HEARD : 11­14, 17­20 OCTOBER, 14 & 15 NOVEMBER 2005

Contract - Managing agent agrees to "effect all appropriate insurance cover" for commercial building - Building not insured when destroyed by fire - Construction of "effect all appropriate insurance cover" - Whether principal's conduct was waiver of right to performance of contract - Whether agent's conduct negligent and, if so, whether principal contributorily negligent - Whether agent's conduct misleading and deceptive - Measure of damages

Evidence Act 1906 (WA), s 79C

Trade Practices Act 1974 (Cth), s 52

Banning v Wright [1972] 1 WLR 972

Commonwealth of Australia v Verwayen (1990) 170 CLR 394

Craine v Colonial Mutual Fire Insurance Co Ltd [1920] HCA 64; (1920) 28 CLR 305

Hillstead v The Queen [2005] WASCA 116

Kammins Ballrooms Co Ltd v Zenith Investments (Torquay) Ltd [1971] AC 850

Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305; (2001) 52 NSWLR 705

Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1

Pollock v Wellington (1996) 15 WAR 1

Andar Transport Pty Ltd v Brambles Ltd [2004] HCA 28; (2004) 217 CLR 424

Australian Milk Marketing Pty Ltd v Victorian Dairy Industry Authority, unreported; SCt of Vic (Harper J); 19 February 1998

B Davis Ltd v Tooth & Co Ltd [1937] 4 All ER 118

Burns v MAN Automotive (Aust) Pty Ltd [1986] HCA 81; (1986) 161 CLR 653

Dodd Properties Ltd v Canterbury City Council [1980] 1 WLR 446

Gaitanis v Nicholas Moss (Victoria) Pty Ltd [2003] VSCA 63

GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] FCA 50; (2003) 128 FCR 1

Henville v Walker [2001] HCA 52; (2001) 206 CLR 459

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

I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41; (2002) 210 CLR 109

Industrial Rollformers Pty Ltd v Ingersoll­Rand (Australia) Ltd [2001] NSWCA 111

Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR 11,110

Jetcity Pty Ltd v Yenald Nominees Pty Ltd, unreported; SCt of WA; Library No 990180; 9 April 1999

March v E & MH Stramare Pty Ltd [1991] HCA 12; (1991) 171 CLR 506

Owners of Dredge Liesbosch v Owners of Steamship Edison [1933] UKHL 2; [1933] AC 449

Paltara Pty Ltd v Dempster (1991) 6 WAR 85

Radford v De Froberville [1977] 1 WLR 1262

Rogers v Whitaker [1992] HCA 58; (1992) 175 CLR 479

Sellars v Adelaide Petroleum NL [1994] HCA 4; (1994) 179 CLR 332

Terrell v Mabie Todd & Co Ltd (1952) 69 RPC 234

Trans Trust SPRL v Danubian Trading Co Ltd [1952] 2 QB 297

Transfield Pty Ltd v Arlo International Ltd [1980] HCA 15; (1980) 144 CLR 83

1 TEMPLEMAN J: The plaintiffs in this action are the trustees of a property at 432 Murray Street, West Perth. On 29 July 2001, the commercial building erected on the Murray Street property was destroyed by fire. It was then uninsured. I shall refer to both the building and the site as "the Murray Street property". The intended meaning will appear from the context.

2 At the time of the fire, the defendant, DTZ Australia (WA) Pty Ltd ("DTZ"), was the plaintiffs' managing agent pursuant to a written agreement made between the parties on 28 November 2000. That agreement imposed on DTZ an obligation to "use due diligence and best endeavours" on behalf of the plaintiffs to "effect all appropriate insurance cover for the improvements of the property".

3 The plaintiffs contend that DTZ breached this obligation; and that it is therefore liable to pay damages to the plaintiffs, such damages representing the cost of reconstructing the building on the Murray Street property and the loss of rent during the period of reconstruction. That, it is said, would place the plaintiffs in the position they would have been in had the property been insured appropriately.

4 Although the claim in contract is the principal claim, the plaintiffs contend, in the alternative, that DTZ was negligent; and further, that, in the circumstances to which I shall refer below, DTZ engaged in misleading and deceptive conduct.

5 DTZ denies liability. It contends that the plaintiffs required all rental moneys to be paid to them, without deduction, and that the plaintiffs "assumed sole responsibility for effecting insurance cover" for the Murray Street property, thereby releasing DTZ from its obligations pursuant to the management agreement. In essence, DTZ contends that the plaintiffs elected not to insure the property and cannot now adopt an inconsistent position.

6 The management agreement is in a standard form approved by the Real Estate Institute of Western Australia (Inc) ("REIWA") for use by its members. The obligation imposed on a managing agent to "effect all appropriate insurance cover" must therefore vary according to the circumstances of the particular case.

7 The circumstances of the present case were by no means clear and were contentious. It is therefore necessary to establish the history of the plaintiffs' dealings with DTZ and then, once the facts have been found, to determine the extent of DTZ's contractual obligations pursuant to the management agreement and to consider the plaintiffs' alternative claims. It will be convenient to commence this exercise by introducing the parties.

8 The plaintiffs are Mahomed Ahmed Badat and his wife Yasmeen Badat. Mr and Mrs Badat migrated to Australia from South Africa in 1990 with two children. They now have six children. Mr Badat gave evidence that he attended university in South Africa up to the second year. He said he had studied physical education and teaching. He said he then worked as a locum school teacher, not being fully qualified. He said he has no accounting experience.

9 On 1 June 1996 Mr and Mrs Badat became the trustees of the Yasmeen Family Trust ("the Trust") pursuant to a deed of settlement made between them and George Fiorentino as settlor. Mr Fiorentino is the Trust's accountant. The primary beneficiaries of the Trust are children of the marriage of Mr and Mrs Badat.

10 Although Mrs Badat is a trustee, it seems she has played no part in the Trust's commercial activities. She was not involved in any of the dealings with DTZ, nor is she involved in this litigation, other than as a party. It will therefore be unnecessary to make further reference to her.

11 In his witness statement (exhibit B) Mr Badat said he had not worked in paid employment in Australia. He said he worked on a voluntary basis for the Islamic Community of Western Australia. His work involves assisting refugees to re-settle in Western Australia.

12 It is not disputed that Mr Badat is involved in those activities. However, when asked in cross-examination if he would describe himself as a businessman, he said he would (TS 73). Having regard to the various real property investments made by Mr Badat both personally and on behalf of the Trust, I think that is an accurate description.

13 Mr Badat commenced purchasing property at about the time the Trust was established. He did so, he said, with moneys his mother loaned to the Trust for this purpose. There is no documentary evidence of any kind relating to the loan by Mr Badat's mother, who (Mr Badat says) is now deceased. DTZ contends that in the absence of any such evidence and the fact that no interest has ever been paid, I should conclude that there never was any such loan. However, the accounts for the Trust, prepared by Mr Fiorentino (on information provided by Mr Badat), disclose a loan of $1,405,000 as at 30 June 1997. The amount of the loan is said to have increased to $4,248,000 by 30 June 2001 and to have reduced slightly in subsequent years.

14 Mr Badat's first property investments on behalf of the Trust were two BP service stations, in Port Hedland and Girrawheen. Mr Badat bought those properties at auction. He thought it would be preferable to invest Trust funds in income producing property, rather than keeping it in the bank. Mr Badat agreed in cross-examination that he had worked out a form of capitalisation equation which he applied during the auction. As the bidding proceeded, Mr Badat worked out the approximate rate of return so as to determine an acceptable price for the Trust to pay.

15 On behalf of the Trust, Mr Badat paid $460,000 for the Port Hedland service station and $720,000 for the Girrawheen service station. He paid for the properties outright.

16 At about the same time, Mr Badat purchased a residential property at 132 Star Street, Carlisle in his wife's name. This property, which became the family home, was purchased outright for $175,000.

17 Also at that time, Mr Badat purchased three other residential properties in Mrs Badat's name: at 132 Star Street, Carlisle and 8 and 10 Rowe Street, Rivervale.

18 On 26 March 1998, Mr Badat purchased the Murray Street property for $1,830,000 on behalf of the Trust. Again, this property was purchased outright, without the assistance of any loan funds. Although the Murray Street property was to be auctioned, Mr Badat pre-empted the sale. The vendor's agent told him there was a lot of competition and that if he wanted to purchase the property, he should make an offer before the auction. The agent told Mr Badat "that it would take $1,830,000" to buy the property. Mr Badat said that on his own investigations he was prepared to pay that amount of money, based on the income he was told the property was then generating from its two tenants.

19 In 1999, Mr Badat purchased a block of residential units at 60 Great Eastern Highway, Rivervale on behalf of the Trust. The price was $1,350,000, of which, $650,000 was borrowed.

20 The Great Eastern Highway property had been sold by tender shortly before Mr Badat sought to acquire it. He was informed by the original vendor's agent that if he offered $100,000 more than the purchaser had paid, the purchaser might be prepared to on-sell to him. Mr Badat did make that offer; and it was accepted. The agent was DTZ, which managed the property thereafter, on behalf of the Trust.

21 The Great Eastern Highway property was in a run-down condition when the Trust purchased it, albeit income producing. Mr Badat said he bought the property because it enjoyed river frontage which he thought augured well for its long term value.

22 In addition to investments made on behalf of the Trust, Mr and Mrs Badat purchased the property at 134 Star Street, Carlisle adjacent to their home in August 2003. The property was purchased for $270,000 of which $200,000 was borrowed. The Badats then demolished the house and commenced the construction of three units, with the assistance of a $300,000 loan. The object of the investment is to sell the units separately at a profit.

23 More recently, in June 2004, Mr Badat purchased a number of properties in Rockingham (one in his daughter's name). Some of these properties, in Merrimac Loop (numbers 39, 43, 45 and 51) are vacant blocks in a new estate. Mr Badat proposes to develop the properties and sell them in order to generate a profit. However, Mr Badat has decided to delay development in the expectation that property values will rise, and thereby increase the ultimate profit.

24 The evidence about Mr Badat's property investments, both personal and on behalf of the Trust, was adduced in cross-examination without objection by his counsel. It is, I think, relevant evidence. It demonstrates that Mr Badat is by no means naïve when dealing with property and related matters.

25 DTZ was established in 1996 by Dennis John Volk and Brad Carey who were its two directors. It operated in Perth under a licence agreement, with what Mr Volk described as "a global real estate service provider", apparently operating under a DTZ corporate name.

26 In 2000, DTZ employed Craig Robinson in the property management division and Francesco (Frank) Mattaboni who was a consultant in the agency division. The agency division was concerned primarily with leasing and selling properties. Mr Robinson was the commercial property manager, albeit under Mr Volk's supervision. I accept Mr Volk's evidence that he did not have "a hands-on role" because DTZ's employees were experienced people.

27 Mr Mattaboni, who has a degree in business economics and finance, worked for 15 years with the Main Roads Department where he was involved in land acquisitions and disposals. He joined DTZ in 1999 as a property consultant. In that role, he was involved with sales, auctions and leasing of properties. Mr Mattaboni was the representative of DTZ with whom Mr Badat dealt principally. This was not because he had any expertise in property management, but because he had a good working relationship with Mr Badat, who liked to deal with him.

28 Both Mr Badat and Mr Mattaboni gave evidence at trial, but Mr Robinson did not, because of serious illness. Medical reports relating to Mr Robinson shown to me in advance of the trial led me to believe it might be pointless to adjourn the proceedings; and I declined to do so.

29 I admitted into evidence a statement prepared for Mr Robinson by DTZ's solicitors, following conferences at which the solicitor concerned took notes. The notes were also admitted into evidence: and the solicitor gave evidence about the process he had adopted.

30 The statement thus prepared for Mr Robinson was not signed by him. However, I accepted it as his evidence pursuant to s 79C of the Evidence Act 1906 (WA). Further, I consider that insofar as the solicitor's notes contain information provided by Mr Robinson, the relevant statements are admissible on the same basis. References in these reasons to Mr Robinson's evidence are, therefore, based on these materials.

31 The Murray Street property consisted of a two-level building of approximately 1422 square metres standing on a 931 square metre site. When purchased by the Trust in 1998, the ground floor was let to Brashes Pty Ltd pursuant to a lease which expired on 31 July 1998. The lower ground floor was let to Rowe & Jarman Pty Ltd pursuant to a lease expiring 30 April 1999.

32 When the Trust acquired the property, the vendor's agent was Richard Ellis (Western Australia) Pty Ltd. That company changed its name subsequently to C B Richard Ellis (WA) Pty Ltd. I shall refer to it generally as "Richard Ellis". On 11 March 1998, the plaintiffs, as trustees of the Trust, entered into a management agency agreement with Richard Ellis in relation to the Murray Street property.

Management of the Murray Street property by Richard Ellis

33 The management agency agreement between the plaintiffs and Richard Ellis (exhibit 7) imposed an obligation on Richard Ellis to:

"Arrange building insurances and renewals thereof as and when the Agent is given written instructions thereto by the Principal."

34 The Murray Street property was managed initially by Lincoln Paul Delahunt, who was then an associate director of Richard Ellis. On 13 August 1999, Mr Delahunt sent a facsimile to Mr Badat consisting of a letter and the re-transmission of a facsimile he had received from insurance brokers AON Risk Services Australia Ltd ("AON") setting out the proposed terms for the renewal of the insurance on the property. The total cost of that cover was $8,322.78. The period of insurance was 12 months, from 27 July 1999.

35 Mr Delahunt said in his letter that he was of the opinion that the cover offered was adequate, that the premium was very competitive in the then current market and that it was his intention to pay the premium out of the income to be derived from the new tenant of the Murray Street property. That was FILA Sport Oceania Pty Ltd ("FILA") which leased the ground floor of the property for five years from 1 September 2000.

