Australian Competition & Consumer Commission v Michigan Group Pty Ltd

BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

REASONS FOR JUDGMENT 1 This judgment is divided into the following parts: · INTRODUCTION · THE CLAIMS · EVIDENCE FROM INVESTORS · EVIDENCE CONCERNING THE SITES · EVIDENCE FROM, OR ON BEHALF OF THE RESPONDENTS · CONCLUSIONS · ORDERS

INTRODUCTION 2 The applicant ("ACCC") seeks injunctive and other relief pursuant to the Trade Practices Act 1974 (Cth) (the "Act") against various respondents. The first respondent ("Michigan") is in liquidation and so no relief is now sought against it. The second respondent ("Mr Laski"), the fifth respondent ("Mr Peter Semos"), the sixth respondent ("Mr George Semos") and the seventh respondent ("Mr Doherty") all appeared in person at various stages during the proceedings. The third respondent ("Mr Cameron") has not appeared, either in the action or at the trial. The ninth respondent ("Ms Moretto") is in prison and has similarly not appeared. Proceedings have been discontinued as against the tenth respondent. Mr Peter Semos was given leave to appear on behalf of the fourth respondent which traded under the name Queensland Juice Company and is hereafter so described. He was a director of that company. Ms Moretto was a director of the eighth respondent ("Yeppoon") which also has not appeared. At all relevant times Mr Laski was a director of Michigan. ACCC eventually abandoned any claim to relief as against Mr George Semos. 3 ACCC alleges that from some time in early 1998 until some time in early 2000, Michigan promoted a scheme involving the distribution of orange juicing machines. It is alleged that the other respondents all participated in some way in the promotion of that scheme. Without wishing to pre-empt any findings in the matter, I observe that Mr Laski seems to have been in control of Michigan. That company was to acquire juicing machines for sale to investors. The machines were to be located in existing retail outlets at no cost to the retailers. The retailer was to assume responsibility for operating the machine and was expected to purchase bottles and caps from the relevant investor. The profit on such sale was to be the investor's return on his or her investment. The retailer was to profit from the sale of orange juice. Although it is not entirely clear, Michigan may have actually acquired machines from Queensland Juice Company or Mr Peter Semos who effectively controlled the latter company. There is mention in the evidence of another Michigan company, but no relevant distinction was drawn between its actions and those of Michigan. Queensland Juice Company was to find commercial sites in which to install the machines and then install them. Mr George Semos worked for Queensland Juice Company or for Mr Peter Semos. Mr Cameron worked for Michigan. Mr Doherty worked for Michigan or for Mr Cameron. On 8 April 1999 Yeppoon was appointed by Michigan to be Queensland distributor of the orange juicing machines. Ms Moretto apparently controlled its activities. 4 ACCC alleges that the corporate respondents have breached ss 52, 53, 58 and 59 of the Act and that the respondents who are natural persons were involved in such breaches. The breaches were allegedly constituted by various representations made by one or more of the respondents to one or more of the investors or, in the case of alleged breaches of s 58, by the receipt of money.

THE CLAIMS 5 Paragraph 22 of the statement of claim is as follows: From about early 1998, the Respondents promoted and participated in a scheme whereby: (a) persons ('the investors') would purchase a business ('the business') including one or more commercial orange juicing machines ('the machines') from (Michigan); (b) (Queensland Juice Company) would import parts for the machines and would assemble the machines in Australia; (c) (Queensland Juice Company) would sell the machines to (Michigan); (d) the machines would be installed in nominated retail fruit outlets arranged by (Michigan) or alternatively (Queensland Juice Company); (e) (Michigan) or alternatively (Queensland Juice Company) would have a representative of the retail fruit outlets sign a standard form Machine Supply Site Agreement; (f) (Michigan) or alternatively (Queensland Juice Company) would arrange for labels to be manufactured and placed on 2-litre plastic bottles, showing the retail fruit outlet concerned; (g) the investors would purchase the labelled 2-litre plastic bottles ('the bottles') from (Michigan) or alternatively (Queensland Juice Company) at a price, in the case of some investors of $0.50 per bottle and, in the case of other investors $1.00 per bottle; (h) (Queensland Juice Company) would train the staff of the retail fruit outlet in the operation of the machines on site; (i) (Queensland Juice Company) would provide maintenance of the machines on site for a period of 12 months; (j) the investors would on-sell the bottles to the retail fruit outlets at $1.50 per bottle, thereby making profits; (k) the retail fruit outlets would supply oranges and use the machines and the bottles to sell freshly squeezed orange juice to their customers in-store; (l) persons ('the distributors') would purchase a business ('the distribution business') from (Michigan); (m) the distributors would sell the machines to the investors within the respective distributor's allocated exclusive territory, and would receive part of the price of the bottles sold to the investors within the territory, by (Michigan) or alternatively (Queensland Juice Company), thereby making profits. 6 Broadly speaking, the relevant representations appear in par 23 of the statement of claim. They are identified below in slightly paraphrased form. The identifying lower case letters relate to the relevant subparagraphs of par 23. The representations were that: (a) Michigan, or alternatively Queensland Juice Company had agreements with large supermarket chains such as Franklins for the use by those supermarket chains of the machines; (b) Michigan had formed an alliance with some of the major supermarket chains in Australia for the use by those supermarket chains of the machines; (c) Michigan, or alternatively Queensland Juice Company had a two year contract with Franklins for the use by Franklins of the machines; (d) Michigan, or alternatively Queensland Juice Company had a contract with Franklins for a period of twelve months for the use by Franklins of the machines, at the end of which period the contract would be renewed; (e) Michigan, or alternatively Queensland Juice Company had entered into an agreement with Franklins for use of the machines by supermarkets in Asia associated with Franklins; (f) Michigan, or alternatively Queensland Juice Company had an agreement with Franklins for the use by Franklins of the machines in Franklins Fresh stores and Big Fresh stores; (g) Michigan, or alternatively Queensland Juice Company had an agreement with Franklins for the use by Franklins of the machines in Franklins stores in Queensland; (h) Michigan, or alternatively Queensland Juice Company had a contract with Franklins for the use by Franklins of the machines in all Franklins Big Fresh stores; (i) Queensland Juice Company had an agreement, arrangement or affiliation with Franklins Big Fresh for the use by Franklins Big Fresh of the machines; (j) Michigan, or alternatively Queensland Juice Company had contracts with approximately forty Franklins Big Fresh stores for the use by those stores of the machines; (k) Queensland Juice Company had an agreement, arrangement or affiliation with Davids for the use by Davids of the machines; (l) Michigan, or alternatively Queensland Juice Company had an agreement with Duffy Brothers for the use by Duffy Brothers of the machines; (m) Michigan, or alternatively Queensland Juice Company had entered into an agreement with the SPAR supermarket chain for the use by that supermarket chain of the machines; (n) Michigan, or alternatively Queensland Juice Company had an agreement with the Coco's store chain for the use by that chain of the machines; (o) Michigan, or alternatively Queensland Juice Company would be entering into an agreement with Coles for the use by Coles of the machines; (p) Michigan, or alternatively Queensland Juice Company had an agreement with Coles for the use by Coles of the machines; (q) some Coles stores were selling 120 of the bottles per day; (r) Queensland Juice Company had an agreement, arrangement or affiliation with Coles for the use by Coles of the machine; (s) Michigan, or alternatively Queensland Juice Company had an arrangement with Woolworths and Coles for the use by Woolworths and Coles of the machines in their stores in 2000; (t) Michigan, or alternatively Queensland Juice Company was negotiating with Woolworths and Coles for the use by Woolworths and Coles of the machines; (u) the alliance with some of the supermarket chains in Australia would ensure a constant supply of new sites at which the machines could be installed; (v) supermarkets could be relied upon as a source of new and ongoing business for the distributors; (w) Michigan, or alternatively Queensland Juice Company had secured arrangements with major retailers throughout Australia for the use by those persons of the machines; (x) Michigan, or alternatively Queensland Juice Company had arrangements with large fruit and vegetable stores for the use by those stores of the machines; (y) Michigan, or alternatively Queensland Juice Company had arrangements with many very high volume independent stores for the use by those stores of the machines; (z) the machines were state-of-the-art; (aa) the machine could be cleaned in eight to ten minutes and did not need to be pulled apart for cleaning; (bb) the machines had been health and safety checked; (cc) very little work or time commitment would be required of investors to operate the business; (dd) impliedly, that investors could, or could to a considerable extent, conduct the business from the investor's place of residence; (ee) that prime sites would sell far more than 300 of the bottles per week in respect of each of the machines; (ff) the business would earn income for the investors on a full-time basis; (gg) the business would earn an income for the investors from day one; (hh) the potential income that the investors would earn from the business would be in accordance with the following figures: Number of bottles sold in a day 20 30 40 50 Your profit per machine per day $20.00 $30.00 $40.00 $50.00 Your profit over 5 machines per day $100.00 $150.00 $200.00 $250.00 Your profit over 7 days $700.00 $1,050.00 $1,400.00 $1,750.00 Your profit per year $36,400.00 $54,600.00 $72,800.00 $91,000.00 % return on your investment 72% 91% 121% 150%

(ii) a good site could get two or three times the sales specified in the top of the range in the following figures: Number of bottles sold in a day 20 30 40 50 Your profit per machine per day $20.00 $30.00 $40.00 $50.00 Your profit over 5 machines per day $100.00 $150.00 $200.00 $250.00 Your profit over 7 days $700.00 $1,050.00 $1,400.00 $1,750.00 Your profit per year $36,400.00 $54,600.00 $72,800.00 $91,000.00 % return on your investment 72% 91% 121% 150%

(jj) the potential income that the investor would earn from the business would be in accordance with the following figures: Number of bottles sold in a day 20 30 40 50 Your profit per machine per day $20.00 $30.00 $40.00 $50.00 Your profit over 5 machines per day $100.00 $150.00 $200.00 $250.00 Your profit over 7 days $700.00 $1,050.00 $1,400.00 $1,750.00 Your profit per year $36,400.00 $54,600.00 $72,800.00 $91,000.00 % return on your investment 56% 84% 112% 140%

(kk) the potential income that the investors would earn from the business would be in accordance with the following figures: Number of bottles sold in a day 40 60 80 Your profit per machine per day $20.00 $30.00 $40.00 Your profit over 5 machines per day $100.00 $150.00 $200.00 Your profit over 7 days $700.00 $1,050.00 $1,400.00 Your profit per year $36,400.00 $54,600.00 $72,800.00

(ll) the potential income that the investor would earn from the business would be in accordance with the following figures: Per 5 Machines Number of bottles sold in a week 350 450 550 650 750 Profit in a week $875 $1,125 $1,375 $1,625 $1,875 Profit in a month $3,500 $4,500 $5,500 $6,500 $7,500

(mm) the potential income that the investor would earn from the business would be in accordance with the following figures: $ Value Return on 30 Machines Per week $9,720 Per month $41,796 Per annum $501,552

(nn) the potential income that the investor would earn from the business would be in accordance with the following figures: Number of bottles sold in a day 20 40 60 Your profit per machine per day $10 $20 $30 Your profit over 5 machines per day $50 $100 $150 Your profit over 7 days $350 $700 $1050 Your profit per year $18,200 $36,400 $54,600 Based on 20 machines $364,000 $728,000 $1,090,200

(oo) the investor could make a profit of $500.00 or more per week from each of the machines; (pp) other investors had made a profit of $500.00 or more per week from each of the machines; (qq) some of Michigan's trial sites for the machines had sold over 100 of the bottles in one day of trading; (rr) other investors were making $1,000.00 per month; (ss) the expected volume from a grade "A" site was 720 of the bottles each two weeks, and anything in the range of 300 to 400 of the bottles per week; (tt) Michigan, and further or alternatively Queensland Juice Company was positive the machines would sell 200 of the bottles per week; (uu) certain retail fruit outlets at which the machines would be sited would sell a minimum of 200 of the bottles per week; (vv) certain retail fruit outlets at which the machines would be sited would sell a minimum of 500 of the bottles per week; (ww) investors in Queensland were earning income from the business in accordance the following figures: Number of bottles sold in a day 40 60 80 Your profit per machine per day $20.00 $30.00 $40.00 Your profit over 5 machines per day $100.00 $150.00 $200.00 Your profit over 7 days $700.00 $1,050.00 $1,400.00 Your profit per year $36,400.00 $54,600.00 $72,800.00

(xx) one of the machines sited in Queensland was averaging sales of 400 of the bottles per week; (yy) investors in New South Wales would sell at least 60 to 100 of the bottles per week; (zz) some sites were selling over 100 of the bottles in a busy day; (aaa) some sites were selling over 500 of the bottles in a busy week; (bbb) other investors were selling in excess of 500 of the bottles per week; (ccc) on average the machines of current investors were selling 70 to 80 of the bottles per day; (ddd) some sites were selling more than 40 of the bottles per day; (eee) some sites were selling more than 60 of the bottles per day; (fff) some sites in Queensland were selling 100 of the bottles per day; (ggg) one of the machines was in use at the Darling Harbour Fish Markets and was selling 120 of the bottles per day on some days; (hhh) poor to average stores sold 350 to 400 of the bottles per week and good to excellent stores could sell 800 to 1,000 of the bottles per week; (iii) a small scale store would sell a couple of hundred of the bottles per week; (jjj) there was about 40 per cent to 50 per cent profit in being an investor; (kkk) there was a lot of money to be made from the distribution business; (lll) the potential for sale by the distributor for New South Wales was well over 300 of the machines, with the distributor's profit being $600,000.00; (mmm)the potential for sales by the distributor for Victoria was well over 200 of the machines, with the distributor's profit being $400,000.000; (nnn) the distributor for New South Wales would make a profit of $2,000.00 on each of the machines sold in that state, or $10,000.00 for every territory of five of the machines, sold by the distributor; (ooo) the distributor for Victoria would make a profit of $3,000 on each of the machines sold in that state, or $10,000 for every territory of five of the machines, sold by the distributor; (ppp) the supply of oranges for juicing by use of the machines would be maintained throughout the entire calendar year; (qqq) the business concept was sound; (rrr) there was an investor who had already purchased ten (10) of the machines; (sss) one investor had purchased 100 of the machines at the Franchise and Investment Expo at the Sydney Convention and Exhibition Centre, Darling Harbour held during March 1999; (ttt) well over 100 of the machines had been sold at the Brisbane Expo and about 140 of the machines as a result of the Sydney Expo; (uuu) Michigan, or alternatively Queensland Juice Company had around 100 of the machines sited in Queensland; (vvv) there was a warehouse facility available at Homebush, New South Wales, for use by investors for storage of the bottles prior to delivery to retail fruit outlets; (www)investors could expect to make well in excess of the written profit projections; (xxx) the machines being offered to investors would be installed and operational at nominated or agreed retail fruit outlet sites within short periods thereafter; (yyy) the machines that had been purchased by investors had been installed at nominated or agreed retail fruit outlets; (zzz) Coles had sought to enter into an agreement with Michigan or alternatively Queensland Juice Company in relation to the use by Coles of the machines; (aaaa) impliedly, that the business being sold to the investors, including the machines, involved an established and tested business concept or system, which had already proven to be successful for other investors. 7 Paragraphs 24, 25 and 26 of the pleading are as follows: 24. Insofar as the representations referred to in paragraph 23 of this pleading were representations as to future matters, the Respondents impliedly represented that there were reasonable grounds for making those representations. 25. By the representations referred to in paragraph 23 of this pleading, the Respondents invited persons to engage or participate in a business activity requiring the investment of moneys and the performance by them of work associated with the investment. 26. In reliance upon the representations referred to in paragraph 23 of this pleading and induced thereby, persons made payments or gave other consideration to (Michigan) or alternatively (Queensland Juice Company) or alternatively (Yeppoon) for the purchase of the businesses, the purchase of the distribution businesses, the supply of the machines, the supply of the bottles, and the provision of services associated with the machines and the provision of services associated with the bottles, namely those services referred to in paragraph 22 of this pleading, which payments or consideration were accepted by (Michigan) or alternatively (Queensland Juice Company) or alternatively (Yeppoon). 8 The extreme diversity of the pleading reflects the fact that ACCC impugns the conduct of one or more respondents in dealing with no fewer than fourteen different investors (treating Mr and Mrs Kirkwood as one investor). The circumstances surrounding each investment were unique to it. The factual bases of the claims against the various respondents also differ. In the original application, ACCC primarily claimed relief of the protective kind, designed to restrain or avoid future breaches of the Act and/or to facilitate public warnings as to the respondents' activities. However par 7 of the prayer for relief sought: Findings pursuant to section 83 of the Trade Practices Act 1974 (Cth) of the facts that constitute the respects in which the conduct of the Respondents referred to in the Statement of Claim is in contravention of the provisions of Part V of the Trade Practices Act 1974 (Cth). 9 It emerged in the course of the hearing that although the relief sought was of the protective kind, ACCC had in mind the possibility that it might subsequently seek compensation on behalf of investors pursuant to subss 87(1A) and (1B) of the Act, relying in any such claim upon the provisions of s 83 of the Act. Section 87 of the Act, as it was prior to the amendments made by the Trade Practices Act Amendment Act (No 1) 2001 (Cth), provided as follows: (1) … (1A) Without limiting the generality of section 80, the Court may, on the application of a person who has suffered, or is likely to suffer, loss or damage by conduct of another person that was engaged in (whether before or after the commencement of this subsection) in contravention of a provision of Part IVA, IVB or V or on the application of the Commission in accordance with subsection (1B) on behalf of such a person or 2 or more such persons, make such order or orders as the Court thinks appropriate against the person who engaged in the conduct or a person who was involved in the contravention (including all or any of the orders mentioned in subsection (2)) if the Court considers that the order or orders concerned will compensate the person who made the application, or the person or any of the persons on whose behalf the application was made, in whole or in part for the loss or damage, or will prevent or reduce the loss or damage suffered, or likely to be suffered, by such a person. (1B) Where, in a proceeding instituted for an offence against section 79 or instituted by the Commission or the Minister under section 80, a person is found to have engaged (whether before or after the commencement of this subsection) in conduct in contravention of a provision of Part IVA, IVB or V, the Commission may make an application under subsection (1A) on behalf of one or more persons identified in the application who have suffered, or are likely to suffer, loss or damage by the conduct, but the Commission shall not make such an application except with the consent in writing given before the application is made by the person, or by each of the persons, on whose behalf the application is made. (1C) An application may be made under subsection (1A) in relation to a contravention of Part IVA, IVB or V notwithstanding that a proceeding has not been instituted under another provision of this Part in relation to that contravention. (1CA) An application under subsection (1A) may be commenced: (a) in the case of conduct in contravention of Part IVA - at any time within 2 years after the day on which the cause of action accrued; or (b) in any other case - at any time within 3 years after the day on which the cause of action accrued. (1D) For the purpose of determining whether to make an order under this section in relation to a contravention of Part IVA, the Court may have regard to the conduct of parties to the proceeding since the contravention occurred. (2) The orders referred to in subsection (1) and (1A) are: (a) an order declaring the whole or any part of a contract made between the person who suffered, or is likely to suffer, the loss or damage and the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct, or of a collateral arrangement relating to such a contract, to be void and, if the Court thinks fit, to have been void ab initio or at all times on and after such date before the date on which the order is made as is specified in the order; (b) an order varying such a contract or arrangement in such manner as is specified in the order and, if the Court thinks fit, declaring the contract or arrangement to have had effect as so varied on and after such date before the date on which the order is made as is so specified; (ba) an order refusing to enforce any or all of the provisions of such a contract; (c) an order directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct to refund money or return property to the person who suffered the loss or damage; (d) an order directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct to pay to the person who suffered the loss or damage the amount of the loss or damage; (e) an order directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct, at his or her own expense, to repair, or provide parts for, goods that had been supplied by the person who engaged in the conduct to the person who suffered, or is likely to suffer, the loss or damage; (f) an order directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct, at his or her own expense, to supply specified services to the person who suffered, or is likely to suffer, the loss or damage; and (g) an order, in relation to an instrument creating or transferring an interest in land, directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct to execute an instrument that: (i) varies, or has the effect of varying, the first-mentioned instrument; or (ii) terminates or otherwise affects, or has the effect of terminating or otherwise affecting, the operation or effect of the first-mentioned instrument. … 10 Section 83 provides: In a proceeding against a person under section 82 or in an application under subsection 87(1A) for an order against a person, a finding of any fact by a court made in proceedings under section 77, 80, 80A or 81, or for an offence against section 79, in which that person has been found to have contravened, or to have been involved in a contravention of, a provision of Part IV, IVA, IVB or V is prima facie evidence of that fact and the finding may be proved by production of a document under the seal of the court from which the finding appears. 11 In the course of the hearing, ACCC amended its prayer for relief to that which now appears in exhibit 13. By reference to that exhibit and to the statement of claim, it can be seen that the first prayer as against each of the respondents is for "findings/declarations" concerning the misrepresentations allegedly made to the various investors. There are seventy-nine different representations allegedly made to fourteen investors (again treating Mr and Mrs Kirkwood as one investor). Although there were common themes in the representations, there were also differences. Not all representations were made by all respondents. In some cases legal responsibility for representations will depend upon issues of agency. 12 Causes of action involving numerous claimants are by no means unknown to the law. Techniques have been developed to deal with them including, in particular, the class action. Those techniques focus on common issues with a view to resolving them in a way which will be binding on all parties. Issues peculiar to individual claimants may then be resolved separately. This approach assumes substantial common issues. Superficially, there are common issues in the investors' claims. They are principally: ® the apparent similarity of the representations made to different claimants by one or other of the respondents; and ® the accuracy or otherwise of certain common themes in those representations. 13 However, when one looks more closely at the evidence, these "similarities" are shown to be illusory. This is for two main reasons. Firstly, all potential claims will involve allegations of loss as a result of reliance upon representations which were essentially untrue. In any proceedings seeking compensation for such loss, the extent to which each claimant's state of mind concerning the relevant investment was formed in reliance upon the impugned conduct will be the key to recovery. That will involve an assessment of the conduct of the representors in the context in which it occurred. That representations in broadly similar terms were made to different investors will not necessarily lead to the conclusion that each investor relied upon such representations in the same way, to the same extent or at all. In the present case, for example, many investors received documentary representations in identical or very similar forms. In most, if not all cases, these representation were followed up by other, more specific representations. In all probability the earlier, and arguably common, representations ceased to operate on the decision-making process of the particular investor when the more specific representations were made. This was not a case in which each investor merely responded to the same advertisement. There was substantial personal contact between each of them and one or more of the respondents, involving oral representations which were unique in each case. Secondly, it is at least possible that some of the representations were misleading when made to some investors but not when they were made to others. 14 Some examples of the differences in the positions of the various investors are: ® Mr Rotheram, on any view of the evidence, purchased his machines from Queensland Juice Company and not from Michigan, although he had previously agreed to acquire machines from Michigan. The change in arrangement was brought about by a secret transaction between him and Mr Semos. He can hardly have relied upon representations made as to the arrangements made by Michigan for the siting of machines purchased from it. ® Mr Ellis acquired distribution rights for the juicing machines, swapping those rights for an interest which he had, pursuant to an agreement with Michigan, in the marketing of slush (iced drink) machines. He agreed to the swap because he was dissatisfied with the slush machine business and saw the juicing machine business as a better prospect. He was clearly aware of the uncertain nature of the arrangements with retailers for the siting of the orange juicing machines. Allegedly misleading representations as to such arrangements were important in inducing other investors to enter the Michigan scheme. ® Mr Carter purchased six machines for a total investment of $71,940. All six were sited, and Mr Carter appears to have been quite satisfied with his investment until the price of oranges rose unexpectedly. It will be difficult for Mr Carter to rely, in any compensation claim, upon misrepresentations as to siting arrangements. ® Ms Lasser deliberately chose not to deal with Michigan and understood that she was acquiring her machines from Mr Semos and/or Queensland Juice Company. This was because either Mr Doherty (on Ms Lasser's version) or Ms Lasser (on Mr Doherty's version) had learnt something unfavourable about Mr Laski. Either Ms Lasser decided not to deal with him or his company or Mr Doherty decided that he did not wish to do so. ® Neither Ms Lasser nor Mr Kwon received documentary representations. ® Mr Nemes was an undischarged bankrupt and apparently proposed to trade through a company, NTD Constructions Pty Ltd. He was not a director of that company, presumably because of his position as an undischarged bankrupt. No director was called. Mr Nemes referred to it as "his" company. Nonetheless one would think that there would be issues concerning reliance arising out of this anomalous situation. 15 Clearly, ACCC's purpose in seeking findings/declarations is related to proceedings which may be commenced in the future, seeking compensation on behalf of investors, and not to any present claim to protective relief. That relief includes injunctions, orders for the publication of notices and orders that the natural persons who are respondents undertake education and training courses concerning compliance with the Act. The injunctive relief seems to go beyond what might be thought reasonable in order to demonstrate that the respondents had contravened the Act and to protect the public from similar misconduct. Injunctions are sought to restrain quite specific conduct which could easily be avoided by anybody who was intent upon continuing to market this scheme. One would have thought it better to identify the common elements of the representations and to frame the injunctive relief upon a more general basis. A member of the public could only be confused by such a plethora of legalese as is presently sought. I suspect that the injunctive relief has been tailored to give apparent support to the prayer for declaratory relief. 16 There is no express power in the Act to grant declaratory relief of the kind here sought. However, s 21 of the Federal Court Act 1976 (Cth) (the "Federal Court Act") confers a general power to make binding declarations of right. Such relief would not generally be granted under the general law if the only purpose in seeking it was its possible use in other anticipated proceedings. Various policy considerations militate against such a course. For present purposes, the most compelling is that it cannot be said with certainty that any of these declarations will ever be put to any valuable use. It is not certain that claims for compensation will be made on behalf of any of the various investors. Even if such a claim is made, it is unlikely that all of the representations which have been alleged by any one investor will have to be proven on the balance of probabilities. As I have previously observed, a claim for compensation will focus upon those matters which induced a particular investor to part with his or her funds. It is likely that in many cases, earlier representations will have been overtaken by later, more specific representations. This is particularly true of the various documentary representations. 17 Had the investors sought to recover compensation they may have done so by way of class action, assuming sufficient common issues. I doubt whether there are sufficient common issues to justify a class action. The facts surrounding arrangements made by Michigan and/or Queensland Juice Company with various retailers would have been common, but that is a relatively small part of the case. Some common documentation was used, but it is by no means clear that such documentation constituted a major incentive for some or all investors to enter into the scheme. This case is really made up of fourteen claims, each based primarily upon dealings between one or more respondents and each of the investors. In other words, fourteen different claims have been joined in the same proceedings. This has been done under the guise of a claim for injunctive relief which is, of course, designed, not to protect those who have already entered the scheme, but those who have not. 18 It is appropriate for ACCC to seek to demonstrate that past misconduct has contravened the Act and to obtain orders which will assist it in preventing future misconduct and in warning the public. However such relief would have been designed to identify and prohibit the substance of the alleged misrepresentations rather than the various forms in which it was made to particular investors. 19 ACCC may have considered that it was not asking the Court to do any more than it would have had to do in the sum total of the fourteen cases. This is incorrect. In determining whether or not an individual investor had acted in reliance upon a representation, it would not have been necessary to determine whether every conceivable representation made to that investor was established on the balance of probabilities. It would only have been necessary to determine whether or not it was possible to infer from the whole of the evidence that particular factual representations had been made and acted upon by the investor. 20 It is likely that the structure of the case made it more difficult for the respondents than was necessary. A respondent faced with the prospect of an extended trial, involving many claims against numerous respondents, may well decide that he or she cannot afford to be represented. None of the respondents in this case was represented at the trial. On the other hand, a respondent faced with a case concerning his or her own involvement in the matter may be able to afford the cost of a much shorter trial. The decision as to legal representation may also be affected by the relief sought. Where no substantial financial relief or penalty is sought against a respondent, he or she might well choose not to incur the costs of such representation. For this reason, too, the course adopted by ACCC in this case was undesirable. 21 Numerous other difficulties arose in the course of this trial, resulting from the unfortunate joinder of causes of action, but it is not necessary to go into them in detail. I should say that as the difficulties emerged, counsel for ACCC tried very hard to assist, but in the end, it was beyond even their substantial experience. I received very little assistance in terms of marshalling the evidence to reflect the cases of the various investors or to demonstrate the ways in which evidence concerning one investor or one respondent might affect other aspects of the case. Having tried to so marshal the facts myself, I entirely understand why they chose not to do so. It is not always possible to reduce fundamentally flawed proceedings to a form in which they can be resolved in accordance with received views and expectations as to the integrity of the judicial process. I should also say that I accept some responsibility for these unfortunate circumstances. Had I acquired a deeper understanding of the case in the course of its management prior to trial, I would have taken steps to resolve the problem. 22 The point of all of this is simply that ACCC should not have sought to conduct proceedings designed to advance individual claims under the guise of seeking quite different forms of relief. Had the matter been identified as a series of claims for compensation by, or on behalf of investors, the difficulties would have been obvious and appropriate orders made at an early stage. This was not done because the proceedings appeared to be something other than that which they were. The problem has arisen because ACCC has tried to make ss 83 and 87 do rather more than they were intended to do. Parliament certainly contemplated that there would be issues resolved in proceedings brought by ACCC which would be relevant in subsequent claims brought by, or on behalf of persons who suffered loss as a result of the conduct in question. However I do not accept that it was intended that ACCC should simply run a large number of quite separate proceedings under the guise of seeking more general relief. I do not mean to imply any misconduct by ACCC. I have no doubt that it was motivated by a desire to do its duty, both towards the public and towards individual investors. However the course which was adopted was, in the circumstances of this case, inappropriate. 23 ACCC may have been influenced in its conduct of these proceedings by a line of cases which includes the decision of Pincus J in Trade Practices Commission v Friendship Aloe Vera Pty Ltd (1988) ATPR 40-892, that of Drummond J in ACCC v The Shell Company of Australia Ltd (1997) 72 FCR 386 and that of Lindgren J in ACCC v Giraffe World Australia Pty Ltd (1998) 84 FCR 512. Those cases established that ACCC may not commence proceedings on behalf of other persons pursuant to subs 87(1B) until a determination has been made that the respondent had contravened a relevant provision of the Act. Drummond J held that ACCC could not, in an initiating application for relief other than relief pursuant to s 87, seek relief pursuant to subs 87(1B) in anticipation of its establishing a relevant contravention. Although I appreciate the textual justification for that view, I consider that the application and subsequent pleadings in a case are primarily designed to give notice to the respondent of the case which he or she must meet. I would have thought that ACCC might properly indicate in those documents that should a relevant contravention be established, a claim would be made pursuant to subs 87(1B). 24 Given these difficulties it is necessary to determine how I should proceed. These proceedings are primarily for declaratory and injunctive relief. Whilst the power to grant an injunction pursuant to Part VI is arguably wider than is the power under the general law (see in particular subss 80(4) and (5)), it is still discretionary, as is any power to make a declaration. A court will not generally make such orders unless they will serve some useful purpose. ACCC does not demonstrate such a purpose merely by indicating a possible future claim for compensation on behalf of investors. I have some doubts as to the availability of much of the relief sought in exhibit 13. I will deal with that matter at a later stage. Whilst injunctive relief of some kind may be appropriate, it is difficult to see any value in those presently sought. In the circumstances it may be better to consider the facts of the case, making appropriate findings. I will then adjourn the matter to enable the parties to make appropriate submissions as to relief. In considering the evidence, however, I propose to be selective, identifying those aspects which may be arguably relevant for the purposes of this action as presently constituted. However I will also keep in mind the possibility of subsequent claims for compensation.

EVIDENCE FROM INVESTORS 25 This evidence identifies the conduct which is the subject matter of the proceedings. In most cases investors purchased machines for siting in retail outlets. A few investors acquired, or were interested in acquiring distribution rights. The alleged contraventions primarily involved representations made in connection with the sale of fruit juicing machines as to: ® arrangements for siting them at existing retail outlets; and ® profitability of investment in such machines. 26 Other representations are alleged. I will mention them when appropriate. I will deal with the investors in more or less temporal sequence. Where detailed consideration of documents is necessary, I will include those documents in schedules which, for ease of reference, will be bundled separately from the reasons. I will generally only include documents which contain relevant representations, focussing on representations made prior to decisions to invest.

Graeme Raymond Ellis Persons Spoken to - Mr Laski, Mr Cameron, Mr Semos, Mr Franzese Relevant documents - See Schedule 1 Payments Made: Date Amount Reason for Payment July 1999 $150,000.00 Payment in full for distribution rights in Victoria

27 Mr Ellis first became aware of Michigan in late September 1998 when he saw an advertisement in a Melbourne newspaper for slush machines . These machines dispense crushed ice drinks. He met Mr Laski and Mr Cameron at the offices of Michigan in St Kilda. He was introduced to Mr Semos and eventually became involved in the slush machine business. In March 1999, at the invitation of Mr Laski, he attended the Sydney Business Expo in order to market these machines. He noted considerable interest in orange juicing machines which were also being marketed by Michigan. He heard Mr Peter Semos, Mr Laski and Mr Cameron say to numerous people that Michigan had contracts drawn up for sites at forty-one Franklins Big Fresh Stores and eight Duffy Brothers stores. He understood that by the end of the Expo, all of these sites had been allocated to investors and secured by deposits. He spoke to Mr Semos and Mr Laski about the juicing machines, asking whether there were distribution rights available for purchase. They told him that there were. On 8 April he received a letter from Michigan in which Mr Laski set out the terms, conditions and price for the distribution rights for Victoria. Numerous documents were attached. The letters and attachments are exhibit GRE 13 to Mr Ellis's affidavit and are included in Schedule 1 to these reasons. Mr Ellis responded on 15 April 1999, but this letter appears to have related to the slush machines. 28 Mr Ellis became dissatisfied with the slush machine business. Mr Laski invited him to a meeting to discuss the problem. Mr Cameron and Mr Laski suggested that he should swap his interest in the slush machine business for Victorian distribution rights for the orange juicing machines. Mr Ellis wrote to Mr Laski on 28 June, indicating interest in the general proposal but dissatisfaction with the detail. On 30 June, Mr Cameron sent him a draft letter for use with prospective investors in the orange juicing machine business. On 2 July, Mr Franzese sent him a copy of a proposed distribution agreement for Victoria. On 2 July, Mr Ellis wrote concerning the terms of the agreement. Much of the negotiation seems to have concerned the status of the arrangements with retailers for the siting of machines. In particular, in a facsimile dated 5 July 1999 which is exhibit GRE 23 to Mr Ellis's affidavit, this paragraph appears: You have consistently refused to elaborate on what contracts you have in place. Peter advised me in Sydney and again in Melbourne that Franklins and Coles had been tied up. Your only statement of substance about the business has been to describe the problems of Franklins. Hopefully the Franklins' contracts are still in place. If they are not, and all the confident stories about "everyone" wanting them proves incorrect, where am I left with 8.2.2 and 8.2.3 (apparently references to the draft contract)? 29 In a letter of 16 July 1999 from Mr Franzese to Mr Ellis, being part of exhibit GRE 27, the following passage appears: Michigan will not provide a guarantee or other warranty to any party guaranteeing minimum sales of bottles. It is at Michigan's discretion when the guarantee is given. In regard to the status of machines sited in the Franklins Big Fresh stores, the internal health department of Franklins have made certain queries regarding compliance of the handling of fruit to Franklins internal policies. The future status of the Orange Juice machine in Franklins big Fresh is uncertain, until they finalise their handling system. Negotiations are continuing with Coles in respect of siting machines. These negotiations have been commenced in the Brisbane office of Coles. A trial machine was sited for a short period of time in a Coles Supermarket, Brisbane. Coles have not made any decisions regarding the siting of orange juice machines in their stores. No approach has been made to Safeway/Woolworths. 30 On 17 July, Mr Ellis wrote to Mr Franzese. The letter (exhibit GRE 28) primarily concerned slush machines. He also pointed out that his interest in the orange juicing machines was prompted by his desire to transfer his investment from the slush machine business. The following paragraphs are relevant: However, once again hurdles have arisen. The costs of paying siting personnel are apparently significant ($300 per site) and I have never, until recently, heard anyone ever say that the machines were anything other than easy to site. "Franklins are signed up", "Coles are knocking at our door". Yet now it comes to the crunch, it looks like Coles and Franklins are anything but tied up. I am faced by new sounds from MI such as "the best sites are large Fruit Barns". This may be so, but the potential number of sales is significantly lower without the large supermarket chains. … The receipt of your e-mail confirms my doubts as to the availability of sites and reinforces my resolve to try to water down the opportunity for MI to terminate with 14 days notice and forfeiture of outstanding money's (Surely one of the huge selling points I had was the availability of large Supermarkets as clients and that therefore it is going to be more difficult to convince sub-distributors!) 31 Notwithstanding his concerns, Mr Ellis indicated that he remained interested in negotiating a swap. He said at par 60 of his affidavit: The process of swapping terms of the new agreement was very difficult. I was under pressure because they already had my money. I had several arguments with Mr Laski and then Prospero Franzese rang to say he would take over negotiations. I had a number of conversations with Franzese. 32 In par 61 of his affidavit, Mr Ellis set out a conversation with Mr Franzese as follows: Mr Franzese: "Rod has said that you are doubting the orange juice machine". Mr Ellis: "With good reason." Mr Franzese: "We can work through a deal." Mr Ellis: "OK, keep going." Mr Franzese: "Don't worry, Graeme, I know that they've sold 140 machines as a result of the Sydney Expo because I have written the contracts and there are about 110 operating up in Queensland. Don't worry, I wouldn't lie to you. I was offered a job in Canada but I had to deceive clients so I wouldn't do it." 33 There were other meetings with Mr Franzese. Mr Ellis said that Mr Franzese had a desk in the Michigan office. Mr Franzese denied this. According to Mr Ellis, during one conversation, Mr Franzese said: Peter Semos from the Queensland Juice Company is responsible for locating sites. It is a way of keeping the price down. Peter Semos is in charge of siting and locating and his brother comes down from Queensland to do siting. It is $300 to find a site and locate the machine. A machine is delivered to the site and it is installed. There is also a 4 hour promotion and the Queensland Juice Company teach staff to use machine. But siting is the key. 34 On 22 July, Mr Ellis and Michigan agreed to terminate the arrangements concerning the slush machines. In lieu thereof, Mr Ellis was to have exclusive rights to distribute the orange juicing machines in Victoria. In his affidavit at par 66 Mr Ellis again refers to representations made by Mr Cameron, Mr Semos and Mr Doherty at the Sydney Expo. However, having regard to the correspondence discussed above, it is very unlikely that Mr Ellis relied upon such representations, particularly those as to the availability of sites.

