"The evidence was that the deposit of $30,000 was paid on or about 30 September 1996 - at the latest, on 4 October. (Wunsch's evidence gives both 30 September and 4 October as the date). Although the purchaser was only a two dollar company and although it was to be let into possession on payment of only $30,000 out of a total price of $180,000, and notwithstanding the acumen and firmness which Salvo seems to have exhibited in his business dealings, no guarantee of the purchaser's obligations under the contract was taken by the vendor. This becomes the more striking when regard is had to the evidence that $80,000 was outlaid by Montedeen for the 1997 Yellow Pages advertisements, which, it was said, the purchaser had agreed to reimburse it. The evidence of Touma was that at the time of trial his company had reimbursed Montedeen only about $5,000 of that $80,000. (Wunsch claimed not to be able to say how much had been reimbursed.) A transaction of this kind with a two dollar company does not, we repeat, sit at all well with the clear impression of Salvo which one gets from the evidence, including his own, as a very capable and hard businessman. Performance of the franchisee's obligations under the franchise agreement was guaranteed by the Vernuccios. Touma swore that his company had made payment of the first instalment of $30,000 under the contract of sale in addition to the deposit. Both Salvo and Wunsch, on the other hand, swore that only the deposit had been paid. On 7 August 1996 - the day before the date of sale given in the contract of sale (which was according to the evidence the actual date of execution of that contract), Crown Rent A Car Pty Ltd sent a fax to Telstra reserving numbers for the 1997 Yellow Pages. Sable Smooth did not, as we have said, change its name until 18 November 1998, and at the time of this fax Crown Rent A Car Pty Ltd was the Salvo company NTL Corporation Pty Ltd under its new name, the name which it had adopted on 4 August 1994. The numbers reserved included two sets of three numbers for 46 Swan Street, Richmond and 444 Burke Road, Camberwell, Crown, Astoria and Real Cheap each being allocated one number in each of those two sets. The evidence showed that the two addresses were bogus, in the sense that the premises mentioned had no connection with Crown Rent A Car Pty Ltd, or `Crown', or `Astoria', or `Real Cheap', except the connection created by the bogus advertisement itself. It will be remembered that Bamco Villa's premises - its genuine branches - were at 26 Swan Street, Richmond and 343 Burke Road, Camberwell. Notwithstanding Touma's professed intention to use Crown to establish a Melbourne branch of his `prestige' sportscar hire business, he accepted that the Yellow Pages advertisements for 1997 which Salvo caused to be inserted - allegedly at Touma's request - showed in the Crown advertisement not a sportscar but a medium size family sedan. On 14 November 1996 Touma wrote to Wunsch as follows: `Due to being so close to Christmas and several unforeseen minor problems I am experiencing I would like to postpone the settlement date to early January 1997 say 15 January 1997 and would be pleased if you could continue caretaking the business until that date as the new phone books are coming out now, please take the calls for the new numbers until we open.' This is curious, because the deposit had, according to the evidence, been paid on or about 30 September 1996, the last day for its payment under the contract, with the result that settlement should have taken place on that date. Wunsch found himself at a loss when asked about this letter. On about 3 September 1996 a Crown franchise was established in Scoresby. The grant of this franchise was negotiated by Salvo. On 28 October 1996 Montedeen instructed Yellow Pages Australia that Sable Smooth was the transferee of the advertisements in respect of Astoria, Crown and Real Cheap. On 20 December 1996 Montedeen instructed Telstra to divert the Crown, Astoria and Real Cheap telephone numbers for the bogus addresses in Richmond and Camberwell from Montedeen's City office to the Crown franchisee at Scoresby. (Those were the six telephone numbers which a Salvo company then named Crown Rent A Car had reserved on 7 August 1996 and which had been diverted on 20 November 1996 to Delta's city office, that is, the City office of Montedeen.) On the same day Wunsch told Touma by letter that Delta could no longer service his calls at Delta's city location and told him that the telephone numbers had been diverted to the Scoresby franchise. He added, `Please get established as soon as possible'. Asked why Delta could no longer service Touma's calls, Wunsch said, `We didn't want to have anything to do with it'. Asked to explain this answer, Wunsch spoke of the need to look at all the other documents and discussions. He did not put forward as a reason the launching by Bamco Villa of proceedings for contempt of court on 17 