Balls & Tackles Pty Limited v International Management Group of America Pty Ltd

District Court of NSW|2019-04-18|Before: Judge J

i. The issues

The plaintiff (Balls & Tackles) carried on business as a manufacturer of men's underwear under licence. The defendant (IMG) acts as agent for the owners of intellectual property rights in certain brands. In 2015 one of those owners held the rights in respect of the Playboy brand. In December 2015 the plaintiff entered into a licence agreement with the owner of that brand which entitled it for a period of five years to manufacture and sell men's underwear carrying the Playboy logo. It was required to pay a royalty on the sale of that underwear of at least $125,000 over the five year period of the licence.
The plaintiff claims that it entered into that licence agreement because it was misled by an employee of the defendant, Elie Mansour, into believing that he would obtain contracts for the sale of the Playboy underwear to certain major retailers (Buyers Representations). The plaintiff also claims that Mr Mansour later misled it into believing that he had in fact obtained such contracts (BNT Representations and T Representations [1] ). It claims that, on the basis of those beliefs, it became liable to make the royalty payments and expended money designing, ordering and storing the underwear.
The defendant denies that it was responsible for any of Mr Mansour's representations because they were made outside the scope of his authority. It also denies that the representations, as pleaded, were made and that if they were, no loss was suffered as a consequence of them.
During the course of the proceedings the defendant became aware that Mr Mansour had received a number of payments from the plaintiff directly to his personal bank account. The defendant claims that these payments were secret commissions and bribes and were made in performance of an agreement between the plaintiff and Mr Mansour. It claims that the plaintiff induced Mr Mansour to breach his contract, engage in a fraudulent scheme or engage in unconscionable conduct.
Many of the factual issues in the proceedings turn on the difference in the evidence of three of the witnesses in the proceedings: Mr Mansour, who gave evidence under subpoena; Peter Nielsen, the director of Balls & Tackles; and Amanda Brandl, who worked for Balls & Tackles throughout the relevant period. In light of that, it is necessary to say something at the outset about the credibility of each of those witnesses. There was one other witness who gave oral evidence, Matthew Primack, the senior vice president of IMG Licensing Worldwide based in London. Although there was an issue about the basis for some of the opinion evidence given by him, there was no issue about his general credibility and I agree that his evidence ought generally to be accepted.

a. Elie Mansour

There is every reason to disbelieve Mr Mansour. He was a salesman who, according to his boss at IMG, Mr Primack, was prone to exaggeration and making promises he could not deliver on. On his own evidence he lied to and cheated his employer; he lied to his clients and extracted money from Mr Nielsen on the basis of his lies. He fabricated emails from fictitious buyers and purchase orders in order to prolong his scheme of deception. Only weeks before the hearing Mr Mansour met with IMG's lawyers and gave them a version of events that was largely inconsistent with the evidence he gave under oath in Court. Even when giving evidence in Court he exaggerated. He was asked about the names he had used in his scheme, including Kent Ewers. Although the source of that name was an apparently inconsequential matter, he said, quite implausibly, that he knew many Kent Ewers but he could not back that up when given a chance to do so. He protested under cross-examination that he was telling the truth 200%.
However, in spite of all of those matters, I accept much of his evidence as truthful. As far as demeanour is helpful in determining the credit of witnesses [2] , the way in which Mr Mansour gave evidence revealed that, for the most part, he was attempting to give an honest recollection of events.
The plaintiff suggested in argument that Mr Mansour sought to tailor his evidence to undermine the plaintiff's case. I reject that submission. Mr Mansour was not a party to the proceedings, was no longer employed by, or in any way connected to IMG and had little to gain from his evidence. He frankly admitted that he had only recently misled IMG's lawyers and that he had lied and cheated for financial gain. Although he explained that he was undiagnosed with a psychiatric disorder in early 2016 and that he had been undergoing the stress of a family breakdown, he did not do so by way of excuse for his conduct. Further, he was in fact an unwilling witness. He only came to Court under the compulsion of a subpoena service of which he had actively attempted to avoid.
Critically, his version of events was consistent in important respects with contemporaneous documents. That was particularly so in respect of one critical matter that will be explored in more detail later in these reasons: the reasons for the payments made to him by the plaintiff. For those reasons, while Mr Mansour's evidence must be treated with some caution, I cannot and do not reject any critical aspect of his evidence without further analysing it in the context of established facts and contemporaneous records.

b. Stephen Nielsen

The defendant attacked Mr Nielsen's credit on a number of bases. The first was that he provided deliberately false information to IMG for the purposes of encouraging Playboy to grant Balls & Tackles a licence. Under cross-examination he accepted that previous sales had been fabricated [3] , that forecasts of sales had no proper basis [4] or were made up [5] , that net profit had been made up [6] and that statements that certain retailers were top 10 customers of Balls & Tackles were lies [7] . In spite of those admissions, Mr Nielsen said that he did not think that this was dishonest [8] and explained that he just did what he needed to do to make it work [9] .
In its submissions Balls & Tackles defended Mr Nielsen on the basis that both Mr Mansour and Mr Primack had recommended that changes be made to the business plan prepared by Balls & Tackles even though they did not have any understanding, for example, of what growth Balls & Tackles could reasonably expect [10] . That submission is difficult to accept, particularly in a case in which Balls & Tackles is alleging misleading and deceptive conduct.
Regardless of the conduct of Mr Mansour and Mr Primack (whose honesty was not impugned) Mr Nielsen's own evidence was that, because Balls & Tackles' previous attempt to sell branded underwear had failed he was willing to do what he "needed to do to make it work" [11] . Here, that was to lie and cheat in order to get the opportunity to use the Playboy brand. The fact that he did so was bad enough. The fact that he says, quite implausibly, that he did not know that it was wrong and that he seeks to excuse his conduct by the conduct of others significantly undermines his credibility as a witness.
The second ground of attack on Mr Nielsen was the failure to give any explanation for the cash payment made by Balls & Tackles to Mr Mansour. The background to this argument includes the fact that no reference was made to the payments in Mr Nielsen's affidavit in chief and, even after the payments were discovered by the defendant and brought to light in pleadings, they were not addressed in any evidence in chief by Mr Nielsen. Indeed Mr Mansour gave evidence before Mr Nielsen so that he would have a chance to consider and respond to what Mr Mansour said in his evidence. I do not consider that this impacts negatively on Mr Nielsen's credit. The evidence given by him by way of an affidavit was no doubt carefully prepared with the assistance of Balls & Tackles' lawyers. Decisions as to what was and was not included are more likely in those circumstances to reflect forensic decisions than any level of dishonesty. That said, Mr Nielsen was best placed to explain the nature and purpose of the payments to Mr Mansour and his failure to give any explanation makes it easier to accept Mr Mansour's evidence and to draw inferences from the surrounding circumstances including the text messages that passed between Mr Nielsen and Mr Mansour at or about the time of some of the payments.
The third significant attack on Mr Nielsen's credit was that he shifted his position when it occurred to him that his evidence had been unfavourable to Balls & Tackles' case. The defendant relied on two examples, but there were more. The first was that having accepted that a retailer was one that promoted itself to families, Mr Nielsen immediately said that he did not shop there and knew that they sold "like clothes and stuff" [12] before shifting to say that he did know a bit about the retailer and that "they would sell to families" [13] .
The second is that, when questioned about a particular email [14] , he first said that he understood that there was an order in place at that time [15] but he then said that there was an order and that he only looked at the figures in the email [16] . These were not peripheral matters. The likelihood of a family oriented retailer stocking Playboy branded underwear and the existence of an order were central to the plaintiff's case. I accept that these instances reveal a willingness in Mr Nielsen to mould his evidence to suit the plaintiff's case. Another important example of this was that after he had frankly stated that he had done what was necessary to get the Playboy licence [17] , he sought to clarify his answer by saying: "Well not to do but just, you know, follow some sort of guideline to make it happen." [18] That evidence makes no sense in the context other than as an attempt to mollify the impact of the fabricated information he sent to Playboy in order to obtain the licence.
At this point it is worth mentioning that Balls & Tackles submitted that, in fact, Mr Nielsen made concessions where "it did not reflect well on him, or might be considered to be harmful to Balls & Tackles' case". It is true, as submitted, that there were instances of this. Mr Nielsen accepted, for example, that he should have been more cautious in the conduct of Balls & Tackles' business [19] . However, that answer was coloured by hindsight [20] and on other occasions, such as that referred to in the paragraph immediately above, Mr Nielsen sought to qualify answers that were apparently against his interest. While he accepted, for instance, that loans made by him to Balls & Tackles were a bad financial decision [21] , he qualified it by saying he did not think so at the time [22] .
The last basis for the defendant's attack on Mr Nielsen's credit was that he had limited recall of any events in his dealings with Mr Mansour. The defendant pointed to Mr Nielsen's need to resort to his affidavit or a contemporaneous document [23] and the fact that he qualified his evidence on a number of occasions by the word "probably" even when giving evidence about his present understanding of matters [24] . I do not give much weight to the second of these but the first is important for three reasons: first, this is a representation case. For that reason it is important to determine with some precision the representations actually made and the context in which they were made. Nuance can be very important. Secondly, reliance is a key issue and, given Mr Nielsen's control of Balls & Tackles, his recollection of specific reasons for its conduct is critical. Finally, there are, at least in some respects, large gaps in the documentary evidence. That makes the accuracy of Mr Nielsen's recollection even more important.
Overall, I have concluded that Mr Nielsen's evidence must be treated with significant caution. There are certain aspects of his evidence which, for reasons I give in more detail later, I reject entirely. One important instance is Mr Nielsen's denial that the purpose of the payments to Mr Mansour were to procure orders from buyers [25] . Leaving aside Mr Mansour's evidence, those denials were entirely inconsistent with text messages sent by Mr Nielsen to Mr Mansour in late 2016 and early 2017 which spoke of payments to buyers and "looking after" Mr Mansour [26] . My conclusion about that evidence has an impact on Mr Nielsen's credibility as a whole. That said, there are aspects of his evidence that were plausible in the context and which I accept.

