Bruce Harvey and Anor v State of New South Wales [2006] NSWSC 1436 | Case summary

Bruce Harvey and Anor v State of New South Wales [2006] NSWSC 1436 | Case summary | Zoe

(e) Robin Glass, investor - Mr Glass' statement concerns his dealings with Mr Harvey on and after 29 June 2000 with respect to possible investment in the Plaintiffs' project involving the marketing of framed items of Aboriginal art and Certificates of Title. 11 At the conclusion of the Plaintiffs' case, Mr Menzies QC, for the Defendant, moved for dismissal of the proceedings under Part 29 r 29.9 Uniform Civil Procedure Rules ("UCPR"). Mr Titus, solicitor for the Plaintiffs, stated that the Plaintiffs wished to argue the question raised by the application for the purpose of Part 29 r 29.9(3) UCPR. Thereafter, I heard submissions and ruled that I would not accede to the Defendant's application for dismissal of the proceedings (T357.18). 12 On such a dismissal application, the Plaintiffs' evidence should be taken at its highest: De Gioia v Darling Island Stevedoring & Lightecage Co Ltd (1941) 42 SR(NSW) 1 at 3; Challenge Finance Limited for Forshaw (No 4) (1995) 217 ALR 264 at 268-9; Hunt v Watkins (2000) 49 NSWLR 508 at 510. 13 In evaluating a submission of "no case to answer" in civil proceedings, the Court does not evaluate the evidence nor make findings of fact. I was in the same position as a judge with a civil jury, except that I fulfil both roles. It was necessary to consider whether, as a matter of law, the Plaintiffs' case met the standard set out in De Gioia, Challenge Finance Limited v Forshaw (No. 4) and Hunt v Watkins. If there was sufficient evidence to surmount this barrier, then, in due course, the case proceeds with it falling to me, as the trial judge, to evaluate the evidence and to decide the case and make findings of fact. 14 Where, as in the present case, the Plaintiffs' case is based partly upon inferences which the court is asked to draw from evidence in the Plaintiffs' case, and there are countervailing probabilities, it would be a very exceptional case in which the judge could be justified in taking the case away from a jury in civil proceedings: Carr v Baker (1936) 36 SR(NSW) 301 at 306-307. A similar approach is adopted where a submission of no prima facie case is made in criminal proceedings based upon circumstantial evidence: R v Serratore (1999) 48 NSWLR 101 at 130. 15 Having applied these principles to the submissions advanced by the parties, I refused the Defendant's application for dismissal of the proceedings. 16 Following the rejection of the Defendant's application for dismissal of the proceedings, the Defendant adduced evidence as permitted under Part 29 r 29.9(5)(a) UCPR. The Defendant called the following witnesses:

The Plaintiffs' Pleaded Claims 17 The Plaintiffs' claims are set out in the Further Amended Statement of Claim ("FASC") filed by leave on 9 June 2005, which is the principal source for the following narrative and which serves to introduce a number of persons and entities to be referred to later in this judgment. 18 Enterprises was incorporated on 14 June 1984. At all relevant times, the second-named Plaintiff, Bruce Harvey, was a director of Enterprises and the company acted through him as its agent. 19 By Deed of Trust dated 1 September 1999, Enterprises became trustee of the trust known as "The Australian Indigenous Peoples Hill End Land Trust" ("the Trust"). 20 Prior to 25 July 2000, Sir Barry Jowett was a director of Sydney-Beijing Development Corporation Pty Limited. He was also a registered proprietor of 99,980 out of 100,000 shares of land near Hill End comprised in Lots 63, 64 and 107 in Deposited Plan 756105, being the land comprised in Certificate of Title Volume 8647 Folio 246 ("the Land"). Sir Barry Jowett employed Henry Kelly, solicitor, in respect of his dealings with Mr Harvey and Enterprises. 21 During 1998, Mr Harvey was introduced to Sir Barry Jowett. During discussions, Sir Barry Jowett introduced Mr Harvey to the concept of the sale of 100,000 individual shares in the Land including mounted and authenticated Certificates of Title. During 1998, Sir Barry Jowett and Mr Harvey attempted to develop projects for the sale of similar products into China and elsewhere, but without success. 22 On or about 11 August 1999, Mr Harvey contacted the DAA to notify it of the project and to seek the co-operation of the DAA in its promotion. He was directed by the receptionist to Adrian Tucker, a person employed as a policy officer in the DAA. 23 On 12 August 1999, Mr Harvey met with Mr Tucker at the offices of the DAA and thereafter Mr Harvey and Mr Tucker communicated with each other concerning the Plaintiffs' project. 24 Mr Harvey's project involved the marketing of products in co-operation with the Wiradjuri Council of Elders ("the Elders"). As a result of Mr Harvey's co-operation with the Elders, the project was refined to a plan to market a mounted and authenticated Certificate of Title which was said to be for the mutual benefit of Mr Harvey (or his nominee) and the Wiradjuri people. It was proposed that the Trust would develop a product for sale to the public which consisted of:

(5) A reference in this section to the state of mind of a person includes a reference to the knowledge, intention, opinion, belief or purpose of the person and the person's reasons for that intention, opinion, belief or purpose." 45 It was common ground between the parties that Mr Tucker did not have actual authority of the Defendant to act in the way in which he did. The relevant concept for the purpose of this case is apparent or ostensible authority. I will return to this issue shortly. 46 The claim under the Fair Trading Act 1987 will only run if the Court is satisfied that the Defendant, through the DAA, was "carrying on business" (s.3(1)) or was engaged "in trade or commerce" (s.42(1)). 47 The term "business" is not capable of a precise definition and its meaning is to be derived from the context in which it is used: Sirway Asia Pacific Pty Limited v Commonwealth of Australia [2002] FCA 1152 at [51]. The expression "carry on a business", in its ordinary meaning, signifies a course of conduct involving the performance of a succession of acts and not simply the effecting of one solitary transaction: Sirway at [52]. A business may still be carried on when the activities engaged in are purely altruistic or charitable in scope: Sirway at [54]. Usually, the less commercial the character and objectives of an organisation, the greater the degree of system and regularity required for the organisation's activities to be characterised as a business: Paramedical Services Pty Limited v Ambulance Service of NSW [1999] FCA 548 at [86]. 48 It was common ground between the parties that relevant principles were to be found in the decision of the Court of Appeal in State of New South Wales v RT & YE Falls Investments Pty Limited (2003) 57 NSWLR 1. 49 Spigelman CJ observed that it is necessary to identify with some degree of precision the particular conduct in issue in proceedings, in order to determine whether that conduct can be characterised as having been performed "in trade or commerce" or in the course of "carrying on a business": Falls at 5 [24]. The Chief Justice observed, at 5 [24], that the conduct in issue in that case involved representations to the effect that a particular proposal under consideration by a government department (the Department of Agriculture) was "highly unlikely" to be rejected or that approval was "almost a foregone conclusion", and that the representations were made by an officer of the Department of Agriculture in the course of the administration of two of the large number of acts for which that Department was responsible. 50 At 7 [33], Spigelman CJ agreed with Hodgson JA that it was not possible to characterise the conduct in question in Falls as the "carrying on of a business" or as having been engaged "in trade or commerce". The Chief Justice concluded that it was erroneous to take one aspect of the scheme of compensation and thereby characterise the process as a whole. Spigelman CJ concluded that "the governmental character of the process remains not only the dominant but, in my opinion, the sole characterisation of the process" (at 7 [33]). 51 Sheller JA, in Falls at 9 [47], agreed that the representation was not made in the course of a business carried on by the New South Wales Department of Agriculture, a department with no separate legal status. Sheller JA observed that the concept of the Crown carrying on a business "is a difficult one in borderline cases" and "the answer tends to be more intuitive than the product of a process of reasoning". Sheller JA at 9 [47] adopted what was said to Sundberg J in Sirway Asia Pacific Pty Limited v Commonwealth of Australia at [62] that, because the New South Wales Department of Agriculture's activity in Falls "so obviously relates to the execution of a government function which is in the interests of the community, it does not have the characteristic of carrying on a business". Sheller JA concluded that the assignment to the Department of part of the owner's interests in the proceeds of sale in Falls was to achieve a policy objective and had nothing to do with business considerations and, accordingly, the Fair Trading Act 1987 had no application to the representation complained of (at 9 [47]). 52 In Falls, Hodgson JA at 34-35 [129]-[135], considered whether the Crown, through the Department of Agriculture was carrying on business for the purpose of the Fair Trading Act 1987. Hodgson JA accepted, at 34 [129], that the fact that certain activities are part of the provision of governmental services will generally be relevant to the question whether or not they amount to the carrying of a business although it will not be conclusive. Hodgson JA accepted, at 34 [130], that a government agency may be carrying on a business, by activities which are themselves only a part, perhaps even a small part, of activities which are, when considered as a whole, plainly the provision of government services and not a business. However, his Honour said at 34 [131] that "the activities in question must be sufficiently systematic and regular, and sufficiently similar to commercial activities that private persons might engage in, to justify being characterised as a business". Hodgson JA concluded that the New South Wales Department of Agriculture was not relevantly carrying on a business and, for similar reasons, the representations were not made in trade or commerce (at 35 [135]). 53 I will return later in this judgment to apply these principles to the facts of the present case.

