APPEAL AND NEW TRIAL --- APPEAL - GENERAL PRINCIPLES --- IN GENERAL AND RIGHT OF APPEAL TRADE AND COMMERCE --- TRADE AND COMMERCE GENERALLY --- STATUTES RELATING TO MISLEADING OR DECEPTIVE CONDUCT IN TRADE --- SOUTH AUSTRALIA

Per Lander J (Prior J concurring) Appeal and cross appeal - deed of settlement - trust - family trust - non-appearance of defendant - franchise agreement - contract of sale - sale of assets agreement - contract - default of statutory obligations - reliance - representations - express terms - implied terms - breach of contract - duty of care - standard of care - accountant - breach of duty - consequential loss - recission - damages - misleading and deceptive conduct - unconscionable conduct - misrepresentation - contributory negligence - credibility of witnesses - purchase agreement - financial statements - damages - causal link - retainer - reasonable care and skill - causation - apportionment - remoteness - foreseeability - costs - joinder - appeal dismissed - cross appeal on damages allowed.

• Land and Business (Sale and Conveyancing) Act 1994 (SA) s 5;
• Fair Trading Act 1987 (SA) s 84;
• Misrepresentation Act 1972 (SA) ;
• Trade Practices Act 1974 (Cth) s 82;
• Wrongs Act 1936 (SA) s 27A;
• District Court Act 1991 (SA) s 42;
• Supreme Court Rules 1987 (SA) s 101.02(1), referred to.
• Astley v Austrust Ltd [1999] HCA 6; (1999) 197 CLR 1;
• Duke Group v Pilmer [1999] SASC 97; (1999) 73 SASR 64;
• Cut Price Deli Pty Ltd v Jacques [1994] FCA 1101; (1994) 126 ALR 413, applied.
• Devries v Australian National Railways Commission (1993) 177 CLR 472;
• (In Liquidation) [1999] HCA 3; (1999) 160 ALR 588;
• Wardley Australia Ltd v Western Australia [1992] HCA 55; (1992) 175 CLR 514;
• Janssen-Gilag Pty Ltd v Pfizer Pty Ltd [1992] FCA 437; (1992) 37 FCR 526;
• Donald Campbell & Co Ltd v Pollak [1927] AC 732;
• Fennell v Supervision and Engineering Services Pty Ltd (1988) 48 SASR 6, discussed.

TRADE AND COMMERCE --- TRADE AND COMMERCE GENERALLY --- STATUTES RELATING TO MISLEADING OR DECEPTIVE CONDUCT IN TRADE --- SOUTH AUSTRALIA

Per Wicks J Misleading or deceptive conduct under Fair Trading Act - fraudulent misrepresentation as to turnover and profitability of business - claim by plaintiff purchaser against accountant making representations to bank which made a loan to the plaintiff on the faith of misrepresentations - appeal dismissed.

TORTS --- NEGLIGENCE --- ESSENTIALS OF ACTION FOR NEGLIGENCE

WHERE ECONOMIC OR FINANCIAL LOSS - CARELESS ADVICE, STATEMENTS AND NON-DISCLOSURE Breach of duty of care on the part of accountant of plaintiff purchaser of business - sale of business to trading trust formed for the benefit of the plaintiff after settlement of sale of business - whether damages recoverable by company formed by the plaintiff on its own account or as trustee - cross-appeal allowed.

CONTRIBUTORY NEGLIGENCE Contributory negligence on the part of plaintiff purchaser of business - quantum of contributory negligence one third - appeal dismissed.

• Fair Trading Act s 56, referred to.
• Evers v Bennett [1982] 31 SASR 228, applied.
• ANZ Banking Group Limited v Turnbull & Partners [1991] FCA 618; (1991) 106 ALR 115, discussed.
• Bialkower v ACOHS Pty Ltd (1998) 154 ALR 534;
• Bevington v Perks [1925] 2 KB 229, considered.

First Appellant: PAUL BARTLEY (FORMERLY PAUL POPOWSKI)

Counsel: MR T ANDERSON QC WITH MR P HEINRICH - Solicitors: MINTER ELLISON

Counsel: MR T ANDERSON QC WITH MR P HEINRICH - Solicitors: MINTER ELLISON

Counsel: MR M HOILE WITH MS N HASLAM - Solicitors: ILES SELLEY

Second Respondent/Cross-Appellant: SUSAN MYERS PTY LTD

Counsel: MR M HOILE WITH MS N HASLAM - Solicitors: ILES SELLEY

Judgment No. [2002] SASC 24

On Appeal from DISTRICT COURT OF SOUTH AUSTRALIA (HIS HONOUR JUDGE LUNN)

[2002] SASC 24

1. PRIOR J: I agree with the reasons given by Lander J and with the orders he proposes.

3. This is an appeal and cross appeal. The appellants were two of three defendants in proceedings brought by the respondents/plaintiffs. The cross appellants are the plaintiffs. I will refer to the parties as they were described in the court below.

4. The first plaintiff brought this action in her own right. She is also the sole director of the second plaintiff, which is the trustee of the Susan Myers Family Trust pursuant to a Deed of Settlement executed on or about 28 April 1997. For all intents and purposes the first plaintiff controls the second plaintiff. The second plaintiff was created for the purpose of conducting the business which was acquired by the first plaintiff from the first defendant and which is the subject matter of this litigation. The first defendant is Evelyn Neis. She is not an appellant to these proceedings. She is, however, a respondent to the cross appeal brought by the plaintiffs. She did not appear on this appeal. However, in respect of the ground of appeal raised against her the second and third defendants had a like interest. In the end result her non appearance did not disadvantage her. The second defendant has changed his name to Bartley. He was the first defendant's and the plaintiffs' accountant. He conducted his public accountancy practice through the third defendant Unite Pty Ltd (Unite).

5. During both the trial and the appeal the second and third defendants were treated compendiously.

6. The defendants joined a third party, Australasian Law Chambers Pty Ltd, which carries on a law practice under the name of Winters. Those third party proceedings were discontinued before the trial and are unimportant in a consideration of this matter.

7. The brief facts are these. The first plaintiff agreed to purchase from the first defendant and the first defendant agreed to sell to the first plaintiff for a consideration of $125,000:

1 The first defendant's stock in trade in a business known as Evelyn Neis Creations;

3 a franchise to carry on a business in the name of Evelyn Neis Creation pursuant to a 'Franchise Agreement'.

8. The contract (the Sale of Assets Agreement) was in writing and was executed on 9 April 1997 but bears the date 10 April 1997.

9. On that latter date the first plaintiff paid to the first defendant the sum of $10,000 by way of deposit.

10. The first plaintiff and the first defendant entered into a second agreement (the Fit-Out Agreement), which was also in writing and was executed on 12 April 1997 whereby the first defendant sold to the first plaintiff fixtures and fittings situated within a shop at Shop 28, Adelaide Arcade, Adelaide.

11. On 16 April 1997, the first plaintiff and the first defendant executed a third written agreement (the Franchise Agreement) which was contemplated in the provisions of the Sale of Assets Agreement and was indeed a schedule to that Agreement.

12. The second plaintiff executed a Deed of Settlement on 28 April 1997 creating the Susan Myers Family Trust and became the trustee of that trust. It was always under the control of the first plaintiff.

13. After the execution of the various agreements to which I have referred the first plaintiff and later the first and second plaintiffs carried on a business from the shop in the Adelaide Arcade under the name of Evelyn Neis Creations.

14. The first plaintiff claimed that the Sale of Assets Agreement provided for the sale of a small business and was governed by s 5 of the Land And Business (Sale And Conveyancing) Act 1994 (SA) and that the first defendant was in default of her obligations under that Act and that the first plaintiff was thereby entitled to the remedies provided for under that Act.

15. The first plaintiff also claimed that the first defendant by herself and by Mr Bartley made certain representations to her and to her and her bankers, Australia And New Zealand Banking Group Ltd (ANZ) upon which both she and the ANZ relied. She claimed that those representations were false. The first plaintiff claimed that the false representations made to her induced her to enter into all three agreements. She thereby claimed that she was entitled to remedies under the Fair Trading Act 1987 (SA) and Misrepresentation Act 1972 (SA). She claimed that the false representations to her banker was conduct as a result of which she suffered loss and damage. Again she claimed she was entitled to damages under the Fair Trading Act 1987.

16. Next she claimed that the first defendant was in breach of express terms of the Franchise Agreement. She also claimed that there were implied terms in the Franchise Agreement which the first defendant had also breached.

17. The plaintiffs claimed that Mr Bartley became their accountant in or about April 1997 and remained so until July 1997. They claimed that the second and third defendants owed them a duty of care "commensurate with the standard of care expected of a reasonably diligent accountant". They claimed that Mr Bartley and the third defendant breached that duty of care. The plaintiffs did not allege that there was a contract of retainer between the plaintiffs and the second and third defendants or either of them. They did not claim that the second or third defendants were in breach of any contract of retainer. Their claim therefore in respect of their professional relationship with the second and third defendants was in tort.

18. The plaintiffs claimed that they suffered loss. The plaintiffs claimed that they suffered a loss of $125,000 by payment to the first defendant of that sum on account of stock in trade, debtors and the franchise. They claimed a further loss in the sum of $17,500 being payment for the items listed in Fit Out Agreement.

19. They claimed that they suffered consequential loss such as interest, bank charges, stamp duty, brokerage and professional fees. Further they claimed that they suffered other trading losses.

"1 A declaration that the first plaintiff is entitled to and has exercised her "cooling off rights" under any of the Sale of Assets, Fit-Out and Franchise Agreements of 10, 12 and 15 April 1997 respectively and/or the Franchising Code of Practice as incorporated therein and/or pursuant to Section 5 of the Land and Business (Sale and Conveyancing) Act, 1994 (SA);

2 A declaration that the first plaintiff has and is entitled to rescind, or in the alternative avoid, each of the agreements, whether at common law or pursuant to Section 6 of the Misrepresentation Act, 1972 (SA), Sections 84 and 85 of the Fair Trading Act, 1987 (SA) and Section 15 of the Land and Business (Sale and Conveyancing) Act, 1994 (SA);

3 Reimbursement of all monies paid to the first defendant by the plaintiffs pursuant to the Sale of Assets, Fit-Out and Franchise Agreements, whether at common law or pursuant to Section 7 of the Misrepresentation Act, 1972 (SA), Sections 84 and 85 of the Fair Trading Act, 1987 (SA) and Section 15 of the Land and Business (Sale and Conveyancing) Act, 1994 (SA);

4 Orders in the nature of compensation under Section 85 of the Fair Trading Act, 1987 (SA);

6 Damages to be assessed pursuant to Section 7 of the Misrepresentation Act, 1972 (SA);

7 Damages to be assessed for misleading or deceptive conduct in contravention of Section 56 of the Fair Trading Act, 1987 (SA);

8 Damages to be assessed for unconscionable conduct in contravention of Section 57 of the Fair Trading Act, 1987 (SA);

10 Damages for the loss of use of monies paid by the plaintiffs to the first defendant;

11 All such accounts and/or enquiries as to damages as may be necessary;

21. It is apparent from the pleadings that the only claim brought by both plaintiffs was against the second and third defendants for breach of a common law duty of care said to be owed by the second and third defendants to the plaintiffs.

22. The other claims brought against the first defendant and in respect of the claim of misrepresentation against all three defendants were brought only by the first plaintiff.

23. The first defendant's defence is not included in the appeal papers but that is not a matter of consequence. It may be assumed that the first defendant put all matters in issue. Because of her limited role on this appeal it is not necessary to further inquire into her defence. It is, however, relevant to note that the first defendant counterclaimed against the first plaintiff. I will refer to that counterclaim in due course.

24. The second and third defendants filed a joint defence. They did not plead to the first plaintiff's claim for relief under the Land And Business (Sale And Conveyancing) Act 1994. That was not a claim brought against them. Nor did they plead to the claim for breach of the express and implied terms of the Franchise Agreement. Again that was not a matter relevant to the second and third defendants. They were obliged to plead to the claim alleging false representations. They mainly denied making the representations alleged against Mr Bartley. Some representations were admitted. In respect of those representations it was denied that the representations were false. By denying the falsity of those representations they, of course, denied that the first plaintiff was entitled to any relief under the Misrepresentation Act 1972 or Fair Trading Act 1987.

25. They denied that any duty of care was owed by the defendants to the plaintiffs. In the alternative they asserted that if a duty of care was owed it was not in the terms pleaded by the plaintiffs. In the further alternative they asserted that any duty of care owed by the second and third defendants was not breached. Lastly, they claimed that the plaintiff (meaning the first plaintiff) was guilty of contributory negligence.

26. The matter came on for trial before a Judge in the District Court. He accepted the evidence of independent witnesses Mrs Vozzo, Mr Wheeler and an expert witness, Mr Krantz. He noted that the ANZ bank manager, Mr Bartsch and a solicitor, Mr Winter, were not called.

"I did not find any of the plaintiff, the 1st defendant or the 2nd defendant to be impressive, or very reliable witnesses. As between them it is really the case of who was the least unsatisfactory of them. I reject the evidence of each of them insofar as it is inconsistent with the other evidence mentioned in the preceding paragraphs."

He said of the first plaintiff at paragraph 52:

"It is likely that the plaintiff's present inability to remember accurately a number of important aspects of her dealings in purchasing the business was because they were of no importance or concern to her at the time. As much of her evidence where it can be checked against other more reliable indicators as shown to be unreliable, no great weight can be placed on her assertions on other matters which cannot be independently verified."

He said of the first defendant at paragraph 53:

"The 2nd (sic) defendant was as erratic in her evidence as she was in the conduct of her business. There are assertions that the plaintiff was an expert accountant and well familiar with her records was absurd. Her claim that the plaintiff was represented by her own accountants and lawyers in the events leading up to the settlement was also too far fetched to be accepted. She claimed that the plaintiff had prepared some of the secondary accounting records of the business, but the plaintiff's writing was not identified on them. She told a false story to various people about supposed arrangements for her to set up a franchise in Melbourne to justify the urgency of the settlement of the sale to the plaintiff. She was evasive and unconvincing in merely answering the allegations about what occurred at 301 North Terrace on 4 April by saying that she could not remember. Her evidence was inconsistent with the instructions which she must have given for parts of her pleaded defence. Many of her responses in cross examination were merely argumentative or specious. I do not find that she was in any way involved in the malicious damage of stock in the shop in September 1997."

The Trial Judge said of the 2nd defendant in paragraph 54 of his reasons:

"I am satisfied that the 2nd defendant deliberately gave false evidence to bolster his own case and is unworthy of any credit on matters which are on dispute. Many of his assertions were unconvincing, self serving attempts to bolster his defence and to deny that he had acted unethically. The records of Mr Bartsch contradict his evidence in numerous respects. His assertion that when he commenced to work for the plaintiff on 10 April he thought that the sale of the first defendant's business to her was complete was quite incredible in the light of the other evidence. There is a strong inference that a good deal went on between him and the 1st defendant which neither of them were prepared to disclose in their evidence because it would have been adverse to their cases. However, I remind myself that the fact that he has lied on many matters does not mean that the opposite of his lies is therefore proved, but only that there is no evidence from him on that topic. When he prepared the 1st defendant's 1997 financial statements, which is well after he knew that misrepresentation was alleged in the Projection it included various items totalling about $76,000 and income for the 1st defendant in that financial year which were not earnings by her."

The Trial Judge continued in the same paragraph immediately after the passage to which I have referred:

"This was apparently done to make it that the 1st defendant's earnings from the shop after 1 July 1996 were considerably greater than they were, and therefore spuriously to justify the sales figure in the Projection."

It would be as well to deal with a complaint made by the second defendant in relation to the last mentioned matter immediately.

The second and third defendants alleged as a ground of appeal:

"9 The Learned Judge erred in law in making the findings referred to in the last two sentences in paragraph 54 of his reasons because:

(a) the matters referred to therein were never raised or otherwise put in issue at any stage in the proceedings (including the trial);

(b) the learned Judge and the other parties did not raise the matters referred to in those sentences against Paul Bartley and Unite Pty Ltd at any stage of the trial;

(c) Paul Bartley and Unite Pty Ltd have been denied procedural fairness because they were not given notice of the matters so as to have a reasonable opportunity to provide an explanation;

(d) none of the other parties in the proceedings admitted that Paul Bartley and Unite Pty Ltd prepared the relevant financial statements for the purposes or reasons found by the learned Judge."