c. Amanda Brandl

Ms Brandl presented as an earnest witness who became quite upset during the course of cross-examination. I do not put that down to any aggression on the part of counsel, whose conduct in cross-examination was unimpeachable, but to Ms Brandl's admission that she felt like a fool for what had happened [27] . I accept the defendant's criticism of Ms Brandl to the extent that at times, she was non-responsive to questions [28] and, on one occasion, dogmatically refused to accept the rather obvious proposition that her recollection of one part of a meeting may not have been perfect [29] . I also agree that Ms Brandl's willingness to deceive IMG [30] , to vary a purchase order [31] and her apparent failure to recognise the dishonesty of Mr Mansour's conduct at the time [32] undermine her general credibility. However, each of those matters must be seen in the context of the evidence as a whole and the contemporaneous records. The most significant impression I was left with having seen Ms Brandl give evidence, was that she was perhaps overly willing to accept propositions that did not sit comfortably with her evidence in chief. Ultimately, I formed the view that I should be careful in relying too closely on any specific evidence given by Ms Brandl without taking into account the general context of that evidence.

a. Misleading and deceptive conduct

The plaintiff's case relies on the following provisions of sch 2 Australian Consumer Law (ACL) of the Competition & Consumer Act 2010 (Cth) (CCA). First, that "a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive": s 18. Secondly, that a person who suffers loss or damage because of the conduct of another person that contravenes s 18 may recover the amount of loss or damage suffered: s 236(1).
The defendant relies on s 137B of the CCA which provides, in essence, that where a claimant suffers loss or damage as a result of a contravention of s 18 of the ACL, and that loss was suffered partly as a result of the claimant's failure to take reasonable care, the amount recoverable can be reduced to the extent the Court thinks just and equitable.
In proceedings involving a claim under s 18 of the ACL, the plaintiff must prove to the reasonable satisfaction of the court: 1. what the alleged conduct was; and 2. circumstances which rendered the conduct misleading.
Where the conduct consists of verbal statements it is necessary to bear in mind the well-known note of warning given by McLelland CJ (in Eq) in Watson v Foxman (1995) 49 NSWLR 315 at 318-319: "Where the conduct is the speaking of words in the course of a conversation, it is necessary that the words spoken be proved with a degree of precision sufficient to enable the court to be reasonably satisfied that they were in fact misleading in the proved circumstances. In many cases (but not all) the question whether spoken words were misleading may depend upon what, if examined at the time, may have been seen to be relatively subtle nuances flowing from the use of one word, phrase or grammatical construction rather than another, or the presence or absence of some qualifying word or phrase, or condition. Furthermore, human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience."
The aspect of this passage concerning the corrosive impact of time on the human memory and the trial process has recently been examined by the Court of Appeal in Moubarak by his tutor Coorey v Holt [2019] NSWCA 102 at [77]-[80] (Bell P, Leeming JA and Emmett AJA agreeing).

b. Evidence Act 1995 (NSW), s 140

As I have foreshadowed, the evidence and issues require me to make findings of significant gravity; namely, whether or not bribes were paid by the plaintiff to Mr Mansour. Such conduct could amount to an offence such as under s 249B of the Crimes Act 1900 (NSW). In those circumstances, the Court must take that into account in deciding whether it is satisfied on the balance of probabilities that the case has been proved: Evidence Act 1995 (NSW), s 140(2). That means that the Court should not lightly make a finding that the conduct has been engaged in, and that such findings require clear or cogent or strict proof and ought not to be made on inexact proofs, indefinite testimony or indirect references: New South Wales v Hathaway [2010] NSWCA 184 at [263] [33] .

i. The parties

Balls & Tackles is a manufacturer of men's underwear produced under licence. The plaintiff's name derives from the fact that Balls & Tackles was incorporated in order to enter into a licence agreement with the NRL [34] , the governing body of professional rugby league in Australia. Mr Nielsen is a director of Balls & Tackles.
The defendant is part of an international group of companies known as the "Endeavor" group. Amongst other things, IMG operates a licensing business in Australia which serves as a satellite office for a business known as "IMG Licensing Worldwide". This business provides services as agents for licensors of intellectual property rights. At the relevant time, one of those licensors was Playboy Enterprises International Inc.

ii. Mr Nielsen and Mr Mansour

In mid-2013 Mr Nielsen was introduced to Elie Mansour who was then working for the BBC in respect of the licensing of its intellectual property including that relating to the television productions, Dr Who and Top Gear. The two discussed the possibility of Balls & Tackles entering into a licence agreement with the BBC, but no agreement was ever reached.
On 1 December 2014 Mr Mansour began working for IMG with the title "Licensing Director - Australia". Although there was a General Manager of the IMG business in Australia, Mr Mansour reported directly to Matthew Primack, the Senior Vice President of IMG Licensing Worldwide who was based in London.
Later that month Mr Mansour contacted Mr Nielsen to discuss the possibility of Balls & Tackles acquiring the licence to produce James Bond underwear. Mr Nielson then asked Amanda Brandl [35] , who had some experience in the clothes retailing industry, to put some designs together for the James Bond licence. On 20 April 2015 Mr Nielsen signed a Deal Memo with IMG in respect of the James Bond licence. This was not a binding agreement, but in its terms, set out the intentions of the parties in respect of a potential licence agreement.
Mr Primack explained [36] that a Deal Memo is a "pro forma document used by IMG to document the negotiated commercial terms" which were "intended to be transferred into a formal, binding written agreement between a licensee and licensor, at a later date".
The James Bond Deal Memo contained details of the licence including the period of the licence, the rate of royalties and amounts of minimum royalty payments. It also included a timeframe for the production of samples and marketing.
Ms Brandl met Mr Mansour at IMG's offices in Edgecliff, Sydney on the day the Deal Memo was signed. Later that day, she sent Mr Mansour a design board for James Bond branded underwear.
On 18 September 2015, Mr Nielsen followed up Mr Mansour after the James Bond agreement. Mr Mansour replied by email on 21 September 2015 [37] to the effect that the deal was unlikely to proceed and saying that he would like to discuss a Playboy licence if Mr Nielsen was still interested.
Mr Nielsen then asked Ms Brandl whether they should "invest time and money again [38] ". Ms Brandl undertook some research and told Mr Nielsen that she thought the Playboy market was the same as the James Bond market and that there should not be a problem [39] .
Mr Nielsen then telephoned Mr Mansour to say that he was interested in the Playboy licence. A meeting was arranged to be held at IMG's Edgecliff offices on 28 September 2015.
On 24 September 2015 Ms Brandl emailed Mr Mansour to inquire "about the state of the market for Playboy in Australia". Mr Mansour responded by sending links to promotional videos for Playboy and suggesting that they talk the following Tuesday (29 September 2015).