December 1996, together with an application for an injunction requiring the defendants to divert to the plaintiff the six telephone numbers for the bogus addresses in Richmond and Camberwell. Nor would he accept the suggestion that it was as a result of those proceedings that the defendants had caused Touma to offer the use of telephone numbers to Bamco Villa and other franchisees of Montedeen. The evidence was that Sable Smooth had an office in Sydney in the same building as Montedeen. There was also evidence that Sable Smooth conducted the Crown Rent A Car business in Melbourne at premises in Franklin Street let to it by a company controlled by Salvo, Pearce Valley Pty Ltd. Touma swore that he set up a branch in Franklin Street in January 1997. He said that a lease had been prepared but apparently not yet executed. A lease was put in evidence, undated, and executed only by Sable Smooth. Although the lease makes provision for the guarantee of the performance of the tenant's obligations, no guarantee was in fact given or (so far as the evidence shows) sought. Again this is striking in view of the financial position of the tenant as a two dollar company, its substantial obligations under the contract of sale and the lease and the business experience and shrewdness of the controller of the landlord. The lease creates only a monthly tenancy, commencing on 15 January 1997. It is an unusual and unsatisfactory document, partly because many of its provisions are appropriate to a lease creating a term of years rather than a mere monthly tenancy. Even the rent is expressed as an annual one - $36,000. A number of criticisms could be made of the lease and it gives the impression of having been hastily or at least ineptly prepared. It does nothing to dispel the suspicion created by a considerable number of circumstances. One highly suspicious circumstance concerns the amount of the rent, expressed in the lease as $36,000 per annum including outgoings, payable monthly. According to Touma, the rent was `$3,000, $36,000 a year'. Yet the manager of the Crown business, Marion Atwill, gave evidence, as the person who had established and who administered the system, that the rent paid to Salvo's company was $5,000 a month. Wunsch's evidence on this point is noteworthy. He swore that the rent payable was $5,000 a month and that Sable Smooth had been paying at that rate. When it was pointed out to him that the lease reserved a rent of $3,000 a month, he said that the $5,000 a month had been paid by mistake. All this is very singular. According to Touma, the manager of Crown's business engaged by him, Marion Atwill, was recommended to him by Salvo and was a former girlfriend of Salvo. He said he thought that Atwill had an assistant, but did not know the assistant's name or salary. Wunsch was unable to mention any step which Touma had himself taken in the early days with a view - according to Wunsch - to the establishment of a business in Melbourne to be controlled by Touma. The steps which Wunsch took included instructing Montedeen's solicitors to prepare the contract of sale; instructing Montedeen's accountants to obtain a shelf company for Touma; causing requests or instructions to be made or given to Telstra concerning the reservation of telephone numbers, the form of advertisements, the diversion of telephone calls and other matters; arranging on 12 August 1996 for the registration of the business name `Real Cheap Car Rentals', with Montedeen as the proprietor, and payment of the cost of that with Montedeen's money; arranging for the transfer of that business name in November 1996 from Montedeen to Sable Smooth; arranging for the transfer of the `Astoria Rent A Car' business name from Montedeen to Sable Smooth in mid-January 1997. We have drawn attention to provisions of the contract of sale which give the vendor a part to play in the conduct of the businesses sold. Whether this part is to be played before settlement, or after settlement, or both before or after, is as a matter of construction not always clear. Touma said it was his understanding that the contract provided that Salvo should `caretake' the businesses until September 1996. We have raised the question whether special condition 3 required the vendor to answer telephone calls in the purchaser's name before or after settlement, or both. Special condition 12 requires the vendor virtually to manage what is - for some reason, or perhaps none - described as a national vehicle rental operation for one year from the date of settlement. Special condition 16 - contemplating an `agency agreement' - speaks of the continuation of all three businesses sold until the purchaser has established an infrastructure (although Touma was emphatic that the businesses other than that of Crown were of no use to him). The vagueness of these provisions and their apparent conflict with the intentions of Touma as expressed in his evidence - for example, he never