The second and third defendants submitted on this appeal, as the ground of appeal complains, that the matters in the final two paragraphs of paragraph 54 of His Honour's reasons were not issues raised during the trial. The defendants were not given notice of the matters referred to by the Judge. There was no cross examination on the issues. They alleged that in those circumstances they were denied procedural fairness and the findings cannot stand.

The second defendant discovered financial statements which he had prepared and which showed takings for the business for the financial year ended 1996/97. Those documents were supplied to the plaintiff's expert, Mr Krantz, who gave evidence that the takings for the business in those financial statements were overstated by $76,000.

Mr Bartley was cross examined on that matter and agreed that a sum of $76,000 should not have been included in those financial statements.

He was not asked why it was that the sum had been included. It was not put to him that it had been included for any sinister reasons.

In my opinion, the conclusion arrived at by the Trial Judge to which I have referred cannot stand. A conclusion of that kind cannot be arrived at unless the party against whom the finding is made has had an opportunity of answering such an allegation.

However, in my opinion, the finding is not critical to His Honour's reasons in any respect. His Honour was not prepared to accept the second defendant for a number of reasons. Even without regard to this matter, clearly enough there was adequate evidence upon which His Honour could have rejected the second defendant's evidence.

Whilst I agree that the Trial Judge should not have arrived at the conclusion on the evidence as it stands, in my opinion, that error does not in any way invalidate His Honour's conclusions.

This Court's Approach To The Judge's Conclusions On The Witnesses

His Honour has expressed very strong views on the truthfulness and reliability of the evidence of each of the parties to the action. He had a significant advantage not enjoyed by this Court. He heard and saw the parties give evidence.

In Devries v Australian National Railways Commission (1993) 177 CLR 472 at 479 Brennan, Gaudron and McHugh JJ said:

"More than once in recent years this Court has pointed out that a finding of fact by a trial judge, based on the credibility of a witness, is not to be set aside because an appellate court thinks that the probabilities of the case are against - even strongly against - that finding of fact. If the trial judge's finding depends to any substantial degree on the credibility of the witness, the finding must stand unless it can be shown that the trial judge "has failed to use or has palpably misused his advantage" or has acted on evidence which was "inconsistent with facts incontrovertibly established by the evidence" or which was "glaringly improbable." "

In the same case Dean and Dawson JJ said at 480:

"In a case where it appears that a challenged finding of fact has, to a significant extent, been based on the trial judge's observations of the demeanour of the witnesses, the members of an appellate court are inevitably placed in a position of real disadvantage compared with the trial judge."

However their Honours went on to say that even in such a case, the court cannot abdicate its responsibility to assess the evidence for itself.

More recently in State Rail Authority Of New South Wales v Earthline Constructions Pty Ltd (In Liquidation) [1999] HCA 3; (1999) 160 ALR 588 at 610 Kirby J said:

"Appellate Judges must necessarily perform their statutory function. They must rehear the matter and form their own conclusions on the evidence recorded at the trial. Rising to their duty they must condescend to a re-examination of the facts, if their statutory charter so requires or permits. Yet that re-examination obliges appellate judges to take into account, and give full weight to, the advantages which the trial judge had and which, in the nature of their different functions and purpose, they may not have."

His Honour went on to discuss the circumstances where credibility findings do not conclude the appeal in the appellate Court.

This is one of those cases where, in my opinion, the appellate Court is in as good a position as the Trial Judge to determine the honesty and reliability of the parties. The Trial Judge did not rely upon the demeanour of the parties in assessing their credibility or reliability. His Honour determined those matters against objective and incontrovertible evidence. That evidence was contained in contemporaneous documents which were prepared in circumstances where no-one suspected that litigation would take place. In those circumstances one can usually expect that those contemporaneous documents will speak honestly of the facts which are contained in the documents.

In the end result it does not matter much in this case, because after a reading of the evidence, the exhibits and His Honour's reasons I have reached the same conclusion as His Honour as to the reliability of the parties to whom he referred.

His Honour was right, in my opinion, to proceed upon the basis that none of the parties was particularly reliable. The better evidence to rely upon for a determination of the issues in the case was contained in the exhibits which were tendered by the various parties.

I have had the advantage of reading the reasons of Wicks J. His Honour has dealt extensively with the facts. I shall merely mention those facts which appear to me to be more important.

The first defendant carried on the business of designing, manufacturing and selling women's clothing under the label of Evelyn Neis Creations. She carried on that business from both her premises at North Terrace and at Shop 28, Adelaide Arcade. The business sold only a few garments each week. The business targeted the more affluent market.

Most of the clothing which she sold had a mark up of 100% over wholesale price. The first plaintiff and the first defendant were known to each other. Originally the first plaintiff was a customer of the first defendant. In due course she became an employee.

The Trial Judge found that by early 1997 the first defendant was not in a good financial position. There are a number of factors which caused her then poor financial position, which do not need to be examined.

On or about 21 March the first defendant rang the first plaintiff to ascertain her interest in purchasing the business of the shop.

The plaintiff was keen to do so and immediately contacted her bankers, the ANZ Bank.

The next day the first plaintiff and the first defendant met to discuss the terms of any purchase. The first defendant suggested that the plaintiff could take up a new lease on the shop at Adelaide Arcade which was due to expire shortly. She suggested the first plaintiff should sell only garments supplied by the first defendant on a franchise arrangement. It was suggested by the first defendant that the first plaintiff should buy the existing stock at half its retail price, and that she should assume the existing lay-by arrangements. The first defendant told the first plaintiff she did not seek any payment for goodwill.

The first defendant required the transaction to be completed by 15 April.

On Monday 24 March the first plaintiff met with Mr Bartsch at the ANZ Bank. Whilst the first plaintiff had sufficient funds to meet the purchase price which had been suggested on the Saturday she wished to retain her investments for income purposes. She believed that she would be better off to borrow the purchase price and retain her investments.

The manager of the ANZ Bank told the first plaintiff that he would need to sight a Form 2 under the Land and Business (Sale and Conveyancing) Act 1994 and the financial statements for the business over the three preceding years.

On the same day the first plaintiff telephoned her accountant. He also told her that she needed a Form 2.

The first plaintiff then spoke to the first defendant seeking a Form 2 and the previous three financial year's statements. The first defendant in turn instructed the second defendant to provide those documents and any other information to the first plaintiff. The second defendant had been the first defendant's accountant for some years.

The Trial Judge has found that at or about this time there was some discussion between the first plaintiff and the first defendant about the transactional costs. They agreed that they would endeavour to keep the transactional costs at a minimum by both employing the same accountant and the same solicitor. The first plaintiff therefore withdrew her instructions to her accountant with the intention of instructing the second defendant.

The Trial Judge has found that the second defendant became the first plaintiff's accountant on 10 April. That is a finding with which I agree. I will return to that matter.

The first defendant wanted to put in place a franchise agreement. She obtained the name of Mr Paul Wheeler of Complete Franchising from the Yellow Pages of the telephone book. She and the first plaintiff and Mr Wheeler met on 26 March for the purpose of instructing Mr Wheeler to put a franchise agreement in place. Mr Wheeler quoted a fee of $15,000. He also advised the parties that he would need a copy of the previous financial statements. The first defendant again telephoned the second defendant and instructed him to provide Mr Wheeler with those financial statements.

Mr Wheeler was unable to obtain those statements from the second defendant. In due course the second defendant refused to supply them because they were unavailable.

The Trial Judge has found that the financial statements were not produced by the second defendant because the second defendant realised they were not likely to be acceptable. It is not entirely clear what His Honour meant by that. I think he meant that the financial statements were unlikely to disclose a viable business.

The second defendant advised the first defendant that he could obtain a franchise agreement for substantially less than that quoted by Mr Wheeler. The second defendant instructed Mr Phillip Winter, a solicitor, who estimated that he could provide such an agreement and the necessary paperwork for about $8,500-$9,500.

On 1 April the first defendant instructed Mr Winter concerning the proposed transaction. On 2 April Mr Winter forwarded to the first defendant a draft of a sale and purchase agreement and a franchise agreement. He asked the first defendant and the first plaintiff to meet with him after they had considered those documents.

Mr Winter met with the first plaintiff and the first defendant on 4 April and agreed to meet with them again on Sunday 6 April for signing the documents.

At one of those meetings the first plaintiff and the first defendant agreed that the monthly franchise fee would be 10 per cent of the wholesale price of the stock sold by the plaintiff.

The first plaintiff did not attend the meeting with Mr Winter on 6 April because she was unwell. Mr Winter did meet with the first defendant. He advised her at that time that because only assets were to pass she was under no obligation to comply with the Land and Business (Sale and Conveyancing) Act 1994 because the transaction did not involve the sale of a small business. He advised her that she did not have to produce a Form 2 or her previous financial statements.

The first plaintiff did attend a meeting with Mr Winter and the first defendant on 8 April when Mr Winter explained the transactional documents. At that same meeting he recommended to the first plaintiff that she obtain independent legal advice. She said she would. In fact she did not. She did not advise Mr Winter that she had not obtained independent legal advice.

The Sale of Assets Agreement was signed on 9 April.

The first plaintiff and the second defendant met with Mr Bartsch of the ANZ Bank either on 7 April or 9 April. The Trial Judge has found that it is more likely that the meeting occurred on 9 April. Nothing turns on that.

The purpose of the meeting was for the first plaintiff to borrow $140,000. Mr Bartsch was told that stock would be purchased for $90,000 and the lay-by debtors for $30,000. The plaintiff required $20,000 for working capital.

What is important is that at the meeting the second defendant supplied to the ANZ Bank a document entitled "The Projection" which purported to be a projection for Evelyn Neis for the year 1 May 1997 to 30 April 1998 based on the current trading figures.

The Projection assumes sales of $200,000 with the cost of goods being $80,000 resulting in a gross profit of $120,000. Expenses which do not include wages, total $37,951 and a nett profit of $82,049 is arrived at.

The Projection had an accompanying cover sheet under the heading of the third defendant. It said:

"The attached is an estimate only for budgetary purposes and has been attained (sic) from the trading figures extracted from the complex accounting structure of Evelyn Neis and from information supplied to us. We believe that the detail enclosed represents a true and fair view of the potential trading position of the shop in Adelaide Arcade, known as Evelyn Neis Creations.

No warranties or guarantees are given by this firm or any of its employees in relation to these figures as the actual performance will be dependent on the operators (sic) own skills and abilities in marketing the merchandise. This firm will accept no liability for the accuracy of the information supplied nor for the performance of the operating seeking to be franchised."

The Projection was not supplied to the first plaintiff or indeed the first defendant. It was, however, supplied to the ANZ Bank and a copy of it was retained on the ANZ Bank file.

The plaintiff saw that the Projection included gross sales of $200,000. Her only other knowledge of the content of the document was what she gleaned during the meeting at the ANZ Bank itself.

The Trial Judge found that the second defendant told those at the meeting that the figures for the previous two years were not available because the first defendant had four other business interests and those figures were intertwined. He told the meeting he was the accountant for the first defendant and was then to become the plaintiff's accountant. He said he had extracted the figures in the projection "from historicals".

The Trial Judge has found that there was a meeting either shortly before or shortly after between the first plaintiff and the second defendant at which the first plaintiff raised with the second defendant a number of matters related to the proposed franchise agreement. It was at that meeting that she confirmed her instructions to the second defendant for him to act as her accountant. On 10 April the second defendant wrote to the first plaintiff's previous accountant advising that he was acting.

On 11 April, for reasons which are unimportant, the second defendant terminated Mr Winter's instructions.

On 12 April the first plaintiff and the first defendant executed the Fit Out Agreement whereby the first plaintiff agreed to pay $17,500 to the first defendant on 16 April 1999 for various items of plant and equipment.

Mr Wheeler was instructed to act in Mr Winter's place. He reviewed the Franchise Agreement which had been drafted by Mr Winter and noted that the franchise fee was payable on 10 per cent of the wholesale price. He raised that matter with the first defendant who instructed him that she wanted a fee assessed at 10 per cent of the retail price. He changed the document in accordance with those instructions. He did not obtain the consent of the first plaintiff prior to doing that.

The Franchise Agreement was executed on 15 April. Immediately prior to its execution Mr Wheeler showed the plaintiff the alteration to the franchise fee. The plaintiff, who was then unwell, appeared to comprehend the change. Settlement did not take place on 15 April as the plaintiff was unwell and instead took place on 16 April.

The ANZ attended at settlement and advanced $140,000 to the first plaintiff. At settlement the bank paid $2,987.86 to Adelaide Arcade Pty Ltd; and $113,418.49 to Evelyn Neis. The remainder of the advance, totalling $23,593.65, was credited to the first plaintiff's accounts with the bank. That money was to be used as working capital as had been proposed at the meeting with Mr Bartsch.

The second defendant advised the first plaintiff that she should carry on the business to be conducted from Adelaide Arcade through a trading trust. He caused the incorporation of the second plaintiff on 24 April 1997 which was to act as trustee of that trust. On 28 April the second defendant acted as settlor and entered into a Deed of Settlement with the second plaintiff to set up the Susan Myers Family Trust. The first plaintiff is the sole director of the second plaintiff and the beneficiary of the trust.

The Trial Judge has found that thereafter the trading in the shop was carried on through the trust. However, there was no evidence of any agreement between the first plaintiff and the second plaintiff for the transfer of the assets which were acquired on settlement on 16 April.

I think the Trial Judge's finding is correct. The balance sheet of the Susan Myer's Family Trust indicates that those assets had been transferred as at 30 June 1997. There is a corresponding liability to the ANZ at that date.

It became obvious, as early as May 1997, that the takings were nowhere near enough to support a business. The first plaintiff did what she could to keep the business going but by September 1997 she was obliged to close the business.

He found certain representations had been made. In particular he found that the first defendant represented to the first plaintiff that she could expect to achieve a profit of between $40,000 and $50,000 per annum from the shop.

He also found that a representation was made to the plaintiff in the document which was described in the trial as a 'Projection' at the meeting at the ANZ Bank confirmed to the plaintiff in a conversation between the second defendant and the manager of the ANZ Bank, Mr Bartsch. His Honour found, however, although it is not entirely clear, that the first plaintiff was not induced by those representations to enter into the agreements.

His Honour rejected the plaintiff's case that there was a representation made in relation to the franchise fee which was false. He found that she was told by Mr Wheeler, who had the responsibility of preparing the franchise agreement, of the true state of affairs before she signed the franchise agreement.

However, he did find that one representation had been made out and had been established to be false and had been acted upon by the first plaintiff. He found that certain representations had been made out as a result of which the plaintiff was induced to pay $35,000 for debts which had a value considerably less. He found that the plaintiff suffered loss as a result of those representations in the sum of $18,264.

Otherwise he found that representations had not been made out or that they had not been relied upon.

He did find that Mr Bartley was guilty of misleading and deceptive conduct in providing the Projection to the ANZ Bank. He found that the ANZ Bank was induced by the second defendant's misleading and deceptive conduct to advance the sum of $140,000 to the first plaintiff.

However, he found the plaintiff did not suffer any loss or damage for that misleading and deceptive conduct.

"The plaintiff's loss flowed from her decision to apply the loan to the purchase of the business. The plaintiff's ultimate loss in acquiring a business which was worth far less than you agreed to pay for it is too remote a consequence in the 2nd defendant's misleading and deceptive conduct in relation to the ANZ Bank to be recoverable by reason of it."

(2) Land And Business (Sale And Conveyancing) Act 1994

100. He found that the transaction did involve the sale of a small business and that the first defendant failed to comply with her obligations under the Land And Business (Sale And Conveyancing) Act 1994. He found, however, that the first defendant was entitled to rely on a defence under s 16 of that Act and that she was not liable in respect of her failure.

(3) Duty Of Care Of The Second And Third Defendants

101. He found that the second and third defendants were in breach of the duty of care they owed to the first plaintiff and liable in damages.

102. He found that the first plaintiff was negligent in not taking legal advice and that negligence amounted to contributory negligence. He reduced the second and third defendants' liability by one third on that account.

103. He further found that because the second plaintiff was not in contemplation by either the plaintiff or the second or third defendants prior to settlement the second plaintiff was owed no duty of care by the second and third defendants.

104. He found that the first defendant had not established any breach of any of the express or implied terms of the Franchise Agreement.

105. He found that the first plaintiff had not established that she contemplated the formation of the second plaintiff before the purchase on 16 April. He found therefore that the second plaintiff did not have any contractual claims against the first defendant arising out of any of the agreements relating to the shop. However, I think there was no claim in that respect.

(5) Only The First Plaintiff Entitled To Recover

106. He found that only the first plaintiff was entitled to damages against the second and third defendants for their breach of duty of care.