iii. 28 September 2015 meeting

On Monday 28 September 2015, Mr Nielsen met Mr Mansour at IMG's Edgecliff office. In its statement of claim the plaintiff alleges that Mr Mansour made the following representations to Mr Nielsen at that meeting: "a. Mr Mansour had contacts with employees responsible for placing orders with underwear manufacturers at Bras N Things, Target and Kmart (the Buyers); b. if Balls and Tackles entered into a licence agreement with Playboy to enable Balls and Tackles to manufacture Playboy-branded men's underwear items: i. Mr Mansour would organise orders for Bras N Things with his contacts with the Buyers; and ii. Balls and Tackles would have no trouble in meeting the minimum licence payments due under the licence agreement with Playboy, (the Buyers Representation)." (Emphasis in original)
There are two issues that arise here: first, whether the Buyers Representations were made; and secondly, if they were made, whether they were made by Mr Mansour with the actual or ostensible authority of IMG.
In his affidavit [40] , Mr Nielsen said that the following happened at the meeting: 1. Mr Mansour said words to the effect: "Balls & Tackles should take the Playboy licence. Playboy is reinventing itself and becoming more of an upmarket brand and not as sleazy as before." 1. Mr Mansour showed him a video on his computer in relation to Playboy's marketing in the USA; and 2. The following conversation took place: That video shows how the brand is reinventing itself in "Mansour: America. Australia and New Zealand would be a great market to break into. Nielsen: What are the details of the licence fees that Balls & Tackles would need to pay for the licence? Mansour: There is a minimum of $125,000 over five years. Nielsen: I am concerned about those amounts. The minimum number of sales that Balls & Tackles would need to make in order to make a profit on the licence agreement are very high. I will probably pass as it is just too much to risk. Mansour: I can negotiate a lesser amount for the royalty payments because of what has happened in the past. My best friend George Wahby is in charge over at Bras N Things and I can organise an order with him, they sell the Playboy brand through their stores. Its [sic] women's only but we could do some sort of gift with the purchase. Nielsen: Oh really. That's great."

Mr Mansour then showed Mr Nielsen documents that showed the financial sales of BNT relating to Playboy-licenced female underwear for that year. The amount was $20 million. 2. The conversation then continued as follows: "Mansour: If you can do for ten percent of the Bras N Things figures you will have no trouble in making the licence payments. We will make a lot of money together. Other companies are vying for the licence and you will be missing out on a good opportunity if you do not take it. I also have contacts with buyers at Target and Kmart that I can contact to get things off to a great start. Nielsen: It sounds like a great opportunity. If you can organise what you said I'll probably go ahead with it. Mansour: You won't regret it. I will send everything through as soon as possible to make it happen."

It is immediately apparent that Mr Nielsen's evidence does not match the pleaded representation. In particular, according to Mr Nielsen, other than in respect of BNT, Mr Mansour only said he had people he could contact, not that he would "organise orders". I will return to those differences in due course. First it is necessary to set out Mr Mansour's evidence of what occurred.
In his examination in chief, Mr Mansour described the meeting as follows [41] : "A. Well that meeting was a typical sales meeting where I informed, I presented the brand for him and I showed him, we had videos of the brand, and how the brand is really trying to move from a soft porn brand and sleazy brand to a brand that is more a lifestyle brand. So basically, I just, in that meeting, the first meeting for Playboy, I just sold him the idea of taking the Playboy brand as a licence. Q. When you say it was a "Typical sales meeting", can you explain to the Court what you mean by that expression? A. Well it's a sales meeting where I basically present the brand. At that stage, he didn't say whether he want to do it or not. He got excited with the material that I, I, I presented to him but obviously the next step after that, is that he was going to go back and discuss with his team whether he wants to do it or not and come back to us with a proposal."

More details of the meeting came out in cross-examination [42] . Mr Mansour agreed that he had shown Mr Nielsen sales figures for BNT [43] and that it would be good for his business if he could make 10% of those sales [44] . He also agreed that he had pitched the idea of targeting BNT because they already had licensed underwear and many stores nationwide [45] , although he was not certain whether it was at the 28 September meeting or later. At first, Mr Mansour also agreed that he had said he could persuade George Wahby to place an order for Balls & Tackles [46] but he said that BNT was one of the "retailers (he) mentioned that there's a potential." [47]
Similarly, Mr Mansour initially accepted that he could persuade his other contacts to place orders for Balls & Tackles [48] but quickly retracted that, saying that he did not say he could get orders but that he could introduce Mr Nielsen to retailers [49] .
Understandably, the plaintiff placed great emphasis on these paragraphs of Mr Mansour's evidence. The difficulty for it however, is that Mr Mansour's evidence as to what he said to Mr Nielsen about the buyer other than BNT was consistent with Mr Nielsen's own evidence. In light of that, the change in Mr Mansour's evidence takes on a different hue and I accept that his corrected evidence was in fact his true recollection of the conversation on 28 September 2015.
The only difference of any importance between the two versions of the meeting is that, on Mr Nielsen's account, Mr Mansour said that he would organise an order through his friend at BNT and, on Mr Mansour's version, he said that he could introduce him to BNT which could get him an order.
The plaintiff argued that other evidence supported the conclusion that the Buyers Representations were made. First, Ms Brandl gave evidence that Mr Mansour had promised that Mr Wahby would order from Balls & Tackles [50] . That however, was not her evidence. In her affidavit [51] Ms Brandl said that Mr Mansour had said to her: "…George Wahby who runs Bras N Things is my good mate and I've already discussed with him about doing joint promotions and he is excited about it." That is a long way from a promise of obtaining an order. Ms Brandl properly accepted that in cross-examination [52] .
Secondly, the plaintiff argued that other evidence [53] showed that Mr Mansour had a tendency to make promises he could not deliver. That was opinion evidence sought to be relied on as tendency evidence [54] . Whatever its nature, the basis for the opinion was not clear and I give it little weight.
Thirdly, as Mr Primack accepted [55] , potential licensees could be very interested in introductions to contacts that Mr Mansour had as part of his job. This submission misses the point. Mr Mansour agreed that he said that he had contacts and could make representations, however, that was not part of the pleaded "Buyers Representations". The critical aspect relied on was not the introduction but the promise of the subsequent order.
The plaintiff's final point is similarly flawed. It relies on an email of 31 January 2017 [56] in which Mr Mansour attempted to explain what had been happening with Balls & Tackles. In it, Mr Mansour described the 28 September 2015 meeting as follows: "Meeting with B&Ts to pitch PB Mens underwear - They've stated that they will need our help in pitching to the retailers - we agreed to help them." Pitching to retailers is different to guaranteeing the placement of orders from retailers.
There are other aspects of the evidence that make it unlikely that the Buyers Representations as pleaded were made by Mr Mansour. Most importantly, this was the first meeting held in respect of the Playboy licence. While it may be accepted that Mr Mansour was keen to try and "sell" the licence, there was no reason why he would promise to get orders: there were no designs and no samples. The prospect that a retailer that sold only women's underwear would on the basis of friendship alone, and without seeing any product, sign up to an order of male underwear makes little sense.
Finally, my general view of Mr Nielsen's credit adds to the other difficulties with this aspect of the plaintiff's case.
I am not satisfied that the Buyers Representations were made.
That conclusion means that it is unnecessary to consider whether the representations were made with the actual or apparent authority of the defendant. If it were necessary to do so, I would accept the plaintiff's submission that they were.
The purpose of the meeting was to "pitch the brand" of Playboy; in other words, to make a sale. Mr Mansour was authorised to do that. The way in which he carried out his role was left largely up to him. There were no prescriptions of that in his contract of employment and there was no other document or policy expressly limiting what he could and could not do. His direct supervisor was in London. Had the representations been made as pleaded, they were closely connected to the purpose of the meeting and so to Mr Mansour's course of employment and it was reasonable for the plaintiff to have relied on them. Thus, even though they may have fallen outside the permissible scope of the manner in which Mr Mansour was authorised to fulfil his role, the defendant was responsible for them: Australian Competition & Consumer Commission v Cornerstone Investment Aust Pty Ltd (in liq) (No 4) [2018] FCA 1408 at [302] - [306]; Feldman v GNM Australia Ltd [2017] NSWCA 107at [99] - [100] and the cases cited there.