John Edward Carter Persons Spoken to - Mr Cameron, Mr Semos Relevant documents - See Schedule 2 Payments Made: Date Amount Reason 26 October 1998 $15,000.00 Deposit and part payment 1 November 1998 $56,940.00 Balance of purchase price

35 In September or October 1998 Mr Carter attended the Franchise Expo at the Convention Centre in Brisbane. He met Mr Peter Semos and Mr Cameron who were demonstrating orange juicing machines. Mr Semos said words to the effect that: We are offering an investment opportunity where orange juice machines are sited at Franklin's stores. 36 Mr Carter was attracted by the reference to Franklins whom he considered to be a reputable company and "a big operator". He left contact details and later received the documents which are exhibits JEC 1, JEC 2 and JEC 3 to his affidavit. Copies are contained in Schedule 2 to this judgment. On or about 26 October 1998, Mr Carter met with Mr Peter Semos and Mr Cameron at an office in Orange Grove Road, Coopers Plains or Salisbury. Mr Semos said: Franklins have given a commitment to take the machines. The first person who takes up the investment will get the choice of Franklins' sites. Franklins do their contractual arrangements in two-year time periods. 37 Mr Carter understood that he was dealing with Michigan. Nothing was said about Queensland Juice Company. However the name appears on one of the brochures supplied to him. Mr Carter was invited to contact several people, including Ian McPherson and Mick Patti, to discuss the machines. Both gave favourable reports. Once it was "confirmed" that machines were going into Franklins, Mr Carter was keen to become involved. The business sounded like a good concept. Mr Carter had previous experience with Woolworths and was aware of the amount of fruit which was discarded. He wished to purchase six machines and nominated Franklins, Redbank Plains; Franklins, Sunnybank Hills and Franklins, Beenleigh as locations. Mr Semos suggested that he should consider Freshy Fruit Mart at Woodridge rather than Franklins, Beenleigh. He also suggested Coco's at Annerley and at Sunnybank saying that: Some of the independent stores produce better than Franklins. 38 They agreed to site machines at Franklins, Redbank Plains; Franklins, Sunnybank Hills; Coco's Annerley; Coco's, Sunnybank and Freshy Fruit Mart, Woodridge. One machine remained un-sited. Mr Semos and Mr Cameron said that they would find a site. Mr Semos thought that these sites would perform well. He had previously sited his own machines at Coco's. He said that in sites like Coco's and Franklins it would be easy to make a couple of hundred dollars a week. He also said words to the effect: You will make somewhere in the vicinity of $300.00 per week for Coco's and Franklins. 39 Mr Carter agreed to purchase six machines for $11,990 each, a total of $71,940. He drew $50,000 against an existing loan arrangement with Westpac to pay for the machines. He paid a deposit of $15,000 on 26 October 1998 and received an invoice which is exhibit JEC 4 to his affidavit. The invoice is in the name of Michigan Investments. At some stage prior to his agreeing to purchase the machines, either Mr Semos or Mr Cameron mentioned that Coles Supermarkets were interested in the machines. On 26 October or shortly thereafter, Mr Cameron said that Mr Carter would have first option on Coles or Woolworths stores if they became available. There is a handwritten note to this effect on exhibit JEC 4. Mr Cameron also told him that the contracts with Franklins were for two years and renewable. There is a handwritten note to that effect upon the exhibit. Mr Carter does not now recall whether the reference to "renewable" was to renewal at the instance of Franklins or at his instance. He was expecting a profit of $600 per week from six machines. Mr Semos and Mr Cameron had suggested a higher figure. 40 On 1 November 1998, the balance of the purchase price was paid. On or about 14 November, Mr Carter met Mr Semos and Mr Cameron at the Novotel Hotel. They provided him with further information which he recorded in exhibit JEC 6. The first five machines were sited quite quickly. Mr Carter, himself, organised for the sixth machine to go to a Greenbank store. It was sited on 25 March 1999. Shortly thereafter, Mr Carter spoke to Mr Tierney at Franklins, Sunnybank Hills. The latter was quite excited about the machines, saying that he was thinking about building a special display in the refrigeration section. Mr Carter then discovered that Michigan had already supplied the site with bottles. He spoke to Mr Cameron who said that Peter Semos would be taking over "the bottles siting", and that Mr Carter should buy the bottles from Queensland Juice Company. This was the first time he had heard of that organisation. Mr Peter Semos and his wife later conducted promotion activities at a number of the stores. Initially, Mr Carter was earning about $100 per week per operating machine. Two of the machines were not operating. He considered that everything was going well. 41 Things started to go wrong about six months after purchasing the machines. Oranges became very expensive, Mr Carter found it difficult to contact anybody at Michigan or Queensland Juice Company. He usually tried to contact Peter Semos. Mr Carter felt that the stores were not getting behind the orange juicing machines. They were labour-intensive and there were problems with refrigeration. On or about 30 May 1999, he received a message from Mr Laski on his answering machine. Mr Laski asked him to supply details of his machines and how much money he had earned from them because there was some prospect of reimbursement or compensation "as the machines were not working". In reply Mr Carter sent a facsimile message dated 30 May 1999, which is exhibit JEC 7 to his affidavit. He subsequently received a letter from Mr Laski providing an owner's manual for the juicing machines. The letter was dated 7 June 1999. On 26 July 1999, Mr Peter Semos advised him that there would be no more juicing at Franklins sites because they were awaiting a health and safety report.

Adrian Michael Harman Persons spoken to - Mr Cameron, Mr Peter Semos, Mr George Semos Relevant documents - See Schedule 3 Payments Made: Date Amount Reason 13 November 1998 $2,500.00 Deposit and part payment 7 December 1998 $57,000.00 Balance of purchase price

42 In mid-October 1998 Mr Harman and his wife, Pam, attended a Franchising Expo at the Brisbane Exhibition Grounds. They spoke to Mr Cameron and Mr George Semos concerning orange juicing machines. Mr Semos explained how the machines worked. Mr Cameron said: The way the business works is that the investor buys the orange juice machines and Queensland Juice Company organises the site. Queensland Juice Company then trains the staff in the store to operate the machine and does an initial promotion in the store. The stores buy the oranges and take the proceeds from the juice. Owners of the machines make their profit from selling the orange juice containers to the stores at $1.50. The labelled bottles are purchased by investors from Queensland Juice Company at 50 cents per container. Machine owners enter a contract with the site. Queensland Juice Company provide maintenance for the machines for twelve months, and after that you can have a maintenance agreement for the machine. To date the business has operated by selling the machines directly to small fruit shops. We now have agreements with large supermarkets, such as Franklins. We want to have investors buy the machines and place them in the sites. These supermarkets are not prepared to make the outlay necessary to purchase the machines themselves. Some people keep one machine themselves at a site and use others to supply juice to restaurants. There is a machine operating at a site in Clayfield. It is an older model. The guy says it is ok. I believe this new one is better. Stores usually throw out the oranges which do not sell. With the juice machines, these oranges can be used so the stores do not lose money on them. The fruiterers love the machines because with the number of people that feel the fruit, the oranges are too soft at the end of the day. Every one wins. They can use them rather than throw it out. 43 Mr Harman asked for further information, giving his name and address. On or about 26 October 1998 he received the documents which are exhibit AMH 1 to his affidavit. Copies are contained in Schedule 3 to the judgment. On 3 November 1998 he spoke to Mr Cameron by telephone, indicating that he would like more information. They met in early November at the Novotel Hotel. Both Mr Cameron and Mr Peter Semos were present. At some stage Mr Peter Semos said: Franklins have agreed to come on board. In a couple of months we will have Coles as well. The people who sign up now will be given the first opportunity to purchase further machines for siting at Coles. There is one person who has already purchased ten machines. 44 Mr Harman asked: Can the stores buy the bottles from elsewhere? 45 Mr Cameron said: Franklins will not do that. They will sign an agreement to say that they will only buy bottles from the investor. Queensland Juice Company will arrange delivery direct to the site. 46 Mr Semos said: There are currently a number of sites available at Franklins stores but they are going fast and there are a number of other interested investors. 47 Mr Harman enquired as to which Franklin sites were available. Mr Peter Semos said: Indooroopilly, Carindale, Brookside, Cannon Hill. There is also a fruit and vegetable shop at Toowong called Fruity Capers and another one at Indooroopilly called Tropicana. 48 Mr Semos said: Fruity Capers is one of the highest volume fruit and vegetable stores in Brisbane. 49 Mr Harman said that he was interested in sites close to where he lived (Toowong) and that he wished to speak to other people who could recommend the business concept and the machine. He was given names of people in fruit and vegetable shops in Melbourne. These included John Carter, Robbie Thomas, Ian McPherson and Mick Patti. Mr Semos also referred Mr Harman to a fruit shop in Clayfield. 50 Mr Harman asked: What is the Michigan Group? How does the Queensland Juice Company fit in? 51 Mr Semos said: Michigan Group is the marketing company. 52 Mr Harman asked: Are you a director of the Michigan Group Peter? 53 It seems that Mr Semos did not reply. Eventually, Mr Harman indicated that he was interested in all of the identified sites and that he would buy five machines. He asked Mr Semos for his views concerning the Franklins store at Cannon Hill and Tropicana. Mr Semos recommended Tropicana. Funding was then discussed. Mr Cameron said that a Franklins store at Redbank had only just started and "… did 100 bottles today". He also said "That is not unusual and I would expect all Franklins stores have the potential to do that." 54 Mr Harman asked: Why are the figures in the material you sent me a lot lower than what you are saying now? 55 Mr Cameron replied: The written profit projections represent the absolute minimum and are based on smaller stores. The company has to cover themselves because those figures are provided to everyone and some of the sites would be in smaller stores than the ones you would have. In Franklins stores you can expect to make well in excess of those figures. 56 Mr Harman then asked to see proposed contracts for the purchase of machines. He was told that if written contracts were used, solicitors would be involved. They would want to change things for the sake of changing them. Mr Harman again said that he wished to make further enquiries. Mr Cameron said: Another investor is interested in the Franklins site at Carindale but I'll hold it for you. You will have to get back to us with your decision within a couple of days. 57 Later that day Mr Harman made his own calculations, having decided not to rely on the figures which he had been given at the meeting. He and his wife decided that they would like to have machines in the Franklins stores at Carindale, Indooroopilly and Brookside. They also chose the Fruity Capers store, but could not decide between Franklins, Cannon Hill and Tropicana. They visited Franklins, Cannon Hill. It seemed to be a smaller store. Mr Harman contacted a number of the persons nominated by Mr Cameron and Mr Semos. The information provided was generally favourable. They then arranged finance through a bank which had been recommended by Mr Semos. Some time prior to 13 November 1998 Mr and Mrs Harman visited the sites which they had been offered but did not speak to anybody. On 13 November Mr and Mrs Harman met with Mr Peter Semos and Mr Cameron. Mr Harman said that he was generally happy with the concept but concerned that he hadn't spoken to people who had been in the business for any length of time. Mr Semos said that nobody had been in the business for long. Mr Harman asked about contracts for siting machines, saying that he would like them signed before he paid. Mr Semos said that the site contracts would only be signed after the machines had been sited as Queensland Juice Company did not wish to risk losing title. Mr Harman then said: We are prepared to go ahead with the purchase of machines for four sites, Franklins Indooroopilly, Brookside and Carindale, and Fruity Capers at Toowong. We are undecided for the fifth site between Franklins Cannon Hill and Tropicana Indooroopilly. What is your opinion? Which site would you prefer? 58 Mr Semos recommended Tropicana, and Mr Harman said that they would proceed accordingly, buying five machines. Mr Semos said that he had heard that Mr Harman's finance had been approved and that the machines were currently in transit. He expected them in early December. Mr Cameron said that Mr Harman would have to pay the balance of the purchase price when the machines arrived. Mr Harman asked that site details be listed on the invoice which was prepared. Mr Semos asked for a deposit of 10 per cent of the purchase price. An invoice was issued in the name of Michigan's Investments Pty Ltd. The purchase price was said to be $59,950. Mr Harman offered $2,500 as a deposit. This was accepted. The cheque was handed to Mr Semos. 59 On 4 December 1998 Mr Cameron telephoned to advise that the machines had arrived. He asked that the balance of the purchase price be paid before they were released. Mr Harman was not happy about that, asking for a copy of the signed contracts with the sites. Mr Cameron said that Franklins would not sign until the machines were sited and that they would be sited within seven days of payment. Mr Harman said that the money would be transferred on Monday. He subsequently spoke to Mr Carter, one of the other investors to whom he had spoken, and to the officer at the bank with whom he had been dealing. That officer made an enquiry of Mr Peter Semos and advised Mr Harman to proceed. Mr Harman authorized payment of the balance of $57,000 to Michigan Investments Pty Ltd. Thereafter he spent much time trying to ascertain when his machines would be installed and why there were delays in effecting such installation. He was eventually told that the Toowong installation would take place on 14 January and that machines would be installed in the Franklins stores in the following week. The fifth machine would be installed a week later. 60 On 16 January 1999 Mr Harman went to Fruity Capers at Toowong. He introduced himself as the owner of the machine which was to be sited there. He was told that they were going to "give it a try", but there were presently no ice cabinets available to store the product. They would not be available for at least two weeks. He was concerned and telephoned Mr Peter Semos, telling him of his conversation at Fruity Capers. He asked for information concerning the machines going to Franklins stores. He was told to ring Mr Greg Tierney at Franklins, which he did. He introduced himself as the owner of the machines to be installed at Indooroopilly, Brookside and Carindale and was told that machines were not to be installed at those sites as they were not Big Fresh stores. Mr Harman then telephoned Mr Semos and told him of this conversation, saying that he wished to call off the deal and have his money refunded. Mr Semos said that he had a written agreement with Franklins which included the relevant stores. 61 It is clear from the later exhibits to Mr Harman's affidavit that as early as 25 January 1999 he was communicating with Michigan through his solicitors concerning the installation of machines. On 11 February, Mr Laski wrote saying: Peter Semos has spoken to Franklins this day. They want the machines - but will wait for the price of oranges to drop until taking delivery. The reason being, staff need to be trained when the machines are installed. 62 In the letter he also offered to locate machines at three Coco's sites; Franklins Big and Fresh (sic), Capalaba; Fresh & Fast, Caloundra Shopping Town and Hyper Fruit Market, Loganholme. Mr Harman declined the alternative sites. Correspondence continued. The solicitors became involved. On 16 February Mr Harman's solicitors wrote, purporting to terminate the contract, relying upon Michigan's inability to site four of the machines. On 23 February, the solicitors threatened proceedings seeking damages for misleading and deceptive conduct. On 15 March Mr Laski replied asserting that: Franklins were always willing and able to take the machines and site them to their stores. Due to environmental causes and a shortage in orange supply, Franklins advised that they would be taking the machines once adequate availability of orange was restored. Our company offered alternative sites in the meantime and the machines were to go back to Franklins after the price and availability of orange was restored to normal levels. We offered to pay you initial finance instalments. 63 Clearly, Franklins was not willing to install the machines at sites which had been offered to Mr Harman as they were not Big Fresh stores. Whatever may have been asserted by Mr Laski, it is quite clear that Mr Harman's complaints were entirely justified. In those circumstances it is unlikely that Mr Laski, if he were acting honestly, would, after these events, have placed any reliance in anything that Mr Semos said to him about the siting of machines. This may not be of much assistance to Mr Harman, but it may be of assistance to some of the other investors who acted on representations made after that time.

Elisabeth Lasser Persons Spoken to - Mr Semos , Mr Doherty, Mr Semos Relevant documents - Nil Payments Made: Date Amount Reason 14 November 1998 $4,197.00 Deposit and part payment 20 November 1998 $37,773.00 Balance of purchase price

64 In late 1997, Ms Lasser and her partner, Mr Coad, were looking for a business which they could operate in addition to their existing business in which they provided computer training. They considered various alternatives and in about September 1998, saw an advertisement in a newspaper for a business called "Top Brew". They telephoned the specified telephone number and spoke to Mr Doherty. He told them that the business involved the purchase of commercial coffee machines for placement in locations such as offices and car sales yard waiting rooms. Mr Doherty later introduced them to Mr Peter Semos as the director of Top Brew. At some stage Ms Lasser said that she was interested in a business that would not take up a lot of time. Mr Doherty said that he was the sales representative for Michigan Group Pty Ltd for the sale of territories. He said that the Top Brew business was run by Michigan and that principals of the company were Rod Laski and Charles Cameron. They were very wealthy. Mr Doherty gave them certain information and a booklet. 65 In early October Mr Doherty telephoned Ms Lasser and said that he was concerned that Mr Laski, Mr Cameron and Michigan might not be reputable. He said that he did not wish to continue any further negotiations with Ms Lasser as he had no intention of dealing with Michigan. He subsequently telephoned to say that he was now in partnership with Peter Semos, selling coffee machines. They had formed a separate company. Ms Lasser could deal with them and not with Michigan. She subsequently advised Mr Doherty that she did not intend to proceed with the Top Brew business. 66 In the same month, Mr Doherty telephoned, proposing a business opportunity which involved the purchase of commercial orange juicing machines. They were said to be available through Queensland Juice Company, a company owned by Peter Semos and not connected with Michigan. Towards the end of October, Ms Lasser and Mr Coad met with Mr Peter Semos at the Franklins store at Sunnybank Plaza. Mr Doherty was also present. The purpose of the meeting was to inspect a machine. The meeting lasted between 30 and 45 minutes. They were told that juicing had occurred earlier in the day. The Franklins' staff recognised Mr Semos. They subsequently had coffee. Peter Semos said: Once the machines are installed you purchase plastic two litre bottles which are labelled accordingly. You deliver the bottles to the shop and then invoice the shop. There is a minimum purchase of five hundred bottles per order. You should make $500 or more per week in profit from each machine, guaranteed. If any site does not perform, we will resite the machine for you at no charge, but I assure you that you will make $500 profit minimum each week on each machine. These are targets reached by other operators and are very realistic. We have some people in Melbourne who have invested with us and they are doing more than 500 bottles per week. We are just starting off in Queensland but Clayfield Markets have a machine and it is turning over a minimum of 500 bottles per week. 67 There was general discussion concerning sites, including Franklins, Brookside; Franklins, Morayfield; Franklins, Nerang; Franklins, Cannon Hill; Franklins, Sunnybank Plaza; Aspley Pick 'n Pay; Farmer Joe's at Kedron, and Coco's fruit shops. Ms Lasser said that she wanted two Franklins stores and was told that they were available. She said that she would like Morayfield. Mr Semos said that it would do more than 500 bottles per week. Ms Lasser said that she was also interested in Pick 'n Pay at Aspley. Mr Semos said that it was already under contract. At some stage, he had told her that the Clayfield Market site had been successful. She thought that Farmer Joe's would be as successful as that outlet. This was based upon her knowledge of the site. She said that she would take the Farmer Joe's site. Mr Semos said that it was also taken. Subsequently, Mr Doherty invited her to look at Franklins, Cannon Hill. She did so on Saturday, 14 November 1998. She did not like it and decided to go ahead with Franklins, Morayfield; Franklins, Brookside and the Aspley Pick 'n Pay store. This is somewhat curious as she had been told that the last-mentioned outlet was not available. She paid Mr Semos a cheque for $4,197 by way of deposit and received a receipt on Queensland Juice Company letterhead. Mr Semos said: If the sites do not work then we will resite the machines. Don't worry. It will be resited within seven days. 68 This appears to relate to what is called a "special condition" on the invoice which provides: Out-clause, seven day notice on siting agreement for Franklins and Pick 'N Pay. If so machine will be resited at no charge. 69 This was written in at the request of Mr Jack Coad. At a later stage it was agreed that Ms Lasser could exchange her Pick 'n Pay site for the Farmer Joe's site which had become available. Again, this is curious as the Pick 'n Pay site had initially been one of her choices ahead of Farmer Joe's. It is likely that this aspect of Ms Lasser's evidence is unreliable. On 20 November 1998 Ms Lasser, Mr Coad and Mr Peter Semos met. Ms Lasser said that her machines were to be sited at Franklins Big Fresh, Morayfield; Franklins Fresh, Brookside and Farmer Joe's Country Market in Kedron. Mr Semos said that the machines would be sited at Farmer Joe's and Franklins, Morayfield five days after payment of the balance of the purchase price. As Franklins Fresh, Brookside was being renovated, installation would be in the second week in December. Ms Lasser gave Mr Semos a cheque for the balance of the purchase price. He then said: Your machines will be sited within 5 days of clearing the cheque. The machines come up from Melbourne. That is why it takes 5 days. 70 In November Ms Lasser discovered that no machine had been installed at Farmer Joe's and subsequently telephoned Mr Semos. He said that there was a delay in printing labels and that they would be ready before Christmas. At some stage Ms Lasser was told that a machine was to be installed on 25 November at Franklins Big Fresh, Morayfield. She visited the site with Mr George Semos and his wife in order to conduct a promotion. Mr Semos introduced her to the acting Produce Manager, Michael Raffout, indicating that Franklins would be buying bottles from Ms Lasser. Mr Raffout appeared surprised and said that he had thought that he was dealing with Queensland Juice Company. He then said that Franklins Big Fresh required a number of tests including health and safety checks, and that the machines could not be operated on that day. Ms Lasser was surprised by this statement as she had understood from Mr Peter Semos that the machines had already been tested. Mr George Semos said that Franklins merely wanted to do their own checks. On 3 December Ms Lasser participated in a promotion at the store. On 4 December, she noted that Franklins, Morayfield had run out of juicing oranges. A further promotion was held on 17 December. 71 In January 1999 Ms Lasser still had not heard from Mr Peter Semos concerning the siting of the machine at Farmer Joe's. She telephoned him and was told that the label factory was on holiday for six weeks. In January or February she went to Farmer Joe's at Kedron and spoke to the store manager, identifying herself as the person who owned the juicing machine which was to be installed there. He said that he did not intend to have a machine in the store and that he had told Queensland Juice Company as much. He said that it was not viable for him and that there was no room. Further, the price of oranges was currently too high. Ms Lasser reported this conversation to Mr Peter Semos. He said: I am surprised. I have spent $3,000 on labels for juice bottles to be supplied to Farmer Joe's. I have a contract with them and can legally ask them to pay that money. 72 Ms Lasser asked for a copy of the contract. He said that he would send it to her. She gave him her facsimile number. He said that he had other sites in which she might be interested, including Franklins, Brookside; Franklins, Noosaville and Pick 'n Pay at Aspley. He said that a trial machine had previously been installed at Franklins, Noosaville and "went really well". Ms Lasser then became somewhat aggressive, saying: Get real. What are you doing with this machine? You have been stalling for so long. What are you going to do? This is not what we discussed. 73 Mr Semos said, "I'll have a site for you next week." Ms Lasser did not receive a copy of the contract as promised. On 18 January a machine was installed at Franklins Big Fresh, Maroochydore. She went to the store with Mr George Semos and was told that the machine could not be operated because it had not been "health and safety tagged". Mr Semos produced a siting agreement for that store which is exhibit EL 4 to Ms Lasser's affidavit. Shortly before 1 February 1999, Ms Lasser received a telephone call from somebody at Franklins, Maroochydore advising that the machine had been tagged and that they were ready for trading. It commenced to operate on 1 February 1999. On 2 February Ms Lasser sent a facsimile to Queensland Juice Company, placing an order for 540 bottles and indicating that the machine would be very busy over the next few days. On 5 February Ms Lasser went to a promotion at Morayfield and found that the machine was not operating. There were other difficulties with the machines, and Ms Lasser eventually spent an extended period of time at Morayfield and Maroochydore, juicing and conducting promotions. In particular, she regularly spent the entire week at Morayfield. She received little assistance from the Franklins' staff. Operation of the machine was labour-intensive. 74 In February 1999 she was told of the distinction between Franklins Big Fresh and Franklins Fresh and that Franklins Fresh stores was not taking the juicing machines. She told Mr Peter Semos of this. He challenged her right to contact Franklins, alleging that it would cause unnecessary "hassles". Shortly thereafter, he advised her that her machine would be installed at Franklins, Noosaville. When Ms Lasser pointed out that Franklins was not going to install a machine there, Mr Semos replied that the machine would be installed on the following Friday. The machine was never installed. 75 Ms Lasser received no further orders for bottles from Franklins, Morayfield after 20 March 1999. On 15 April she telephoned Mr Semos, saying that Franklins did not intend to order any bottles. She pointed out that she still required a third site. He said that available sites were Bellairs at Eight Mile Plains, a chain store at Carina and the IGA Supermarket chain. He also said that a really good site was the Big Mushroom in Cleveland. He said that he no longer sited the machines. Mr George Semos was now responsible for that. She telephoned Mr George Semos. On 15 May 1999 he informed her that there was a site available at Chris's Superior Fruit and Vegetables at Graceville. On 20 May a machine was sited there. However no contract was ever provided. When asked about this, Mr George Semos told Ms Lasser: You don't want to tie him down with a contract. He may not like that idea and it's better to have a verbal agreement. 76 By this time the machines at Maroochydore and Morayfield needed repair. On 29 June 1999 Ms Lasser wrote to Mr Tierney, complaining about the fact that juicing was not proceeding at Big Fresh stores. Further correspondence passed between the parties, but it is not particularly relevant for present purposes.

Adrian Domenik Scipione Persons Spoken to - Mr Cameron, Mr Peter Semos, Mr Laski Relevant documents - See Schedule 4 Payments Made: Date Amount Reason 27 November 1998 $1,000.00 Deposit and part payment 24 December 1998 $30,000.00 Part payment 8 January 1999 $28,455.00 Balance of purchase price

77 From about October 1998 Mr Scipione, a veterinarian, was looking for a business opportunity. He saw an advertisement in a Sydney newspaper of which he has not retained a copy. It contained words to the effect: A great business opportunity, minimum hands on, and high earnings. He rang the advertised telephone number. The person who answered said, "Michigan Investments, Charles Cameron". Mr Scipione referred to the advertisement and gave his home address. Between 9 and 13 November he received the documents which comprise exhibit ADS 1 to his affidavit. They are reproduced in Schedule 4 to these reasons. Included was a form designed to enable the recipient to request further information. Mr Scipione completed and returned this. Shortly after 13 November, he was contacted by Mr Peter Semos. Mr Semos said relevantly:

The way this business works is that you purchase the juice machines and we will arrange for them to be sited in stores. We have contracts for Franklins' stores and large fruit and vegetable stores. We are contracted to put machines in every Franklins store in New South Wales. You select which ones you want. The contracts with Franklins are for one year and will be renewed yearly. The bottles are supplied by Queensland Juice Company and are sent to a warehouse in Homebush, New South Wales. You collect them from the warehouse and drop them to the store premises. Mr Scipione asked for sites near the Homebush warehouse. Mr Semos said:

In that case I recommend sites at Leichhardt, Burwood and Marrickville. These stores are Franklin's Big Fresh stores which sell large volumes of fruit and vegetables. I suggest you also consider the Franklins Big Fresh store at Mt Druitt and Campbelltown. 78 Mr Semos also gave him the names of persons whom he might like to contact in order to confirm the quality of the machines. Mr Scipione caused his wife to telephone some of these people, and he spoke to one of them. He later telephoned Mr Cameron who said: We have got contracts with Franklins to put machines in all stores in NSW. You can have any stores. First in, best dressed! Put money down, then they're yours. Mr Scipione inquired as to current turnover on average, and was told: They're doing 70 to 80 bottles per day. 79 Mr Cameron said that they had been selling machines for four years and that there were current distributorships in Queensland and Victoria but none in New South Wales. Mr Scipione asked to speak with two established distributors. He was told that the contracts with Franklins were for one year. Prior to 27 November he telephoned Mr Peter Semos to tell him that he was interested in proceeding. On 27 November Mr Semos and Mr Scipione met in Sydney. Mr Semos again said that the siting agreements were for one year and that: They will renew the contracts. 80 There was a further discussion about sites near Homebush. Mr Semos recommended Franklins Big Fresh stores at Leichhardt, Burwood, Marrickville, Mt Druitt and Campbelltown. Mr Semos said that these stores were bigger than the Queensland stores on which his projections were based. Queensland stores were "already doing 60-100 bottles per day". He also pointed out that whereas in Queensland the stores were only open six days a week, in New South Wales there was seven day trading. He also said: Queensland Juice Company is getting some Coles stores on line in the near future. Some Coles stores already have their own juice machines in store and are doing about 120 bottles a day. None of the Coles stores are as big as these Franklins stores so you should do very well out of the Franklins stores. I am trialing a machine in a Coles store on the North Shore at Baulkham Hills for six months. If I get the go ahead with Coles, I could put your machines in there. Mr Scipione was asked, "Are the Coles stores as good as Franklins?" Mr Semos said, "Franklins are the biggest, why go elsewhere?" He paid a deposit of $1,000 and received an invoice. Various other conversations ensued. In early December 1998, Mr Semos told Mr Scipione that the machines would be sited within two weeks of his paying the purchase price. He was aware that the price of oranges was high. He had received information that this would be the case for some weeks from mid-December. 81 On 17 December Mr Scipione telephoned Mr Peter Semos and indicated that he would proceed. The balance of the purchase moneys was paid on 8 January 1999. Mr Scipione understood that Michigan was responsible for the financial arrangements and that Queensland Juice Company was a subcontractor to Michigan, responsible for physically siting the machines. On 15 January he tried to contact Mr Semos and Mr Cameron to confirm that the machines had been sited. He was unable to do so. His wife subsequently had a conversation with somebody called Paul at Michigan. During the following weeks they attempted to contact Mr Semos and Mr Cameron concerning siting of the machines. In early February Mr Scipione had a telephone conversation with Mr Peter Semos. The latter said that he would arrange to have the machines sited within a week. 82 On 9 February, in another telephone conversation, Mr Semos said that a bar code required by Franklins was causing a delay with labelling and that the machines would be installed on 11 and 12 February. In the course of this conversation Mr Scipione asked if they could substitute stores closer to Homebush for those at Mt Druitt and Campbelltown. Mr Semos suggested Fruity's, Miranda Fair and Duffy Brothers, Darlinghurst. Mr Scipione visited them and thought that they would be good sites. He subsequently agreed to take them. Mr Scipione's wife had a further conversation with Paul, and on 11 February Mr Scipione telephoned Mr Semos, asking to see the machines. Mr Semos said that they were in Sydney. Mr Scipione said he had been told that they were in Melbourne. Mr Semos said that was a mistake. Mr Semos offered to arrange an inspection. Subsequently, on 11 February, Mr Semos said that the machines would be sited at Fruity's on 17 February, at Franklins, Leichhardt on 18 February, at Franklins, Marrickville on 19 February, at Duffy Brothers on 24 February and at Franklins, Burwood on 27 February. 83 On 16 February Mr Laski telephoned, saying that bottles were to be delivered to Mr Scipione's home at Otford. Mr Scipione said that they should be delivered to the warehouse at Homebush. Mr Laski said that the warehouse at Homebush was not available for such purposes. Mr Scipione said that Mr Semos had said that the bottles could be stored at Homebush. Mr Laski said that he was not authorized to say so. Mr Scipione then spoke to Mr Semos who made it clear that the warehouse at Homebush was not available. Mr Scipione said that this had been a crucial aspect of the arrangement and that he wanted his money back. Mr Semos said that he could not have it. Mr and Mrs Scipione thought that it was unlikely that they would get their money back and decided that the best course was to continue with the plan and eventually sell the machines. 84 On 23 February one machine was installed at Fruity's at Miranda Fair. A few days later, the site-owner advised that the price of oranges was too high to permit juicing. On 24 February a machine was installed at Duffy Brothers, Darlinghurst. The owner subsequently said that he had done some trials, that there was no profit in it and that he did not intend to continue juicing. At some time prior to 10 March, Mr Semos suggested that because of delays experienced with Franklins, Marrickville, the machine should be located at Duffy Brothers, Hurstville until the delays at Franklins were sorted out. Mr Scipione agreed to this. Subsequently, Mr Scipione spoke to the owner of Duffy Brothers, Hurstville and then spoke to Mr Semos. He told him that the owner was not aware that a juicing machine was to be installed there. Mr Semos said that he would get back to Mr Scipione. Mr Semos subsequently told him that a machine had been sited at Franklins Big Fresh, Leichhardt. Mr Scipione spoke to the manager at that outlet and then spoke to Mr Semos, saying that Franklins, Leichhardt had no bottles. Mr Semos said that the machine would not be operational until a juice bar was completed at the store. Numerous other delays were experienced in siting the machines. 85 On 14 May 1999 Mr Laski wrote to Mr Scipione saying: I wish to confirm that yesterday a machine of yours was sited at Franklins Big Fresh, Leichhardt (NSW). .. Franklins will in due course return the siting agreement form, duly signed. It will be forwarded on to you, once we receive same. A further 2 machines of yours are in storage in Sydney awaiting siting. If you prefer I can have these delivered to your home. Please advise. We will hear from Franklins when they want these two machines installed. The architect is finalising the plans for the construction of the juice bars. 86 This was four months after Mr Scipione had paid the balance of the purchase price. It is reasonable to infer that Mr Laski must, by this stage, have realized that there was a problem with siting of machines in Franklins stores. 87 Ultimately, in early 2000, Mr Scipione said to Mr Semos: You told me that you had a contract with Franklins to site my machines in their stores. Mr Semos said: I did not say that at all. I said I had an arrangement or understanding with Franklins, not a contract.