107. He assessed the damages suffered by the first plaintiff as follows:

Lay-bys not realised (after credit for garments resold) 18,264.00

Nett allowance for labour by plaintiff after tax 2,500.00

108. He refused the plaintiff's claim for recision.

109. He found that the first defendant had established her counterclaim against the plaintiff for various breaches of the Franchise Agreement and the Fit-out Agreement. He assessed damages on the counterclaim at $23,279.

110. The Judge set off the sum assessed on the counterclaim against the judgment on the claim by the first plaintiff against the first defendant of $18,264. That left a balance in favour of the first defendant of $5,015 and he entered judgment for the first defendant for $5,495 which included a sum of $480 interest.

111. In the first plaintiff's claim against the second and third defendants he brought to account the sum of $137,939 being the sum assessed in the claim for breach of duty. He awarded the first plaintiff a further sum of $5,495 being the judgment payable by the plaintiffs to the first defendant. He thereby arrived at a figure for damages of $143,434. He assessed interest at $9,100. Damages and interest totalled $152,629. He then deducted one third on account of the first plaintiff's contributory negligence. He arrived at a judgment figure in favour of the first plaintiff against the second and third defendants of $101,753.

112. He made an order for contribution in the sum of $9,132 in favour of the second defendant against the first defendant.

113. He later heard the parties on costs. He gave no reasons for his orders for costs.

"1 The first plaintiff, Susan Myers, recover from the first defendant, Evelyn Neis, the sum of $5,495.00.

2 The first plaintiff, Susan Myers, recover from the second defendant, Paul Popowski, and the third defendant, Unite Pty Ltd, the sum of $101,753.00.

3 The second plaintiff's, Susan Myers Pty Ltd, claim be dismissed with no order as to costs.

4 On the contribution notice of the second and third defendants, that insofar as the second and third defendants satisfy the judgment in favour of the first plaintiff, there be contribution by the first defendant to the second and third defendants for $9,132.00.

5 No order on the contribution notice by the first defendant against the second and third defendants.

6 That the plaintiffs pay to the first defendant her costs of action on the scale applicable to a judgment for $5,594.00 under the Magistrates Court Rules and as agreed or taxed.

7 That the second and third defendants pay to the first plaintiff her costs of action incurred on and after the joinder of the second and third defendants and that there be no order as to the costs prior to that date.

8 That the first plaintiff recover from the second and third defendants two-thirds of the costs which she is liable to pay to the first defendant.

9 No order as to the costs of the contribution proceedings.

10 The parties may apply for further orders and directions."

The second and third defendants have appealed against paragraphs 2, 7 and 8 of His Honour's orders. Paragraphs 7 and 8 complain about costs orders. The success of those grounds will depend in part upon the success or otherwise of the second and third defendants finding by the Trial Judge that they owed a duty of care to the first plaintiff, that they were in breach of that duty and that as a result she suffered loss.

The plaintiffs complain about paragraphs 2, 3, 7 and 8 of His Honour's orders. Again the complaint about the orders for costs must depend in part upon the success or otherwise of the plaintiff's appeal in relation to the other matters.

The complaints by the respective parties relate to paragraphs 2 and 3 of His Honour's orders. The following issues are raised by the parties' appeal and cross appeal against those orders:

1 Whether the second and third or both of the defendants owed a duty of care to either the first or second or both plaintiffs.

5 Whether both or either plaintiff is entitled to recover.

6 If there be a breach the damage suffered by the plaintiffs or if only one plaintiff, the plaintiff.

7 The plaintiff's or plaintiffs' contributory negligence.

1 Whether the misrepresentations the Trial Judge found proved induced the plaintiff/plaintiffs to enter into the transaction.

2 Whether either or both plaintiffs have thereby suffered damage.

There are a number of matters which were in issue at trial which do not concern this Court. This Court is not concerned with the question of whether the transaction involved the sale and purchase of a small business and whether the transaction was governed by the Land And Business (Sale And Conveyancing) Act 1994. There is no issue raised on appeal as to whether the first defendant was in breach of any of the terms of the agreements and in particular the terms of the franchise agreement. Nor is there any issue raised on appeal as to the plaintiff's breach of any of the agreements and on the findings on the counter claim.

Some aspects of the questions posed can be answered immediately. The Trial Judge found that the second and third defendants did not owe any duty to the second defendant before settlement which occurred on 16 April 1997. The plaintiffs do not dispute that finding on this appeal.

In those circumstances, if no duty was owed to the second plaintiff prior to settlement it is difficult to see how the second plaintiff could have suffered any damage by reason of any breach of duty on the part of the second and third defendants.

Of course the second plaintiff had not been incorporated at the time of settlement.

In those circumstances it seems to me that in truth the only party to whom a duty could have been owed was the first plaintiff. That was the finding of the Trial Judge. That finding is correct.

In those circumstances the questions which I have posed can be refined even further such that the questions on this appeal are, whether the second and third defendants owed the first plaintiff a duty of care, the extent of the duty of care, whether the duty of care was breached and, whether the first plaintiff suffered damage and, if so whether the damages ought to be reduced because of the first plaintiff's contributory negligence.

The matters for consideration in relation to the claim for misrepresentation can be distilled further. Whilst both plaintiffs claimed relief for misrepresentation, the second plaintiff's claim had the same difficulty as its claim in negligence. The acts complained of occurred prior to its creation. On appeal the first plaintiff did not claim to be entitled to any relief apart from damages. Moreover, she did not claim to be entitled to any greater or different damages to that which she claimed in negligence.

The question then for this Court in regard to that cause of action is whether there is the necessary causal link between the misrepresentations and the damage.

The further matter in relation to misrepresentation and misleading and deceptive conduct is whether the second defendant's misleading and deceptive conduct in relation to his production of the Projection to the ANZ Bank sounds in damages. The Trial Judge found the conduct to be misleading and deceptive and to have induced the ANZ Bank to lend the first plaintiff $140,000. He found, however, that any damage she suffered was too remote.

On 9 April 2001 the plaintiff and the first defendant executed the sale of assets agreement in Mr Winter's office. The document is dated 10 April 1997 but there is no doubt it was executed on 9 April 1997.

There is no doubt that by 10 April 1997 the second and third defendants were acting as the accountants of the first plaintiff. The defendants admit in their defence that they were the plaintiff's accountant after 10 April 1997. Moreover, the second defendant readily agreed in cross examination that he was the first plaintiff's accountant after 10 April. They also became the accountants to the second plaintiff upon the second plaintiff's creation later in April of that year.

Whether or not the second and third defendants were the first plaintiff's accountants prior to 10 April may or may not matter. Whether it matters depends upon the duty of care which is owed by the first and second defendants to the first plaintiff. If that duty of care includes a duty to correct information given to the first plaintiff prior to 10 April then it does not matter, in my opinion, whether or not the first and second defendants were the first plaintiff's accountant before 10 April or not.

The plaintiffs have chosen not to bring an action in contract. They could have pleaded, in my opinion, and established that there was a contract of retainer between the plaintiffs and the second and third defendants and that it was an implied term of that contract of retainer that the defendants owed a duty of care to the plaintiffs: Astley v Austrust Ltd [1999] HCA 6; (1999) 197 CLR 1. They could have successfully pleaded and established that that duty of care included an obligation on the part of the second and third defendant to give advice.

I am at a loss to know why the plaintiffs did not bring a claim in contract against the second and third defendants and for breach of that contract. If they had they would have avoided, insofar as the claim was based on that cause of action, the consequences of their own contributory negligence: Astley v Austrust Ltd (supra).

The plaintiffs did not assert, either in their pleadings or at trial, that there was a contractual relationship between the plaintiffs and the second and third defendants or either of them. The plaintiffs relied simply on their claim in tort.

One of the plaintiffs' grounds of appeal on the cross appeal was:

"3. The learned Judge erred in law in that, having found a contractual engagement by Susan Myers of Paul Bartley and Unite Pty Ltd "from at least 10 April 1997 and possibly slightly earlier", his Honour thereafter failed to find that:-

3.1 it was a term of that contract that Paul Bartley and Unite Pty Ltd:

3.1.1 discharge the obligations pleaded at paragraph 18B of the Fourth Amended Statement of Claim;

3.1.2 without limiting the generality thereof, act in Susan Myers' best interests;

3.1.3 disclose to her all material information which he/they had about the business she was about to purchase including what he/they knew about it through having acted as the accountant for Evelyn Neis; and

3.1.4 make such investigations as were necessary to disclose the true trading position of Evelyn Neis' business for the year ending 30 June 1997;

3.2 those contractual terms were breached by Paul Bartley and Unite Pty Ltd; and

3.3 accordingly, Paul Bartley and Unite Pty Ltd were liable for the loss to Susan Myers and/or Susan Myers Pty Ltd which flowed from that breach, which loss could not be reduced for contributory negligence in accordance with the principles set out in Astley v Austrust Ltd [1999] HCA 6; (1999) 161 ALR 155."

Early in the hearing of this appeal Mr Anderson QC, who appeared for the defendants, asserted that the plaintiffs should not be allowed to claim the benefit of the decision in Astley v Austrust Ltd (supra) in circumstances where no contractual relationship was pleaded or raised at trial.

It was pointed out to counsel for the plaintiffs that this Court could hardly entertain the ground of appeal in circumstances where it was still not part of the plaintiffs' case that such a contractual relationship existed. Counsel responded by making an oral application to amend the plaintiffs' pleadings to rely upon a contractual relationship. Counsel was not able to articulate the précise amendment to the pleading. The application was refused on the basis that no such allegation had been made at trial and that if there had been such an allegation the defendants may have conducted their case differently.

It followed, in the absence of any amendment to the pleading to the effect of a contractual relationship, the plaintiffs could not pursue such a complaint upon appeal.

There is no doubt, in my opinion, that the second and third defendants owed the first plaintiff a duty of care. Such a duty of care arose by reason of the relationship between the first plaintiff and the second and third defendants. The second and third defendants undertook to act as the first plaintiff's accountants. Thereby a duty of care was erected.

The defendants were under a duty to take reasonable care and skill in the advice which they tendered to the plaintiffs. They were under a duty to advise the first plaintiff of the risks associated with the transaction. They were under a duty to advise the first plaintiff of the financial viability of the business.

In my opinion, the second and third defendants owed the first plaintiff the duties pleaded by the first plaintiff in her Statement of Claim. Specifically the first plaintiff asserted that the second and third defendants owed her a duty of care to provide accurate information concerning the first defendant's business to her and the ANZ Bank. Secondly, to advise her and the ANZ Bank that the purchase of the first defendant's business was not a viable business opportunity. Thirdly, to advise her to seek independent accounting advice before agreeing to the purchase of the first defendant's business.

In my opinion the duty of care encompassed all three of those particular matters.

The standard of care which had to be met was that of an ordinarily competent accountant exercising or professing the skill of an accountant.

If the duty of care arose on 10 April then it arose in circumstances where the defendants were aware of information which had been provided to the first plaintiff between 7 April and 10 April. The duty of care included the duty to correct any misinformation which had been given to the plaintiffs prior to 10 April.

In those circumstances, if the plaintiff had been made aware of that information the first plaintiff would have been in a position to withdraw from the transaction. She could have asserted on 10 April that the Sale of Assets agreement had been entered into on incorrect assumptions. She could have refused to execute the Fit Out and Franchise Agreements.

In my opinion, if the defendants had complied with their tortious duty to correct the misinformation given to the first plaintiff prior to 10 April the transaction would not have completed.

Paragraph 10 of the Sale of Assets Agreement provided:

"THIS agreement is expressly subject to the Purchaser:-

10.1 on or before the 14th day of April 1997 entering into a Franchise Agreement with the Vendor in substantially that form and in those terms contained within the draft Franchise Agreement attached hereto and marked Schedule 2.

10.2 securing from such Bank or lending authority as she may determine a loan on or before the 14th day of April 1997 in a sum of not less than Ninety Thousand Dollars ($90,000.00) for a term of 5 years at an interest rate not exceeding 9% per annum and otherwise upon such terms and conditions as the aforesaid lendor may stipulate or require. The Purchaser shall use the Purchaser's best endeavours to obtain the loan and in the event of lendor agreeing to grant the loan the Purchaser agrees to take and accept the same and to pay all fees in connection with the preparation stamping and registration of any security documents;"

The transaction would not have been completed for both the reasons in paragraph 10. The first plaintiff would not have entered into the Franchise Agreement and the transaction would not have completed. Moreover, the Bank would have been aware of the value of the business to be acquired. In those circumstances it can be assumed that the Bank would not have lent the amount in paragraph 10.2. The transaction could not have been completed. Of course, as I have already said, no officer from the ANZ Bank was called. However, in my opinion, that would not preclude the Court concluding that, if the bank had been aware of the true financial condition of the first defendant's business, it would not have lent the sum of money in clause 10.2 of the Sale of Assets Agreement.

It does not matter in the end result whether the second and third defendants were the accountants of the plaintiffs prior to 10 April because the transaction would not have completed had the second and third defendants discharged their tortious obligations after 10 April.

In my opinion, the duty of care which arose in this case, having regard to the circumstances known to the first and second defendants prior to 10 April, included a duty to correct any information given to the first plaintiff prior to 10 April.

I agree with the findings of the Trial Judge that the second and third defendants were in breach of their duty of care to the plaintiff. I agree that the second and third defendants were in breach of their duty in failing to advise the first plaintiff and later the second plaintiff that it was not in her interests to enter into this transaction. They were also in breach of their duty in failing to advise that the business was not viable. They were further in breach of their duty in failing to advise her to obtain proper legal advice in relation to this matter.

The defendants contended that even if there was a duty of care and there had been a breach of that duty that did not lead to any loss. It was contended that the first plaintiff would have proceeded with the transaction whatever advice was given by the defendants to the plaintiff.

In my opinion, for the reasons I have already given, that contention cannot be accepted. It may have been, as the Trial Judge found, that the plaintiff had no particular interest in the profitability of the business prior to entering into the transaction, but that is quite different to positive information that the business was neither profitable or viable.

The further finding by the Trial Judge that "if Mr Bartley had made a full disclosure to the plaintiff or relevant matters known to him and given proper advice to her, it is likely that she would have accepted that advice and would not have settled" is not inconsistent with the previous finding to which I have referred.

There was evidence to support the finding that the first plaintiff would not have settled if she had been fully appraised of the financial circumstances of the first defendant's business.

In examination in chief the first plaintiff was asked:

"Q If you had known that the history of the shop was that it turned over about $100,000 a year, and was generally unprofitable, or if it was profitable, made a profit in the order of $10,000 or $20,000 a year, would you have signed that agreement that morning (in Mr Winter's office on 9 April 1997)?

A No, no, because I wanted to buy a business that was going to be profitable and that I was going to make money out of. I also doubt that if I had those figures to show the bank that the bank wouldn't even have given me the loan."

The Trial Judge found that the first plaintiff had failed to take care for her own safety by failing to follow the advice of Mr Winter, which was to obtain independent legal advice in relation to the transaction. He found that if she had taken such advice it is highly unlikely she would have gone ahead with the transaction. He further found there was no good reason why she should not have obtained such advice. She knew a solicitor and she could afford legal advice.

The first plaintiff has contended, on this appeal, that the finding that the first plaintiff should have obtained independent legal advice and that the failure to do so amounted to contributory negligence was not open on the evidence. It was submitted that there was no evidence that the failure to get legal advice was causative of loss. It was not established, so it was argued, that any such legal advice would have averted the loss.

In my opinion, the criticisms made by the first plaintiff of this aspect of His Honour's reasons cannot be upheld. It was open to the Trial Judge to find that the plaintiff failed to take care for her own safety in failing to take the advice which she was given by Mr Winter that she obtain legal advice.

It may be assumed that if she obtained legal advice she would have obtained competent legal advice. That competent legal advice would have included advice concerning the first defendant's obligations under the Land And Business (Conveyancing) Act 1994.

If the first defendant had complied with the obligations under that Act, in my opinion, the first plaintiff would not have proceeded with this transaction because she would have been acquainted with the true state of the first defendant's business.

It was open to find that the first plaintiff's failure to obtain legal advice was evidence of contributory negligence on her part.

The second and third defendants contended on this appeal that in the event that the finding of negligence was to stand that the Judge was right in his finding of contributory negligence on the part of the first plaintiff. However, they contended that the apportionment was inappropriate having regard to the plaintiff's failure to take care for her own safety. They say the apportionment should have been greater.

The first plaintiff, on the other hand, contended that there should have been no finding of contributory negligence, but if such a finding was appropriate, the apportionment was incorrect and that the first plaintiff should have been found responsible for a lesser percentage than that arrived at by the Trial Judge.