36 Although the management agency agreement authorised Richard Ellis to pay insurance premiums only on receipt of written instructions, there is no evidence that Mr Badat did provide such instructions. Mr Delahunt's evidence was that Mr Badat telephoned him and instructed Richard Ellis to make the payment. I accept that evidence. Indeed, there is a conspicuous absence of any document written or created by Mr Badat throughout all his dealings with Richard Ellis and DTZ.

37 Mr Delahunt was assisted in his property management role by Allesandra (Sandra) Mead Watkins. Ms Watkins joined Richard Ellis in 1999, having recently obtained a real estate licence and diploma in property management and risk management from REIWA. During the first half of 2000, Ms Watkins took over the management of the Trust's properties from Mr Delahunt, albeit under his supervision.

38 On 24 July 2000, AON wrote to Mr Delahunt attaching an invoice relating to the renewal of the insurance policy for the Murray Street property. The total amount of the charge was $10,045.97, a substantial increase over the cost of insurance for the previous year.

39 No payment was made to AON in respect of this invoice. There is no evidence that Richard Ellis informed Mr Badat that the invoice had been received until Ms Watkins referred to it in the standard monthly report for September 2000. The report was sent to the plaintiffs under cover of a letter dated 10 October 2000 signed by Ms Watkins and Mr Delahunt (exhibit 15). In the report, which had been prepared by Ms Watkins, she said:

"I have the insurance premium due for the premise (sic), would you like me to forward it to you so that you can pay it direct or use the rental remittance for November to cover it, the amount is $10,045.97."

40 The report followed Richard Ellis' standard format. It consisted of a title page containing the principal's name and the address of the subject property. There was then a contents page followed by a page containing a summary of financial information and setting out the amount remitted to the principal. The third page contained a reference to arrears, rent reviews and "Building and General Matters". It was under the last heading that Ms Watkins referred to the insurance premiums in the manner set out above.

41 It was Mr Badat's evidence that he read only the page containing financial information and setting out the amount remitted to him. He said he did not read any further in the report because he could not be bothered to do so. I do not accept that evidence. I find that he read the whole report.

42 I am reinforced in that view by the fact that on Mr Badat's own evidence, at a meeting he had with Ms Watkins on 2 November 2000 (to which I shall refer below) he said he "specifically mentioned" the need to increase the rent payable by FILA. I think this is significant because in the monthly report, Ms Watkins had stated that there was a rent review due on 1 September 2001 and that no action was required at present. In fact, under the FILA lease, a rent review was due on 1 September 2000.

43 I think it probable that Mr Badat raised the question of the rent review with Ms Watkins as a result of reading in her report of September 2000 that no action was required. That statement appeared only a few lines above the reference to the insurance premium. I therefore think it implausible that Mr Badat did not read the latter.

44 Further, I think it improbable that Mr Badat, who had a $1,300,000 investment in the Murray Street property, would not look at the entirety of the brief and simple report relating to that property.

45 According to Ms Watkins, a short time after she sent Mr Badat the September 2000 report, he telephoned her to say that he wanted to pay the insurance premium himself (exhibit P, pars 49 - 50). I do not accept that evidence. It is clear from subsequent events that Mr Badat wanted to reduce the cost of insurance very considerably. I do not believe that he volunteered to pay an amount which he regarded as excessive, particularly when he had not seen the invoice.

46 I think Ms Watkins' evidence was a reconstruction based on a letter dated 26 October 2000 she sent Mr Badat by facsimile. Together with the letter, Ms Watkins sent copies of facsimiles she had received from AON which included the relevant invoices (exhibit 16).

"Please find to follow the Insurance Premiums as requested."

48 I draw the inference that there had been some communication between Mr Badat and Ms Watkins in which he had requested the relevant documents: not so that he could pay the premium himself, but so as to see how the amount of $10,045.97 could be justified.

49 Mr Badat was asked in interrogatories whether he had received Ms Watkins' letter of 26 November 2000 and its attachments. In his answers, sworn on 15 April 2004, he said he had received the documents by facsimile on or about 26 October 2000. However, under cross-examination, Mr Badat said he had not received the documents. He said he had answered the interrogatory without looking at the whole of the document. His explanation for the mistake was that:

"My solicitor was very ill at that time and he wanted to try and get the trial date done (sic) as soon as possible ..." (TS 126)

I regard that explanation as implausible and I do not accept it. I am satisfied that the answer given by Mr Badat to the interrogatory was true.

50 As I have noted above, it is common ground that a meeting took place at Richard Ellis' offices on 2 November 2000 between Ms Watkins and Mr Badat. In Mr Badat's evidence (exhibit B, par 79) he said he discussed with Ms Watkins the recovery of outgoings that she did not appear to have been recovering from FILA. He said he mentioned specifically the need to recover GST on the rent, to increase the rent and the need to recover land tax and council and water rates. According to Mr Badat, Ms Watkins apologised. She said her mother had just died or was terminally ill. She promised to attend to the matters immediately.

51 According to Mr Badat, Ms Watkins informed him - for the first time - that the insurance premium for the Murray Street property had increased substantially to approximately $10,000. He said he had not been aware previously of the amount of the premium.

52 Mr Badat said Ms Watkins then raised the possibility of an overlap of insurance cover on the Murray Street property between the AON policy and the insurance effected by FILA. He said Ms Watkins raised the possibility of reducing the plaintiffs' insurance to the extent of any overlap. According to Mr Badat, Ms Watkins said she would need to examine the FILA policy and that she could not locate it at that meeting.

53 Mr Badat's evidence in cross-examination was to the same effect. However, he confirmed that he had not given Ms Watkins any instructions to reduce the cost of insurance for the Murray Street property; that it was her concern, not his, that the premium was too high (TS 103). Mr Badat said also that he had not dealt with the AON invoice at his meeting with Ms Watkins (TS 99 - 100).

54 Ms Watkins gave a different account. She said the meeting was arranged at her request. She wanted to discuss the insurance cover because she was "frustrated at Mr Badat's continued lack of response to my letters" (exhibit P, par 53). I do not accept that evidence, there being no evidence of any letters written by Ms Watkins to Mr Badat other than the two referred to above.

55 Nor do I accept the evidence Ms Watkins gave in cross-examination that she actually recalled telephoning Mr Badat to arrange the meeting (TS 492). That evidence was, I think, reconstruction. However, I do accept Ms Watkins' evidence that she was concerned about the fact that the insurance premium was outstanding, and that Mr Badat had said he would pay it (TS 497).

56 I accept Mr Badat's evidence that he was dissatisfied with Ms Watkins' management of the Murray Street property and that he raised with her the matters of concern to him to which I have referred above. Ms Watkins agreed that these matters were discussed (TS 506).

57 Ms Watkins said she had a definite recollection that Mr Badat made annotations on an AON invoice against various elements of the premium which he did not want to pay.

58 In her statement (exhibit P, par 61) Ms Watkins said Mr Badat had with him at the meeting a copy of the invoice, on which he had made the markings in his own handwriting. In cross-examination Ms Watkins said the document was "an original statement": although it could have been a duplicate copy from AON, it was not a photocopy (TS 505, 537).

59 The document on the Richard Ellis file which contained the handwritten annotations was a plain paper photocopy of the facsimile sent by AON to Richard Ellis on 26 October 2000. That could not have been the document Ms Watkins forwarded by facsimile under cover of her letter of 2 October. That is because I accept Mr Badat's evidence that his facsimile machine printed on the obsolete thermal paper in the form of a roll.

60 Faced with this evidence, Ms Watkins said that Mr Badat made the annotations on the document in her presence (TS 540).

61 There was a marked distinction between the way in which Ms Watkins gave her evidence generally and the way in which she gave her evidence about this aspect of the meeting of 2 November 2000. Having regard to the impression I formed of Ms Watkins' evidence in relation to this matter, I find as a fact that Mr Badat did make the handwritten annotations on the AON invoice and that he did so in the course of the meeting with Ms Watkins.

62 The only legible annotations are the words "no" written on the client coverage summary against two heads of liability. These were the theft of property "excluding money" and "specified damage". The limit of liability for the former was $10,000 and for the latter $250,000. This, I think, explains the reference to the overlap between the plaintiffs' insurance cover and that obtained by FILA. It is plausible that Mr Badat thought it unnecessary to insure against the theft of property when he was concerned only to insure the fabric of the building. This is likely to have been a matter of concern to FILA, not to the plaintiffs.

63 Further, I accept that Mr Badat was reluctant to insure against "specified damage" to a limit of $250,000 when the damage does not appear to have been specified in the client coverage summary.

64 I therefore accept Mr Badat's evidence that there was a discussion between him and Ms Watkins about a possible overlap with the FILA insurance policy. It is not necessary to make any finding beyond that because I am satisfied that the matter was never pursued.

65 I therefore find that as at 2 November 2000, Mr Badat knew that the AON policy for the insurance of the Murray Street property had fallen due for renewal, and that the cost of renewal was $10,045.97. I find that Mr Badat knew the premium had not been paid and that he did not want to pay the amount sought.

A reduction in the insurance cover for the Murray Street property

66 On 8 November 2000, Richard Ellis sent its monthly report for October under cover of a letter, again signed by Ms Watkins and Mr Delahunt. The report followed the standard format. On the second substantive page, under the heading of "Building and General Matters", Ms Watkins wrote:

"As requested I will reduce the cover of the current premium and have the policy requoted by AON. I will forward to you the revised policy once it has been amended." (exhibit 21)

67 In cross-examination, Ms Watkins' evidence about the events following the meeting of 2 November 2000 was vague and confused. Ms Watkins said she spoke to AON on that day, in accordance with Mr Badat's instructions. I do not accept that she did. That is because, on 8 November 2000, she sent the Richard Ellis monthly report to Mr Badat in which she said:

"As requested I will reduce the cover of the current premium and have the policy requoted by AON. I will forward to you the revised policy once it has been amended." (exhibit 21)

This suggests that Ms Watkins had not, at the date of the report, made any approach to AON.

68 On 7 November 2000, AON produced a statement of account, addressed to Mr Badat. It showed an outstanding amount of $10,061.08. This included $10,045.97 in respect of the renewal of the commercial policy for the Murray Street property (exhibit 20).

69 The invoice bore a stamp in large capital letters saying "URGENT". Also stamped clearly on the invoice were the words:

"Cover will be LAPSED due to non-payment at 4 pm 20/11/00."

70 Mr Badat was asked in the interrogatories referred to above, whether he had received this invoice. He said he had: that it had been "posted or possibly faxed". He said further, that he had sent it on to DTZ "as managing agents" in accordance with the arrangements he had made, that he would send all documents relating to the Murray Street property to DTZ.

71 In fact, Mr Badat had not then appointed DTZ to be his agents. And there is nothing in DTZ's discovery to suggest that Mr Badat did forward the invoice.

72 In cross-examination, Mr Badat said he had never seen the invoice (TS 128). A little later in his cross-examination, he said he did not recollect receiving it. He said he had answered the interrogatory as he did, because the invoice was addressed to him and bore the stamp "posted". He therefore assumed he had received the document in that way. (I infer that the document shown to Mr Badat for the purpose of the interrogatories was AON's office copy on which the word "posted" had been stamped.)

73 I am satisfied, on the balance of probabilities, that Mr Badat received the AON invoice of 7 November 2000 and that he did not forward it to DTZ.

74 I therefore find that as at about 7 November 2000, Mr Badat knew that the insurance cover for the Murray Street property would lapse unless payment was made by 20 November 2000.

75 I find also that Mr Badat had no intention of paying the premium or authorising Richard Ellis to pay. That is because he had already told Ms Watkins the policy was too expensive and he was waiting for her to provide him with quotes, as she had said she would in her most recent monthly report.

76 The evidence does not enable me to make any finding as to the precise instructions given by Mr Badat to Ms Watkins, nor whether those instructions came unprompted from Mr Badat or whether it was Ms Watkins' suggestion that he obtain another quote. However, I think it highly improbable that Ms Watkins would have sought a reduction in the level of insurance cover for the Murray Street property of her own volition.

77 There seems to have been a delay in AON responding to Ms Watkins' request. On 28 November 2000, Ms Roberts-Henfrey of AON sent Ms Watkins by facsimile a letter and a revised invoice for insurance on the Murray Street property in an amount of $5,578.27. In her letter, Ms Roberts-Henfrey said:

"As discussed, attached is a copy of our revised tax invoice confirming alterations in cover as requested by the owner and apologise for the delay in forwarding this to you. The original documents are in the mail to you tonite (sic).

As this renewal does date back to 27 July 2000, the insurers have requested that we have the payment from the owner no later than 30 November 2000. Can you please advise whether payment will be made by that date." (exhibit 23)

78 The tax invoice sent under cover of that letter contained a transaction description in the following terms:

"This policy is renewed for a further 12-month period with effect from 27th July 2000 and replaces invoice I0899194."

The invoice referred to was that which charged Mr Badat with the amount of $10,045.97.

79 The client coverage summary attached to the tax invoice showed that the limit of liability had been reduced from $3,000,000 to $1,800,000. The declared value of the Murray Street property had been reduced from $2,510,000 to $1,510,000. However, the policy still included cover for theft of property and specified damage in the sums of $10,000 and $250,000, apparently in disregard of Mr Badat's previous instructions.

80 In his answers to interrogatories, Mr Badat said he received a copy of these documents by facsimile on or about 28 November 2000 from Richard Ellis. However, in cross-examination, Mr Badat denied having received the cover page. He claimed to have received only the invoice. Nothing turns on that inconsistency.

