8 The evidence at the trial as to the course of negotiations was given principally by Mr Keig, Mr Burrowes and Ms Roulston for the applicant and by Mr Jack Messenger ("Mr Messenger") for the respondents. Ms Walsh did not given evidence. Much of the evidence was not contested, or was contested only by cross-examination as to detail without any directly contradictory evidence. 9 I have had regard to the evidence of each of the participants in the negotiations who gave evidence, including their general demeanour and their respective roles in the negotiation process. I am satisfied that each was endeavouring to be truthful, but inevitably perspectives of precisely what was said differed a little, reflecting in part the relative knowledge and understanding of those participants at the time and also, I think, in part because those persons each reflected later upon those events and to a degree sought to rationalise their role in those events. The following represents my findings after carefully considering those matters. Where there has been a significant conflict of evidence on a topic, I have sought to explain in more detail my reasons for that particular finding. 10 On 23 March 1993, at the instigation of Ms Walsh, Mr Keig and Ms Walsh met and she raised the possibility of Prides and Midland somehow combining. The discussion was a preliminary one only. Mr Keig raised the matter with his fellow directors and with Mr Burrowes. 11 On 25 March 1993, Mr Keig attended a further meeting with Ms Walsh at the offices of Messenger Zerner, accountants and auditors for Prides, at which Mr Messenger was also present. Mr Keig was given at that time certain further information including about Hales and Metropolitan. No information significant for the purposes of the case was then conveyed. 12 On 30 March 1993, Mr Keig attended Prides to get more background information about its business. He learnt that its records were manually maintained for student enrolment and accounting, and was told that with appropriate computers it could significantly reduce its overheads. He first learnt at that meeting of the Jobskills program. He was told that "informal advice"had been received from DEET that Prides would be allocated another one hundred places in the next program. He learnt in a general way of administrative and teaching staff and facilities, student numbers and programs, and other matters. He was informed that Prides had three city premises and premises at Mount Gambier, that its programs were directed essentially to the development of clerical skills, but that it had a potential market in the hospitality and retail areas. He formed the view that there was considerable scope for improving Prides' administrative and accounting processes, and for course development and marketing, so that without much additional outlay Midland and Prides together could greatly improve the "bottom line". His plan then was to obtain financial information. 13 On 3 May 1993, Mr Burrowes recommended that Midland engage Leadenhall Australia Limited ("Leadenhall") to review Pride's accounts and operations. Midland decided to proceed accordingly. In the first instance, it sought from Leadenhall a report on whether a detailed acquisition investigation of Prides was warranted. By that time it was known that Ms Walsh was seeking a sale price of $950,000. During May 1993, certain financial information regarding the operations of Prides was obtained from Ms Walsh and from Messenger Zerner for the use of Leadenhall. 14 Leadenhall provided a report dated 11 June 1993 to Midland. 15 The Leadenhall report recommended that, if the proposed acquisition was to be pursued, there should be conducted a detailed due diligence investigation in relation to Prides' historical and budgeted results, and in order to obtain assurances that the historical profitability was sustainable into the future. The Leadenhall report was seen and considered by Mr Keig and Mr Burrowes, but not by Ms Roulston. It also identified "key risk areas" to include Government revenue in the following terms: "Pride's obtain government revenue from two sources, a significant portion of revenue coming from education and training contacts (sic) and a small portion from government export subsidies. We have not reviewed in detail the arrangements which give rise to this revenue. However, it is clearly a significant driver for the success of the business and care needs to be taken in undertaking due diligence relating to this item. Any purchase contract may also need to include warranties or milestones relating to the ongoing realisation of the government funding via contracts or subsidies. In discussions with Mr Kevin Burrowes, it was agreed that Midland's existing knowledge of the tendering process by which the Federal Government funding arises is sufficient information for the purpose of this preliminary assessment and it was agreed that no further work would be conducted in this area at this stage." 16 It also identified a risk area in student numbers and course fees, and that the future profitability of Prides depended on those matters. It also pointed out the need for further investigation to: "… reconcile the information provided to us to the financial statements and to the budgets for 1993". 17 It also pointedly remarked on the "haphazard and unstructured manner" in which financial information had been provided by Messenger Zerner, involving repeated questioning and sometimes conflicting answers. 18 That report, and the proposed merger of Midland and Prides businesses, was the subject of a draft business plan proposed by Mr Keig for the Midland shareholders. It was also circulated on 11 June 1993, together with an agenda involving the possible decision-making processes. The draft business plan described the potential benefits of the proposed merger, and the prospects of much greater benefits over time, especially following extensive marketing possibly involving franchising the new merged business. By this time, Mr Keig identified Prides as: "synonymous with quality training in Adelaide, with a particular emphasis on secretarial work." 19 It had a valuable reputation and employer data base. Mr Keig assessed significant benefits in merging the operations of Prides and Midland with their complementary features, including an extension of the range of training programs, eg. into hospitality and retail training courses. The Midland management skills would be likely to enhance the Prides business. The Leadenhall report was attached. The need for further due diligence was recognised. 20 Initially, a decision was then taken by Midland to pursue further the acquisition of Prides and the Business Colleges generally, but one of the directors promptly resiled from that decision as he did not wish to guarantee personally the proposed borrowing to be secured by his private assets. 21 The proposed acquisition did not then come to an end. 22 A document dated 9 July 1993 prepared by Mr Fisher was circulated to Mr Keig and, I find, was also seen by Mr Burrowes. It is unclear whether it was seen by Ms Roulston. It discouraged proceeding further with the proposal, as the price of $950,000 was (it urged) really for no more than access to Prides' market, its name, its contacts, and its wider curriculum. He recognised the vulnerability that came with Prides having dependence on Government contracts. 23 At a meeting on 19 July 1993, Midland formally decided that it did not propose to proceed to explore further the possible combination of Prides and Midland. Ms Walsh was duly informed. 24 Mr Keig however did not drop the concept. He met Ms Walsh again on 22 July 1993 to discuss the proposal, and to indicate his ongoing interest, possibly with other private investors. He wished to discuss specifically with Ms Walsh the prospects of increasing private student numbers. 25 There is no doubt Ms Walsh knew that Government work cash flows, and private student numbers, were each critical to the ongoing consideration of Mr Keig and his interests in the possible acquisition of Prides. 26 In mid July 1993, Mr Keig and Mr Burrowes decided to explore the formation of a private syndicate to acquire Prides or its assets and business. Ms Roulston had been aware of the general proposal to Midland, as she was employed as a contract trainer by Midland. The possibility of her taking some equity participation through Midland had been mentioned to her. She had had no discussions with Ms Walsh on the topic. Mr Keig and Mr Burrowes decided to invite Ms Roulston to participate in any proposal they developed to invest in Prides' business. She agreed. Mr Keig then, on behalf on that syndicate, had a number of telephone conversations with Ms Walsh in July and August 1993. 27 An important meeting occurred on 2 August 1993 between Mr Keig and Ms Walsh, when Ms Walsh provided him with three documents concerning Prides entitled: "Prides Business College Ltd Cash Budget 1994: Payments", "Income Budget for 1994",and "Projected Income - 1994". 28 Those documents were discussed in detail. The "Income Budget for 1994" document is, for present purposes, the critical document. It provides:

"PRIDES BUSINESS COLLEGE LIMITED

INCOME BUDGET FOR 1994 STUDENTS 1994 1993

TOTAL PRIVATE FEES - ADELAIDE 740000 426050 ADVANCED CERTIFICATE IN GRAPHIC DESIGN 25 125000 58400 GRAPHIC DESIGN BOOKS/STAT 12500 8500 ADELAIDE BOOKS/STAT 64000 64000 MT GAMBIER - 12 MONTHS 15 60000 48000 MT GAMBIER - 6 MONTHS 5 15000 18000 MT GAMBIER BOOKS/STAT 8000 9800 GOVT ADELAIDE 135000 135000 JOBSKILL - 100 350000 500000 MT GAMBIER GOVT 30000 30000

TOTAL 15395001297750 LESS : REVENUE PAYMENTS 974276 993885

OPERATIONS SURPLUS 565224 303865 "

29 Mr Keig was then told, and Mr Burrowes was told later on a number of occasions, that that budget reflected an increase of 50 students over 1993 numbers for private fee paying students, to 160 students, although substantially more placements could be achieved. They were also each told that the 1994 provision for revenue for Jobskills students of $350,000 was a "worst case" scenario, as no decrease in the Jobskills work from DEET was anticipated during 1993. Mr Keig was also told that a Jobskills contract for 1993 was "in place". That information was in turn passed on to Mr Burrowes and Ms Roulston by Mr Keig. The "Projected Income - 1994" document showed revenue flow from Jobskills contracts of $105,000 in each of February and May 1994 and $140,000 in August 1994 totalling $350,000. That works out at 100 placements at $3,500 per student. That figure of $3,500 per student was conveyed by Ms Walsh as the amount presently paid by DEET under Jobskills contracts. The nature of Jobskills contracts, and how places were allocated by DEET, were discussed at some length.
30 Mr Keig said, and I accept, that this meeting was a "turning point". Following the meeting, Mr Keig decided on behalf of his syndicate to pursue the proposed venture further.
31 Later in August 1993, Mr Keig, Mr Burrowes and Ms Roulston attended a further meeting with Ms Walsh and Mr Messenger when the budgets were again discussed at length. Both Ms Walsh and Mr Messenger reaffirmed the reliability of the 1993 and 1994 estimates of income and expenditure and the operating surplus. Mr Burrowes in particular quizzed Ms Walsh and Mr Messenger at some length on the topic, especially as the estimated 1993 operating surplus of $303,865 was a significant increase upon the 1990 and 1991 outcomes. They were reassured that the better management systems and controls in place, and more focussed marketing, was producing that effect. They discussed the anticipated reduction in operating expenses for 1994 of $974,276 compared to the anticipated operating expenses for 1993 of $993,885. They were told that that was due to significant reorganisation and cost control measures. They were also told that the anticipated revenue increase for 1994 from $1,297,750 in 1993 to $1,539,500 was realistic, and was also due to potentially increased student numbers caused by improved marketing.
32 At that meeting, the status of the Jobskills contract was again raised. The income from Jobskills contracts accounted for about 38 per cent of the anticipated 1993 income, and some 23 per cent of the anticipated 1994 income. Ms Roulston recalls being told that Prides had been a Jobskills Broker since 1991, and that there was no reason why that would change in the future. Both Ms Walsh and Mr Messenger told them, in response to questions by Mr Burrowes, that the 1994 estimated income of $350,000 was a worst case scenario, but there was no real reason why the 1993 level of income should not be maintainable from that source. Ms Walsh did point out that there was an annual tendering process for "members and participants". Mr Keig, in his cross-examination, accepted that, through his dealings with DEET on behalf of Midland, he was aware that contracts such as the Jobskills contracts were offered only on an annual basis.
33 I find that Mr Burrowes also remained active in gathering information about Prides, although, as might be expected, his focus was more on the accounting and financial details. One document provided by Ms Walsh to Mr Keig and Mr Burrowes in the course of negotiations was a sheet containing the history of profits and losses of Prides. It showed that for the calendar years ending 31 December 1990, and 31 December 1991, Prides had made losses of $360,966 and $395,206 respectively and for the calendar year ending 31 December 1992, Prides had made a profit of $301,671. Not surprisingly, Mr Burrowes had various queries on aspects of those figures. He pursued those with Mr Messenger, and on occasions with Ms Walsh. In the course of his enquiries, at no time was it conveyed to him that there was any real risk of Prides' performance during 1993 being unlikely to meet the 1993 budgeted figures with which he had been provided. He was conscious of the warnings in the Leadenhall report, and sought to explore them in detail. I conclude that his focus was, in the event, too narrow to detect the underlying and fallacious optimism in the 1993 and 1994 budgets provided. That optimism was not confronted, in part due to the absence of any significant 1993 actual trading figures. Having received the 1993 and 1994 budget projections, Mr Burrowes did request both Mr Messenger and Ms Walsh to produce 1993 actual trading figures but he did not receive them. The reasons given were various: that the management restructuring or cost cutting programs had not been completed so the figures were not reliable, that they were confidential and could not be released, and that they were not prepared until post balance date 31 December 1993 and no interim accounts were normally or readily prepared. I accept that his requests were persistent. Accordingly, there was no scope for Ms Walsh to believe that he was not concerned about whether the projections were realistic, and whether the current trading levels were consistent with the 1993 projections. He carefully studied the three documents provided by Ms Walsh on 2 August 1993. He questioned her and Mr Messenger about them. He was aware that the 1993 operating surplus as budgeted was greater than the 1992 actual results. He was reassured by her, and Mr Messenger did nothing to contradict her assurances, that the 1993 financial performance was consistent with the 1993 budget, and that the improved performance reflected better management controls and systems, and better and more focussed marketing.