Ostensible Authority 54 It is common ground that Mr Tucker was not acting within the scope of his actual authority and the Plaintiffs put their case as one of ostensible or apparent authority. 55 If Mr Tucker was acting within the scope of his apparent authority, then the Defendant may be liable for breach of the Fair Trading Act 1987 (s.70(4)) if other elements of the statutory claim are made out. 56 Whether or not someone has ostensible authority to act on behalf of a principal depends, not on the conduct of the person who has purported to act on behalf of the principal, but rather on the conduct of the person or body alleged to be the principal, being the person or body upon whom liability may be fixed: Northside Developments Pty Limited v Registrar General (1990) 170 CLR 146 at 187; Pacific Carriers Limited v BNP Paribas (2004) 218 CLR 451 at 466-467 [36]. In Pacific Carriers Limited v BNP Paribas, Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ said at 466-467 [36] (footnotes excluded): "It is not enough that the representation should come from the officer alone. Whether the representation is general, or related specifically to the particular transaction, it must come from the principal, the company. That does not mean that the conduct of the officer is irrelevant to the representation, but the company's conduct must be the source of the representation. In many cases the representational conduct commonly takes the form of the setting up of an organisational structure consistent with the company's constitution. That structure presents to outsiders a complex of appearances as to authority. The assurance with which outsiders deal with a company is more often than not based, not upon inquiry, or positive statement, but upon an assumption that company officers have the authority that people in their respective positions would ordinarily be expected to have. In the ordinary case, however, it is necessary, in order to decide whether there has been a holding out by a principal, to consider the principal's conduct as a whole." 57 A claim that someone is bound by the acts of someone having ostensible authority "may be rejected on the ground that the circumstances of the case were such as to put the party who makes the claim on inquiry to ascertain the actual state of affairs. Those circumstances may be the nature of the transaction or facts of which the claimant was aware": Northside Developments Pty Limited v Registrar General at 154, 164 (Mason CJ), 178, 181 (Brennan J) and 212 (Gaudron J). As will be seen, this principle assumes particular importance in this case. 58 If Mr Harvey is acting on behalf of a disclosed principal (Sir Barry Jowett), then Mr Harvey, as agent, has no right of action against a third party: Bowstead and Reynolds on Agency, 17th edn, 2001, paragraph 9-010. Where the principal is undisclosed at the time of contracting, the contract is made with the agent and he is personally liable and entitled on it. If an agent is acting for an undisclosed principal then, if he sues in tort, he can generally only recover his own loss and not that of the principal: Bowstead and Reynolds on Agency at paragraph 9-013. 59 An apparent or ostensible authority is a legal relationship between the principal and the contractor created by a representation, made by the principal to the contractor, and in fact acted on by the contractor that the agent has authority to enter on behalf of the principal into a contract of a kind within the scope of apparent authority so as to render the principal liable to perform any obligations imposed upon him by such contract. To the relationship so created, the agent is a stranger. He need not be (although he generally is) aware of the existence of the representation, but he must not purport to make the agreement as principal himself: Freeman and Lockyer v Brockhurst Park Properties (Mangal) Limited (1964) 2 QB 480 at 503-504; Essington Investments Pty Limited v Regency Property Pty Limited [2004] NSWCA 375 at [39]. 60 Ostensible authority comes about where the principal, by words or conduct, has represented that the agent has the requisite actual authority, and the party dealing with the agent has entered into a contract with him in reliance on that representation. The principal in these circumstances is estopped from denying that actual authority existed. In the commonly encountered case, the ostensible authority is general in character, arising when the principal has placed the agent in a position which in the outside world is generally regarded as carrying authority to enter into transactions of the kind in question. Ostensible general authority may also arise where the agent has had a course of dealing with a particular contractor and the principal has acquiesced in this course of dealing and honoured transactions arising out of it: Armagas Limited v Mundogas SA (1986) AC 717 at 777; Essington Investments at [43]. 61 In Pacific Carriers Limited v BNP Paribas, it was observed at 467 [38]: "A kind of representation that often arises in business dealings is one which flows from equipping an officer of a company with a certain title, status and facilities. In Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd , for example, the court spoke of the representation that might flow from supplying a particular person with 'a blank order form, thus arming him with a document which, when he signed it, would bear the hallmark of authenticity' ((1975) 133 CLR 72 at 80; 7 ALR 527 at 533). The reference to corporate administrative procedures under which an officer is armed with a document to which he or she can, by signature, impart an appearance of authenticity is a reminder of the wider principle of estoppel which may be relevant to a question of ostensible authority ( Northside Developments Pty Ltd v Registrar-General (1990) 170 CLR 146 at 200; 93 ALR 385 at 422; 2 ACSR 161 at 198 per Dawson J, CLR 212; ALR 430-1; ACSR 206-7 per Gaudron J). The holding out might result from permitting a person to act in a certain manner without taking proper safeguards against misrepresentation." 62 It will be necessary to consider the evidence to determine whether the Plaintiffs have established that Mr Tucker had ostensible authority from the Defendant to act in the way he did so as to satisfy the requirements of s.70 Fair Trading Act 1987 and the general law with respect to this aspect of the claim for damages.

Events Before August 1999 71 In March 1995, Mr Harvey acquired an interest in an undivided 1/100,000th share, as tenants in common, of land at Hill End formerly owned by Sir Barry Jowett. Sir Barry Jowett had initiated a scheme to market the Land in China. It was originally known as the "Lord Edward Trust" (T104, 7 June 2005). The scheme as marketed by Sir Barry Jowett involved the Land only, and despite his efforts, only about 10 Chinese people had taken up the idea of remembering their ancestors by buying this concept (T104.5, 7 June 2005). The shares were being marketed at that time at $149.95 each. The experience of the "Lord Edward Trust" provided no cause for optimism with respect to Mr Harvey's later project. 72 Mr Harvey attempted to obtain Olympic endorsement, but was unsuccessful. He took the concept of sale of land together with Aboriginal artwork to World Vision Australia in November 1998, but the proposal was rejected by World Vision Australia in July 1999. 73 Mr Harvey's concept was to market the proposal in the run up to the Olympics and during the Olympics (Affidavit of Mr Harvey, 6 March 2004, paragraphs 9 and 10). The proposal, as ultimately settled, was to sell, for $A1,000.00 each, a 1/100,000th undivided share as tenant in common in the Land, together with an Aboriginal painting. The painting with the Certificate of Title was to be framed together to comprise a "limited edition". 74 The Land in question at Hill End was valued by the Valuer General at $25,000.00 and Mr Harvey placed a value of $50,000.00 on it (T106.40, 7 June 2005). 75 The Registrar General is required to effect the registration of a transfer in registrable form, provided his fee is paid and registration is not opposed by the Office of State Revenue (s.100(3) Real Property Act 1900; Affidavit of NJ Moses, 17 December 2003, annexed statement, paragraph 16). 76 Following the withdrawal of World Vision Australia from its participation in Mr Harvey's project, he determined to seek another source of funding.