81 Mr Badat said in cross-examination that it was the receipt of the invoice for $5,578.27 which prompted him to telephone Mr Mattaboni at DTZ (TS 134). I shall refer below to the circumstances in which DTZ was appointed as managing agent for the Murray Street property.

82 In his evidence (exhibit B, par 98) Mr Badat said that "at about the same time" he received from Richard Ellis a copy of an invoice from AON dated 28 November 2000 which cancelled the original AON policy and credited an amount of $10,045.97 (exhibit 24).

83 Mr Badat said in his evidence (exhibit B, pars 99 - 100) that he assumed from the fact that he had been given a credit of $10,045.97, that Ms Watkins had organised a new AON policy with reduced cover because of the overlap of cover with the FILA policy. He said he assumed also, from the reference to the credit, that Richard Ellis had paid that premium previously. He said he assumed that the further premium of $5,578.27 would be paid from that credit, and that the balance of the credit would be refunded by AON. He said he had no idea that in fact Richard Ellis had not paid the premium to AON. In cross-examination, Mr Badat said that even if he had read the Richard Ellis report of October 2000, and had seen the credit, he would have believed the premium had been paid by Richard Ellis (TS 140).

84 I do not accept that evidence. There are a number of reasons. First, the so-called "credit" is expressed to be the reversal of the previous invoice, not a refund. Even if Mr Badat did not understand the terminology, I do not accept, for the reasons given above, that he believed Richard Ellis had paid the $10,045.97 premium previously. As I have said, Mr Badat had not authorised that payment and he was unwilling to pay that amount because he considered it to be too expensive.

85 Thirdly, I find that Mr Badat regarded the invoice of $5,578.27 as too expensive: and it was for that reason he contacted Mr Mattaboni at DTZ. His action in so doing is inconsistent with a belief that the premium had been paid. As will appear below, Mr Badat then thought he could obtain appropriate insurance at a cost of $1500-$2000.

86 Mr Badat's evidence was that in August 2000 he telephoned Mr Mattaboni and spoke to him about appointing DTZ to manage the Murray Street property (exhibit B, par 49). Mr Badat said he then went to see Mr Mattaboni: and that Mr Robinson was present also at the meeting. He said he told them about his problems with Ms Watkins of Richard Ellis and he asked Mr Mattaboni and Mr Robinson to take over the management of the Murray Street property and the two BP service stations.

87 Mr Badat said he was told by Mr Robinson that he would commission "a full audit" when DTZ took over the management of all three properties. Mr Badat said he told Mr Mattaboni and Mr Robinson that Richard Ellis was looking after the insurance for the Great Eastern Highway property, even though it was not managing that property. He said AON insisted that workers' compensation insurance was required as part of the residential policy for the Great Eastern Highway property even though the Trust did not need or employ any workers there. Mr Badat said Mr Robinson told him he would get "a better combined bonus premium" from DTZ's insurance brokers by combining both policies into a single combined and comprehensive policy. According to Mr Badat, Mr Robinson said that DTZ preferred to arrange all its insurance through Elkington Bishop Molineaux Insurance Brokers Pty Ltd ("EBM") and not AON.

88 In Mr Mattaboni's responsive statement (exhibit H) he said he had no recollection of any such meeting. He maintained that position in cross-examination, although he did not deny that a meeting took place as alleged by Mr Badat. Mr Mattaboni thought he had met Mr Badat early in September 2000. However that, I think, is because Mr Mattaboni wrote to Mr Badat on 12 September 2000. According to Mr Robinson, he did not meet Mr Badat until early December 2000.

89 Mr Mattaboni recalled being told by Mr Badat, at some stage, about his dissatisfaction with Richard Ellis (TS 285).

90 As to Mr Badat's evidence that Mr Robinson said he would commission a full audit when DTZ commenced the management of the three properties, Mr Mattaboni said, in substance, that as far as he knew, that was standard procedure. Although Mr Mattaboni said he had no recollection of Mr Robinson actually making that statement, I accept that he did so.

91 I accept that Mr Badat was dissatisfied with Richard Ellis in general and Ms Watkins in particular. I accept that he met Mr Robinson and Mr Mattaboni in August 2000, at DTZ's offices. I think it probable that Mr Robinson was present because he, and not Mr Mattaboni, was DTZ's property manager.

92 Mr Badat's evidence is supported to some extent by the fact that on 12 September 2000, Mr Mattaboni wrote to him, enclosing management agreements for the three properties "as requested", and proposing to take over the management from 1 October 2000 (exhibit 13). He enclosed also a draft letter dated 11 August 2000 which he had prepared for Mr Badat's signature, to inform Richard Ellis of DTZ's appointment in its place. The letter requested the recipient to forward to DTZ the lease documents, copies of various invoices and notices relating to statutory charges and "current insurance details" (exhibit 13).

93 According to Mr Badat, he signed and returned the agreements enclosed in Mr Mattaboni's letter of 12 September 2000. He said he did not know why the agreement is dated 20 November 2000.

94 I accept that Mr Mattaboni sent the relevant agreements to Mr Badat for his signature. However, I find that Mr Badat did not then sign and return the agreements.

95 I find that the agreement appointing DTZ as the managing agent for the Murray Street property was made on 20 November 2000, the date it bears. The date was inserted by Mr Mattaboni in his own hand. It is not necessary to make any finding as to the precise circumstances in which the agreement came into existence. Mr Mattaboni had said in his letter of 12 September 2000 that DTZ proposed to take over the management of the various properties on 1 October 2000. However, in the agreement dated 20 November 2000, the date had advanced to 1 January 2001. This suggests that the previous proposal had been received by Mr Badat, but not then accepted by him.

96 As I have noted above, it was Mr Badat's evidence that it was the receipt of the AON invoice in the sum of $5,578.27 which prompted him to telephone Mr Mattaboni. I accept that evidence.

97 It was Mr Mattaboni's evidence that he made a contemporaneous note of the telephone conversation he had with Mr Badat and that he then made a further note which he put on Mr Robinson's desk (exhibit 170). It was in the following terms:

"Bobbo

Fila Building - Not Insured

Can we arrange a quote

Fire only $1M

Public

Liability $10M

Expects to pay $1500 - 2000

based on what he is getting

from 60 GEH

I accept that the note is an accurate summary of the information conveyed to Mr Mattaboni by Mr Badat during the course of their telephone conversation. The fact that the note was addressed to Mr Robinson (Bobbo) without any introduction or explanation, supports the finding that Mr Robinson already had some knowledge of the matter as a result of a meeting with Mr Badat.

98 As at 28 November 2000, DTZ had not been in contact with Richard Ellis. On 22 November 2000, Mr Mattaboni had prepared a letter for Mr Badat to send to Richard Ellis to inform it of DTZ's appointment and to request various documents relating to the Murray Street property and the BP service stations (exhibit 22). That letter was received by Richard Ellis on 24 November 2000 (see exhibit 169). However, Richard Ellis did not respond to it. DTZ did not receive the relevant documents from Richard Ellis until January 2001. Mr Mattaboni's note to the effect that the Murray Street property was not insured could therefore have been based only on information provided to him by Mr Badat. The statement was not strictly accurate: in fact, as has been noted above, AON was prepared to hold the Murray Street property covered until 30 November 2000. I find that Mr Badat did not appreciate that.

99 According to Mr Badat, he told Mr Mattaboni in the course of the telephone conversation of 28 November 2000 that he was "concerned at the drastic reduction in the premium" which, he assumed, reflected an equivalent reduction in the level of cover. Mr Badat said it was Mr Mattaboni's suggestion that he arrange an interim $1,000,000 cover for the Murray Street property "until the adequacy of the reduced AON insurance cover was sorted out" (exhibit B, pars 102 - 106).

100 Mr Mattaboni said it was Mr Badat who made the suggestion (TS 304).

101 I do not accept Mr Badat's evidence. I think it highly improbable that Mr Mattaboni, who would then have had little or no knowledge of the Murray Street property, would have suggested that cover of $1,000,000 be obtained. As I have noted above, Mr Mattaboni was not himself a property manager: that was Mr Robinson's role.

102 Mr Mattaboni's note to the effect that Mr Badat expected to pay between $1500 and $2000 for insurance is, I find, a summary of Mr Badat's instruction to him. Mr Mattaboni denied that Mr Badat told him about the AON quotation. I find that Mr Badat made no mention of it during the course of the conversation.

103 I am therefore satisfied on the balance of probabilities, and find as a fact, that on 28 November 2000, Mr Badat telephoned Mr Mattaboni and asked him to obtain a quote for fire insurance of $1,000,000 and public liability insurance of $10,000,000 for the Murray Street property.

104 My finding that the instruction came from Mr Badat and was not the result of any suggestion made by Mr Mattaboni, is supported by a letter dated 29 November 2000 written by Mr Mattaboni to Mr Badat (exhibit 25). It was in the following terms:

"We are proceeding to obtain quotes for the insurance you require based on:

$1M fire for the building,

$10M for public liability.

We will further obtain quotes for a more comprehensive insurance plan so you are fully informed of the options available.

Can we arrange to 'borrow' your leases for FILA and BP for photocopying while we await CB Ellis forwarding details. Our property manager Craig Robinson has queried why is it that this insurance is not part of the lessee's requirements to procure and we would like to check further ..."

105 I have no reason to doubt that Mr Mattaboni was correct in referring to the quotes for the insurance "you require", again reflecting his instructions. I do not accept the submission made by counsel for the plaintiffs in their closing submissions (par 123) that Mr Mattaboni used the word "require", rather than "request", to differentiate between a requirement arising from advice received from DTZ and a request originating from Mr Badat himself. In any event, I accept Mr Mattaboni's evidence.

106 In his evidence, Mr Badat said that "around 29 or 30 November" he met Mr Mattaboni and Mr Robinson and gave them the two AON invoices. That is, the invoice for the reduced cover in the sum of $5,587.27 and the cancellation of the invoice in the sum of $10,045.97.

107 Mr Badat said that at the meeting he again told Mr Mattaboni and Mr Robinson that he thought the old AON policy had been cancelled and that the new AON policy had been taken out, but he was not confident that the policy overlap had been properly considered by Ms Watkins. According to Mr Badat, Mr Robinson said he would telephone Ms Watkins to confirm that the overlap justified the reduction, that he would sort the matter out; and that he might get the old AON policy reinstated in the meantime until DTZ took over the management.

108 Mr Badat said Mr Robinson also said he would have a "surveyor" evaluate the appropriate insurance cover for the Murray Street property: and that once he had the surveyor's report he would evaluate the AON and FILA insurance policies himself. It was in that context, according to Mr Badat, that Mr Mattaboni repeated his advice that an interim policy of $1,000,000 should be obtained as a precautionary measure.

109 Mr Badat said that it was after the meeting that he found the facsimile from Mr Mattaboni dated 29 November 2000. However, he said they had discussed the matters referred to in that facsimile at a meeting (exhibit B, pars 107 - 115).

110 The facsimile transmission sheet relating to Mr Mattaboni's letter of 29 November 2000 shows it was transmitted at 5.14 pm on that day. Although Mr Badat gave no evidence about the time at which the meeting took place, any such meeting is likely to have been held during business hours. In other words, the facsimile is likely to have been transmitted after the meeting took place.

111 In my view, if Mr Badat is correct in saying that he attended a meeting with Mr Mattaboni and Mr Robinson on 29 November 2000, it is surprising that the letter made no reference to it. Further, if Mr Badat had met Mr Robinson on that day, it seems odd for Mr Mattaboni to refer to him in his letter as "our property manager Craig Robinson". In my view, Mr Mattaboni's letter gives the appearance of raising matters for the first time: not in confirmation of a meeting which (if Mr Badat is correct) must have taken place a short time before the letter was written.

112 There is the possibility that Mr Mattaboni had written the letter before the meeting but had not altered it to take account of the fact that a meeting had then taken place. However, if that was the sequence of events, there would have been no need to send the letter by facsimile. It could have been given to Mr Badat at the meeting.

113 If, as he contends, Mr Badat had given the AON invoices to Mr Mattaboni and Mr Robinson at the meeting, it would, I think, have been obvious to them that AON was not crediting Mr Badat with an amount of $10,045.97. This would have prompted them to ask Mr Badat whether Richard Ellis had paid the other invoice. If Mr Badat did not know, it would have been a simple matter for DTZ to find out: and there would have been no need to arrange "interim cover".

114 Further, if Mr Badat had given DTZ the AON invoices, it is probable they would have been placed on DTZ's file relating to the Murray Street property. However, according to Mr Volk's affidavit of discovery on behalf of DTZ, the documents do not appear there.

115 These considerations lead me to find that there was no meeting on 29 November 2000 as alleged by Mr Badat.

116 On 11 December 2000, AON issued a notice of cancellation of the second policy. The notice (exhibit 26) was in the form of an invoice showing a credit in an amount of $5,528.27. Under the heading "Cancellation", the invoice contained the statement:

"This policy is cancelled with effect from 28th July 2000 due to non-payment."

117 Mr Badat said he received the notice from AON and forwarded it to Mr Mattaboni (exhibit B, par 117). Mr Mattaboni denied receiving the notice (exhibit H, par 54). Mr Badat was not cross-examined about this matter. It was put to Mr Mattaboni in cross-examination that Mr Badat had sent the notice to him. Mr Mattaboni said he was not aware of the document. It was not discovered by DTZ.

118 Mr Badat said he did not turn his mind to the notice because he was confident that DTZ would deal effectively with the matter (exhibit B, par 118). I do not accept Mr Badat's evidence that he sent the notice to DTZ. However, I accept that Mr Badat was not concerned about the cancellation. Although he knew the Murray Street property was uninsured, he was expecting DTZ to obtain the quotes he had sought on 28 November 2000.