iv. The deal progresses

On 10 October 2015 Mr Nielsen signed a Deal Memo in respect of the Playboy licence [57] . Like the James Bond Deal Memo, this was not intended to be a binding agreement but set out the terms the parties hoped would eventually form the essential part of a licence agreement. Like the James Bond memo, this document included a timeline for product development. The date for product development was 1 November 2015. The date for trade introduction was 1 January 2016 and the date for the product in-store was 1 February 2016. There was also a provision for 10 free samples to be made: six to go to Playboy and four to IMG.
After the Deal Memo was entered into Balls & Tackles engaged Ms Brandl as a full-time consultant Head Designer, who later became an employee [58] . In this role Ms Brandl sent IMG design boards for approval by Playboy. She was also involved in preparing a business plan to be sent to Playboy so that it could determine whether to proceed to a binding licence agreement. In doing this she relied on Mr Nielsen and acted on his instructions. As I have alluded to above [14, 17-18], the financial details in the Balls & Tackles business plans were largely fabricated.
On 17 November 2015 Mrs Brandl sent a design board to Mr Mansour and Cedric Schaal, another IMG employee in Australia [59] . She also asked for feedback from Playboy.
On 1 December 2015 Mr Nielsen executed the Playboy Licence agreement on behalf of the plaintiff [60] . The agreement was executed by Playboy on 16 December 2015. The agreement enabled the plaintiff to use the word "Playboy" and the rabbit-head design in Australia and New Zealand subject to conditions. One of those conditions was that all products and packaging had to be submitted to Playboy for approval prior to being sold into the market: cl 2.i.(i). Playboy's approval was required in advance at each stage of development of the products.
As foreshadowed in the Deal Memo, the licence agreement required payment of a royalty of 10% on net sales and provided for a minimum royalty for each of the five years of the agreement, commencing with $20,000 and totalling $125,000.
Clause 2.a.(i) required that, subject to the prior approval by Playboy mentioned above, the plaintiff was to "commence bona fide commercial sales of the Products as soon as practicable" but by no later than the Market Date. The Market Date was 1 February 2016: cl S.15. The failure to do so was an incurable default for the purposes of the licence.

v. Production Commences

Mr Nielsen gave evidence [61] that in early December 2015 Mr Mansour told him that he needed to get some samples to provide to George Wahby and other buyers and that BNT wanted to do a Valentine's Day promotion that would involve the provision of a gift of men's underwear with the purchase of a woman's product. Mr Nielsen said that, in order to provide these samples, he caused Balls & Tackles to order 1,000 pieces from a Chinese factory. This appears to have been undertaken by Ms Brandl.
On 3 December 2015 Ms Brandl emailed Ruxing, a manufacturing firm in China, saying that they (Balls & Tackles) were ready to start production and that they needed samples of 10 styles. She enquired what the MOQ (Minimum Order Quantity) would be to obtain 1,000 samples and indicated that they were needed for early January and they would be "ordering large quantities (100,000+) in February".
Ms Brandl's evidence [62] was that she met Mr Mansour and Mr Nielson and was told by Mr Mansour that "Bras N Things will be ordering at least 20,000 pieces for the cross promotion and we will try and get them up to 30,000 (pieces)".
By this stage, Ms Brandl had already submitted full design production boards for approval by Playboy [63] .
On 15 December 2015 she chased up Mr Schaal about the approval, referring to the need to have samples for a meeting with BNT in January 2016 [64] . Playboy had not yet executed the agreement.
On 7 January 2016 Balls & Tackles was given approval by Playboy in respect of the designs sent by Ms Brandl in early December.
On 12 January 2016 Sam Calder, an employee of IMG, sent an email to Ms Brandl explaining the approval process [65] . Relevantly, he explained that there were three stages: design, pre-production and production. The pre-production stage required a sample to be sent to IMG and an image to be uploaded to the approval system. The final stage required the contractually stated number of samples [66] , complete with a hologram and any additional packaging or branding.
On 3 and 4 February 2016 a submission by Balls & Tackles of a design was recorded on the IMG approval system [67] . This submission was approved and Balls & Tackles was notified the following day that there was approval "to the next stage" [68] . On the following Monday, 8 February 2016, Mr Nielsen sent an email to Mr Schaal and Mr Mansour attaching copies of the design and style boards that were to be presented at the meeting the following day [69] . I infer that these were the designs that had just been approved by Playboy.

vi. BNT Representations

On 9 February 2016 Mr Nielsen and Ms Brandl met Mr Mansour at the new offices of IMG in the MLC Centre in the Sydney CBD. It was at this meeting that the next representations relied upon by the plaintiff were made (BNT representations). It was pleaded [70] that, at this meeting, IMG represented to Balls & Tackles that IMG had successfully negotiated a binding contract between BNT and Balls & Tackles or alternatively, between BNT and IMG on behalf of Balls & Tackles pursuant to which BNT had ordered 20,000 underwear items from Balls & Tackles. The pleading also states that the representation was made in an email from Mr Mansour on 16 June 2016. I will deal with that email later in these reasons.
Mr Nielsen's evidence was, again, different to the pleaded case. He said [71] that at the 9 February 2016 meeting Mr Mansour told him that he would deal with the buyers directly and that he was meeting George Wahby later that day to show him the design boards. The critical conversation was said to have taken place the following day in the following terms [72] : "Mansour: George liked what he saw. They are definitely ordering 20,000 pieces from Balls & Tackles and are having an internal meeting to choose which styles they will order. Nielsen: That's fantastic."

Mr Nielsen then said [73] that Mr Mansour called him a few days later and had a conversation in the following terms: "Mansour: Bras N Things have chosen the styles they want. You will have to urgently start the process to have the goods manufactured so that they can be in store for a September Father's Day 2016 campaign. Nielsen: Ok. We'll get started straight away. Mansour: You will need to order extra pieces of Bras N Things underwear to have for the product launch as well as the Playboy exhibition. It's taking place at the Crown Casino in Melbourne in September 2016. If you have extra on your website if Bras N Things require extra stock if they have a good 'sell through' you will have stock available."

(Without alteration)

Ms Brandl's evidence about the 9 February meeting [74] was that Mr Mansour said he would meet Mr Wahby alone and that Mr Wahby would "let us know what styles they (BNT) are choosing".
On the plaintiff's own evidence the pleaded representation cannot be accepted. At its highest, the evidence suggests that a representation was made by Mr Mansour on 10 February 2016 that BNT "are definitely ordering 20,000 pieces from Balls & Tackles". No application was made to amend the pleading. In its written submissions, the plaintiff relied on the following evidence of Mr Mansour under cross-examination [75] : "Q. Because you had been telling him since, at least, February that Bras N Things were ordering products from Balls and Tackles? A. Yeah, and he ordered products as well already. Q. That had been false all along? A. Yeah."