Q. That is what you were doing, wasn't it? It was all smoke and mirrors? A. No. It was a viable project." 83 Mr Harvey sought to raise $3 million by way of a grant to the Wiradjuri people who would then apply that grant to acquire a half share in the Trust. The Wiradjuri people did not have funds themselves to invest in the project (T248.15, 16 June 2005, Mr Amatto). Mr Harvey would hold 50 per cent of the Trust. The sum of $3 million would be disbursed, as to $1 million, to purchase "the land and intellectual copyright for the subdivision concept" (Affidavit of Mr Harvey, 6 March 2004, paragraph 18) and the balance would fund full production and advertising of the product. 84 On 27 August 1999, Mr Harvey and Mr Betts picked up Mr Tucker and took him to a fish market restaurant for lunch, for which Mr Harvey paid. There was further discussion concerning the involvement of Ms Ingram and conflict of interest. According to Mr Harvey and Mr Betts, Mr Tucker said that "it happens all the time within the indigenous community". 85 By facsimile dated 31 August 1999, Mr Tucker wrote to Mr Harvey on DAA letterhead: "I refer to our recent discussions regarding the proposed Australian Indigenous Peoples Hill End Land Trust. As you are aware the location of the land is Wiradjuri country meaning the Aboriginal people that the land traditionally belonged to are of this group. I have informally approached the Wiradjuri Council of Elders, who I must say reacted with barely restrained enthusiasm, and briefly outlined your proposal. The Council immediately recognised the benefits and was able to provide me with some information in regards to the establishment of the cottage industry and the availability of Wiradjuri artists that would be able to contribute to the project. I can say with confidence that there would be minimal problems in regards to establishing the cottage industry and accessing the artists that would be required as employment programs are currently operating throughout the region. I can provide you with more information about this aspect if you require. The purchasing of the land from Sir Barry Jowett is feasible out [sic] would require formal proposals to be developed and submitted to the Commonwealth Development Corporation (CDC) and/or to the Indigenous Investment Fund (IIF). Once the proposals are developed and submitted it would take 6-8 weeks to obtain a decision. I believe the decision would be a positive one because of the economic benefits for Aboriginal communities. The appropriateness of the Wiradjuri people eventually controlling the Trust and the land would also contribute to a positive outcome from the CDC and/or IIF. To move the project forward, exempting the land purchase from the equation, to a point of having the cottage industry and artists ready to begin working would require 6-8 weeks. I have approached Ms Suzanne Ingram, Jariah Productions Pty Ltd, with a view to acting as your liaison with the Wiradjuri Council of Elders. Ms Ingram is a Wiradjuri woman who has extensive personal and professional networks throughout the region that includes west of the Blue Mountains through to Hay, down to the NSW/Victorian border and as far north as Dubbo. Ms Ingram would be of great assistance in facilitating the involvement of the Wiradjuri people. In closing I would like to state that I am genuinely excited about the project and I am confident that the project will not be at all difficult to initiate and will be successful with many positive benefits, in both the short and long term, for all involved. If you have any further queries please do not hesitate to contact me on 9290 8723." 86 In the first half of September 1999, a further meeting took place between Mr Harvey, Mr Betts and Mr Tucker at a restaurant in Balmain. Mr Betts and Mr Harvey allege that Mr Tucker said that funding was available from the CDC if and when the Elders were given the grant and purchased 50 per cent of the Trust. Mr Harvey and Mr Betts allege that they returned to the DAA office and were introduced to Ms Burney. This is denied by Ms Burney. As will be seen, I do not accept the evidence of Mr Harvey and Mr Betts that they met Ms Burney on this occasion or at all. 87 On 24 September 1999, Mr Tucker sent an email to Mr Harvey in the following terms: "Here is an update for you. 1. After the meeting with you I referred the matter onto Suzanne Ingram of Jariah Productions for discussions with the Wirudjari [sic] Council of Elders. Suzanne met with the full Council on Saturday. She relayed some feedback to me and it all seems very positive. The Council are extremely excited and have initiated the following: a. A company search and land title search for their own peace of mind. I expect that I will facilitate this process and get it completed in about 14 days. b. Begin the development of the submissions/investment application. Completion is expected a few days after response of the company and land search. c. They have stared to identify the best areas for the cottage industry aspect. d. They have begun compiling a list of artists to undertake work. Bruce, I would expect that Suzanne will contact you on Monday 27 September with a more detailed report of the meeting. The Council did say that they were appreciative of the appropriate approach that you are taking and would not like to see it go off the rails. I do not believe that now that they are aware of the land at Hill End that they will let to [sic] much else be done with it. I am glad you are doing it this way because they would be really pissed if it was done any other way. They do have a range of legal options they could take if they feel that are getting screwed. These options include: a. Slapping an Aboriginal Heritage Order on it. Which means that it is purchased from the vendor at current market value. etc, etc. This would also block any future sale. b. A land rights claim. Probably wouldn't succeed but would take 2-3 years before the owner could do anything with it. So I am happy that everything is being done the right way. I will talk to you soon." 88 On 1 October 1999, Ms Suzanne Ingram, the Managing Director of Jariah Productions Pty Limited (and Mr Tucker's partner) sent an email to Mr Harvey in the following terms: "I write following discussions I have had with you and Mr Tucker about the Hill End Trust Project.

If you have any queries please don't hesitate to contact me and I am sure that this information will contribute to you have [sic] a Merry Christmas and Happy New Year." 101 As it happens, no application of any type has been lodged with the CDC by Mr Tucker. The suggestion that it had been was entirely fictitious. 102 On 24 January 2000, Mr Tucker sent a further facsimile to Mr Harvey on DAA letterhead in the following terms: "I am writing to notify you of a slight delay in obtaining written notification of the success of the Wiradjuri Council of Elders grant submission to the CDC investment authority. I have been verbally notified that the Wiradjuri Council of Elders is successful and will be receiving a Government grant in excess of $2,000,000.00 for the project. As I have already advised you the Authority is awaiting the formal paperwork to be approved by the Commonwealth Minister of Finance. I have been notified this morning that the aforementioned Minister supports the project and will be finalising the paperwork from his office shortly. Once this has been received by the authority, I would suggest that it will be this afternoon or first thing in the morning, a formal letter will be sent to the Wiradjuri Council of Elders, with a copy to myself of which I will forward to you. Once again I apologise for the delay but as you are aware I can not [sic] control federal public servants and their processes. In closing I would like to reiterate the support for the project from all parties involved and we look forward to participating in a very exciting and innovative project. If I can be of any further assistance please don't hesitate to contact me." 103 Once again, the contents of this letter are false. No application had been made to the CDC, let alone approved by it, and no documentation was awaiting approval by the Commonwealth Minister of Finance. 104 On 7 February 2000, Mr Tucker wrote to Mr Kelly, solicitor for Sir Barry Jowett, on DAA letterhead in the following terms: "l am writing to you following a telephone conversation that I had with Sir Barry Jowett this morning, 7 February 2000.

Events After June 2000 113 On 19 June 2000, a meeting occurred in Canberra attended by Mr Harvey, Mr Herb Grant and Ms Flo Grant (for the Wiradjuri people), Mr Geoff Scott (ATSIC) and Mr Ian Myers (Indigenous Business Australia - CDC). At that time, Mr Myers was Deputy General Manager of Indigenous Business Australia and his role included examining incoming proposals, testing for commercial viability, assessing the credentials of proposed business partners and then assessing whether the business being proposed is suitable for the involvement of proposed indigenous people. Mr Myers has testified that the normal financial model is a joint venture structure where the non-indigenous partner owns 50 per cent, Indigenous Business Australia would then take a 25 per cent equity position and seek to introduce an appropriate indigenous group to also own 25 per cent of the proposed project. 114 At the meeting with Mr Harvey and others on 19 June 2000, Mr Myers stated that Indigenous Business Australia was a Commonwealth statutory body engaged in commercial activities, but which did not provide grant funding. Mr Myers indicated a willingness to assess the proposal treating the Wiradjuri people as Indigenous Business Australia's clients. 115 Having undertaken that task, Mr Myers wrote to Mr Grant on 26 June 2000 stating that CDC had examined the proposal against the criteria of commercial prospects and the value of the investment for the Wiradjuri people. Mr Myers raised a number of issues concerning the commercial prospects of the Hill End project. Turning to the value of the investment for the Wiradjuri people, Mr Myers observed that, whilst the proposal may have attractions from a potential profit viewpoint, CDC did not believe that the proposal, as presented, represented a sensible investment for the Wiradjuri people. He pointed out that, in essence, the Wiradjuri people were being asked to accept a very high risk by providing 100 per cent funding to meet all of the joint venture costs and that, based on CDC's considerable experience, this was not a fair or equitable division of associated risk. Mr Myers emphasised that, in reality, he did not believe that an independent assessor would value the Trust, at that point in time, at $6 million. He noted further, with emphasis, that Enterprises would not be contributing any funds to the project. Although recognising a potential to make profits, Mr Myers advised "that the proposal as presented to you is not equitable from the Wiradjuri viewpoint". 116 Mr Myers was contacted by Mr Harvey on a number of occasions in June and July 2000, with Mr Harvey sending Mr Myers a lengthy email on 10 July 2000 attempting to persuade him to take a different position to that reflected in the letter of 26 June 2000. 117 Mr Harvey submitted a revised proposal to the CDC leading to a further meeting on 25 August 2000 in Canberra attending by Mr Harvey, Mr Forrest, Mr Hargraves (a former Indigenous Business Australia employee), Mr Myers and a further person who accompanied Mr Harvey. Mr Harvey's revised proposal sought funding for a project involving a different group within the Wiradjuri people, the Ngarru Wiradjuri (with which Mr Amatto was involved). 118 Following that meeting, Mr Myers wrote to Mr Harvey on 4 September 2000 setting out a number of concerns which the CDC had concerning the revised proposal. These concerns included the fact that no consideration had been given to Wiradjuri intellectual property rights that were, in the eyes of CDC, "the cornerstone of the commercial venture". Further, CDC had difficulty that potential shareholders were to be treated differently in the purchasing price of units. 119 Mr Myers observed, in that letter, that CDC's concerns on financial aspects were highlighted by the fact that the proposed product had not been independently market tested and this was considered to be "a fundamental prerequisite for any investment proposal". It was observed that, based on the information provided, Enterprises stood to make $3.3 million profit before any business activity was undertaken (that is, sale of 750 units at $6,000.00 equals $4.5 million less a loan of $1.2 million to the Trust). More importantly, Mr Myers observed that the Wiradjuri people "will be taking significant risks by providing a large percentage of the start up capital through exposure to a loan on full commercial terms". 120 Mr Myers concluded the letter in the following way: "In summary, the proposal seeks to raise funds for a very high-risk venture with no independent assessment of, or demonstration of, marketability of the product. As a consequence, the CDC is not in a position to support the loan request. I will write separately to Mr Anthony Amatto to explain the CDC's decision to decline the loan request." 121 Between July and December 2000, Mr Harvey and/or Mr Forrest made contact, from time to time, with Mr Gavin Bartier, then the Duty Legal Officer at the Department of Lands. Discussion ensued from time to time concerning the mechanism for the issue of Certificates of Title in the names of individuals who purchased a share in the Land at Hill End as tenants in common. In the course of a meeting on 9 October 2000, Mr Harvey told Mr Bartier that he thought there had been a fraud in the execution of the transfer. Mr Bartier responded that, if there had been fraud, the NSW Police Service should be contacted and Mr Harvey should obtain legal advice. 122 It was the Plaintiffs' case that, in and after June 2000, he was introduced to Mr Robin Glass, a South African investor, by a financier, Mr Michael Wilson. Mr Harvey believed that funding for the project was available from Mr Glass, but could not be advanced because of issues concerning the transfer of the Land. 123 Mr Harvey did not proceed with the Hill End project. There was no production or marketing of framed items comprising Aboriginal art and Certificates of Title.