119 It is not clear when Mr Badat received the cancellation notice of 11 December 2000 (a Monday). It appears to have been sent to him by post, in which case it probably arrived on 12 or 13 December 2000.

120 Mr Mattaboni wrote to Mr Badat on 12 December 2000 to inform him that DTZ had not received any documents relating to the Murray Street property or the BP service stations from Richard Ellis, although two letters had been sent. He therefore asked Mr Badat to make available copies of the respective leases for photocopying "as the 1st of January is fast approaching ..." (exhibit 27).

121 Mr Mattaboni said he did not recall receiving any such documents: and I find that Mr Badat did not deliver them. This finding is consistent with the fact that DTZ continued to press Richard Ellis for the relevant material.

122 Although Mr Mattaboni had said in his letter of 29 November 2000 that "we are proceeding to obtain quotes", it seems he did not do so until 19 December 2000. On that day, he telephoned EBM and spoke to Deborah Ulerick and asked for "an indicative quote".

123 Ms Ulerick gave evidence. She was an impressive witness. She is an experienced insurance broker who holds (as she did in 2000) a professional qualification for insurance brokers, being a Qualified Practising Insurance Broker (or QPIB).

124 I am satisfied that Ms Ulerick had a good recollection of the relevant events and that she had an efficient record-keeping system, which enabled her to refresh her memory, insofar as that was necessary.

125 According to Ms Ulerick, Mr Mattaboni told her that cover of $1,000,000 was required for the Murray Street property with a public liability cover of $10,000,000. In response to Ms Ulerick's standard questions, Mr Mattaboni told her that the Murray Street property was not insured.

126 Ms Ulerick then telephoned several insurers to obtain the information required by Mr Mattaboni. She considered that cover offered by Zurich Australia Ltd ("Zurich") was the most appropriate.

127 During the afternoon of 19 December 2000, Ms Ulerick telephoned Mr Mattaboni and gave him the indicative prices. Mr Mattaboni said that was sufficient for his purposes. It was his evidence that he then sent a facsimile to Mr Badat, setting out the information and the basis on which it had been given. This included the statement "currently not insured" (exhibit 29).

128 The facsimile is dated "219/12/00". Mr Mattaboni said he thought he sent it on 19 December: that it could not have been sent on 29 December because DTZ's offices were closed between Christmas and New Year.

129 Because Mr Mattaboni's previous letter to Mr Badat was dated 12 December 2000, I suspect that he (or the typist) omitted to delete the number "2" when the word processor was updated. I discount the possibility that the facsimile was sent on 21 December 2000 because there was another facsimile sent on that day to which I shall refer below. On the balance of probabilities, I find that Mr Mattaboni did send the facsimile on 19 December 2000.

130 Mr Badat said in his evidence that he did not "specifically recall" receiving the facsimile. He said that if he had received it he had not read it "too closely" (exhibit B, par 124).

131 Mr Mattaboni said in his facsimile that "verbal estimates" had been received from EBM "as you require" based on $1,000,000 for fire insurance at an approximate price of $3465 and $10,000,000 for public liability at an approximate price of $594.

132 It was Mr Mattaboni's evidence that on receiving the verbal quotations from EBM on 19 December 2000 he telephoned Mr Badat and gave him that information. According to Mr Mattaboni, Mr Badat said words to the effect that the prices were much better than he had been paying and asked for the details of the cover to be sent to him. Mr Mattaboni said he did not obtain further quotes for any more comprehensive insurance plans because Mr Badat had said he only wanted $1,000,000 for fire cover and $10,000,000 for public liability.

133 In cross-examination, Mr Mattaboni said he thought that during the course of the telephone conversation in which he informed Mr Badat about the figures Mr Badat "indicated along the lines that he was happy with that and progress it" (TS 322).

134 Mr Badat denied having any such conversation with Mr Mattaboni (exhibit C, par 45). However, under cross-examination, he said only that he did not recall receiving a phone call from Mr Mattaboni (TS 143).

135 I accept that Mr Mattaboni did telephone Mr Badat to inform him of the EBM quote. However, I do not accept that Mr Badat gave any instructions to Mr Mattaboni to proceed. Such an instruction would have been inconsistent with the facsimile sent by Mr Mattaboni to Mr Badat on 21 December 2000 in which he informed Mr Badat about the receipt of lease details from Richard Ellis on the previous day. Mr Mattaboni also asked in the facsimile:

"Have you thought about the insurance?" (exhibit 183)

136 Mr Mattaboni also asked Mr Badat in that facsimile when he would be going overseas and for how long.

137 It is clear from travel documents produced by Mr Badat, and his passport, that he travelled to Mauritius on 14 January 2001, returning on 3 February 2001. It was Mr Badat's evidence that in early January, he received a telephone call from Mr Robinson who said he had received all the documents requested from Richard Ellis, but was still awaiting "statements and balances". According to Mr Badat, Mr Robinson told him he had received the "Outgoing Budget" from Richard Ellis, for July 2000 to July 2001; that "the insurance is on the outgoings budget" or words to that effect and that the Murray Street property was insured (exhibit B, par 125).

138 I accept that DTZ received a copy of the Richard Ellis Outgoings Budget on 9 January 2001, when it was transmitted by Ms Watkins to Mr Mattaboni by facsimile (exhibit 88). The Budget refers to "Building Insurance" in an amount of $10,120. However, it gives no indication whether any payment had been made.

139 I accept that Mr Badat had a conversation with Mr Robinson in which he was told about the Budget. However, I do not accept that Mr Robinson told Mr Badat that the Murray Street property was insured. I think it improbable he would have made such a representation given that (on Mr Badat's evidence) he was still waiting for "statements and balances" from Richard Ellis.

140 Further, if Mr Robinson then believed the Murray Street property was insured, it is likely he would have informed Mr Mattaboni, who would not then have pursued the $1,000,000 cover later in January in the circumstances to which I shall now refer.

141 Returning to the events of December 2000: it was Ms Ulerick's evidence, which I accept, that Mr Mattaboni did not, on 19 December, accept the verbal quotation she had given him that day.

142 I find that Ms Ulerick heard nothing further from Mr Mattaboni until 19 January 2001 when he sent her a facsimile in which he said:

"You would recall my earlier phone calls where you quoted us ballpark figures for the following insurance, which we subsequently confirmed acceptance to.

Fire only $1 Million Quote $3465.44

Public Liability $10 Million Quote $594.00

The insurance was to be taken out in the names of:

Mohamed Ahmed Badat and Yasmeen Badat as trustees for the Yasmeen Family Trust.

We have not received confirmation that the insurance has since been placed and need your confirmation of this in writing today please." (exhibit 194)

143 Ms Ulerick's evidence was that on receipt of the facsimile, she telephoned Mr Mattaboni and confirmed the details of the cover. She also telephoned Zurich and spoke to a Wayne Cousins to confirm that the terms would hold. Mr Cousins gave Ms Ulerick information which allowed her to issue a cover note. She wrote the number of the cover note on the facsimile.

144 As I have noted above, Ms Ulerick impressed me as being an efficient and well-organised person. If Mr Mattaboni had confirmed acceptance to her, before 19 January 2001, I have no doubt that she would have acted as promptly then, as she did on that day.

145 In cross-examination, when it was pointed out to Ms Ulerick that Mr Mattaboni's facsimile of 19 January 2001 was inconsistent with her evidence (which I have accepted) that she had not spoken to Mr Mattaboni since 19 December 2000, she said the facsimile had been sent to her as a consequence of a telephone call earlier on 19 January 2001. She said Mr Mattaboni had told her he wanted cover and that she had informed him she could not make those arrangements without written instructions (TS 393). This was, I think, reconstruction, based on Ms Ulerick's interpretation of the facsimile. A little later in her cross-examination, Ms Ulerick changed her evidence and said she "must have" spoken to Mr Mattaboni after she had received the facsimile (TS 394).

146 I find that Mr Mattaboni did not confirm acceptance of Ms Ulerick's quote of 19 December 2000, until 19 January 2001, when he sent the facsimile. I think he realised on that date that he had done nothing to resolve the outstanding insurance question. He knew the Murray Street property was uninsured and that Mr Badat was overseas. I infer that he (somewhat belatedly) realised that the situation required urgent attention. Hence his request for written confirmation that day.

147 It was not suggested to Mr Mattaboni in cross-examination that the statement in his facsimile about subsequent confirmation of the verbal quote was false. I do not therefore draw that inference. It is possible he spoke to someone other than Ms Ulerick at EBM but that the matter was overlooked.

148 In his evidence, Mr Mattaboni said that on 4 January 2001 he had received by facsimile a blank proposal form direct from Zurich (exhibit G, par 72). However, as Mr Mattaboni accepted in cross-examination, this was incorrect. His error clearly arose from the fact that the proposal form bore a facsimile transmission notation showing it had been transmitted by Zurich on 4 January 2001. However, the destination was not DTZ, but EBM.

149 Mr Mattaboni accepted in cross-examination, and I find it to be the fact, that the blank proposal form was sent to him by Ms Ulerick under cover of a letter dated 23 January 2001, which DTZ received on 25 January 2001 (exhibit 195).

150 It is a feature of Ms Ulerick's correspondence that although she addressed the letters to "A & Y Badat" (spelt incorrectly as "Batad" in this instance) she sent them to DTZ's address. Further, the salutation was always "Dear Frank". It is not clear whether Mr Mattaboni realised the letters were not intended for him, but were written to Mr and Mrs Badat.

151 On 19 February 2001, Mr Mattaboni sent a facsimile to Mr Badat in which, after referring to other matters, he said:

"Lastly, EBM Insurance Brokers have sent a follow up to the insurance proposal for the FILA building. You will recall that you took details away to read and execute. Please confirm your agreement and execution of the proposal form." (exhibit 205)

152 It was Mr Badat's evidence that he first saw the proposal form at a meeting with Ms Ulerick on 13 March 2001, to which I shall refer below. It is not necessary to make any finding about this apparent conflict.

153 In the meantime, Ms Ulerick had heard nothing further from DTZ or Mr Badat about insurance for the Murray Street property.

154 On 5 February 2001, Ms Ulerick wrote a further "Dear Frank" letter to Mr & Mrs "Batad" at DTZ's address, in which she noted that EBM had not received the proposal form and sought "urgent attention" to the matter (exhibit 196).

155 At the time, Ms Ulerick had two assistants. It was her practice to have them make file notes of relevant telephone conversations. In this case, the file notes were made on EBM's office copy of the letter of 5 February 2001. The notes record telephone conversations with Mr Mattaboni on 20 and 27 February 2001 and on an illegible date in March. The substance of the conversations, I find, was that Mr Mattaboni said he would follow up the matter with Mr Badat.

156 On 8 March 2001, Mr Mattaboni sent a letter to Mr Badat's home address, by post. He enclosed EBM's invoice for $3,958.62 and said he was enclosing the proposal form for completion and return (exhibit 206). Mr Badat said in his evidence that he had not seen this letter before the litigation.

157 Again, it is not necessary to make any finding about that matter because it is common ground that there was a meeting between Mr Badat and Ms Ulerick at the Great Eastern Highway property on 13 March 2001, when the proposal form was completed.

158 The meeting was arranged after a discussion between Ms Ulerick and Mr Mattaboni at which it was agreed between them that Ms Ulerick would contact Mr Badat direct. I find that Ms Ulerick arranged to meet Mr Badat during the course of a telephone conversation between them on 12 March 2001. This is recorded in Ms Ulerick's "day book" (exhibit 261).

159 Ms Ulerick's account of the meeting is that she went through the Zurich proposal form with Mr Badat, having partially completed it in advance by writing the basic information such as Mr Badat's name and address.

160 Ms Ulerick said she completed the balance of the proposal form after reading each question to Mr Badat and receiving his responses. She said Mr Badat said it would be easier and faster for her to proceed in this way. Ms Ulerick said the first section of the proposal form required Mr Badat to say whether he wanted "gold" cover against accidental loss or damage or "silver" cover against loss by fire and other defined perils. According to Ms Ulerick, Mr Badat said he wanted only the silver cover. Further, Mr Badat confirmed that he wanted the building insured for $1,000,000 with accidental damage cover of $10,000: he did not want to insure for loss of rental income.

161 Ms Ulerick said that in accordance with "standard good broking practice" she explained the under-insurance clause and cautioned Mr Badat that the sum insured might be inadequate, given the location and size of the premises. However, he confirmed that he wanted the building insured for only $1,000,000 (exhibit J, pars 33 - 44).

162 Ms Ulerick said Mr Badat signed and dated the proposal form confirming that all was correct and that he understood it. Ms Ulerick took the completed proposal form with her when the meeting ended.

163 Mr Badat's account is quite different. According to him, Ms Ulerick telephoned him and arranged to meet "regarding the pooling of all my insurance needs with one insurer for the purpose of reducing premiums". This, Mr Badat said, was consistent with a comprehensive combined policy recommended by Mr Robinson (exhibit B, par 131).

164 Mr Badat said he agreed to meet Ms Ulerick because DTZ was then only managing one property requiring insurance, that is, the Murray Street property. He said there were other family and Trust properties he wished to add to the comprehensive combined insurance mentioned by Mr Robinson.

165 Mr Badat said that Ms Ulerick brought some proposal forms to the meeting: that she asked questions and completed some of the details but he did not think she completed all of those details in his presence. Mr Badat said he signed the proposal forms but did not read them (exhibit B, pars 133 - 134).