In my opinion, the learned Judge was right to find that the first plaintiff had failed to take proper care for her own safety. The circumstances leading up to the first plaintiff entering into this transaction indicate such a failure. A plaintiff can be guilty of contributory negligence even where the defendant was retained to protect the plaintiff against the very damages that the plaintiff suffered: Astley v Austrust Ltd (supra); Duke Group Ltd v Pilmer [1999] SASC 97; (1999) 73 SASR 64 at paragraph 596.

Of course, if this had been a claim based in contract it would not have been appropriate to reduce the award on account of the plaintiffs' contributory negligence: Astley v Austrust Ltd (supra). However, as I have already pointed out, for reasons which are unknown to me the plaintiffs elected to sue only in tort.

Having made a finding that the first plaintiff has been guilty of contributory negligence the Trial Judge was under an obligation to weigh the respective departures from the standards applicable to the second and third defendants and to the first plaintiff.

In my opinion, the apportionment arrived at by the Trial Judge was within the exercise of his discretion. In those circumstances it would be inappropriate for this Court to interfere with the apportionment or to substitute its discretion for that of the Trial Judge. It is only in rare and exceptional cases where an appeal court will interfere with an apportionment arrived at by a Trial Judge: Watt v Bretag (1982) 56 ALJR 760.

The Trial Judge found that some representations had been made by both the first and the second defendants to the first plaintiff. He found that the first defendant represented to the first plaintiff that the first plaintiff could expect to achieve a profit of between $40,000-50,000 per annum from the shop.

He found that there had been a representation to the first plaintiff of sales of $200,000 in the projection in the meeting with Mr Bartsch at the ANZ Bank. He also found that other representations made by the second defendant to Mr Bartsch had been made to the first defendant at that time.

The Trial Judge further found that the first defendant represented to the first plaintiff that the debtors which were acquired in the Sale of Assets Agreement were recoverable. He further found that those representations were false.

As I have already said he was prepared to find that the plaintiff was entitled to recover in respect of the representations relating to debtors. However, he was not prepared to find that the other representations to which I have referred and which he found had been made were actionable.

It is not clear that His Honour has found those other representations to be false. He has not made an express finding. However, I think that must be implicit in his findings having regard to his earlier statement of the evidence.

His Honour has found that the representations did not induce the first plaintiff to enter into the transaction.

He concluded his discussion on the question of inducement in the following terms:

"Accordingly, all of the causes of action based on proved misrepresentations about turnover and profitability must fail as no sufficient inducement or causation has been proved. Insofar as any causes of action are based on misleading and deceptive conduct under the FTA, they also fail for similar reasons because, for the purposes of s 84(1) of the FTA, the plaintiff did not suffer loss or damage "by" the conduct which was in contravention of Part X of that Act: Cut Price Deli Pty Ltd v Jacques [1994] FCA 1101; (1994) 126 ALR 413 (sic)."

In my opinion, the finding that the representations did not induce the first plaintiff to enter into the sale of assets agreement or indeed the other agreements was open to the Trial Judge on the view that he took of the witnesses.

The first plaintiff complained of the Trial Judge's failure to find that the false representations had induced the first plaintiff to enter into the transaction but did not point to any evidence of the first plaintiff or of any other witness or in the documents which would lead this Court to reverse that finding.

The last matter complained of on the cross appeal relates to the finding the Trial Judge made in relation to the misleading or deceptive conduct of the second defendant in relation to the ANZ Bank.

As I have already said the learned Trial Judge found that the second defendant was guilty of misleading or deceptive conduct in putting forward the projection to Mr Bartsch at the meeting at the ANZ Bank.

He also found that the ANZ Bank was induced by the second defendant's misleading and deceptive conduct to grant the loan of $140,000 to the first plaintiff.

The Trial Judge treated this aspect of the misleading and deceptive conduct as distinct from any misleading and deceptive conduct upon which the plaintiff may have relied.

"However, the plaintiff is not shown to have suffered any loss or damage from that misleading and deceptive conduct of the 2nd defendant in relation to the ANZ Bank. The plaintiff's loss flowed from her decision to apply the loan to the purchase of the business. The plaintiff's ultimate loss in acquiring a business which was worth far less than she agreed to pay for it is too remote a consequence of the 2nd defendant's misleading and deceptive conduct in relation to the ANZ Bank to be recoverable by reason of it."

183. There is no dispute that the second defendant was guilty of misleading and deceptive conduct in the provision of the Projection to the ANZ Bank. No notice of alternative contention has been filed. The first question that needs to be answered is whether the first plaintiff was entitled to claim damages under s 84 of the Fair Trading Act 1987, in circumstances where the misleading and deceptive conduct was directed to her banker and not to herself? If she is, the next question, which the Trial Judge answered adversely to the first plaintiff, is whether the first plaintiff's damages are too remote?

184. Section 82 of the Trade Practices Act 1974 (Cth) and s 84 of the Fair Trading Act 1987 are for all intents and purposes in like terms. Relevantly they provide that if a person suffers loss or damage by conduct of another in contravention of the corresponding parts of the two Acts, that person may recover the amount of the loss or damage by action against that other person.

185. In Wardley Australia Ltd v Western Australia [1992] HCA 55; (1992) 175 CLR 514 at 525 Mason CJ, Dawson, Gaudron & McHugh JJ said:

"The statutory cause of action arises when the plaintiff suffers loss or damage 'by' contravening conduct of another person. 'By' is a curious word to use. One might have expected 'by means of', 'by reason of', 'in consequence of' or 'as a result of'. But the word clearly expresses the notion of causation without defining or elucidating it. In this situation, section 82(1) should be understood as taking up the common law practical or common-sense concept causation recently discussed in this Court in March v Stramare (E&MH) Pty Ltd [1991] HCA 12; (1991) 171 CLR 506, except insofar as that concept is modified or supplemented expressly or impliedly by the provisions of the Act. Had Parliament intended to say something else, it would have been natural and easy to have said so."

186. Because of the Trial Judge's findings on reliance in respect of false representations made by the second defendant to the first plaintiff it cannot be said that the first plaintiff has suffered loss and damage by conduct of the second defendant unless it was by reason of his misleading and deceptive conduct which was relied upon by the ANZ Bank.

187. In my opinion, the first plaintiff is entitled to say, subject to a positive answer to the second question, that the second defendant's misleading and deceptive conduct, upon which the ANZ Bank relied, gave rise to loss and damage to her. It is not necessary, in my opinion, that the misleading and deceptive conduct, be directed to her for her to be entitled to damages under the two statutes. She is entitled to say that the ANZ's reliance upon the second defendant's misleading and deceptive conduct caused loss and damage to her.

188. In Janssen-Gilag Pty Ltd v Pfizer Pty Ltd [1992] FCA 437; (1992) 37 FCR 526 at 529 Lockhart J said:

"Section 82 is the vehicle for the recovery of loss or damage for multifarious forms of contravention of the provisions of Parts IV and V of the Act. It is important that rules laid down by the courts to govern entitlement to damages under s 82 are not unduly rigid, since the ambit of activities that may cause contraventions of the diverse provisions of Parts IV and V is large and the circumstances in which damage therefrom may arise will vary considerably from case to case.

What emerges from an analysis of the cases (and there are many of them) is that they do not impose some general requirement that damage can be recovered only where the applicant himself relies upon the conduct of the respondent constituting the contravention of the relevant provision.

Also, a perusal of the provisions of Parts IV and V, the contravention of which gives rise to an entitlement to an applicant for compensation for loss or damage, points to the conclusion that applicants may claim compensation when the contravener's conduct caused other persons to act in a way that led to loss or damage to the applicant."

"The use of preposition 'by' in s 82(1) is important; it indicates the requirement that there be a sufficient cause or link between the respondent's conduct and the recoverable loss or damage; see Brown v Jam Factory Pty Ltd [1981] FCA 35; (1981) 53 FLR 340 at 350-351; Elna Australia Pty Ltd v International Computers (Aust) Pty Ltd (No. 2) [1987] FCA 230; (1987) 16 FCR 410 at 418. 'By' is used in s 52(1) in the sense of 'by reason of' or 'as a result of'; see Munchies Management Pty Ltd v Belbario (1989) ATPR 50 026. Loss or damage must directly result from or be caused by the respondent's conduct.

"Whilst the applicant's loss or damage must be caused by the respondent's misleading or deceptive conduct, I see nothing in the language of the Act or its purpose to warrant the suggestion that the right of an applicant for damages under s 82 is confined to the case where he has relied upon or personally been influenced by the conduct of the respondent which contravenes the relevant provision of part IV or part V of the Act."

After discussing March v E & M H Stramare Pty Ltd (supra) His Honour said at 531:

"Section 82(1) should not be given a restricted meaning to be available only to the person who suffers loss or damage by reason of his own reliance upon the representations which constituted the relevant contravention of part IV or V; nor for that matter should it be given an extended meaning which strains the language used by the legislature. But a person who suffers damage by reason of or as a result of the conduct of the contravener (albeit that that person does not himself rely upon the representations) is not destroying the language of the subsection, but to interpret according to its ordinary and natural meaning. For a person to recover under the section he must suffer loss or damage by reason of or as a result of the contravention. There is nothing unduly wide about that."

With respect I agree with His Honour's reasons.

That decision was approved and followed by the Court of Appeal in New South Wales in Hampic Pty Ltd v Adams (1999) NSWCA 455. The scheme of the Fair Trading Act, 1987, like the Trade Practices Act 1974, is to provide for consumer protection. It does so by providing for general prohibitions against misleading and deceptive conduct in s 56. It then provides in Division 2 of Part 10 for prohibitions against more specific conduct.

The Act then provides for penalties in the event that any party is guilty of any breach of the specific prohibitions: s 75. It also provides for civil remedies. A court may grant an injunction (s 83), might award damages (s 84) or make any of the other orders provided for in s 85.

The primary purpose of the Act is to prohibit the conduct which is dealt with in Division 2 of Part 10. It does so by giving the courts the very wide powers to which I have referred. If Parliament had wished to create a statutory cause of action which gave an entitlement only to a person who has directly relied upon the misleading and deceptive conduct it could quite easily have done so.

I agree with Lockhart J that there is no reason to read s 82 of the Trade Practices Act 1974 as being confined to an applicant who has directly relied upon the contravention of s 52. It follows that s 84 of the Fair Trading Act 1987 should be given a similar construction.

An applicant can, as His Honour's decision recognises, suffer loss or damage by the conduct of another person who contravenes s 52 of the Trade Practices Act 1974 in circumstances where a third party has relied upon that contravention.

In my opinion, the first plaintiff in these proceedings, was entitled to claim that she suffered loss or damage by conduct of the second defendant in his provision of the Projection to ANZ Bank. She was entitled to rely upon the provisions of the Fair Trading Act 1987.

The Trial Judge seems to have assumed that the cause of action lay. He has not dismissed the first plaintiff's claim on that ground. Rather he has dismissed it on the basis that the loss or damage suffered by the first plaintiff was too remote a consequence of the second defendant's misleading and deceptive conduct.

With respect I disagree with His Honour. It seems to me not too remote at all (if remoteness is relevant) to say that the first plaintiff suffered damage by borrowing $140,000 from the ANZ Bank to enter into the transactions with the first defendant.

I am not sure that questions of foreseeability and remoteness are relevant in the assessment of damages under s 82 of the Trade Practices Act 1974: Kenny and Good Pty Ltd v MGICA (1992) Ltd [1999] HCA 25; (1999) 199 CLR 413 at 428; Wardley (Australia) Ltd v Western Australia (supra) at 526; Marks v GIO Australia Holdings Ltd [1998] HCA 69; (1998) 196 CLR 494 at 510. There is no relevant distinction between that Act and the Fair Trading Act 1987. Even if remoteness is relevant, in my opinion, it did not preclude the first plaintiff from recovery.

His Honour said that the first plaintiff's loss flowed from her decision to apply the loan to the purchase of the business. He has found that her ultimate loss in acquiring the business which was worth far less than she agreed to pay for it is too remote a consequence.

She only approached the ANZ Bank for one reason. That was to borrow these monies to buy this business. The second defendant was well aware when he met with Mr Bartsch at the ANZ Bank that the purpose of the meeting was to satisfy the ANZ Bank that it would be appropriate to lend those monies for that purpose.

It was that loan which allowed the first plaintiff to proceed with the transaction. Without that loan the transaction could not have gone ahead. Whether or not the first plaintiff suffered loss or damage by the conduct of the second defendant is a factual inquiry. In my opinion, she did suffer such loss or damage by reason of that conduct.

The first plaintiff is therefore entitled to succeed in the claim brought under the Fair Trading Act 1987.

I shall deal with three other matters for completeness. First if the first plaintiff is entitled to recover under the Fair Trading Act 1987 and, in my opinion, she is, would she be entitled to obtain orders under s 85 of the Fair Trading Act 1987 or under the Misrepresentation Act 1972.

In my opinion, the first plaintiff would not be entitled to any order except for damages against the second defendant, under s 85 of the Fair Trading Act 1987. Section 85 allows a court to make a wide range of orders in favour of a person who has suffered damage by reason of a contravention of a provision of Division 2 of Part 10 but only against a person "who engaged in the conduct or a person who was involved in the contravention".

In my opinion, no order can be made under s 85 which would affect the rights of the first defendant because it was not the first defendant who engaged in the contravention of the Act. The Trial Judge did not find that she had been guilty of conduct which could have brought her within that section. Indeed, he found that she, like the first plaintiff, was unaware of the knowledge of the context of the Projection before the meeting with Mr Bartsch or at any relevant time afterwards. She was then not a person who engaged in the conduct or a person who was involved in the contravention .

Nor would the first plaintiff be entitled to relief under the Misrepresentation Act 1972. She does not come within the terms of that Act.

It follows therefore, in my opinion, that the first plaintiff's claim in respect of the provision of the Projection by the second defendant to Mr Bartsch is limited to damages under the Fair Trading Act 1987 against the second defendant.

The second matter which could have been raised by my opinion that the first plaintiff is entitled to recover under that Act against the second defendant is whether the damages assessed under that cause of action is the same as those assessed in negligence.

However no party contended that the damages would be any different if assessed under the Fair Trading Act 1987 so in those circumstances that question does not need to be answered.

The third question which the finding gives rise to is whether or not the damages, which are to be assessed on the same basis as those in negligence, are to be reduced on account of any contributory negligence on the part of the first plaintiff.

In my opinion, the concept of contributory negligence has no application to the damages which are assessed under either the Trade Practices Act 1974 or Fair Trading Act 1987. In my opinion, s 27A of the Wrongs Act has no application to proceedings brought under the Fair Trading Act 1936 (SA). Section 27A is confined to actions in tort: Astley v Austrust (supra). A contravention of s 56 does not create a liability in tort: Marks v GIO Australia Holdings Ltd (supra). See also ANZ Banking Group Ltd v Turnbull & Partners Ltd [1991] FCA 618; (1991) 33 FCR 265.

It follows therefore, in my opinion, the first plaintiff is entitled to recover against the second defendant for the whole of her damages without reduction on account of contributory negligence.

The last matter of complaint made by the defendant was as to the assessment of damages itself. The Trial Judge proceeded upon the basis that any loss which was suffered by the second plaintiff was also a loss of the first plaintiff. He said he would not draw any distinction between her and the trust which she controlled in the assessment of damages.

The defendants contend that the second plaintiff should be recognised as a separate entity. The second plaintiff was not created until after the transaction was completed. In those circumstances it is said that any loss suffered by the second plaintiff was not as a result of any breach of duty of care by the second and third defendants.

The Trial Judge recognised that any breach of a duty of care prior to the creation of the second plaintiff could only have given rise to a claim for damages on the part of the first plaintiff. In fact he found only for the first plaintiff on this cause of action.

In my opinion, the first and second plaintiffs had to be treated separately. The second plaintiff is separate to the first plaintiff and it had to be recognised as a matter of law that the second and third defendants, had not been guilty of negligence qua the second plaintiff: Gould v Vaggelas (1985) 157 CLR 215 per Gibbs CJ at 219.

However the Trial Judge did not proceed on that basis.

"It may be that as a matter of strict law the 1st plaintiff's loss should be assessed by having regard to what her financial position would be if there was a notional winding up of the trust and with the taxation implications which that might involve. I do not have sufficient evidence to be able to assess her damages on that basis. If the 2nd defendant had wanted an assessment on that basis, he could have adduced accounting evidence to provide a basis for it, but he did not. On the evidence before me I can only assess her loss against the 2nd defendant by not drawing any distinction between her and the trust which was the original approach of Mr Krantz. I will make the assessment on this basis."