There are two points to make about this evidence: first, it was given in the context of questions about a purchase fabricated by Mr Mansour in October 2016 and Mr Mansour's evidence [76] that Mr Nielsen was "desperate for a purchase order". A purchase order constitutes an offer by a buyer to purchase goods from a supplier. As such, had there been a concluded and binding agreement in February 2016 it is unlikely that this document was even required. Secondly, and in any event, the operative words in the question were, "were ordering". Those words are, at best, ambiguous. They could mean either "were going to order" or "had ordered". In light of that, the apparent concession made by Mr Mansour carries little weight, at least insofar as it has any impact on what is said in February 2016.
Mr Mansour's own recollection of the 9 February meeting was patchy [77] . He did recall that he had asked Mr Nielsen to give him cash on the side to "try and influence Bras N Things decision to place an order" [78] and that Mr Nielsen had agreed and given him $5,000 initially in cash at the MLC building [79] . Mr Mansour denied telling Mr Nielsen and Ms Brandl that it would be better if he dealt with Mr Wahby directly on their behalf [80] and said that they did not want to meet the buyers.
All of Mr Mansour's evidence in this respect was in dispute. In my view, the probabilities favour a position somewhere between the parties' positions. Given the later admitted payments by Mr Nielsen to Mr Mansour, the contractual imperative to have progressed the production and sale of goods, Mr Nielsen's admitted willingness to "do what it takes", and even taking into account the seriousness of the allegation, it is most likely that Mr Nielsen did give cash to Mr Mansour for the purpose of enticing BNT to purchase goods from Balls & Tackles, in plain terms, to bribe them. The evidence was that Ms Brandl did not know about any such payments until August [81] . Further, Mr Mansour admitted that he never intended to give the money to any prospective buyer and that he needed it because of his marriage breakdown and mental illness.
I will turn to the consideration of the arrangement pursuant to which this payment, and the later payments, were made later in these reasons.
In the circumstances, I find that Mr Mansour did suggest that he met with Mr Wahby alone. This was both to hide any bribe from Ms Brandl and also to hide his perfidy from Mr Nielsen.
This conclusion is fortified by a note made by Ms Brandl many months later in which she said that "[w]e were supposed to attend the BNT meeting but at the last minute Elie told us he would go alone" [82] . There may be some doubt about the accuracy of that document given the time of its production but I accept that, at least to this extent, it accurately represents what took place at the meeting.
Mr Mansour also denied having told Mr Nielsen on 10 February 2016 that BNT would definitely be ordering 20,000 pieces [83] . The contemporaneous documents support his evidence. In an email of 17 February 2016 [84] Ms Brandl wrote to Mr Nielson about "the styles Bras N Things loved" and asked whether BNT wanted exclusivity "with the prints they will order" (emphasis added). Mr Nielsen then emailed Mr Mansour to ask about exclusivity and Mr Mansour replied [85] that BNT would want exclusivity in respect of "whatever they finally choose".
Mr Nielsen was cross-examined on this email exchange [86] : "Q. So you understood, didn't you, when you received that email, that Bras N Things hadn't finally chosen anything? A. Well, I took that to be that they'd - that they'd approved the - they … (not Transcribable) … to be exclusive, 17th of the 2nd. I, I - well, looking at that email I thought that it sounded like he'd seen the product and he, he decided he wanted - if they'd make a decision on the final choice of what they've seen already."

That answer made no sense and was a clear attempt to avoid the obvious conclusion that was not favourable to Balls & Tackles' case. Mr Nielsen did better when he was asked about his current understanding [87] : "Q. But what you understand is, they hadn't chosen anything finally, hadn't they? They were yet to make the decision? A. Yeah, correct. Yeah. Yep."

The point becomes even clearer when later events are considered. On 13 May 2016 Ms Brandl wrote to Mr Mansour by email [88] saying: "… Attached is our PR and launch event proposal with ID Collective [89] , we thought you might like to take a look. Great idea to work with George and Bra's and Things for a joint campaign for Father's Day. Will definitely talk to ID Collective & BNT's about it."
Mr Mansour replied by email on 16 May 2016 [90] : "… I am still going to explain that the final product will be much better and I will try my best to convince him to place an order now. Please don't engage ID collective in this conversation before we get the greenlight form BNT."
This correspondence is entirely inconsistent with there ever having been a representation made that there was, as pleaded, a concluded and binding agreement that BNT would purchase 20,000 items from Balls & Tackles or, on the evidence, a representation that BNT were definitely ordering 20,000 pieces.
It is now convenient to deal with the email of 16 June 2016 [91] which Balls & Tackles relied on as forming part of the BNT representations. In that email, Mr Mansour wrote to Ms Brandl: "How exciting? BNT confirmed they will order 20,000 pcs. Okay I believe you should split into two. I think you should keep 1670 Pcs from each style and we tell BNT that they will have to order the remaining stock. Better if you guys are in control and not them especially that you are launching the online shop and we want to make sure you have a solid stock on hand." (Emphasis added)
This email, while no doubt presenting positive news, was still couched in terms of the future. It was accepted by Mr Mansour, that this was a lie [92] but it was not the pleaded representation.
In summary, the evidence simply does not support the plaintiff's pleaded case that the BNT representations were made to Balls & Tackles by Mr Mansour.
In its submissions the plaintiff went beyond its pleaded case, suggesting [93] that the BNT representations was in fact a continuing representation that was "initially made in February 2016 but repeated over the course of 2016, culminating in the generation of a false purchase order by Mr Mansour."
There are two difficulties with this submission. First, as will be seen, the plaintiff's reliance case (and thus any entitlement it has to damages) turns to a large extent on the conduct of Mr Mansour up to April 2016 [94] and so his conduct after that date cannot support the bulk of its damages claim. As I have found that the representations as to a binding contract were not made up to and including the middle of June 2016, no reliance on that conduct can support the damages claim. Secondly, and in any event, there being no application to amend, the plaintiff should be kept to its pleaded case. To proceed any other way would be to deny the defendant procedural fairness and that would be anathema to the exercise of judicial power and contrary to the requirements of s 56 of the Civil Procedure Act 2005 (NSW).
This is not a case in which the parties have chosen to expand the case beyond the boundaries of the pleading: cf. Banque Commerciale SA (En liquidation) v Akhil Holdings Ltd (1990) 169 CLR 279. In its opening written submissions the defendant expressly identified the first issue as whether the "representations were made to B&T by Mr Mansour on the terms alleged by it in support of its misleading or deceptive conduct case" [95] . In the written submissions of each party the relevant issue was identified as being whether the "BNT representation, as alleged," was made. Accordingly, the defendant is entitled to the benefit of the rule that relief should be restricted to that available on the pleadings: Banque Commerciale SA at [17].
If, contrary to my finding, the BNT representation was made, it was not made on behalf of IMG. That is because by this time Mr Nielsen had agreed to pay Mr Mansour in order to obtain orders from retailers. In light of that agreement, what Mr Mansour did in connection with those retailers was on his own behalf and not within the scope of his authority to act for IMG: see Ex parte Colonial Petroleum Oil Pty Ltd; Re Byrne (1944) 44 SR (NSW) 306 at 308.

vii. The April order of 25,500 pieces of underwear

The plaintiff claims that on 20 April 2016, it caused the manufacture of 25,000 underwear items in reliance on the BNT representations [96] . Although it is unnecessary to deal with this, I can do so briefly.
Mr Nielsen says that he caused Balls & Tackles to order 25,000 items of underwear in reliance of what he was told by Mr Mansour. The contemporaneous documents undermine his evidence [97] . On 20 April 2016 Ruxing emailed Ms Brandl about the delay in producing items that had been ordered. It was explained that a regular order would be 70 days for a bulk production of 5,000 or 10,000 pieces per design. After explaining the production process, the email continues: "… the printing factory understanded that there would be only 100 pcs of one design, they become not so cooprative. that is the reason why one of printing factory rejected to work after asking them to amend the prints.if we got the big order, we will be able to contract with them,then everything can move much quickly. the situation for us now would be to ask them to help us to work." (Without alteration)
Ms Brandl replied to this email, saying: "… what I can do is order 5000 pieces in 5 of the designs to work with the larger factory … Once the store sees the samples they will place an order. So maybe we can change this order to MOQ of 5000 per design."
After further email correspondence, Ms Brandl explained that Playboy had to approve any style before bulk production happened and asked for three samples for that purpose.
In cross-examination [98] Ms Brandl said that she thought at the time of this correspondence that it was perfect timing "that we'd been instructed to give, to do more and to get the Bras N Things order into production." That, however, was in neither her affidavit nor that of Mr Nielsen. It also does not sit well with the pleaded case. In this instance I do not accept Ms Brandl's evidence. The email makes it clear that the order of 25,000 pieces were made purely in response to the exigencies of the manufacturer. It must also be borne in mind that there was a contractual obligation to get the products into the market and a financial incentive to obtain sales. Ms Brandl explained that some of the order was to be used in order to attract purchases from the retailers [99] .
For those reasons, even if the BNT representations were made, either as pleaded or as contended for in the plaintiff's closing submissions, the order of 25,000 pieces of underwear in April 2016 was not made in reliance on it.