166 I do not accept that the purpose of the meeting was to discuss pooling of insurance with one insurer. I accept Ms Ulerick's account of the meeting, as set out above. I accept also that after Ms Ulerick and Mr Badat had dealt with the proposal form for the insurance on the Murray Street property, Mr Badat did raise other insurance matters. It was Ms Ulerick's evidence that Mr Badat told her, after the proposal form had been completed, that he was not happy with the service provided by AON and that there had been problems with a recent claim in respect of one of his rental properties. Ms Ulerick said Mr Badat handed her "a bunch of documents" from AON. She said she flicked through the documents and noted there was no document for commercial cover: that is, for the Murray Street property. All the documents related to residential properties. Ms Ulerick said that until she saw these documents she was not aware of the existence of the residential properties. I accept that evidence.

167 Although neither Mr Badat nor Ms Ulerick said so directly, it seems to be common ground that at their meeting, Mr Badat asked Ms Ulerick about placing insurance on his or the Trust's residential properties through EBM. (This, I think, is what Mr Badat referred to as "pooling" his insurance needs.) It was Ms Ulerick's evidence that she explained to Mr Badat that she could not take the policies over automatically as they were well past their due date and that he would need to pay AON before EBM could take over.

168 It is also common ground that at the meeting, Mr Badat told Ms Ulerick that some of the residential properties were insured by Royal & Sun Alliance and that he was unhappy with that company because of a problem with a claim he had made. Further, Mr Badat told Ms Ulerick that other residential properties were insured with CGU Insurance. In fact, the Great Eastern Highway property was insured with CGU: and Mr Badat asked Ms Ulerick to insure that property also. Ms Ulerick told Mr Badat that she would see what quotes she could obtain and would then send him the details together with a letter of appointment.

169 I make these findings based on Ms Ulerick's evidence in chief (exhibit J) and her cross-examination (TS 419 - 427). In the course of cross-examination Ms Ulerick corrected what I regard to be some relatively trivial errors in her statement. Generally, however, I prefer her evidence where it conflicts with evidence given by Mr Badat.

170 On 19 March 2001, Ms Ulerick wrote another "Dear Frank" letter to Mr and Mrs Badat at DTZ's address. It was received by DTZ on 20 March 2001 (exhibit 208).

171 In her letter, Ms Ulerick said she was enclosing a copy of the completed proposal form for the Murray Street property. She noted that it had been completed in Mr Badat's presence and asked that he check it thoroughly to ensure that all was correct.

172 In fact, Ms Ulerick enclosed the original proposal form, not a copy. I find that the document was placed on DTZ's file and not forwarded to Mr Badat. Mr Mattaboni was asked in cross-examination whether his reason for not sending the proposal to Mr Badat was that he knew the Zurich cover was only intended to be "a temporary matter while Mr Robinson was sorting out the insurance issue concerning AON?" Mr Mattaboni replied:

"I don't know that. That may have been the case." (TS 341)

173 The plaintiffs' counsel in their closing submissions say that DTZ has proffered no other explanation for its failure to do anything with the proposal form after 20 March. Counsel submit also that Mr Mattaboni clearly had no reliable recollection about the matter: and Mr Robinson did not mention it.

174 Mr Mattaboni gave the evidence set out above towards the end of his cross-examination, after he had been in the witness box for the better part of a day. By then, it was apparent that his recollection was poor. My impression of him was that he had become somewhat disinterested in the proceedings. His answer was not responsive to the question, which was directed to his reason for not sending the proposal form to Mr Badat. I did not regard the second sentence of Mr Mattaboni's answer to be a considered response. I had the impression it was given on the basis that anything was possible. I therefore place no weight on that evidence.

175 In my view, the most probable explanation for DTZ's failure to send the proposal form to Mr Badat is that it was overlooked.

176 On 23 March 2001, Ms Ulerick wrote to Mr and Mrs Badat at their home address (exhibit 34). In the letter, Ms Ulerick informed Mr and Mrs Badat about the results of her enquiries about insurance for rental properties, personal home and contents insurance, and the Great Eastern Highway property. She enclosed a letter of appointment. That document set out the standard terms on which EBM acted as insurance brokers.

177 Mr Badat did not respond to Ms Ulerick's letter of 23 March 2001. Not having heard from him by early April, Ms Ulerick attempted to contact him by telephone on 3 and 4 April. In her evidence, Ms Ulerick said she left messages on Mr Badat's home answering machine asking him to call back. Mr Badat's evidence was that he had no such answering machine. I accept that evidence. However, I find that Ms Ulerick was simply mistaken about the nature of the message she left. I accept that she did leave messages for Mr Badat at his home. Notes to that effect are recorded on EBM's office copy of the letter of 22 March 2001 (exhibit 34A).

178 On 4 April 2001, Mr and Mrs Badat signed and dated the EBM letter of appointment and inserted a commencement date of 5 April 2001. It was posted to EBM which received the document on that date (exhibit 255).

179 Mr Badat did not, however, make any payment in respect of insurance for the Murray Street property.

180 In explaining why he made no payment, Mr Badat contended that he relied on various statements and representations made to him by Mr Robinson in the course of telephone conversations.

181 In summary, Mr Badat's evidence was that he had a telephone conversation with Mr Robinson shortly after his meeting with Ms Ulerick on 13 March 2001. He said Mr Robinson told him he was still trying to sort out the insurance with AON and that he was awaiting the building survey. According to Mr Badat, Mr Robinson said also that he was not getting any "clarity or cooperation" from Richard Ellis. Mr Robinson said he would try to get a refund of the difference between the old and new AON policies to pay for the interim policy if needed. He said that if a refund could not be obtained then he would ensure that the old AON policy remained in place.

182 Mr Badat said he had a further telephone conversation with Mr Robinson on or about 29 March 2001. Mr Robinson, he said, then told him he had reviewed the FILA policy and that the new AON policy would have been sufficient. According to Mr Badat, Mr Robinson told him also that AON was unwilling to refund part of the premium for the old AON policy for the current year by reason of an adjustment in coverage. He said that the old AON policy taken out by Richard Ellis was valid until July 2001 and that there was no need to review the matter until then, when a comprehensive policy could be arranged which included all Mr Badat's properties (exhibit B, pars 137 - 142).

183 I do not accept any of that evidence. There is no evidence of any communication between DTZ and AON at this time. If there had been any such communication, AON would no doubt have told Mr Robinson that the Murray Street property was not insured. That is what he was told when he enquired about the position shortly after the building was destroyed by fire.

184 Nor is there evidence of any communication between Mr Robinson and anyone at Richard Ellis. It was not put to Mr Delahunt or to Ms Watkins that either of them had spoken to Mr Robinson about the state of the insurance on the Murray Street property. If there had been any such communication, there is no doubt that Mr Robinson would have been informed that there was no insurance.

185 Further, there is no evidence that DTZ ever commissioned a survey of the Murray Street property. Given that Mr Badat required insurance only in an amount of $1,000,000, that would have been a pointless exercise in any event.

186 I have already found that Mr Badat did not give any of the AON documents to DTZ. Had he done so, it would have been immediately apparent to Mr Robinson that there would be no question of a refund for the original policy because the charge of $10,045.97 had never been paid: the invoice had simply been reversed.

187 Viewed objectively, therefore, there is no basis on which Mr Robinson could properly have made any of the statements summarised above attributed to him by Mr Badat. However, some support for the plaintiffs' position is to be found in the evidence of Glenn Charles Dumbrell, who was employed by DTZ as a retail and commercial leasing manager.

188 Without objection, Mr Dumbrell gave evidence about conversations he had with Mr Robinson about two weeks before the fire. According to Mr Dumbrell, Mr Robinson told him about his difficulty in obtaining information from Richard Ellis about the outgoings and insurance on the Murray Street property. Mr Robinson said he was making efforts to renew insurance on the property (exhibit F, par 5).

189 Mr Dumbrell also said that on the day after the fire, Mr Robinson told him he believed there was insurance in place over the Murray Street property, but that it had expired just prior to the fire (exhibit F, par 6).

190 Some two weeks later, Mr Dumbrell said, Mr Robinson told him he had discovered that Richard Ellis had not paid the insurance premium, despite telling him that payment had been made.

191 This evidence was set out in a statement prepared for Mr Dumbrell by the plaintiffs' former solicitors. He signed it on 8 April 2005.

192 In cross-examination, Mr Dumbrell agreed that he had been contacted by DTZ's solicitors in November 2004: and that this was the first time since 2001 that he had turned his mind to the events surrounding the fire at the Murray Street property (TS 215).

193 Following that contact, DTZ's solicitors prepared a statement for Mr Dumbrell. This was sent to him under cover of a letter dated 6 December 2004 (exhibit 257).

194 Mr Dumbrell's draft statement was amended subsequently, following discussions between him and DTZ's solicitors. The revised draft was sent to him under cover of a letter dated 7 April 2005 (exhibit 258).

195 Mr Dumbrell said he was satisfied that the revised draft recorded accurately the account he had given to the solicitors (TS 219). However, he did not sign the statement.

196 Subsequently, Mr Dumbrell told DTZ's solicitors that he had been brought to Perth by Mr Badat's former solicitors and had provided a statement to them. He said he was concerned that the statements he had provided to Mr Badat's former solicitors and to DTZ's solicitors were inconsistent. He said he did not want to be relied on at trial (TS 220).

197 The draft statement prepared for Mr Dumbrell by DTZ's solicitors and adopted by him in cross-examination, is indeed inconsistent with his evidence in chief. It refers to Mr Robinson telling Mr Dumbrell of his obtaining a cover note for the Murray Street property, trying unsuccessfully to have Mr Badat pay the premium and warning him about the consequences of his failure to do so.

198 In short, the statement given by Mr Dumbrell to the plaintiffs' former solicitors supports their case, while that given to DTZ's solicitors supports its case.

199 In all the circumstances set out above, I place no reliance on Mr Dumbrell's evidence.

200 In the course of closing submissions, leading counsel for the plaintiffs accepted that if Mr Robinson had telephoned AON, he would have discovered the true position. Counsel suggested a possible explanation consistent with Mr Badat's evidence. It was that Mr Robinson was busy on other matters and thought Mr Mattaboni was looking after the insurance question: and that he fobbed off Mr Badat with a plausible but incorrect statement (TS 682). In my view, that is mere speculation: there is no basis in the evidence for drawing such an inference.

201 On 9 April 2001, EBM issued a final reminder for payment of the insurance relating to the Murray Street property, in an amount of $3,958.62. This was in relation to cover of $1,000,000 for the building. The document contained the words:

"We do not appear to have received your remittance for the policy detailed below. Please remit within 10 days or the policy will lapse accordingly." (exhibit 211)

202 The reminder notice was addressed to Mr Badat at DTZ, where it was received on 10 April. Mr Mattaboni transmitted it by facsimile to Mr Badat.

203 Mr Badat's evidence was that he received the document on or about 10 April (exhibit B, pars 144 - 147). I accept that he did so.

204 Mr Badat's evidence was that he spoke to Mr Robinson by telephone about the final reminder. According to Mr Badat, Mr Robinson told him that Mr Mattaboni had sent the document to him and that he should ignore it. Mr Badat said Mr Robinson again confirmed and reassured him that the original AON policy had been reinstated by AON and that the property was insured under that policy until 27 July 2001. Mr Badat said Mr Robinson told him not to worry about the reminder and that he (Mr Robinson) would contact Mr Mattaboni and tell him to ignore the document until the AON renewal came up in July 2001. Mr Robinson said he would then combine the insurance over the Murray Street property and the Great Eastern Highway property (exhibit B, pars 143 - 146).

205 For the reasons given above, I do not accept this evidence. Further, it is inconsistent with Ms Ulerick's evidence, which I accept, that Mr Robinson telephoned her on 23 April 2001 and asked whether she had heard anything about obtaining the premium from Mr Badat. Ms Ulerick told him she had not; and that she would keep trying to contact him (exhibit J, par 73).

206 Ms Ulerick gave evidence also that she spoke to Mr Badat, apparently in May, and asked where the proposal forms and premiums were (exhibit J, par 76). I accept Ms Ulerick's unchallenged evidence that Mr Badat answered her enquiry by saying that he was sorting out a problem arising from the fact that Richard Ellis had paid for the AON policy and that he had two lots of insurance. Mr Badat told Ms Ulerick he intended to sort the matter out and then speak to her again.

207 In their closing submissions, counsel for the plaintiffs rely on Mr Badat's evidence that Ms Ulerick telephoned him towards the end of April, "enquiring about the EBM Policy over the (Murray Street) Property and the 60 Great Eastern Highway workers' compensation cover". Mr Badat said he told Ms Ulerick that the Murray Street property had been insured with AON by Richard Ellis who had paid the premium and that renewal was not required until July 2001 (exhibit B, par 148).

208 Counsel for the plaintiffs submit that this is entirely consistent with Ms Ulerick's evidence about her conversation with Mr Badat in May (submissions, par 154).

209 I accept that either Ms Ulerick or Mr Badat may have been mistaken about the date, and that they were both referring to the same conversation. I accept, therefore, that their evidence is substantially consistent. However, on the findings I have made, I consider that Mr Badat's answer to Ms Ulerick's enquiry was disingenuous because I am not persuaded that it could have been based on anything Mr Robinson had told him. It is improbable that Mr Robinson would have been pursuing payment from Mr Badat, through Ms Ulerick, on 23 April (as I have found that he did) while at the same time, telling Mr Badat to ignore the final reminder.

210 Further, if Mr Robinson had made the statements attributed to him by Mr Badat, I think it probable that as soon as Mr Badat discovered, after the fire, that the Murray Street property was uninsured, he would have made an immediate complaint to the effect that he had been misled by Mr Robinson.