suggested that Montedeen was to promise to provide management services for his sportscar business in New South Wales as part of the consideration for the purchase - give further grounds for doubting the genuineness of the transactions. As regards special condition 12, Touma spoke of having a sportscar business in Melbourne added to his Sydney sportscar business. He never spoke in evidence of contemplating a `national operation', either in the first twelve months or subsequently. Montedeen and Touma claimed that the purchaser had been granted a franchise in respect of the eastern suburbs, with the franchisee having a branch in Scoresby. (We have already mentioned the Scoresby franchise.) As early as 3 September 1996 Wunsch sent a fax to Montedeen's City branch informing it that `a Crown Car Rentals Branch' had recently opened in Scoresby and that Montedeen was `entering into an Agency Agreement with them'. Although the author of this fax, Wunsch had difficulty explaining it. He said that Montedeen's only connection with the franchisee (evidently Peterron Pty Ltd) was that it leased vehicles to it. Pressed, he added, `I'd have to see what else there might be'. Wunsch's explanation of the fax of 3 September 1996 is in our view unsatisfactory. The `Peter' of Peterron Pty Ltd was Peter Castledene. In the letter to Wunsch of 26 July 1996, asking for contracts to be prepared, Touma said, `I would also be obliged for an introduction to the Franchisee, Peter Castledene, as well as acting as my agent until possession date.' This is puzzling in two respects. In the first place, the letter from Touma is dated about five weeks before Wunsch's fax. That fax says that the branch has `recently' opened, but operation of the branch would be impossible without the provision of vehicles by Montedeen. In the second place, leaving aside the doubt about whether it is Montedeen or Castledene who is to act as Touma's agent, the notion of someone's acting as agent for the purchaser until the possession date seems strange. Perhaps the expression can be explained as a layman's choice of a word to describe the vendor as carrying on the business for the vendor's benefit but so as to preserve it for the purchaser between contract of sale and settlement. But we must say that the provisions of the contract and lease and even the words used in communications between Wunsch and Touma, taken in conjunction with other circumstances, raise very serious questions about the genuineness of the transactions of sale and lease. (It was not at the trial suggested on behalf of Bamco Villa that documents like the letter from Touma to Wunsch of 26 July 1996 and the contract of sale were manufactured documents, produced after the event. The allegation was that they were contemporaneous documents but that they did not relate to contemplated or actual genuine transactions.) As regards the words used in communications, the letter of 26 July 1996 from Touma to Wunsch is open to the comment that the author gives the impression of setting out to create evidence. `Due to the time constraints and practical reasons I require you to act on my behalf' does not have a natural ring, nor, it may perhaps be said, does `Please document the sales documents on the terms we agreed'. The letter expresses a preference for the name `Real Cheap Car Rentals' over similar names. But Touma's evidence was that the only name of value to him was the Crown name. Touma said more than once that the Astoria and Real Cheap names or businesses were of no interest and no value to him: what he wanted, and was prepared to pay $180,000 for, was the Crown name - which he said usefully suggested a link with Crown casino - and the prominent Crown advertisements in the Yellow Pages. He acquired Crown, he said, as a means of establishing a branch of his `prestige' sportscar business in Melbourne. His evidence fails altogether to explain his evident failure to take any steps to establish a Melbourne sportscar branch and his actual steps (by his own account) to establish or take over a business in Melbourne which would lease out ordinary vehicles. According to his account, in November 1996 he inquired about buying a few cars with which to run the Crown business in Melbourne, although he also said that he at no stage had tried to ascertain what the existing volume of Crown business was. He said also that in December 1996 he began negotiating with Salvo, and, as we have mentioned, the uncontradicted evidence was that Montedeen had supplied on hire all the vehicles used by Sable Smooth for leasing. A letter of 8 January 1997 records an agreement between Montedeen and Touma for the leasing of vehicles for use as stock at the Crown branch. The agreement is to last for a year. There is no suggestion of any steps having been taken by Touma with a view to the establishment of a sportscar branch, or where the money for that purpose would come from. Touma said that his inability to sell