viii. The T Representations

The plaintiff claims [100] that Mr Mansour also represented to it that IMG had successfully negotiated a binding contract between T (a retailer) and Balls & Tackles or alternatively, between T and IMG on behalf of Balls & Tackles for the purchase of 40,000 items of underwear by T. The representations were said to have been made in a meeting on 23 June 2016 and in emails on 28 June, 3 August, 12 August and 12 September 2016 [101] . There is no question that Mr Mansour was lying to Balls & Tackles about T. The issues concern the precise nature of the representations and IMG's responsibility for them. In order to address these issues it is necessary to consider some of the events leading up to the meeting on 23 June 2016.
Back in March 2016 Ms Brandl had asked Mr Mansour by email [102] whether he had a contact with T that Balls & Tackles could approach. Mr Mansour replied that he did not know the buyer for men's underwear but he did know the head buyer and would introduce "you to her very soon".
In the meantime, Balls & Tackles had obtained some samples and taken them to IMG. Ms Brandl gave evidence of a meeting with Mr Mansour on 13 May 2016 at which he said that he was happy with the samples and would be taking them to George Wahby. Mr Mansour denies that account. It is unnecessary to resolve this dispute.
Importantly, for present purposes I accept the evidence [103] that Mr Schaal found an issue with the Playboy logo. That evidence is consistent with a later email from Ms Brandl [104] and the reply from Mr Mansour [105] . This reveals that Balls & Tackles did not yet have any final, approved product and so were not contractually entitled to take any product to market [106] .
On 2 June 2016 Mr Mansour met Mr Nielsen and encouraged him to have enough stock for the Playboy exhibition in Melbourne and discussed the promotional efforts [107] . Mr Nielsen also suggested adding swimwear and sleepwear to the licence agreement.
On 4 June 2016 Sam Calder, an IMG employee in London, sent an email to Ms Brandl asking when IMG could expect to receive pre-production samples of Balls & Tackles range and noting that Balls & Tackles expected to have a soft launch in June [108] . Ms Brandl replied saying that they had taken the first pre-production samples to IMG a few weeks earlier and were expecting final production samples of nine styles in two weeks.
Mr Schaal, who had been copied in to the emails, replied that "you cannot call something 'final production sample' until the pre-production sample has been approved". He explained further that feedback and support could be provided in Australia but that every product had to be sent to the UK for approval.
On 7 June 2016 Ms Brandl sent an email to Mr Mansour (but mistakenly sent the email to Mr Nielsen's email address) concerning supply to BNT. She said that Balls & Tackles had 5,000 of the identified styles coming and gave a breakdown of sizes and attached a catalogue and line sheet [109] . She followed this with another email on the same day [110] saying that they would price items for George Wahby according to the quantity of the order. This would be odd if, in fact, there had been an order from BNT at that time rather than just the possibility of one.
Mr Nielsen's evidence [111] was that in early June Mr Mansour said this to him: "I have organised another order for you through Target. The buyer for Target, Garry Symes, is a friend of mine. I have discussed the price point with Target and they are excited that Playboy are going to be a premium brand for them. They are getting rid of their existing brands and focusing solely on brands like Playboy."
Mr Mansour accepted that he made this statement, but said it was made after Mr Nielsen had given him money [112] . Mr Nielsen apparently did not notice that Mr Mansour had previously referred to his contact at T as a woman.
The money referred to by Mr Mansour was cash transferred from Balls & Tackles' account to Mr Mansour's personal account. Mr Mansour said that the payment was for him to use his effort to influence BNT or to pass on to the buyer at BNT and other retailers to influence their decision to place orders [113] .
The first bank transfer was for $6,000 on 7 June 2016 [114] . This appears, as Mr Mansour suggested, to coincide with Mr Mansour's statement that he had organised a purchase by T.
The second transfer was on 15 June 2016 [115] . The next day Mr Mansour sent an email to Ms Brandl saying: "How exciting? BNT confirmed they will order 20,000 pcs" [116] . Mr Nielsen says that he telephoned Mr Mansour the same day and was told that his email was as good as a purchase order [117] .
At the same time, Balls & Tackles' path to market was not going smoothly. After the clarifying email from Mr Schaal on 3 June 2016, Ms Brandl sent the pre-production samples to IMG in the UK for approval [118] . However, those samples were not approved and Ms Brandl was also asked for labels and packaging to be sent for approval [119] .
On 21 June 2016 there was another bank transfer of $5,000 [120] and Mr Mansour sent an email to Mr Nielsen purporting to forward an email from Garry Symes confirming approval to over 10,000 units [121] . In it Mr Symes says, "we will order from IMG Australia and not Balls and Tackles as are already listed as a supplier in our systems". If this were a genuine email that statement would be odd. IMG was not a supplier of anything other than agency services, and then only to owners of intellectual property, not retailers of manufactured goods. As will be seen though, this statement laid the path for Mr Mansour's efforts to conceal his dishonest conduct while continuing to extract money from Balls & Tackles.
On the morning of 23 June 2016 Mr Mansour forwarded an email chain to Mr Nielsen purporting to be between Garry Symes and Mr Mansour. In it Mr Symes is shown to have been impressed by Balls & Tackles' range and to ask for confirmation that it could deliver 20,000 items instead of 10,000. He asks for confirmation "before (he gets) final approval from the division head so we can book these funds from our buying budget."
On the same day there was a meeting at IMG's offices between Mr Nielsen, Ms Brandl and Mr Mansour and a further cash transfer of $5,000 from Balls & Tackles to Mr Mansour. It is not clear which came first. In his affidavit Mr Nielsen says that Mr Mansour said the following in the meeting [122] : "I'm excited about the purchase orders I have been able to get you. Target will be ordering 20,000 pieces. They will be ordering 10,000 pieces from the swimwear collection for a February 2017 delivery. You will need to be ready for a December 2016 delivery."
Ms Brandl gave evidence that Mr Mansour said [123] : "Target will be ordering 20,000 pieces from your seasonal collection and 10,000 pieces of swim wear." Ms Brandl's note [124] , created sometime later, was to a similar effect.
Once again this evidence does not establish the representation pleaded. There is nothing in it to suggest that there was, as pleaded, a binding contract for the purchase of goods. All of the statements, even taking into account the fake emails from the buyer, are prospective. Importantly, however, as the fake emails make clear, the prospect of the order was contingent upon approval being obtained and internal finance being organised. Further, the evidence is that there "will be" an order for 20,000 pieces and 10,000 swimwear items. There was no swimwear at this point, and certainly no licence to design or produce it. The figure in the pleading is 40,000 pieces. There is no evidence to support that claim.
On 27 June 2016 Ms Brandl sent an email to Mr Mansour with the design board for the essentials range for Playboy [125] . In that email she asked Mr Mansour to "show Target in case they would like to order from this range" and that they would "encourage (T) to include some pieces" from it as they were to be used in the August lifestyle photo shoot. Mr Mansour replied that he had already told T that the minimum order quantity was 2,500 per unit so they could order 8 different styles for the 20,000 unit order.
On 28 June 2016 Mr Mansour forwarded another email purporting to be from Garry Symes [126] . The email stated: "Thank you for the call. You definitely impressed Paul and he now wants to order another 10,000 pcs (5000 per style (White and Black)) of the essential range you have sent us. This will take the Feb order to 30,000 pcs for $15.95 … I will review all the sizes and confirm the specifics of this order after we receive the production samples. We are still aiming for an August PO." [127]
Mr Mansour wrote, "BOOOOM! it's a done deal J".
On the same day another $5,000 was transferred by Balls & Tackles to Mr Mansour's account.
In spite of Mr Mansour's enthusiastic message to Mr Nielsen (not copied to Ms Brandl), the fake email was again not a representation, as pleaded, that there was a concluded and binding contract. The email only went so far as to say that there would be an order and that T was aiming for that to occur in August.
Following this email, there were eight further payments by Balls & Tackles to Mr Mansour: $5,000 on the day of the email, 28 June; $1,150 on 1 July; $5,000 on 5 July; $1,000 on 6 July; $1,000 on 12 July; $5,000 on 3 August; $5,000 on 5 September; and $2,500 on 12 September.
It may be noted that each of the payments up to 28 June 2016 coincided with a piece of new, positive, information from Mr Mansour. It may be inferred from that, that the purpose of the payments was to encourage retailers to make purchases from Balls & Tackles. That is consistent with Mr Mansour's evidence as to the purpose of the payments and inconsistent with Mr Nielsen's denials [128] .
Mr Nielsen did not address this issue in either his affidavit evidence or any oral evidence in chief. In those circumstances, I am less likely to draw inferences favourable to the plaintiff from other evidence in relation to this issue: Commercial Union Assurance Co of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 at 418E; Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361 at [63]. In any event, I cannot readily see any inference available from other evidence that could favour the plaintiff.
The balance of the chronology can be dealt with very briefly. Before doing so however, I will deal with the claim that Balls & Tackles relied on the T representation and so suffered loss. While it is strictly unnecessary, given my conclusion that the representations were not made, I will do so in case I have erred in that conclusion.
In the Amended Statement of Claim, Balls & Tackles claims [129] that, in reliance on the T representations, Balls & Tackles prepared designs and placed an order for 40,000 underwear items for T intended by Balls & Tackles to be supplied to T pursuant to the contract referred to in the T representation.
There is very little, if any, evidence to support that conclusion. In his affidavit, Mr Nielsen says only two things of any relevance to this issue: 1. following conversations (which must mean the emails referred to at [121] and [122] above), he instructed Ms Brandl to attempt to cancel the manufacturing order that had been placed [130] ; and 2. he caused Balls & Tackles to expend a large amount of money in the course of: "a. causing products to be manufactured to fulfil the orders that I thought Bras N Things and Target had placed for Balls & Tackles products …"
The only invoice from the manufacturer in 2016 was in respect of 27,924 pieces, well short of the 40,000 pieces said to have been ordered [131] . It also does not specify whether the date (7 October 2016) is the order date, or specify any delivery date for the goods.
Ms Brandl does not say anything in her affidavit about ordering, or being told by Mr Nielsen to order, 40,000 pieces in reliance of the T representation. In her note of the meeting of 23 June 2016 [132] she wrote: "2. Elie told us Target will want their order early in 2017 so we will need to be ready for a December 2016 delivery. I instructed my factory of this on my return back to my office the same day."
The last sentence in that extract is unclear and could mean either that she placed an order on terms that the delivery take place by December 2016, or, that she simply told the factory in China that any order would have that delivery date. The latter makes more sense in context and, absent any explanation by Ms Brandl, or other evidence as to what she did, I am not satisfied that she took any steps to order goods on instructions from Mr Nielsen and in reliance on any representations made by Mr Mansour.
As to the preparation of design boards, the evidence reveals these were produced in a generalised fashion in order to be shown to retailers who might purchase product based on the designs [133] . That suggests, and I find, that they were not produced in reliance of any representation of a binding contract. In short, even if the T representations were made, Balls & Tackles has not established any reliance on them and so no loss or damage was caused by the representations.
In any event, Mr Mansour was well and truly acting on his own behalf by the time of the T representations. It is undeniable that he was being paid by Balls & Tackles and, as I have found, the payments were directed towards the very matter that the T representations concerned. For that reason, even if those representations were made, and they were relied on, IMG is not responsible for any loss that followed.