Ray Turton Persons Spoken to - Mr Peter Semos, Mr George Semos Relevant documents - See Schedule 5 Payments Made: Date Amount Reason for Payment 9 December 1998 $4,242.00 Deposit and part payment 15 January 1999 $37,797.00 Balance of purchase price

88 In October 1998 Mr Turton attended the Franchising Expo at Brisbane in company with his wife Lyndell. They visited the Queensland Juice Company stall where Mr Peter Semos and Mr George Semos were demonstrating orange juicing machines. Mr Peter Semos said: You purchase the machine and we site the machine and look after it. The customer will purchase bottles. Your obligation would be to order bottles and look after the customer. You buy bottles from us with the customer's logo and sell them to the customer. They returned to the stall at a later stage during their visit to the Expo. At some stage they received a brochure which is exhibit RT 1 to Mr Turton's affidavit. It is part of Schedule 5 to these reasons. About two weeks later they received a letter from Mr Peter Semos dated 25 October 1998. Attached was a document headed "Your Profit Potential". These documents are exhibit RT 2 to Mr Turton's affidavit and are part of Schedule 5 to these reasons. Mr Turton inferred that the prospect of selling twenty bottles "sounded reasonable". He was attracted by the percentage return of 72 per cent. He did not, at any time, place great weight on the figures as he thought that they were "probably overstated". 89 In November 1998 he and a friend, Mr Robert Reed, went to the Coffee Club in Toowoomba to meet Mr Peter Semos. Mr Semos expanded upon the concept and talked about the cost of the machines. He also handed Mr Turton a letter dated 21 November 1998. A document headed "Your Profit Potential" was attached to it. However the figures were slightly different from those previously provided. These documents are exhibit RT 3 to Mr Turton's affidavit and are part of Schedule 5 to these reasons. After the meeting Mr Turton took Mr Semos to Betros Brothers, a fruit and vegetable store in Toowoomba. He thought that it might be a good site. Mr Semos entered the store to speak to the owner. Mr Turton remained outside. Mr Semos returned, saying that it was a good site. On 7 December Mr Turton and his wife met Mr Semos in Toowoomba. He said that he had just negotiated agreements with Franklins and Coco's to site juicing machines in their Queensland stores. He said that Coles was also going to be involved and that people in other areas had already had success. He said: If you do not sell 70 bottles per day from three machines then QJC will re-site machines to give a satisfactory return. 90 There was discussion involving the acquisition of three machines, one to be sited at a Franklins store and one at a Coco's store. Mr Turton hoped for a good site in Toowoomba for the third machine. Subsequently, he indicated that he wished to proceed, and Mr Semos asked for a deposit. On 9 December 1998 Mr Turton paid a deposit of $4,242 for three machines. Mr Semos gave him "first option" on the Coles sites in south-west Queensland west of the Great Divide. They also agreed that Mr Semos would not site machines in Dalby, St George, Goondiwindi, Toowoomba or Warwick without first consulting Mr Turton. On 9 December 1998 Mr Turton received a facsimile from Michigan, signed by Mr Semos. It described him as "Consultant, Michigan Group". The facsimile said that one machine would be sited at Coco's Fruit Barn, Toowoomba, one at Franklins Big Fresh, Toowoomba and the third at a nominated fruit shop. Subsequently, Mr Turton said that his preferred site for the third machine was Betros Brothers. In January 1999 there was a further meeting in Brisbane at which Mr Semos said that they would do a promotion in each store when the machines started juicing. The machines came from Melbourne and could be in the Brisbane factory within two days. 91 On, or shortly before 15 January Mr Turton had a further discussion with Mr Semos concerning the dates for siting the machines. They arranged to meet at Franklins, Sunnybank Hills on 15 January. Mr Turton there saw a machine in operation. The manager said that he was happy with the machine. Mr Turton also met Mr Tierney who said: Franklins will go ahead with the orange juice machines but at the moment the price of oranges are too high. We will not be going ahead with machines at other stores until the price of oranges comes down and it is economical to juice. 92 Subsequently, Mr Semos said that he could not install the machines until the purchase price had been paid. The balance was paid on 15 January. Mr Semos then told him that the price of oranges had gone up as a result of a frost in California. On 22 February a machine was sited at Franklins Big Fresh, Toowoomba. However the Produce Team Leader, Darren Madden, told Mr Turton in the presence of Mr Semos: I cannot do any juicing. Greg Tierney said that there has to be a certificate of safety on the machine. Our electrician is at Nambour and he won't be back for another 4 or 5 weeks. Mr Turton said:

Don't worry. I'll get it done myself. 93 He had a safety check performed. From about late January he contacted Mr Madden on several occasions to ascertain whether the machine was juicing. On each occasion he was told that the price of oranges was too high. There is some inconsistency in the affidavit. As I have previously indicated, Mr Turton said in par 34 that the machine was not sited at Franklins Big Fresh, Toowoomba until 22 February 1999. He could hardly have expected juicing prior to that date. At about this time he discovered that the price of oranges had been high since before December 1998. Subsequently, Mr Semos said that the third machine would be installed at the Big Orange, a store about 50 kilometres from Toowoomba. When Mr Turton telephoned that store on 9 June 1999, he was told certain things. No machine was ever sited there. The machines were subsequently removed from Coco's and Franklins because they were not being used. Mr Turton's third machine has never been delivered. In January 2000 Mr Semos told Mr Turton that SPAR supermarkets would take three of the machines. This has not occurred. Mr Semos told him at some stage that there was a problem with the SPAR Group because they wished to pay less for bottles than the stipulated amount. The machines had been installed on trial at SPAR stores in Brisbane and Warialda, but SPAR had decided not to proceed with them.

Leon William Kirkwood and Dianne Forsyth Kirkwood Persons Spoken to -Mr Cameron, Mr Peter Semos, Mr Doherty Relevant documents - See Schedule 6 Payments Made: Date Amount Reason 9 March 1999 $16,788.00 Deposit and part payment 13 March 1999 $53,460.00 Balance of purchase price 15 March 1999 $3000.00 Deposit and part payment on additional machine 7 April 1999 $9,000.00 Balance of purchase price for additional machine

94 In March 1997 Mr and Mrs Kirkwood sold a business, intending to retire. They then decided to find another business which would not take up too much of their time and would allow them to travel. In February 1999 they saw an advertisement in the "Courier Mail" for orange juicing machines. Mr Kirkwood called the relevant telephone number and as a result, received a letter from Michigan dated 8 February 1998 (presumably 1999) and other documents. They are exhibit LWK 1 to his affidavit and are attached as Schedule 6 to these reasons. On or about 24 February he was telephoned by Mr Doherty who said that Mr Charles Cameron, one of the "head" people in Michigan Group, and Mr Peter Semos, who was the "site locater": … are going to be in Brisbane next weekend. Would you like to meet them while they are in Brisbane? There will be a machine operating. We can meet and talk and then go and see the machine. 95 Mr Doherty also said that the machines were selling very quickly and that owners were doing very well. Mr Kirkwood agreed to meet Mr Cameron, Mr Semos and Mr Doherty at the Sunnybank Hills Shopping Centre. At the meeting, Mr Cameron said that he was from Michigan and that Mr Semos was the siting manager. Queensland Juice Company may have been mentioned later in the conversation. Mr Cameron and Mr Semos did most of the talking. Mr Kirkwood got the impression that Mr Doherty's involvement was only part-time. The documentation previously sent to Mr Kirkwood was discussed. During the conversation either Mr Cameron or Mr Semos said: We have a contract with Franklins to supply and install juice machines Australia wide. We have also had a number of enquiries from Coles in relation to supplying them with juice machines. However, we will not start supplying Coles yet as we have an agreement with Franklins that we will not place juice machines in their major competitors for a period of six months. Mr Kirkwood asked, "Why are Coles so interested?" Either Mr Cameron or Mr Semos replied:

Because Franklins have the juice machines, all of the other stores want them as well. We sell the machines in lots of five as that is the most profitable way of handling the business. We don't have many sites left in Brisbane. If you are really interested then you will have to invest soon. Otherwise we may run out of sites to place juice machines. There's only Franklins site left around Brisbane at Capalaba. As Franklins is a very big seller of juice we only give purchasers one Franklins site in each package of five machines so that it is fair to all of the other people who are buying into juice machines. You would get Franklins plus a couple of really good fruit shops such as Cocos. 96 Mr Semos said: The fruit shops just love the juice machines because there is no wastage. They buy a bin of oranges to sell and whatever oranges they have left over they just juice. 97 Mr Kirkwood was given a list of sites currently available in the vicinity of his residence. They included Franklins, Capalaba; Coco's at Loganholme; Perry's at Wynnum; Carina Fruit Market; Chris and John's Fruit Shop and a fruit shop at Inala. A document entitled "Your Profit Potential" (part of exhibit LWK 1) was discussed. It was said to be a guide to what Mr Kirkwood could expect. He asked: How much can I expect to sell? Is it at the bottom or medium end of the range set out in the document? One of them said:

20 bottles per day is an easy and attainable goal. A good site can get two to three times that specified in the top of the range. Some are even selling 100 bottles per day. The available sites we have told you about are very good sites and we expect them to do very well. 98 Somebody said that the investment would not take up too much time and that Michigan could handle the delivery of bottles if Mr Kirkwood preferred it. They went to Franklins, Sunnybank to observe the juicing machine, but it was not working at the time. It was in a corner at the back of the fruit section. Somebody said that it was to be installed in a new stand at the front of the store. 99 Mr Cameron and Mr Semos told Mr Kirkwood that he could not introduce himself at any of the chosen stores because he had not yet signed the contracts. Nonetheless he and his wife went to visit them. About a week later, he contacted either Mr Peter Semos or Mr Doherty to arrange a meeting with them. This took place at Taylor Street, Bulimba, the Queensland Juice Company warehouse. Mr Peter Semos and Mr Doherty were both present. The machine was demonstrated, including cleaning and maintenance. Mr Kirkwood was shown a workshop which was said to be capable of repairing the machines. Further discussion took place at the Coffee Club at Balmoral. The quoted price of the machines was higher than that previously advertised, allegedly because newer models were now available. Sites were also discussed. Mr Semos said that there was a guarantee that the stores would sell at least 200 bottles during the first three months or "they would compensate us". Mr and Mrs Kirkwood decided to go ahead with the project, influenced by the profitability figures in the "Your Profit Potential" document, the involvement of Franklins and Coco's in the scheme, the brochure received in the mail which mentioned the "Coffee Club", the representation that the business could be run without Mr and Mrs Kirkwood being there, and the fact that the product was natural and fresh. Mr Kirkwood said that he was told of other people who were doing well in the business, but he was unable to remember details. 100 The Kirkwoods paid deposits on five machines. On 9 March they paid a deposit on a sixth machine. On or about 15 March a seventh machine was purchased. At some stage prior to 10 June 1999, Mr Kirkwood was told that the machines were not being operated at Franklins because of health concerns. He raised the matter with Mr Semos. He said that they were looking at it. On or about 10 June 1999 Mr Kirkwood telephoned Mr Cameron to enquire as to what was happening. Later that night he received a call from Mr Laski who said: If everyone wants their money back I'll just leave. I'll just pull out of it. 101 This suggests that Mr Laski was aware of problems other than those raised by Mr Kirkwood. At some time in that month, Mr and Mrs Kirkwood went to Coco's at Loganholme and saw the manager. He said that the machine was "out the back". He thought that they had come to pick it up. He had received a facsimile from his head office telling him not to use the machine and to put it into storage. 102 On 16 June Mr Laski wrote to him (exhibit LWK 4). He queried complaints by Mr Kirkwood that he could not contact Mr Cameron and suggested that perhaps it was Mr Kirkwood who did not wish to speak to Mr Cameron because of an outstanding balance of his account in the amount of $10,000. The letter went on to say, concerning the high price of oranges: A guarantee is in place - 200 BTS per week per machine for 12 weeks. This should cover you for any loss. We will be sending you a cheque for same, shortly 103 At the first meeting at Sunnybank in late February 1999, Mr Kirkwood had raised with Mr Semos and Mr Cameron the fact that oranges are seasonal. He was told that when the Australian crop ran out, oranges were imported from Chile, and that any delay between the end of the Australian season and the arrival of the imported oranges would only be for a few weeks. 104 Some time after 16 June 1999, Mr and Mrs Kirkwood called at Franklins, Capalaba to find that the machine had been stored in the back of the premises. They contacted Mr Tierney who said that the juicing machines had been removed from production because of concerns over health standards. He said that Queensland Juice Company had been notified approximately six weeks previously. They then went to Franklins Big Fresh, Capalaba, to Coco's at Loganholme and Carrara, to Franklins Big Fresh, Nerang and to Chris and John's Fruit Shop at Carina. On 29 June Mr Semos said that: We will be installing a machine at Chris and John's next week. This did not occur. Mr Kirkwood telephoned Mr Cameron on numerous occasions and left messages for him. At some stage Mr Cameron told him to write to Mr Laski. In late June or early July he did so, offering him a 25 per cent reduction if he would return their investment. In a subsequent telephone conversation, Mr Laski said:

You bought the machine off us. It is Peter's problem and I don't have to worry about any of this. We will sell up and no-one will get anything. 105 On 26 July 1999 Mr Kirkwood tried to contact Mr Peter Semos and then Mr George Semos. Somebody said that the latter was in New Zealand. Mr Kirkwood then tried to contact Mr Cameron. On 27 July he again tried to contact Mr Peter Semos and Mr Cameron. On 27 July a letter was sent to Mr Laski (LWK 6). In it Mr Kirkwood said that five of the machines (at Franklins, Capalaba; Coco's, Loganholme; Coco's, Carrara; Franklins, Nerang and Chris and John's Fruit Shop) were all out of service. He invited Mr Laski to negotiate to re-acquire the machines. On 29 July he wrote to Queensland Juice Company, indicating that the machine had not yet been installed at the Stone's Corner Fruit Market. He received a reply dated 2 August which said that Mr Semos had undergone surgery. In a letter dated 3 August Mr Laski wrote: In regards to your sites, all the sites have signed a siting agreement between you and them. As such, we have no control over the sites. You mention you wish to sell the five machines you have purchased. Please let me know what price what you want for them. 106 Mr Kirkwood replied on 19 August, saying that they had only ever received one siting agreement, which was for a period of seven days. The Kirkwoods offered Mr Laski a discount of 25 per cent on the amount paid for the machines. There were further attempts to contact Mr Peter Semos and some discussion with him and with Mr George Semos. In par 82 of his affidavit Mr Kirkwood sets out his understanding of the arrangements between Michigan and Queensland Juice Company. The basis of this understanding is not clear. I would be reluctant to act upon such evidence. In cross-examination Mr Laski put to him that they had not spoken by telephone. The suggestion was not that Mr Kirkwood was lying or mistaken, but rather that somebody impersonating Mr Laski had telephoned him. However Mr Laski later made it clear that he had spoken to Mr Kirkwood by telephone on at least one occasion. Mrs Kirkwood also had discussions with Mr Semos at which her husband was not present. They appear not to have added much to the overall effect of Mr Kirkwood's evidence. 107 In support of the Kirkwoods' evidence is that of Mr Doherty. He said that he told them that there was a contract with Franklins for the placement of machines. That was his understanding at the time. He agreed that he had told Mr Kirkwood that the juicing machines sounded like a very good investment and that consumers were interested in them for health reasons. He also agreed that he had said that there were places at which the machines were doing well.

Tom Nemes Persons Spoken to - Mr Laski, Mr Cameron, Mr Peter Semos Relevant documents - See Schedule 7 Payments Made: Date Amount Reason for Payment 30 March 1999 $5,000.00 Deposit and part payment 1 April 1999 $5,000.00 Part payment 14 April 1999 $39,950.00 Part payment 24 May 1999 $80,000.00 Balance of purchase price May 1999 $40,000.00 Part payment of distributorship for NSW and ACT 4 June 1999 $30,000.00 Part payment of distributorship for NSW and ACT 7 June 1999 $30,000.00 Balance of purchase price for distributorship for NSW and ACT

108 During a holiday at the Gold Coast in February 1999, Mr Nemes saw an advertisement placed by Michigan in the "Gold Coast Bulletin". At the end of February he telephoned the nominated number and spoke to Mr Cameron. The conversation was as follows: Mr Nemes: I am calling about the advertisement in the Gold Coast Bulletin offering 40% return. What is this business opportunity? Mr Cameron: Orange juice machines. Mr Nemes: What are they? Mr Cameron: They are machines that are sited in stores so that they can juice oranges and sell the juice to customers. The machines that are already sited are doing very well. We have machines sited in Queensland. There is about 40-50% profit. Everything is done for you. No time needs to be spent by you except for invoicing customers. All you have to do is order the bottles. It is a simple business, there is nothing to it. I'll send you a brochure. You read it and you get back to me. 109 Mr Nemes gave Mr Cameron his home address. He subsequently received a letter dated 16 March 1999 and other documents. Those documents are contained in exhibit TN 1 to his affidavit and are part of Schedule 7 to these reasons. They include a document headed "Your Profit Potential". Mr Nemes assumed that the figures in that document were "examples" of the profits which might be earned. He accepted that turnover would vary from area to area and site to site. He understood that Michigan was guaranteeing that the business would sell a minimum of 200 bottles per week per machine and that if the machine did not achieve this, Michigan would pay the difference. He thought that Michigan would not be guaranteeing these figures unless they were true. However he also thought that he should make his own enquiries before proceeding. 110 On that day he spoke to Mr Cameron by telephone, asking why the guarantee was for twelve weeks. Mr Cameron replied: We guarantee 200 bottles per week per site for three months. We could guarantee it for six months, but we just put the guarantee in because we are positive the machines are making money and will sell 200 bottles per week. Some sites are doing more than 40 bottles per day. Some sites are doing over 60 bottles per day. Some sites in Queensland are doing 100 bottles a day. One site in Sydney, at the Darling Harbour Fish Markets, is doing 120 bottles a day some days. If the store made less than 40 bottles per day, we would site the machine elsewhere. We maintain the machinery, you just have to ring us up when something goes wrong. Once you pay, the machines will be installed in two to three weeks. 111 Mr Cameron also said that they had plenty of sites but no investors. They then discussed price. Mr Nemes said that he was looking to earn enough money to wind down his current business and go into semi-retirement. In later telephone conversations they discussed price and finance. At one stage Mr Cameron said that he would get a Queensland investor to telephone Mr Nemes to talk about the business. Such a person telephoned, but Mr Nemes cannot remember his name. The man said: I've got 15 machines with Michigan. You've got to be on top of everything. We're doing promotions at the moment. You should look into doing promotions as well, on top of what they do for you. I've had the machines for about 3 to 4 months. Some of my sites are on the Gold Coast. 112 At some time prior to the end of March 1999 Mr Cameron said to Mr Nemes: Michigan Group are looking to sign a state distributor to sell the machines throughout New South Wales. If you know someone that might be interested in buying the state rights to our business, let me know. 113 Mr Nemes said that he was interested. Mr Cameron said that there was more money in the distributorship than there was in the bottles. He predicted that the business was going to be a multi-million dollar operation throughout Australia. In late March Mr Nemes and his wife went to Sydney to meet with Mr Cameron. They met in the lobby of the Hilton Hotel. Mr Peter Semos was also present. Mr Cameron said that Mr Semos's role was to look after machines, bottles and sites. Mr Nemes asked how many machines had been sited and Mr Semos said: We have around 100 machines sited in Queensland. There are five on the Gold Coast and 15 in Sydney. We need investors. We have really good sites in Sydney at the moment. We also have someone in Victoria who is doing well. 114 Mr Nemes asked if he could have a telephone number in order to speak to the person in Victoria. Mr Semos said that he could not give him the number but could telephone him and let Mr Nemes speak to him. He did this. The man said: I own a fruit shop. Its in a tourist area near Geelong so juice sales depend on the holiday season. We're doing well, making a profit. Our business was run down but after we got a machine it has picked up. We've sold about 40,000 litres this season. 115 Either Mr Semos or Mr Cameron said: The machines will be sited in all Franklins Big Fresh Stores, in Duffy Brothers stores and various fruit shops in New South Wales. We have many sites in Sydney. What sites you get will depend when you come on-line. There is very little that can go wrong with the machines. Everything is automatically done. There is no spillage. With the press of a button, the machine cleans itself. You will have very little to do with the machines. You just invoice the sites. We train the site staff how to operate the machine and show them where to put it in the store. The machines will all be put at the front of the stores. 116 There was then discussion about sites, in particular Duffy Brothers sites. Mr Nemes asked about Woolworths or Coles stores. Mr Semos replied: We have a contract with Franklins Big Fresh for all stores Australia-wide. Franklins are eager to have the machines installed but we haven't got enough investors. We want to go in to New South Wales, then the ACT, then South Australia, then on to Western Australia. 117 There was further discussion about the machines. They then visited a fruit store at the fish market near Darling Harbour. The store was said to be operating an old model machine. An employee said that they had sold 120 - 150 bottles on the previous Saturday. Mr Semos said that the old machine was subject to a lot of spillage. With the new machine there was no spillage. The old machine squeezed peel and made the juice acidic. The new machine apparently did not do so. Mr Nemes said that there was a new machine at the store but it was not installed. This seems to be inconsistent with the evidence of Mr Poniris who, I infer, was the manager of this site. I am inclined to the view that Mr Nemes may have been told that there was another machine at the store. I doubt whether this was so. 118 They then went to the Duffy Brothers store in Oxford Street. Mr Semos said that it would be Mr Nemes' site. They spent only a few minutes there, but Mr Nemes thought it was a good site. It may be relevant in any compensation proceedings that Mr Nemes' view was apparently based on his own observations. They then returned to the Hilton Hotel. Some time thereafter, Mr Nemes had a conversation with Mr Semos in which Mr Semos said "Do you want the Darling Harbour Fish Market site?". Mr Nemes said that he did. Mr Semos said that he would arrange it. At various stages Mr Nemes was told that machines would be sited within two to three weeks after payment. Labels had to be produced. The machines themselves would be available within a couple of days. On 30 March Mr Nemes sent Michigan a cheque for $5,000. On 1 April he sent a further cheque for $5,000. 119 On 8 April he had a telephone conversation with Mr Cameron in which state distribution rights were discussed. He then had a telephone conversation with Mr Laski about that matter. On 9 April he received a facsimile from Mr Laski, setting out Michigan's proposal for state distribution rights. That letter is exhibit TN 3 to his affidavit and is part of Schedule 7 to these reasons. There was subsequent discussion about the price. It was reduced from $200,000 to $100,000. On 14 April Mr Nemes forwarded a cheque for $39,950 to Michigan. His solicitor received from Michigan or its solicitor a Profit and Loss Statement for Michigan for the year ended 30 June 1998 which showed a profit of over $1 million. Mr Laski subsequently sent him a distribution agreement which Mr Nemes signed on 6 May. In the meantime, his finance for acquisition of ten machines, which had previously been approved, was withdrawn because Michigan had been unable to provide details of sites and copies of site contracts. 120 Shortly after 7 May Mr Nemes and Mr Semos discussed siting of machines on the Gold Coast. Mr Semos said that he wanted to have one machine at Franklins, Rockhampton. In May 1999 Mr Nemes paid $40,000 pursuant to the distribution agreement. On 24 May he obtained finance through his construction company in the amount of $80,000 for the purchase of ten machines. He claimed to have paid a total of $129,950 for the ten machines. On 4 June he paid a further $30,000 as a second payment pursuant to the distribution agreement. On 7 June he paid a further $30,000. In mid-June he spoke to Mr Semos who said that siting would be delayed for another two to three weeks, that there were no oranges in New South Wales and that oranges were too expensive. Mr Nemes asked for a list of the locations at which he machines would be sited. Mr Semos agreed to send him a list. On 24 June he received a facsimile from Queensland Juice Company. He had not previously heard of that organization. It provided a list of "potential sites". They included Coco's, Franklins, Natoli Brothers in Queensland, Mitchell's, Country Garden, Central Fruit Market, the Freshest Group, Crinis Fruit Market and Box Road Fruit Market in New South Wales. In early July he had a telephone conversation with Mr Semos who said: Three of your machines are sited in Queensland. One is in Rockhampton but not yet installed. We are going to put it in Franklins up there. One was placed in to Coco's at Southport and one is at Coco's at Woodridge. Your remaining machines will be placed in the Freshest Group stores. We have organized in-store promotions at each of the sites. 121 In early July Mr Nemes telephoned Coco's at Southport and subsequently spoke to Mr Semos, saying that Coco's at Southport was only "doing about ten bottles per day". Thereafter business tended to decline. Some stores did very little business and a number seemed to be using bottles supplied from some other source. Eventually the machines were removed. 122 In cross-examination it emerged that until his discharge on 9 August 1999, Mr Nemes had been an undischarged bankrupt. The hire purchase agreement for the machines and the distribution agreement were all taken out in the name of NTD Constructions Pty Ltd. It seems that he was not a director of that company. This may cause difficulties in any proceedings to recover compensation for loss. In cross-examination he made it clear that he did not rely upon the estimated bottle sales referred to in the introductory material which was forwarded to him. It seems, however, that he may have relied upon the guarantee. He agreed that the only mention of Coles had been to the effect that it would "come later down the line". He also knew that there was no contract with Woolworths.

Arjan Dewan Persons Spoken To - Mr Peter Semos, Mr Doherty, Mr Cameron Relevant documents - See Schedule 8 Payments Made: Date Amount Reason 1 April 1999 $6.000.00 Deposit and part payment 18 May 1999 $24,000.00 Balance of purchase price

123 Mr Dewan is the sole director of S. Michael Pty Ltd, a company established for the purpose of making personal investments. On the weekend of 27/28 March 1999 he attended the Franchise and Investment Expo at Darling Harbour, accompanied by Mr Kumar, another investor and witness. Mr Dewan was seeking a passive investment, that is one which would require only limited involvement on his part. He received a booklet which introduced the exhibitors, including Michigan. This is exhibit AD 1 to his affidavit. It is contained in Schedule 8 to these reasons. He went to a stall bearing the name "Michigan". There, in company with Mr Kumar, he spoke to Mr Doherty who introduced Mr Peter Semos. Mr Semos was said to be Michigan's site engineer, responsible for siting machines at retail outlets. According to Mr Dewan, Mr Semos said: We have had a lot of success with the machines in Queensland. The machines are an excellent product as they cost very little to maintain. The business has a low cost of entry. We have made arrangements to site machines in supermarkets such as Franklins as well as major fruit and vegetable stores such as Duffy Brothers. Franklins have trialed the concept for one year in Queensland and now we are going national. It has been such a success. That is the purpose of us being at the Expo. We are canvassing now for second level sites. We are at the expo to place machines in first level sites. Most of these sites are taken. When there are left over oranges from the orange bins, and before they spoil, they are cut and put in the juicer. The juicer is a special and unique invention, in that it is able to extract the juice without pressing on the peel. This ensures that the juice is sweet and has no trace of bitter. 124 Mr Doherty said: It's both a winter and summer product with people drinking orange juice for vitamin C in winter and is an excellent refreshing and cool healthy drink in summer. Oranges are imported into Australia when there is a shortfall, so supply is maintained to juice the whole year through. We will take care of the promotions and we have an initial three months guarantee of $200 per week per machine until the business takes off. The cost of the machine is around $15,000 and most customers take five sites in a lot. They are really selling fast. 125 Mr Doherty also said: Once a machine is purchased and sited, the store will order bottles from Queensland. Queensland will pass the delivery note on to the investor. The investor will invoice the store for the bottles at $1.50 per bottle and wait for the store to pay the invoice. The investor then pays $1.00 per bottle to Michigan and keeps 50 cents as profit. The retailer sells the juice for a price it determines and keeps the profits. Sites such as Franklins, and high volume fruit and vegetable stores, are referred to as "A" sites. This grading is based on the sales turnover per week that the stores achieve. The "A" sites easily achieve $750 per week per machine in sales turnover. 126 Mr Dewan asked about competition and was told that the machines would not be sited in Coles or Woolworths stores and that: The stores we have are not going to take other machines. Franklins and Michigan have an agreement that it is exclusive both ways. 127 Mr Doherty said that Mr Peter Semos was the site engineer and that he (Mr Doherty) did the marketing. His boss was Rod Laski who was finally in charge of the whole operation. Mr Semos was the inventor and imported the machines from Brazil. Mr Dewan said that he was interested in two machines to be sited at high-volume sites. He was told that no "A" sites were available, but it was expected that they would arrange more in the future. He left his telephone number. On 31 March he received a telephone call from Mr Doherty who said: Certain investors have dropped out as they have been unable to arrange finance, so a number of "A" grade sites have come back on the market. The available sites are Franklins Big Fresh stores at Marrickville and Burwood, Duffy Brothers at Hurstville, Burwood and Chatswood, Fruit World, and Joes Fruit Market at Strathfield. 128 Mr Dewan replied that the Duffy Brothers store at Burwood had been demolished. He also said that as he lived at Burwood, he would be interested in the Burwood site once the redevelopment was completed. He was also interested in reserving the Duffy Brothers site in Chatswood. Price and finance were then discussed. At some stage Mr Doherty said: Michigan is under pressure to find investors considering that the Expo is now over and there are "A" grade sites available. 129 On 1 April 1999 Mr Dewan saw Mr Doherty at the Radisson Hotel in Sydney and was introduced to another person called Charles, presumably Mr Cameron. Mr Dewan and Mr Doherty had a conversation in the absence of Mr Cameron. Mr Doherty said that it would take two weeks to locate the machines after notification that finance was approved. He offered a discount if Mr Dewan signed at that time. They then discussed product and public liability insurance, maintenance and delivery time. The machines were to be delivered within two weeks of full settlement. Mr Dewan drew a personal cheque for $6,000 in favour of Michigan and gave it to Mr Doherty as a deposit upon two machines, one at Duffy Brothers, Chatswood and the other at Franklins, Burwood. On either 8 or 9 April Mr Dewan again called Mr Doherty, saying that he was interested in purchasing two more machines. Mr Doherty said that he was willing to negotiate a deposit in the amount of $4,000 on two machines in view of the fact that Mr Dewan had already paid a deposit of $6,000 on the other two machines. Mr Dewan subsequently received an invoice in the amount of $4,000 being part payment for two machines. However he decided not to purchase the third and fourth machines. 130 He arranged finance for the acquisition of two machines. On 18 May the funds were advanced pursuant to a hire purchase agreement. He telephoned Mr Doherty, told him that his finance was approved and asked him to site his machines. Mr Doherty said that they were awaiting the release of the money and that he should speak to Peter Semos at Queensland Juice Company. Mr Dewan was surprised because until then he had thought that Mr Semos worked for Michigan. Between 18 May and 24 June he telephoned Mr Semos about five times, asking about siting of the machines. He was told that the machines had been delivered and tested, but that there was a delay in printing labels. They would not be available for about a week and a half. On 24 June he was told by Mr Semos that a machine had been installed at Duffy Brothers, Chatswood and that the installation at Franklins, Burwood was scheduled for 28 June. On 28 June Mr Semos told him that he had been speaking to Franklins, Burwood and that the installation had been delayed because of the high price of oranges. Mr Semos offered him compensation at the rate of $100 per week until the machine was "up and running at Franklins". Alternatively, he was offered another site, Franklins Big Fresh, Wollongong. Mr Dewan accepted the offer of compensation. He was told to telephone Ms Kinikis at Queensland Juice Company. 131 On 9 July he spoke to Mr Doherty about the possibility of reserving the Duffy Brothers site at Burwood which had closed during reconstruction. Mr Doherty said that he would accept $500 as a deposit on the site. Mr Dewan did not go ahead with this proposal. On 9 July he received a cheque for $200 from Queensland Juice Company, apparently as compensation. He received a subsequent payment of $700. The machine was never sited at Franklins, Burwood. On 15 August he visited a store at Chatswood which, as he understood it, was operated by Duffy Brothers. He had obtained the address from a telephone directory. The person operating the store told him that he had bought it from Duffy Brothers in January 1999. He knew nothing about juicing machines, Queensland Juice Company or the Michigan Group. Mr Dewan advised Mr Peter Semos of this conversation. Mr Dewan pursued the matter in various facsimile transmissions to Mr Peter Semos but received no satisfaction.

Siva Ratnasabapathy Kumar Persons Spoken to - Mr Peter Semos, Mr Doherty Relevant documents - See Schedule 9 Payments Made: Date Amount Reason 6 April 1999 $6,000.00 Deposit and part payment 21 April 1999 $24,000.00 Balance of purchase price

132 Mr Kumar and Mr Dewan attended the Franchise and Investment Expo at Darling Harbour on 27 March 1999. They visited a stall which had signs identifying it as "Michigan" and observed juicing machines in operation. At some stage Mr Kumar received a brochure which introduced the exhibitors including Michigan. It is exhibit SRK 1 to his affidavit and is in Schedule 9 to these reasons. They spoke to two men, one of whom was Mr Doherty. The other was Mr Peter Semos. Not surprisingly, Mr Kumar's version of the conversation is not precisely the same as Mr Dewan's. According to Mr Kumar, Mr Doherty said: I am from Brisbane. We have had a lot of success with the pilot site in Queensland. It is located in metropolitan Brisbane and has been running for nine months. The juice has been selling for $4.99 per two litre bottle and we are averaging sales of 400 bottles per week. Based on that Franklins went for an agreement with us Queensland-wide. We have been very successful with investors in Queensland. Franklins is very happy and have machines in all their Big Fresh stores there. 133 Mr Semos said: I am from Melbourne so we have the deal with Franklins stores in Queensland and that is now expanding into New South Wales. The deal with Franklins is restricted to the Big Fresh stores only. They are not for the No Frills stores. 134 Mr Doherty then provided information concerning the machines and the arrangements for their installation, including the mechanism for investment. Mr Kumar said that he wanted only high volume sites such as Franklins. Mr Doherty identified sites as being "A" sites and "B" sites. He said that all "A" sites were taken. During the conversation, Mr Semos left on a number of occasions to speak to other people. Mr Kumar and Mr Dewan subsequently spoke by telephone. Mr Kumar then spoke to Mr Doherty by telephone, saying that he was interested in buying a machine and that he was interested in newly available "A" sites. Mr Doherty said: We are offering a discount if you buy two machines. I'll give them to you for $15,000 each. Mr Kumar said: What are the locations of these "A" sites? 135 He was told that they were in Tuggerah, Gosford, Bankstown, Campbelltown and at a large fruit barn on the Hume Highway. Mr Doherty interrupted the conversation on a number of occasions, allegedly to check information with Mr Semos. At some stage Mr Doherty said that Mr Semos had told him that Gosford was not available and that the Bankstown site was a Duffy Brothers store. Campbelltown was a Franklins Big Fresh store. Mr Kumar knew that the Franklins store at Campbelltown was a large store but had never seen the Duffy Brothers store at Bankstown. He asked what volume of sales could be expected from the sites. Mr Doherty said: In the first three months you will be guaranteed a minimum of 200 bottles per week per site. If sales drop below 200 bottles per week Michigan will cover you for the difference. 136 Mr Kumar decided to proceed. He bought two machines. Mr Doherty asked for a $6,000 deposit. This was paid on 6 April. At some stage prior to that, Mr Semos and Mr Doherty told him that he could expect an average of 400 bottles per week. However Mr Kumar calculated his expectations upon the more conservative basis of 300 bottles per week. On 21 May he telephoned Mr Doherty, asking when the machines would be installed. He was told that they would be ready within two weeks from the date "of the first disbursement of your finance". On 7 June he telephoned Mr Doherty and asked if the machines had been installed. He was told to speak to Mr Semos at Queensland Juice Company as he was responsible for installation. This was the first occasion on which Mr Kumar had heard of Queensland Juice Company. He had thought that only "companies in the Michigan Group" were involved. 137 Mr Kumar telephoned Mr Semos on 7 June and was told that the machines would be on site in another week. He asked if Mr Semos was from Michigan and was told that he was not. Michigan looked after marketing whilst Queensland Juice Company looked after operations. On 14 June he inquired again as to siting. Mr Semos said: Things are a bit slow because the price of oranges is very high at the moment. The price per kilo has increased from $1.20 to $4.60. There has been an unusual frost in Sydney and the Murray Valley Irrigation Area. There has also been a frost in California as well, and the USA has been buying oranges off Australia. Within the next two weeks prices should drop to an acceptable level. There is also a delay in getting the labels from the printer. For the labels to be profitable we need a higher batch quantity. I should have everything worked out in another ten working days. 138 This was the first occasion on which Mr Kumar had heard anything about orange prices. On 21 June Mr Kumar telephoned Mr Semos again. Mr Semos said: Franklins are not in any hurry to install the machines as they are waiting for the orange prices to drop so that juicing becomes more profitable. Quite a few people are in the same boat while they wait for the price of oranges to come down. That should be in two weeks. Michigan is going to work out some sort of compensation. 139 Mr Kumar asked for something in writing about that. Mr Semos said that he would give him something in due course. On 30 June there was a further conversation concerning siting. On this occasion Mr Semos said: The machine has been installed at Duffy Brothers, Bankstown. I am going to be on site on Saturday 10 July 1999. Why don't you meet me there then and we can work out the details of the compensation? 140 On 8 July Mr Kumar telephoned Mr Semos who confirmed that the machine had been installed at Duffy Brothers, Bankstown. He asked that their meeting be relocated to the Food Court at Westfield Shopping Centre in Liverpool. On 9 July that meeting took place. Mr Semos said: The machine has been installed at Duffy Brothers, but Franklins in Campbelltown will be a little longer. The reason for the delay is that the Franklins Big Fresh stores are waiting for the price of oranges to return to traditional season prices. I expect Franklins to be ready to juice in a fortnight. 141 Mr Kumar received a cheque from Mr Semos for $200, drawn by Queensland Juice Company. This was compensation for the delay in installing the machine at Franklins. He asked if he would have the benefit of the guarantee after the machines had been installed. He was told that the guarantee would be honoured if necessary. On 10 or 11 July, Mr Kumar discovered that Duffy Brothers did not have a store at Bankstown, although they had one at Blacktown. He visited the Blacktown store and discovered that there was no juicing machine at that site. On 12 July he telephoned Mr Semos and told him these facts, saying that he was annoyed and that he had been told that installation had taken place. Mr Semos said that he did not do the installations and would check the records. 142 On that day Mr Kumar received an email from Queensland Juice Company, asserting that one machine had been installed on 30 June 1999 at the Freshest Group site at Strathfield. He had not discussed that location. On Saturday, 17 July, he visited it and found the machine in a storeroom. It had not been unpacked. There were also two pallets of two-litre bottles on the premises. A different juicing machine was operating at the front of the store. An employee told Mr Kumar that they had been waiting for somebody from Queensland Juice Company to install and demonstrate the machine. He visited the Strathfield shop every Saturday after this but did not see any sales from the juicing machine which was installed at the front of the store. His machine was never installed. On 19 July he sent a facsimile to Mr Laski and to Mr Doherty attaching a letter dated 18 July. In it, he complained of events concerning location of the first machine at Duffy Brothers, Bankstown. He then complained about the location of the second machine at Strathfield. He received a letter dated 19 July from Queensland Juice Company in reply. On 26 July he spoke to Mr Semos by telephone, asking for a meeting and for alternative sites for his second machine. At that meeting, he agreed to move the machine from Strathfield to Campsie. The three-month guarantee was to re-commence from the date of relocation. Mr Kumar asked for a copy of the agreement between Queensland Juice Company and the fruit shops. Mr Semos responded that he was not well, that he had a brain tumour and that he had to have an operation. Further correspondence ensued. On 23 August 1999 Mr Kumar received a cheque for $700, presumably by way of compensation. Subsequently, the machine at Strathfield was removed by Queensland Juice Company.