34 At no later point during 1993 was this picture corrected or qualified. Despite his ongoing efforts during 1993 and 1994 to obtain precise figures, it was not until receipt of Prides' accounts to 31 December 1993 in July 1994 that he learned that its actual financial performance in 1993 was very poor compared to the 1993 projections.
35 There was also no attempt by Ms Walsh at any time to vary or qualify other matters in the 1994 projections, in particular those concerning student numbers or that concerning the Jobskills contract income projected.
36 Mr Burrowes' knowledge of the Jobskills program was less than that of Mr Keig. He asked Ms Walsh about the 1994 projection, and was told that there was an annual tendering process for Jobskills contracts, but that the "worst result" for 1994 would be $350,000. He was not told that the result for 1993 would be adversely affected compared to the 1993 budget if there were no further Jobskills contracts granted in 1993. He concluded on the information provided that there was a Jobskills contract in place for the 1993-1994 financial year. He did not check directly with DEET, as he had been told by Ms Walsh that Prides' dealings with DEET concerning Jobskills contracts were confidential, and he accepted that it would be commercially imprudent to do so in the circumstances.
37 By letter dated 18 August 1993, Mr Keig put an 'in principle' offer to Ms Walsh to purchase Prides, expressed to be "for discussion purposes" only. He referred to a business plan (the only one in evidence is the draft circulated on 11 June 1993). That plan recognised Prides' dependence on Federal Government funded programs as an "Achilles heel" in the long term, and the need to refocus Prides' business by marketing into the private sector. It proposed the revised role of marketing director for Ms Walsh, with Ms Roulston becoming the new college director. It proposed a price of $500,000. It also included an arrangement that Ms Walsh would provide marketing services to Prides through PWEC for four years. It contemplated that the business operation would be refinanced. It also sought a warranty from Ms Walsh and "the vendors" that the information provided to "the purchasers" (then still to be identified) "… is completely true and accurate and not misleading in any way". It was said to be subject, inter alia, to further due diligence being carried out. It also invited equity participation by Mr Joseph Lee ("Mr Lee"), the principal of UMI and of a number of other Business Colleges in the United States.
38 The due diligence contemplated by Leadenhall, or apparently in contemplation by Mr Keig, does not seem to have been progressed in any structured way.
39 Mr Keig had further meetings with Ms Walsh, Mr Lee and Mr Messenger during August, September, October and November 1993 at which the terms and format of the proposed arrangement for the purchase of Prides were discussed, and details of the price and method of payment negotiated. One topic covered in those discussions, was the prospect of increasing student numbers, particularly through contracts with Mr Lee's business college in the United States. Those discussions were reflected ultimately in the Deed entered into referred to below.
40 Mr Messenger had been the external accountant to Prides for many years. His first role in relation to this transaction was the meeting of 25 March 1993 with Ms Walsh, but nothing of moment came out of that meeting. He was aware that Leadenhall had been engaged by Midland. On 9 July 1993, he attended a meeting with Ms Walsh, Mr Keig, Mr Burrowes and two other Midland directors. Later that day he learnt that Midland was no longer interested in acquiring an interest in Prides. By early August, he was aware that Mr Keig, Mr Burrowes and Ms Roulston had elected to continue to explore the prospect of acquiring control of Prides. Following the meeting with Mr Keig and Ms Walsh on 2 August 1993, he arranged to reproduce the three documents provided by Ms Walsh to Mr Keig the previous day as print-outs or spread sheets under the Messenger Zerner name. They contained no additional information. He said that they were loaded on to the Messenger Zerner spread sheet program so that they could be easily changed if required. He said he did not have the underlying information to speak in support of the Prides' budgets for 1993 and 1994, and that he had not prepared those documents. I accept that he had no day to day management role in the affairs of Prides, that is concerning such things as course registrations, course accreditation, classroom and teacher rosters, budgets and costings on teaching and training programs, amalgamation of courses, class facilities or sizes, classroom or teaching loads, marketing strategies, procuring Government funding programs or dealing with Government, criteria for eligibility for Government contracts, payment of accounts or debt collection. He acknowledged that Prides' internal financial records were not up-to-date, were incomplete, or had not been diligently prepared. He said that he could not have provided detailed financial statements to June 1993 or for any other period of 1993 without considerable work. I accept the evidence that, when asked for that type of information, he said he could not provide it, or at least could not provide it without considerable work being done. He was sent by Mr Keig a copy of Mr Keig's letter of 18 August 1993 commenting on using Government funded programs as a "bonus" in the proposed acquisition. Mr Messenger's evidence was that after receipt of that letter, he thought that Mr Keig and his associates would be placing minimal reliance on the revenue flow from Government funded programs.