ix. The scheme comes undone

Balls & Tackles continued to seek approval from Playboy for its products and to correspond with Mr Mansour about the proposed orders from BNT and T.
On 23 September 2016 Mr Mansour finally sent an email attaching a Purchase Order purporting to come from BNT. This order was addressed to IMG, not Balls & Tackles even though, as I have said earlier, IMG did not manufacture or sell any goods. Even more oddly, Ms Brandl changed the order a number of times, adjusting quantities per size of stock to be supplied [134] .
When Ms Brandl was unable to contact Mr Mansour in early October [135] , she attempted to email the contact on the purchase order, Kent Ewers. The email bounced. That is because both the order and Mr Ewers were fabricated by Mr Mansour.
By this stage the wheels were falling off Mr Mansour's plans and he was getting no further payments from Balls & Tackles. In late October he told Mr Nielsen that Garry Symes and his team had been sacked [136] . Next, in early November, he sent a series of fabricated text messages to Mr Nielsen [137] seeking to extract more money from Mr Nielsen. It suffices to say that those messages are consistent with Mr Mansour's account that he had been paid money in order to secure orders from buyers.
There were further fabricated communications sent by Mr Mansour to Mr Nielsen towards the end of 2016 concerning orders and Purchase Orders [138] . In mid-December Ms Brandl asked Mr Mansour for a contact at T [139] and was effectively told that T did not want to work directly with Balls & Tackles. Mr Nielsen sent a text message to Mr Mansour on 21 December 2016 about T. He wrote [140] : "… what's going on with (T) I have to let manufacturer know either way so I can stop wasting there [sic] time and my money if it's no I need to get the $3K I gave that guy back ..." The reference here to the $3K can only be to one of the payments made by Balls & Tackles to Mr Mansour earlier in the year.
Following this, Mr Nielsen instructed Ms Brandl to try to cancel the manufacturing order [141] .
Mr Nielsen also chased up Mr Mansour about BNT. In a text sent on 23 December 2016 [142] he wrote: "… can you chase up George today … he can keep the money I gave him … I've looked after you too …"
In January 2017 Mr Nielsen continued to chase up Mr Mansour and there was some internal discussion in IMG about the Purchase Order purporting to come from BNT.
On 31 January 2017 Ms Brandl finally got in contact with T and was told by email that T was unaware of any order and that Garry Symes was not an employee there [143] .
Ms Brandl was also in contact with Playboy directly and was told that they had spoken to Mr Wahby and he was unaware of any purchase order.
On 17 January 2017 Ms Brandl and Mr Nielsen were told directly by BNT that the Purchase Order of September did not exist and that the contact name on it, Kent Ewers, did not work at BNT.
On 1 February 2017 Mr Mansour told Mr Nielsen by text message that he had been "lied to and given fake promises by the buyers and BNT" [144] . That, of course, was a lie.
Mr Mansour's employment with IMG ceased on 12 May 2017.

x. Conclusion

The plaintiff's pleaded case must fail on the facts. Mr Mansour did not make the representations set out in the Amended Statement of Claim and, in any event, I am not satisfied that Balls & Tackles relied on the representations in the manner set out in its pleading. Further, in respect of the BNT and T representations, Mr Mansour was acting on his own behalf, encouraged by the money being given to him by Balls & Tackles and IMG is not responsible for that conduct.
It is fair to say that the venture into the business of underwear manufacturing and wholesaling was entirely unsuccessful. However, the failure of the business and the financial losses sustained by Balls & Tackles cannot be sheeted home to IMG.

C. The Cross-Claim

In its cross-claim IMG claims damages and equitable compensation in the amount of its costs of the proceedings as well as any damages awarded to the plaintiff. As the nature of the damages and compensation sought suggest, and the cross-claim makes clear, the claim is contingent on the plaintiff being found to be entitled to any relief in the proceedings and, or alternatively, IMG not obtaining an order for its costs in respect of the claims made in the Amended Statement of Claim.
I have concluded that the plaintiff is not entitled to any relief in the proceedings and will make an order that it pay IMG's costs in respect of the Amended Statement of Claim. In those circumstances, the claims in the cross-claim do not arise for consideration. That said, it is both necessary and convenient to deal with the cross-claim for three reasons: first, that it can be done relatively briefly; secondly, a question of costs arises in respect of the cross-claim which did occupy some time at the hearing; and thirdly, to give my conclusions in the event that I am wrong in respect of the plaintiff's claims.
IMG's cross-claim is based on the claim that the plaintiff entered into an agreement with Mr Mansour in or about 21 or 28 September 2015 whereby the plaintiff would enter into a licence agreement with Playboy, and Mr Mansour would perform services in connection with that licence, including organising purchase orders for stock produced under the licence from various contacts of Mr Mansour's for the benefit of the plaintiff [145] (B&T/Mansour Agreement). Balls & Tackles was to make secret payments to Mr Mansour in consideration for his services [146] .
IMG claims, in summary, that the B&T/Mansour Agreement constituted an inducement to Mr Mansour to breach the terms of his employment contract with IMG, a fraudulent scheme and, together with the making of the secret payments or bribes, unconscionable conduct in contravention of s 21 of Schedule 2 of the Competition & Consumer Act 2010 (Cth).
As submitted by IMG [147] , the cross-claim rests on the Court finding that the arrangement between Balls & Tackles and Mr Mansour in about September 2015 was "a private agreement quite different to that pleaded" by Balls & Tackle. More specifically, it rests on the Court finding that there existed an agreement identified as the B&T/Mansour Agreement in [9] of the cross-claim. I am not satisfied that such an agreement existed. Although there was, at the very least, an informal arrangement between Balls & Tackles and Mr Mansour that Mr Mansour would be given money to use to bribe potential buyers and to reward Mr Mansour for doing that, there is no evidence to support the conclusion that the agreement was made in 2015 or that it included the entry into a licence agreement with Playboy. Indeed, the evidence suggests otherwise.
IMG relies largely on the fact of the secret payments to establish the existence of the agreement. Given the nature of the alleged agreement, it is no surprise that it was neither in writing nor the subject of extensive evidence. That is no barrier to its existence as it is well settled that contract may be inferred from acts and conduct, as well as or in the absence of words: Técnicas Reunidas SA v Andrew [2018] NSWCA 192 at [50].
In Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR 97,326 at 11,118 McHugh JA said: "… it is an error 'to suppose that merely because something has been done then there is therefore some contract in existence which has thereby been executed'. Nevertheless, a contract may be inferred from the acts and conduct of parties as well as or in the absence of their words. The question in this class of case is whether the conduct of the parties viewed in the light of the surrounding circumstances shows a tacit understanding or agreement. The conduct of the parties, however, must be capable of proving all the essential elements of an express contract. …" (References omitted)
IMG relies on Mr Mansour's evidence [148] that, after the Deal Memo had been signed and shortly before the Licence Agreement was signed, Mr Nielsen had said to him that he would take care of him. Mr Mansour replied, "Yeah, we'll see how this goes" [149] . However, it is clear from a later passage in Mr Mansour's evidence that there was nothing more at that stage than what appears on its face: some vague suggestion of a reward if the Playboy licence worked well for Balls & Tackles.
When asked whether he had a discussion with Mr Nielsen about approaching other retailers, Mr Mansour said: [150] "A. That's when I, in February 2016, is that when I personally started having personal issues in my life and I was undiagnosed bipolar the whole of 2016 and we'll get back to that. But I was in debt and my marriage was breaking up so I remembered what he told me about taking care of me and I've asked Mr Nielsen to give me money on the side, cash, to try and influence Bras N Things decision to place an order. Q. Do you remember when you did that? A. February 2016. Q Did you do - A. And he agreed to that."