211 In fact, the allegations about misrepresentations by Mr Robinson were not made until the plaintiffs filed their reply to the amended defence, on 15 April 2002 (exhibit 284). That was after the last occasion on which Mr Robinson met DTZ's solicitors for the purpose of reviewing the draft statement which had been prepared for him: 14 March 2002 (exhibit R, par 29). Mr Robinson did not, therefore, provide any instructions to the solicitors in response to the allegations that he had made misleading statements to Mr Badat. However, I am not troubled by the absence of evidence from Mr Robinson in relation to these matters. For the reasons set out above, I am not persuaded that I should accept Mr Badat's evidence.

Insurance arrangements for the Great Eastern Highway property

212 Although DTZ had been managing the Great Eastern Highway property since its purchase by the Trust in November 1999, DTZ had no responsibility for effecting insurance on that property. Insurance had been arranged by Richard Ellis through AON.

213 It was Mr Badat's evidence that the insurance policy on the Great Eastern Highway property expired in March or April 2001. As I have noted above, Mr Badat asked Ms Ulerick to arrange insurance on that property during the course of their meeting on 13 March 2001.

214 In Ms Ulerick's letter of 23 March 2001 (exhibit 34) she informed the plaintiffs that EBM had obtained alternative cover with CGU Insurance for a premium of $1,309.77 in respect of the Great Eastern Highway property. An invoice was sent by EBM to the plaintiffs at DTZ's address on 11 April 2001. The period of insurance referred to in the invoice was 12 January 2001 to 31 January 2002. This suggests that the insurance had lapsed much earlier than Mr Badat stated in his evidence. It is not clear whether Mr Badat received that invoice. However, on 17 April 2001, Ms Ulerick wrote direct to the plaintiffs at their home address enclosing an invoice and a proposal form for completion, in relation to the Great Eastern Highway property (exhibit 35). Mr Badat's evidence was that he received that letter (exhibit B, par 136).

215 I accept Ms Ulerick's evidence that also on 17 April 2001, she received a telephone call from Mr Badat who asked her to send all documents to his home address and to deal with him direct on all of his insurances (exhibit J, par 71).

216 As I have noted above, when Ms Ulerick spoke to Mr Badat, apparently in early May, she asked him about all the outstanding proposal forms. These included the proposal for the Great Eastern Highway property.

217 The invoice relating to that property not having been paid, Ms Ulerick wrote to Mr Badat on 16 May 2001 to inform him that EBM would be unable to extend credit terms past 25 May 2001. Ms Ulerick said that unless payment was made in full and the proposal form for the block of units (ie the Great Eastern Highway property) was received by that date, all cover would lapse "from inception" (exhibit 36).

218 The EBM invoice for insurance on the Great Eastern Highway property referred to a policy schedule which included workers' compensation insurance "as per Act".

219 According to Mr Badat, in a conversation he had with Ms Ulerick towards the end of April, he told her that workers' compensation insurance at the Great Eastern Highway property was not needed because the plaintiffs did not employ any workers. According to Mr Badat, he told Ms Ulerick that Mr Robinson would contact her in July to arrange a combined policy and sort out the insurance for the Great Eastern Highway property (exhibit B, par 148). I do not accept that evidence. I prefer the evidence of Ms Ulerick that despite her attempts to speak to Mr Badat from 17 April onwards, she was unable to contact him (except for the occasion in late April or early May to which I have referred above) until some three months later (exhibit J, pars 75 - 76).

220 On 22 May 2001, EBM issued cancellation notices in relation to the Zurich policy for the Murray Street property and the CGU policy for the Great Eastern Highway property. Mr Badat said he recalled receiving the notices at the time. However, he said they were not of concern to him because, based on his conversations with Mr Robinson, he was expecting both policies to be cancelled. Mr Badat said that the insurance for the Great Eastern Highway property was to be included in the comprehensive plan in July (exhibit B, par 153).

221 I accept that Mr Badat was expecting the cancellation notices. However, I find that was because he knew that the respective invoices had not been paid. I am unable to accept his evidence that he was expecting the insurance on the Great Eastern Highway property to be cancelled because of anything Mr Robinson had said to him. I am satisfied that Mr Robinson was not involved in Mr Badat's attempts to obtain insurance for that property.

222 At the end of May 2001, Mr Badat asked AON for a quote to insure both the Great Eastern Highway and the Murray Street properties.

223 On 1 June 2001, Ms Roberts-Henfrey of AON sent a facsimile to Mr Badat in which she set out the quotations (exhibit 41). Ms Roberts-Henfrey referred to the quotations as being required "to reinstate cover". That was the position: and I am satisfied that Mr Badat knew it to be so.

224 According to Mr Badat, his reason for seeking the quotations was that Mr Robinson had informed him that the AON policy for the Murray Street property was to expire in July 2001 and that the amount of cover under the new or reduced AON policy would be sufficient. However, that proposal was to insure the building for $1,800,000 whereas the quotation of 1 June 2001 referred to an amount of $1,500,000.

225 The quotation was not, therefore, as Mr Badat asserted in his evidence, to reinstate the reduced AON policy (exhibit B, pars 156 and 164).

226 On 14 June 2001, Ms Roberts-Henfrey sent Mr Badat a follow up facsimile to ask him whether he required "reinstatement of cover" for the Great Eastern Highway and Murray Street properties (exhibit 42).

227 It was Mr Badat's evidence that he forwarded a copy of Ms Roberts-Henfrey's facsimile of 1 June 2001 to Mr Mattaboni. He was unsure whether he had forwarded also a copy of the facsimile of 14 June 2001. I do not accept that evidence. I am satisfied that he did not produce the quotation to Mr Robinson and Mr Mattaboni until the day of the fire.

228 As I have noted above, the Murray Street property was destroyed by fire on 29 July 2001. The circumstances of the fire are not relevant: nor, generally speaking, are the actions of the parties subsequently. However, one subsequent matter (to which I shall now refer) is, I think, significant.

229 Following the fire there was a meeting at DTZ's offices between Mr Badat, Mr Volk and Mr Robinson. Mr Dumbrell was also present but played no part in the meeting.

230 It is Mr Badat's evidence that on his way to the meeting, he drove to the caretaker's office at the Great Eastern Highway property and collected two folders of documents, some of which related to the Murray Street property (exhibit B, par 170).

231 It is common ground that during the course of the meeting Mr Robinson attempted to telephone AON, for the purpose of enquiring about the state of the insurance on the Murray Street property. However, the day being Sunday, the AON offices were unattended.

232 According to Mr Badat, in an attempt to discover whether he had received a renewal notice for the insurance on the Murray Street property, Mr Robinson searched through the folders of documents Mr Badat had brought to the meeting. He said Mr Robinson found a copy of the AON facsimile of either 1 or 14 June 2001 which, he said, he had not seen previously. Mr Badat said he told Mr Robinson he had forwarded the quote to Mr Mattaboni.

233 Mr Volk's version of these events is that Mr Badat did not bring files with him to the meeting, but that he produced from his pocket a facsimile sheet on the shiny paper used in the obsolete thermal imaging facsimile machines. According to Mr Volk, Mr Badat placed the paper on the table in front of him and Mr Robinson and asked whether there was insurance cover over the Murray Street property. Mr Volk said he asked what was in the document. Mr Badat replied that he thought it was the AON insurance document but said he did not understand it and asked whether it needed to be paid.

234 Mr Volk said Mr Robinson looked at the sheet of paper and said it looked as though it did need to be paid. Mr Volk himself noticed that the document was a renewal notice and that the date by which the premium had to be paid had past.

235 It is not in dispute that during the meeting, Mr Badat wrote out a cheque in favour of AON in an amount of $8,098.05. That was the amount of the two premiums quoted by Ms Roberts-Henfrey in her facsimile of 1 June 2001.

236 The cheque (exhibit 44) was drawn on the Trust's account and was dated 26 July 2001. According to Mr Badat, it was Mr Robinson who instructed him to backdate the cheque. That is not a matter on which it is necessary to make a finding. On any view, the writing of the cheque and the subsequent posting that day was clearly an attempt to obtain insurance cover for the Murray Street property.

237 I prefer and accept the evidence of Mr Volk who appeared to me to have a clear recollection of Mr Badat producing only the AON quotation to the meeting.

238 In my view, it is significant that Mr Badat took that quotation to the meeting and that he also took the Trust's cheque book. It is consistent with my finding that Mr Badat knew as at the date of the fire, that the Murray Street property was uninsured and that his only hope of salvaging the situation was to make belated payment in respect of the only insurance then available, that offered by Ms Roberts-Henfrey on behalf of AON.

239 Counsel for the plaintiffs submit that an exchange between Mr Volk and Mr Robinson on the day after the fire is significant "because it is impossible to reconcile with [DTZ's] case" (closing submissions, par 158).

240 Mr Volk's evidence was that on the day in question, Mr Robinson appeared to be very surprised that there was no cover over the Murray Street property (exhibit M, par 74).

241 In the cross-examination of Mr Volk, he gave evidence, without objection, to give a context to that statement. It was that Mr Robinson gave that appearance after telephoning AON and being told the Murray Street property was uninsured.

242 I do not regard that as inconsistent with DTZ's case. That is because, on Mr Robinson's evidence, he was told by Mr Badat on the day of the fire, that he had "taken out a cover note" (exhibit R, RFE9, par 74).

243 Mr Robinson's surprise is therefore explicable on the basis of his discovery that Mr Badat had not made any such arrangement.

244 Against the background of these findings of fact, I turn to consider the various cases brought against DTZ by the plaintiffs, and DTZ's defences.

245 The plaintiffs' case in contract is based primarily on the management agreement made between them and DTZ on 20 November 2000. So far as relevant, the agreement provides, by cl 3:

"3.1 The Agent agrees to use due diligence and best endeavours on behalf of the Client in the exercise of the following duties, powers and authorities and the agent shall:-

3.1.1 Collect all rents including minimum, variable, special and percentage rentals and all amounts due in respect of electricity or other fuels supplied promptly as and when the same shall fall due and are payable and shall give valid receipts therefor;

3.1.2 Pay when due water rates, local authority rates and land tax and obtain reimbursement where appropriate from the lessees;

3.1.3 Negotiate rent reviews, new leases, extensions of leases, options of renewal, options to purchase, rights of first refusal, assignments of leases, surrender of leases, as and when same shall be appropriate pursuant to instructions given from time to time by the Client;

3.1.4 Effect all appropriate insurance cover for the improvements of the property and shall arrange for reimbursement and payment of premiums by lessees, where appropriate;

3.1.5 Negotiate leases for the occupation of any vacant space in the building in accordance with the instructions of the Client;

3.1.6 Terminate leases and tenancies with the consent of the Client and shall sign and serve in the name of the Client all such notices as may be appropriate;

3.1.7 Deposit promptly all monies collected in the course of management of the building or otherwise incidental thereto in a trust account and may if necessary endorse any cheques or negotiable instruments drawn in favour of the Client for deposit into such bank account;

3.1.8 Remit to the Client in such manner as may be agreed between them all monies held in the trust account and not required for the payment of disbursements in connection with the management of the building;

3.1.9 Advise the Client promptly in writing of the service upon the Agent of any Writ, Summons, Plaint, Subpoena or other legal document including any notices, letters or communications setting out or making claims upon the Client or the building;

3.1.10 Observe strictly any special conditions or instructions set forth in the Schedule;

3.1.11 Notify the Client promptly and in writing of any substantial or major items of expenditure required in connection with the management of the building and in this respect the Agent shall secure the prior approval of the Client to all expenditure in excess of the amount shown in item 6 of the Schedule in respect of any one item other than for monthly or recurring operating charges and/or emergency repairs required to protect the property from damage or to maintain the essential services."

In fact, item 6 of the schedule had been left blank.

246 The plaintiffs plead in par 13 of the further amended statement of claim that in breach of cl 3.1.4 of the management agreement, DTZ failed to "effect appropriate insurance cover" for the Murray Street property in that DTZ failed to effect any insurance cover for loss or destruction by fire or loss of rental income as at 29 July 2001.

247 There is an issue between the parties as to the extent of the obligation imposed on DTZ by cl 3.1.4. In par 8 of the further amended statement of claim, the plaintiffs plead that on its proper construction, cl 3.1.4, read together with cll 3.1.7 and 3.1.8, required DTZ to take out insurance cover for the term of the management agreement for the reinstatement cost of the building on the Murray Street property in respect of loss or destruction by fire and for the loss of rental income for a reasonable period until the improvements were rebuilt and re-let. The plaintiffs contend that these provisions imposed on DTZ an obligation either to pay the premiums itself or to make those payments from moneys held by DTZ on trust for the plaintiffs. The plaintiffs contend also that DTZ was obliged to arrange for the reimbursement from FILA of 58.5 per cent of the premiums payable in respect of the relevant insurance, pursuant to the FILA lease.

248 The plaintiffs called an expert witness, Derek J Cockle. Mr Cockle is an associate of the Australian Property Institute and a former member of the Royal Institution of Chartered Surveyors. At the time of giving his evidence, Mr Cockle had some 50 years' experience in the real estate and property development industry.

249 It was Mr Cockle's opinion that an exclusive managing agent might reasonably be expected to obtain insurance to include the replacement or repair of a building under management and any of the landlord's improvements. In addition, Mr Cockle's opinion was that such insurance should cover the landlord's loss of profit from the date of destruction or damage until the relevant property is re-leased and rental is again paid. This loss would include all fees and expenses incurred in lodging and negotiating an insurance claim and re-leasing (exhibit E).

250 Mr Cockle's evidence was not challenged: and the plaintiffs say in their closing submissions that there is no issue as to these matters. However, the allegations contained in par 8 of the further amended statement of claim are denied in the defence. That is not because DTZ disputes Mr Cockle's opinion, but because it contends that the management agreement precluded it from paying the premium out of rent, without Mr Badat's prior approval.