Evidence of Ms Burney 126 Ms Burney's affidavit of 1 March 2005 reveals that the only discretionary money which the DAA had was through its grants program. It was not a large grants program, and was certainly not for individual or private enterprises. During 1999-2000, grants were either major grants (up to amounts of $45,000.00) or smaller discretionary grants (up to $5,000.00). The total budget for all grants in the financial year 1999-2000, was approximately $1 million. 127 Ms Burney recalled that, when she was Director General of the DAA, she had approval to sign off grants for $2,000.00, with anything above that requiring approval by the Minister. 128 In February 1999, Mr Tucker was employed as a policy officer grade 7/8 in the Policy and Research Unit and then a policy officer grade 9/10. The position statements for these grades are in evidence, and neither reveals a project funding function. 129 According to Ms Burney, the DAA worked like any government department in that, if Mr Tucker produced a briefing note or any correspondence, it had to go through the chain of command to his immediate superiors, being his supervisor, the Deputy Director General and the Director General. Mr Tucker had no sign-off authority on any correspondence and certainly not on cabinet minutes or briefing notes. Ms Burney states that there were very clear procedural processes in place at DAA in relation to sign-offs. Any correspondence committing DAA to any action were signed off by the Deputy Director General or Director General, depending on its nature and breadth. 130 With reference to correspondence generated by Mr Tucker concerning Mr Harvey's project, Ms Burney states that Mr Tucker's actions reflected in that correspondence were done without her knowledge and without the authority of the DAA. 131 Ms Burney denied Mr Betts' allegation that on an occasion in the first half of September 1999, she had been introduced to Mr Betts and Mr Harvey in the DAA offices near a photocopying machine and she denied the claim of Mr Betts that she had said on that occasion "Adrian has advised me of the project. It has a lot of interest for the indigenous people". I prefer the evidence of Ms Burney in this respect. Mr Betts was an unsatisfactory witness in a number of respects as he grappled, in an unconvincing way, to explain the manner in which he approached his billing relationship with Mr Harvey, and his approach to preparation of a memorandum of fees which the Plaintiffs seek to recover, as part of their damages, in this case. Further, in my view, it is inconsistent with the objective probabilities that Ms Burney was aware of the activities of Mr Tucker, let alone that she approved of them in 1999 and 2000. 132 Ms Burney had become a director of Jariah Productions Pty Limited in 1995 at the request of her cousin, Ms Ingram. She had no involvement in the day-to-day operations of the company and resigned from it on 21 May 1999. There is no evidence that Ms Burney had acquired any knowledge of the Hill End project from Ms Ingram, or as a result of her past association with Jariah Productions Pty Limited. 133 Ms Burney gave her evidence in a direct and forthcoming fashion. I accept her evidence generally and, in particular, where there is any conflict with that of Mr Harvey or Mr Betts. 134 Ms Burney stated that she was second cousin of Ms Ingram (T469, 6 December 2005). She knew Mr Tucker, who was employed by the Board of Studies at a time when Ms Burney was a member of the Board of Studies (T470, 6 December 2005). Ms Burney was aware that Mr Tucker had left the Board of Studies under a cloud but Mr Tucker "was subsequently cleared of whatever the issues were there" which, she believed, related to distribution of video tapes (T470, 6 December 2005). 135 Ms Burney said that she was unaware that Mr Tucker had met with Mr Harvey at the DAA office in about August 1999 (T474, 6 December 2005). She said that she was aware that there was something untoward going on with Mr Tucker by May 2000, and was later involved in the process of his dismissal for inappropriate behaviour (T474-5, 6 December 2005). Ms Burney said that the DAA was not an "entrepreneurial agency" (T477, 6 December 2005). 136 Ms Burney learned for the first time that Mr Tucker had told Mr Harvey that Jariah Productions Pty Limited would carry out framing and provide art for a fee, in relation to the Hill End project, only during the course of the investigation by Mr Griffin (T481, 6 December 2005). It was only at that time that Ms Burney learned that Ms Ingram undertook to become trust manager of the Trust (T481, 6 December 2005). 137 Ms Burney learned in about May 2000 that Mr Tucker had been writing letters on DAA letterhead. She considered that the use of letterhead indicated a person "who blatantly misused government property". With respect to the adequacy of supervision of Mr Tucker, Ms Burney emphasised that a degree of trust was needed in the context of a government agency (T483, 6 December 2005). 138 Ms Burney emphasised that Mr Tucker was dismissed for misconduct, including his use of DAA stationery for correspondence with Mr Harvey and others concerning the Hill End project (T485, 6 December 2005). Ms Burney rejected suggestions that the activities of Mr Tucker between August 1999 and May 2000 demonstrated poor reporting requirements and ineffective file management within the DAA (T485, 6 December 2005). 139 Ms Burney explained that the Aboriginal community's development program (concerning infrastructure) and the grants program were entirely different to Mr Harvey's project with which Mr Tucker had become involved (T490-492, 6 December 2005). 140 Ms Burney explained that Mr Tucker was dismissed "because he undertook very dishonest, very unprofessional and very dangerous activities using departmental resources in a very dishonest way" (T494.42, 6 December 2005).