Bryan Martin Egan Persons Spoken to - Mr Cameron, Mr Peter Semos, Mr Doherty, Mr Laski Relevant documents - See Schedule 10 Payments Made: Date Amount Reason for Payment 13 April 1999 $2,000.00 Deposit and part payment 18 May 1999 $76,750.00 Balance of purchase price

143 On 26 March 1999, Mr Egan attended the Franchising and Business Opportunities Expo at Darling Harbour. He visited a stall bearing the name "Michigan Group" and received a brochure which introduced Michigan. It is exhibit BME 1 to his affidavit and is part of Schedule 10 to these reasons. He spoke to somebody who introduced himself as Daryl. He now knows him to be Daryl Doherty. Mr Doherty said that he was based in Queensland and owned machines himself. He made various representations as to the conduct of the business and in particular said: We have a number of stores lined up in which to locate the machines. We have arrangements with major supermarket chains and fruit and vegetable shops, for example, Franklins Big Fresh and Duffy Brothers fruit and vegetable chains. There are also other sites which we call A1 sites which turn over more than $100,000 per week per site in fruit sales. This is the launch of the machines in New South Wales. We have arranged to put the machines into these sites straight away, and the sooner you get in the better sites you are going to get. You should get in early before the good sites go. If you get in early you can select the best sites available. Here is some promotional material for you to look at. Mr Doherty then handed him certain documents which are exhibit BME 2 to Mr Egan's affidavit and part of Schedule 10 to these reasons. Mr Doherty particularly referred to a document headed "Your Profit Potential" and said:

These figures are based on what people are getting out of the machines in Queensland. We do the in-store promotions to get the sites up and running and we also do on-going promotion. The machines are sold in lots of five. Five machines will cost you $78,750. He then referred to a page in the promotional material concerning finance. Discussion ensued. Mr Egan said that he would prefer to organise his own finance. 144 Over the next few weeks Mr Egan discussed the promotional material with his wife and looked at the profit projections. He decided to be cautious and focussed on the minimum figures in the "Your Profit Potential" document. He spoke to Mr Doherty by telephone, saying that he was concerned about making an up-front payment before the machines were in place. Mr Doherty arranged for another investor to speak to him. On 13 April Mr Egan paid a holding deposit to Michigan. Mr Doherty told him that Mr Peter Semos wanted more than $5,000 by way of deposit, but Mr Egan paid only $2,000. Mr Doherty said that it was refundable. At this time they also had a conversation with Mr Peter Semos concerning the guarantee. He said: Once the machines are sited we will pay you if they do not reach 200 bottles per week per machine. The guarantee would be credited against your purchase of bottles. 145 At some stage Mr Egan asked Mr Doherty for details of how the machines were going elsewhere. Mr Doherty said he would get somebody to call him. A man subsequently called, saying he had twenty machines in Queensland which were doing very well. Mr Egan does not remember his name. Mr and Mrs Egan decided that they could fund the acquisition from the minimal profit projections. Mr Egan telephoned Mr Doherty and told him that they were interested in buying five machines. They arranged to meet at the Radisson Hotel. Prior to such meeting, Mr Egan received a letter from the Michigan Group dated 8 April 1999. This is exhibit BME 5 to Mr Egan's affidavit and is part of Schedule 10 to these reasons. The meeting took place between 8 and 13 April. Mr Doherty introduced them to Mr Semos and Mr Cameron and said: Peter is the Siting Supervisor. Peter will be responsible for setting up the machines on the sites you select. Peter is responsible for siting the machines for Michigan Group. 146 There was other discussion concerning bottles, labels and promotion, as to the availability of oranges and maintenance. At some stage Mr Egan asked for a copy of the proposed contract with Michigan and was told that there would be no contract. Mr Semos excused himself from the meeting. In his absence Mr Cameron read out the names of a number of sites and said: These are the sites on which we are seeking to have machines installed. We want to allocate the sites as soon as possible. 147 The list included Franklins Big Fresh stores at Nowra, Penrith and Gosford, Duffy Brothers stores across Sydney and other major fruit stores. Mr Cameron said: First in gets the best sites. The quicker you get involved the more chance you will have of getting prime sites such as Duffy Brothers and Franklins Big Fresh stores. 148 Mr Egan said that he would think about it. He and his wife discussed the matter further. Mrs Egan telephoned a number of nominated sites. She was told by the person to whom she spoke at Franklins Big Fresh, Nowra that he knew nothing about any arrangements for the location of a juice machine at the site. She was referred to the Produce Group Manager at Franklins Big Fresh whom she telephoned. He said that Franklins had one juicing machine at the Leichhardt store. It had been there for three weeks but had not been operating. Mr Egan subsequently conveyed this information to Mr Semos. Mr Semos said: You should not be talking to people like this. It will cause problems. What has been sorted out with Franklins has been sorted out overseas. I have been dealing with a Franklins person overseas. 149 There were numerous other telephone conversations during one of which Mr Semos said: The better site options are the fruit and vegetable retailers because the trading terms of supermarkets and Franklins Big Fresh sites mean that you will have to wait up to 90 days to get money through from them. Mr Cameron said much the same thing in other conversations. 150 In early May Mr Egan and his wife decided to invest in five machines at a cost of $78,750. They organised finance and telephoned Mr Doherty, saying that they had decided to proceed and asking as to available sites. He offered them Franklins Big Fresh, Nowra; Banana Joe's in Marrickville; Marrickville Fruit; and Miles Fresh in Rockdale. They were said to be the best sites available. Mr Doherty said that he should pay the money immediately and that all five machines would be sited within two weeks of payment. The first machine was to be installed at Banana Joe's at Marrickville. Mr Egan arranged to meet with Mr Cameron and Mr Semos at Banana Joe's on 18 May. At the meeting Mr Egan indicated that he and his wife would need income in order to meet their minimum repayment obligations. He also inquired as to the availability of oranges. He was told that there were always a lot of oranges suitable for juicing and that there was no substantial seasonal drop off or change in prices. He was told that there would be a siting agreement for each site and that they would site them for him. The guarantee was explained to Mr Egan. 151 The machine was to be installed at Banana Joe's on or about 3 June. Mr Egan arranged to meet Mr George Semos at the site for the installation. However it seems that the father of the family operating the store was not happy about its being installed. Orange prices were also very high. The machine was not installed. Mr Egan and his wife spoke to Mr Peter Semos on numerous occasions between 18 May and early June. On each occasion he said that the price of oranges was unusually high and that it was not profitable for retailers to juice oranges. In early June Mr Egan visited Miles Fresh at Rockdale and had a conversation with the manager there. He was told that the machine had been used for a couple of days but was no longer wanted In early June he called at Banana Joe's and was told that they did not want a machine. On 3 June Mr Egan telephoned Michigan and spoke with Mr Cameron. He told him of these conversations. Mr Cameron said that the sites were not juicing because of the high price of oranges. On 4 June Mr Egan received a facsimile from Mr Laski which indicated that the guarantee did not apply to their contract although he had "now included the guarantee for you". He said that a cheque would be forwarded on 7 June. Mr Egan called Michigan on numerous occasions thereafter and spoke to Mr Laski who was very rude. Subsequently, Mr Egan agreed to a machine being located at Grandma Rosie's which was said to have a direct line to South Australia for the supply of oranges. A machine was also installed at Thai Kee Supermarket and Café at Haymarket. As at 16 June 1999 only three machines had been sited. Only that at Thai Kee Supermarket was juicing. 152 There was further correspondence concerning the guarantee. Mr Egan received $2,000 from Mr Laski. On 28 June Mr Egan discovered that Banana Joe's was juicing, using a machine other than his. He said that there had been no juicing at the Thai Kee Supermarket. This is inconsistent with par 60 of his affidavit in which he said that Thai Kee Supermarket was the only machine which was juicing. At some stage Mr Laski offered to site a machine at Mitchell's Fruit For Less, Warilla Grove. A machine was already sited there. It was to be transferred to Mr Egan in place of one of his. There was further correspondence concerning siting of the machines, but it is of little relevance for present purposes.

Won Hwan Kwon Persons Spoken to- Mr Laski, Mr Cameron, Mr Peter Semos Relevant documents - Nil Payments Made: Date Amount Reason for Payment 26 March 1999 $31,400.00 Payment in full for two machines (Cheque cancelled on 29 March 1999) 29 March 1999 $15,750.00 Payment of balance of purchase price for one machine

153 On 26 March 1999 Mr Kwon and his partner, Jenny Wang, attended the Franchise and Trade Show at Darling Harbour. They visited a stall which had a "Michigan" sign. It was operated by three men, two of whom introduced themselves as Rod Laski and Charles Cameron. Mr Kwon cannot remember the name of the third man. A conversation took place involving Mr Laski, Mr Cameron, Mr Kwon and Ms Wang. One of the Michigan personnel said: You buy the machines. The business operates by placing the machines in supermarkets and fruit and vegetable retailers around Sydney. The retailers juice the oranges and sell the juice for a profit. We do all the work for you. All you have to do is supply the bottles to the retailers. You earn $1.00 per bottle. We already have an agreement with Franklins to put the machines in their Fresh and Big Fresh stores, but they are not going to put them in the No Frills stores. The machines are very popular in Queensland. They are already being used in Brisbane and all the investors are very happy. They are a very good investment and very profitable. They are making $1,000 per month. The machines cost $15,750 each. You should recover your investment in one and a half years. If you buy a machine you will be the first buyer in Sydney. There are very good sites available immediately. If you get involved straight away you can have the best two sites. You don't have to worry about paying for the bottles. When you get an invoice from Michigan Group you just hold onto it then give an invoice to the shop. The shop pays you for the bottles and then you pay Michigan Group. 154 Mr Kwon was attracted by the involvement of Franklins and said that he would buy two machines. Ms Wang, Mr Kwon and Mr Cameron then went to an upstairs coffee lounge. Mr Cameron said: Peter Semos has arranged everything. Peter is the site manager, he is always looking for sites. He is in Sydney at the moment looking for sites. I will give him a call to find out which sites are available. Mr Kwon said: I only want the big Shopping Centres. Mr Cameron said: Peter will keep an eye for all the Shopping Centres. Mr Cameron then called Mr Semos and spoke to him. He then said: There is one in Chatswood, one in Miranda, and one in Parramatta. Those are Franklins in the Westfield Shopping Centre at Chatswood and a large fruit and vegetable store in the Westfield Shopping Centre at Miranda. 155 Mr Kwon could not recall the identity of the site at Parramatta. He had some familiarity with the areas in question and said that he would buy two machines, one to be installed at Franklins Chatswood and the other at the fruit and vegetable store in Miranda. He wrote out a cheque for $31,400 saying: I am leaving to go to Korea for a couple of weeks. He said that one of the men then said:

We will have an invoice for you and a site agreement to sign when you returned from overseas. The reference to "one of the men" is a little difficult to understand as by this stage, only Mr Cameron was with them. Mr Kwon also said that Mr Laski and Mr Cameron gave him business cards. 156 Subsequently, over the weekend of 27/28 March, Mr Kwon considered the matter further and decided that the machines were not a good investment. He therefore cancelled his cheque and rang Mr Laski to tell him. He said that he did not wish to proceed because he did not know how the business was going. He was not sure that the machines were good. Mr Laski asked him to come to his hotel with Ms Wang. They met at the Radisson Hotel on that day, 29 March. Mr Laski, Mr Peter Semos and Mr Cameron were present. Mr Cameron said that one of the machines was already on the way to a site, and that Mr Kwon would have to pay for it He also said that somebody had bought a machine in Queensland and was making money. Mr Semos said that the machine was on its way to Franklins, Chatswood and would be installed on the following morning. Mr Kwon then said that he would buy one machine for installation at Franklins, Chatswood. He wrote out a cheque for $15,750 and gave it to them. One of them again said that the machine would be installed the following day. They then discussed cocktail machines. Mr Kwon agreed that during his visit to Korea, he would explore the possibilities of exporting them to that country. 157 In mid-April he and Ms Wang went to Franklins, Chatswood but could not find the juicing machine. There was no fruit and vegetable section in the store. He telephoned Mr Cameron in Melbourne, telling him that the machine was not in the store and that it did not sell fruit. He was told that he would have to speak to Mr Peter Semos in Brisbane. He tried to contact him but was unsuccessful. At about the end of April he spoke to Mr Semos by telephone, asking about his machine. Mr Semos said that he was trying to organise another site for him, a fruit and vegetable store called "Top Score" at Chatswood. Mr Kwon and Ms Wang visited that site on the following day, and Mr Kwon again spoke to Mr Semos. He told him that Top Score knew nothing about the machine and did not want it. Mr Semos said that he had made the arrangement himself and that they would have to take it as they had promised to do so. Mr Kwon said that he did not want that site. Mr Semos said that he was arranging another site at Duffy Brothers, Chatswood. Towards the end of April, Mr Kwon and Ms Wang went to inspect that site but were unable to locate it. They were told that there was no Duffy Brothers store in Chatswood. Mr Kwon then telephoned Mr Semos and informed him of this. Mr Semos said that he had been in contact with Top Score and that they wished to install machines in two stores. He said that the reason that the owner had previously told Mr Kwon that he did not want his machine was that he (Mr Kwon) only had one machine. Mr Semos said that he could have Top Score if he took two machines. Mr Kwon said that he did not want another machine. Mr Semos told him to look around and pick his own site. In late April Mr Laski telephoned him. When Mr Kwon raised the question of siting with him Mr Laski said: Peter is responsible for the sites. Why don't you go and find a site to put your machine and then contact Peter Semos? 158 This conversation may be of significance in establishing Mr Laski's state of knowledge at later times. Mr Kwon also spoke to Mr Semos at about that time. He said that somebody had bought a machine for Franklins, Leichhardt. Mr Kwon and Ms Wang went to inspect that site and found no machine. The manager told them something and on 22 April Mr Kwon sent a letter to Michigan, demanding that the machine be installed at Top Score in Chatswood within seven days or the purchase price refunded. On 23 April he received a letter from Michigan. Mr Kwon does not agree with the contents of that letter but it is not necessary to identify them. On 3 May he commenced proceedings in the local court at Burwood. In mid-May Mr Franzese, the solicitor for Michigan, telephoned and said that Michigan would fix the problem if Mr Kwon withdrew the claim. He also said that if the claim was not withdrawn, Mr Kwon would not win because he had ordered two machines and cancelled the cheque. Mr Kwon continued with the proceedings. 159 On 25 May Mr Kwon was advised by Queensland Juice Company that a machine had been installed at My Fruit Market in Chatswood. Mr Kwon telephoned Mr Semos and arranged to meet him at that site. At the meeting he told Mr Semos that he was not happy with the site and asked why he had been given it. Mr Semos said that Mr Laski had told him that the machine must be on a site in Chatswood because of Mr Kwon's court claim. Mr Kwon said that he had found a shop called Fruit World in Campsie in which he would like to install his machine. Mr Semos went with them to see the store. Mr Semos spoke to the manager who referred him to the head office of Fruit World at Flemington. They then went to that location, and Mr Semos apparently spoke to the relevant person. He informed Mr Kwon that: They are very interested in doing business. They have seven stores around Sydney which will all have a machine. There are sites at Penrith, Campsie and Randwick. The busiest shop is Randwick Fruit World. 160 Mr Kwon said that he wanted his machine installed at Randwick. Mr Semos agreed to this. On 26 May Mr Kwon received a letter from Michigan with a copy of a site agreement for My Fruit Market and an invoice in the amount of $500 for bottles. He was subsequently told by Mr Franzese that Michigan would install the machine when the next orange season started. The price of oranges was too high. In June 1999 Mr Kwon spoke to Mr Semos by telephone. Mr Semos said: Your machine is at the warehouse. The new orange season will begin in a couple of weeks. However, before the machine is installed at Fruit World in Randwick you must pay $700 for the first stock of bottles. If you don't pay for the bottles we cannot install the machine. Mr Kwon said: That is very different to what you told me at the Franchise and Trade Show. You said that I didn't have to worry about the bottles, that when I got an invoice from Michigan I could just hold onto it and give an invoice to the shop. I am to pay Michigan only when the shop pays me for the bottles." Mr Semos said: The system has changed. You must pay for the bottles first now. Mr Kwon asked why and was told: That was what we were offering for the first month only, after that it did not apply. 161 It seems that the machine was eventually installed at Randwick, but the terms of such installation are not clear. Mr Kwon has recovered judgment in the local court at Burwood in the amount of $16,097.26 and interest. 162 In cross-examination Mr Laski sought to establish that Ms Wang had acted as Mr Kwon's interpreter during negotiations. However it seems that she speaks Chinese, and he speaks Korean. English is their common language.

Gordon John Poole Persons Spoken to - Mr Peter Semos, Ms Moretto Relevant documents - See Schedule 11 Payments Made: Date Amount Reason 9 August 1999 $10,000.00 Deposit and part payment 9 August 1999 $115,000.00 Balance of purchase price

163 Prior to June 1999 Mr Poole had met Ms Moretto in her capacity as a finance broker. In that month she came to see him. He knew that she ran Yeppoon and another company. She asked whether he was "interested in another business scenario using trade dollars". He said that he was. Trade dollars are a form of unofficial currency. As best I can understand it, they represent the credit balance of the holder with a central clearing house to which debts are assigned. On or about 11 June Mr Poole received a letter signed by Ms Moretto as state distributor for Michigan. It concerned juicing machines. Certain documents were attached. They constitute exhibit GJP 1 to his affidavit and are part of Schedule 11 to these reasons. A couple of days later she visited him and said: The juice machines are good. There are lots of places to choose from. The machines are in Franklins Big Fresh stores. The Big Fresh located in the 'Q' Shopping Centre at Mermaid Waters has a machine that we can go and have a look at. We're also having talks with both Coles and Woolworths. 164 Ms Moretto said that "all five machines" would go into Franklins sites in Brisbane and/or the Gold Coast. She was apparently proposing that he purchase five machines. Ms Moretto said that there would be a two or three week delay for labels to be produced Mr Poole thought that the machines would be a good money earner if they were going into Franklins Big Fresh stores. About a week later he visited Franklins Big Fresh, Mermaid Waters and spoke to somebody who told him that the juicing machines "are the best things since sliced bread and that they were doing a lot of juice and that the machines were well made". On the basis of the documents contained in exhibit GJP 1 and his visit to the store, he decided to purchase five machines. In early July he applied for finance. This was eventually organized. He borrowed $115,000 which was paid to Yeppoon. A further 45,000 trade dollars were also transferred to Yeppoon. Yeppoon then refunded $35,000. The total price for the machines was said to be $125,000. On 9 August one Craig Ross gave Mr Poole five serial numbers for his machines. On the same day Ms Moretto said that the machines would not be going into the supermarkets straight away. It would take three to four weeks to prepare labels. A couple of things had to be "tidied up". In late August Mr Poole spoke to Mr Semos who said: I'm responsible for siting the machines. There is likely to be a three to four week delay in siting the machines. They'll be going in to Franklins and will be in by September. 165 Mr Poole had several other conversations with Mr Semos. He was eventually told that the machines would not be going into Franklins Big Fresh stores but would be sited at SPAR supermarkets. They would be in position by December. Mr Poole said that he needed assistance in meeting his repayments. Mr Semos offered to meet his monthly payments of $2,200 until all machines were sited. On 9 November Mr Poole telephoned Mr Semos concerning these payments. At about that time he received one payment of $2,200. By December none of his machines had been sited. He did not receive any payment for that month. This matter continued to be the subject of correspondence and telephone calls throughout January. On 1 February 2000 Mr Poole sent a facsimile to Mr Laski asking for assistance in locating his machines and funding his repayments. In February he received a cheque for $1,200 from Queensland Juice Company. 166 On 4 February Mr Laski rang. He said that he was about to meet with Mr Semos and would try to locate Mr Poole's machines. He also said that Linda Moretto had no right to use Michigan letterhead. By this stage Mr Poole had lost track of Ms Moretto. On that day Mr Laski sent him a facsimile in which he denied Ms Moretto's authority to act on behalf of Michigan. He also asserted that Mr Semos and Queensland Juice Company had an agreement with Michigan for supply, maintenance and warranty of orange juicing machines but not to make representations or promises. He indicated that he would use his best endeavours to locate Mr Poole's machines. He also offered financial assistance. On 21 February Mr Poole received a facsimile from Mr Semos, saying that IGA sites for the machines were being finalized. He also said that the moneys paid to Mr Poole were in respect of interest only. Mr Poole asserted a right to a further $7,600 to cover lost income. Mr Semos said that he would not pay. Mr Poole went to New Zealand. Mr Semos called him there, offering him new sites. He also said that he would pay a further $800. Mr Poole subsequently received $880. There was further discussion about siting. On 13 March Mr Laski telephoned and said, "I'm calling to see how it went with Peter. I'm going to bring the interest up to date". Mr Laski challenged this evidence in cross-examining Mr Poole. He suggested that he had said, "Pete's going to bring the interest up to date". In about June 2000 Mr Poole telephoned Mr Laski who said: The machines are not up to government standards for dispensing fresh juice as they have to be chilled. They will have to be modified to allow refrigeration of the juice. Peter Semos will have to attend to that matter before they can be placed into supermarkets. 167 Mr Poole said that at the time at which the relevant representations were made, he had no reason to believe that Mr Semos had any interest in Yeppoon. See TS 199 ll 2 and 3.

John Keith Rotheram Persons Spoken to - Ms Moretto, Mr Cameron, Mr Peter Semos Relevant documents - See Schedule 12 Payments Made: Date Amount Reason 6 December 1999 $16,500.00 Part payment for 3 machines 21 December 1999 $65,000.00 trade dollars Deposit and part payment on additional 10 machines 22 December 1999 $135,000.00 Balance of purchase price for additional 10 machines 22 December 1999 $38,400.00 Balance of purchase for 3 machines

168 Mr Rotheram had previously owned and operated motels and was a member of the International Business Exchange Pty Ltd ("IBEX") which dealt in "trade dollars". I have previously explained my limited understanding of that concept. In conducting his motel businesses Mr Rotheram used trade dollars as a way of topping up occupancy. In late October 1999 he was interested in using them to acquire a business. He spoke to a Mr Devonport at IBEX and was introduced to Ms Linda Moretto, Mr Cameron and Mr Peter Semos. Ms Moretto claimed to be a real estate agent and finance broker, operating under the name Yeppoon Pty Ltd. Mr Cameron produced a business card which identified him as a salesman for Michigan. Mr Semos introduced himself as the designer of juicing machines. Ms Moretto claimed to owe IBEX trade dollars. She explained the concept of the juicing machine operation and indicated that she was prepared to take trade dollars rather than her commission. She said: I am a recently appointed state distributor for Michigan Group. Peter Semos got the machines in the first place. He gave Michigan Group the rights to market in Queensland. 169 Mr Semos did most of the talking in explaining the business. He said: The machines are sold in lots of five. 350 -400 bottles per site per week, some sites up to 800 -1000 each week. The minimum a bad site would do is 350 bottles per week. The statistics down south back that up. The machines are new in Queensland and Brisbane. The cash flow is very good. We can support the interest payments on the loan until the site gets up to 350 bottles. 170 Mr Cameron said: I am working with Linda to help with the marketing and any problems with the machines. Linda is the contact person though. 171 Mr Semos said: I spent some time in America while I was at university getting a degree in mechanical engineering. I came across the machine and saw how much money was being made. I brought it back to Australia. I became an agent for the machines. When the patent in Australia lapsed I improved the machines and got a patent for them. Mr Rotheram was shown a picture of the machine. Mr Semos said: Michigan are agents for lots of machines. Michigan specialises in marketing. I sold very few of the machines when I marketed the machines myself. We gave the agency to Michigan to sell the machines in Australia. I can't sell any machines to anyone direct because I sold the business and there was a restraint of trade clause. The way I got around it was to sell the rights to Michigan. He said that Ms Moretto was the state distributor of the machines. She said:

You could finance the machine to 100 per cent through cash flow. You could also cash convert. Mr Rotheram understood her to mean that if he purchased a machine for $25,700 using 30 per cent trade dollars, he could sell the machine and convert the trade dollars to cash. I do not understand this. The regular price for a machine was $25,000 but the cash price was $23,000. If buying with trade dollars, the price was $25,700. Mr Rotheram asked for a discount for buying in bulk. 172 Mr Rotheram had seen a particular "squeeze" bottle in New Zealand for which a friend had a patent. He showed it to Mr Peter Semos and Mr Cameron. They were very interested in it, suggesting that rather than his investing in machines, they should "do a joint venture on the bottles". However, Mr Rotheram's interest in the machines continued. He considered buying twenty of them. On 1 November Ms Moretto sent him some profit projections. The document is exhibit KR 3 to Mr Rotheram's affidavit and is contained in Schedule 12 to these reasons. Bargaining continued until a price for twenty machines was agreed at $20,000 per machine to be made up of $6,500 in trade dollars plus $13,500. 173 On 6 November, Mr Rotheram met with Mr Peter Semos and Mr Cameron in Brisbane. They went to Clayfield Fruit Markets to inspect a machine and there spoke to somebody called Carlos. He said that he was selling about 600 bottles of juice per week, that it was a good machine and that they did not have to market the product because people knew it was there. Mr Semos and Mr Cameron also took him to a relatively small SPAR supermarket at Clayfield where a machine had been installed. Mr Semos said: The machine hasn't been here for long. SPAR have trialed it, liked it, and want 16 machines. I infer that this was Mr Sirianni's store. I will deal with his evidence in due course. Mr Rotheram became very interested in the prospect. Until that point he had been more interested in the bottles. On 9 November he received a facsimile message from Mr Laski, expressing interest in his squeeze bottles. On 10 November he received further turnover information for juicing machines, apparently from Michigan. This material is contained in exhibit KR 6 to Mr Rotheram's affidavit and is part of Schedule 12 to these reasons. 174 On or about 10 November, Mr Rotheram realised that he would have difficulty in obtaining finance for the acquisition of the machines. On 12 November Mr Laski wrote to him, confirming his order for twenty machines at the agreed price mentioned above. He indicated that IBEX was to be instructed to hold 1,000 trade dollars per machine until such time as Mr Rotheram received the serial numbers of his twenty machines. The balance was to be payable upon delivery of the serial numbers. Mr Rotheram made some handwritten notes on the facsimile when he received it. On 16 November Mr Rotheram telephoned Mr Laski to find out what was happening with the machines. On that day he received a further facsimile from Mr Laski, advising that the machines had been ordered. There was also some discussion concerning siting, particularly at "SPA" stores, which is presumably a reference to SPAR stores. On 19 November Mr Rotheram organised a letter of credit for the purchase of the twenty machines. On 2 December he received a facsimile invoice for $400,000. 175 In December Mr Rotheram went into hospital. He said that for about three months prior to his hospitalisation, he had been taking painkillers and was not himself. This continued for two to three weeks after his operation. At least that is my understanding of par 33 of his affidavit. Following the operation, Mr Semos visited him at home on 6 December. Their conversation is of some relevance. The version which appears in Mr Rotheram's affidavit is a little difficult to understand. According to Mr Rotheram, Mr Semos said that "a guy" had three machines but did not want them as he had to return to Europe. They were still packaged. Mr Semos was willing to let Mr Rotheram have them at a cheap price, but he was not to tell Michigan. He mentioned a price of $11,000 each. Mr Semos also said that he only wanted one supplier for the SPAR supermarkets and that they wanted twenty machines. Mr Rotheram said that he could not get finance for twenty machines. Mr Semos asked him how many he wanted. He said "Ten". Mr Semos said that SPAR would not take the machines unless sixteen were available. 176 What happened next is not precisely clear, but it seems that Mr Semos agreed to sell Mr Rotheram three machines for $33,000. Mr Rotheram paid $16,500 on that day and was to pay the balance on delivery. Mr Semos also provided him with a list of nine SPAR outlets which were to take the machines. Mr Semos said that all machines would be sited before Christmas. On 14 December Mr Rotheram paid Queensland Juice Company $7,160.40 for ten pallets of bottles to satisfy the Christmas rush. He also bought a cold room. 177 At this stage Mr Laski still believed that Mr Rotheram was to purchase twenty machines from Michigan. In fact, he intended to purchase any machines from Mr Semos. He claimed that he had rejected Mr Laski's offer because he could not obtain finance for the twenty machines. On 21 December he authorized IBEX to pay 65,000 trade dollars into a trust account "as part payment to Michigan for ten machines". The relevant voucher is exhibit KR 14 to his affidavit. This is a letter from IBEX which states: Below is a copy of a trade voucher for 65,000 dollars. This represents part payment of ten juicing machines you are purchasing from Linda Moretto. These funds will be deposited into the IBEX trust account until finalisation of the terms of your agreement for the purchase of these machines. 178 The reference to Ms Moretto might suggest that he was still dealing with her, but the evidence of his conversation with Mr Semos suggests otherwise. The trade voucher, a copy of which appears at the foot of the document, does not identify any particular payee. On 22 December Mr Rotheram paid $38,400 to Mr Semos for three juicing machines and transferred $135,000 into an account for ten machines. He was apparently obliged to pay a further 9,000 trade dollars, but did not do this. On 22 December he signed site agreements for machines to be sited at SPAR supermarkets at Sunnybank Hills, Loganholme, Bellbowrie, Robina, Manly, Algester and Wishart in Queensland, and Warialda in New South Wales. These agreements had, however, not then been signed by the site owners. It seems that the Sunnybank Hills, Loganholme and Bellbowrie agreements were signed by the site owners on 5 January 2000, and those for Robina and Manly were signed on 7 January. The agreements for Algester and Wishart were signed on 11 January. That for Warialda was signed on 12 January. Prior to Christmas 1999, Mr Semos told him that sixteen machines had been installed. Mr Rotheram was only aware of eight. 179 At about that time Mr Semos went overseas. In his absence Mr Rotheram tried to contact Mr Cameron and Mr Laski. When he eventually spoke to Mr Laski he asked, "Where are my machine sites. What's happening?" Mr Laski made it quite clear that as Mr Rotheram had bought the machines from Queensland Juice Company, Michigan had no interest in them. In subsequent correspondence Mr Laski reiterated this position. On 9 February Mr Rotheram rang a number of the stores at which his machines were sited and was told that they were selling very little juice. On 16 February he telephoned Mr Peter Semos and asked for a refund of money paid for the eight machines that had not been sited. Mr Semos declined but said he would try to sell the machines to somebody else. On 17 February Mr Rotheram again complained to Mr Laski who again made it clear that he was not interested. At par 54 of his affidavit, Mr Rotheram said: I still couldn't understand this. I just made the cheque out. I didn't distinguish between Peter Semos, Rod Laski, Michigan and Queensland Juice Company. 180 This seems to me to be simply untrue. Mr Peter Semos had offered him a deal which he was not to communicate to Michigan. As a result, Mr Rotheram chose not to proceed with the Michigan transaction. It is quite clear to me that Mr Rotheram knew both that he was buying the machines from Mr Semos and that he was not buying them from Michigan. From about 9 March, Mr Rotheram became aware that the SPAR organisation was returning the machines. Six were delivered to his warehouse on 10 March 2000. The evidence does not disclose the locations of the others. 181 In cross-examination, Mr Rotheram said that he was introduced to Ms Moretto as the State Manager of Michigan. This is inconsistent with his affidavit in which he said that he was introduced to her as a real estate agent and finance broker, operating under the name of Yeppoon Pty Ltd and that she had said that she was the state distributor for the Michigan Group. Mr Semos had also so described her. Mr Rotheram said in cross-examination that Yeppoon had not been mentioned during negotiations, that the only company mentioned was Michigan. Again this is inconsistent with his affidavit. See par 7 and exhibit KR 3. There are a number of unsatisfactory aspects to Mr Rotheram's evidence.

EVIDENCE CONCERNING THE SITES 182 Many of the pleaded misrepresentations concerned arrangements allegedly made with retailers for the location of juicing machines in their outlets. Mr Laski asserted that Queensland Juice Company and Mr Peter Semos were responsible for identifying sites and negotiating with retailers. The evidence generally supported that assertion. For present purposes, two aspects of the dealings between Mr Semos and the various retailers may be relevant. Firstly, it may be necessary to identify the actual arrangements (if any) in existence at any relevant time concerning the siting of juicing machines at particular sites. This will be relevant in determining whether statements were misleading or deceptive. Secondly, it may be necessary to consider the views as to such arrangements held at relevant times by each of the natural persons who are respondents. This may be relevant to the question of their involvement in contraventions of the Act by the corporate respondents. Many of the representations related to retail chains, with particular focus upon Franklins stores, SPAR supermarkets, Duffy Brothers fruit and vegetable outlets and Coco's fruit and vegetable outlets. ACCC led evidence from persons employed by, or previously employed by various retailers.