222. Mr Krantz was the expert witness called by the plaintiff on the question of damages. He provided calculations of the first plaintiff's loss upon the assumption that it was appropriate to ignore the intervention of the second plaintiff and assume that all of her trading losses were suffered by the first plaintiff.

223. In my opinion, the second defendant, like any other defendant, was entitled to require the plaintiffs to prove their damages according to law. The second defendant did not have any obligation to call any evidence on damages. The second defendant was entitled to criticise the plaintiff's evidence if it did not in law support the first plaintiff's claim for damages.

224. I think the Trial Judge was wrong to assess damages upon the premise which he did. His approach ignores, as did Mr Krantz's report, the intervention of the second plaintiff. His evidence assumes that all of the losses fell upon the first plaintiff.

225. That, however, does not mean that the first plaintiff was not entitled to the damages assessed by the Trial Judge. In my opinion, it was foreseeable that the first plaintiff would create a trading trust for the purpose of carrying on the business. It was foreseeable that if the defendants were in breach of their duty of care to the first plaintiff, the first plaintiff would be without a remedy if such a trust was created and as a result thereby the first plaintiff would suffer damage.

226. In those circumstances, it seems to me, that the first plaintiff's damages had to be assessed by reference to the losses which she suffered by reason of the creation of the trust and which would otherwise have been payable by the second and third defendants to the first plaintiff.

227. In this case the second and third defendants in relation to the claim in negligence, and the second defendant in relation to the claim under the Fair Trading Act 1987, were guilty of breaches whereby the first plaintiff entered into a transaction which she otherwise would have avoided. She is entitled, at least in respect of her claim in negligence, to be put in the position she would have been if the tort had not been committed. She is also entitled to say that she has suffered her damage as at the date of the tort. She is entitled to the immediate damage which she has suffered and any consequential damage. Insofar as her claim is based under the Fair Trading Act 1987 she is also entitled to be put in the position she would have been if the contravention of the Act had not occurred. That would mean she would be entitled to the difference in value of that which she purchased and its worth together again with any consequential losses.

228. The plaintiff's damages could have been assessed in a number of ways. In my opinion, they could have been assessed in the way in which the Trial Judge did, not upon the assumption that the first plaintiff and the second plaintiff could be treated as one, but upon the assumption that it was foreseeable that the plaintiff would cause a trustee company to be created and a trust to be erected for the purpose of carrying on a business as a result of the completion of the transaction.

229. Thus the second plaintiff's trading losses are also in truth the losses of the first plaintiff.

230. An alternative method of assessment of damages would have been to assess the losses to the first plaintiff by reason of her entry into the transaction and her investment in the second plaintiff.

231. The plaintiff remained personally liable to the ANZ Bank for the borrowing of $140,000. When the trust was created she transferred the assets acquired in the transaction to the trust. However, the assets did not have value and did not produce income. She therefore lost her investment in the trust which comprised the capital loss on the assets transferred to the trust and the losses which were occasioned by the trust in trading. Those losses together with the losses in respect of the original loan would amount to the same damages as assessed by the Trial Judge.

232. Whilst I accept therefore the second and third defendant's argument that the first and second plaintiffs had to be treated separately it does not follow, in my opinion, that in doing so the damages would be assessed in any different way.

233. The same result would be arrived at, in my opinion, if damages were assessed in accordance with the Fair Trading Act 1987. At least her damages would not be less than those assessed by the Trial Judge.

234. Section 42 of the District Court Act 1991 (SA) gives the District Court Judge the statutory authority to order costs. It provides:

"42(1) Subject to subsection (2) and the Rules, costs in any proceedings in the civil division will be in the discretion of the court and may be awarded against any person (whether a party to or a witness in the proceedings or not)."

235. Section 42 does not give an unfettered discretion to a District Court Judge to award costs in any proceedings in the civil division of the District Court. It gives a discretion but the discretion is fettered in three ways. First the discretion is fettered by the provisions of subsection (2) which are unimportant for the purpose of a consideration of these matters. Secondly, the discretion is fettered by any Rules of Court, because s 42(1) is subject to the Rules: Bailey v Manos Breeder Farms Pty Ltd (1990) 3 ACSR 143. Thirdly, the discretion must be exercised judicially: Bevington v Perks [1925] 2 KB 229.

"Subject to these Rules the costs of and incidental to a proceeding shall follow the event unless the Court otherwise orders."

The rule at law in relation to costs was stated by Viscount Cave LC in Donald Campbell & Co Ltd v Pollak [1927] AC 732 at 811:

"A successful defendant in a non-jury case has no doubt, in the absence of special circumstances, a reasonable expectation of obtaining an order for the payment of his costs by the plaintiff; but he has no right to costs unless and until the Court awards them to him, and the Court has an absolute and unfettered discretion to award or not to award them. This discretion, like any other discretion, must of course be exercised judicially, and the judge ought not to exercise it against the successful party except for some reason connected with the case."

In my opinion, r 101.02(1) is in different terms to the rule enunciated by the Lord Chancellor.

I think now a successful party can expect to be awarded costs unless in the exercise of the judge's discretion, exercised judicially, some other order is made. The difference between the rule as it stands and that part of his Lordship's speech to which I have referred is the absence of a requirement for special circumstances.

In this case the Judge was obliged, because of the provisions of the Act and the Rules, to approach the question of costs on the basis that ordinarily the successful party, in this case the plaintiffs, (at least so far as the second and third defendants are concerned) could expect to receive their costs unless there were reasons for exercising the discretion adversely to them.

The plaintiffs complain of the failure by the Trial Judge to award them their costs of proceedings before the joinder of the second and third defendants. The plaintiffs relied upon Fennell v Supervision and Engineering Services Pty Ltd (1988) 47 SASR 6. That was a case where an employee sued his employer and another party, Santos Ltd. The employee failed against his employer but succeeded against Santos Ltd. The issue in the case was whether Santos Ltd should pay the costs of action including those costs payable by the employee to the employer. King CJ thought it was appropriate to require Santos Ltd to indemnify the plaintiff for the plaintiff's liability for costs to the employer. That case required a determination as to whether or not the employer or Santos Ltd was liable for the undoubted injuries suffered by the plaintiff. It was entirely reasonable to sue both parties especially in circumstances where Santos Ltd issued a third party notice alleging that the responsibility for the plaintiff's injuries was that of the employer.

In my opinion, that case is no guide to the exercise of discretion in relation to costs in this case. That case was no more than an example of a case where a plaintiff is unsure which party is responsible to pay the plaintiff's damages. It is reasonable in those circumstances, where both parties deny liability, to sue both and allow the Court to decide.

In this case the circumstances are different. The plaintiffs originally sued only the first defendant and in causes of action quite different to that for which they later joined the second and third defendants. In due course they failed against the first defendant.

There was only one cause of action common to all three defendants. That was in relation to misrepresentation. That cause of action failed against the first defendant but succeeded against the second defendant, but in respect of different representations. The other causes of action were quite independent. For example, the actions against the first defendant in relation to the Land And Business (Sale And Conveyancing) Act 1994 and Breach of Contract were in no way related to the cause of action against the second and third defendants in negligence.

In my opinion, it was quite within the exercise of the learned Trial Judge's discretion to make the order for costs in paragraph 7. In my opinion, it was quite appropriate to order the second and third defendants to pay the plaintiffs' costs after they were joined and not before. It would have been, in my opinion, unfair to the defendants to require them to pay the costs of action before they were joined. By the same token it was not unfair to the defendants to require them to pay all of the costs after they were joined. After they were joined they denied liability for the claim brought against them. It made it necessary that that matter go to court. Again it was within the exercise of the learned Trial Judge's discretion to visit the costs of action on the second and third defendants after they were joined.

In my opinion, not only was it within his discretion the order was right. If I were exercising my discretion I would have exercised it in the same way.

I also believe that the order in paragraph 8 was within the exercise of the Judge's discretion. The plaintiffs recovered damages in respect of agreements they entered into with the first defendant at a time when they were receiving advice from the second and third defendants. The plaintiffs became obliged to pay damages to the first defendant in relation to those same agreements. The Trial Judge has ordered that the plaintiffs recover the balance of the judgment against the plaintiffs as damages against the second and third defendants.

The order made by the Trial Judge was consistent with his assessment of the first plaintiff's damages. He included in those damages the amount awarded against the first plaintiff on the counterclaim.

All defendants denied liability after the second and third defendants were joined. It was not unreasonable to proceed against all defendants.

In my opinion, the order for costs in paragraph 8 should not be disturbed.

In those circumstances, the appeal must be dismissed but the cross appeal against the judgment entered against the second defendant has to be allowed. The judgment entered against the second defendant will be set aside. In lieu thereof the first plaintiff shall have judgment against the second defendant in the sum of $152,629. The judgment entered against the third defendant should stand.

This is an appeal and cross-appeal against a judgment of the District Court.

The first defendant, Ms Neis, carried on the business of designing, manufacturing and selling women's clothing from premises situated at 301 North Terrace, Adelaide. The clothes marketed by her were under the label of "Evelyn Neis Creations". In or about March 1994, she took over a small shop in the Adelaide Arcade from which she conducted retail sales of the garments designed and manufactured by her.

The second defendant, at about the time of the following events, known as Paul Popowski but now known as Paul Bartley, carried on the business of a public accountant in practice in Adelaide. He carried on his accountancy practice through a company which he owned and controlled, known as Unite Pty Ltd (ACN 050 166 339) ("Unite"). During the course of the trial Mr Bartley and Unite were treated as one entity, there being no practical reason to deal with each of them separately in considering the questions of liability and, if relevant, the measure of damages.

Mr Bartley had been Ms Neis' accountant for a number of years. He visited her at her premises at 301 North Terrace, Adelaide on a regular basis and developed a close relationship of accountant and client with her over the period in which she had been in business.

Mrs Carmel Vozzo was known to Ms Neis and was regarded by her as an experienced and capable businesswoman. Mrs Vozzo was divorced. She had a substantial mortgage commitment on her home and needed to work to enable her to meet her normal household expenses. In the early 1990s, she was approached by Ms Neis to work for her but she declined as she considered Ms Neis to be domineering and overbearing. She was then currently working at Katies women's clothing store in Rundle Mall.

The first plaintiff, Ms Susan Myers, studied accounting on a part-time basis between 1977 and 1981 and obtained a Business Certificate of Accounting. She assisted her father in the management of the Enfield Hotel of which he was the owner. After his death, she ran the hotel as its managing director until 1983 when it was sold. By the mid-1990s Ms Myers was out of touch with the management and running of a business, particularly the business of retailing fashion garments, an activity in which she had had no prior experience. With her limited experience and with the lapse of time, the learned trial Judge found that she was somewhat out of touch with the commercial world and needed independent professional assistance to guide her in what was in her best interests. He found that she was a reasonably intelligent and articulate person and from previous experience would know sufficient to enable her to engage the appropriate professional assistance.

Most of the garments marketed in the shop conducted by Ms Neis in the Adelaide Arcade had a mark-up of 100 per cent on the wholesale price. They were individually designed items for weddings and other formal occasions.

At best, only a few sales were made each week, the market for these items being very limited and the shop being patronised by a small number of well-to-do women, many of whom were original customers. Many of the purchases she says were on lay-by arrangements. No specific conditions were placed on the lay-by. From time to time a sale was made to Ms Myers. Ms Neis worked as a sales person in the shop but she was, on occasion, assisted by part-time employees.

Ms Neis maintained a rudimentary bookkeeping system in the shop comprising a single current docket book in which contemporaneous entries were made for all sales, lay-bys, cash expenses and other relevant items. A perusal of the docket book would give a ready indication of the level of trading in the shop during the periods to which the docket book related. Ms Neis also prepared a secondary financial record, being handwritten daily, weekly and monthly reports of her turnover and takings in the shop.

In 1995, Ms Myers became a regular customer at the boutique, making a visit about every six weeks or so. During these visits, Ms Myers became friendly with Ms Neis. On the death of Ms Neis' partner, Ms Myers' regular visits to the shop increased. She seemed to be fairly lonely and was looking for friendship. She had regular lay-by transactions and needed to pick up garments from time to time.

By late 1996, Ms Myers had started working for Ms Neis on a part-time basis as a sales person and working a number of hours each week in the shop. She worked on Mondays and Tuesdays and on other occasions as required. In the company of another employee, Ms Myers was left to run the business while Ms Neis took a holiday in Queensland.

Ms Neis' financial position was not good and she knew that she would not be continuing in the business when the lease expired which she believed to be in or about the end of April 1997.

On 21 March 1997 Ms Neis rang Ms Myers to ascertain whether she would be interested in buying the business of the shop. Ms Myers was enthusiastic about the idea and immediately contacted her bank, the ANZ Bank, to enquire about obtaining a loan to enable her to purchase the business. It was proposed that Ms Myers would take up a new lease of the shop and would only sell garments supplied by Ms Neis. Ms Neis had discussed with Mr Bartley some time earlier the prospect of establishing a franchise arrangement for the sale of the garments which she manufactured. Ms Neis suggested that Ms Myers should take up the franchise which would give her an assurance of available stock. Neither Ms Myers nor Ms Neis had a detailed knowledge of the legal and accounting implications of the proposed sale.

On Monday 24 March 1997, Ms Myers saw Mr Bartsch, a lending officer, at the ANZ Bank about obtaining a loan for the purpose of buying the business. While she had various investments, she did not wish to realise these to raise funds for the purchase as she relied on her investments to provide income for living expenses. Mr Bartsch told Ms Myers that she would need a Form 2 under the Land and Business Agents (Sale and Conveyancing) Act 1995 ("the LBS Act"). This form would need to be accompanied by financial statements for the business for the previous three years.

On or about 24 March 1997 Ms Myers received a written quotation from the ANZ Bank for the interest and repayments on various types of loans. She had not been given any assurance that she would get the loan. However, she was only prepared to proceed with the purchase if the loan was obtained. Ms Myers' own accountant, Mr Wiadrowski, also told her that she would need a Form 2. Ms Myers relayed this information to Ms Neis who passed it on to Mr Bartley.

It appears that there were no separate accounts of Ms Neis available in respect of the Adelaide Arcade shop. These would need to be prepared quickly. Also, discussions at that time were taking place between Ms Myers and Ms Neis whereby they agreed to use the same accountant and solicitor without having adequately appreciated the consequences of such a course and the real possibility of there being a conflict of interest and duty.

As the parties contemplated that a franchise agreement would be entered into, Ms Neis telephoned Mr Paul Whelan of Complete Franchising in order to have such an agreement prepared. Mr Whelan quoted a fee of $15,000 for the preparation of the necessary documents together with any legal expenses involved. Mr Whelan indicated that he needed the financial statements for the past three years. Ms Neis contacted Mr Bartley and requested him to supply the statements in question. Mr Whelan was unable to contact Mr Bartley for some time. Ultimately, he made contact and requested that the financial statements be provided. Mr Bartley refused to supply the necessary documents. The learned trial Judge found that this was because some of them had not yet been produced and that Mr Bartley realised that they were not likely to be acceptable.

Mr Bartley indicated to Ms Neis that he thought that a franchising arrangement could be set up for considerably less expense than Mr Whelan had quoted. On 27 March 1997, Mr Bartley rang Mr Philip Winter, a solicitor, with whom he had had a number of dealings and obtained an estimate to the effect that a franchising arrangement could be set up at a cost of $8,500 to $9,500. An appointment was then made for Ms Myers to see Mr Winter on 1 April 1997.

Ms Neis then conferred with Mr Winter at his office on 1 April. Ms Myers did not attend on that occasion. The following day, Mr Winter forwarded to Ms Neis a draft of a sale and purchase agreement and franchise agreement which he had prepared. Ms Neis and Ms Myers conferred with Mr Winter a few days later. Both were prepared to sign the agreement there and then but Mr Winter arranged to meet them a few days later to give them an opportunity in the meantime to read and consider the draft prepared. At one of these meetings, the amount of the monthly franchise fee payable by Ms Myers to Ms Neis was negotiated and agreed at 10 per cent of the wholesale price of stock sold.

Ms Neis met with Mr Winter on the evening of 6 April in order to discuss the draft franchise agreement. Ms Myers was not available on that occasion because she was suffering from a migraine headache. The question of the form under the LBS Act was raised on that occasion and discussed. Mr Winter expressed the view that as the sale was simply a sale of assets and not a sale of the business and goodwill, a form under the LBS Act would not need to be signed and delivered to Ms Myers.