41 I do not accept his evidence in that respect. I find that there was a more or less constant focus by Mr Keig and Mr Burrowes upon whether the revenue and expenditure projections for 1993 and 1994 were reasonable and realistic, and that they expressly referred to the projected revenue from Jobskills contracts in that regard. I accept that Mr Messenger, given his relative lack of detailed knowledge of the day to day affairs of Prides, did not positively mislead either Mr Keig or Mr Burrowes. I do find, however, that he was careful not to say anything which would undermine any of Ms Walsh's comments about Prides and its performance and its potential. I also find that Mr Burrowes did seek assurances from Mr Messenger on those general matters, and that in response he indicated words to the effect that, so far as he knew, the position as presented in those documents was "okay" in the sense that he had no reason to think the projections were unrealistic. That was strictly true. In the context of the conversations, and as those three documents had been reproduced by Messenger Zerner with the description "Prepared by Messenger Zerner from unaudited data provided 2 August 1993", his comments served to provide some reassurance to Mr Burrowes that he should place confidence in what Ms Walsh was saying. In fact, no primary data had been provided to Messenger Zerner and the only preparation was transcription.
42 Mr Messenger ultimately did not positively dispute much of Mr Burrowes' evidence. He was clearly pestered by Mr Burrowes, inter alia for financial statements, to a degree which Mr Messenger perceived as inappropriate given his limited knowledge. He did not dispute that Ms Walsh, in his presence, may have said what Mr Burrowes alleges. There are many areas which he clearly regarded as "no go" areas for him: such as student projections and numbers, dealings with DEET, projected income from Government projects and valuation of stock. He thought that Mr Burrowes should have understood and accepted that.
43 In completing the accounts, Mr Messenger sought to bring to account in each calendar year the Jobskills revenue attributed to services performed during that year. In respect of the 1992/93 contract, most of that work was in fact done up to the end of December 1992 and so was brought to account in the 1992 calendar year accounts of Prides. I find that the figure of $500,000 for Jobskills revenue in 1993 in the 'Income Budget for 1994' was arrived at by Ms Walsh on the basis of a proportion of the 1992/1993 Jobskills contract then already awarded and being partly performed but largely from her anticipation of a 1993/1994 Jobskills contract being awarded, and being partly performed during the calendar year 1993. The detail of that application and its outcome is set out below.
44 At no time in subsequent meetings and up to the time of settlement were the potential investors told in any way that those figures were not reliable, or that any matter had occurred which might put those figures at risk, or in any respect exposed them as other than fair and accurate estimates. From time to time during those meetings, the financial projections were referred to without demur, as other matters arising from them were discussed. There were occasions when the assurances about the reliability of the 1993 budgeted figures and the 1994 budgeted figures were reaffirmed in the presence of the solicitors for the proposed offerors and for Ms Walsh, and including during discussions as to the corporate vehicle proposed to make any offer for Prides. That corporate vehicle transpired to be College Co.
45 During this period, like Mr Burrowes, Mr Keig did not directly approach DEET to seek any confirmation of Prides' position. He was positively requested by Ms Walsh not to do so. That avenue of possible due diligence was not pursued for that reason. He accepted her word as reliable. I also find that neither Mr Keig nor Mr Burrowes obtained from Mr Messenger any information that would have contradicted any of the material presented by Ms Walsh.
46 On 14 October 1993, a detailed implementation meeting took place at which the structure for any offer through College Co was explained and considered. On 18 October 1993, an offer was put in terms which were developed following that meeting. The offer also generally reflects the terms ultimately expressed in the Deed of Agreement referred to below. The letter contained pars 9.1 and 9.6 as follows:
     "9 The vendor, Prides and Hales are to jointly and severally warrant, inter alia:
          9.1 all the information provided to the purchaser is completely true and accurate and not misleading in any way;
…
          9.6 they are not aware of any actual or contingent facts or proposals which may have the effect of detrimentally affecting the future profitability of the companies being acquired."
47 That offer was accepted.
48 On 17 December 1993, the Deed referred to below was executed to reflect those terms. It is dated 23 December 1993. Settlement took place in late January 1993.
49 In my judgment, the course of negotiations included representations by Ms Walsh, orally and through the document "Income Budget for 1994" that Prides' operations were on a calendar yearly basis, and that no financial statements for the 1993 calendar year were available. There is no evidence to indicate that this representation was incorrect. Her representations also included that:

· the 1993 financial projections were, and up to the time of settlement remained, reasonable and realistic, including that the Jobskills revenue for 1993 would be $500,000 and that the projected operating surplus was $303,865

· the 1994 financial projections were prepared on the basis of Prides' existing operation, and with reasonable projected growth;

· the 1994 financial projections were, and up to the time of settlement remained, reasonable and realistic;

· Prides continued as a Jobskills Broker under DEET;

· the reduction in budgeted Jobskills revenue for 1994 to $350,000 was a worst case scenario, and that there was no particular reason to think existing income levels from that source would diminish;

· the increase in the number of private students projected for the 1994 year to one hundred and eighty five was a reasonable objective, following a change in Prides' marketing and management processes.

50 Those representations were, it was ultimately submitted by College Co, the matters which were misleading and which entitled it to relief. I will separately consider their accuracy below. 51 It is not necessary to make findings about other representations in the statement of claim, including about the value of Prides' stock plant and equipment, because those matters were not sought to be pursued separately in the course of final submissions. In fact, a private and independent valuation of the stock and plant and equipment was procured on 3 September 1993.

52 On 23 December 1994, by Deed to which Prides, Hales, Metropolitan, PWEC, Hales Secretarial, Ms Walsh and College Co are parties ("the Deed"), the control of Prides, Hales and Metropolitan was transferred to persons nominated by College Co. The terms included Ms Walsh being allotted shares in College Co. 53 The process of settlement of the Deed involved first changing the membership of the committees of Prides, Hales and Metropolitan, and secondly the advance to Prides by College Co of two separate loans of $300,000 and $200,000 subject to certain adjustments to be made at settlement date. The loans were to be applied in payment of existing liabilities of Prides and Hales. The Deed provided that in the event that those liabilities exceeded the amount of the loans, Ms Walsh was to pay to Prides any additional amount necessary to meet the shortfall (excluding certain specified liabilities). 54 By that process, control of the assets of Prides and Hales effectively was transferred. Those assets included stock, plant and equipment, the interest in leased plant and equipment, fees paid in advance and "Jobskill fees". It is, in my view, significant that "Jobskill fees" was specifically referred to. They are defined in the Deed as follows: "2.1.15 "Jobskills Fees" means expenses and wages paid in advance to Pride's Business by Department of Employment Education and Training and held in "Jobskills Cash Management" account at Westpac Banking Corporation;". 55 The Deed provided that Prides' assets did not include debts incurred to Prides prior to settlement, including fees paid in arrears for courses completed prior to the settlement. Ms Walsh was to be entitled to receive and recover those amounts. 56 In effect, a line was being drawn at settlement. Ms Walsh was to be entitled to receive the benefit of Prides' existing debtors in her personal capacity, but was also to be liable to pay absolutely its then liabilities to the extent that they exceeded $500,000. 57 There were supplementary documents. PWEC agreed to lend College Co $50,000, to be applied as part of College Co's loans to Pride at settlement. Similarly, entities associated with Mr Keig, Mr Burrowes and Ms Roulston agreed to lend to College Co $150,000 as follows:

David Keig & Associates (Mr Keig) $25,000 JEV Pty Ltd (Mr Burrowes) $75,000 Kanuck Pty Ltd (Ms Roulston) $50,000 58 The total of those advances was to make up the $200,000 loan to Prides. The loan of $300,000 also payable by College Co under the Deed was to come from $325,000 to be lent by National Australia Bank to College Co. 59 In addition, the Deed recorded that Prides acknowledged that it was indebted to Ms Walsh for $400,000, and that interest was payable on that debt only after the meeting of the obligations of Prides in respect of the loan of $300,000 from College Co, and funded by College Co's borrowing from the National Australia Bank. Interest was also payable on that debt only to the extent that it did not exceed 25 per cent of the net profit of College Co, to be calculated only after paying interest on the $300,000 loan and after paying tax. A Deed of Priority annexed to the Deed ensured that Prides paid interest firstly on the loan of $300,000 and then on the PWEC debt (subject to the limitations referred to), and then on the second College Co loan of $200,000. That Deed of Priority established a similar regime for repayment of principal sums. 60 The Deed also provided for Ms Walsh, through PWEC, to become the holder of 20 per cent of the issued capital of College Co, and to become one of its directors. The existing shareholders and directors agreed to implement that provision. Those shareholders were David Keig & Associates, JEV Pty Ltd and Kanuck Pty Ltd. It also provided for College Co to engage PWEC as consultant at the annual fee of $35,000 for a period of four years. PWEC was to engage Ms Walsh to provide those services for it. Finally, both PWEC and Ms Walsh entered in to a Deed of Restraint for a period of two years after termination of the consultancy agreement not to engage in the provision of services in competition with the business of College Co. 61 The Deed also recorded that: "19.1 Information To the best of the knowledge of PW the information provided to College or its officers or agents prior to the Settlement Date is completely true and accurate and not misleading in any way." 62 Settlement was effected by payment of the following amounts on behalf of Prides: Westpac Banking Corporation $345,000 Zurich Australia Insurance Ltd $ 81,069 Phillips Fox Trust Account $ 2,325 Messenger Zerner $ 21,065 P. Walsh $ 50,000 63 I infer that those payments were in respect of existing indebtedness of Prides, or largely so. There was no direct evidence as to the reasons for those particular creditors being owed those amounts. I infer the Westpac Banking Corporation was the banking entity providing operating funds for Prides. If the Zurich Australia Insurance Ltd debt was also in some way for operating funds, the $500,000 advanced was really no more than re-financing arrangement. The reason why $50,000 was paid to Ms Walsh was not explained. There is no evidence that any of the then directors of College Co queried any of those payments. 64 In addition to the $500,000 advanced by College Co to Prides, the settlement process also noted the "vendor finance" provided by the ongoing acknowledged debt of $400,000 to PWEC. 65 The advances by College Co did not increase Prides' available working capital in any significant way. The Position regarding Jobskills 66 Jobskills was one of the programs run by DEET. 67 The Jobskills program was a job brokerage program designed to provide for both training and work experience for the long term unemployed. It was conducted through contracted Jobskills brokers. They were to provide six weeks in-house training and then to arrange twenty weeks work experience. It was hoped at the end of the program that the work experience would mature into employment. Jobskills brokers were selected by advertising inviting tenders, and then by measuring the tenders against specified criteria. The advertisement was generally made early in each financial year (ie. as soon as funds became available) for all the proposed contracts during the year. On occasions, but not routinely, circumstances arose which led to further invitations to tender Jobskills contracts during a particular financial year. 68 There were also separate Job Training programs for which DEET sought tenders, and in respect of which Prides had tendered successfully during 1993 and earlier, and again successfully during 1994. Midland had not previously participated in the Jobskills program. It had successfully tendered for other DEET programs including Job Training programs. Mr Keig was aware that DEET's programs generally, including Jobskills, involved a period of in-house training and a period of work experience. He was also aware that if in-house training was done with existing resources and personnel, such contracts could be very profitable. 69 The financial arrangements of Jobskills contracts involved an administrative component, effectively payable to the Jobskills broker for its services, and a salary component effectively payable to the work experience employer. Depending on the arrangements entered into, that salary component could be paid direct by DEET or though the Jobskills broker. In the case of Prides in respect of the 1992-93 Jobskills contract, the salary component or portion of it was paid through Prides. 70 Prides had applied for, and been granted, Jobskills contracts for the financial years 1991/1992 and 1992/1993. One contract for the 1992/93 financial year had been entered into on 11 February 1993, and on 10 October 1993, had been extended to 29 April 1994 to enable its full performance. There was therefore a Jobskills contract in place during all the negotiations. 71 Shortly after 1 July 1993, DEET invited applications for Jobskills contracts for the 1993/1994 financial year. On 12 July 1993, Prides applied to DEET on an appropriate form "Proposal to register an expression of interest to operate as a Jobskills Broker", proposing that it be allocated up to one hundred and twenty clients to start progressively from August 1993 to January 1994 so that it did not have more than sixty clients at any one time, and so that all participants finished within the financial year. 72 On 15 July 1993, DEET acknowledged that application. Prides was told that the assessment of proposals would commence after the closing date for applications on 17 July 1993, and that it would be advised of the outcome. There is no direct evidence of further communications between DEET and Prides for the next several months, although a letter from Ms Walsh of 7 December 1993 referred to below asserts a series of inquiries as to progress. It was during that period that the negotiations referred to were largely taking place. 73 On 3 December 1993, DEET informed Prides that its application to operate as a Jobskills broker for 1993-94 was unsuccessful as "Other applications were better able to demonstrate stronger claims against[the]selection criteria." I find, based on the evidence from the DEET officer, that Prides' failure to procure a Jobskills brokerage for 1993/94 was not through dissatisfaction with its past performance, or through some lack of quality in its tender, but because Prides' focus was on clerical placements whereas DEET's focus at the time was becoming more diffuse. 74 Ms Walsh did not accept that decision passively. There is no doubt that she understood the decision. On 7 December 1993 Prides, through her, sent to the office of Senator Rosemary Crowley a long letter expressing her concerns and anxieties "for not receiving a renewal" of the Jobskills contract and in effect seeking a review of that decision. Senator Crowley's staff treated that letter as such a request, and referred it to DEET on 8 December 1993. Ms Walsh then had a meeting with DEET representatives on 14 December 1993, following which she again wrote to Senator Crowley on 18 December 1993 and again on 22 December 1993 seeking advice and providing further information in relation to Prides' application. Senator Crowley's electoral officer sent letters to the Parliamentary Secretary of the Minister for Employment, Education and Training for "urgent consideration"on 23 December 1993. By letter dated 31 January 1994, the Parliamentary Secretary responded to Senator Crowley explaining the DEET decision, and declining to review it. 75 Ms Walsh in later correspondence acknowledged that she was aware that the request for review (whether procedurally sought or not) had failed. Prides, as she then knew, was not awarded a Jobskills contract for 1993/94. I find that she had that awareness from 3 December 1993. Also following the "appeal" process, she was aware just after 31 January 1994 that her attempts to have that decision reversed had failed. 76 I find also that each of Mr Keig, Mr Burrowes and Ms Roulston knew or understood that Jobskills contracts were awarded annually, so that there could be no guarantee as to their ongoing availability. I also find that they were aware or understood that Jobskills contracts were awarded after a tender process starting early in each financial year. I also find that they were aware that it was not uncommon for there to be a delay in the contract or contracts being awarded.