Anthony George Cassone 183 Mr Cassone commenced employment with Franklins Limited in Australia in June 1994, having previously worked for that organisation in New Zealand. Franklins conducted a network of large retail outlets, some described as "Franklins No Frills", some as "Franklins Fresh" and some as "Franklins Big Fresh". Franklins Fresh and Franklins Big Fresh stores sold fresh produce. Franklins No Frills did not. Franklins Big Fresh stores were "upmarket" outlets, offering a wider range of products than did Franklins Fresh stores. From 1994 until 1998, Mr Cassone was responsible for managing the fruit and vegetable operations of Franklins Fresh and Franklins Big Fresh on a national basis. For a period of about six weeks in October/November 1998 he was responsible for establishing procedures and policies regarding fruit and vegetables for Franklins Fresh and Franklins Big Fresh outlets. From 28 November 1998 until May 2000 he was employed in another division of the Franklins group. Notwithstanding the above job descriptions, it seems that in late 1998, Mr Cassone's involvement with Big Fresh stores was different from his involvement with Franklins Fresh stores. While he was responsible for day-to-day operations of the Big Fresh group, he was not involved in day-to-day operations of the Fresh group. This distinction is of some significance in the case. 184 Mr Peter Semos first supplied juicing machines to Franklins in about 1993. At some time prior to 1998, perhaps in 1996, Franklins had ceased to operate such machines. In September 1998 it was decided that juicing machines would be reintroduced into Franklins Big Fresh stores in order to give them an "edge" in competing with other retailers such as Coles Myer and Woolworths. Some senior personnel, including Mr Hodgman, were opposed to juicing machines. Mr Cassone was about to move to another position and so he asked Mr Tierney to deal with the matter and in particular, to contact Mr Peter Semos to see if he was interested in supplying juicing machines. In late September or early October 1998 Mr Peter Semos telephoned Mr Cassone. They discussed the reintroduction of machines into Franklins Big Fresh outlets. Mr Cassone asked Mr Semos to "put together a proposal for me to have a look at". Mr Semos said that he could get machines "straight away", but Mr Cassone said: We've had problems with your machines before, and I want to trial one of yours in Sunnybank Big Fresh. That's the store where we're trialling our strategies to put the edges back into Big Fresh. Mr Semos said that he would be in touch. Mr Cassone and Mr Semos next spoke in the first couple of weeks of October at the former's Sydney office at Flemington Markets. Mr Semos advanced two alternative proposals for the supply of juicing machines to Franklins. The first was by way of direct sale of machines with maintenance agreements. The second involved the installation of the machines without charge to Franklins upon the basis that Franklins would then pay a "premium for bottles". In either case Mr Semos would install and maintain the machines and train staff. He also said that he would be available for some promotional activities. Mr Cassone pointed out that they had previously had mechanical difficulties and health and safety concerns with his machines. Mr Semos said that the machines were now improved and that they would not break down. They were self-cleaning. There would be no health issues. Mr Cassone said he would discuss the matter and get back to Mr Semos. After discussion with his colleagues they chose the second option for acquisition. Mr Cassone telephoned Mr Semos and said:

If your machines are okay, then we'd like to use them in our Big Fresh stores, but only in Queensland for the moment. We don't want to buy them, we'll buy your bottles instead. I want to trial one in Sunnybank for 2 months with a view to putting one into the new Morayfield store if the trial was successful. I'll be changing positions, so Greg Tierney will be the one to decide about the machines after the trial. 185 It is of some importance that Mr Cassone limited the immediate proposal to Queensland Big Fresh stores. Mr Semos responded: Ok, I'll send you a note about all this. I'll have a contract drawn up. I'd also like to put the juice machines into some other stores - how about it? 186 He then listed a number of different supermarkets, none of which was a Big Fresh store. Mr Cassone responded: If the machines go in, it will be in Big Fresh stores only. Those stores are Franklins Fresh stores, and they are discount stores. We aren't putting the edges back into those stores. Send me your contract, but I'm moving on, and you'll have to finalize it with Greg Tierney. 187 Mr Cassone subsequently received a letter dated 13 October 1998 from Queensland Juice Company signed by Mr Peter Semos. The letter is relevantly as follows: Re: Orange Juice Machines Further to our meeting and numerous telephone conversations regarding the supply of Upright Automatic Juice Machines to Franklins Big Fresh. I wish to confirm what we are prepared to do for you. 1. Install a machine in each and every Franklins Big Fresh and selected Franklins Fresh supermarkets throughout Australia (Nationwide) and also New Zealand if required. 2. These machines will be supplied to Franklins free of any capital cost. Title to the machines does not pass to Franklins. 3. We are totally responsible for the ongoing service on the machines. Again, this will be of no cost to Franklins. 4. Installation and staff training (on how to operate the juice machines) is also included free of cost. 5. We will supply you with plastic bottles and lids for your own labels to go on, at a cost of $1.50 per 2-litre bottle. RRP is $4.99 per 2-litre bottle. Average cost of contents is $1.30 per 2-litre bottle. A 56% mark-up on the above figures. 6. Handbooks on Health and Safety and Cleaning Operations are also provided. Tony, what I need from Franklins is a letter agreeing to the above terms and conditions of supply, based on Franklins signing a Siting Agreement form for each store and installation. A Siting Agreement form is enclosed for your perusal. Your comments would be appreciated. Should you not agree to my terms and conditions and wish to have any terms or conditions changed - please send me a fax regarding same or alternatively please call me to discuss it. I understand you require 2 machines to be installed by the 20th October 1998. One at Morayfield, Queensland and the other at Sunnybank Shopping Plaza at Sunnybank Hills, Queensland. In order to install the above 2 machines I will need a confirmation in writing from you and the siting agreement signed prior to installation. Tony, I will ring you tomorrow, on your return from New Zealand to discuss the contents of this fax with you. 188 Mr Cassone said that he was surprised at the contents of the letter. At that time he had no jurisdiction over the New Zealand operation and no relevant jurisdiction over Franklins Fresh stores. He had only asked for a trial of one machine at Sunnybank. He did not respond to the letter. The letter refers to an enclosed siting agreement form. It is not clear whether this was also part of the facsimile transmission, but it seems that in some way that document came into Mr Cassone's hands. It was in "blank" in the sense that paragraph 1 (concerning the period during which the machine would be provided to Franklins) had not been completed. A schedule also required completion. At some stage Mr Cassone signed the agreement on behalf of Franklins Limited and dated it 21 October 1998. He retained his signed copy. It is part of exhibit 6. Immediately above the signature are the words: For a period of 2 months trial in Sunnybank Big Fresh. The words appear to be in Mr Cassone's handwriting, but the evidence does not disclose the person who inserted them. In cross-examining Mr Cassone, Mr Peter Semos asserted that he (Mr Semos) had not been in a position to permit such a trial. Mr Cassone seemed to agree that this problem had been raised with him at the time. However he maintained that Mr Semos had eventually agreed to a trial. Mr Cassone probably sent a copy of the signed "agreement" to Mr Semos. Mr Semos suggested as much in cross-examining Mr Cassone. See TS 529 ll 9-14. In late October Mr Cassone attended a meeting at Sunnybank with Mr Tierney and Mr Semos. The purpose of the meeting was to discuss the trial of a juicing machine at that site. It was agreed that Mr Semos would speak further with Mr Tierney concerning the trial. As I have said, Mr Cassone had been offered another position within the group and took it up in late November. At some time in November Mr Peter Semos telephoned Mr Cassone and said:

Hi Tony. I'm calling because Clem Hodgman has asked me to install juice machines in Franklins Fresh stores, and I need a site agreement from you for those stores. 189 Mr Cassone said: As far as I'm aware, it was decided that juicing machines would only go into Big Fresh. I've told you this before. However, if Clem wants to put the machines in Fresh stores in Queensland, that's up to him. It's fine with me, but he's the one in charge of Fresh stores in Queensland. I don't have any authority there, you'll have to deal with him. 190 In December, Mr Cassone learned from Mr Tierney that the Sunnybank trial had been satisfactory. However the price of oranges was prohibitive at that time. He told Mr Tierney to design a juice bar which would incorporate the machine for use at Sunnybank and subsequently assisted in that process. As to the price of oranges, Mr Cassone said that Australian produce tended to run out towards the end of the calendar year and that over Christmas, demand was usually satisfied to some extent by imports from the United States. In 1998 the American producers suffered an unusually cold season and so there was little produce available for the Australian market. The price of oranges in December 1998 was more than double the usual seasonal price, and juicing was uneconomical. 191 In December 1998 Mr Cassone learnt from Mr Tierney that Mr Semos had "investors", who owned the juicing machine. Early in 1999 he attended the opening of the refurbished Sunnybank store. Mr Tierney and Mr Semos also attended. In mid- to late April Mr Cassone received a telephone call from Mr Semos who said: You agreed that the juicing machines would be introduced into Franklins Fresh stores. 192 Mr Cassone said: I did not agree to that. I said it was not up to me. Consideration of this matter was not part of my role so I referred you to Clem Hodgman. 193 Mr Semos said: Yes, I know, but I'm having a problem with this. I am being chased by investors who have purchased machines to go into Franklins stores. 194 Mr Cassone said: Peter, this isn't my problem. I can't help you. 195 In May 1999 he again spoke to Mr Semos by telephone. Mr Semos said: I need to talk to you again about juicing machines in Franklins Fresh. 196 Mr Cassone said: I'd like to remind you that I did not reach any agreement with you about the introduction of the juicing machines into the Franklins Fresh stores. I only agreed that the juicing machines would be introduced into the Franklins Big Fresh Sunnybank store for a 2 month trial. 197 Mr Semos said: But I sent you some documents including a copy of a letter in relation to the proposed arrangements for Franklins Fresh stores. 198 Mr Cassone said: I don't remember this at all. I wouldn't have agreed to it, I don't have jurisdiction over Franklins Fresh. If you remember, I left my role with fruit and vegetables at the end of November and told you to deal with Greg Tierney. I can't help you, you'll have to deal with Greg or Clem. 199 It is appropriate at this stage to say something more about exhibit 6 and two documents which were marked "A" and "B" respectively for identification but not tendered in evidence. I mention them at this stage only to record and explain their existence. Exhibit 6 is the original of the letter of 13 October 1998 from Mr Semos to Mr Cassone, with the signed machine supply site agreement attached to it. Copies of these documents were exhibited to Mr Cassone's affidavit. The document marked "A" for identification appears to be a facsimile copy or photocopy of the signed site agreement, save that the figure "1" has been inserted in front of the figure "2" in the handwritten addition on the second page so that it reads: For a period of 12 months trial in Sunnybank Big Fresh. 200 The similarity between the handwriting on this document and that in exhibit 6 leaves little doubt that the document marked "A" was produced by inserting the figure "1" in front of the figure "2" on a photocopy or facsimile copy of the original and photocopying the result. The document marked "B" for identification appears to have originated as a photocopy of the document marked "A". Mr Carter, one of the investors, has signed and dated it 23 October 1998. He has also completed the schedule and clause 1 which now reads: Supplier agrees to allow the user to use and operate the machine for the sale of orange juice for a period of one years commencing 23/10/98 … . I will treat the documents marked "A" and "B" as irrelevant to my consideration of this matter. 201 In cross-examination Mr Cassone agreed that there may have been some discussion concerning the possibility of installing juicing machines in Franklins Fresh stores after installation in Franklins Big Fresh stores was completed. He was aware that there had been a trial of a machine at the Noosaville store. This had occurred in 1997 without his consent. He could not recall whether there had been discussions concerning trials during the conversation at Flemington Markets. He agreed that he had told Mr Semos that Mr Hodgman was opposed to orange juicing machines. Mr Cassone was somewhat vague about the circumstances surrounding installation of a machine at the Morayfield store. He had no recollection of requesting such installation but seemed to accept that somebody had done so on behalf of Franklins. He did not really deny that he may have been aware of such installation at the time. 202 Mr Cassone's evidence as to some of these conversations is a little stilted and may well have involved reconstruction. However there is nothing inherently improbable about the general thrust of his evidence.

Timothy Don-Hugh Mak 203 Timothy Don-Hugh Mak is a solicitor. He commenced employment with Franklins in about January 2000. He had previously performed legal work for them as an employee of a firm of solicitors. Much of his affidavit records information given to him by other people. At some time in the first half of July 1999 he became aware of health concerns arising out of the use of juicing machines supplied by Mr Peter Semos. On 9 July 1999 he saw a facsimile transmission received from one of the investors, Elizabeth Lasser, concerning machines owned by her and sited at Franklins Big Fresh, Maroochydore and Morayfield. On 14 July he spoke to her by telephone, advising that there were operational and design problems with the machines and that Franklins had ceased juicing operations until these matters were resolved by Queensland Juice Company. On 26 July he spoke to Mr Peter Semos concerning the problems, and correspondence ensued. The following summary may be of some use: ® On 27 July Mr Peter Semos wrote to Mr Mak confirming their conversation of 26 July. The letter makes it clear that Mr Semos was aware that all machines in Franklins Big Fresh stores in Queensland and New South Wales were out of service awaiting a quality assurance audit. Mr Semos appears to have accepted that Queensland Juice Company would probably have to take steps to deal with any adverse comments made as a result of such audit. ® On 9 August 1999 the audit result was provided to Franklins who forwarded copies to Ms Lasser and Mr Semos. ® On 12 August 1999 Mr Semos responded, indicating steps which might be taken to remedy the identified deficiencies. ® On 6 September Mr Semos wrote to Mr Mak, asking to be informed as to "the development on the Juice machines in the Franklins Big Fresh Market". ® A telephone conversation in early October was followed by a letter from Mr Semos of 11 October. In it he asserted that Mr Mak had indicated that he had recommended that the juice programme recommence in the near future. ® On 19 October 1999 Mr Mak sent a facsimile to Mr Semos confirming that Mr Semos had agreed: ® To arrange with Greg Tierney to have one machine modified and re-inspected; ® That if the modifications were accepted, all the machines were to be modified accordingly and staff were to be re-trained; ® That Queensland Juice Company was to sign an indemnity in a form which was attached; and ® That Queensland Juice Company was to provide details concerning ingredients of the cleaning agent. 204 In the letter Mr Mak also indicated that all machines were to be removed and agreements terminated by 31 January 2000. The attached indemnity warranted that the machines complied with all relevant health and safety standards, were safe to operate, and when operated in accordance with operating instructions, would produce orange juice which did not pose a health risk. Warranties were also required concerning the cleaning agent and as to public liability insurance. On 1 December 1999 Mr Mak sent a further facsimile to Mr Semos, indicating that he had received no reply to his facsimile of 19 October. On 6 May 2000 Mr Mak wrote, confirming that all machines were to be removed. In his affidavit, Mr Mak asserted that Mr Willoughby had told him that shortly after a store visit in early May 1999, he had informed Mr Peter Semos of health problems with the machines. There was no objection to this hearsay evidence, but Mr Willoughby did not say this in his affidavit, nor was he questioned about it. The irregular nature of this evidence poses difficulties in deciding when Mr Semos first became aware of this problem. Other evidence suggests that it may have been in early June 1999.

Gregory Scott Tierney 205 Mr Tierney was the Produce Group Team Leader for Franklins Big Fresh in Queensland from September 1998 until September 1999. He had previously been Produce Group Team Leader in various other areas. There were eight Franklins Big Fresh stores in Queensland located at Capalaba, Maroochydore, Morayfield, Nerang, Redbank, Rockhampton, Sunnybank Hills and Toowoomba. Mr Tierney first met Mr Semos in 1993, prior to joining Franklins, and met him again with Mr Cassone in 1994. At this time Mr Semos was providing juicing machines to Franklins. In 1996 Mr Tierney received a report from Mr Hodgman, another witness, in which he recommended the discontinuance of juicing machines in Franklins outlets. Mr Tierney said that he and Mr Hodgman both pushed for the removal of the machines. Their recommendation was eventually accepted, and all machines were removed in late 1996 or early 1997. 206 In September 1998, as part of an attempt to give an "edge" to the Franklins Big Fresh operation, Mr Cassone recommended the reintroduction of juicing machines. Mr Tierney was not keen on the idea, but he was instructed to "analyze the pros and cons". He initially reached the conclusion that the capital investment involved in buying the machines was not justified by the likely return. In October 1998 Mr Cassone informed him of an alternative method of acquisition pursuant to which Franklins would not have to pay for the machines or their maintenance costs. He also told him that the machines in question were different from those previously used and were, to some extent, self-cleaning. As a result of this, Mr Tierney asked Mr Semos to provide a machine for a trial at Sunnybank. 207 Mr Semos told him that Franklins' staff would have to operate the machines and clean them. He also said that the machines were largely self-cleaning. He offered his own services and those of his wife in making juice and promoting the machines. The machines were to be serviced at no cost. Franklins was to buy bottles from Mr Semos. The trial commenced on 16 November and continued for about four weeks. It was satisfactory, but the price of oranges started to rise in December. Mr Tierney and Mr Cassone decided to install machines in the other Franklins Big Fresh stores on a "roll out" basis, whatever that means. Mr Tierney told Mr Semos to contact the Produce Team Leaders at the various outlets to discuss the training of staff. Mr Tierney, Mr Cassone and Mr Stephen James from Design Solutions developed a concept for a juice bar. Mr James was instructed to complete the design. Between December 1998 and April 1999 machines were installed in Big Fresh stores at Sunnybank, Redbank, Capalaba, Morayfield, Maroochydore, Toowoomba and Nerang. In January or February 1999 Mr Tierney learnt from Mr Semos that he was financing the machines through investors who purchased the machines and then allowed them to be installed in the various outlets. At that stage Mr Tierney pointed out that the cost of juicing oranges was too high, and that Franklins did not intend to commence juicing. According to Mr Turton, Mr Tierney had said this to him and Mr Semos on 15 January. 208 On 18 January 1999 Mr Tierney received a telephone call from Mr Harman, an investor, who said that he owned machines which were to be installed at Franklins Indooroopilly, Brookside and Carindale. Mr Tierney told him that those stores were not under his control as they were not Big Fresh stores. Mr Harman called him again and said that Mr Semos was adamant that machines were to go into those three stores. Mr Tierney again told him that this was not the case. Mr Tierney subsequently spoke to Mr Hodgman who was responsible for Franklins Fresh stores. The latter said that he had decided not to install the machines. In a subsequent conversation with Mr Semos, Mr Semos said that he had gained the impression from Mr Cassone that the machines were going into Franklins Fresh stores. Mr Tierney said that from May or June 1999 Franklins Big Fresh discontinued use of the machines for health and safety reasons.

Clem Evan Hodgman 209 Clem Evan Hodgman was Senior Group Manager (Fruit and Vegetables) in the Franklins Group in Queensland between January 1999 and November 2000. He had previously been Group Team Leader overseeing produce in certain areas. In essence this meant that he was responsible for the produce departments in a group of Franklins supermarkets in Queensland. At the end of 1998 he was a Senior Group Team Leader in Queensland. He first met Mr Peter Semos in 1989. In 1996 he recommended that the group discontinue use of juicing machines. This recommendation was adopted. In September or October 1998 Franklins commenced operating its Big Fresh stores as a separate brand with separate management. He was told that juicing machines were to be installed in Big Fresh stores, and that machines were to be supplied by Mr Semos's company. In December 1998 he received a telephone call from Mr Semos in which the latter said: In about mid-1998 I spoke to Tony Cassone. At that time I was selling juice machines through a business called Queensland Juice Company. I proposed that Franklins be given the juice machines to operate in their stores at no cost. The machines were to be owned by investors. In return the investor would sell labelled empty bottles to Franklins at $1.50 per bottle rather than the typical cost of $0.50. There would be no capital investment or maintenance obligations for Franklins, and there was no requirement for Franklins to purchase a minimum number of bottles. I am wondering if you're interested for Franklins Fresh. 210 In a later conversation Mr Hodgman told Mr Semos that Franklins Fresh did not want the machines. Mr Semos then said that Mr Cassone had said that Franklins Fresh would take them. In December 1998 Mr Semos again telephoned Mr Hodgman and said: My machines are going into the Big Fresh stores. Are you interested in putting them into Franklins Fresh stores? Mr Hodgman replied:

I have already said I'm not, besides, I can't even consider putting them in the stores until liability issues regarding the machines are resolved. I would need a contract between the Queensland Juice Company and Franklins dealing with legal liability for the machines, if people are injured or property damaged. 211 Later in December, Mr Semos called again. He observed that the price of oranges had risen and asked if Mr Hodgman was still interested in his proposal concerning the machines. Mr Hodgman said that he had not been interested. However, apparently in response to something Mr Semos said, he offered to put the matter to a meeting of Area Team Leaders. They had a similar conversation in January. In February 1999 Mr Semos inquired as to what was holding up the installation of machines in Franklins Fresh stores. At this stage Mr Hodgman said: I have already told you I would need a formal document. Give me a formal document because I will have to get it past John Hallam in the legal department. I am powerless to do anything. If you send me something in writing I will take it to the next Operations meeting on 11 February and see what the response is. Call me on 12 February and I will let you know. 212 Mr Hodgman subsequently received a proposal from Mr Semos. The proposal was rejected at an operations meeting held on 11 February 1999. Mr Semos called again at the end of March 1999. Mr Hodgman told him that his proposal had been rejected and that if he wanted to take the matter further, he should speak to Mr Vogel. In May 1999 he received a further call from Mr Semos in which the latter said: Tony Cassone endorsed the juice machines to be put into the stores He approved the machines being positioned in all Franklins stores, and said that the whole deal, that is, where Franklins would be given the machines at no initial cost, was approved by Franklins Limited. Tony Cassone said you asked about putting the machines in Fresh stores. 213 Mr Hodgman said he did not believe that Mr Cassone had said that.

Roger Willoughby 214 Mr Roger Willoughby was the Northern Region Food Safety Officer of Franklins. In March 1999 certain aspects of the operation of the juicing machines were drawn to his attention, as a result of which he recommended that the machines not be used. A memorandum from him to Mr Tierney dated 28 May 1999 is to that effect. Mr Peter Semos asserted, in cross-examining Mr Willoughby, that this document, or a version of it had been forged in order to justify Franklins' attitude to the installation of the machines and/or their ceasing to use them. I see no reason to act on such an unlikely assertion, particularly as Mr Semos did not, himself, give evidence. He knew of the problems with the machines from, at the latest, July 1999 and even offered to assist in rectifying them. It is quite unlikely that any forgery occurred. I reject the assertion.

Franklins' employees - Summary 215 There is no direct evidence to contradict any aspect of the evidence from Franklins' employees. I saw no reason to doubt the truthfulness of these witnesses. However their evidence was less than satisfactory concerning the circumstances which led to the introduction of machines into various Big Fresh stores in Queensland commencing in November or December 1998. Mr Cassone said that he did not authorize any such installation. Mr Tierney said that he and Mr Cassone had authorized it. I suspect that the inconsistency is attributable to the confusion associated with Mr Cassone's changing his position in the group. It may be that he thought he had given up responsibility to Mr Tierney but Mr Tierney had not realized as much. Mr Cassone may have thought that Mr Tierney was asking for advice when he was actually asking for a decision. In any event, it is clear that machines were installed in a number of Big Fresh stores. I accept Mr Cassone's evidence that he told Mr Semos that he required a trial and that Mr Semos, at some stage, agreed to such trial. It is also clear that from early in 1999, Mr Semos knew that Franklins were not juicing and that at some stage, he became aware that the machines were not being used for health reasons. Mr Cassone had said at an early stage that the machines were, for the moment, only to go into Queensland Big Fresh stores. Mr Tierney was concerned only with Queensland operations. The evidence does not support any agreement or arrangement for installation of machines other than in Queensland. 216 One other aspect of the evidence in this area requires comment. It concerns the point at which Mr Semos might reasonably have believed that he had an arrangement with Franklins for the installation of machines. It should be remembered that Mr Cassone initiated the contact with Mr Semos. By that time, Franklins had decided to install machines in Big Fresh stores. Mr Semos had previously supplied machines to them. It is quite likely that these events created the impression in Mr Semos' mind that subject to satisfactory trial, his machines would be installed in Big Fresh stores. The problem with the price of oranges and then the health and safety problems must have raised doubts in his mind as to the future of that arrangement. He clearly knew of the problem concerning the price of oranges on 15 January, and presumably knew of it before that date. He was said to be knowledgeable about such matters. It is a little difficult to identify the point at which he first heard of the health and safety problems. Exhibit EL 9 to Ms Lasser's affidavit suggests that he knew in early June. Mr Semos has not denied the conversation with Mr Tierney which is there alleged.

Natale Pisciuneri 217 Since 1989 Mr Pisciuneri has been managing director of Duffy Brothers Fruit Markets (NSW) Pty Ltd and Duffy Brothers Fruit World Pty Ltd. Mr Peter Semos approached him in 1998, suggesting that Duffy Brothers could make money from the use of juicing machines. Mr Pisciuneri said that he was not interested, but Mr Peter Semos contacted him on a number of other occasions. Eventually, Mr Pisciuneri agreed to install one machine at the Darlinghurst store on a trial basis. There was no formal agreement. The trial was a failure. The orange juice was too expensive, and the machine regularly broke down. After five or six weeks Mr Pisciuneri asked Mr Semos to remove it. Whilst the machine was at Darlinghurst, Mr Semos asked if he might install another machine at the Hurstville store. Mr Pisciuneri initially declined but eventually agreed. No machine was ever delivered. There was no agreement to site orange juicing machines permanently at any Duffy Brothers store. Mr Pisciuneri said that he would not have been interested in entering into any agreement had he known that Mr Semos would be supplying the machines through investors. 218 In cross-examination by Mr Peter Semos, Mr Pisciuneri was asked about the Chatswood store. It was suggested that a machine had been installed there without his knowledge. He denied that any machine had ever been installed at Chatswood. It eventually emerged that at some stage, Duffy Brothers had disposed of the Chatswood store to somebody who traded there under the name "My Fruit Market". It seems that any machine was installed there after the change in ownership. Mr Pisciuneri agreed that a machine had been installed at a Duffy Brothers store at Wagga Wagga. He had learnt of this after swearing his affidavit. He agreed that he had discussed with Mr Semos the printing of labels but denied that he had ever authorized production of such labels. I see no reason to doubt any aspect of Mr Pisciuneri's evidence.

Peter McPhee 219 Since 1995 Mr McPhee has been the general manager of Coco's Fresh Foods Pty Ltd trading as Coco's Big 'n Fresh Food Markets. In April or early May 1999 Mr Semos visited him, offering to supply juicing machines at no cost other than the cost of buying empty juice bottles. Mr Semos said: It doesn't matter if you can't sign up agreements. I need you to take delivery of six machines and we'll worry about the paperwork later. I don't have a warehouse to store them in. I'll give you the bottles on consignment. 220 Mr McPhee replied: I can't guarantee anything long term but we'll give it a try. 221 He subsequently agreed to conduct trials of the machines in the Coco's stores at Annerley, Toowoomba, Loganholme, Southport, Carrara and Sunnybank. The machines were installed in June 1999. The machines turned out to be unsuitable. Coco's had, at no time, agreed to any long term commitment. Mr McPhee agreed to keep two machines (at Annerley and Toowoomba) because Mr Semos complained that he had printed labels at his own expense and wanted to run some in-store promotions. The other machines were removed "a few months" after their installation. Mr Semos's promotion was also unsuccessful. In Mr McPhee's view it proved that the exercise was not profitable. 222 Mr McPhee did not know that the machines were owned by investors until he was telephoned by a Greek gentleman called "Bill" who claimed to have a machine at the Annerley store. He was also contacted by a Toowoomba investor, Ray Turton. Mr Turton was happy to remove the machine from the Toowoomba store as he had another site. On one occasion Mr McPhee saw Mr Semos and Bill together. On that occasion Mr McPhee told Bill that he could not guarantee anything. Although Mr McPhee said that Coco's had no agreement with any investor, he had copies of store agreements. Presumably they were with Queensland Juice Company or Mr Semos. They can no longer be found. He said that all installations were on a trial basis, subject to seven days' notice to terminate. I see no reason to doubt any aspect of Mr McPhee's evidence.

Andrew Reitzer 223 Andrew Reitzer is the managing director of Metcash Trading Ltd, previously known as Davids Ltd. This company supplies the IGA Supermarket chain and licenses such supermarkets to use the name "IGA". The IGA supermarket at Bribie Island purchased a juicing machine in 1997. The store at Charters Towers purchased a machine in 1998. Mr Reitzer said that Queensland Juice Company had a stall at the Davids Food Expo in 1998, which I assume was organized by his company. He has no knowledge of any other arrangements with Queensland Juice Company, nor does he have any record of such an arrangement. Davids Ltd did not authorize the use of its name on the brochure which is exhibit AR 1 to Mr Reitzer's affidavit. I accept Mr Reitzer's evidence.

Arthur Edward Trindall 224 Mr Trindall has been the General Manager (Operations) of Foodland Associated Ltd since June 1995. That company is the franchisor of the Foodland Supermarket Group in Western Australia and licenses use of the name "Foodland" in that state. There are other Foodland outlets in South Australia with which his company is not associated. The company has no record of dealing with any of the respondents concerning the installation of juicing machines. I accept Mr Trindall's evidence.

Louie George Poniris 225 Mr Louie George Poniris has been the manager of Waterside Fruit Connection in Sydney Fish Markets since 1997. He has a "Zumo" brand juicing machine. There has never been any agreement with any of the respondents for the location of a juicing machine in that store. In the course of cross-examination Mr Poniris said that the juicing operation at his store was conducted as something of an attraction for customers. It seems that many of the people who frequent the store are tourists who enjoy the experience of seeing juice freshly squeezed. Mr Poniris does not expect a substantial profit from supplying freshly squeezed orange juice. Mr Nemes claimed that there was a machine of the kind marketed by Michigan at the store when he visited it. It was not installed. I accept Mr Poniris's evidence, including his evidence that there were no relevant contractual arrangements with the respondents. He is probably more likely to be correct about the presence of a machine than is Mr Nemes. I conclude that there was no machine at the store of the kind being marketed by the respondents.

Peter Joseph 226 Mr Peter Joseph is the general manager of Independent Produce Professionals ("IPP"), an organization which supplies fruit and vegetables to independent grocery retailers including about two-thirds of the SPAR Group of supermarkets in Queensland and New South Wales. In late October 1999 Mr Joseph became aware that the managing director of IPP, Mr David Guttormsen, had received a telephone call from Mr Sirianni who operated a SPAR outlet at Ascot. The conversation concerned juicing machines supplied by Queensland Juice Company. As a result of the communication from Mr Sirianni, the machines were, in effect, recommended by IPP to various SPAR outlets. The following passage appeared in a newsletter distributed on Friday 29 October 1999: I have been approached by a company who supplies fresh Orange Juice machines into supermarkets at no cost to the store. The concept sounds good to me, especially as the machines are worth $15,000 and we are certainly keen to supply the Oranges. Ugo Sirianni has one at Ascot and raves about it, so read the letter and talk to Ugo and I'll contact you next week. 227 At some stage Mr Guttormsen advised Mr Peter Semos that twenty or thirty stores were likely to take machines. In early January 2000 nine machines were sited in outlets at Robina, Sunnybank, Wishart, Algester, Warialda, Bellbowie, Dalby, Manly and Loganholme. On 6 January IPP again mentioned the machines in its newsletter. From about February 2000 stores were indicating dissatisfaction with their machines.

Ugo Sirianni 228 Mr Ugo Sirianni, his brother and mother, have owned Sirianni's Ascot SPAR supermarket since 1965. In August 1999 Mr Peter Semos and another man visited the store. They told Mr Sirianni of the orange juicing machine and the arrangements for installing such machines at no cost to site owners. Mr Sirianni considered the proposal to be attractive and subsequently recommended it to Mr Guttormsen at IPP. Mr Sirianni's machine was installed in September 1999. He signed a site agreement. He learnt of the involvement of investors when a Mr John Messina telephoned him on or about 5 October 1999. On two occasions he declined to pay $1.50 per bottle for bottles bought from Mr Messina, paying only $1.34. He had agreed on that price with Mr Peter Semos. The machine's performance deteriorated with time, and it needed frequent cleaning. Its use was labour-intensive. Subsequently, oranges became expensive. As a result of the cost of oranges and the tendency of the machine to break down, he and his partners decided not to order any more bottles. In early March 2000, Mr Sirianni asked Mr Messina to remove the machine. 229 Exhibit US 6 to Mr Sirianni's affidavit is a letter dated 14 August 1999, purportedly sent by email from Mr Sirianni to Mr Peter Semos. The text of the letter is as follows: In response to your letter dated 11th August I am happy for you to install a machine at my store with a view that if it is successful I will be able to include this programme throughout the Spar Group which includes 30 stores. I am currently involved with another company which supplies fresh produce to 18 of the Spar supermarkets currently. I will be speaking to the Director Mr Tuttormsen (sic) in reference to this program and he will be contacting you in the near future to commence this program. I would like once again to confirm the price of $1.34 per 2-Litre bottle with the option to purchase 1-litre bottles at an agreed price. I will also request that we have two day promotion with each site that is signed up with Spar Group. Please forward any advertising material that you have available. 230 Mr Sirianni denied writing that letter. Mr Peter Semos claimed to have received it from Mr Cameron. Neither Mr Semos nor Mr Cameron gave evidence. In the circumstances I accept Mr Sirianni's denial of authorship and his evidence generally. This strongly suggests that either Mr Peter Semos or Mr Cameron forged the letter.

Colin Budden 231 Since 1996 Mr Budden has been the National Merchandise Manager (Fresh Produce) for Coles Supermarkets Australia Pty Ltd. A representative from Queensland Juice Company approached Coles Supermarkets in 1996 or 1997, suggesting that it conduct trials of an orange juicing machine. Trials were conducted at the Coles store at Oakleigh in Victoria, but Coles chose not to install the machine. During cross-examination, Mr Budden agreed that the Coles store in Cairns had purchased a machine in 1997. He also agreed that the Coles store at Toombul had conducted trials of a machine in October or November 1997. The machine was not acquired.

Summary 232 It seems that, subject to a successful trial, there were arrangements for installation of machines at Franklins Big Fresh sites in Queensland. It may have been expected that some Franklins Fresh sites would also take them. The trial commenced on 16 November and lasted four weeks. The Franklins arrangement must, in any event, have been in doubt after December 1998 when the price of oranges rose. From about March 1999 there were health and safety concerns about the machines. Mr Semos became aware of them from, at latest, about 10 June (21 days before 1 July). These problems were never resolved. There were machines installed in some Duffy Brothers outlets and some Coco's outlets, but there were no permanent arrangements concerning them. The first contact with SPAR was in August 1999, and machines were installed in late 1999. They were falling into disfavour by February or March 2000. There were a few machines at other sites.

Mr Laski's affidavit 233 At all material times Mr Laski was the sole director of Michigan. On 20 November 2001 he went into bankruptcy. Michigan sold dispensing machines. Mr Cameron was the Sales and Marketing Manager. Michigan had previously employed him but had dismissed him for misconduct. He was re-hired in 1996 on conditions which included: ® That all letters to clients were to be shown to Mr Laski prior to being posted; ® That Mr Laski was to be kept informed of all oral and written representations to clients; ® That Mr Laski was to approve all brochures and figures before they were given to clients; ® That all moneys would be banked to Michigan's account; ® That overheads would be paid first; and ® That net profits would be distributed equally between Mr Cameron and Mr Laski. 234 In September 1998 Mr Cameron told Mr Laski that he had been talking to Mr Peter Semos of Queensland Juice Company about orange juicing machines. Mr Semos proposed that machines should be sold to private owner-operators who would site them in supermarkets and other retail outlets. Mr Laski understood that Mr Semos was to find the outlets. Messrs Laski, Cameron and Peter Semos met to finalize the proposal, in particular the respective obligations of Michigan and Queensland Juice Company. Mr Semos said that he had sold and sited over 100 machines throughout Australia and spoke highly of the machines. He said that they were imported from Brazil. It was agreed that Michigan would market the machines and that Mr Semos and Queensland Juice Company would be responsible for importation, testing and installation, siting, warranty work, provision of spare parts, repairs and service and providing bottles and labels. Michigan's role was to advertise for clients, to process clients' leads, to send out marketing letters and brochures, to attend trade shows and fairs, to meet with clients and to show them existing sites. 235 Once a client had purchased a machine, Michigan would pay Queensland Juice Company for it, for the warranty and for siting and installation. Mr Semos would then contact the client to work out the siting and timing. Queensland Juice Company would be responsible for ongoing ordering of bottles and labels. The sites were to be as agreed between Mr Semos, Mr Cameron and the client. According to Mr Laski, siting was to occur only after the client had purchased the machines. He said that it was not possible to … pre-determine sites and guarantee sites to clients. As it was not possible to promise a machine to a site and then have the site wait for a machine. One could not leave a site waiting for a machine to be available or ready. 236 This aspect of Mr Laski's evidence may be of some significance in assessing his state of mind concerning available sites at relevant times. I will return to it at a later stage. Queensland Juice Company was to supply bottles and labels which were to comply with relevant health legislation. Sites would fill bottles and sell the product. The owner of the machine would be paid a fixed, negotiated price per bottle sold. In early October Mr Laski asked Mr Cameron whether he had checked to see that all necessary health checks and other legal requirements had been obtained. Mr Cameron said that Queensland Juice Company had engaged a food health expert to attend to these matters. Mr Laski asked Mr Semos to identify sites where his machines were being used. Mr Semos identified the Clayfield Fruit Market in Brisbane. He said that it was selling between sixty and eighty bottles a day. Mr Semos provided a letter from the owner of that outlet dated 23 September 1998 which said: As owner/manager of Clayfield Fruit Market I would like to advise that our sales of fresh orange juice over the 12 years that we have been selling fresh juice averages per day at 50 x 2 ltr bottles and 25 to 30 x 1 ltr bottles. 237 Mr Semos also referred Mr Laski to Mike Patti at St Kilda. Mr Laski visited his shop. Mr Patti said that he had purchased a machine three years previously and was selling over 1,000 litres per week. He was making a profit in excess of $2.00 per 2 litre bottle and had employed a casual employee to operate the machine. Mr Laski said that these figures were supported by subsequent operations at Franklins Big Fresh, Maroochydore. This appears from a letter dated 19 May 1999 from the Produce Team Leader at that store which records an average turnover of 60 - 100 bottles per day since March 1999. Either Mr Laski or Mr Cameron spoke to Mr Ian MacPherson who ran a fruit business at Queenscliff in Victoria. He said that he had two machines and had established a very good reputation for the product in the Geelong area. The sale of juice was profitable. 238 Mr Laski instructed Mr Cameron that: ® all sales were to be done on invoice, with a deposit cheque paid to Michigan; ® the balance of purchase moneys was to be paid when the machines were landed, payment meaning cleared funds; ® any introductory letter to be used in marketing was to be approved by Mr Laski; ® any figures provided had to bear a disclaimer; ® all brochures had to be approved by Mr Laski; ® specific sites were not to be nominated prior to sale or at sale; ® clients were to be told that delivery time depended on importation and availability; ® clients were to be told that the printing, including artwork preparation for the labels, could take up to thirty days; ® machines were to be operated only in conjunction with use of bottles and labels supplied by Queensland Juice Company; and ® sites were to be negotiated with Queensland Juice Company, based on client preference, geographic preference and suitability of the operating business. 239 Mr Laski said that only Mr Cameron was authorized by him to operate as salesman. Mr Cameron asked if he could use Mr Doherty for assistance. Mr Peter Semos was only authorized to assist in siting and on matters concerning operation of the machines. Mr Cameron would place advertisements and take telephone calls from potential clients. He would then send out letters of proposal and brochures. Subsequently, he would follow up with clients, meeting with them. He would show them sites and work out relevant deals after introducing them to Mr Semos to discuss siting and installation arrangements. Queensland Juice Company was to provide an initial on-site promotion, free of charge to the investor. The cost of ongoing promotion would come out of the cost of bottles. Queensland Juice Company was to design labels and take initial orders from sites. When labels and bottles were ready, Queensland Juice Company would organize their delivery to the site and invoice the investor for them. The owner would then invoice the site. A standard form site agreement is exhibit RML 3 to Mr Laski's affidavit. Owners were free to modify or amend the agreement as they preferred. Owner/operators were required to: ® introduce themselves to site personnel; ® contact the sites for orders for bottles and labels; ® read the operator's handbook for the machine; ® make spot checks at the sites to assess machines for hygiene and care; ® assess whether promotions were necessary and determine frequency; and ® ensure that sites paid on time in accordance with prudent credit policies. 240 The investment scheme was allegedly designed to meet the needs of persons who wanted a second income without diverting time away from, or leaving other employment. To this end Michigan inquired of interested parties how many hours they would be able to devote to the operation. 241 In mid-October 1998 Mr Cameron informed Mr Laski that Mr Peter Semos had concluded discussions with Franklins "which would mean that QJC would site machines in all stores of Big Fresh and selected stores of Fresh". Mr Laski was not personally in touch with Franklins. The machines were to be sited gradually as stores were upgraded. Mr Laski agreed to the description in promotional material of this arrangement with Franklins, as an "alliance". He did not authorize anybody to say that Michigan had a contract or agreement with Franklins. He knew that Franklins was designing juice stands and thought that this indicated that there was a future for the machines in Franklins stores. 242 Mr Laski attended the Brisbane Franchising Show between 15 and 17 October 1998. Mr Cameron, Mr Doherty, Mr Peter Semos and Mr George Semos also attended. A brochure was distributed to interested parties. It is exhibit RML 5 to Mr Laski's affidavit. Mr Laski was not in good health and so did not spend much time at the show. Exhibit RML 6 to Mr Laski's affidavit is a copy of a letter which, to Mr Laski's knowledge, was to be sent to interested parties. He was aware from February 1999 that the price of oranges had risen to an all-time high. In March he decided to offer a guarantee that investors would recover $200 per week. This was to compensate clients who were not selling 200 bottles per week owing to the price of oranges or to Queensland Juice Company's poor siting arrangements. In the latter case Queensland Juice Company "wore the guarantee". Mr Cameron was to advise all persons of the guarantee and that prices of oranges were abnormally high. Mr Laski expected that the prices would fall within ninety days. For that reason the guarantee was for ninety days. His own recollection was that orange prices came down in March 1999 but rose again in April/May 2000, staying high for the next nine months. 243 Mr Laski became aware, in or about April 1999, that ACCC was investigating Michigan and Queensland Juice Company in connection with the sale of machines. In May 1999 he attended a meeting with representatives of ACCC in Sydney. He was asked to provide lists of investors. He did so in early June 2000. He suggested that the ACCC investigation had a detrimental effect upon Michigan's business and may have detracted from their capacity to site machines. He said that it also tended to discourage investors from working at making their investments successful. 244 Mr Laski responded specifically to affidavits from the various investors. I will summarize his evidence in relation to each of them.