251 This contention is based on cl 3.1.11 of the management agreement, which I have set out above. This provision required DTZ to notify the plaintiffs promptly and in writing of any substantial or major items of expenditure "required in connection with the management of the building". In my view, an insurance premium does not fall within this description: I do not think that the existence or otherwise of insurance has anything to do with the management of the building. Put another way, the manner in which a building is managed by an agent on behalf of the owner will be no different, whether or not the building is insured against loss by fire.

252 Clause 3.1.11 goes on to provide that "in this respect" the agent shall secure the prior approval of the client to all expenditure in excess of the amount shown in item 6 of the schedule. That approval is required in respect of any one item other than for monthly or recurring "operating charges and/or emergency repairs".

253 In my view, an insurance premium is not an operating charge: its payment is not required for the operation of the building. The client's approval of expenditure is therefore required only in respect of proposed expenditure "in connection with the management of the building". Thus, the approval is not required in relation to the payment of an insurance premium. The fact that item 6 of the schedule to the management agreement had been left blank is therefore of no significance in the circumstances.

254 The construction of cl 3.1.11 advanced by DTZ does not, I think, sit comfortably with the obligation imposed on it by cl 3.1.4: this required DTZ to use due diligence and best endeavours to effect all appropriate insurance cover. That must include an obligation to make the appropriate payment necessary to obtain insurance. And that obligation would be inconsistent with a requirement first to seek the client's approval.

255 I therefore accept the plaintiffs' submissions about the true construction of cl 3.1.4 of the management agreement. That being so, it is necessary to consider DTZ's various defences to the plaintiffs' claim.

256 In par 3.7 of its further re-amended defence, DTZ contends that after the management agreement was signed, it was varied "orally and by conduct" so that DTZ paid and was obliged to pay to the plaintiffs all moneys collected in the course of the management of the Murray Street property, without deductions. In the particulars of that allegation, DTZ contends that Mr Badat orally requested DTZ to remit by direct debit all rental money immediately DTZ received it. It is then alleged that "almost every month" Mr Badat orally enquired about the whereabouts of the rental money and requested prompt payment. DTZ contends that in accordance with that request all rental moneys were paid to Mr Badat.

257 It is trite law that the variation of a contract itself involves a contract which must be identified clearly, although it may have been made informally: see Cheshire and Fifoot, The Law of Contract, 8th Australian ed par [22.4].

258 In my view, the particulars of the alleged variation do not satisfy the contractual criteria. The particulars do not go so far as to allege that in consideration of DTZ agreeing to remit all rental income to the Trust, DTZ would be relieved of its obligation to effect insurance on the Murray Street property.

259 Further, and in any event, the evidence does not support the contention that the management agreement was varied. Mr Mattaboni's evidence (exhibit G, par 77) was that the payment of rent was "a recurring issue". He said that almost every month, Mr Badat telephoned, asked where was the rent and whether a cheque was ready for him. Mr Robinson's evidence was very similar. It was to the effect that within the first fortnight of almost every month, Mr Badat would telephone him and ask where the rent was. As soon as FILA paid the rent, Mr Robinson would have a cheque prepared and sent to Mr Badat. Only the management fee would be deducted (this was authorised by cl 6.2 of the management agreement).

260 I accept the evidence of Mr Mattaboni and Mr Robinson that Mr Badat was always concerned to be paid promptly. Indeed, Mr Badat's evidence in relation to the Richard Ellis monthly reports was that the most important thing to him was the cheque he received (TS 94). However, Mr Badat's concern to ensure prompt payment of moneys due from FILA cannot be elevated to a variation of the management agreement. In my view, for this defence to succeed, it would be necessary for DTZ to prove not only that it agreed to pay all rental income to Mr Badat, but also, that he agreed that DTZ need not pay for insurance out of those moneys. That was never put to Mr Badat: and I do not think it can be inferred from the evidence. This limb of the defence is not, therefore, made out.

DTZ's defence based on Mr Badat's assumption of sole responsibility for insurance

261 In par 3.7.3 of its further re-amended defence, DTZ contends that by reason of the matters pleaded in par 4, cl 3.1.4 of the management agreement was varied or waived so that the plaintiffs assumed sole responsibility for effecting insurance cover for the Murray Street property and accordingly released DTZ from its obligations pursuant to cl 3.1.4. It is alleged further that the plaintiffs engaged their own insurance brokers directly to obtain the relevant insurance cover. As the particulars of that allegation disclose, that is a reference to Mr Badat's appointment of EBM to be the plaintiffs' insurance brokers on 17 April 2001.

262 In par 4 of the defence, DTZ pleads, in essence, that:

• On 28 November 2000, Mr Badat informed Mr Mattaboni that the Murray Street property was uninsured and requested him to obtain quotes for his approval;

• Mr Mattaboni obtained estimates from EBM for insurance of the Murray Street property on or about 19 December 2000;

• The estimates were approved orally by Mr Badat on or about 11 January 2001;

• On or about 11 or 19 January, DTZ instructed EBM to obtain an interim policy of insurance with Zurich;

• On or about 25 January, EBM sent an invoice in the sum of $3,958.62 for the Zurich policy to DTZ, which in turn, sent the invoice to the plaintiffs for payment;

• The plaintiffs failed to pay the premium for the Zurich policy or to complete the proposal form;

• By letter dated 8 March, DTZ sent Mr Badat a further invoice from EBM and a further proposal form for completion and return;

• On or about 13 March, Mr Badat completed and executed an insurance proposal form in the presence of Ms Ulerick;

• On or about 9 April, EBM sent DTZ a final reminder notice requesting payment of the premium for the Zurich policy and DTZ forwarded that notice to the plaintiffs by facsimile on 10 April;

• On 17 April, Mr Badat orally appointed Ms Ulerick of EBM to act as the plaintiffs' insurance broker in respect of all their domestic and commercial properties and requested EBM thereafter to send all documentation in relation to such insurance to the plaintiffs at their home address, and requested EBM to deal direct with Mr Badat in relation to those matters;

• The plaintiffs did not pay the premium for the Zurich policy which, on or about 22 May 2001 was cancelled.

263 For the reasons set out above, these allegations are substantially true, although the assertion that Mr Badat approved the estimates obtained by Mr Mattaboni from EBM is somewhat overstated. However, at their highest, these allegations do not support any finding of a variation. There is no suggestion of any agreement by Mr Badat that in dealing with EBM he would relieve DTZ of its obligations. I do not think that the appointment of EBM as the Trust's broker could be said to have had that effect. In any event, there is no evidence that DTZ knew of the appointment. This defence therefore fails.

264 In their closing submissions, counsel for the plaintiffs said:

"It is not at all clear in what sense the term 'waiver' is employed by the defendant in this case.

There is no pleaded case of waiver in the sense of estoppel. There is no allegation of any representation to the defendant by Mr Badat, nor of any detrimental reliance by the defendant on the plaintiffs' alleged assumption of responsibility or engagement of EBM. Indeed, it is not even pleaded (that) the defendant knew of those matters. The allegations of fact relied on cannot support a case of estoppel.

The plaintiffs have not come to meet, nor sought to answer, any unpleaded case of estoppel."

265 I agree, for the reasons advanced by counsel, that it is not open to DTZ to rely on any estoppel-based waiver.

266 However, as the High Court said in Commonwealth of Australia v Verwayen (1990) 170 CLR 394 and as the majority affirmed in Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1 at [28]:

"It has been observed that 'waiver' is a vague term, used in many senses, and that it often requires further definition according to the context."

The context of that case was waiver of legal professional privilege. At [29], the majority said:

"What brings about the waiver is the inconsistency which the courts, where necessary informed by considerations of fairness, perceive between the conduct of the client and maintenance of the confidentiality; not some overriding principle of fairness operating at large."

The majority referred to Verwayen's case (supra) at 406, 422, 467 and 472.

267 In the first of those references, Mason CJ said:

"According to its strict legal connotation, waiver is an intentional act done with knowledge whereby a person abandons a right by acting in a manner inconsistent with that right .... However, the better view is that, apart from estoppel and new agreement, abandonment of a right occurs only where the person waiving the right is entitled to alternative rights inconsistent with one another, such as the right to insist on performance of a contract and the right to rescind for essential breach ... This category of waiver is an example of the doctrine of election."

268 Brennan J at 422 noted that it was necessary to identify the sense in which the term "waiver" was used, in order to identify the relevant legal doctrine. His Honour went on to refer to the observation of Lord Hailsham in Banning v Wright [1972] 1 WLR 972 at 979 that:

"... the primary meaning of the word 'waiver' in legal parlance is the abandonment of a right in such a way that the other party is entitled to plead the abandonment by way of confession and avoidance if the right is thereafter asserted."

"... upon waiver, the party waiving the right ceases to be able thereafter to assert it effectively. When a right has been waived in the sense defined by Lord Hailsham ... it is unnecessary to consider whether any other party has acted in reliance on the release or abandonment: the right is abandoned once and for all."

269 The point that the opposing party was not required to have acted upon the basis that the relevant right had been waived was made by Deane J in his judgment at 449. In this context, Deane J observed that the principal examples of cases in this area "are cases of true election".

270 Dawson J referred to the judgment of Lord Diplock in Kammins Ballrooms Co Ltd v Zenith Investments (Torquay) Ltd [1971] AC 850 at 883 where his Lordship distinguished waiver amounting to an election from waiver amounting to an estoppel. The former, Lord Diplock said, occurs:

"where a person is entitled to alternative rights inconsistent with one another and acts in a manner which is consistent only with his having chosen to rely on one of them." (at 452).

"Waiver, in the sense used for the purposes of this appeal, may be found in the deliberate act of a defendant not to rely upon a defence available to him. That is not to say that there must be an intention to bring about the consequences of waiver; rather, the conduct from which waiver may be inferred, must be deliberate. Detriment is not an essential attribute of waiver, though it will often be found as a consequence. Within the adjudicative process at any rate, it is enough that the defendant 'renounces' a defence which is available to him and which is there for his benefit."

272 Gaudron J at 481 referred to the judgment of Isaacs J in Craine v Colonial Mutual Fire Insurance Co Ltd [1920] HCA 64; (1920) 28 CLR 305 at 326 where his Honour referred to waiver as "a doctrine of some arbitrariness introduced by the law to prevent a [person] in certain circumstances from taking up two inconsistent positions". That expression, Gaudron J observed, is wider than the expression "asserting two inconsistent rights". However:

"It is the assertion of inconsistent rights that is generally understood to be at the heart of what is called 'election'."

273 At 485, her Honour said she would continue to use the word "waiver":

"... to signify deliberate action or inaction which has resulted in a changed relationship to which the parties will be held whether or not detriment is actually established."

274 The issue in Verwayen (supra) was whether the Commonwealth could plead a limitation defence in an action brought against it by former naval personnel, having previously stated that its policy was not to rely on the limitation defence. The situation was therefore quite different from the present case. However, I consider that the principles to be extracted from Verwayen are applicable here.

275 The plaintiffs clearly had a contractual right to require DTZ to effect appropriate insurance on the Murray Street property. The question arises, whether Mr Badat acted so inconsistently with that right - and did so intentionally - as to make it unfair to DTZ, and hence, unjust, for him now to assert an inconsistent position. The findings of fact I have made do not accord precisely with the allegations pleaded in par 4 of DTZ's defence, as set out above. However, there is a common theme: that knowing the Murray Street property was uninsured, Mr Badat decided not to pay for insurance.

276 As I have found, Mr Badat chose not to pay the premium of $10,045.97 as initially proposed by AON. He sought a cheaper option through Ms Watkins who obtained a reduced premium from AON, in the sum of $5,587.27. Mr Badat regarded this amount as still too expensive: he told Mr Mattaboni that he was expecting to pay some $1500 - $2000. He therefore turned to DTZ to obtain a further quotation. He sought to reduce the cost by limiting cover to $1,000,000 and not insuring for loss of rent.

277 DTZ obtained "verbal estimates" from EBM for amounts totalling a little over $4000. This was still higher than Mr Badat's expectation.

278 Mr Badat then procrastinated. Although he gave the impression that he was willing to proceed, and completed the proposal form with Ms Ulerick at their meeting on 13 March 2001, he did not thereafter pay the premium. He quietly maintained his position, despite various efforts made by Ms Ulerick and Mr Mattaboni to obtain payment. Indeed, as I have found, in late April or May 2001, Mr Badat deflected Ms Ulerick's enquiry with an explanation which, on my findings, was disingenuous.

279 Mr Badat must have known that the failure to pay the relevant premium would lead inevitably to cancellation of the temporary cover, as it had in the past. In other words, Mr Badat elected not to pay the premium: he elected to take the risk arising from the fact that the Murray Street property was uninsured. And he elected to deal personally with insurance matters relating to all relevant properties. He thereby adopted a position inconsistent with his later assertion that he had expected DTZ to insure the property.

280 It was put to Mr Badat in cross-examination that he obtained quotes from AON in June 2001 because he knew that the property was uninsured. In answer, Mr Badat said:

"... there was no way I would have Murray Street uninsured. It was a commercial property in the city centre, that's worth $3 million or more, giving me an income." (TS 174)

281 I do not accept that evidence. Not only did Mr Badat elect to leave the Murray Street property uninsured, he adopted the same position in relation to the Great Eastern Highway property. I accept that he may have been contemplating some combined insurance cover. Indeed, there is a suggestion to that effect in the note made by DTZ's solicitor at the meeting with Mr Robinson and Mr Mattaboni on 13 February 2002 (exhibit R, RFE4). However, pending any such arrangements being made Mr Badat took the risk.