77 The evidence reveals that Pride's operating surplus or deficit had fluctuated dramatically between 1990 and 1992. I find, on the basis of Mr Messenger's evidence, that the 1993 financial figures were not prepared or available until mid 1994. The contrast between the actual results for 1993 and those projected for 1993 in the "Income Budget for 1994" document is stark. The "Income Budget for 1994" showed revenue projected during 1993 of $1,297,750 and expenses of $993,885, leaving an operating surplus of $303,865. The 1993 financial accounts showed a net profit of $50,673, and after allowance for extraordinary items (asset revaluation and finance reconstruction) there was a net operating loss of $81,974 and accumulated losses of $148,212. 78 It is not possible to reconcile the detailed entries on those documents, as the items have in significant respects been treated differently. In particular, it is not possible to identify the actual Jobskills revenue in the 1993 financial accounts. That is because in the projection only net revenue is included, whereas the financial accounts include the salary component which was on-paid by Prides. Nor is it possible to discern from the 1993 accounts, or from other material, the student numbers or the nature or extent of the variation in student numbers in 1993 compared to earlier years. No submission was made by College Co that, in respect of any relevant item projected in the 1993 budget figures, it can be shown what the actual amount was for that calendar year, or how or why it may have deviated from the projection. 79 The submissions of College Co were really that Ms Walsh by December 1993 knew that Prides had no prospect of meeting the projected 1993 result in the "Income Budget for 1994" document, partly because there had been no 1993/1994 Jobskills contract by then and partly from her general knowledge of the affairs of Prides. In the absence of Ms Walsh giving evidence, any conclusions or inferences about her state of knowledge will come from contemporaneous documents or events, but where such inferences are available I may more readily draw such inferences in the absence of her evidence provided such inferences are available in any event. 80 Ms Walsh and PWEC plead that the 1993 and 1994 revenue projections in the "Income Budget for 1994" were unaffected by the failure of Prides to obtain a Jobskills contract for the 1993/1994 financial year. I reject that assertion. In my judgment, the contrary was the case. No direct evidence as to how the "Income Budget for 1994" was prepared was given. Mr Messenger did not prepare it. I find that the revenue anticipated for 1993 for Prides included a significant amount from a Jobskills contract for 1993/94. The "Projected Income - 1994" document showed income from Jobskills contracts in each of February and May 1994 of $105,000. That total sum of $210,000 could not be attributable to a Jobskills contract for 1994/95. The other Jobskills contract income anticipated in that document for 1994 was the receipt of $140,000 in August 1994. Mr Messenger said that most of the Jobskills 1992/93 contract income was received, and brought to account in the 1992 year for Prides. In my judgment, it is clear that the 1993 budget did contain provision for the receipt of substantial moneys from DEET in respect of a Jobskills contract anticipated to be awarded for the 1993/94 year. In my judgment, that amount was in the order of $200,000. It is not possible to be precise. A Jobskills contract for 120 places at a rate of $3,500 per place would produce revenue of $420,000. I have concluded that $210,000 was projected to be received in 1994 in respect of a Jobskills contract for 1993/94. The prospect was for up to 120 student places to be allocated. It may have been less. There was an ongoing Jobskills contract, awarded in respect of the 1992/93 year. I infer that it was to contribute to the projected Jobskills revenue during 1993 of $500,000. Even if in the first six months of 1993 Prides was to, or did, receive as income an amount equal to the amount projected to be received in February and May 1994 from a Jobskills contract for 1993/94, that would leave a very significant income flow from the 1993/94 Jobskills contract which was anticipated to be awarded to be received during 1993. Doing the best I can, I conclude that sum was of the order of $200,000. 81 Consequently, I find that there was in fact a significant shortfall to Prides in respect of the income anticipated from Jobskills' contracts during the 1993 year as reflected in the "Income Budget for 1994", from an anticipated 1993/94 Jobskills contract. By 3 December 1993, at the latest, Ms Walsh knew that the shortfall would occur. 82 The issue was, I suspect, only of progressive significance during September 1993 and thereafter. That was because the later in the year the contract was awarded, the less of the services contracted to be provided would be carried out in 1993 and the less was the income to be brought to account by 31 December 1993. In addition, so long as the contract was awarded, the real impact was one of the timing of the receipt of moneys. If it was not received in 1993 because of the late awarding of the contract, then the income would have been received during 1994. But ultimately, so long as a contract was awarded for 1993/94, and subject of course to the number of places awarded, the income would ultimately be received. 83 On 3 December 1993, when Prides was told that no contract was to be awarded for the 1993/94 year, that was no longer the case. 84 There is insufficient evidence, in my judgment, to identify the other respects in which the actual financial performance of Prides up to December 1993 departed from that which had been budgeted for in the "Income Budget for 1994", to determine whether Ms Walsh had any particular knowledge of any such matter. My finding in respect of the complaints of College Co concerning the 1993 financial projections is, therefore, limited to the revenue projection from the anticipated Jobskills contract. The evidence does not disclose when the "Income Budget for 1994" was prepared, but it was clearly in existence at, or prior to early August 1993. At the time of its creation, it may well have been a realistic expectation. In particular, tenders for 1993/94 Jobskills contracts had only recently been advertised, and Prides had applied for one. At that time, it may well have been the case that if tenders were assessed, and contracts awarded promptly much of the work for any 1993/94 contract would have been undertaken before the end of 1993. 85 Ms Walsh, in her letter to Senator Crowley of 7 December 1993, asserted: "When I applied for the 1993/94 Brokerage I was advised there would be less places available this year and was originally proposing to seek a brokerage for 80 places but DEET staff advised me to apply for a higher number because they felt confident that whatever number was on the application the number would be reduced. We applied for 120 places - which we certainly could have catered for but were anticipating certainly a lower figure - but to be awarded NOTHING I cannot accept." 