Mr Ellis 245 Mr Laski did not recall receiving the letter which is exhibit GRE 2 to Mr Ellis's affidavit, referred to in par 19 of that affidavit. He recalled some of the points in that letter having been mentioned in telephone conversations. Mr Laski denied saying that the Michigan Group had contracts with forty-one Franklins Big Fresh sites and eight Duffy Brothers stores or that this was said in his presence. He did not authorize anybody to say that. Mr Laski said that in the meeting referred to in par 45 of Mr Ellis's affidavit held shortly after 14 June 1999, Mr Ellis asked if he could substitute his orange juicing machine rights for his Boom Boom interests. It was agreed that this was possible and that they should record such an arrangement in writing. Mr Franzese was then called to the meeting and instructed to prepare documents. 246 The letter which is exhibit GRE 21 to Mr Ellis's affidavit, referred to in par 51 of that affidavit was, according to Mr Laski, handed to Mr Ellis at a meeting between Mr Laski, Mr Franzese and Mr Ellis. The meeting was called to consider the proposed distribution agreement. According to Mr Laski, Mr Ellis was anxious to sign it, but Mr Franzese and Mr Laski said that he should not do so and that he should seek legal advice. Mr Franzese was not authorized to make any "representations of a sales nature". The representations allegedly made by Mr Cameron and referred to in par 66 were not authorized. Mr Laski said that he had not previously seen exhibit GRE 33 to Mr Ellis's affidavit. It was not authorized by him. However it is very similar to exhibit RML 6 to Mr Laski's affidavit. With respect to Mr Ellis's claim that he was not assisted by Michigan, Mr Laski exhibited various letters commencing with one dated 15 September 1999. As far as I can see these have little relevance for present purposes. Mr Laski denied that he authorized anybody to represent that Coles were "on board or had agreed to take orange juice machines". He said that he had instructed Mr Franzese to state in his letter of 16 July 1999 that Coles had not made any such decision.

Mr Carter 247 Mr Laski has never met Mr Carter. He denied that any representations made by Mr Semos were made on behalf of Michigan. Mr Laski asserted that the documents contained in exhibit JEC 2 to Mr Carter's affidavit were authorized by Michigan but those contained in exhibit JEC 3 were not. Exhibit JEC 2 contains only a brochure concerning the machine. Exhibit JEC 3 is the Queensland Juice Company brochure which asserts that Queensland Juice Company "supplies the market leaders". It also bears the names of various retail outlets. Mr Laski denied the telephone conversation with Mr Carter referred to in par 33 of Mr Carter's affidavit. He said that Mr Cameron may have called, using his name.

Mr Harman 248 Mr Laski denied that Mr George Semos was authorized to make any representations on behalf of Michigan. Mr Peter Semos also had no such authority. Mr Laski particularly denied the authority of Mr Cameron to make the representations contained in par 25 of Mr Harman's affidavit. He denied that Mr Cameron had authority to identify sites on invoices. He denied having previously been aware of exhibit AMH 10 to Mr Harman's affidavit. This is a letter to Mr Semos from Mr and Mrs Harman dated 19 January 1999. It purports to terminate the agreement to purchase five machines following advice from Mr Tierney that none of the machines would be sited at Franklins, Indooroopilly, Carindale or Brookside. Nonetheless it is clear that Mr Laski became aware of the relevant problem. Mr Harman's solicitor's letter of 25 January (exhibit AMH 12) certainly put him on notice of it. Mr Laski admitted having a conversation with Mr Harman in which he said that he was not interested in who said what and that all he wanted was to arrive at a solution. He discovered that Mr Cameron had specified sites on Mr Harman's invoice. In order to be conciliatory, he offered to make some repayments of Mr Harman's loan. Mr Harman rejected this proposal.

Ms Lasser 249 Mr Laski denied that Michigan was in any way concerned in any business known as "Top Brew". He was unaware that Mr Doherty had met with Ms Lasser. He alleged, concerning the conversation with Mr Doherty referred to in par 5 of Ms Lasser's affidavit, that "Daryl Doherty did not make these comments without my authority, knowledge whether on behalf of myself or Michigan". It is probable that Mr Laski meant to deny authority. He also alleged, concerning par 6, that: I am not aware of any further dealings with Elizabeth Lasser. No person had authority to deal with Ms Lasser on Michigans or my behalf. It seems like Mr Doherty and Mr Semos have done a 'side deal' without my knowledge and in breach of Michigans agreement with QJC.

Mr Scipione 250 Mr Laski said that he has never met Mr Scipione and that the information contained in exhibit ADS 1 to his affidavit was not authorized by Michigan or by him. However the contents seem very similar to those of other documents which Mr Laski admitted authorizing such as exhibit RML 6. As to par 6 of Mr Scipione's affidavit Mr Laski denied that Mr Semos was authorized to make any representations on behalf of Michigan. He also denied having told Mr Scipione that Michigan had a warehouse in Homebush as alleged in par 40. He denied that there was any such warehouse. He agreed that a receipt was issued by Michigan to Mr Scipione as alleged in par 45. He was aware of the facsimile transmissions being exhibits ADS 9, 10 and 11, referred to in pars 55 and 56 of the affidavit. At that stage he had been told by Mr Semos that all Franklins Big Fresh sites would be getting juice stands and that Mr Scipione's machine would be on such a stand. 251 As to par 75 of the affidavit, Mr Laski denied that he authorized the letter dated 30 June 1999 which is exhibit ADS 19 to the affidavit. He may have been overseas at the time it was sent. He similarly denied having authorized the facsimile dated 30 June 1999 and referred to in par 76. He denied any telephone conversation with Mr Scipione concerning that letter. He denied authorizing the facsimile referred to at par 85, being exhibit ADS 26 to the affidavit and denied receiving the facsimile referred to in par 90 dated 8 May 2000, being exhibit ADS 31 to the affidavit.

Mr Turton 252 Mr Laski accepted that Michigan had authorized exhibit RT 2 for distribution but denied that exhibit RT 3 was so authorized. There is little relevant difference in their contents. Mr Turton asserted that in the course of a company search concerning Michigan, he discovered the name of Mr Semos. Mr Laski denied this, and it seems most unlikely. There is no other evidence suggesting that Mr Semos had any official connection with Michigan. He similarly denied that exhibit RT 4, which purports to be signed by Mr Semos, was authorized by Michigan. Mr Laski denied that the representations made by Mr Semos, as alleged in par 14 of Mr Turton's affidavit, were so authorized. As to exhibit RT 7, Mr Laski denied that Michigan had authorized that letter and that Mr Semos was authorized to write such a letter. Mr Laski also denied knowledge of any problems with health and safety requirements as alleged in par 38 of Mr Turton's affidavit.

Mr and Mrs Kirkwood 253 Mr Laski denied having met Mr Kirkwood. He also denied making statements to the effect alleged in par 54 of Mr Kirkwood's affidavit. He seemed not to deny the telephone conversation. As to Mrs Kirkwood, Mr Laski denied that Mr Semos was authorized to make the statements alleged in pars 12-16 of her affidavit or that Mr Doherty was authorized to make the statements alleged in par 20. Mr Laski denied being aware that the Kirkwoods had bought a machine from Queensland Juice Company, apparently asserting that any contract was with that company and not Michigan. He admitted knowledge of the letter which is exhibit DK 19 to the affidavit of Mrs Kirkwood. It contains a reference to a guarantee.

Mr Nemes 254 Mr Laski was aware that exhibit TN 1 to Mr Nemes' affidavit had been distributed to investors but denied that the representations by Mr Cameron referred to in par 9 of the affidavit were authorized by Michigan. Mr Laski denied that he was "Mr Cameron's boss" as described in the conversation set out in par 12 of that affidavit. As to the discussions with Mr Cameron concerning state distributorship, Mr Laski said that Michigan had been looking to appoint sub-distributors for the machines in New South Wales and a state distributor in Queensland. Mr Nemes was granted exclusive distribution rights, but he had difficulty in meeting his financial obligations. Mr Laski agreed that Mr Nemes was told that there were potential machine sales of well over 300 machines. This was based upon the fact that there were well over 300 sites available for the machines, including major retail and independent supermarkets, fruit stores and barns, markets and bakery/delicatessens. In exhibit TN 3, a letter dated 9 April 1999 from Mr Laski to Mr Nemes, the former said "The potential for this large area is well over 300 machines". This was said to be "only 18 per cent of total available sites". Representations for Victoria were based upon the assumption that in that state, there would be about two-thirds of the total number of potential sites in New South Wales. 255 Mr Laski did not recall the conversation alleged in par 104 of Mr Nemes' affidavit but said that he had told Mr Nemes, in a conversation late in August 1999, that the Chief Executive of the Freshest Group, Jordan Kelly, had approved the whole transaction. Mr Laski also said: Tom, we even paid $3,000 to the Freshest Group for promotion that the orange juice machine was being introduced.

Mr Dewan 256 Mr Laski denied that Mr Doherty was the Sales Manager of Michigan and that Mr Semos was Michigan's Site Engineer. He also denied that Michigan had graded sites as "A1" sites. He denied being Mr Doherty's "boss" and that the statements referred to in par 10 of Mr Dewan's affidavit were made with Michigan's authority. Mr Laski denied that he was aware of other matters referred to by Mr Doherty and in particular, denied his authority to make statements concerning public liability as alleged in par 22. He also denied being aware that Queensland Juice Company or Mr Semos was compensating clients as alleged in par 41.

Mr Kumar 257 Mr Laski denied ever meeting or speaking to Mr Kumar. He also denied that Michigan had sites denoted as either "A" or "B" sites. He denied that Mr Doherty had any authority to make statements to that effect. He was not aware of the payment made on 6 April 1999 as alleged in par 18 of the affidavit. He was also unaware of payments made by Queensland Juice Company as alleged in par 36. He denied that Michigan had sited machines as alleged in par 46.

Mr Egan 258 Mr Laski denied authorizing the representations allegedly made by Mr Doherty as set out in par 6 of Mr Egan's affidavit. Mr Laski was aware that the document which is part of exhibit BME 2 to Mr Egan's affidavit was being used at the Sydney show. Mr Laski was not aware of the conversations referred to in pars 14 and 25. Mr Laski also denied any telephone conversations as alleged in par 74 of the affidavit.

Mr Kwon 259 Mr Laski recalled meeting Mr Kwon and Ms Wang at the Darling Harbour Trade Show in March 1999 and handing them a brochure. He then left them with Mr Cameron. He did not otherwise talk to them. He said that he was not present when Mr Kwon decided to proceed with the purchase and that at no stage did Mr Kwon tell him that he would be purchasing two machines. He denied any knowledge of the cheque referred to in par 11 of Mr Kwon's affidavit and denied that he had used the words referred to in par 12. He denied giving a business card to Mr Kwon or Ms Wang but believed that Mr Cameron may have given them his (Mr Laski's) card. Mr Cameron had left his cards in the hotel room. 260 Mr Laski said that he telephoned Mr Kwon on 29 March 1999 after discovering that his cheque had been cancelled. He arranged a meeting between Mr Kwon and Mr Cameron at the Radisson Hotel. He was not initially present at the meeting. However Mr Cameron telephoned him in his room and asked him to bring down some brochures concerning Granita machines. He then met Mr Kwon. Mr Cameron said that everything had been sorted out and that Mr Kwon was going to start with one machine. Mr Laski then received a cheque for $15,750 payable to Michigan. He did not recall anybody saying that the machine would be installed on the following day. There was also discussion concerning slush machines. In late April 1999 Mr Laski spoke to Mr Kwon by telephone. They discussed the slush machines. Mr Kwon said that he was having difficulty in contacting Mr Semos and that his juicing machine had not been sited. Mr Laski told him to list some sites and give the list to Mr Semos. Mr Laski then spoke with Mr Semos.

Mr Poole 261 Mr Laski denied having met Mr Poole. He agreed that Linda Moretto of Yeppoon was Michigan's state distributor pursuant to a distribution agreement. He denied that he or Michigan had authorized the letter of 11 June 1999 which is exhibit GJP 1 to Mr Poole's affidavit. He also denied that Michigan had any interest in the acquisition by Mr Poole of the machines. This may be true. The machines were purchased from Yeppoon. He was unaware of the arrangement by which Mr Semos extended financial assistance to Mr Poole as alleged in pars 15 and 16. Mr Laski acknowledged receiving the letter dated 1 February 2000, exhibit GJP 6 to Mr Poole's affidavit and having had a conversation to the effect set out in par 38 of the affidavit. He denied speaking to Mr Poole by telephone on 13 March 2000 as alleged in par 47. He also denied the conversation in June 2000 which is alleged in par 49.

Mr Rotheram 262 Mr Laski denied that Michigan had authorized the letters being exhibits KR 2, KR 3 and KR 4 to the affidavit of Mr Rotheram. He claimed never to have met Mr Rotheram although he was aware that he had attended meetings with Mr Peter Semos, Mr Cameron and Ms Moretto, and that there had been discussions concerning patent rights for a plastic bottle. He wrote to Mr Rotheram on 9 November 1999, expressing an interest in purchasing such bottles and referring to the latter's proposal to buy twenty machines. Yeppoon did not have the financial resources to complete that sale. It was agreed between Michigan and Yeppoon that a commission would be paid to Yeppoon. I infer that Mr Laski meant that Michigan was to take over the deal from Yeppoon. 263 He denied authorizing the facsimile transmission which is exhibit KR 6 to the affidavit. He acknowledged the facsimile transmission which is exhibit KR 7, concerning Mr Rotheram's order for twenty machines. He alleged that this agreement was unconditional and that Mr Rotheram had later secretly agreed to buy machines from Queensland Juice Company. Mr Laski acknowledged the facsimile sent on 20 December 1999 as alleged in par 40. He understood at this stage that Mr Rotheram was still going ahead with the purchase of twenty machines. As to par 47, he agreed that Mr Rotheram had telephoned him on 3 February 2000, asking where the machines were. Mr Laski said that Mr Rotheram had not bought any machines from Michigan and that he knew nothing about the matter. Mr Laski also told him that Mr Semos was overseas. 264 Mr Jackson for ACCC objected to the admissibility of exhibits RML 1 and RML 2 to Mr Laski's affidavit. These objections were upheld.

Mr Laski's oral evidence 265 In cross-examination Mr Laski agreed that the document headed "October 1998", behind tab 13 in the agreed bundle of documents, was prepared for distribution at the Brisbane Expo. This is substantially the same as that received by many of the earlier investors. He then understood that Michigan had an alliance with Franklins and Coco's. He thought that there may have also been alliances with other groups. He had derived this information from Mr Semos. Mr Laski said that by this time Queensland Juice Company had installed about 100 machines. He agreed that none of them had been placed pursuant to an investor scheme. He also agreed that the letter behind tab 14 was written to Mr Harman. It is in similar form to the document behind tab 13. It seems that the document headed "Your Profit Potential" behind tab 14 was also attached to the document behind tab 13. The brochure referred to in the second last paragraph of the letter behind tab 14 is the brochure relating solely to the orange juicing machines and not the Queensland Juice Company brochure behind tab 31 (which referred to various retail outlets). Mr Laski denied that the tab 31 document (which is a copy of exhibit 14) had ever been used with his authority or that it had been distributed at the Brisbane Expo. He had seen it in Mr Semos's office. 266 Mr Laski was cross-examined concerning the documents behind tab 12, a letter dated 26-28 March 1998 with an attached document headed "Your Profit Potential". Mr Laski denied having authorized these documents to the extent that they differed from those behind tab 14. In particular, he pointed to the additional words added to the disclaimer which comprised the guarantee which he had authorized in March 1999. See par 29 of his affidavit. As he had authorized the guarantee, it would not be surprising if he had also authorized communication of it to investors or potential investors in this way. Mr Laski's response to this cross-examination was suggestive of instinctive denial of any evidence which he suspects may be unfavourable. In any event, the documents are to substantially similar effect. 267 Mr Laski agreed that Mr Cameron was authorized by Michigan to close deals, to issue invoices and to receive money. He also had authority to negotiate within parameters which had been prescribed by Mr Laski as set out in his affidavit. He was referred to exhibit RML 6 which has a "Your Profit Potential" document attached. Mr Laski seems to have accepted that it was issued with his authority. He did not challenge Mr Doherty's authority to the extent that his conduct did not go beyond the instructions which Mr Laski claimed he had given to Mr Cameron. He was aware that Mr Peter Semos had an agreement with Mr Cameron pursuant to which the former would receive a commission if he sold machines through Mr Cameron. Mr Laski also knew that Mr Semos had spoken to Mr Scipione, but he heard about it at some later stage. This part of Mr Laski's cross-examination (TS 885 l 27 - TS 887 l 25) is a little difficult to follow. It seems that Mr Laski was aware that Mr Semos had been participating in sales activities with Mr Cameron's approval. No doubt he was being truthful when he said that he had not authorized them to do deals behind his back. Nonetheless he was aware that Peter Semos was selling machines on behalf of Michigan. 268 Mr Laski admitted signing the document behind tab 38, a letter dated 9 April 1999 to Mr Nemes, but denied signing the document behind tab 21, a letter to Mr Ellis, dated 8 April 1999. He said that he was not saying that he did not agree with the contents of the letter, nor did he dispute authorizing it. Mr Cameron was authorized to enter into state distributorship contracts after Mr Laski had spoken to the potential distributor. Mr Laski would negotiate the terms. 269 As to the document behind tab 15, a letter dated 25 October 1998 to Mr Turton, Mr Laski agreed that it was in substantially the same form as that behind tab 14 which was addressed to Mr Harman. There is a similar letter behind tab 16 dated 9 November 1999, addressed to Mr Scipione. Mr Laski apparently accepted that he had authorized these letters. At tab 17 there is a copy of a letter dated 21 November 1998 from Mr Semos to Mr Turton. Mr Laski said that he was not aware that Mr Semos had been talking to Mr Turton. As to the document behind tab 18, a letter dated 8 February 1998 (presumably 8 February 1999) to Mr Kirkwood, Mr Laski agreed that it was in a standard form. The document behind tab 19, a letter to Mr Nemes dated 16 March 1999, was authorized by Mr Laski. He denied that the letter behind tab 23 was authorized by him. It is a letter from Yeppoon to Mr Rotheram dated 1 November 1999. The document behind tab 39 is a letter dated 11 June 1999 from Ms Moretto to Mr Poole, It is on Michigan letterhead. Mr Laski denied having sent it, asserting that the letterhead had been created by computer. That is possible. 270 Concerning the various projections that were offered in the documentation, Mr Laski was asked at TS 956 whether any investors as at March 1999 were making $100 per week per machine. He said that Mr Carter was, although he was not aware of that at the time. In cross-examination by Mr Doherty, Mr Laski agreed that he had paid commission to Mr Doherty. He said that he had done so because Mr Cameron had asked him to do so. The commission came out of Mr Cameron's share. He also agreed that Michigan owned a business called "Better Brew", which he distinguished from the business called "Top Brew" referred to by Mr Doherty. This was incidental to his denial that Mr Doherty was his or Michigan's employee. Clearly, Mr Laski knew that Mr Doherty was acting as a salesman for Michigan with the authority of Mr Cameron. Mr Doherty said that Mr Laski had asked him to come to Melbourne to discuss the operation. Mr Laski denied this, but I prefer Mr Doherty's evidence. Mr Laski's desire to distance himself and Michigan from Mr Doherty was yet another device to avoid responsibility for any representations made to investors. 271 In the course of Mr Franzese's cross-examination it became clear that a tape-recorded meeting had been conducted by ACCC at which Mr Franzese, Mr Laski and others were present. I suggested that if ACCC intended to rely upon its contents, they should have been put to Mr Laski in cross-examination. He was eventually recalled. He said that at the meeting, he was not asked specific questions concerning Mr Cameron's authority. He agreed that Mr Cameron had authority to make specific representations of the kind which I have discussed. I was left in a state of utter confusion as to the various letters and other documents which had been produced at various times in the course of the sales campaign. This is yet another consequence of ACCC's attempt to advance so many different claims in these proceedings. 272 It is appropriate that I say something at this stage concerning Mr Laski's evidence. These observations are based upon my appreciation of the evidence as a whole. In his affidavit he tried to depict himself as having been very careful to try to control the activities of Mr Cameron who had previously disappointed him. However he seemed very quick to accept that notwithstanding his care, Mr Cameron had managed to make many representations which he had not authorized. Mr Laski was also quite willing to accept that Mr Cameron may have, without authority, published documents in the name of Michigan and even impersonated Mr Laski. It seems very unlikely to me that a person who was aware of the risks associated with employing Mr Cameron would have been so easily outwitted by him. 273 Mr Laski sought to discredit Mr Kwon's evidence by suggesting that he did not speak English and that negotiations had been conducted using an interpreter, Ms Wang. However this proposition became untenable when Mr Kwon disclosed that he and Ms Wang shared only English as a common language. Again this reflects adversely on Mr Laski. Mr Laski attempted to deny that Mr Doherty was employed by Michigan. His assertions that some documents were authorized and other, quite similar documents not unauthorized was also very curious. These matters suggested a fairly inelegant attempt to exploit an imperfect understanding of the law of agency in order to avoid personal involvement. 274 It is relatively clear that from at latest 25 January 1999 Mr Laski was aware that Mr Harman was dissatisfied with the arrangements which had been made as to the siting of his machines. Even if the solicitor's letter of that date did not identify the actual concerns, it is inconceivable that Mr Laski would not have investigated the matter to find out what the problem was. Subsequent correspondence suggests that he well knew that it was about siting of the machines. It is barely possible that prior to that date, he had relied entirely upon Mr Semos for information as to arrangements for siting of machines, although even that seems most unlikely. Whatever Mr Laski may be, he is not stupid. He certainly would not have risked any asset of his own in reliance upon anything that he was told by Mr Semos. In any event, after 25 January he was on notice of a problem. I find it difficult to accept that he continued to rely upon anything said by Mr Semos as to the siting of machines. 275 In this context, I return to a matter mentioned earlier. 276 At par 11 of his affidavit he said: A client would be asked to state what area they preferred for the machines to be sited in. This was done after the client had purchased the machines. It was not possible to predetermine sites and guarantee sites to clients. As it was not possible to promise a machine to a site and then have the site wait for a machine. One could not leave a site waiting for a machine to be available or ready. 277 This suggests that Mr Laski, and therefore Michigan, expected that sites would be identified only after investors had agreed to acquire the machines. The reason for this was that Michigan was not willing to "promise" a machine for installation at any particular site until such time as an investor had committed him- or herself to purchasing a machine. If Michigan had not committed itself to providing a machine to a particular site, it is a little difficult to understand what level of commitment could have been expected from site owners, even site owners such as Franklins. This suggests that Michigan had no belief that any retailer was committed to siting machines at any particular store. Mr Laski seems to have made no enquiries as to the extent of any particular siting arrangements, nor to have received much information about them. I do not accept that an assurance by Mr Semos that he had an arrangement with Franklins or with any other retailer would satisfy the requirements of s 51A. For Michigan to have reasonable grounds for making representations as to the availability of sites or as to any other matter, one would expect that it would have made its own enquiries, either through its employees or through independent contractors suitable for that purpose. I do not include in that category somebody such as Mr Semos who obviously had a vested interest in the proposed transactions. 278 Finally, I do not accept Mr Laski as a witness of credit. In general he created the impression of a person who was willing to deny any matter which might be unfavourable to him, without regard to the truth of the matter.

Prospero Franzese 279 Mr Franzese is a solicitor. His firm acted for Michigan from 1996 to 2000. He was not employed by that company. He denied allegations by Mr Doherty as to the extent of his involvement in the promotion of sales schemes by Michigan. He denied that he had ever approved any "standard sales script" for use in the business. Mr Cameron was, as far as he knew, the sales manager of Michigan. He had little to do with Mr Semos until ACCC commenced its investigation. In cross-examination by Mr Jackson, Mr Franzese said that his office was separate from the office of Michigan. Nonetheless it seems to have been within the general boundaries of that office. He had a monthly retainer from Michigan and acted for various associated companies. He had other clients. Michigan files accounted for only about 10 per cent of his practice. He was not Michigan's only solicitor. I accept Mr Franzese's evidence.

Daryl Francis Doherty 280 In 1998 Mr Cameron told Mr Doherty that Mr Laski, the director of Michigan, was looking for a sales consultant in Queensland. Mr Doherty rang Mr Laski and was invited to come to Melbourne to discuss the opportunity. He did so. He spoke to Mr Laski and Mr Franzese at the Michigan office and was shown a "script" for use with potential investors. He felt comfortable about the scheme because he understood that the company solicitor, Mr Franzese, was supervising matters. At the meeting they discussed various sales letters which were in use. Mr Laski explained how the business worked. He said that Mr Franzese was there to check all paperwork and to ensure that the business would not run into any problems. Mr Doherty was particularly told not to change any information contained in the paperwork. Only Mr Laski and Mr Franzese were permitted to do this. It is not entirely clear whether the documents in question concerned the juicing machines or other machines. 281 As a result of the meeting Mr Doherty was employed on commission. He commenced about October 1998. He understood that Michigan was marketing the juicing machines whilst Queensland Juice Company was responsible for siting them. He met the managing director of Queensland Juice Company (presumably Mr Peter Semos) who explained the relationships and alliances which he had with supermarkets and fruit shops and how siting was to be handled by him. Mr Semos said that he had sold machines which were producing and selling 400 - 500 bottles per week and that the business would be successful. Mr Doherty visited a few sites, including a couple of Franklins Big Fresh outlets, a few smaller stores, the fruit shop at Sydney Fish Market and the Junction Fruit Market. They all confirmed Mr Semos's information. Mr Doherty understood that there was an arrangement to site machines in every Franklins Big Fresh store in Australia. He spoke to a number of Franklins managers. The proposal for juice bars was frequently raised in conversation. Mr Semos showed him a picture of this concept. Mr Doherty took this as indicating that Franklins intended to make the juicing machines an important part of the Franklins Fresh store image. This was confirmed by Franklins staff. He and Mr Cameron attended to sales whilst Mr Laski was responsible for arranging delivery of machines. Mr Semos located sites, installed machines and took care of the bottle supply. He also trained owner/operators to conduct promotions and maximize sales. Mr Doherty dealt individually with the evidence of a number of the investors. I will deal with that evidence in the same way.

Ms Lasser 282 Mr Doherty recalled discussing the possible "Top Brew" investment with Ms Lasser. However she lost interest as the result of something she had discovered about Mr Laski. Ms Lasser said that Mr Doherty claimed to have lost faith in Mr Laski. I am inclined to prefer her evidence on that score. Mr Semos suggested to Mr Doherty that Ms Lasser might be willing to deal with Queensland Juice Company. Ms Doherty subsequently arranged a meeting between Ms Lasser, Mr Coad (her partner), Mr Semos and himself. At the meeting they inspected a machine which may or may not have been operating. Mr Peter Semos "controlled" the meeting. There was a subsequent meeting between the same people at Franklins, Cannon Hill. Mr Semos talked about sites and the operation of the business. Mr Doherty had no further dealings with Ms Lasser.

The Kirkwoods 283 On 23 February Mr Doherty was instructed to telephone Mr Kirkwood who, as he understood it, had seen an advertisement in the "Courier Mail" and had already received the "standard information pack". He arranged a meeting between Mr Kirkwood and Messrs Semos, Cameron and himself at the Sunnybank Hills Shopping Centre where a machine had been installed. They there met the produce manager. Mr Doherty thought that Mr Kirkwood was impressed by what the produce manager said to him. Mr Kirkwood was told that his wife would be allowed to conduct promotions at the site. At this time, Mr Doherty was aware that a couple of investors had proceeded and seemed happy. He had visited a number of sites where large amounts of orange juice were being turned over. He understood that Michigan had an arrangement with Franklins, this impression being based upon the fact that there were a number of machines sited in Franklins stores. He also knew that Franklins were designing juice bars to be installed in Franklins stores. Mr Peter Semos, Mr Laski and Mr Cameron were all very confident about the arrangement. Mr Doherty denied that he had said to Mr Kirkwood that there was a man in Toowoomba selling juice "hand over fist". He did, however, mention other places where the machines were doing well, such as Sydney Fish Market and the Junction Fruit Market. He had not met any investors from Melbourne. He had been told by Mr Peter Semos and Mr Laski that investors were doing well.

Mr Dewan 284 Mr Doherty met Mr Dewan at the Darling Harbour Expo in March 1999. They discussed the juicing business in the presence of Mr Peter Semos. Mr Doherty claimed to have adhered to the "script" to which I have previously referred. He agreed that as alleged in par 21 of Mr Dewan's affidavit, he told Mr Dewan that machines should be installed about two weeks after payment of the balance of the purchase price. He had been told this by Mr Laski and Mr Semos. Apparently there had been some discussion between the three of them concerning payment and delivery just prior to the meeting with Mr Dewan. Mr Doherty could not recall any conversation concerning insurance matters but agreed that Michigan had offered insurance cover for $25 per month. He recalled saying that Michigan was committed to Franklins rather than Coles. They had an agreement with Franklins. He also told Mr Dewan about the three months guarantee of a minimum of 200 bottles.

Mr Kumar 285 Mr Doherty recalled meeting Mr Kumar at the Business Expo in Sydney. He agreed that he would have made the business "sound good" because his impression was that it was good. He had observed fruit and vegetable stores which were doing very well with the juice. He also believed that there was an understanding with Franklins as previously explained. He agreed that he had made the statements alleged in par 6 of Mr Kumar's affidavit as that was "the standard sales script as supplied" to him by Mr Laski. He said that he relied upon Mr Peter Semos for information as to available sites. He also recalled offering Mr Kumar the choice of sites at Tuggerah, Gosford, Bankstown, Campbelltown and a fruit barn. He had been instructed by Mr Laski to offer a minimum bottle sale guarantee of 200 bottles per week underwritten by Michigan. Accordingly he offered it to Mr Kumar. He denied having said that the sites would average 400 bottles per week. He was under instructions not to promise turnover to anybody. He said that he had been told by Mr Peter Semos that there was a Duffy Brothers store at Bankstown. Mr Kumar told him that this was not so. At some stage Mr Semos apologized for the error and said that he would arrange for installation at the Duffy Brothers store at Blacktown.

Mr Egan 286 Mr Doherty met Mr Egan at the Darling Harbour Expo in March 1999. He denied saying that he himself owned machines. He said that it was Mr Laski's policy that no employee or consultant should own any machine. He said that he went through "our standard stales script" and handed Mr Egan "the standard handout brochure and potential turnover figures". Mr Doherty was asked questions concerning documents which are part of exhibit BME 2 to Mr Egan's affidavit as they related to the content of par 59 of his affidavit. In that paragraph he said, referring to Mr Egan's affidavit, that he had handed him a standard brochure and potential turnover figures. The exhibit which is part of Schedule 10 to these reasons, contains a number of documents. It seems that the questioning commencing at the bottom of TS 1103 concerned a circular letter dated 26-28 March 1999, on Michigan letterhead and headed "Sydney Franchising and Small Business Show". There is some handwriting on it. Mr Doherty said that he and Mr Laski had carried copies of the document to the Darling Harbour Expo although he was not sure whether it was distributed there. Mr Laski denied having authorized this document. Mr Doherty said that the document behind tab 12 in the agreed bundle was handed to Mr Egan at the Expo. This is the same document as that to which I have referred as being part of exhibit BME 2. This document contains a guarantee of 200 bottles per week. (See the second paragraph on p 2.) Mr Doherty thought that there was an earlier document which did not contain that guarantee.

Other matters 287 In the course of cross-examination by Mr Laski, Mr Doherty said that he had twenty-two years experience in selling business opportunities. He had known Mr Cameron since 1990. He went to Melbourne to meet Mr Laski at his invitation. As to the letters to potential investors, he said that "95 per cent of the letters were sent out from Head Office" and that he followed up on them. Occasionally, he may have sent out standard letters himself. The form of every such letter had been authorized by "Head Office". He also said that his use of the terms "A1" and "A2" to describe sites was something that he had picked up from Mr Cameron. Mr Peter Semos not infrequently spoke to prospective investors about the machines and the industry generally because he was most knowledgeable about those matters. Mr Doherty asserted quite firmly that Mr Laski knew that Mr Semos was actively involved in sales, but he did not justify this opinion by reference to objective facts. In any event Mr Laski admitted knowing of Mr Semos's involvement in sales. 288 Mr Doherty said that Mr Cameron worked very closely with Mr Laski. He was in charge of sales whilst Mr Laski was in charge of the company and its affairs, back-up and support. He would contact Mr Cameron and Queensland Juice Company to ensure that machines were sent out on time and sited and that investors were happy. As to alliances with retail outlets, Mr Doherty said that apart from Franklins, he had become aware that there was a machine at a Duffy Brothers' site. He was not aware of any difficulty with the Franklins sites, although he understood that there was a shortage of oranges which was causing delay. 289 As to estimates of profit potential, Mr Doherty said that Mr Peter Semos had been in the industry for many years and had said that machines in the marketplace were "doing those figures". Mr Doherty understood that there were operators achieving such figures so. He also understood that there was somebody in Toowoomba who was doing very well. Curiously, I understood him to say with respect to Mr Kirkwood's evidence, that he had not spoken to any Toowoomba investor. See par 14 of Mr Doherty's affidavit. At TS 1128 ll 1-6, he agreed that the person in question was Mr Carter. However this seems unlikely as Mr Carter did not have machines in Toowoomba. Mr Turton operated in that city. Mr Doherty said that the guarantee was offered because of the difficulty with the price of oranges. He was told by Mr Semos that there was a "water-tight agreement with all Franklins stores around Australia". He appears also to have believed the same concerning Duffy Brothers. Mr Doherty could not recall whether he had spoken to potential investors about the SPAR Group. He said that Mr Semos had, at some stage before the Sydney show, mentioned the SPAR stores as potential sites. Mr Doherty spoke to Mr Poole on one occasion but never met Mr Rotheram. 290 Mr Doherty said that he was employed by Michigan. He had made enquiries concerning the company and discovered that it seemed to be reputable. He appears to have placed great reliance upon the fact that it had the services of Mr Franzese who, as he thought, checked the documents. On occasions there were delays in clients receiving information because Mr Franzese hadn't approved the documents. Mr Doherty also appears to have had confidence in both Mr Laski and Mr Peter Semos. He said that he was given a sales script. As far as I am aware, it is not in evidence. The diagrams of the juice bars proposed for Franklins were of some significance to him. He visited a number of outlets and spoke to managers. He otherwise accepted what Mr Laski, Mr Semos and Mr Franzese said. It appears that Mr Laski in particular, and perhaps also Mr Semos, kept a close eye on him and tended to take over negotiations as a successful outcome became more likely. 291 Mr Doherty was a difficult witness to assess. He struck me as generally honest, if somewhat naďve. I do not necessarily accept all of his evidence at face value. In general, I think it likely that investors would be more reliable in their recollections of detail than would he. On the other hand, I prefer his evidence to that of Mr Laski in all respects. Because of his gullibility, he would have been easily convinced that the Michigan operation was substantial and that arrangements for siting machines were reliable. I am not persuaded that he made any statement knowing it to be untrue. In his evidence, he may have over-stated the extent of Mr Franzese's involvement in day-to-day operations. I suspect that he has tried hard to rationalize his involvement in this matter. Reliance on Mr Franzese's presence was one of the devices used in this process. I am not sure whether this rationalization process was prompted by honest remorse at his unknowing involvement in misleading conduct or by a desire to conceal his knowing involvement.