282 As I have noted above, it is significant, in my view, that there were no recriminations on the day of the fire. There was no suggestion from Mr Badat at his meeting with Mr Volk and Mr Robinson at the DTZ's offices, that he assumed DTZ had effected appropriate insurance. The assertion that DTZ ought to have insured the Murray Street property was made later, after Mr Badat had consulted lawyers. They presumably advised him as to the construction of the management agreement, but without being aware of the surrounding circumstances as I have found them to be.

283 Mr Badat's conduct in bringing to DTZ's offices on the day of the fire, the AON quotes for "reinstatement" of the insurance for the Murray Street property which he had himself obtained, and the Trust's cheque book is consistent with his election. Knowing the Murray Street property was uninsured, Mr Badat hoped to salvage the situation by making a late payment of the premium.

284 In these circumstances, it is, I think, unnecessary to consider whether DTZ acted in reliance on Mr Badat's conduct or acted to its detriment in failing to effect appropriate insurance. Applying the law as I find it in Verwayen (supra), I am satisfied that Mr Badat's conduct amounted to a waiver, on behalf of the Trust, of its right to have the insurance effected by DTZ. This, in my view, is a complete answer to the plaintiffs' claim.

285 The plaintiffs allege in par 14 of the further amended statement of claim that DTZ owed them "a duty of care in tort to exercise appropriate skill, care and diligence in the performance of their agency". The plaintiffs rely on the fact that DTZ did not effect appropriate insurance as the basis for the claim in tort.

286 DTZ denies the allegation in its defence. However, that position was not maintained: the existence of the duty to exercise reasonable care, skill and diligence was accepted by DTZ's counsel in his closing submissions. It was submitted, correctly in my view, that the duty existed concurrently with DTZ's contractual obligations: Astley v Austrust Ltd (1999) 197 CLR 1 at 21 - 22.

287 Given my conclusion that Mr Badat waived the plaintiffs' contractual right to have DTZ effect insurance on the Murray Street property, there can be no substance to the claim in negligence.

288 Despite that conclusion, there is one matter which has troubled me and which does, I think, need to be mentioned. It is the fact that when Ms Ulerick sent DTZ the completed proposal form prepared on 13 March 2001 and signed by Mr Badat, DTZ did not forward it to him as Ms Ulerick had requested. As I have noted above, it seems that the proposal was simply filed by DTZ.

289 In my view, DTZ's failure to send the proposal to Mr Badat demonstrates a lack of care and diligence in the performance of its duties. However, I am satisfied that DTZ's conduct did not cause the plaintiffs any loss. There is no evidence that Ms Ulerick had told Mr Badat she would send him the completed proposal: nor is there evidence that Mr Badat was expecting to receive it. In my view, Mr Badat's position would have been the same whether or not he received the proposal.

290 In any event, if DTZ was negligent, I consider that Mr Badat was contributorily negligent to such an extent as to reduce DTZ's liability to nil.

The plaintiffs' claim based on misleading and deceptive conduct

291 The plaintiffs claim that five representations were made to them on behalf of DTZ which constituted misleading and deceptive conduct within the meaning of s 52 of the Trade Practices Act 1974 (Cth).

292 The representations, which are pleaded in par 18 of the further amended statement of claim, may be summarised as follows:

1. In about September 2000, Mr Robinson undertook to investigate and ascertain the status of the insurance taken out in respect of the Murray Street property;

2. On or about 29 November 2000, Mr Robinson undertook to attempt to reinstate the AON policy which had been cancelled in December 2000 and to instruct a quantity surveyor to estimate the replacement cost of the building on the Murray Street property;

3. Shortly after 13 March 2001, Mr Robinson told Mr Badat that he was still trying to sort out the matter of the insurance with AON and that he would try to obtain a refund of the difference between the premium of $10,045.97 paid in respect of the original policy and the premium of $5,587.27 in respect of the subsequent policy and to apply that refund to the payment of the policy arranged by EBM;

4. On or about 29 March 2001, Mr Robinson told Mr Badat he had reviewed the insurances held by FILA and the plaintiffs with respect to the Murray Street property and the improvements thereon which were the subject of adequate insurance under the policies obtained by Richard Ellis: that the policies were valid until July 2001 and that AON was unwilling to refund part of the premium for the then current year by reason of an adjustment in the cover and that there was no need to review the matter until July 2001;

5. In about April 2001, on receipt of the final reminder in respect of the policy arranged through EBM, Mr Badat telephoned Mr Robinson and was advised to disregard the final reminder on the basis that although Mr Robinson had been unable to obtain a refund from AON, he had organised for the original AON policy to be reinstated.

293 For the reasons given above, I accept that the first representation was made albeit before the plaintiffs entered into the agreement with DTZ. There is no reason to suppose that the representation was false when made. I also accept that at some early stage Mr Robinson spoke of appointing a quantity surveyor to assess the value of the Murray Street property. However, this became unnecessary after Mr Badat instructed DTZ that he required cover only to the extent of $1,000,000.

294 Having regard to my findings set out above, I do not accept that any of the other representations were made. It follows that there is no substance to the plaintiffs' claim that DTZ engaged in misleading or deceptive conduct.

295 For the reasons given above, I conclude that the plaintiffs have not proved their case and that the action should therefore be dismissed. However, in case I am wrong and the matter should go further, I propose to consider the question of damages.

296 The plaintiffs claim loss of rental income from FILA from 1 August 2001 to 1 August 2004, a total sum of $466,614. This is based on the initial rent of $136,700 payable by FILA from 1 September 1999 and the agreed annual increases of 4.5 per cent per annum.

297 If the plaintiffs are correct in their contention that DTZ was under a contractual obligation to effect "appropriate insurance" for the Murray Street property, then I accept that the amount claimed would be the measure of the loss in relation to that part of the Murray Street property which was let to FILA.

298 The plaintiffs claim also, loss of rental income from the basement of the Murray Street property, despite the fact that it was vacant at the time of the fire. As I have noted above, the basement had been let to Rowe & Jarman Pty Ltd at a gross rent (inclusive of outgoings) of $32,000 per annum. However, the basement had been vacant since February 2000.

299 The plaintiffs called evidence from Kym William Thomason, the director of leasing for Lease Equity Pty Ltd. Mr Thomason had prepared an expert report setting out rental income estimates for the Murray Street property. He produced his report on the basis of his many years of experience in letting commercial property, including property in the central business district of Perth.

300 Mr Thomason expressed the opinion that the basement would be let at a rent of $45,000 per annum (inclusive of outgoings) and that the rent would be increased by 4 per cent per annum.

301 Although Mr Thomason said he based his opinion on comparable evidence, his report did not refer to any specific comparables. This led counsel for DTZ to object to the admission of Mr Thomason's evidence, although his qualifications were not challenged. Alternatively, counsel submitted, if the evidence was to be received, no weight should be attached to it.

302 I admitted Mr Thomason's evidence over that objection. However, I accept counsel's submission that it should be given no weight. In Hillstead v The Queen [2005] WASCA 116, the Court of Appeal followed Pollock v Wellington (1996) 15 WAR 1 at 3 - 4 and Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305; (2001) 52 NSWLR 705 at [81] in holding that:

"Unless the process of inference by which an opinion is reached is expressed in a manner which permits the conclusions to be scrutinised and a judgment made as to its reliability, the opinion can carry no weight ... In short, it is a primary duty imposed on experts in giving opinion evidence to furnish the trier of fact with the criteria to enable the evaluation of the expert conclusion ..."

303 In the present case, the absence of evidence as to the actual comparables upon which Mr Thomason reached his opinion makes it impossible to evaluate the reliability of his conclusions. It is for that reason I place no weight on Mr Thomason's evidence.

304 Further, I note Mr Dumbrell's evidence that he had been attempting to let the basement at a rent of $45,000 per annum (exhibit F, par 3). He was obviously unsuccessful in this endeavour.

305 In my view, all that can be said in relation to the basement, is that, until February 2000, it was let at $32,000 per annum. Presumably, its rental value thereafter was of that order. However, it would be impermissible for me to speculate so as to fill this gap in the evidence.

306 The plaintiffs' claim for damages is, of course, based on the proposition that DTZ should have insured the Murray Street property to the full extent of its rental value. In my view, however, this claim could not have succeeded in any event. If Mr Badat had not waived his right to have DTZ effect insurance, DTZ could only have been liable for failing to effect the insurance he actually required. On Ms Ulerick's evidence (which I accept) as reflected in the proposal form signed by Mr Badat on 13 March 2001, he did not require insurance cover for loss of rental income.

307 The same point arises in relation to the plaintiffs' claim for damages to compensate the Trust for the cost of rebuilding the Murray Street property. On the view I take, DTZ could be liable for no more than $1,000,000 under this head. That was the extent of insurance cover required by Mr Badat.

308 In fact, the plaintiffs claim damages in the sum of $2,498,000, being the agreed cost of rebuilding the Murray Street property as at 31 October 2005.

309 The agreed cost of rebuilding as at 30 June 2001 is $1,676,000. That is the date on which DTZ contends that damages should be assessed. The plaintiffs claim the higher figure as at 31 October 2005 on the basis that the Trust was impecunious as at the date of the fire and could not have afforded to rebuild until it recovered the damages claimed in this action.

310 One of the issues in the trial has been whether the plaintiffs ought reasonably to have mitigated their loss by taking steps to finance the rebuilding of the Murray Street property sooner rather than later.

311 A number of factors arise for consideration in relation to mitigation. First, Mr Badat said in his evidence that soon after the fire he was advised that the cost of rebuilding the Murray Street property would be some $2,000,000. However, he did not obtain a written estimate until May 2002, when Broad Construction Services Pty Ltd submitted a written estimate in an amount of $2,372,199 (exhibit 58). Mr Badat said he did not believe the Trust could afford to borrow moneys to rebuild (exhibit B, par 222).

312 Given that assertion, it is surprising that in about November 2002, Mr Badat applied to the Commonwealth Bank for a loan in excess of $4,000,000 to redevelop the Murray Street property (see exhibit S42).

313 Mr Badat made the application to the Commonwealth Bank in the name of Midking Pty Ltd. That company owned a property in Cowan Street, Midvale which was part of the site occupied formerly by the Kewdale High School. Mr Badat said that the property had been purchased from the Department of Education for the Islamic Community with funds donated by his family. Part of the property, comprising 7500 square metres, was surplus to the present requirements of the Islamic Community and was vested in Midking of which Mr Badat is "the director" (TS 89) and the sole shareholder (TS 115). The consideration for that transfer was $475,000.

314 Mr Badat said that the intention was to use the land for the future development of the Islamic Community in that area (TS 90). However, he explained in cross-examination that he was proposing to use the property vested in Midking as security to enable him ("I, Mahomed") to borrow money so that the Trust could rebuild the Murray Street property (TS 185).

315 Following the fire, Mr Badat purchased, either on behalf of the Trust or in his own name or on behalf of family members, properties in Star Street, Carlisle, Barrack Street, Perth and in Rockingham, which must have had a value in excess of $1,000,000. In addition, Mr Badat had at his disposal the property in Cowan Street, Kewdale referred to above. Mr Badat had borrowed $600,000 for the purpose of purchasing property. He also borrowed $300,000 for the purpose of developing the property in Star Street, Carlisle. The Trust, of course, owned the site of the Murray Street property which was unencumbered. There is no evidence as to its value.

316 It therefore appears that in some capacity or other, Mr Badat had substantial borrowing power which could have been mobilised to enable the Trust to rebuild the Murray Street property. This, I think, casts substantial doubt on Mr Badat's assertion that the Trust could not afford to rebuild because it was impecunious.

317 Further, I have serious reservations about the accuracy of the financial statements prepared for the Trust for income tax purposes. The statements were prepared by the Trust's accountant George Fiorentino, to whom I have referred above. Mr Fiorentino, who gave evidence at the trial, has practised as a public accountant for some 18 years. He is a member of the National Institute of Accountants and a member of the National Tax and Accountants Association. He has a diploma in accounting. He is a qualified tax agent, having been registered as such for at least 17 years. I have no reason to doubt Mr Fiorentino's integrity or professionalism.

318 It is plain that in preparing the accounts for the Trust, as he did each year on Mr Badat's instructions, Mr Fiorentino relied on the information provided to him by Mr Badat. That information included the interest rate payable on the moneys said to have been borrowed from Mr Badat's mother in South Africa (TS 230). Mr Fiorentino calculated the amount of interest which was then included in the relevant financial statements as an expense of the Trust.

319 The amount of the interest was substantial. For the year ended 30 June 1999, the amount was $396,600. In the following year the amount was $308,999. No payments of interest have ever been made.

320 There is no documentary evidence of the loan agreement said to have been made between Mr Badat and his mother. There is no documentary evidence that Mrs Badat is now deceased: and there is no documentary evidence as to the disposition of her estate. As Mr Fiorentino pointed out, the amounts of overseas interest (although not paid) could only be brought to account as an expense if there was an intention to pay. Mr Fiorentino said he had discussed with Mr Badat on more than one occasion the fact that the expense could not accrue indefinitely (TS 237). Further, Mr Fiorentino pointed out that if the debt was forgiven, the accrued interest and the loan itself would be regarded as a capital gain and taxed on that basis.

321 In these circumstances, the absence of any documentation relating to the loan makes it impossible to determine the accuracy of Mr Badat's assertions as to the financial position of the Trust.

322 It is well settled that a defendant who has caused the plaintiff's loss bears the onus of proving that the plaintiff has failed to take reasonable steps in mitigation. However, I do not think it appropriate to require the defendant to discharge that onus until the plaintiff has made a full and frank disclosure of its financial position. In the present case, for the reasons set out above, I am not satisfied that the plaintiffs have done so.

323 In these circumstances, even putting the plaintiffs' case at its highest, I would not have been persuaded to award damages representing the cost of rebuilding the Murray Street property at anything greater than the 30 June 2001 cost, being $1,676,000.