This evidence suggests that an agreement was first formed in February 2016 and the terms were that Mr Mansour would be paid to bribe BNT to try to get it to order products from Balls & Tackles. On that basis, I am not satisfied that the B&T/Mansour Agreement was made and the cross-claim must be rejected.

D. Conclusion

The plaintiff has failed to establish an entitlement to the relief sought by it. There will be a verdict for the defendant and an order for costs. Similarly, there will be a verdict for the cross-defendant and an order for costs. I will hear the parties on the appropriate costs orders.

Endnotes

It is unnecessary for the purpose of this judgment to identify the buyers in question with any greater particularity than by these initials.
See Fox v Percy (2003) 214 CLR 118 at [30]-[31] and the cases cited there.
Transcript (T) 213.8-15; T218.4-22.
T213.17-28.
T218.50-219.1; T219.35-46.
T218.35-48; T219.3-5.
T219.15-20; T219.22-27.
T220.47.
T221.22.
T348.36-38.
T221.22.
T222.20.
T222.27.
T224.24-29.
T227.6-15.
T227.38-40.
T221.22.
T221.25.
T166.35.
T166.42.
T184.5.
T183.48; see also T189.47-T190.14.
T198.12-18; T215.48-T216.3; T217.39-43; T234.7-21; T240.50-T241.2; T245.15-35; T262.41-49; T287.47-T288.1; T294.1-7; T307.3-10.
T220.11-13; T220.47; T230.27-29; T231.10; T243.36-37; T260.42; T288.1.
T233.41; T238.47; T245.13.
Exhibit 9, tab 4.
T425.11.
T406.7-20; T408.35-T409.29.
T407.32-43.
Exhibit 4, p113.
T428.6-37.
T429.5-7.
Applying what was said in respect of the common law in Briginshaw v Briginshaw (1938) 60 CLR 336 at 361-362 and Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 CLR 445 at [2] to s 140 of the Evidence Act 1995 (NSW).
National Rugby League Ltd known as the National Rugby League.
Then called Amanda Callaghan.
Affidavit of Matthew Primack affirmed 28 February 2019 at [19].
Exhibit 1, p5.
Exhibit 1, p6.
Affidavit of Stephen Nielson dated 7 May 2018 at [10].
Affidavit of Stephen Nielson dated 7 May 2018 at [12].
T62.33-46.
T102.33-T105.26.
T103.24.
T103.34.
T103.37-48.
T104.18.
T104.31.
T104.47.
T105.4.
The plaintiff referred to her evidence under cross-examination at T405.37-39.
Affidavit of Amanda Brandl dated 4 May 2018 at [8].
T406.1.
Exhibit 6, pp20, 23.
In spite of notice being given under s 97 of the Evidence Act 1995. There was, however, no objection to the admission of the evidence.
T365.45-50.
Exhibit 5, p216.
Exhibit 1, pp8 -11.
On 8 April 2016: Affidavit of Amanda Brandl dated 4 May 2018 at [3].
Exhibit 4, p30.
Exhibit 1, pp15-62.
Affidavit of Stephen Nielsen dated 7 May 2018 at [18]-[20].
Affidavit of Amanda Brandl dated 4 May 2018 at [14].
Exhibit 3, pp22-31.
Exhibit 4, pp89-91.
Exhibit 3, pp41-44.
The contracted number of sample styles being 10.
Exhibit 3, pp46-51.
Exhibit 1, p65.
Exhibit 3, pp113-130.
Amended Statement of Claim at [4].
Affidavit of Stephen Nielsen dated 7 May 2018 at [24].
Affidavit of Stephen Nielsen dated 7 May 2018 at [25].
Affidavit of Stephen Nielsen dated 7 May 2018 at [26].
Affidavit of Amanda Brandl dated 4 May 2018 at [17].
T138.6-11.
T138.1.
T117.13-T120.18.
T67.45.
T68.9; T117.36.
T118.13.
T393.24.
Exhibit 4, p93.
T120.27.
Exhibit 1, p66.
Exhibit 4, p95.
T 281.19-25.
T281.27-29.
Exhibit 3, p147.
A marketing firm.
Exhibit 3, p178.
Exhibit 4, p105.
T130.20-21.
Plaintiff's written submissions dated 2 April 2019 at [159].
That is the date on which a large order was placed for the production of Playboy underwear.
Defendant's outline of opening submissions dated 18 March 2019 at 21.
Amended Statement of Claim [5].
Exhibit 4, pp97-103.
T412.31-45.
T428.48-429.3.
Amended Statement of Claim [8].
Amended Statement of Claim [8].
Exhibit 3, p131.
Exhibit 4, p104.
Exhibit 3, p178.
Exhibit 3, p178.
Licence cl 2 i (i), Exhibit 1, pp29-30.
Exhibit 1, p70.
Exhibit 5, p130.
Exhibit 3, p55.
Exhibit 1, p71.
Affidavit of Stephen Nielsen dated 7 May 2018 at [53].
T147.41-50.
T68.25-32.
Exhibit 9, tab 2; National Australia Bank Statement 14, p1.
Exhibit 9, tab 2; National Australia Bank Statement 14, p1.
Exhibit 1, pp74-76.
Affidavit of Stephen Nielsen dated 7 May 2018 at [33].
Exhibit 5, p128.
Exhibit 5, pp124-125.
Exhibit 9, tab 2; National Australia Bank Statement 14, p2.
Exhibit 2, p46.
Affidavit of Stephen Nielsen dated 7 May 2018 at [53].
Affidavit of Amanda Brandl dated 4 May 2018 at [22].
Exhibit 4, p108.
Exhibit 1, p125.
Exhibit 1, p127.
A "PO" is a Purchase Order.
T72.39; T73.3; T157.48.
Amended Statement of Claim at [9].
Affidavit of Stephen Nielsen dated 7 May 2018 at [65].
Exhibit 1, p147.
Exhibit 4, p108.
T228.4-11; T405.1-15.
Exhibit 5, pp164-166; 169-170.
Mr Mansour was hospitalised at the time.
Affidavit of Stephen Nielsen dated 7 May 2018 at [61].
Exhibit 9, tab 4.
Exhibit 1, pp91-92.
Exhibit 1, pp138-139.
Exhibit 9, tab 4.
Affidavit of Stephen Nielsen dated 7 May 2018 at [65].
Exhibit 9, tab 4.
Exhibit 4, p136.
Exhibit 1, pp106-107.
Cross-claim filed 12 February 2019 at [9].
Cross-claim filed 12 February 2019 at [10].
Defendant's written submissions dated 2 April 2019 at [175].
T66.37-49.
T66.49.
T67.45-T68.4. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 05 July 2019

Consumer Act 2010(Cth)

Australian Consumer Law Crimes Act 1900(NSW)

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Judgment (28 paragraphs)

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