CONCLUSIONS 292 The substantive provisions of the Act upon which ACCC relies are s 52 (misleading or deceptive conduct), s 53 (false or misleading representations), s 58 (accepting payment) and s 59 (misleading representations about business activities). Section 52 provides as follows: (1) A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. (2) Nothing in the succeeding provisions of this Division shall be taken as limiting by implication the generality of subsection (1). 293 Section 53 relevantly provides as follows: A corporation shall not, in trade or commerce, in connexion with the supply or possible supply of goods or services or in connexion with the promotion by any means of the supply or use of goods or services: … (bb) falsely represent that services are of a particular standard, quality, value or grade; … (d) represent that the corporation has a sponsorship, approval or affiliation it does not have; … 294 Section 58 of the Act provides: A corporation shall not, in trade or commerce, accept payment or other consideration for goods or services where, at the time of the acceptance: (a) the corporation intends: (i) not to supply the goods or service; or (ii) to supply goods or services materially different from the goods or services in respect of which the payment or other consideration is accepted; or (b) there are reasonable grounds, of which the corporation is aware or ought reasonably to be aware, for believing that the corporation will not be able to supply the goods or services within the period specified by the corporation or, if no period is specified, within a reasonable time. 295 Subsection 59(1) provides: A corporation shall not, in trade or commerce, make a representation that is false or misleading in a material particular concerning the profitability or risk or any other material aspect of any business activity that the corporation has represented as one that can be, or can be to a considerable extent, carried on at or from a person's place of residence. 296 I do not understand why ACCC seeks relief under these various alternative provisions, given that on the facts of this case, they seem to overlap. Further, as I have previously pointed out, these proceedings are not presently to recover compensation on behalf of investors. Thus the only relief likely to be granted is relief designed to demonstrate that one or other of the respondents has breached the Act and to protect the public against continued or repeated breaches. It will not matter much whether the conduct in question contravenes s 52, s 53, s 58 or s 59. In those circumstances I propose to consider only the application of s 52 to the facts of this case. It will be open to ACCC, after publications of my reasons, to apply for further findings and other relief. 297 ACCC also relies upon s 51A which provides: (1) For the purposes of this Division, where a corporation makes a representation with respect to any future matter (including the doing of, or the refusing to do, any act) and the corporation does not have reasonable grounds for making the representation, the representation shall be taken to be misleading. (2) For the purposes of the application of subsection (1) in relation to a proceeding concerning a representation made by a corporation with respect to any future matter, the corporation shall, unless it adduces evidence to the contrary, be deemed not to have had reasonable grounds for making the representation. (3) Subsection (1) shall be deemed not to limit by implication the meaning of a reference in this Division to a misleading representation, a representation that is misleading in a material particular or conduct that is misleading or is likely or liable to mislead. 298 Some of the statements made to investors contained both statements as to existing facts and actual or implicit representations with respect to future matters. The statements as to existing facts must be dealt with pursuant to s 52. It will be necessary to determine whether or not each relevant representation was misleading or deceptive. The onus is on ACCC to so prove. The representations as to future matters must be considered having regard to ss 51A and 52. In the case of those representations it is for the relevant corporate respondent to demonstrate that it had reasonable grounds for making the representation in question. Should it fail to do so, the representation will be taken to be misleading. It is of some importance to note that s 51A has two functions. Firstly, it defines the circumstances in which representations by corporations concerning future matters will be treated as misleading. Secondly, it places the onus upon a corporate respondent to demonstrate such reasonable grounds. However it does not place any such onus upon natural persons who are said to be knowingly concerned in such conduct. 299 For evidentiary purposes, ACCC may also rely upon s 84 which provides: (1) Where, in a proceeding under this Part in respect of conduct engaged in by a body corporate, being conduct in relation to which section 46 or 46A or Part IVA, IVB, V or VB applies, it is necessary to establish the state of mind of the body corporate, it is sufficient to show that a director, servant or agent of the body corporate, being a director, servant or agent by whom the conduct was engaged in within the scope of the person's actual or apparent authority, had that state of mind. (2) Any conduct engaged in on behalf of a body corporate: (a) by a director, servant or agent of the body corporate within the scope of the person's actual or apparent authority; or (b) by any other person at the direction or with the consent or agreement (whether express or implied) of a director, servant or agent of the body corporate, where the giving of the direction, consent or agreement is within the scope of the actual or apparent authority of the director, servant or agent; shall be deemed, for the purposes of this Act, to have been engaged in also by the body corporate. (3) Where, in a proceeding under this Part in respect of conduct engaged in by a person other than a body corporate, being conduct in relation to which a provision of Part IVA, IVB, V or VB applies, it is necessary to establish the state of mind of the person, it is sufficient to show that a servant or agent of the person, being a servant or agent by whom the conduct was engaged in within the scope of the servant's or agent's actual or apparent authority, had that state of mind. (4) Conduct engaged in on behalf of a person other than a body corporate: (a) by a servant or agent of the person within the scope of the actual or apparent authority of the servant or agent; or (b) by any other person at the direction or with the consent or agreement (whether express or implied) of a servant or agent of the first-mentioned person, where the giving of the direction, consent or agreement is within the scope of the actual or apparent authority of the servant or agent; shall be deemed, for the purposes of this Act, to have been engaged in also by the first-mentioned person. (5) A reference in this section to the state of mind of a person includes a reference to the knowledge, intention, opinion, belief or purpose of the person and the person's reasons for the person's intention, opinion, belief or purpose. 300 Subsection 80(1) provides as follows: Subject to subsections (1A), (1AAA) and (1B), where, on the application of the Commission or any other person, the Court is satisfied that a person has engaged, or is proposing to engage, in conduct that constitutes or would constitute: (a) a contravention of any of he following provisions: (i) a provision of Part IV, IVA, IVB or V; (ii) section 75AU or 75AYA; (b) attempting to contravene such a provision; (c) aiding, abetting, counselling or procuring a person to contravene such a provision; (d) inducing, or attempting to induce, whether by threats, promises or otherwise, a person to contravene such a provision; (e) being in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by a person of such a provision; or (f) conspiring with others to contravene such a provision; the Court may grant an injunction in such terms as the Court determines to be appropriate. 301 For present purposes injunctive relief against the corporate respondents is sought pursuant to pars 80(1)(a) or (b). In the case of the natural person respondents such relief is sought pursuant to pars 80(1)(c), (d) or (e). As far as I can see there is little ground for distinguishing between each of these latter provisions in the context of this case. I therefore propose to consider only whether or not each of the natural person respondents was knowingly concerned in a contravention. As to declaratory relief, the Act seems not to provide for it other than pursuant to par 87(2)(a) and s 163A. I do not understand ACCC to seek relief under either section. Such relief may be available pursuant to s 21 of the Federal Court Act. Relief is also sought pursuant to s 80A but as I understand it, that section has been repealed. I will receive further submissions concerning these matters. An order is also sought that the natural person respondents undertake education and training. This order is said to be sought pursuant to s 80. I have some doubts as to the availability of such relief but will receive further submissions. 302 Relief other than injunctive relief, against natural person respondents, will be available only if the provisions of s 75B apply. They are similar to those contained in pars 80(1)(c), (d) and (e). The availability of relief against natural person respondents depends upon ACCC demonstrating that one or other of the corporate respondents has contravened the Act. However most, if not all, of the alleged contraventions were acts of natural person respondents. Thus it is necessary to show that each act was the act of one of the corporations, primarily by reference to the law of agency and s 84. If a contravention is established, it will then be necessary to determine the extent to which each natural person respondent was "involved" in it. 303 It is quite possible that the act of a natural person respondent on behalf of a corporation will constitute a contravention of the Act by that corporation, and yet the natural person respondent will be found not to have been knowingly concerned in that contravention. In the case of representations as to existing facts, this is because it is not necessary to show that the respondent corporation knew of the misleading nature of the statement in question, but knowing involvement predicates such knowledge on the part of the relevant natural person. The matter is even more complex in the case of representations as to future matters. A representation on behalf of a corporation will constitute a contravention if the corporation fails to show reasonable grounds for it. However a natural person respondent bears no onus of proof. It will be necessary for ACCC to demonstrate that such a person: ® knew that the representation was made; and either: ® knew that it was misleading; or ® knew that the corporation had no reasonable grounds for it.

Agency 304 As I understand it, ACCC does not assert that Mr Laski, Mr Cameron or Mr Doherty was authorized, actually or apparently, to speak on behalf of any corporation other than Michigan. Similarly I do not understand it to assert that either Mr Peter or Mr George Semos was authorized to speak on behalf of any corporation other than Queensland Juice Company, nor that Ms Moretto was authorized to speak on behalf of any corporation other than Yeppoon. See TS 1223 ll 18-23. If I am in error in my understanding of this aspect of the case, the parties may make further submissions in due course. Mr Laski, I would infer, was in effective control of Michigan, as was Mr Peter Semos of Queensland Juice Company and Ms Moretto of Yeppoon. I infer that both Mr Cameron and Mr Doherty were employees of Michigan and that Mr George Semos was an employee of Queensland Juice Company. In some cases Mr Semos made representations in the presence of Mr Laski, Mr Cameron or Mr Doherty. The converse is also true. In the absence of any disavowal of such representations, I will treat them as having been made by all respondents who were present. I will treat Ms Moretto and Yeppoon similarly. 305 Mr Laski has challenged the extent of the authority of Mr Cameron and Mr Doherty to bind Michigan. This is relevant only to the extent that it affects the case against him. The evidence generally does not support his challenge. Mr Cameron was authorized to act as sales representative of Michigan and to make representations as to the orange juicing machines. Although difficult questions may arise as to which representations were expressly authorized by Mr Laski on behalf of Michigan and which were not, in the end it does not matter very much. The representations were all of the same general kind. If Mr Cameron was authorized to make some of them, then he had apparent authority to make all of them, regardless of what the actual position as to agency may have been. Similar considerations apply to Mr Doherty. It does not matter whether or not he was employed by Michigan or by Mr Cameron, although I accept Mr Doherty's evidence on this point. The point is that Mr Laski (on behalf of Michigan) authorized him to act as its sales representative and to make representations. He had apparent authority to make the various representations attributed to him. Mr Doherty said that everything that he said was specifically authorized by Mr Laski, Mr Cameron or perhaps Mr Semos. I accept his evidence. Although Mr Semos was not directly authorized to make representations on behalf of Michigan, it seems probable that Mr Doherty understood that he was to rely on him for information concerning the machines and the industry. The conduct of Mr Laski or Mr Cameron or both of them suggested that he do so. 306 It does not follow that Mr Laski was necessarily knowingly concerned in all contraventions by Michigan constituted by the acts of either Mr Cameron or Mr Doherty. In order to be knowingly concerned in a contravention, he would have had to know that a representation was being made and that it was either misleading or that Michigan had no reasonable grounds for making it. I do not necessarily accept Mr Laski's denial that particular representations were authorized by him on behalf of Michigan. His evidence in this respect was obviously self-serving and seemed to follow no particular pattern. Documents which he denied authorizing were often in forms which were very similar to other documents which he did not deny or to instructions which he had given. I see no reason to doubt that either Mr Cameron or Mr Doherty acted entirely in accordance with directions given by Mr Laski and on information provided by him or by Mr Semos. As I have previously observed, Mr Laski was conscious of Mr Cameron's shortcomings and careful to place very strict limitations upon his conduct. I do not believe that he would have taken any risks in that regard. It is also of importance that he attended the trade shows in both Brisbane and Sydney.

Some common themes 307 It is convenient that I discuss a number of common themes which emerge from the evidence.

Siting representations 308 As I have previously observed, many of the representations were as to the possibility of siting juicing machines in retail outlets. Although in some cases representations were made as to contracts for siting machines over fixed terms, in most cases the duration of siting was not mentioned. Thus, in one sense, such representations might arguably have been justified by arrangements to install machines on trial. However it is most unlikely that any of the respondents or investors understood the representations in this way. It is most unlikely that an investor would have been encouraged to buy a machine upon the representation that Duffy Brothers or Coco's or any other retailer had agreed to take it for a trial period. I will therefore proceed upon the basis that any such representation was intended to mean, and was understood to mean, that the relevant retailer had indicated a willingness to install and operate the machine as part of his or her ongoing operation. Obviously, the representation was not that the machine would remain in perpetuity. It is a little difficult to identify the minimum period of siting which might justify such a representation. 309 Further, for the purposes of the investors, it was not sufficient that machines be simply sited at retail outlets. It was also necessary that they be operated by the retailers. This involved the provision of appropriate staff and oranges. It could not be suggested, for example, that the retailers had undertaken to continue to operate the machines even if the price of oranges made juicing uneconomical. In other words, if one sets aside the express guarantees, it is clear that the representations did not amount to guarantees against loss in all circumstances. This may be a problem for the investors in any proceedings for compensation.

"Your Profit Potential" documents 310 A number of investors received one or more of these documents. The contents varied over the period from late 1998 until early 2000. Some of the earlier versions contained actual representations as to sales levels. The later documents did not. However some of the later documents contained guarantees. I will discuss the guarantees separately. 311 In my view, those "Your Profit Potential" documents which contained no representations as to actual sales levels did not constitute representations as to profitability or as to likely levels of sales. They were merely worked arithmetical examples, assuming different levels of sales. Each bore a disclaimer which made it clear that the document in question set out an "example only", that turnovers would vary from area to area and site to site, that figures should not be relied upon and that the investor should make his or her own enquiries. I find it hard to see how a document in this form could, by itself, be misleading or deceptive. Indeed, many of the investors implied as much. Of course, it is possible that an otherwise innocuous document might be used in such a way as to create a misleading effect, but I am not presently concerned with that possibility. 312 Where representations were made in such documents as to actual sales performance or profitability, the position is otherwise. The waiver or disclaimer might well discourage reliance upon such a representation, but it did not deny its truth. An investor might assume that such a representation was true notwithstanding the waiver or disclaimer.

Guarantees 313 It is said that the various guarantees were in forms which were misleading or deceptive. They took a number of different forms. It is true that in some of them, the benefits appear to have been to illusory. However they did not necessarily contravene the Act. People would be expected to read such documents with reasonable care. Again, it is possible that a guarantee was used in conjunction with other representations so as to create a misleading effect, but I am not presently concerned with that possibility.

The availability and price of oranges 314 A few investors said that representations were made as to the continuing availability of oranges. There seemed to be some suggestion that this conduct might have been in contravention of the Act. As far as I can see, the representations which were made generally reflected experience in the industry prior to December 1998. It is possible that some of the later representations were arguably misleading or deceptive. However I do not presently see that as a major part of this case. Should the parties wish to make further submissions on that point after I have published these reasons, they may do so. Similar comments apply to the price of oranges.

Representations as to bottle sales and profits 315 Numerous representations were made as to likely bottle sales and profits. The representations varied widely. This in itself suggests that no particular care was exercised by those making them. However that view may be somewhat unfair to Mr Doherty and possibly Mr Cameron. Mr Doherty appears to have acted in reliance upon what he was told by Mr Laski, Mr Cameron and Mr Peter Semos. There is no evidence as to Mr Cameron's state of mind concerning these matters. Mr Laski claimed to have derived such information as he possessed from Mr Semos. I suspect that this was to some extent true. Mr Laski also said that he or Mr Cameron contacted various existing sites at the time at which he was considering Mr Semos's proposal. See pars 16-19 of Mr Laski's affidavit. However, with the exception of the figures obtained from Franklins Big Fresh, Maroochydore in May 1999, none of the machines in question was sited pursuant to an arrangement such as that offered to investors by Michigan. It seems likely that the economics of the business would be different for the owner of a machine who was not obliged to purchase bottles and labels from investors at pre-arranged prices. 316 At some stage Mr Laski suggested that Mr Carter's experience demonstrated possible profitability, but this can not have been the basis for representations made prior to Mr Carter commencing business in late 1998 or early 1999. Further, from December 1998 there was the difficulty with the price of oranges, although Mr Laski seems to have thought that it lasted only for a few months. Nonetheless it must have raised doubts as to the viability of the business for the future. Similarly, by early June at the latest, Mr Semos knew of health concerns raised by Franklin. It is not clear when Mr Laski may have heard of this matter. However it is clear that from later January 1999 he was aware of difficulties in siting machines. All of these things would have led an honest man to have concerns about the viability of the proposed investments. 317 To this must also be added the experience of the investors who have given evidence. It is at least possible that there are other investors who have not been called and whose experiences may have differed from those from whom I have heard. Nonetheless, the body of evidence before me suggests significant problems in achieving success in this business, even with substantial personal effort such as that invested by Ms Lasser.

Reasonable grounds for the purposes of s 51A 318 In so far as concerns the representations as to the siting of machines, Mr Laski, on behalf of Michigan, appears to have relied upon nothing more than Mr Semos's assertion that he had made an arrangement with Franklins and a belief that there were some other arrangements, possibly with Duffy Brothers or Coco's. The question is whether or not, in a commercial context, such information provides reasonable grounds for representations to third parties upon the strength of which they are expected to invest substantial amounts of money. In my view a corporation, acting reasonably, would require something more than mere word-of-mouth assurance from somebody such as Mr Semos. One might reasonably have expected that Mr Laski would, at the very least, himself have sought to discuss the matter with representatives of Franklins. In reality, it is likely that much more would be required. Assuming that something short of a binding agreement might have been sufficient, a letter of commitment to the project would have been at least highly desirable. Had Mr Laski, on behalf of Michigan, turned his mind to this problem, it is likely that many questions would have been considered such as the length of the commitment, the commitment to juice regularly and the consequences of an increase in orange prices. That none of these things was considered demonstrates that Michigan had not considered whether it had reasonable grounds for its representations as to siting. Similar considerations apply to the representations as to the level of commitment required of investors, profitability and bottle sales. There is no evidence that Michigan considered any of these matters.

The respondents 319 It is appropriate that I say something about the views I have formed as to the degrees of involvement of the various respondents.

Michigan 320 I am satisfied that all of the representations made by Mr Laski, Mr Cameron and Mr Doherty were made on behalf of Michigan. To the extent that such representations related to future matters, I am generally satisfied that they were made without reasonable grounds. Some representations were made by Mr Semos in the presence of one or more of Messrs Laski, Cameron and Doherty. In the absence of any disavowal of such representations I have treated them as also having been made on behalf of Michigan.

Queensland Juice Company 321 I am satisfied that all of Mr Semos's statements were made on behalf of Queensland Juice Company. Indeed the contrary was not suggested. To the extent that they concerned future matters, I am satisfied that they were made without reasonable grounds. Some statements made by Mr Laski, Mr Cameron or Mr Doherty were made in the presence of Mr Semos. In the absence of any disavowal, I have treated them as having been made on behalf of Queensland Juice Company.

Mr Laski 322 I am satisfied that Mr Laski personally authorized the various letters and "Your Profit Potential" statements that were distributed on behalf of Michigan. Where oral representations were made within the range of the content of those documents I infer that he authorized such statements. Where oral representations went beyond the content of those documents, I am not satisfied that the statements were made with his authority or knowledge. Of course the rules of apparent authority do not apply to the relationship between him and Mr Cameron or Mr Doherty. They were not his agents in any sense.

Mr Semos 323 There was no suggestion that Queensland Juice Company acted other than upon information provided by Mr Semos and at his instigation.

Mr Doherty 324 I have come to the conclusion that Mr Doherty should be treated as not having had knowledge of the falsity of any representations which he may have made. He seems to have acted upon instructions. I suspect that this is an unduly favourable view of his involvement. I was left with a suspicion that he must have, at some stage, realized that things were being said which were untrue, but I have been unable to identify any particular representation the falsity of which he must have realized. It is possible that had the case been conducted in a more focussed way, his involvement may have been more clearly demonstrated. In the end I am not satisfied that he was knowingly concerned in any contravention.

Mr Cameron 325 Mr Cameron did not give evidence, but the evidence said little more about his involvement than it did about Mr Doherty's. It is true that Mr Laski sought to blame Mr Cameron for some things, but I simply reject that evidence. Mr Laski was clearly preoccupied with protecting himself at the expense of others. Whilst it seems probable that Mr Cameron was closer to the minds behind this operation than was Mr Doherty, nonetheless there is a real possibility that he, too, merely acted in accordance with instructions. Even Mr Laski asserted that he had tried closely to supervise Mr Cameron's activities. In the circumstances I am also unable to infer that Mr Cameron was knowingly concerned in any contravention.

Yeppoon and Ms Moretto 326 As these respondents were concerned in only a small number of transactions, I will reserve my comments concerning their involvement until I consider those transactions.

Sites 327 I set out below the most favourable view, from the respondents' point of view, of the arrangements in place with the major chains.

Franklins: ® 16 November - trial commenced; ® mid-December - trial completed; ® late December - price of oranges increases; ® January 1999 - Mr Harman complains about arrangements for siting; ® Problems never resolved

March 1999 - hygiene problems; ® early June 1999 - Mr Semos hears of hygiene problems. Any arrangements with Franklins were for Franklins Big Fresh stores in Queensland.

Duffy Brothers: ® some time in 1998 - Mr Semos approaches Mr Pisciuneri; ® one machine installed at Darlinghurst; ® later agreement to installation of another machine at Hurstville - never installed; ® the trial was a failure.

Coco's: ® April or May 1999 - Mr Semos offers to supply machines at no cost, indicating that it was not necessary to sign agreements and that he had no other place to store his machines; ® Mr McPhee declines to guarantee any long-term commitment but offers to "give it a try"; ® June 1999 - machines installed; ® a few months latter - all but two machines removed.

SPAR ® August 1999 - Mr Semos approaches Mr Sirianni; ® September 1999 - machine installed at Mr Sirianni's store; ® October 1999 - machines promoted in IPP newsletter; ® January 2000 - machines sited at various outlets; ® February 2000 - complaints concerning machines from outlets - ome machines returned.

The investors 328 I now propose to consider the representations made to individual investors and make appropriate findings. I will generally commence in each case with the documentary representations and then discuss oral representations. However I may in some cases depart from this approach.

Mr Ellis 329 Mr Ellis's case differs from the others in that he acquired only distribution rights. His acquisition of those rights was in exchange for his interest in another business venture with Michigan. He was disillusioned with that venture and anxious to escape from it. He saw the distribution rights for the orange juicing machines as a preferable alternative. 330 Most, if not all, of the documents which Mr Ellis received from Michigan appear to have been for use in dealing with potential investors. To the extent that they constituted representations as to the current or future availability of sites, their effect was negatived by Mr Ellis's own knowledge of the difficulties with siting which were being experienced by Michigan and Queensland Juice Company. This appears from a letter dated 5 July 1999 in which Mr Ellis made it clear that he had no reason to believe that the marketing situation was promising. The position was even more clearly demonstrated in a letter dated 16 July from Mr Franzese. Mr Ellis acquired the distribution rights notwithstanding these matters because of his concerns about his other business arrangements with Michigan. I am satisfied that Mr Franzese's only involvement in dealings with Mr Ellis was in connection with the preparation of the distribution agreement. I also accept Mr Franzese's evidence that he and Mr Laski discouraged Mr Franzese from signing the distribution agreement without first obtaining independent legal advice. 331 Mr Ellis also claimed to have learned about the juicing machines from overhearing representations made to potential investors at the Sydney Expo whilst he was involved in marketing other machines. His evidence appeared to be a summary of his impressions. He did not identify the source of his assertion that by the end of the show, all sites had been allocated to investors and secured by deposits. Given the nature of the relief presently sought, no good purpose will be served by further considering Mr Ellis's transaction.

Mr Carter 332 I considered Mr Carter to be a generally reliable witness. In the absence of evidence from Mr Peter Semos or Mr Cameron, I accept his evidence as to his dealings with them, particularly as to the representations made to him. I accept Mr Carter's evidence as to the telephone conversation which was denied by Mr Laski. It would be very easy for the latter to be mistaken about this, given the large number of investors who were contacting him. 333 Of the documents allegedly received by Mr Carter, Mr Laski agreed that the documents in exhibit JEC 2 were authorized for distribution by Michigan but asserted that those in exhibit JEC 3 were not. He was aware of the document at exhibit JEC 1, which also appeared as the document at tab 13 in the agreed bundle. It is of most significance for present purposes. Exhibit JEC 2 is a completely innocuous brochure for machinery. Exhibit JEC 3 is a Queensland Juice Company brochure. On its front page various retail outlets are identified, including Coles, Franklins Big Fresh, Coffee Club, Davids and others. It asserts that: Queensland Juice Company supplies the market leaders so let QJC assist you in squeezing more $$$ out of your business. 334 The brochure relates to products of which the juicing machine is only one. It does not assert that Queensland Juice Company has supplied the so-called market leaders with orange juicing machines. Queensland Juice Company's relationship with "market leaders" with respect to other machines is not relevant and was not tested in the course of the trial. I do not consider this document to be, in itself, a contravention of the Act, although it may have been used in such a way as to create a misleading overall effect. That matter has not been addressed in these proceedings. 335 I return to exhibit JEC 1. Two relevant representations were made in this letter dated October 1998 from Michigan to Mr Carter. The first was: We have formed an alliance with some of the major supermarket chains in Australia to procure sites that will have a high turnover of freshly squeezed orange juice. 336 The second was: All you do is collate orders and effect delivery of the pre-labelled plastic bottles to the sites in your area. It would take about two hours per fortnight to take care of five machine orders. 337 The first statement was superficially a representation as to an existing fact, namely the existence of an alliance with some of the major supermarket chains. However, in context, it was also a representation that Michigan would, for the future, be able to site juicing machines at retail outlets operated by the relevant supermarket chains. The first aspect was a representation as to an existing fact to be assessed pursuant to s 52. The second was a representation with respect to a future matter to be considered in light of ss 51A and 52. 338 As at October 1998 Michigan had no alliance with any major supermarket chain, let alone "some of the major supermarket chains". The Franklins trial had not started. As to the representation concerning future availability of sites, Michigan must demonstrate that it had reasonable grounds for making it. There is no ground disclosed in the evidence for the representation, other than Mr Laski's assertion that he relied on Mr Semos. For reasons previously given, I do not consider that reliance to be reasonable grounds for the purposes of s 51A. The statement constituted a contravention by Michigan of s 52 of the Act. 339 For a natural person to be knowingly concerned in a contravention involving a representation as to an existing fact, it is necessary to show that he or she knew that the representation was made and that it was misleading. For such a person to be knowingly concerned in a contravention concerning a future matter, it will be necessary to show that he or she knew of the representation and that either: ® the representation was misleading; or ® that the relevant corporation had no reasonable grounds for making it. 340 Mr Laski did not dispute that the letter dated October 1998 was sent out by Michigan or that he was aware that it was sent to potential investors. He asserted that he relied upon information provided by Mr Semos as to the arrangements entered into with the various supermarket chains. Mr Laski said that he understood that some time in October, an alliance had been formed with Franklins. He mentioned other "alliances", but in a general and unconvincing way. I regret that aspect of his evidence. I infer that at best for him, he believed that there was an alliance with Franklins, perhaps as the result of a misrepresentation by Mr Semos. I infer that he had no reason to believe that there was an alliance with any other major supermarket chain. This is not simply a matter of opinion which might be held honestly without any factual basis, or even despite the facts. If he had no reason to believe that such alliances existed, then he knew that the representation was false as to "supermarket chains". In those circumstances Mr Laski was knowingly concerned in the contravention constituted by the representation as to alliances in the letter of October 1998. 341 The representation concerning working hours was a representation as to a future matter. Section 51A applies. There is no evidence of any reasonable ground for such a representation. I am satisfied that the representation constituted a contravention of s 52 by Michigan. Mr Laski was in control of Michigan. If that company had no reasonable grounds for the representation, then he must have known that. However he is not subject to the evidentiary presumption as to the existence of reasonable grounds created by subs 51A(2). ACCC must show that he actually knew that the representation was misleading or that Michigan had no reasonable grounds for making it. There is evidence that some investors spent considerable amounts of time trying to make their investments succeed but failed in doing so. Nonetheless, it seems to me that the nature of the investment was such that a relatively small amount of time would have been involved in it if all other representations had been true. I am therefore not willing to infer that Mr Laski was knowingly concerned in this contravention. 342 On or about 26 October 1998 Mr Semos said, in Mr Cameron's presence: Franklins have given a commitment to take the machines. The first person who takes up the investment will get the choice of Franklins sites. Franklins do their contractual arrangements in two year periods. 343 This statement was both a representation as to a present fact and a representation as to a future matter. At that stage there had been no trial of the machines at Franklins, and there was certainly no commitment by that company. Franklins at no time agreed to take machines for a period of two years. In so far as the statement related to existing facts it was untrue and in breach of s 52. In so far as it constituted a representation as to future matters, the evidence does not demonstrate any reasonable ground for such a representation on the part of Queensland Juice Company. As to Michigan, Mr Laski asserted that he and Michigan were acting in reliance upon what he had been told by Mr Semos. For reasons previously given, I do not consider that such reliance constituted reasonable grounds for the purposes of s 51A. 344 Mr Semos was clearly knowingly concerned in Queensland Juice Company's contravention in that he knew that it had no reasonable grounds for making the representation in question. As to Mr Laski, he is burdened neither by the evidentiary presumptions contained in s 51A, nor by any relationship of agency on the part of Mr Cameron. There is no evidence that the representation was made on Mr Laski's behalf. It goes beyond the representation made in exhibit JEC 1. I am not satisfied that he was knowingly concerned in this contravention. This may appear to be a curious result but it is the consequence of the operation of s 51A. 345 Mr Semos also represented to Mr Carter that he would make in the vicinity of $300 per week for Coco's and Franklins. This was a representation as to a future matter, made in the presence of Mr Cameron. There is nothing in the evidence which would suggest any reasonable grounds for such representation. It therefore constituted a contravention of s 52 by both Michigan and Queensland Juice Company. Mr Semos was obviously knowingly concerned in the Queensland Juice Company contravention. There is no evidence that Mr Laski was aware that the representation was made or that he authorized it. I am not satisfied that he was knowingly concerned in the contravention.

Mr Harman 346 I saw no reason to doubt any aspect of Mr Harman's evidence. It was consistent with the documentation and was not shaken in cross-examination. Neither Mr Peter Semos nor Mr Cameron gave evidence. I accept his evidence as truthful and reliable. 347 Mr Harman received a letter from Michigan dated 25 October 1998, signed by Mr Cameron. It contained the same representations as to alliances and as to working hours as did Mr Carter's letter. For reasons similar to those given in the case of Mr Carter, the representation as to alliances was misleading and without reasonable grounds. In my view Michigan contravened s 52. For reasons given in connection with Mr Carter's case, Mr Laski was knowingly concerned in the contravention. 348 As to the representation concerning the amount of time required to conduct the business, the evidence demonstrates no reasonable grounds for making such a representation. Michigan therefore also contravened s 52 in that respect. For reasons given in connection with Mr Carter's case, I am not satisfied that Mr Laski was knowingly concerned in that contravention. 349 A "Your Profit Potential" document was attached to Mr Harman's letter. Together with the various arithmetical exercises and the disclaimer, there was a representation that "Some sites where we have already launched are selling over 100 bottles of Orange Juice in a busy day." Mr Laski said in his affidavit that Mr Semos had told him of the Clayfield Fruit Market which was selling "between sixty to eighty bottles of freshly squeezed orange juice using the TJM machine." He did not say whether this was the turnover for a day or a week. Exhibit RML 1 to Mr Laski's affidavit is a letter from Carlos Lorenti at that outlet, claiming that "Our sales of fresh orange juice over the twelve years that we have been selling fresh juice averages per day at 50 x 2 Ltr bottles and 25 to 30 1 Ltr bottles." He did not identify the machine in use or the conditions under which it was operating, in particular, whether it was owned, leased or installed pursuant to an agreement such as that proposed by Michigan. 350 Mr Laski said that Mr Patti told him that he was selling over 1,000 litres per week from a machine of similar kind which Mr Patti owned. There is also a letter dated 19 May 1999 from the Produce Team Leader at Franklins, Maroochydore, asserting a turnover of sixty to one hundred bottles. Again, it does not stipulate the period over which this average was achieved or when Mr Laski may have heard of these results. Mr Laski suggested that somebody, perhaps Mr Cameron, spoke to a Mr MacPherson at Queenscliff in Victoria who said that the sale of juice was profitable to him and that he was happy with his machines. In the course of cross-examination Mr Laski suggested that Mr Carter's subsequent experience also demonstrated the accuracy of the statement. It was pointed out to him that the representation referred to sites "where we have already launched". Mr Laski agreed that when the document was prepared, no sites had been "launched". None had been launched by the date of the letter. It was also pointed out to him that the sites to which he referred were not operating under the arrangements proposed in the Michigan scheme. In particular, they were not obliged to buy bottles and caps from investors at fixed prices. In the circumstances there was no basis for this representation, and Mr Laski must have known that. The representation constituted a contravention of s 52 by Michigan, in which contravention Mr Laski was knowingly concerned. 351 In early November 1998 Mr Peter Semos, in Mr Cameron's presence, represented that: Franklins have agreed to come on board. In a couple of months we will have Coles as well. The people who sign up now will be given the first opportunity to purchase further machines for siting at Coles. 352 Franklins had not, at that date, indicated an intention to "come on board", although they had agreed to a trial. There seems to have been no basis for the statement concerning Coles. The representation as to Franklins having agreed to come on board was a representation as to a present fact which was incorrect. There was also an implied representation that Franklins sites were available, a future matter. The representation concerning "siting at Coles" was also as to a future matter. The evidence discloses no reasonable grounds for such representations. These representations constituted a contravention by Queensland Juice Company of s 52 of the Act, in which contravention Mr Semos was knowingly concerned. They were made in Mr Cameron's presence and therefore also constituted a contravention by Michigan. For reasons previously given, to the extent that Michigan relied upon what Mr Semos may have told Mr Laski, I do not accept that it had reasonable grounds for such representations. Even if Mr Laski authorized the statement concerning Franklins, it is quite possible that he believed it to be true. There is no evidence that he authorized the statement concerning Coles. I am not satisfied that Mr Laski was knowingly concerned in the contravention. 353 On 13 November 1998, when Mr Harman placed his order, he said to Mr Semos and Mr Cameron: We are prepared to go ahead with the purchase of machines for the four sites, Franklins, Indooroopilly, Brookside and Carindale and Fruity Capers at Toowong. We are undecided for the fifth site between Franklins Cannon Hill and Tropicana Indooroopilly. 354 They subsequently agreed upon Tropicana. Mr Harman proceeded on this agreed basis. By their conduct, Mr Semos and Mr Cameron impliedly represented that those sites were available and that Mr Harman's machines would be installed there. There was no arrangement to install machines at Franklins, Indooroopilly, Brookside or Carindale. They were not Big Fresh stores. Fruity Capers had agreed only to "give it a try" and not to the permanent siting of the machine. The representation must have implied some continuity of commitment on the part of the site owners beyond a mere trial. The conduct contained both representations as to existing facts and as to future matters. As to existing facts, it was misleading. As to future matters, neither Michigan nor Queensland Juice Company had any reasonable grounds for such representations. Both companies therefore contravened the provisions of s 52. Mr Semos was knowingly concerned in the Queensland Juice Company contravention. There is no evidence that Mr Laski was a party to this contravention.

Ms Lasser 355 In connection with the juicing machines, Ms Lasser dealt only with Queensland Juice Company. According to her, Mr Doherty acted as agent for Queensland Juice Company and not as agent for Michigan. Mr Doherty confirmed this. There can be no suggestion that Mr Laski or Michigan authorized the representations in question. I accept Ms Lasser as a generally reliable witness, save only for her apparently inconsistent evidence concerning the siting of one machine. She was, perhaps understandably, somewhat hostile, particularly towards Mr Peter Semos. In particular, I accept her evidence as to the representations made to her. 356 Mr Doherty and Mr Semos represented to Ms Lasser that she should make $500 or more per week in profit from each machine. They also represented that a machine at Clayfield Markets was "turning over" 500 bottles per week. The representation as to profit was as to a future matter. The representation as to turnover at Clayfield was as to an existing fact. As to the latter representation, Mr Rotheram said that he was taken to that site late in 1999. Whilst he was there, somebody said that it was selling 600 bottles per week. There is no admissible evidence of this. There is no other evidence concerning the matter. I am not satisfied that the statement was misleading. As to the representation concerning profitability, it was as to a future matter. I see no reasonable grounds in the evidence for such a representation. It therefore constituted a contravention by Queensland Juice Company of s 52 of the Act. I am satisfied that Mr Semos was knowingly concerned in the contravention. 357 It was also represented to Ms Lasser that sites, including Franklins, Brookside; Franklins, Morayfield; Franklins, Nerang; Franklins, Canon Hill; Franklins, Sunnybank Plaza; Aspley Pick 'n Pay; Farmer Joe's at Kedron and Coco's fruit shops were available. This was a representation that Queensland Juice Company would be able to site Ms Lasser's machines at those sites, a future matter. She made her final decision to invest upon the basis that machines would go to Franklins, Morayfield; Franklins, Brookside and Aspley Pick 'n Pay. However the Pick 'n Pay site was unavailable as was the Farmer Joe's site. Brookside was also unavailable. She chose Maroochydore in place of it. The representations as to the availability of Franklins, Brookside; Aspley Pick 'n Pay and Farmer Joe's were misleading. Queensland Juice Company had no reasonable grounds for such representations. It contravened s 52. Mr Semos was knowingly concerned in the contravention.