In her evidence in chief, Ms Myers said that on Monday 7 April, 1997 she attended a meeting in the morning at Mr Winter's office at which Ms Neis and Mr Winter were present to discuss the forthcoming sale of the shop in the Adelaide Arcade and to discuss the documents to be executed in connection with the sale. Mr Winter expressed some concern about the fact that the matter was being rushed. He also recommended to Ms Myers that she should obtain independent legal advice. She told him that she would consult her own lawyer, Mr Peter Scragg. It appears, however, that she did not consult Mr Scragg or any other lawyer about the matter. As the learned trial Judge found, Ms Myers did not afterwards tell Mr Winter that she had not consulted another lawyer.

Ms Myers said later that day (7 April 1997) she met Ms Neis and Mr Bartley at Augusta's Coffee Shop in Gays Arcade. Ms Myers said that it was on this occasion that she first met Mr Bartley.

Ms Myers said that she attended a meeting at the ANZ Bank at 2 pm on Monday 7 April 1997 in connection with negotiations to obtain finance in order to complete the purchase. Ms Myers did not invite Mr Bartley to attend the meeting at the bank; he simply took it on himself to attend.

Prior to the meeting with the bank, Mr Bartley anticipated that the bank would require a Projection in writing about the likely turnover and profit of the shop under the proposed franchise. Shortly before the meeting with the bank, Mr Bartley prepared a document which was headed "Evelyn Neis - Projection for year 1/5/97 to 30/4/98 based on current trading figures for purpose of franchise". The Projection stated that there would be sales of $200,000 with the cost of garments being sold at $80,000 resulting in a gross profit of $120,000. Expenses were then listed totalling $37,951 and showing a resultant net profit of $82,049. Some adjustments to these figures were made although that was not apparent from the face of the Projection. A cover sheet on the letterhead of Unite was placed on the document and stated:

"The attached is an estimate only for budgetary purposes and has been attained from the trading figures extracted from the complex accounting structure on Evelyn Neis and from information supplied to us. We believe that the detail enclosed represents a true and fair view of the potential trading position of the shop in Adelaide Arcade, known as Evelyn Neis Creations.

No warranties or guarantees are given by this firm or any of its employees in relation to these figures as the actual performance will be dependant on the operator[']s own skills and abilities in marketing the merchandise. This firm will accept no liability for the accuracy of the information supplied nor for the performance of the operation seeking to be franchised."

Mr Bartley accompanied Ms Myers to the meeting with Mr Bartsch of the bank. The purpose of the meeting insofar as Mr Bartley was concerned was to provide information which the bank might require about the existing business and which could not be given by Ms Myers herself. The information concerned would assist in ensuring that the plaintiff got her approval quickly so that the settlement could proceed on 15 April. Mr Bartley did not give the Projection to either Ms Myers or Ms Neis and neither had a complete knowledge of its contents before the meeting with Mr Bartsch, or at any relevant time thereafter.

At the commencement of the meeting Mr Bartley handed the Projection which he had prepared to Mr Bartsch. Although there was some discussion about the figures, Mr Bartsch kept the document and it remained on the bank file. It appears that all the plaintiff saw of the document was the sales figure of $200,000 which she was able to read upside down across the desk while the document was in front of Mr Bartsch. It appears that Ms Myers left this matter in the hands of Mr Bartley. While she was able to glean something from the discussion between Mr Bartley and Mr Bartsch she knew nothing of the content of the Projection (except for a figure of $200,000) nor did she make any attempt, for example, to obtain a copy for her own perusal.

On 9 April 1997, the sale and purchase agreement was executed by Ms Neis and Ms Myers in the presence of Mr Winter at his office although the document was in fact dated 10 April 1997. It was agreed by the parties at the time of executing the agreement that the purchase price would be paid by a deposit of $10,000 on signing the agreement with the remainder being payable at settlement on 15 April. $90,000 was to be paid by Ms Myers for stock and a further $35,000 for lay-by debtors. The agreement was subject to Ms Myers entering into a franchise agreement with Ms Neis substantially in the form set out in Schedule 2 to the Sale and Purchase Agreement. The purchase was also conditional upon Ms Myers obtaining a loan of not less than $90,000 by 14 April 1997 and a lease of the shop for five years from the Adelaide Arcade. The form of the franchise agreement set out in Schedule 2 to the Sale and Purchase Agreement stated that the franchise fee was to be 10 percent of the wholesale value of the stock sold by Ms Myers.

On Friday 11 April 1997, Mr Winter forwarded to Ms Neis and Ms Myers a draft of the operations manual referred to in the franchise agreement. They examined the document and came to the conclusion that it was inadequate and that it contained substantial errors. Mr Bartley thereupon contacted Mr Winter on the telephone and terminated his instructions. Mr Wheeler was re-engaged to complete the necessary documents to set up the franchise to Ms Myers.

On 12 April 1997 Ms Myers and Ms Neis made out an agreement described as a "fit out agreement" whereby Ms Myers agreed to pay $17,500 to Ms Neis on 16 April 1997 without interest for various specified items of plant and equipment in the shop.

As I have said, Mr Wheeler was re-engaged to enable the franchise to be set up. In doing so, he noted that the drafts prepared by Mr Winter had stipulated that a franchise fee would be payable on 10 per cent of the wholesale price of the goods. Mr Wheeler considered that to be unusual and raised the point with Ms Neis who decided that she wanted the fee assessed at 10 per cent of the retail rather than the wholesale price, effectively doubling the fee. The schedule to the franchise agreement was altered accordingly.

On 15 April 1997, the day before settlement actually occurred, Ms Neis and Mr Wheeler went to Ms Myers' home at Auldana in the early evening for the purpose of having the franchise agreement executed. Mr Wheeler pointed out to Ms Myers the alteration he had made to the document in relation to the franchise fee. Ms Myers appeared to understand the nature of the alteration. The agreement was then executed by Ms Myers and Ms Neis and the document was dated 15 April 1997.

Settlement took place on 16 April 1997. After settlement, the plaintiff took possession of the shop and conducted the business under the name "Evelyn Neis Creations".

In early 1997 Ms Neis had recommended to Ms Myers that Mrs Vozzo would be a good person for her to employ as a part-time assistant in the shop. Shortly before settlement Ms Neis approached Mrs Vozzo to see if she would be prepared to work in the shop for Ms Myers on a part-time basis. In the absence of Ms Myers, Ms Neis told Mrs Vozzo that Ms Myers was incapable of running the business, that she would never make a success of it on her own and that she needed someone like Mrs Vozzo who knew what they were doing. The learned trial Judge considered that this was not said by Ms Neis because she knew that she was taking advantage of Ms Myers but rather because as a friend she recognised Ms Myers' inadequacies. Shortly afterwards, Ms Myers approached Mrs Vozzo and offered her part-time work which consisted of a few hours each morning.

Shortly after settlement took place, Mr Bartley recommended to Ms Myers that the business of the shop in Adelaide Arcade should be carried out through a trust. A company was incorporated for this purpose and a suitable trust deed executed. As the learned trial Judge held, there was no evidence of any agreement between Ms Myers and Susan Myers Pty Ltd concerning the transfer to Susan Myers Pty Ltd of any stock, debtors, shop fittings or other assets which Ms Myers had obtained from Ms Neis or the assumption of liabilities in respect of the business.

In mid-May 1997 the first monthly payment of the franchise fee fell due. It was based on the retail price and not the wholesale price of the items sold. The fee was paid without complaint although, as the learned trial Judge found, "she claimed that it was then her understanding that it should only have been half that amount". Although there was nothing in writing on the matter, Ms Myers believed that she was required to take $15,000 worth of stock at stated intervals in each year. Substantial quantities of additional stock were supplied by Ms Neis without being ordered. Ms Myers paid for some of this stock without complaint although it was necessary for her in early June to obtain additional accommodation from the bank to assist with the purchase of the additional stock.

Negotiations were taking place between the Board of Management of the Adelaide Arcade and Ms Myers for a lease for a period of five years. The lease was to be entered into in the name of Susan Myers Pty Ltd and Ms Myers herself was to guarantee the due performance by her company of the terms of the lease. It appears, however, that nothing was signed at that stage.

From May 1997, the turnover in the shop was only $2,976 per week. Ms Myers was trading at a substantial loss. Ms Neis was of the view that "budget" in relation to this business was reached if the weekly gross sales totalled $5,000.

Ms Myers did not want to work at the shop for six days a week commencing at 9.30 am each day. Also, her health was not good. Mrs Vozzo left her present employment to work in the shop. At first, she was employed on a part-time basis but by the end of May Ms Myers was satisfied with her performance and offered her full-time employment which she accepted.

Once employed on a full-time basis, Mrs Vozzo rapidly came to the conclusion that the business was not viable and told Ms Myers that that was the position. A matter of much concern to Mrs Vozzo was the amount of additional stock which Ms Neis had delivered to the shop. Ms Myers took advice from Mr Bartley on the matter and as a result at the end of June Ms Myers gave a letter to Ms Neis which was prepared on her behalf pointing out that she was returning a quantity of stock not required and would in future only take such stock as was ordered. The matter was discussed with Ms Neis who agreed to take back stock which had been returned by Ms Myers on the condition that payment for it would be deferred on terms to be agreed.

In June Mrs Vozzo enquired of Ms Myers how it was that she had purchased the assets of the shop and entered into the franchise agreement. With the permission of Ms Myers, Mrs Vozzo took some of the material documents to her son, a lawyer practising in Adelaide. He recommended that Ms Myers should urgently consult Mr Iles, a solicitor at Piper Alderman, who has acted for her ever since. Mr Iles gave Ms Myers certain advice following which she indicated that she wished to withdraw from arrangements with Ms Neis.

In early July, there was a major difference between Mrs Vozzo and Ms Neis on the shop premises. As a result, Mrs Vozzo told Ms Neis to leave the shop and threatened to call the Adelaide Arcade security service if she did not. Ms Neis left the shop.

On 9 July, the solicitors for Ms Myers gave notice to Ms Neis that Ms Myers had purported to exercise her right of "cooling off" under the LBS Act on the basis that the transaction was the sale of a small business to which that Act applied and that Ms Myers did not intend to be bound by any of the agreements relating to such sale.

Negotiations as between solicitors ensued but came to nothing because Ms Myers would not give up the shop and Ms Neis would not, and was not in a position to, refund the moneys paid at settlement.

As a result of these matters, Ms Myers went to pieces and suffered protracted periods of debilitating migraine headaches. Mrs Vozzo continued to run the shop. Its name was changed to "Susan Myers Boutique". Sales did not improve and in early August, Mrs Vozzo arranged for a friend of hers, Margaret Heaven, who ran another woman's fashion shop to take stock from her on consignment. The stock in question was reasonably priced and was more to the middle of the range in women's fashions. By the end of August, conditions had not improved. As from 30 August, Ms Myers started a half price clearance sale.

Ms Myers had never signed the lease for the shop and in August her solicitors were able to negotiate a payment to the Adelaide Arcade in full satisfaction of any claim made against her or Susan Myers Pty Ltd in relation to the lease.

This action was commenced against Ms Neis on 16 July 1997. On 15 January 1998 Ms Neis commenced third party proceedings against Australasian Law Chambers Pty Ltd, practising as Winters. At the commencement of the trial, the third party proceedings were dismissed by consent with no order as to costs. On 21 January 1999 Mr Bartley and Unite were joined as defendants in the action.

In this matter, after a trial, the learned trial Judge ordered that:

"1 The first plaintiff, Susan Myers, recover from the first defendant, Evelyn Neis, the sum of $5,495.

2 The first plaintiff, Susan Myers, recover from the second defendant, Paul Popowski, (now known and referred to as Paul Bartley) and the third defendant, Unite Pty Ltd, the sum of $101, 753.

3 The second plaintiff's, Susan Myers Pty Ltd, claim be dismissed with no order as to costs.

4 On the contribution notice of the second and third defendants, that insofar as the second and third defendants satisfy the judgment in favour of the first plaintiff, there be contribution by the first defendant to the second and third defendants for $9,132.

5 No order on the contribution notice by the first defendant against the second and third defendants.

6 That the plaintiffs pay to the first defendant her costs of action on the scale applicable to a judgment for $5,594 under the Magistrates Court Rules and as agreed or taxed.

7 That the second and third defendants pay to the first plaintiff her costs of action incurred on and after the joinder of the second and third defendants and that there be no order as to the costs prior to that date.

8 That the first plaintiff recover from the second and third defendants two-thirds of the costs which she is liable to pay to the first defendant.

9 No order as to costs of the contribution proceedings.

10 The parties may apply for further orders and directions."

Mr Bartley and Unite were dissatisfied with the judgment and appealed to this Court. Ms Myers and Susan Myers Pty Ltd were also dissatisfied with the judgment and cross-appealed. I will discuss the appeal and cross-appeal later in these reasons. Although Ms Neis was named as a respondent in the appeal on the part of Mr Bartley and Unite, she made no submissions on the hearing of the appeal and cross appeal.

Neither Mr Winter nor Mr Bartsch was called as a witness. Various documents prepared by them were tendered under s 45A of the Evidence Act 1929. The learned trial Judge found that those tenders were not opposed and that no party sought that the author of the documents be called as a condition of allowing the tenders. The documents in question, being contemporaneous records, were regarded by the learned trial Judge as the best evidence of what occurred. He accepted their contents.

The learned trial Judge accepted the evidence of Mrs Vozzo. He found her an impressive witness and was prepared to accept her evidence notwithstanding a degree of antagonism between her and Ms Neis.

The learned trial Judge accepted the evidence of Mr Wheeler.

He also accepted the accounting evidence of Mr Krantz, an accountant called as an expert witness by Ms Myers.

The learned trial Judge did not find Ms Myers, Ms Neis or Mr Bartley to be an impressive or reliable witness. He thought that as between them it was really the case of who was the least unsatisfactory. He rejected the evidence of each of them in so far as it was inconsistent with the other evidence mentioned earlier in these reasons.

The learned trial Judge said that he could not accept Ms Myers' evidence that Ms Neis told her that the turnover of the shop was $5,000 per week at least in most weeks. If it had been said, Ms Myers must have known that it was false. In the period of seven weeks in which she worked part-time in the shop from 3 February 1997 to 24 March 1997 the recorded turnover showed in the weekly reports was only about $3,288 per week on average. The reports before and after these dates are missing. In the period in question, Ms Myers had regular access to the current docket book and made entries in it for sales and expenses in which she was involved. It is highly likely that she looked at the other entries in the book made by Ms Neis and other employees, and possibly at other prior records which were in the shop. A person of her intelligence, and with her accounting education, must have appreciated from what was in the current docket book that there was nothing like a turnover of $5,000 per week in the shop during this period. In cross-examination on this topic Ms Myers claimed that Ms Neis had told her that there were unrecorded cash sales which made up the deficiency. While it is possible that there were some unrecorded cash sales, the learned trial Judge accepted the conclusion of Mr Krantz that they were not significant. They would not have been sufficient to account for the difference between what could readily be gleaned from the docket book and the alleged representation of a current average turnover of $5,000 per week. In so far as there was any talk by Ms Neis of a turnover of $5,000 per week, the learned trial Judge found that it was only in vague terms of the possible potential of the shop and not what was occurring or what had occurred in the recent past. I agree with the learned trial Judge's findings on this point. As this assertion by Ms Myers of a representation of a current turnover of $5,000 per week was central to her case, rejection of it seriously undermines her credibility about other alleged misrepresentations made to her.

Evidence on these matters may depend in part on the credibility of Ms Myers, Ms Neis or Mr Bartley but some of the evidence may not depend solely on the oral testimony but rather upon the Judge's assessment of objective facts or inferences to be drawn from the facts as found. Ordinarily, the appellate court will then be in as good a position as the trial Judge to make the assessment and draw inferences: State Rail Authority of New South Wales v Earthline Constructions Pty Ltd [1999] HCA 3; (1999) 160 ALR 588 per Kirby J at p 621.

The learned trial Judge said that he could not accept the evidence of Ms Myers that she had no opportunity to read the sale agreement before she signed it at the meeting on 9 April 1997. The effect of her evidence about it was that it was only presented to her at that meeting with Mr Winter. The learned trial Judge held that that was quite incorrect and that it was likely that Ms Neis gave a copy of a draft of it to Ms Myers before the meeting with Mr Winter, which had been planned to take place on 4 April. The draft agreement was clearly part of the documentation discussed by Ms Myers, Ms Neis and Mr Winter, at various meetings held by them. If Ms Myers did not read the draft sale and purchase agreement before she signed it, the learned trial Judge held that it was only because she had chosen not to do so and not because she did not have any adequate opportunity to do so. The learned trial Judge held that her evidence on this topic was unreliable and again, adversely affected her general credibility.