(f) dealing with the response of the State of New South Wales to the Stolen Generation debate. 143 Mr Steadman states that the seeking out of grants to undertake the type of project that Mr Harvey was wishing to carry out, was simply not part of Mr Tucker's responsibilities, nor did it form part of his job description. Mr Steadman states that he never gave Mr Tucker such work and did not ever see him perform such work. 144 Mr Steadman states that Mr Tucker did not come to him with Mr Harvey's project as his supervisor within the DAA. Had Mr Tucker come to him with the project, Mr Steadman states that he would have directed Mr Tucker to forward the proposal to a higher level, being the Deputy Director General or Director General of the DAA, or possibly even the Minster himself. Mr Steadman states that, if he had seen any correspondence concerning the Hill End project, he would have told Mr Harvey that his proposal should be dealt with by the Minster's office, and that the Unit was not the appropriate area for the proposal to be considered. 145 Mr Steadman states that the DAA did not have any role in this sort of project or funding. Mr Tucker's job description was such that there would be no reason for him to have contact with the general public, and Mr Steadman said that he did not observe him doing so. 146 It was Mr Steadman's evidence, which I accept, that he had a conversation with Mr Tucker concerning Mr Harvey's project in or about mid-to-late 1999 or early 2000 to the following effect: "Tucker: I've had an approach from someone in relating to a project involving the sale of land at Hill End and some sort of artwork or certificate potentially valued in the $million range. I think my partner and I will do this as part of our business. Myself: Is this anything to do with the department? Tucker: No, this is something that we'll do as part of our business." 147 I accept Mr Steadman's evidence to this effect. As I have observed elsewhere in this judgment, the approach expressed by Mr Tucker to Mr Steadman appears to be broadly consistent with the contents of his correspondence. Nowhere in that correspondence does Mr Tucker assert that the DAA is involved. The tenor of the conversation is that Mr Tucker and Ms Ingram are taking certain steps with the CDC and Commonwealth officers. The correspondence tends to support Mr Tucker's statement to Mr Steadman that he (Mr Tucker) and Ms Ingram would be carrying on their own business in their dealings with Mr Harvey. Of course, unbeknownst to Ms Burney and Mr Steadman, Mr Tucker was corresponding on DAA letterhead in his dealings with Mr Harvey and others. 148 Mr Steadman was cross-examined by reference to notes made during Mr Griffin's investigation (Exhibit N, pages 327H, 327J). I accept Mr Steadman's evidence with respect to comments attributed to him in those notes (T377ff, 29 November 2005). Mr Steadman said that he was very surprised when he learned that Mr Tucker had been using DAA letterhead in 1999 and 2000 in his correspondence with Mr Harvey and those concerning the Hill End project (T384, 29 November 2005). 149 Mr Steadman was the convenor of the selection committee which considered Mr Tucker at the time of his employment by the DAA in 1999 (T385, 6 December 2005).

(i) I am not satisfied that there was any negligent failure to supervise Mr Tucker. Was the DAA Carrying on a Business for the Purpose of the Fair Trading Act 1987? 151 Mr Titus submits that the Plaintiffs have established that the DAA was carrying on business for the purpose of the Fair Trading Act 1987. He submits that the DAA was responsible for the Aboriginal Communities Development Program (Exhibit O), which involved provision of funds of over $200 million over a number of years associated with infrastructure and capital construction and upgrade. Whilst the detail and supervision was dealt with by the Department of Public Works, the funding for the program came through the DAA. 152 He submits that the business conducted by the DAA was for the purpose of promoting the activities of the DAA, involving funding of substantial sums of money. 153 Mr Titus submits that the conduct in question does not have to be conducted in connection with one's own business and that it would be sufficient if the conduct engaged in was for the purpose of promoting the business of some other person or corporation: Meadow Gem Pty Limited v ANZ Executors and Trustee Company Limited (Supreme Court of Victoria, Hedigan J, 18 May 1994, BC9401058 at pages 33-35); (1994) ATPR (Digest) 46-130. 154 He submits that the activities of the DAA in this endeavour, and also in the purported activities of Mr Tucker in making representations relating to funding of $2 million to $3 million to be provided to the Elders by the CDC, fits within the concept of promotion in Meadow Gem, and encompasses conduct encouraging the continuation of investment in a trading corporation. 155 Mr Titus submits that the fact that the DAA does not charge a fee for its services is not decisive of the question whether it carries on a business. He submits that the Court should find that the DAA was carrying on a business and that the Fair Trading Act 1987 applies to it. 156 Mr Menzies QC submits that the DAA was neither carrying on a business nor acting in trade or commerce. It is not a separate legal person or some form of State corporation, it is a department with no separate legal status. He submits that the only evidence is that it carried on activities for the benefit of the Aboriginal people. Using the words of Sheller JA in Falls at 9 [47], Mr Menzies QC submits that the activity of the DAA "so obviously relates to the execution of the government function which is in the interest of the community, it does not have the characteristics of carrying on a business". 157 Mr Menzies QC submits that the Defendant can only be liable under the Fair Trading Act 1987 assuming the existence of agency (an issue to which I will return later) if it was carrying on a business. Applying the test used by Hodgson JA in Falls at 34 [131], Mr Menzies QC submits that, even if a government agency may carry on business by activities which form a small part of activities of the department considered as a whole, it is essential that the activities in question be sufficiently systematic and regular and sufficiently similar to commercial activities that private persons might engage in to justify being characterised as a business. 158 Mr Menzies QC submits that it is necessary to consider, with some particularity, just what it is that the Plaintiffs assert was the activity of the Defendant through the DAA which could be characterised as "carrying on a business". That activity, he submits, must presumably be the representations by Mr Tucker and the assertions that he would facilitate the obtaining by the Wiradjuri people of a grant from the relevant Commonwealth government department, the CDC. He submits that there is nothing about that activity which could reasonably be characterised as "carrying on business". It does not involve the payment of a fee or charge and it is not, on the evidence, part of some systematic activity. 159 Mr Menzies QC submits that the DAA is doing more than pursuing its functions as described in the evidence of Ms Burney. To the extent that the Plaintiffs submit that the Capital Works Grants Program might possibly be characterised as carrying on business, Mr Menzies QC submits that the activity which Mr Tucker was promoting was not part of that activity. 160 Mr Menzies QC submits that the appropriate conclusion is that no foundation is established by the Plaintiffs for a finding that the Defendant was carrying on business for the purpose of the Fair Trading Act 1987 and, accordingly, even if ostensible authority was established, the Plaintiffs' claims under that Act ought be rejected. 161 I accept the Defendant's submissions on this issue. At its highest, the evidence discloses representations by Mr Tucker that funding might be obtained from the CDC, a Commonwealth government entity, with respect to the project. The evidence does not reveal that the functions of the DAA extended to activities of this type. 162 To the extent that the DAA fulfilled a funding function, it was restricted to capital works and infrastructure projects and small grants entirely unrelated to that proposed by Mr Tucker. I am satisfied that the activities of the DAA relate to the execution of government functions, in the interests of the community, and do not have the characteristics of carrying on a business. 163 In my view, the activities of the DAA do not possess the degree of system and regularity required for the organisation's activities to be characterised as a business: Paramedical Services Pty Ltd v Ambulance Service of NSW at [86]; Falls at 34 [131]. 164 I do not consider that Meadow Gem assists the Plaintiffs' case on this issue. 165 I am not satisfied that the DAA was carrying on business and, for similar reasons, Mr Tucker's representations were not made in trade or commerce. Accordingly, the Plaintiffs' claim under the Fair Trading Act 1987 cannot succeed.

