs fixed in the relevant determination (although the McAuliffe Affidavit is sworn in support of an application for 'indemnity costs and in the alternative special costs' - see par 2 of McAuliffe Affidavit).

98 In Heartlink Ltd v Jones as Liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S), Martin CJ dealt with the issues to be addressed by a court where an application is made by a successful party to remove the limit on the costs which they would otherwise be able to recover from the losing party or parties. In dealing with the application (brought pursuant to s 215(2) of the Legal Practice Act 2003 (WA) (LPA) which then applied and is in identical terms to s 280(2) of the LPA), Martin CJ said [11]:

Before the court can make an order under the subsection, the court must form an opinion which has two components. The first is that 'the amount of costs allowable in respect of a matter under a legal costs determination is inadequate', and the second is that the inadequacy arises because of the 'unusual difficulty, complexity or importance of the matter'.

99 The plaintiffs rely upon the issues raised in the McAuliffe Affidavit to justify a claim that the case was one that was particularly complicated and document intensive. The plaintiffs' solicitors concede that until October 2015 they erroneously focused on issues that ultimately either came to naught, or played a limited role in the case that ultimately proceeded to trial. Whilst the confusion appears to be understandable, it would not now be appropriate to make an order requiring the defendants to pay additional costs which seem to be largely due to the plaintiffs' lawyers' errors. Furthermore, although the case was, to a degree, a complicated one, it was not so complicated or document intensive that it would justify the making of a special costs order.

100 On or about 19 February 2015, the plaintiffs provided to the defendants a document setting out their particulars of loss. This particularised a claim for damages, excluding equitable compensation and exemplary damages and legal costs, totaling $461,200. This did not include legal costs.

101 According to the Cook Affidavit, the parties participated in a mediation at the court on 24 February 2015 during which the plaintiffs offered to settle if the defendants paid them $750,000 in full and final settlement of the matter (see par 40 of the Cook Affidavit).

102 It is clear from the McAuliffe, Cook and Pole Affidavits that there were negotiations and further offers made 'without prejudice save as to costs' by the parties prior to trial. Some of the offers included:

• by letter dated 21 August 2015, the first to third defendants offered to pay the plaintiffs the sum of $60,000 'in full and final settlement of the proceedings' against them. The offer was made on the basis that it was 'without prejudice save as to costs'. It was also purported to be made in 'in accordance with the principles in Calderbank v Calderbank' (see Annexure KSP-44 to the Pole Affidavit being the letter dated 21 August 2015 addressed to the plaintiffs' solicitors);
• the plaintiffs responded by letter dated 1 September 2015 whereby they countered by offering to settle the matter by the defendants paying them the sum of '$145,000 plus costs to be taxed;'
• the fourth and fifth defendants, by letter dated 6 October 2015 made an offer to settle on the basis that they would pay the plaintiffs the sum of $60,000 in full and final settlement of the matter. The letter was made 'pursuant to the principles set out in Calderbank v Calderbank [1975] 3 All ER 333' and remained open for 3 days only;
• by email dated 8 December 2015, the plaintiffs offered to accept the amount of $200,000 in full and final settlement of the matter.

103 The Cook Affidavit also makes it clear that, as at 31 October 2014, the fourth and fifth defendants were prepared to contribute the sum of $30,000 towards a global offer from the defendants to settle the matter (see pars 48 and 49 of the Cook Affidavit and annexures 'CRC 15' and 'CRC 16'). This was ultimately reflected in the offer the fourth and fifth defendants made by letter dated 6 October 2015 (above).

104 The making of an offer of compromise in the form of a Calderbank letter (see Calderbank v Calderbank [1976] Fam 93), in circumstances where the offeree does not accept the offer and ultimately ends up worse off than if the offer had been accepted, is a matter to which the court may have regard when deciding whether to otherwise make the usual order for costs in favour of a successful party. All the circumstances must be considered. The question ultimately is whether the offeree's failure to accept the offer, in all the circumstances, warrants departure from the ordinary rule as to costs. The fact that the offeree ends up worse off than if the offer had been accepted does not of itself warrant departure. The question is whether a party's rejection of a Calderbank offer was unreasonable in all the circumstances: see SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 [37]; Jones v Bradley (No 2) [2003] NSWCA 258 [7] - [9]; Leichhardt Municipal Council v Green [2004] NSWCA 341 [46]; Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298; (2005) 13 VR 435 [23]; Berrigan Shire Council v Ballerini (No 2) [2006] VSCA 65 [10]; Ghunaim v Bart (No 2) [23]; [17] (Buss JA).