Mr Scipione 358 In the absence of evidence from Mr Cameron and Mr Semos, I see no reason to doubt Mr Scipione's evidence as to the representations made to him. 359 He received a letter dated 9 November 1998 from Michigan. It was signed by Mr Cameron and contained the statement as to alliances with supermarket chains and the representation as to hours of work which I have previously discussed. For reasons given in connection with other investors, I am satisfied that the site representation constituted a contravention of s 52 by Michigan and that Mr Laski was knowingly concerned in it. For reasons previously given I am not satisfied that Mr Cameron was knowingly concerned in it. The representation concerning hours of work constituted a contravention of s 52 by Michigan. I am not satisfied as to Mr Laski's involvement. 360 A "Your Profit Potential" document contained a specific representation, namely "Some sites where we have already launched are selling over 100 bottles of Orange Juice in a busy day." As I have previously indicated, Mr Laski's explanation of the basis for this statement is most unconvincing. In fact no sites had then been launched. The statement was misleading and constituted a contravention of s 52 by Michigan. It is probable that Mr Laski was aware of the absence of any justification for such a statement. He was therefore knowingly concerned in the contravention. 361 Shortly after 13 November 1998 Mr Peter Semos told Mr Scipione that: We have contracts for Franklins' stores and large fruit and vegetable stores. We are contracted to put machines in every Franklins store in New South Wales. You select which ones you want. The contracts with Franklins are for one year and will be renewed yearly. The bottles are supplied by Queensland Juice Company and are sent to a warehouse in Homebush New South Wales. You collect them from the warehouse and drop them to the store premises. 362 These statements contained representations as to existing facts and as to future matters. There was not yet any arrangement with Franklins in Queensland, and certainly no arrangement in New South Wales. The representations as to contracts were simply untrue. To the extent that the representations related to future matters, Queensland Juice Company had no reasonable grounds for them. I am satisfied that they constituted contraventions by Queensland Juice Company of s 52 and that Mr Semos was knowingly concerned in them. Similar comments apply to the representations as to renewal and as to storage at the Homebush warehouse. 363 Within the next two weeks, Mr Cameron said that: We have got contracts with Franklins to put machines in all stores in New South Wales. 364 There were no such contracts. To the extent that the representation was as to existing facts, it was misleading. To the extent that it was a representation as to the capacity to install machines in Franklins stores in the future, there were no reasonable grounds for it. The statement constituted a contravention of s 52 by Michigan. I am not satisfied that Mr Laski was aware of the statement. I conclude that he was not knowingly concerned in the contravention. 365 At the same time Mr Cameron also told Mr Scipione that average current turnover was seventy to eighty bottles per day. Objectively, this was a representation as to the performance of machines operated by other investors. There is no evidence supporting these figures. They seem most unlikely in view of the experiences of the investors who have given evidence. Further, it is most unlikely that any machines had been sited at that time. I am therefore satisfied that this representation constituted a contravention by Michigan of s 52. I am not satisfied that Mr Laski was knowingly concerned in it. 366 On 27 November, Mr Semos recommended certain Franklins stores to Mr Scipione and said that Queensland stores "were already doing 60 - 100 bottles per day" and that Queensland Juice Company was "getting some Coles stores on line in the near future". The representation as to bottle sales is a representation as to an existing fact. There is no evidence that stores with machines sited by Queensland Juice Company were selling 60 - 100 bottles per day. In light of all of the evidence it seems most unlikely. In the absence of any evidence from Mr Semos, I infer that this statement was misleading and constituted a contravention by Queensland Juice Company of s 52 of the Act. I infer that Mr Semos was knowingly concerned in it. The reference to Coles concerned a future matter. It was without any reasonable grounds and constituted a contravention by Queensland Juice Company of s 52. I am satisfied that Mr Semos was knowingly concerned in it.

Mr Turton 367 In the absence of evidence from Mr Peter Semos, I accept Mr Turton's evidence as to representations made to him. 368 In a letter dated 25 October 1998 from Michigan signed by Mr Cameron, the alliance representation and the representation as to work hours both appeared. Attached was a "Your Profit Potential" document which contained a statement that: Some sites where we have already launched are selling over 100 bottles of Orange Juice in a busy day. 369 For reasons previously given in connection with other investors, I am satisfied that these statements constituted contraventions of s 52 by Michigan and that Mr Laski was knowingly concerned in that as to alliances and that as to bottle sales. In a second letter dated 21 November 1998, signed by Mr Semos, allegedly as "sales manager" of Michigan, there are similar representations and a similar "Your Profit Potential" document, but in that document the representation is: Some sites where we have already launched are selling nearly 500 bottles of Orange Juice in a busy week. 370 For reasons similar to those previously given I am satisfied that these statements constituted contraventions of s 52 by Queensland Juice Company. I infer that Mr Semos was knowingly concerned in the contraventions. 371 On 7 December 1998 Mr Semos represented to Mr Turton that: ® he had negotiated agreements with Franklins and Coco's to site juicing machines in their Queensland stores; and ® Coles was also going to be involved. 372 There was, at that time, no agreement with Franklins or Coco's. The Franklins trial had not been completed. Even the loose arrangement eventually entered into with Coco's was not in place. The representations as to Franklins and Coco's were both as to existing facts and as to future matters. The representation as to Coles was solely as to a future matter. In my view the representations as to existing facts were misleading. There is no evidence of any reasonable grounds for making the representations as to future matters. This conduct constituted a contravention of s 52 by Queensland Juice Company. There can be no doubt that Mr Semos was knowingly concerned in it.

Mr and Mrs Kirkwood 373 Mr Doherty's evidence is largely supportive of the Kirkwoods. Mr Cameron and Mr Peter Semos have not given evidence. In those circumstances I accept the evidence of the Kirkwoods as to statements made to them prior to their acquisition of the machines. 374 On or about 8 February 1999 the Kirkwoods received a letter from Michigan signed by Mr Cameron. It contained the representations as to the alliance with major supermarket chains and as to working hours. The first representation was as to existing facts and as to future matters. The representation as to working hours was as to future matters. I am satisfied that the representation as to present facts was untrue and that there were no reasonable grounds for making the representations as to future matters. This conduct constituted a contravention by Michigan of s 52 of the Act. By this time, Mr Laski was aware of the problems experienced by Mr Harman with siting of his machines. He must have known that he could not rely upon Mr Semos. I am satisfied that he knew that the representation as to existing facts concerning alliances was incorrect and that there was no reasonable basis for the representations as to future matters concerning alliances. I conclude that he was knowingly concerned in these contraventions by Michigan. I am not satisfied that he was knowingly concerned in the contravention regarding working hours. 375 Shortly after 24 February 1999, Mr Cameron, Mr Semos and Mr Doherty represented to Mr Kirkwood that: We have a contract with Franklins to supply and install juice machines Australia wide. We have also had a number of enquiries from Coles in relation to supplying them with juice machines. The representation as to a contract with Franklins was as to an existing fact, but it also carried the implication that sites would be available in Franklins stores, a future matter. The representation concerning enquiries from Coles was as to existing facts. There was no contract with Franklins and no arrangement "Australia wide". The representation concerning Coles was untrue. The statements as to existing facts were misleading and were contraventions by both Michigan and Queensland Juice Company of s 52. The representation as to future matters was without any reasonable grounds and similarly constituted such a contravention. As to knowing involvement, I have no doubt that Mr Semos was aware that the representations as to existing facts were false and that Queensland Juice Company had no reasonable grounds for the representation as to future matters. He was therefore knowingly concerned in the contraventions. 376 In the same discussion Mr Kirkwood was told that available sites included Franklins, Capalaba; Coco's at Loganholme; Perry's at Wynnum; Carina Fruit Market; Chris and John's Fruit Shop and a fruit shop at Inala. Franklins, Capalaba was a Big Fresh store. However, by February it was well known that the price of oranges had increased. Mr Turton's evidence demonstrated that to Mr Semos's knowledge, Franklins had suspended the siting of machines until such time as the price declined. There was no arrangement for the permanent siting of machines at any of the other sites. Mr Semos did not approach Coco's until April or May, 1999. The statement also implied the availability of sites in the future. The evidence discloses no reasonable grounds for such representation. It constituted a contravention of s 52 by Queensland Juice Company and by Michigan. I am satisfied that Mr Semos was knowingly concerned in the contravention by Queensland Juice Company. 377 Mr Kirkwood asked how much he could expect to make and was told: 20 bottles per day is an easy and an attainable goal. A good site can get two to three times that specified in the top of the range. Some are even selling 100 bottles per day. The available sites we have told you about are very good sites and we expect them to do very well. 378 These representations, made in about February 1999, were as to existing facts and as to future matters. At this time, the price of oranges had brought the operation to a virtual halt. The immediate future of the project was hardly promising. The representations concerning actual sales are unlikely to have been true, particularly given the evidence of other investors. As to the representations concerning future matters, they were without reasonable grounds. The representations constituted contraventions of s 52 by Michigan and by Queensland Juice Company. There can be no doubt that Mr Semos was knowingly concerned in the Queensland Juice Company contraventions.

Mr Nemes 379 As neither Mr Peter Semos nor Mr Cameron gave evidence, I see no reason to doubt Mr Nemes' evidence as to the representations made to him prior to his decision to acquire the machines. 380 I have previously mentioned that there may be difficulties in any claim by Mr Nemes in view of the fact that he contracted through the company NTD Constructions Pty Ltd, of which he was not a director. It is not presently necessary to say anything more about that matter. 381 Mr Nemes received a letter dated 16 March 1999 from Mr Cameron. It contained the representation as to alliances with supermarket chains and a more limited representation as to hours of work as follows: You do not work full time but your machines do, earning you an income from day one. See potential income figures in the schedule. 382 For reasons previously given, the representation as to alliances was misleading in so far as it concerned existing facts and was without any reasonable grounds in so far as it related to future matters. It therefore constituted misleading and deceptive conduct by Michigan. By this stage, Mr Laski was aware of the difficulty with siting experienced by Mr Harman. He cannot have believed that there were alliances with "some of the major supermarket chains". I am satisfied that Mr Laski was knowingly concerned in the contravention. The representation as to working hours could not properly be described as misleading. It seems probable, on the evidence which I have heard, that the proposed investment could have been administered on a part-time basis. Mr Nemes also received a "Your Profit Potential" document. It contained no representations as to likely bottle sales, but it did contain a guarantee. For reasons which I have previously given, I do not consider the document, taken in isolation, to be in contravention of the Act. 383 Mr Nemes also received a letter dated 9 April 1999 from Mr Laski. In the letter, Mr Laski referred to Mr Nemes' attempts to find finance for the purchase of his machines and also to his interest in the state distributorship rights for New South Wales. In one of the accompanying documents the following passage appears: The company has trialled the machines in question in selected Franklins Supermarkets and larger Fruit and Vegetable shops to determine the viability of the venture. To this end we have secured arrangements with major retail groups throughout Australia to provide the use of a machine on a contracted loan basis. 384 This was a contravention of s 52 by Michigan for reasons similar to those given with respect to the earlier letter. Mr Laski was also knowingly concerned in it. 385 Some time in February Mr Cameron said to Mr Nemes by telephone: The machines that are already sited are doing very well. We have machines sited in Queensland. There is about 40 - 50% profit. Everything is done for you. No time needs to be spent by you except for invoicing customers. 386 The representation as to profitability was, as far as I can see, a representation as to existing facts. There is simply no evidence to support it. It seems most unlikely in view of the experience of the various investors who have given evidence and the high price of oranges. I am satisfied that this statement constituted a contravention of s 52 by Michigan. Mr Cameron also represented that: We guarantee 200 bottles per week per site for three months. We could guarantee it for six months, but we just put the guarantee in because we are positive the machines are making money and will sell 200 bottles per week. Some sites are doing more than 40 bottles per day. Some sites are doing over 60 bottles per day. Some sites in Queensland are doing 100 bottles a day. One site in Sydney at the Darling Harbour Fish Markets is doing 120 bottles a day some days. 387 Once again the evidence suggests that all of this is most unlikely. The Darling Harbour Fish Markets did not have a machine of the kind which Michigan was offering to Mr Nemes. Very few machines had been sited at that time, at least upon the basis proposed by Michigan. Fewer were in use. To the extent that this statement made representations as to existing facts, I am satisfied that it was false. To the extent that it made representations as to future matters, I am satisfied that there were no reasonable grounds for it. In those circumstances Michigan was in contravention of s 52. 388 In March 1999 Mr Semos and Mr Cameron represented to Mr Nemes that: The machines will be sited in all Franklins Big Fresh stores, in Duffy Brothers stores and in various fruit shops in New South Wales. We have many sites in Sydney. By that time the difficulty with the price of oranges was well known. The reference to Franklins Big Fresh was implicitly to stores in New South Wales rather than to those in Queensland. There is no evidence of any arrangement other than that concerning Big Fresh stores in Queensland. Even that arrangement must have been in doubt given the price of oranges and Mr Harman's experience. The statement was, in my view, a misleading statement as to future events and was without reasonable grounds. In those circumstances both Michigan and Queensland Juice Company contravened s 52 of the Act. I have no doubt that Mr Semos was knowingly concerned in the Queensland Juice Company contravention.

Mr Dewan 389 Mr Dewan attended the Expo at Darling Harbour on 27 or 28 March 1999. He received a brochure concerning the various exhibitors at the Expo. The entry relating to Michigan stated: The alliance that has been formed with some of the major supermarket chains in Australia to procure sites that will have a high turnover of freshly squeezed orange juice ensures a constant supply of new sites. 390 I infer that the brochure was prepared by those organizing the Expo, based upon information supplied by the participants. There was no suggestion that Michigan had not authorized the statement. It contained both a representation as to the present existence of an alliance and a prediction as to the availability of sites. The only possible alliance was with Franklins and, as far as the evidence goes, that did not extend to New South Wales. The representation was misleading and deceptive in so far as it related to existing facts. There were no reasonable grounds for it in so far as it related to future matters. I am therefore satisfied that the statement constituted a contravention by Michigan of s 52 of the Act. It is reasonable to infer that Mr Laski was responsible for the material used at the Expo and that he was aware of the inclusion of the relevant item in the brochure. Given the difficulty with Mr Harman which he had already experienced, it is most unlikely that he would have been relying upon Mr Semos for information as to alliances. I infer that he was aware of the falsity of the representation in so far as it concerned factual matters and that he was aware that Michigan had no reasonable grounds for the representation as to future matters. I infer that he was knowingly concerned in the contravention. 391 Mr Doherty and Mr Semos made oral representations prior to Mr Dewan's decision to invest. Although Mr Dewan met Mr Cameron on one occasion, he was not a party to any of the representations. Mr Doherty's evidence was generally supportive of Mr Dewan's evidence. I accept Mr Dewan's evidence as to the oral representations made to him. 392 In March 1999, Mr Doherty, in Mr Semos's presence, represented that: We have made arrangements to site machines in supermarkets such as Franklins, as well as major fruit and vegetable stores such as Duffy Brothers. Franklins have trialed the concept for one year in Queensland, and now we are going national. It has been such a success. 393 This representation, in so far as it related to existing facts, was untrue. Although there were arrangements to site machines in Franklins Fresh stores in Queensland, there was no "national" arrangement and no arrangement with Duffy Brothers. Although the trial with Franklins had been successful, it had lasted for about a month. Its success had been overshadowed by the substantial increase in the price of oranges. To the extent that the representation was that sites were available for the future siting of machines, there were no reasonable grounds for such a representation. The representation therefore constituted a contravention of s 52 by both Michigan and by Queensland Juice Company. Mr Semos was knowingly concerned in the Queensland Juice Company contravention. 394 Mr Doherty also represented that: The "A" sites easily achieve $750 per week per machine in sales turnover. This was both a representation as to existing facts and as to future matters. The evidence from investors makes it highly unlikely that it was true as to existing facts. There is no evidence of any reasonable grounds for it as it related to future matters. I infer that it constituted a breach by both Michigan and Queensland Juice Company of the provisions of s 52. I am also willing to infer that Mr Semos was knowingly concerned in Queensland Juice Company's contravention. 395 On 31 March 1999 Mr Doherty told Mr Dewan that sites at Franklins Big Fresh stores at Marrickville and Burwood and Duffy Brothers stores at Hurstville, Burwood and Chatswood were available, as were Fruit World and Joe's Fruit Market. This amounted to a representation that these sites were currently available and that it would be possible for Mr Dewan to have his machines sited there. These were future matters. There is no evidence of any reasonable grounds for such representations. I am satisfied that this conduct constituted a contravention of s 52 by Michigan.

Mr Kumar 396 Mr Kumar also received the Expo brochure. For the reasons given in connection with Mr Dewan's transaction, I consider that the inclusion of the alliance assertion in the brochure and its distribution constituted a contravention of s 52 by Michigan, in which contravention Mr Laski was knowingly concerned. 397 Mr Semos and Mr Doherty spoke to Mr Kumar in Mr Dewan's presence. Mr Dewan's account differs in some respects from Mr Kumar's. However I am satisfied that each was truthful. It is not surprising that they should express their recollections in different ways and, to some extent, recall different aspects of what was said. 398 Mr Doherty's evidence was generally supportive of Mr Kumar, save in one respect. He denied having told Mr Kumar that any site would average 400 bottles per week. He said that he had been told not to offer such undertakings. He agreed, however, that he had offered Michigan's guarantee of 200 bottles per week. I am inclined to accept Mr Doherty as generally honest. However Mr Kumar's assertion was that Mr Peter Semos and Mr Doherty had told him that he could expect to sell an average of 400 bottles per week. It is likely that Mr Semos made such a statement. Mr Doherty may not have dissented from it. I saw no reason to doubt Mr Kumar's evidence. I accept his evidence as to the representations made prior to his decision to invest. 399 Mr Semos represented that the deal with Franklins was "expanding into New South Wales". He also said that it was restricted to Big Fresh stores. This was both a representation as to existing facts, and a representation as to future matters. It seems to have been untrue as a statement of existing facts. There is no evidence of any reasonable grounds for such a representation as to future matters. It was therefore a contravention of s 52 by both Michigan and Queensland Juice Company. I am satisfied that Mr Semos was knowingly concerned in the breach by Queensland Juice Company. 400 On 3 April, Mr Doherty told Mr Kumar that available "A" sites included Tuggerah, Gosford, Bankstown, Campbelltown and a large fruit barn on the Hume Highway. These statements were representations as to future matters, namely the availability of sites for the future installation of machines. I am satisfied that there were no reasonable grounds for this representation and that it constituted a contravention of s 52 by Michigan.

Mr Egan 401 On 26 March 1999, at the Darling Harbour Expo, Mr Egan received the exhibitors' brochure to which I have referred. It is exhibit BME 1 to his affidavit. For reasons which I have given in connection with Mr Dewan and Mr Kumar's cases, this constituted a contravention by Michigan of s 52 of the Act, in which contravention Mr Laski was knowingly concerned. Mr Egan also received a circular (see exhibit BME 2) which had the representation as to alliances with major supermarket chains. This was in two forms. The first was: The alliance we have formed with some of the major supermarket chains in Australia to procure sites that will have a high turnover of freshly squeezed orange juice ensures a constant supply of new sites. 402 The second was: Sites such as Franklins Big Fresh and other major retailers have contracted with us to place the machines in all their stores and those sites are now available on first in best dressed basis. 403 As I have previously observed, such statements were representations both as to existing facts and as to future matters. There was no "alliance" other than that with Franklins, and it did not relate to New South Wales. The representation as to existing facts was therefore untrue. To the extent that the representation related to future matters, there were no reasonable grounds for it. In those circumstances these statements were contraventions of s 52 by Michigan. I am willing to infer that Mr Laski was knowingly concerned in such contraventions. 404 Similar representations were contained in another Michigan document dated 26-28 March 1999 which is also part of exhibit BME 2. This constituted a further contravention of s 52 by Michigan. There was some suggestion that one or other of the relevant documents had been produced without Mr Laski's authority. However the documents were produced for the Sydney Expo, and Mr Laski was in attendance. Given his own evidence as to the extent to which he sought to control Mr Cameron's activities, I think it most unlikely that any document could have been distributed at the show without his knowledge. Mr Doherty said that he and Mr Laski took the disputed document to the Expo. This supports my conclusion that Mr Laski was knowingly concerned in the contravention. 405 All oral representations made prior to the investment were allegedly made by Mr Cameron, Mr Peter Semos or Mr Doherty. I accept Mr Doherty's denial that he claimed to own machines himself. I otherwise accept Mr Egan's evidence as to the representations made prior to his decision to invest. 406 Mr Doherty represented to Mr Egan on 26 March 1999 that: We have a number of stores lined up in which to locate the machines. We have arrangements with major supermarket chains and fruit and vegetable shops, for example, Franklins Big Fresh and Duffy Brothers fruit and vegetable chains. There are also other sites which we call A1 sites which turn over more than $100,000 per week per site in fruit sales. This is the launch of the new machines in New South Wales. We have arranged to put the machines into these sites straight away and the sooner you get in the better sites you are going to get. 407 These statements contained representations as to present facts and also as to future matters. To the extent that they related to present facts, they were misleading in that there was no arrangement for permanent siting of machines at any sites other than Franklins. By 26 March, even that arrangement must have been in doubt. As to the representations concerning future matters, the evidence discloses no reasonable grounds for such representations. I am satisfied that this conduct constituted a contravention of s 52 by Michigan. 408 At some time between 8 and 13 April, Mr Cameron, in Mr Doherty's presence, represented that Franklins Big Fresh stores at Nowra, Penrith and Gosford, Duffy Brothers stores across Sydney and other major fruit stores were sites "… on which we are seeking to have machines installed. We want to allocate the sites as soon as possible." This statement constituted a representation that machines would, in the future, be sited at those stores. The evidence discloses no reasonable grounds for such a representation. It therefore constituted a contravention of s 52 by Michigan. 409 In early May Mr Doherty offered to install Mr Egan's machines at Franklins Big Fresh, Nowra; Banana Joe's in Marrickville; Marrickville Fruit and Miles Fresh in Rockdale. A machine was installed at only one of these venues, Miles Fresh in Rockdale. Machines were installed at other venues. It seems clear that there was no reasonable basis for representing to Mr Egan that his machines could be sited at Franklins Big Fresh, Nowra; Banana Joe's, Marrickville or Marrickville Fruit. Mr Doherty's representation constituted a contravention by Michigan of s 52 of the Act.

Mr Kwon 410 I am unable to draw any conclusion as to the identity of the third person at the Michigan stand at Darling Harbour in March 1999, but I accept Mr Kwon's evidence as to the representations made to him by Mr Laski and Mr Cameron, and later by Mr Cameron. In March, Mr Laski and Mr Cameron told Mr Kwon: We already have an agreement with Franklins to put the machines in their Fresh and Big Fresh stores, but they are not going to put them in the No Frills stores. 411 This representation was made at Darling Harbour and would have been understood to relate to Franklins stores in New South Wales. To the extent that the representation conveyed the assertion that there was an agreement to install machines in Franklins stores other than those in Queensland, it was incorrect. I am satisfied that by this time, Mr Laski was aware of the problems with siting in Franklins stores in Queensland. To the extent that it was a representation that machines would be sited in Franklins stores, it was without any reasonable grounds. The statement constituted a contravention of s 52 by Michigan. Mr Laski was knowingly concerned in the contravention. 412 Mr Laski and Mr Cameron also represented that: The machines are very popular in Queensland. They are already being used in Brisbane and all the investors are very happy. They are a very good investment and very profitable. They are making $1,000 per month. The machines cost $15,750 each. You should recover your investment in one and a half years. 413 The representation that machines were making $1,000 per month is a representation of an existing fact. There was no factual basis for it. The evidence of the investors suggests that it is most unlikely to have been true. I am satisfied that it was misleading and that it constituted a contravention by Michigan of s 52 of the Act. I am satisfied that by this stage Mr Laski was aware of the difficulties involved in siting machines and in their operation as a result of the cost of oranges. I therefore conclude that he was knowingly concerned in this contravention. The statement that Mr Kwon "should recover your investment in one and half years" was a representation as to a future matter. There were no reasonable grounds for it. It constituted a contravention by Michigan of s 52. I am satisfied that Mr Laski was knowingly concerned in it. 414 After these representations were made, Mr Kwon agreed to buy two machines. He then changed his mind. Mr Cameron represented that one machine was already on its way to a site. Mr Semos represented, in Mr Cameron's presence, that one machine was already on its way to Franklins, Chatswood. There was no Franklins store at Chatswood at that time. It follows that no machine could have been on the way to such a store. There was also no prospect of its being installed there at any time in the future. Those statements constituted both misrepresentations as to actual facts and as to future matters. They constituted contraventions of s 52, both by Michigan and by Queensland Juice Company. I am satisfied that Mr Semos was knowingly concerned in the breach by Queensland Juice Company.

Mr Poole 415 Mr Poole dealt with Ms Moretto. In a letter dated 11 June 1999 she made the following representations on Michigan letterhead: Our company has entered into agreements with National Supermarket Chains to provide these machines throughout Australia. The business opportunity provides for the purchase of a machine at a price of $25,000 ($10,000 Trade) each F.O.B. Melbourne which will be sited in a major supermarket. The price includes siting in a prime area, delivery and installation on site, training of staff in the use and maintenance of the machine, storage and preparation of the orange juice, a 3 month on-site labour and parts warranty and a 12 months parts warranty. 416 Although this representation was on Michigan letterhead, it was made on behalf of Yeppoon. Neither Michigan nor Yeppoon had agreements with national supermarket chains, although Michigan may have had an arrangement with one such chain (Franklins) and a temporary arrangement with Coco's. By June 1999, there was considerable doubt as to the Franklins arrangement. As a representation of fact the statement was misleading and deceptive. The statement also impliedly represented the availability of sites for the future. The evidence demonstrates no reasonable ground for such representation. The statement constituted a contravention of s 52 by Yeppoon. I am, however, not satisfied that Ms Moretto was aware of the falsity of the factual representation, or of the absence of any reasonable basis for the representation as to future matters. It is possible that she understood Michigan to have entered into appropriate arrangements. There is simply no evidence as to Ms Moretto's state of mind concerning these matters. ACCC has failed to establish that she was knowingly concerned in any contravention. 417 Elsewhere in the letter, the following passage appears: There is no time commitment with this business other than invoicing the site. 418 A little later it is asserted that: Few business offer a high return with no time commitment such as this. 419 The representation that the only time commitment was in invoicing the sites was misleading. At the very least, investors would have to canvass for orders. This, however, appears to be of minor significance. Mr Poole also received a "Your Profit Potential" document. It contained the usual worked examples and a disclaimer, together with a written guarantee of 300 bottles per week per site. For reasons previously given, I do not consider this document to have been a contravention of the Act. 420 In June 1999 Ms Moretto represented to Mr Poole that all five machines would go into Franklins sites in Brisbane and/or the Gold Coast. This was a representation as to future matters. There is no evidence of any reasonable grounds for such representation. In those circumstances Yeppoon contravened s 52 of the Act. I am unable to conclude that Ms Moretto was knowingly concerned in the contravention.

Mr Rotheram 421 Apart from the documents allegedly received from Michigan by Mr Vasey and passed to Mr Rotheram, with which I will deal at a later stage, the primary documentary representation was contained in a letter from Yeppoon dated 1 November 1999, signed by Ms Moretto. It is exhibit KR 3 to Mr Rotheram's affidavit. It stated, in part, as follows: The following Projections are based on machines that are currently in the marketplace. A poor to average store would be one selling 350 - 400 bottles per week whereas a good to excellent store can achieve 800 - 1,000 bottles per week. Most investors purchase machines in lots of five, therefore he/she may have one or two poor stores, ie 350 - 400 bottles per week and two or three good stores achieving the 800 - 1,000 bottles per week. Therefore the figures below are based on a variation of volumes. Calculations followed. 422 These representations related to both existing facts and future matters. The projected sales figures appear to be quite inconsistent with the experience of the various investors who gave evidence. I am satisfied that to the extent that the representations related to existing facts, they were untrue and that to the extent that they related to future matters, they were made without reasonable grounds. They therefore constituted contraventions by Yeppoon of s 52. I draw no inference as to Ms Moretto's involvement in the contraventions. 423 In the same letter, under the heading "Sites", the following passage appeared: All Franklins Big Fresh in Australia currently have machines as well as their associated supermarkets in Asia. The Coco's chain of fruit and vegetable marts as well as many very high volume independent stores are housing our machines. The Spar Supermarket chain will commence receiving the machines within three weeks and Bi-Lo Mega Fresh towards the end of the month. The New Year will see our machines sited in Woolworths and Coles. The investor is welcome to seek out sites and, if required, we will endeavour to negotiate securing those sites. 424 The representation that there were machines in all Franklins Big Fresh stores in Australia was incorrect. The representation that machines were "housed" at Coco's stores was also incorrect unless "housed" meant "stored". The arrangement with Coco's was for little more than a trial. Mr McPhee said that it was clear within a few months of installation (in June 1999) that the trial had been unsuccessful. He had the machines removed from all but two stores. The representation as to the SPAR stores may have been correct. There was no justification for the representation concerning BI-LO, Woolworths and Coles. With the exception of the representation as to SPAR stores, the representations as to future matters were without reasonable grounds. They therefore constituted contraventions of s 52 by Yeppoon. Again I am unable to make any findings as to Ms Moretto's involvement. 425 Exhibit KR 6 to Mr Rotheram's affidavit included a letter dated 10 November on Michigan letterhead with an accompanying "Your Profit Potential" document. Mr Laski denied authorizing transmission of either document. Mr Rotheram said that he had received these documents from Mr Laski, but he then said that Mr Laski had sent them to Mr Vasey who was Mr Rotheram's finance broker. Mr Vasey had forwarded them to him. Obviously, there is a degree of hearsay in this evidence. I am not prepared to act upon it in the face of Mr Laski's express denial that he sent the documents. In any event their significance is limited. 426 In late October 1999 Mr Rotheram met with Ms Moretto, Mr Cameron and Mr Semos. Mr Semos said The machines are sold in lots of five. 350 to 400 bottles per site per week. Some sites up to 800 - 1,000 each week. The minimum a bad site would do is 350 bottles per week. The statistics down south back that up. The machines are new in Queensland and Brisbane. The cash flow is very good. We can support the interest payment on the loan until the site gets up to 350 bottles. 427 The representations as to bottle sales were as to existing facts and as to future matters. To the extent that they related to existing facts they were unlikely to be true, having regard to the experience of other investors. No justification was offered for them in evidence. To the extent that they related to future matters, they were without reasonable grounds. This conduct constituted a contravention of s 52 of the Act by Yeppoon, Michigan and Queensland Juice Company. I am satisfied that Mr Semos was knowingly concerned in Queensland Juice Company's contravention. I am not satisfied that either of the other persons was knowingly concerned in any contravention. 428 In the end Mr Rotheram did not buy machines from Yeppoon or from Michigan. He entered into a separate deal with Mr Semos who told him not to inform Michigan of it. Any loss suffered by Mr Rotheram was attributable to his decision to purchase machines from Mr Semos. It is unlikely that in so doing, he acted upon representation made as to Michigan's arrangements with retail outlets. Although Ms Moretto's conduct on behalf of Yeppoon and Mr Cameron's on behalf of Michigan may have contravened the Act, there is little point in spending substantial amounts of time in considering it further, having regard to the relief presently sought.

ORDERS 429 In view of the considerable difficulties to which I have referred I have thought it appropriate to publish my findings of fact in this case without formulating any orders. I will hear the parties as to forms of orders after they have had an opportunity to consider these findings. I will hear also hear submissions as to costs at that time.

I certify that the preceding four hundred and twenty-nine (429) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Dowsett.

Counsel for the Applicant: Mr D J S Jackson QC Mr A Duffy

Solicitor for the Applicant: Corrs Chambers Westgarth

The Fifth Respondent appeared on behalf of the Fourth Respondent.

Dates of Hearing: 3, 4,10, 11, 12, 13 & 14 December 2001 18 February 2002 15, 16, 17, 18 and 19 April 2002

Date of Judgment: 26 November 2002

Schedules of Documents Referred to in the Reasons for Judgment in Australian Competition & Consumer Commission v Michigan Group Pty Ltd (ACN 065 378 029) [2002] FCA 1439 Page Number Schedule 1 Graeme Raymond Ellis GRE 13 2-3 Letter dated 8 April 1999 4-5 Sample Letter dated 30 March 1999 6 Sample Your Profit Potential Page Schedule 2 John Edward Carter JEC 1 Promotional Flyer dated October 1998 JEC 2 2-3 Michigan Group Brochure relating to the Boom Boom Machine JEC 3 QJC Brochure relating to the Orange Juice Machine, Pineapple Peeler and Boom Boom Machine 4-7

7-10 Schedule 3 Adrian Michael Harman AMH 1 (Partial) Letter dated 25 October 1998 Your Profit Potential Page 2-3 TJM Brochure under Michigan Group Cover Sheet 4 5-6 Schedule 4 Adrian Dominik Scipione ADS 1 (Partial) Letter dated 9 November 1998 under Michigan Cover Sheet Your Profit Potential Page 2-4 QJC and TJM Brochures 5 Application for further information 6-9 10 Schedule 5 Ray Turton RT 1 2-5 QJC Brochure relating to the Orange Juice Machine, Pineapple Peeler and Boom Boom Machine under Michigan Cover Sheet RT 2 Letter dated 25 October 1998 6-7 Your Profit Potential Page 8 RT 3 9-10 Letter dated 21 November 1998 11 Your Profit Potential Page Schedule 6 Leon and Dianne Kirkwood LWK 1 2-3 Letter dated 8 February 1999 4-5 TJM Brochure Schedule 7 Tom Nemes TN 1 2-3 Letter dated 16 March 1999 4-5 TJM Brochure 6 Your Profit Potential Page TN 3 Letter dated 9 April 1999 7-12 Schedule 8 Arjan Dewan AD 1 Extract from Franchising Business Expo Booklet 2 Schedule 9 Siva Ratnasabapathy Kumar SRK 1 Extract from Franchising Business Expo Booklet 2 Schedule 10 Bryan Martin Egan BME 1 2-3 Franchising Business Expo Booklet 4 Promotional Flyer entitled "Sydney Franchising and Small Business Show" 5-6 TJM Brochure BME 2 Letter dated 26-28 March 1999 7-8 Your Profit Potential Page 9 Schedule 11 Gordon John Poole GJP 1 2-3 Letter dated 11 June 1999 4 Your Profit Potential Page 5 TJM Brochure Schedule 12 Keith Rotheram KR 3 Letter dated 1 November 1999 KR 6 2-3 Orange Juice Dispensing Machine Cash Flow Forecast Your Profit Potential Page 4-5 6

Schedule 1 Documents Referred to in Relation to the Evidence of Graeme Raymond Ellis GRE 13 2-3 Letter dated 8 April 1999 4-5 Sample Letter dated 30 March 1999 6 Sample Your Profit Potential Page

Schedule 2 Documents Referred to in Relation to the Evidence of John Edward Carter

JEC 1 Promotional Flyer dated October 1998 JEC 2 2-3 Michigan Group Brochure relating to the Boom Boom Machine JEC 3 QJC Brochure relating to the Orange Juice Machine, Pineapple Peeler and Boom Boom Machine 4-7

Schedule 3 Documents Referred to in Relation to the Evidence of Adrian Michael Harman AMH 1 (Partial) Letter dated 25 October 1998 Your Profit Potential Page 2-3 TJM Brochure under Michigan Group Cover Sheet 4 5-6

Schedule 4 Documents Referred to in Relation to the Evidence of Adrian Dominik Scipione ADS 1 (Partial) 2-4 Letter dated 9 November 1998 under Michigan Cover Sheet 5 Your Profit Potential Page 6-9 QJC and TJM Brochures 10 Application for further information

Schedule 5 Documents Referred to in Relation to the Evidence of Ray Turton RT 1 2-5 QJC Brochure relating to the Orange Juice Machine, Pineapple Peeler and Boom Boom Machine under Michigan Cover Sheet RT 2 Letter dated 25 October 1998 6-7 Your Profit Potential Page 8 RT 3 9-10 Letter dated 21 November 1998 11 Your Profit Potential Page

Schedule 6 Documents Referred to in Relation to the Evidence of Leon and Dianne Kirkwood LWK 1 Letter dated 8 February 1999 TJM Brochure 2-3 4-5

Schedule 7 Documents Referred to in Relation to the Evidence of Tom Nemes TN 1 2-3 Letter dated 16 March 1999 4-5 TJM Brochure 6 Your Profit Potential Page TN 3 Letter dated 9 April 1999 7-12

Schedule 8 Documents Referred to in Relation to the Evidence of Arjan Dewan AD 1 Extract from Franchising Business Expo Booklet 2

Schedule 9 Documents Referred to in Relation to the Evidence of Siva Ratnasbapathy Kumar SRK 1 2 Extract from Franchising Business Expo Booklet

Schedule 10 Documents Referred to in Relation to the Evidence of Bryan Martin Egan BME 1 2-3 Franchising Business Expo Booklet 4 Promotional Flyer entitled "Sydney Franchising and Small Business Show" 5-6 TJM Brochure BME 2 Letter dated 26-28 March 1999 7-8 Your Profit Potential Page 9

Schedule 11 Documents Referred to in Relation to the Evidence of Gordon John Poole GJP 1 2-3 Letter dated 11 June 1999 4 Your Profit Potential Page 5 TJM Brochure

Schedule 12 Documents Referred to in Relation to the Evidence of Keith Rotheram KR 3 Letter dated 1 November 1999 KR 6 2-3 Orange Juice Dispensing Machine Cash Flow Forecast Your Profit Potential Page 4-5 6