(g) entries in Mr Griffin's notes (Exhibit N) which, so it was submitted, support a conclusion that Mr Tucker occupied "a middle management position" (Exhibit N, page 327B) and that Mr Steadman had heard of the Hill End project from Mr Tucker (Exhibit N, page 327H). 168 Mr Menzies QC submits that a finding of ostensible authority ought not be made. The Defendant submits that nothing turns upon the circumstances of the initial referral of Mr Harvey to Mr Tucker given that Mr Harvey was directed by a telephonist to speak to Mr Tucker. Beyond that, Mr Menzies QC notes that the Plaintiffs' case on ostensible authority depends almost entirely upon actions taken by Mr Tucker himself in letters or emails written or statements made orally. Each of these contacts had it origin in Mr Tucker himself. 169 Mr Menzies QC submits that there is no conduct of the DAA from which it could be reasonably inferred that it was conferring on Mr Tucker the authority to make the representations alleged. There is no evidence to which the Plaintiffs can point to support a finding that the Defendant held out to Mr Harvey that Mr Tucker was clothed with the requisite authority. 170 Insofar as Mr Betts asserted that he had met Ms Burney at the photocopier within the DAA office, Mr Menzies QC submits that Mr Betts was an unsatisfactory witness whose evidence to this effect should not be accepted. In any event, Mr Menzies QC submits that the mere acknowledgement of Mr Betts' presence in the DAA offices cannot be elevated to a form of holding out by the Defendant of authority in Mr Tucker to make the representations which he made. The conduct of DAA officers, the Defendant submits, is consistent with Mr Tucker being held out as having the authority of the DAA to perform his limited duties as a policy officer. 171 Mr Menzies QC emphasises that all representations, oral and written, emanated from Mr Tucker. At no time were there oral or written communications with other DAA officers which purported to endorse, directly or indirectly, the course of action of Mr Tucker. 172 Mr Menzies QC submitted that the use of DAA letterhead by Mr Tucker did not support a finding of ostensible authority. There was no issue that Mr Tucker worked as a policy officer within the DAA. The mere fact that he had access, in that capacity, to DAA stationery did not elevate his use of the stationery, for an unauthorised and extraneous purpose, to a foundation for a finding of ostensible authority. 173 In resolving these competing submissions, it is necessary to assess the evidence which bears upon the question of ostensible authority. The bare assertions of Mr Tucker cannot give rise to ostensible authority. His statements may be taken into account together with other evidence, but it is the acts or omissions of the DAA which must provide a foundation for a finding of ostensible authority. 174 I accept the evidence of Mr Steadman that, when he discussed with Mr Tucker the Hill End project, Mr Tucker told him that this was a private matter to be attended to by himself, his partner, Suzanne Ingram. No act or omission of Mr Steadman, as a senior DAA officer, assists the Plaintiffs on the ostensible authority issue. 175 I accept the evidence of Ms Burney over that of Mr Betts on the question whether there was any introduction to Ms Burney of Mr Betts in the DAA office. Mr Betts was a highly unsatisfactory witness with respect to a range of issues concerning accountancy services and his involvement with Mr Harvey generally. 176 The fact that Mr Tucker had access to, and used, DAA stationery for the purpose of corresponding with Mr Harvey and others does not provide substantial assistance to the Plaintiffs' case. The position may be distinguished from the supply of a blank order form which, when signed, would bear the hallmark of authenticity (Pacific Carriers Limited v BNP Paribas at 467 [38] cited at paragraph 61 above). Mr Tucker was not a salesman or representative who was provided with a certain title, status and facilities by his commercial employer which clothed him with ostensible authority to act in the way he did. Mr Tucker was an administrative officer working in the policy area in a government department. In that capacity, he had access to DAA stationery. In my view, these circumstances are far removed from scenarios where ostensible authority arises from access to, and use of, business stationery. 177 It is, to say the least, regrettable that Mr Tucker conducted himself in the manner in which he did towards Mr Harvey over a period of months in 1999 and 2000. Mr Tucker and Ms Ingram were not called as witnesses at the hearing before me. It would be speculative to consider why Mr Tucker acted in the way he did in his dealings with Mr Harvey. It is clear that ostensible authority cannot be established by reliance upon the conduct of Mr Tucker alone. In my view, the Plaintiffs are left essentially with the conduct of Mr Tucker as being the foundation for their claim of ostensible authority. The additional aspects to which they can point do not, in my view, establish ostensible authority. 178 A consequence of this finding is that the Plaintiffs cannot succeed against the Defendant with respect to the claims dependent on s.70 Fair Trading Act 1987, nor claims under the general law in relation to which ostensible authority was a necessary element.

(g) in letters written on 24 December 1999 and March 2000, Mr Tucker was asserting to Mr Harvey that contact had been made with the CDC in Canberra which was assessing the application - in March 2000, Mr Forrest, Mr Harvey's solicitor, contacted the CDC and was told that they had never heard of the Hill End Project or Mr Harvey - this ought to have caused a serious red light to flash in Mr Harvey's face, and certainly in the mind of a reasonable person confronted with such a state of affairs - Mr Tucker told Mr Harvey that Mr Moroney from the CDC would deny that contact had occurred and that the CDC, in truth, knew of the proposal but that it could not be approved unless reference to Jariah Productions was removed from the proposal and, in its place, reference was made to a "philanthropic entity" - by this stage, it ought to have been apparent to Mr Harvey, and to a reasonable person, that fraudulent conduct was being proposed by Mr Tucker to Mr Harvey as a means of progressing a proposal which the CDC denied knowledge of. 186 All of these steps provide strong support for the Defendant's submission that Mr Harvey, blinded by an element of financial desperation, was prepared to take any step to try and advance the project which he had been advancing for some years, unsuccessfully, through World Vision Australia and other bodies. 187 On this analysis, although Mr Tucker was telling clear untruths to Mr Harvey and this was being done on DAA letterhead and whilst Mr Tucker was in employment with the DAA, reasonable reliance could not be placed on what Mr Tucker was saying so that the Plaintiffs are not entitled to recover upon the basis of such representations. This applies to both a claim based on negligent misstatement and a claim under the Fair Trading Act 1987. 188 I do not have difficulty in accepting Mr Harvey's evidence with respect to a number of primary issues concerning his dealings with Mr Tucker and the things which Mr Tucker was saying to him. After all, Mr Tucker was saying these things in writing in facsimiles and emails. 189 A key area where Mr Harvey's evidence strains credulity is where he seeks to explain his actions in pressing on with the project despite clear danger signals emanating from Mr Tucker's conduct. I am conscious that I have the advantage of viewing events through the prism of hindsight: Rosenberg v Percival (2001) 205 CLR 434 at 441 [16]. In examining the evidence, I have approached events in chronological order with a view to examining the reasonableness of Mr Harvey's response to events which, I accept, placed him on inquiry. 190 On the face of it, this was a substantial grant application where Mr Harvey's point of contact was an officer within a State government department. I do not consider to be persuasive explanations based upon so-called "protocols" in dealing with the indigenous community. Certainly, I do not think this explanation, to the extent that it is available at all, operates to assist Mr Harvey. 191 The absence of any meetings with Mr Tucker's superiors, or regular meetings at the DAA offices, and the approach taken by Mr Tucker without a detailed brief being provided to him by Mr Harvey all sound warning bells in the mind of the reasonable person. Added to this was Mr Tucker's early declaration that his partner, Suzanne Ingram, and her company, Jariah Productions Pty Limited, would have an interest in the process. The reasonable person would be concerned with respect to conflict of interest and that concern would not be quelled by a form of oral assurance from Mr Tucker. 192 Added to this, were the curious features of Mr Tucker whereby, on the one hand, he claimed to be the beneficiary of a $14.5 million trust whilst, at the same time, obtaining small loans from Mr Harvey. By this stage, the reasonable person may well consider that there was something of a "Walter Mitty" flavour to Mr Tucker. 193 To be added to this was Mr Tucker's direction to Mr Harvey that Mr Betts, Mr Harvey's accountant, ought be excluded from the process. The reasonable person would agree with Mr Betts' characterisation that there was "something fishy" about this development. If all was above board, there would be no need for Mr Tucker to advise Mr Harvey to exclude his own financial advisor who was asking questions concerning the arrangement. 194 An examination of the ongoing communications between Mr Tucker and Mr Harvey reveals actual doubts and concerns experienced along the way by Mr Harvey, supported by his own accounting advisor, Mr Betts. Mr Harvey entertained concerns about conflict of interest and Mr Tucker's desire to exclude Mr Betts from the process. The explanation offered by Mr Harvey for the latter step, being a "protocol" or way in which indigenous groups conduct business, is objectively unconvincing. 195 In my opinion, the combination of factors which had commenced to accumulate in August 1999 and certainly those present by December 1999, would have led any reasonable person to conclude that Mr Tucker's conduct did not appear to be proper and above board, and that further enquiry and investigation would be necessary before any reasonable person would consider that Mr Tucker was acting, in some way, on behalf of the DAA and the State of New South Wales. 196 In short, Mr Tucker's actions appeared to be too good to be true. I am satisfied that Mr Harvey pressed on without making any inquiry or check, in the desperate hope that all would work out well in the end. 197 It is noteworthy that Mr Tucker's letters did not state that the DAA was involved in the process. Rather, it was stated that Mr Tucker and Ms Ingram had communicated with the Elders. It was stated that it was intended that an application would be made to the CDC, a Commonwealth entity, and later that such an application had been made. It was stated that the CDC and Commonwealth officers were actively considering and had approved the application. At no point, was it said that an officer of the DAA, or the DAA itself, had approved the process or was involved in it. 198 In reality, the only link with the DAA arose from Mr Tucker's use of DAA letterhead for his correspondence and a limited number of meetings at the DAA office. Even then, most meetings appear to have taken place in restaurants and coffee shops away from the DAA premises. 199 An accumulation of these objective factors, taken with the actual concerns harboured by Mr Harvey and Mr Betts, undermines fundamentally the Plaintiffs' claims in these proceedings. 200 I am satisfied that a reasonable person would have been put on inquiry in such a way that sole reliance upon Mr Tucker would be neither wise nor appropriate. I conclude that Mr Harvey did not act reasonably in pressing on with the project discussions with Mr Tucker despite a series of amber, if not red, lights flashing clearly in his face. 201 Applying the test in Northside Developments Pty Limited v Registrar General referred to earlier (at paragraph 57), the Plaintiffs' claim based upon ostensible authority is rejected on the ground that the circumstances of the case are such as to put the party who makes the claim on inquiry to ascertain the actual state of affairs. 202 If the Plaintiffs had demonstrated the element of ostensible or apparent authority with respect to Mr Tucker, I would have rejected this part of their claim in any event upon the basis that Mr Harvey did not act reasonably in the face of objective circumstances which clearly placed him on inquiry with respect to his dealings with Mr Tucker.