The learned trial Judge held that Ms Myers was adamant in her evidence in chief and during cross-examination that she had first worked for Ms Neis on 28 December 1996 and not earlier, that she had never told anyone that she had worked for Ms Neis for six months before she bought the business, that her first meeting with Mr Winter was on 26 March 1997, that she had not signed the franchise agreement at her home on 15 April and that Mr Wheeler had never been to her home. He held, however, that other acceptable evidence clearly contradicted Ms Myers on each of these matters. The learned trial Judge did not find that Ms Myers' credibility was adversely affected by her omission to put her earnings from Ms Neis into her tax return. He held that he did not find that Ms Myers consciously fabricated evidence. If she had wanted to bolster her case by fabrication it would have been easy for her to have said that she had seen the contents of the Projection at the meeting with Mr Bartsch and relied upon it. The learned trial Judge held that it was likely that the present inability of Ms Myers to remember accurately a number of important aspects of her dealings in purchasing the business was because they were of no importance or concern to her at the time. The learned trial Judge held that as much of the evidence of Ms Myers, where it can be checked against other more reliable indicators, was shown to be unreliable, no great weight can be placed on her assertions on other matters which cannot be independently verified.

The learned trial Judge found that Ms Neis was as erratic in her evidence as she was in the conduct of her business. She made assertions that Ms Myers was an expert accountant and well familiar with her records. The learned trial Judge considered that such assertions were absurd. He was also of opinion that Ms Neis' claim that the plaintiff was represented by her own accountant and lawyers in the events leading up to the settlement in respect of the shop was also too far fetched to be acceptable. Ms Neis claimed that Ms Myers had prepared some of the secondary accounting records of the business. However, evidence of Ms Myers' writing was not identified on any of the documents concerned. The learned trial Judge held also that Ms Neis told a false story to various people about supposed arrangements for her to set up a franchise in Melbourne to justify the urgency of the settlement on the sale to Ms Myers. The learned trial Judge found that her evidence was inconsistent with the instructions which she must have given for parts of her pleaded defence. He found that many of her responses in cross-examination were merely argumentative or specious.

The learned trial Judge found that Mr Bartley deliberately gave false evidence to bolster his own case and was not worthy of any credit on matters which were in dispute. The learned trial Judge found that many of Mr Bartley's assertions were unconvincing, self-serving attempts to bolster his defence and to deny that he had acted unethically. He found that the records of Mr Bartsch had contradicted Mr Bartley's evidence in numerous respects. His assertion, that when he commenced to work for Ms Myers on 10 April 1997 he thought that the sale of Ms Neis' business to her was complete, was quite incredible in light of other evidence. The learned trial Judge held that there was a strong inference that a good deal went on between Mr Bartley and Ms Neis which neither of them was prepared to disclose in evidence because it would have been adverse to their cases. However, the learned trial Judge held that the fact that Mr Bartley had lied on many occasions did not mean that the opposite of his lies was therefore proved, but only that there was no evidence from him on the topic.

Relief under the Land and Business (Sale and Conveyancing) Act 1994

The question of relief under the LBS Act has not been mentioned either in the notice of appeal or notice of cross-appeal in this matter. There is therefore no need to deal with the question of such relief in these reasons.

With one exception to which I will shortly refer, the learned trial Judge found that all causes of action based upon proved misrepresentations about turnover and profitability must fail as no sufficient inducement or causation has been proved. I agree with the finding so made.

The learned trial Judge was not prepared to accept Ms Myers' evidence alone as to representations in the terms which she alleged about turnover, profitability and budgets of the shop. He said there were nebulous discussions in general terms along the lines that there were expectations about what the business might be able to achieve. He proceeded:

"... However, I do not find the plaintiff's evidence to be sufficiently reliable to accept on the balance of probabilities that either the 1st or 2nd defendants [Ms Neis and Mr Bartley] said that the business was generating sales of approximately $5,000 per week or $22,000 per month, that the 1st defendant had budgeted for these sums, that the 1st defendant was meeting budget, that the plaintiff could expect to achieve similar sales and that the plaintiff could expect to achieve profits of between $40,000 and $50,000 per annum."

The learned trial Judge was not satisfied on the balance of probabilities that Mr Bartley made any such representations to Ms Myers.

I think the findings of the learned Judge on these matters were within the scope of the evidence and within the capacity of the learned trial Judge to make.

The parties were not acting entirely at arm's length. The learned trial Judge found that Ms Neis and Ms Myers were personal friends and that Ms Myers trusted Ms Neis and wanted to assist her at a time when she needed assistance. Rather than engage expensive lawyers and accountants, Ms Myers preferred to place her trust in Ms Neis. She ignored Mr Winter's advice to obtain independent legal advice in the matter. She told Mr Winter that she would be consulting Mr Peter Scragg, a solicitor who had previously acted for her. Despite Mr Winter's intimation, she continued to act on the basis that Mr Winter was representing the interests of both Ms Neis and herself. When Mr Wheeler came back into the transaction after Mr Winter had been dismissed, he was told by Ms Neis that Mr Winter had been acting for both vendor and purchaser. Ms Myers did not appear to protect her own financial position or worry about the financial future of the shop. The various alleged representations of about $5,000 per week turnover and sales of $200,000 per year, while not necessarily mutually inconsistent, could be expected to have alerted someone of her experience and intelligence to seek some clarification about them if they were of any significance to her.

Mr Krantz gave evidence as an expert witness. As his figures show, the turnover of the shop in each of the four weeks before and after settlement was about the same. Thus there was no significant downturn immediately after settlement from the position which was experienced in the weeks leading up to settlement. Ms Myers' assertion that she was not concerned about the low takings in the second half of April and May was contrary to her having relied on any representations about the turnover. Her conduct up until the end of June was not consistent with that of a person who had been deceived by substantial misrepresentations about the financial viability of the business. Her only complaint was to Mrs Vozzo in about June 1997 that she had said that she could expect to make between $5,000 and $7,500 per week but nothing else. The fact that she was deceived was inconsistent with her having signed a conditional acceptance of her lease from the Adelaide Arcade on 19 June 1997 when she must have realised that there were problems with the financial viability of the shop.

In a letter of 30 June to Ms Neis there was no suggestion of any misrepresentation but only that Ms Neis was overburdening Ms Myers with excessive stock. Even after the letter of 30 June, she was still seeking to resolve the matter amicably with Ms Neis. However, as explained earlier, she was required to choose between her friendship with Mrs Vozzo and her friendship with Ms Neis. In the correspondence from her solicitors there was no allegation of misrepresentation other than in respect of the Projection. It was only when she had proper independent legal advice from Mr Iles on 2 July 1997 that the reality of her financial situation in the business became apparent to her. She had entered into a disastrous financial transaction which had no immediate prospect of being profitable. However, her subjective state of mind was that she was not interested in how the business had been performing or was then performing or in spending money on professional advice to protect her financial interests.

If she was concerned about the financial aspects of the business she was buying, she would have made an effort to obtain a copy of the Projection and either examine it herself or obtained independent professional advice on it.

Ms Myers was disinterested in and did not actively participate in the meeting on 7 April 1997 at the ANZ Bank between herself, Mr Bartsch and Mr Bartley concerning her loan application. In particular she did not ask to see the Projection Mr Bartley provided to the bank. She only saw it upside down from across the desk and was only able to see a figure of $200,000 which she was able to read across the desk. Also, she did not ask Mr Bartley any questions about the Projection document.

The material part of the transcript is on pp 321 and 322 as follows:

"Q Looking at the document now produced, what you are being shown there is a bound up document that has two pages which I suggest to you is the original of a document Mr Popowski [Bartley] provided to the bank. First of all do you recall seeing that actual document with the plastic cover and bound on the side; do you recall seeing that at any time at the ANZ Bank.

Q I think you've said you recall at the meeting at the ANZ Bank where Mr Popowski [Bartley] and Mr Bartsch were there, so that's the meeting I'm talking about.

Q I think you've said that you saw a document upside down that had 200,000 on it.

Q ... I want to know whether what you're looking at now, is that the document that you saw part of upside down at the bank.

Q Did you see where it came from, who had it, who gave it to who, where it was produced from.

A Yes, I did see Mr Popowski [Bartley] hand it to Michael Bartsch.

A No I didn't. I heard Mr Popowski [Bartley] explain to Mr Bartsch what it was.

A He said that this was his projection of the figures that I should make in the next 12 months.

Q Did you ask Mr Popowski [Bartley] any questions about it.

A Mainly because when we left the bank Mr Popowski [Bartley] seemed to be in a hurry to go off somewhere and I never asked him about it afterwards.

Q During the discussion at the bank did you hear reference to a projected net figure of about $82,000.

There is evidence that Ms Myers made up her mind to buy the business before she met Mr Bartley. The following passage appears at p 350 of the transcript commencing with line 24:

"Q If I suggest to you that before you met Mr Popowski, [Bartley] you had made up your mind to buy the business from Ms Neis, do you agree that's correct.

Q The topic of a budget for Mrs Neis' shop, when she owned the shop -

Q - Mr Popowski [Bartley] never discussed the topic of her budget with you.

Q This was at the bank or at a meeting with Mrs Neis, or both.

A At the meeting with Mrs Neis in Augusta's Coffee Shop."

The learned trial Judge found that insofar as Ms Myers saw part of the Projection at the meeting with Mr Bartsch (reference to $200,000), and heard in the conversation between Mr Bartley and Mr Bartsch another part of it, these constituted representations by him to Ms Myers about what could be expected when she bought the business.

I do not agree with the learned trial Judge's conclusion in relation to the matters referred to in the previous paragraph of these reasons. Ms Myers would have gained nothing from the fact that she was only able to recognise a figure of $200,000 out of all the figures in the document. Such a figure would have meant nothing to her. Nor would she have necessarily been able to make anything of the document from the conversation between Mr Bartley and Mr Bartsch while the document was before them. She was unaware of the contents of the document and without at least a rudimentary understanding of it she would not have been able to follow the conversation. During the meeting, Ms Myers asked for a copy of the document. After the meeting, Mr Bartley had another appointment to keep and nothing was done about providing a copy of the Projection to Ms Myers.

A number of misrepresentations were alleged in par 13 of the statement of claim. Various of them were representations as to turnover and profitability. For reasons which I have given, these misrepresentations are not actionable.

This leaves some four representations contained in par 13.4, par 13.5, par 13.6 and par 13.7 of the statement of claim. It would appear that each of these representations was dealt with by the learned Judge in his reasons and that none of them were the subject matter of this appeal. It is therefore unnecessary to mention them further.

The learned trial Judge found that Mr Bartley, in putting forward the document referred to in these proceedings as the "Projection" to Mr Bartsch as representing the bank, misled the bank, contrary to s 56 of the Fair Trading Act 1987. As the Projection contained a forecast or other representation as to a future matter, Mr Bartley, as the person making the representation as to the future matter, did not have reasonable grounds for doing so. The representations in question must be taken to be misleading. Section 56(1) of the Fair Trading Act 1987 is as follows:

"(1) A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive."

Damages in respect of conduct which is misleading are recoverable under s 84(1) of the Fair Trading Act. For damages to be recoverable, there must be a causal connection between the conduct complained of and the loss or damage suffered. This is made clear by the use of the word "by" in s 84 of the Fair Trading Act s 84 (1) being as follows:

"(1) A person who suffers loss or damage by conduct of another in contravention of a provision of Part 10 ... [the part that includes s 56] may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention."

In Wardley Australia Limited v Western Australia [1992] HCA 55; (1992) 175 CLR 514 at 525, Mason CJ, Gaudron and McHugh JJ said:

"... The statutory cause of action arises when the plaintiff suffers loss or damage "by" contravening conduct of another person. "By" is a curious word to use. One might have expected "by means of", "by reason of", "in consequence of" or "as a result of". But the word clearly expresses the notion of causation without defining or elucidating it. In this situation, s 82(1) [the subsection of the Trade Pr_a_ctices Act 1974 (C'wlth_)_ which corresponds to subsection 84(1) of the Fair Trading Act 1987] should be understood as taking up the common law practical or common-sense concept of causation recently discussed by this Court in March v Stramare (E & M H) Pty Ltd, [1991] HCA 12; (1991) 171 CLR 506 except in so far as that concept is modified or supplemented expressly or impliedly by the provisions of the Act. Had Parliament intended to say something else, it would have been natural and easy to have said so."

Ms Myers suffered loss or damage by the conduct of Mr Bartley in breach of Part 10 of the Fair Trading Act. The conduct in question was the inducement by Mr Bartley of the ANZ Bank to make a loan of $140,000 to Ms Myers, a loan which would not have been made if the bank had been fully informed of the true position as to the turnover and profitability of the business which Ms Myers was about to purchase. If the bank were to refuse to make the loan, Ms Myers would have had no option but to refuse to complete the purchase of the business concerned. As already explained, there must be a causal link between the misleading conduct on the part of Mr Bartley on the one hand and the loss or damage sustained by Ms Myers on the other hand. The ANZ Bank is not concerned because it has not suffered any loss: Janssen-Gilag Pty Ltd v Pfizer Pty Ltd [1992] FCA 437; 1992 37 FCR 526. In that case, Lockhart J concluded (at 537) that the entitlement to recover loss or damage under s 82 of the Trade Practices Act 1974 (C'wlth), the equivalent of s 84 of the Fair Trading Act, is not confined to persons who rely on the representations which constitute contraventions of one or other of those Acts.

In my opinion, Ms Myers would have a claim against Mr Bartley for damages pursuant to s 56 and s 84 of the Fair Trading Act in consequence of the representation made to the ANZ Bank in relation to the loan from the bank of $140,000. The quantum of damages will be discussed later in these reasons.

Contributory negligence in relation to s 56 and s 84 of the Fair Trading Act

Section 27A of the Wrongs Act 1936 deals with apportionment of liability in a case involving contributory negligence. The damage claimed was not suffered by Ms Myers as a result of a tort. This cause of action is for damages for breach of an obligation imposed by the Fair Trading Act itself (s 56) not to engage in misleading conduct. The cause of action is entirely statutory. The right to bring it is conferred by s 84 of the Fair Trading Act. See generally, ANZ Banking Group Limited v Turnbull & Partners [1991] FCA 618; (1991) 106 ALR 115 per Sheppard J at p 127. The decision of Sheppard J on this point was approved by the Full Federal Court in Bialkower v ACOHS Pty Ltd (1998) 154 ALR 534 at p 544.

In view of what I have said in the previous paragraph of these reasons, damages awarded to Ms Myers in this matter and grounded on a claim under s 56 and s 84 of the Fair Trading Act cannot be reduced by conduct on her part which would be treated as contributory negligence in an action for damages for negligence. The provisions of s 27A of the Wrongs Act 1936 have no application to a claim under the Fair Trading Act to which I have just referred.

Claim in negligence by Ms Myers against Mr Bartley and Unite

Relief sought by Ms Myers against Mr Bartley and Unite included an award of damages on the ground that they had has been negligent. Once a relationship of accountant and client has been established between Mr Bartley, Unite and Ms Myers, Mr Bartley and Unite came under a duty of care when acting as her accountants. Particulars of such duty and of its breach and of the findings of the learned trial Judge in relation to negligence are set out below.

The paragraphs pleaded within the statement of claim in this action seem to me to be nothing more than particulars of the general duty to act with care and skill.

Paragraph 4A of the statement of claim provided that at all material times Mr Bartley was Ms Neis' accountant. Paragraph 4B provided that from in or about April 1997 to in or about July 1997, Mr Bartley was the accountant of Ms Myers and also of Susan Myers Pty Ltd. Also, par 4C of the statement of claim provided that at all material times Mr Bartley was a director and employee of and operated his accounting business through Unite. Paragraphs 4A and 4C were admitted in the defence and par 4B was pleaded to in the defence in the following terms:

"Except that the defendants [Mr Bartley and Unite] say the second defendant [Mr Bartley] was the plaintiff's [Ms Myers'] accountant after 10 April 1997 until 22 January 1998, the defendants [Mr Bartley and Unite] admit the matters alleged in paragraph 4B of the ... Statement of Claim."

It was also pleaded that Mr Bartley and/or Unite owed to Ms Myers a duty of care commensurate with the standard of care expected of a reasonably diligent accountant to:

(a) provide accurate information concerning Ms Neis' business to Ms Myers and to ANZ;

(b) advise Ms Myers and ANZ to seek independent accounting advice before agreeing to purchase Ms Neis' business; and

(c) advise Ms Myers and ANZ that the purchase of Ms Neis' business was not a viable business opportunity for Ms Myers.