105 In Ford Motor Co of Australia Ltd v Lo Presti Buss JA summarised some of the principles relating to Calderbank offers. In considering whether to apply the Calderbank offer, the court needs to consider whether the rejection of the Calderbank offer by a party was unreasonable. In that regard, Buss noted that:

1. The mere fact that the recipient of a Calderbank offer is ultimately worse off than he or she would have been had the offer been accepted, does not mean that its rejection was unreasonable. See SMEC [37].
2. As the Court of Appeal of Victoria noted in Hazeldene's Chicken Farm, deciding whether conduct is 'reasonable' or 'unreasonable' always involves matters of judgment and impression [24]. Although it is neither possible nor desirable to enumerate exhaustively all circumstances which must be taken into account, in a particular case, in deciding whether the rejection of a Calderbank offer was unreasonable, the Court of Appeal said that, ordinarily, regard should be had to, at least, the following:

(a) the stage of the proceeding at which the offer was received;

(b) the time allowed to the offeree to consider the offer;

(d) the offeree's prospects of success, assessed as at the date of the offer;

(e) the clarity with which the terms of the offer were expressed; and

(f) whether the offer foreshadowed an application for ... indemnity costs in the event of the offeree's rejecting it. [25].

The plaintiffs' submissions in relation to the Calderbank offer

106 So far as the Calderbank offer is concerned, the plaintiffs point to the fact that the Calderbank offer was made on the basis of $60,000 inclusive of costs. The plaintiffs submit that, since the question is not only whether the plaintiffs would have been better off accepting such offer, but also whether it was unreasonable to reject it, an offer made on the basis that it was inclusive of costs now makes it difficult, if not impossible, to determine whether it was unreasonable to reject the offer.

The second and third defendants' submission in relation to the Calderbank offer

107 Ultimately, the second and third defendants submit that had the plaintiffs accepted the sum of $60,000 offered by the defendants, they would have been better off than the position that they now face after trial. Furthermore, it is submitted that the plaintiffs' rejection of the letter was unreasonable.

108 The first question to consider is whether the plaintiffs would have been better off, had they accepted the offer made by the first to third defendants on or about 21 August 2015 that the matter be settled by them paying the sum of $60,000 in full and final settlement. The difficulty with this task is that the offer was made inclusive of costs. I have no information before me as to what the plaintiffs' costs are now, or were at any stage of the proceedings. I do not know what the plaintiffs' costs were as at 21 August 2015. I have been advised that the fourth and fifth defendants' costs, as at 14 September 2016, were 'approximately $160,000' (see Cook Affidavit par 50). Consequently, I am unable to conclude that the plaintiffs would have been better off if they had accepted the offer made to them to settle in the amount of $60,000 inclusive of costs.

109 In the event that I was able to assess the first question, I would not have applied the Calderbank offer in any event. In my view the plaintiffs' rejection of the offer cannot be said to have been 'unreasonable'. In arriving at this conclusion I note that, by letter dated 20 February 2015, Mr Myers had provided to the plaintiffs' solicitors a written estimate of the property. The estimate, being 'in the range of $270,000 - $285,000 (ex-furniture),' was based upon a 'desktop valuation' of the property. Mr Myers' expert report was dated 11 November 2015 (see exhibit 46). Consequently, at the time of receiving the Calderbank offer from the first to third defendants, the plaintiffs had information from an expert property valuer that the property was worth anywhere between $38,200 and $23,800 more than I have ultimately concluded it was worth. Leaving aside their other claims, based on the estimated value of the property alone, it cannot now be said that the plaintiffs' rejection of the defendants' Calderbank offer was in all the circumstances unreasonable.

The form of orders necessary to give effect to any apportionment between the defendants

110 In my view, to give effect to the proper apportionment between the defendants, the court's orders will be as follows:

(a) The fourth defendant shall pay the first and second plaintiffs the sum of $3,385.80.

(b) The fifth defendant shall pay the first and second plaintiffs the sum of $3,385.80.

(c) The second and third defendants shall pay the first and second plaintiffs $30,848.40.

(d) The second to fifth defendants shall pay the first and second plaintiffs' costs, to be assessed on the scale applicable to the District Court of Western Australia, such costs to be taxed if not agreed.