Credit of Mr Harvey 203 Mr Menzies QC submits that the evidence of Mr Harvey should only be accepted if there is independent corroboration of his testimony. He submits that Mr Harvey will say whatever he thinks will promote his interests, regardless of the truth of the statement. A number of submissions were advanced in support of this proposition. 204 Firstly, the Defendant submits that Mr Harvey did not tell the truth about the funding of the initial start-up of the venture. He asserted that he would fund the initial start-up out of his own successful company, but his "successful" company went into voluntary administration on 7 August 1997 (T27-29, 8 June 2005). 205 Secondly, the Defendant submits that Mr Harvey gave deliberately misleading evidence that Ms Burney was involved in the subject transaction as a director of Jariah Productions Pty Limited, when he had no knowledge at all that Ms Burney was a director until he was told of that well after the arrangements had broken down (T53, 8 June 2005). When Mr Harvey was cross-examined on the issue of whether Ms Ingram's involvement might be a conflict of interest, he responded "I asked the question of the executives running the place and they assured me it wasn't" (T66, 8 June 2005). Mr Menzies QC points to the fact that the only person of whom Mr Harvey asked the question was Mr Tucker who could not seriously be described as one of the "executives running the place" (T67, 9 June 2005). 206 Thirdly, the Defendant submits that Mr Harvey's explanation about how BH Engineering Pty Limited went into administration, namely that its problems arose out of a mistake made by an employed engineer, was false (T33, 8 June 2005). 207 Fourthly, the Defendant submits that Mr Harvey was prepared to lie to protect his position with respect to security for costs and that he admitted lying in this respect (T91, 7 June 2005). 208 Fifthly, the Defendant submits that Mr Harvey had a criminal history for dishonesty stretching back to 1959 and 1961, involving convictions for house breaking, receiving and false pretences (T91-92, 7 June 2005). Ordinarily, such a record of offences more than 40 years ago would have, at best, marginal relevance - the passage of more than 40 years without a blemish would appear to affect the probative value of such evidence: R v Watkins [2005] NSWCCA 164 at [36]. However, under cross-examination, it was suggested to Mr Harvey that he had given a false date of birth (4 July 1947) in his affidavit of 6 March 2003 when his real date of birth was 4 July 1937 (T98-99, 7 June 2005). It was put to Mr Harvey (and denied) that a reason for providing a false date of birth was to reduce the prospect of his criminal record being detected because he thought it may operate against his interests if his record was known. 209 Sixthly, the Defendant submits that Mr Harvey composed letters which other persons were supposed to have written and that this displayed an element of connivance on his part (T98-99, 7 June 2005). 210 Seventhly, and significantly, the Defendant points to Mr Harvey's preparedness, despite his denial, to lend himself to fraudulent activity in agreeing with Mr Tucker that the term "philanthropic agency" should be substituted for "Jariah Productions" in relevant documentation (T80, 9 June 2005). 211 Mr Titus submits that a number of these matters do not operate adversely to Mr Harvey's credit as a witness. He submitted that Mr Harvey was a persistent entrepreneur, who believed in the project, and who spent his own time and money in attempting to progress it. It was submitted that his criminal history was decades ago when he was a young man and had no bearing upon his present credit as a witness. 212 In my view, it is necessary to approach Mr Harvey's evidence with caution. The matters relied upon by the Defendant concerning his credit are significant, especially when viewed cumulatively. At times, Mr Harvey was an advocate in his own cause. He sought, at every opportunity, to emphasise features which he thought would extend liability to the Defendant for Mr Tucker's wrongdoing, even when his answers were not responsive to the questions asked. 213 In areas where he sought to involve other DAA persons, including Ms Burney, I am not prepared to accept Mr Harvey's evidence without independent corroboration. I do not consider Mr Betts' testimony to constitute independent corroboration. Mr Betts' evidence was entirely unconvincing with respect to his charging practices with Mr Harvey and the fees which he asserted were owing to him, which would be paid if the Plaintiffs succeed in this litigation and damages include those sums. Mr Harvey and Mr Betts are not at arm's length and independent corroboration of both is required where they give evidence on contentious matters.

Direct Liability of Defendant in Negligence Concerning Selection and Supervision of Mr Tucker 241 In support of the claim for negligence, Mr Titus submits that the evidence reveals that Ms Burney knew Mr Tucker very well having worked collaboratively with him at the Board of Studies (Exhibit N, page 327B). He submits that Ms Burney knew that Mr Tucker's departure from the Board of Studies was unhappy, and that she was the Deputy Director General of the DAA at the time when he applied for his position there. It was submitted that the "cloud" over Mr Tucker with respect to the Board of Studies should have put Ms Burney, and the DAA, on notice so as to give rise to a requirement to properly assess his application for employment and, if he was selected, to properly supervise him in the course of his employment. 242 Mr Titus submits that the DAA permitted Mr Tucker to carry out a number of activities in the course of his employment with the Department, and that the fact that no file was created with respect to the Hill End project, and that there is no record of any relevant paperwork in that regard, indicates a lack of supervision. He contends that the actions of Mr Tucker, and the absence of any documentation, point to a failure to properly supervise him in his activities and that the Defendant ought be held liable in negligence accordingly. 243 Mr Menzies QC submits that the Plaintiffs have adduced no evidence of any alternative system of supervision that would be efficacious in the circumstances of this case. In the absence of such evidence of an alternative, the Defendant submits that there is no evidence of the practicability or cost of instituting such a system. The Plaintiff bears the onus of demonstrating the existence of an alternative system and, in the absence of any evidence, the Defendant submits that such allegations must fail: Neill v NSW Fresh Food & Ice Pty Limited (1963) 108 CLR 362 at 364, 369-370; Vozza v Tooth & Co Limited (1964) 112 CLR 316 at 319; Kingshott v Goodyear Tyre & Rubber Co Australia Limited (No. 2) (1987) 8 NSWLR 707 at 725. 244 Mr Menzies QC submits that, apart from a suggestion that Mr Tucker left the Board of Studies "under a cloud", a suggestion which was refuted by Mr Burney (T470.25, 6 December 2005), there was no evidence that Mr Tucker was employed in any way other than regularly. The evidence of Mr Scott supports this submission for the Defendant (T460.15, 6 December 2005). 245 The Defendant submits that, to succeed on a claim of negligence with respect to his employment, even assuming the existence of a duty of care, the Plaintiffs would need to show that it was reasonably foreseeable that having appointed Mr Tucker, he might behave in the general manner in which he did behave. The Defendant submits that there is no evidence at all to support such a proposition and that this claim must fail. 246 The Defendant submits that there were no systemic failures identified in the evidence. Mr Tucker was subject to supervision, he told his supervisor (Mr Steadman) that his interest in the Hill End project was a private matter and did not involve the DAA. No witness called by the Defendant accepted the proposition that there was anything untoward about Mr Tucker doing what he told Mr Steadman he was doing. The evidence was that Mr Tucker had no power to sign other than the most routine correspondence and he was required to submit correspondence, with respect to significant matters, to his supervisor. 247 Plainly, the Defendant submits, Mr Tucker ignored these obligations and acted deceitfully. The Defendant submits that there is no evidence to suggest what steps ought to have been taken to ensure the detection of such deceitful conduct. It is submitted that there is no evidence at all of any negligence in the employer with respect to the systems of work. Apart from this, the Defendant submits that the failure to adduce any evidence of an alternative practical system which would have avoided what occurred is fatal to the claim by the Plaintiffs in this respect. 248 The Plaintiffs' claim in negligence with respect to the selection and supervision of Mr Tucker is based on a narrow body of evidence. It is said that Ms Burney's knowledge that Mr Tucker had been "under a cloud" in his prior employment with the Board of Studies was such that the Defendant was put on inquiry with respect to his selection and, if employed, his supervision within the DAA. The difficulty for the Plaintiffs with this submission is that Ms Burney's evidence (which I accept) is that she understood that the cloud over Mr Tucker at the Board of Studies had been resolved. The Plaintiffs have failed to establish liability based upon the allegation of negligent selection of Mr Tucker. 249 With respect to the claim based upon negligent supervision of Mr Tucker, the Defendant has adduced no evidence concerning alternative steps which could or ought to have been taken. 250 According to the evidence, there were restrictions upon correspondence which could be signed by an officer of the level of Mr Tucker. I infer that Mr Tucker knowingly breached these rules in his conduct and course of correspondence with Mr Harvey and others. In this respect, I note that Mr Tucker appears to have used facsimile and email as the means of communication. Any correspondence in reply took similar forms. 251 The failure of Mr Tucker to use ordinary mail, with a corresponding failure of others to respond by the same medium, meant that there was no incoming mail passing through the hands of third parties within the DAA in the mailroom or elsewhere. 252 There was no file created by Mr Tucker, and the means of correspondence adopted by him minimised the prospect that others within the DAA would become aware of his correspondence. 253 I accept the Defendant's submissions on this issue. I am not satisfied that the very fact that these events occurred bespeaks an actionable case of negligence based upon a systemic failure to supervise Mr Tucker. 254 I am not satisfied that the Plaintiffs have established a cause of action in negligence against the Defendant arising from the selection and supervision of Mr Tucker within the DAA.