It was further pleaded that in breach of that duty of care, Mr Bartley and/or Unite failed to discharge their responsibilities with reasonable care in failing to:

(a) give accurate information concerning Ms Neis' business to Ms Myers and to ANZ;

(b) advise Ms Myers to seek independent financial advice before agreeing to purchase Ms Neis' business; and

(c) advise Ms Myers and ANZ that the purchase of Ms Neis' business was not a viable business opportunity for Ms Myers.

In par 5 to par 17 of his defence Mr Bartley pleaded that he gave accurate information to Ms Myers, and that he was not required to provide advice to Ms Myers as he was acting for Ms Neis.

In relation to negligence on the part of Mr Bartley and Unite, the learned trial Judge made the following findings:

(1) That Mr Bartley and Unite acted as the accountant for Ms Myers in relation to the business from at least 10 April 1997, and possibly slightly earlier.

(2) They thereupon became obliged in law to act in her best interests and to disclose to her all material information which they had about the business she was about to purchase including what they knew about it through having acted as the accountant for Ms Neis.

(3) Any independent accountant advising Ms Myers at that time who knew what Mr Bartley did about the business and its history had a duty of care to Ms Myers to give very strong advice that it was not in her financial interests to complete the proposed transactions or to pay the amount of money which was being asked for by Ms Neis.

(4) The duty of an independent accountant acting for the plaintiff at that stage in those circumstances would also have been to have strongly urged Ms Myers to obtain proper legal advice. The legal advice, if obtained, would have reinforced the undesirability of Ms Myers completing the transaction and would have been likely to raise the point that she did have the right under the LBS Act to cool off.

(5) Even under the documents which she had executed by that time she would probably have avoided the obligation to settle on the sale because she would have been advised not to agree to the alteration of the Franchise Agreement doubling the franchise fee.

(6) If Mr Bartley had made a full disclosure to Ms Myers of relevant matters known to him and given proper advice to her, it is likely that she would have accepted that advice and would not have settled.

In relation to the first finding, I am of the view that Mr Bartley was and Unite were appointed Ms Myers' accountants on 7 April 1997. I will now deal with the evidence relating to that appointment.

Evidence as to date of appointment of Mr Bartley as accountant of Ms Myers

In cross-examination by counsel on behalf of Ms Neis, Ms Myers gave the following evidence, commencing on p 175 of the transcript:

"Q When did you first meet, actually physically meet, Mr Popowski [Bartley].

Q At that meeting was Mr Popowski [Bartley], my client and yourself.

Q Who arranged for Mr Popowsky[sic] [Bartley] to be present at that meeting.

Q On your understanding, why was he at that meeting.

A I was supposed to originally be meeting Mr Popowsky[sic] [Bartley] on Friday, 4 April. He was unable to keep that meeting. Therefore, the next possible time for him to meet with Evelyn and myself was on the Monday, the 7th.

Q ... When you met Mr Popowsky[sic] [Bartley] on 7 April, did you engage him as your accountant.

A After we had gone through all of the business that Evelyn and he wanted to talk about, and him stating that he would come to the bank with me to produce the documents that the bank required for me to be able to get a loan to purchase the business, ... I told him that I had not done my 1996 tax return and that, seeing he had been Evelyn's accountant for approximately 15 years, and he knew the business so well, would he continue and act for me, because he knew the business, rather than me going on to Mr Wiadrowski, who would have been coming into a completely new aspect. I thought it was best to stay with the same accountant, and he agreed with me.

Q Before you signed any contract documents regarding this transaction.

Q Did you, at that time apprehend a danger in having the same accountant as the person you were about to enter a transaction with.

A No, I never thought about it that way. I just thought that he would act as my accountant for the business I was purchasing because he was so familiar with it.

Q When you met him in the morning at the coffee shop, do you remember roughly what time that was.

A It would have been later in the morning, possibly 11, but I'm not positive of the time.

Q In any event, it was not first thing in the morning.

Q When you met Mr Popowsky[sic] [Bartley] at, say, around 11 a.m.

Q Had you made arrangements with him for him to go to the bank with you at 2 o'clock.

Q At 2 o'clock that afternoon, on the 7th, the Monday, you go to the bank and, at the bank you meet with Mr Popowsky[sic] [Bartley] and Mr Bartsch.

In the course of cross-examination by counsel for Ms Myers, Ms Neis said that she understood that Ms Myers had her own accountant. She expected that he would examine the documents and give her advice in the matter. She contended that she was unaware that her accountant, Mr Bartley, would provide Ms Myers direct with information relevant to the proposed sale and purchase. Ms Myers told Ms Neis that she had an accountant for many years and that she would use him in connection with this project. In fact, she did not.

It was suggested to Ms Neis in evidence by counsel for Ms Myers that in mid-morning on Monday, 7 April 1997 at Augusta's Coffee Shop that she introduced Ms Myers to Mr Bartley. She denied that she was party to any such introduction.

The date of his appointment as Ms Myers' accountant was not explored in evidence in any depth with Mr Bartley. In the course of his evidence-in-chief, he said that he considered the meeting with Mr Bartsch of the ANZ Bank to have taken place on Wednesday, 9 April 1997, rather than Monday, 7 April 1997. Also he thought that the time of the meeting was 4.00 pm and not 2.00 pm, a note of which he recorded in his diary.

At p 812 of the transcript, during his cross-examination by counsel for Ms Neis there is a brief exchange as follows:

"Q What date do you say Mrs Myers engaged you as her accountant.

A further brief exchange also took place on p 910 of the transcript where Mr Popowski [Bartley] was being cross-examined by counsel for Ms Myers:

"Q Correct me if I am wrong, but you became her accountant on the 10th.

At p 826 of the transcript, Mr Bartley admitted that he was Ms Myers' accountant. It is not clear from the evidence on what date such appointment took effect.

As can be seen, Ms Myers gave evidence at some length as to the date she appointed Mr Bartley and Unite as her accountant. Having read the relevant parts of the transcript I see no reason why I should not accept it on the balance of probabilities as the truth. The learned trial Judge found that Ms Myers' evidence was unreliable at times, not because she was giving evidence which she knew to be false, but rather her evidence was from time to time at variance with other evidence known to be reliable.

"The 2nd defendant [Mr Bartley] acted as the accountant for the plaintiff [Ms Myers] in relation to the business from at least 10 April 1997, and possibly slightly earlier."

351. I do not know how the learned trial Judge came to that conclusion. It seems to me that it was Ms Myers' evidence that Mr Bartley would have been appointed as her accountant at the meeting at which both were present on 7 April 1997 at Augusta's Coffee Shop at or about 11 am. On the other hand, Mr Bartley contends that the appointment was on 10 April 1997, although the transcript does not give any real indication as to how that date was arrived at. It seems to me that the date of the contract is somewhat critical in this matter because it is the date upon which Ms Myers became bound, albeit conditionally, to carry the agreement for sale and purchase into effect. The fact that the contract was a conditional one is of no consequence in view of the fact that the sale and purchase was completed in due course. If the sale and purchase had not been completed and the contract had been rescinded on the ground that the conditions had not been satisfied then the date in question would have had no significance.

352. The fixing of this date is of some importance in the matter. Anything done or omitted to be done by Mr Bartley and Unite before the retainer is of no consequence. There is no duty of care owed by Mr Bartley or Unite to Ms Myers and there is therefore no liability to her for anything which either of them may have said or done. On the other hand, on their appointment as Ms Myers' accountant, they would thereafter owe a duty of care to Ms Myers and may be held liable to her in negligence.

353. Documentary evidence supporting Mr Bartley's position is alleged to have consisted of a letter dated 10 April 1997 from Unite to Ms Myers' former accountant, Mr Wiadrowski, and an insurance quotation for Ms Myers dated 10 April 1997. These items refer to the fact that Mr Bartley was on that date practising as Ms Myers' accountant. This evidence is equivocal, however, in that it is consistent with an appointment on or before that date but not afterwards.

354. As a general matter, the learned trial Judge was of the view that Mr Bartley had deliberately given false evidence at the trial on other matters and that many of his assertions were unconvincing, self-serving attempts to bolster his defence. His answers to questions on the topic of his appointment and that of Unite as Ms Myers' accountant were of no assistance in endeavouring to ascertain whom to believe. The answers were very short and, almost without exception, they were led from the witness. The context would be of considerable assistance in endeavouring to determine whether or not the answers given would be likely to be the truth. If the cross-examination in question had been more extensive and the subject matter explored in greater depth, it might have been possible to assess Mr Bartley's evidence on this matter with more confidence as to its truth. On an important matter of this kind, Mr Bartsch should have been called to give evidence.

355. If 7 April were put to Mr Bartley as the date upon which he agreed to act for Ms Myers as her accountant, he might have agreed that that was the relevant date. He could be reminded of the meeting in Augusta's Coffee Shop on that date and with that additional information, he might have agreed that Monday 7 April was the correct date. As a practical matter, it may well be that he was unaware of the importance of the date of his appointment as Ms Myers' accountant.

356. On the available evidence, I prefer Ms Myers' account of events. I consider that it is possible to fix the date of the appointment of Mr Bartley and Unite as Ms Myers' accountant and that such appointment took effect on 7 April 1997 at the meeting which took place on that day at Augusta's Coffee Shop. The evidence of Mr Bartley to the effect that the appointment took place on 10 April 1997 should be rejected. The learned trial Judge found that Mr Bartley acted as accountant for Ms Myers: "in relation to the business from at least 10 April 1997, and possibly slightly earlier". Such a finding leaves the date of appointment uncertain. In my view, the evidence is available to make a finding of 7 April 1997 and I believe that such a finding should be made. The time such appointment was made has an important effect on various matters discussed in these reasons.

357. There can be no doubt that Ms Myers suffered loss or damage as a result of the breach by Mr Bartley and Unite of their duty of care. In par 70 of his reasons, the learned trial Judge found that the transaction entered into by Ms Myers with Ms Neis proved to be financially disastrous to Ms Myers and that Mr Bartley and Unite were liable in law for the loss or damage to Ms Myers which flowed from it. Also as can be seen later in these reasons, Ms Myers became entitled to a substantial sum by way of damages for breach of the duty of care owed to her by Mr Bartley and Unite.

358. In his reasons, the learned trial Judge said in par 71 and par 72:

" The claim on which the plaintiff [Ms Myers] has succeeded against the 2nd defendant [Mr Bartley] is one framed in tort. Thus 27a of the Wrongs Act can apply to reduce the 2nd defendant's liability to the extent that it is just and equitable that the plaintiff bears responsibility for it: Astley v Austrust Ltd [1999] HCA 6; (1999) 161 ALR 155; [[1999] [1999] HCA 6; 197 CLR 1]. I have not found any reported case in which an issue of contributory negligence has been dealt with in claims against accountants in their capacity as accountants and not as auditors. However, there are a number of instances of reductions for contributory negligence by a client in claims for professional negligence against other types of professionals: Jackson and Powell "Professional Negligence", 1st edition, paras 1-33, 1-34; Laws of Australia, 27.4-25 (blue replacement pages), 27.4-32; 27.3-50.

I find that the plaintiff was negligent in not taking the advice of Mr Winter to obtain independent legal advice on the transaction. If she had taken such advice, it is highly unlikely that she would have gone ahead with the transaction. As I have stated earlier there was no good reason why she should not have obtained such advice. She knew a solicitor and she could afford legal advice. She seems to have believed in a misguided way that the 2nd defendant would look after her interests as well as those of the 1st defendant. The 2nd defendant knew that the plaintiff had no other independent advice, although there is no proper basis to infer that he knew that she had disregarded advice from Mr Winter to get her own lawyer. It was a significant failure of the plaintiff to take reasonable care to protect her own financial interests in the transaction. None of the other particulars of negligence in paragraph 21 of the Defence of the 2nd defendant are made out by him. The liability of the [second defendant to the plaintiff] will be reduced by 1/3rd for her contributory negligence."

359. Ms Myers and Mr Bartley have each challenged the learned trial Judge's apportionment of liability to take account of contributory negligence. Counsel for Ms Myers argued that this was a case in which there should be no reduction in the quantum of damages on account of contributory negligence. He said that on the facts found by the learned trial Judge, it was not legal advice that Ms Myers required; rather it was reasonably accurate accounting or financial information on the state of the business. In the written argument on behalf of Ms Myers, it was submitted that if there were to be an apportionment of liability between Ms Myers and Mr Bartley, Ms Myers should not be required to contribute more than 10% of the total damages.

360. In Evers v Bennett [1982] 31 SASR 228, King CJ held at p 229:

" The statute confers on the trial judge a wide discretion to apportion liability in a way which is just and equitable and an appellate court will interfere only in rare cases: Pennington v Norris [1956] HCA 26; (1956) 96 CLR 10. In many cases opinions will differ as to the precise apportionment which is just and equitable and the trial judge's assessment must prevail unless it is clearly wrong."

361. In the present case, I cannot say that the assessment of the learned trial Judge was "clearly wrong". The reduction by one third must stand.

Whether damages for negligence on the part of Mr Bartley and Unite recoverable by Ms Myers or Susan Myers Pty Ltd or both

362. In assessing damages payable by Mr Bartley and Unite to Ms Myers, the learned trial Judge erred in including damages suffered by Susan Myers Pty Ltd (ACN 078 329 183).

363. Susan Myers Pty Ltd was registered as a proprietary company on 24 April 1997. The sale and purchase agreement was signed on 10 April 1997 and the franchise agreement was signed on 15 April 1997. Settlement took place on 16 April 1997. The deed of settlement constituting the trust was executed on 28 April 1997 some time after the signing of the sale and purchase agreement.

364. It was once the position that no duty of care could be owed to a person who was not in existence at the time the action was commenced. This rule has been relaxed in the case of unborn children who are said to be members of a clause: X v PAL (1991) 23 NSWLR 26. There appears to be no authority for the relaxation of the rule in favour of companies which have not been incorporated at the time of the commencement of the action seeking damages for breach of a duty of care or damages under a statute such as the Fair Trading Act. Also, as the learned trial Judge points out in his reasons, no cause of action has been pleaded that Mr Bartley was in breach of any duty to Ms Myers in having advised upon and being instrumental in the incorporation of Susan Myers Pty Ltd and the setting up of the trading trust.

365. In my opinion, damages in this matter are not recoverable by Susan Myers Pty Ltd either on its own account or as trustee of the trust to which I have earlier referred in these reasons.

366. The learned trial Judge assessed damages in relation to the negligence claim and set out in some detail his reasons for so doing. The notice of appeal and notice of cross-appeal do not disclose any ground of appeal to the effect that the quantum of the damages assessed in relation to the claim based on negligence is either inadequate or excessive; nor was the matter raised in argument before us.

367. Earlier in these reasons, I expressed the view that Ms Myers would have a claim against Mr Bartley for damages pursuant to s 56 and s 84 of the Fair Trading Act ("the Fair Trading Act Claim") relating to representations made to the ANZ Bank, the quantum of such damages to be discussed later in these reasons. I now deal with that issue.

368. In a case such as the present, I see no reason why damages quantified in relation to the Fair Trading Act claim should differ from damages quantified in relation to the negligence claim and I propose to assess damages in relation to the Fair Trading Act claim accordingly.

369. On the conclusion to which he came, there was no need for the learned trial Judge to make an assessment of damages in relation to the Fair Trading Act claim and he did not do so. As I have come to a different conclusion, it is necessary for me to assess damages in respect of the Fair Trading Act claim.

370. In my opinion, on the facts of this case, the assessment should be the same as relates to the negligence claim. The amount of damages assessed against Mr Bartley in relation to the Fair Trading Act claim should be $152,629. Unlike the situation of the negligence claim, there can be no deduction for contributory negligence.

371. Costs awarded under pars 7 and 8 of the order under appeal are clearly within the discretion of the trial Judge: District Court Act 1991, s 42(1). I would not want to disturb the orders made under the paragraphs concerned. Despite the discretion conferred on him under s 42 of the District Court Act he is required to act judicially in the matter: Bevington v Perks [1925] 2 KB 229. I have no doubt that he did.

372. In the circumstances, the appeal must be dismissed but the cross-appeal against the judgment entered against Mr Bartley must be allowed. The judgment entered against Mr Bartley must be set aside. In lieu thereof the first plaintiff is to have judgment against Mr Bartley in the sum of $152,629. The judgment against Unite must stand.