a house for $260,000 had made it necessary for him to arrange to pay the purchase price of $180,000 for the three businesses by instalments over a period of more than two years. The sportscars of which he spoke, `Porsches, Ferraris, Mercs, BMW's' and so forth, are not cheap, and $260,000 would not go very far. Of course it can be said that the 1997 Yellow Pages, with their ordinary family sedan Crown advertisement, could not serve as a springboard for a sportscar business, so that some delay was necessary once the advertisement had, at the request of Touma, been arranged. But this explanation meets the difficulty that Touma - despite his evidence that he wanted to buy the Crown name in order to conduct a sportscar business - seems to have contemplated from the start the possible indefinite use of Crown for the leasing of ordinary vehicles. For he gave evidence that he contemplated establishing `a number of Crown branches' in Victoria if Crown was successful and in a letter to Wunsch of 13 January 1997 he wrote, `I do believe it will be many years before I expand to all the outer suburbs'. This letter, read as a whole, gives the clear impression that the business to be conducted `from my soon to be open city location', which will from the outset service `some inner suburbs', is not a "niche market" sportscar business but an ordinary rent-a-car business, and that it is this ordinary business which will in the fullness of time expand into all the suburbs. Grave doubt is thrown by the evidence as a whole upon Touma's statement that he bought the Crown business in order to create a Melbourne branch of his Sydney sportscar business, and thus grave doubt is thrown upon his credibility. Dealing with the position at the time of trial, he said that he had yet to decide whether the 1998 Yellow Pages advertisements would relate to sportscars. That decision was one which could not be put off for long. We return now to the way in which, and the person by whom, the businesses sold were conducted after the sale. Wunsch said, `We agreed basically to take these numbers and caretake them for a time until he got established'. By the letter dated 14 November 1996 which we set out and commented upon earlier in these reasons, Touma asked Wunsch to postpone settlement until mid-January 1997 and to `continue caretaking the business until that date'. Touma's explanation for this request, given in evidence, was his difficulty in finding staff. Since he originally engaged only a manager, this explanation presumably relates simply to the filling of that post. Wunsch swore that for a short time after the release of the 1997 Yellow Pages (in November 1996) Montedeen `accepted' the diversion of Crown calls to Montedeen's City location and that this was done until Crown could get established in its own right. It was on 20 November 1996 that Montedeen instructed Telstra to divert the telephone calls in question to its City branch. One month later, on 20 December, Montedeen informed Touma that it could `no longer service the diverted calls'. This, as we have said, was done three days after contempt and other proceedings relating to the telephone numbers were launched by Bamco Villa. Touma was emphatic that he did not know, and had never inquired, how much business Montedeen had received as a result of the diversion of the Crown calls to it in November and December 1996. The implication is that it was treated by both Salvo and Touma as conducting the Crown business on its own behalf during that period. But our view on the issue of breach of contract would be the same even if Montedeen was conducting the Crown business on behalf of Sable Smooth. This was, in our view, a breach of Montedeen's obligations under cl. 1.1 and all three branches of cl. 22.4 of the franchise agreement... We have referred in these reasons to a good deal, but by no means all, of the evidence bearing on this question, making at times comments in the course of our incomplete review. On the evidence as a whole very great suspicion is aroused. His Honour does not discuss any of the numerous particular considerations which to our mind point towards the conclusion that there was no real sale. To arrive at that conclusion requires the rejection of the evidence on the point of more witnesses than one. Conscious as we are of the many authorities on the advantage enjoyed by a trial judge where credibility is important - and we do not think it necessary to mention any of them specifically - we are nevertheless persuaded that we should disturb his Honour's finding on this point and determine that the sale was a sham, that Sable Smooth had never conducted any of the three businesses supposedly sold to it and that it was never intended that the supposed purchaser should do so, and that Montedeen has accordingly committed breaches of cll. 1.1 and 22.4 of the franchise agreement additional to those constituted by what took place in November and December 1996."