The Defendant's Approach to Damages 260 Mr Menzies QC submits that, if Mr Harvey was an agent for Sir Barry Jowett as an undisclosed principal, the only damages recoverable by the Plaintiffs are damages for actual expenses and no award should be made with respect to loss of opportunity. 261 Mr Menzies QC submits that the project was bound to fail, even had funding been available, and funding would have been completely lost. In this respect, the Defendant points to the expert evidence adduced on behalf of the Defendant and the unsatisfactory nature of the evidence of the Plaintiffs' expert, Mr McDonald. If any damages were quantified on the basis of a loss of a chance, then the Defendant submits that the chance must have been close to zero. 262 With respect to the claim for out-of-pocket expenses, the Defendant accepts that the sum of $59,680.00 was paid as the purchase price of the Land and the sum of $765.00 as stamp duty on the purchase. However, the Defendant submits that the failure to complete the purchase arose out of the asserted misconduct of Mr Kelly, and not out of any failures on behalf of the Defendant. Had the purchase been completed, the Plaintiffs would have obtained value for the money expended and, accordingly, they suffered no loss. 263 With respect to the claim for $80,000.00 arising from a loan from the St George Bank, the Defendant submits that there is no evidence identifying how this sum was expended and how it was said to relate to the Hill End project. Further, the Defendant submits that it has not been demonstrated that this sum was expended in the period between August 1999 and May 2000 when Mr Harvey was dealing with Mr Tucker. The Defendant submits that this sum should not be allowed. 264 With respect to the claim of $250,000.00 by way of lost income which Mr Harvey could have earned as an engineer, the Defendant submits that no attempt has been made to break up the time allegedly spent in areas unrelated to the Hill End project. Further, it was submitted that, even if some allowance could be made in this respect, it ought be confined to the period August 1999 to March 2000. 265 With respect to the claim arising from Mr Betts' professional costs, the Defendant submits that he was a most unsatisfactory witness with no satisfactory records. Mr Menzies QC submits that the claim smacks of reconstruction and opportunism. It was submitted that Mr Betts was unable to justify any of the elements of his account by any record and was unable to separate those parts of his account which would in any event by unrelated to any claim made with respect to the Defendant, for example, work done by Mr Harvey with respect to the failed attempt to involve World Vision Australia in the project. 266 The Defendant submits that, if liability had been established, a modest award of damages at best could have been expected in the Plaintiffs' favour.

The Expert Evidence Concerning Damages 267 The Plaintiffs' evidence with respect to the loss of an opportunity to make a substantial profit was itself shaky, comprising Mr Harvey's hopes and unimpressive expert evidence from Mr McDonald, Ms Zamora and Mr Amatto. A strong body of expert evidence has been adduced by the Defendant which undermines the Plaintiffs' case on damages with respect to loss of opportunity to make profits from the marketing of the items. 268 Mr Neville James Moses gave expert evidence on conveyancing issues for the Defendant. He identified practical and legal difficulties with the documentation prepared as part of the Hill End project. Under cross-examination, he agreed with the suggestion that it appeared that the documentation had been prepared by a non-lawyer (T399). When asked under cross-examination, he said that he would not personally have paid $1,000.00 for the framed item of Aboriginal art and Certificate of Title (Exhibit A) (T397-398). 269 Mr John Colquhoun gave expert evidence concerning the art market. Mr Harvey had spoken to Mr Colquhoun in late 1999 about the project, but Mr Colquhoun was not interested because he was "sceptical of the scheme as it seemed like a 'get rich quick scheme'". He felt it was "too complicated and they would not sell well enough to the general public". He agreed that Exhibit A was a "novelty", but did not constitute an example of "traditional Aboriginal art". 270 Mr Colquhoun considered that the Certificate of Title detracted from the integrity of the painting in Exhibit A (T403). He said that marketing of such objects would be undertaken by him at no more than a gross price of $A550.00 per item (T406-407). He did not note any increase in interest by buyers of Aboriginal art as a result of the National Day of Reconciliation in May 2000 (T406). 271 Mr Gavin Bartier said that the Registrar General would probably have been bound to issue 100,000 duplicate Certificates of Title with respect to the Hill End project upon payment of the requisite fee. That fee would have been about $50.00 per Certificate of Title ($500,000.00) and $60.00 as the request fee (T412). 272 The Defendant called Mr John Moore to give evidence. Mr Moore had played a significant role with SOCOG in 1999 and 2000. He did not consider that the Hill End project would have received SOCOG approval. He did not consider Exhibit A would have been especially marketable in 2000, especially at a price of $1,000.00 per item (T416). 273 Dr Margaret Craig-Lees was called by the Defendant. She was a marketing expert who had provided reports with respect to the Hill End project for the Defendant. Dr Craig-Lees did not consider that the items would have been especially marketable, being far too expensive, at $A1,000.00 per item (T427). From research she had undertaken, the sale of Aboriginal artefacts did not really gain from the Sydney Olympics in 2000 (T431).

Conclusion 280 I have concluded that the Plaintiffs have failed to establish their cause of action against the Defendant under the Fair Trading Act 1987. I am not satisfied that the Plaintiffs have established the element of ostensible authority with respect to Mr Tucker. Nor am I satisfied that the Plaintiffs have established that the DAA was carrying on business in a sense which could attract the provisions of the Fair Trading Act 1987. 281 I am satisfied that the activities of Mr Tucker with respect to Mr Harvey may be appropriately characterised as Mr Tucker being engaged in a "frolic of his own" in the sense recognised by the law, so that the Defendant is not vicariously liable for Mr Tucker's false and misleading statements or, for the purpose of one aspect of the negligence claim, his negligent misstatements. 282 Even if the Plaintiffs had demonstrated ostensible authority with respect to Mr Tucker, I am satisfied that Mr Harvey acted entirely unreasonably when he was put on inquiry with respect to Mr Tucker on 12 August 1999 and when subsequent events only served to fortify the need to take reasonable steps to verify Mr Tucker's activities. Far from taking these steps, I am satisfied that Mr Harvey turned a blind eye to the problems and moved forward in his association with Mr Tucker motivated by a mix of hope and financial desperation. 283 The Plaintiffs have failed to establish their cause of action in negligence arising from the selection and supervision of Mr Tucker within the DAA. 284 Even if the Plaintiffs had demonstrated liability with respect to one or more of their causes of action, I would not have been satisfied that any award of damages ought extend beyond some of the out-of-pocket expenses claimed by the Plaintiffs. On the evidence, the loss of chance claim was speculative in the extreme with the strong probability of a loss being suffered if the project had even been implemented. 285 The Plaintiffs have failed entirely in their claims. Although costs are discretionary, costs would ordinarily follow the event: Part 42 r 42.1 UCPR. I have considered whether there are features of this case which ought see no costs order made against the Plaintiffs. It is the undoubted fact that Mr Harvey had the misfortune to meet Mr Tucker and then deal with him in and after August 1999. It is clear that Mr Tucker conducted himself in a fashion which was detrimental to the Plaintiffs. However, the Plaintiffs do not sue Mr Tucker in these proceedings. They seek to make the State of New South Wales liable for Mr Tucker's wrongdoings. They have failed. Further, I have found that Mr Harvey was clearly on notice, from an early time, that all was not right with Mr Tucker, but pressed on regardless, motivated by hope and financial desperation. In the exercise of discretion, I am satisfied that the appropriate order is that the Plaintiffs pay the Defendant's costs of the proceedings. 286 With respect to each of the causes of action pleaded in the FASC, there will be a verdict and judgment for the Defendant. The Plaintiffs are ordered the pay the Defendant's costs of the proceedings.

Bruce Harvey and Anor v State of New South Wales

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Judgment (294 paragraphs)

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Cases Cited (19)

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