86 Notwithstanding that information, then available to Ms Walsh, I do not conclude that the anticipated revenue during 1993 for Jobskills contracts from DEET was not reasonably assessed at $500,000. I have endeavoured to explain my reasons for that conclusion above. However, it was progressively apparent from at least September 1993, that the projection for 1993 was unrealistic. Once the contract was not granted at all, as notified to Prides and Ms Walsh on 3 December 1993, the position was in my view plain: the anticipated income for 1993 from a 1993/94 Jobskills contract would not be received during 1993. Even if such a contract were awarded after the "appeal" through Senator Crowley, the work which would attract the entitlement to fees would have been carried out during 1994 and brought to account in the 1994 year figures. 87 In respect of the budgeted performance for 1994 in the "Income Budget for 1994", in conjunction with the "Projected Income - 1994", it was also plain from 3 December 1993 that a foundation for the projections had disappeared. The foundation for revenue totalling $210,000 to be received in February and May 1994 was a 1993/94 Jobskills contract. No such contract was to be awarded. It could from 3 December 1993 no longer be asserted with any confidence that such a contract would be awarded, or that the revenue during 1994 from Jobskills contracts would be a minimum of $350,000. Even if the foundation for the confident expectation of a Jobskills contract for 1994/95 still persisted, the revenue flow from such a contract during 1994 was projected at $140,000 only. Again, I do not have information upon which I can make any finding as to the net consequence of that revenue stream being less or grossly reduced. 88 Apart from that element of the components of the budget for 1994 as represented in the "Income Budget for 1994" document, the evidence is not sufficient for me to reach any conclusion as to whether the other revenue or expense items in that document were prepared on the basis of Prides' existing operations, and with reasonable projected growth, or whether or not those items did in the event fulfil the expectations. One reason is that there were too many changes to Prides' structure and method of operating during 1994 to compare the projected figures with the actual figures. It is the case that the actual financial reports of Prides for 1993 do not contain information from which it can be shown what in fact were the line items corresponding to those in the "Income Budget for 1994", or the extent to which variations were made for the purposes of the projection. Nor does the evidence show with any precision what were the actual figures for 1994 against which the budget line items may be compared. One might extrapolate some calculations from the evidence about student numbers in 1994, although one could not be entirely precise. I have dealt in the succeeding paragraphs with the issue of student numbers. 89 I also find that College Co through Mr Keig and Mr Burrowes appreciated that the 1994 figures were necessarily approximations. There was room for "swings and roundabouts". In fact, the evidence discloses that revenue from "Govt Adelaide" contracts in 1994 was considerably in excess of $200,000 whereas it had been budgeted for both 1993 and 1994 at $135,000. 90 The evidence as to student numbers during 1993 or the earlier years, and during 1994, is not precise. There was a large turnaround in Prides' overall financial performance in 1992, but there was no evidence clearly indicating that the reason for that favourable turnaround in part was the consequence of increased student numbers. The relationship between student numbers in 1993, the projected revenue in 1993, and the actual revenue in 1993, is not clearly spelled out. That is not intended as any criticism of the liquidator. I formed the impression from the evidence that, under Ms Walsh's stewardship, the manual record keeping was not ideal and perhaps somewhat idiosyncratic. However, it does leave College Co with the difficulty of having to make out its case in this respect on less than fulsome and persuasive material. 91 Among the material relied upon by College Co was Ms Walsh's letter for Prides to Senator Crowley of 7 December 1993. She sought in that letter to have the DEET decision conveyed on 3 December 1993 reversed. In the course of that letter, she commented: "Unfortunately due to the poor economical climate in South Australia, our Private student numbers have been very poor for the past two years and we have had to rely on Government Contracts such as Jobtrain, Government Traineeships, Jobclubs and Jobskills for the financial survival of the college. . . . With a decline in Private student numbers and always the uncertainty of other Labour Market Programs I am faced with major concerns in revising the 1994 budget for Prides." 92 I have observed above that the shortfall in budgeted Jobskills contract revenue during 1993 because of the non-awarding, or late-awarding, of a 1993/94 Jobskills contract was in the order of $200,000 so far as it affected the 1993 Prides' figures. That of course does not directly correlate to a change in the "Operations Surplus" as it is described in the "Income Budget for 1994" because there would be expenses (called "Revenue Payments" in that document) to be incurred in the earning of that revenue. 93 However, as I indicated earlier, the evidence does not indicate with any clarity the extent to which revenue otherwise anticipated was not received, or the extent to which expenses otherwise anticipated were exceeded. I am unable to find, notwithstanding those two passages in the letter to which I have referred, whether the student numbers during 1993 were in fact as they had been anticipated for the purposes of the "Income Budget for 1994" or were significantly less than those numbers. 94 I am also not prepared to find that Ms Walsh, in conveying the revenue projected for private student fees in 1994, did not accurately convey her opinion. I do not find that she conveyed that information fraudulently, that is intending to deceive: Bissett v Wilkinson [1927] AC 177. Nor am I satisfied that she did not honestly state her opinion on the prospects for student numbers during 1994 either in the "Income Budget for 1994" or in subsequent discussions concerning that topic, nor am I satisfied that there was no reasonable basis for her holding the opinions expressed by her: Ritter v North Side Enterprises Pty Ltd (1975) 132 CLR 301; Smith v Land and House Property Corp [1884] 28 Ch D 7. Indeed, the evidence indicates that her expectations were the subject of detailed discussion and consideration, particularly by Mr Keig, in the period August to November 1993 and he for his part reviewed those expectations, imparting into his assessment of them his own judgment. That judgment was based in part upon his own knowledge and experience derived from his role in Midland, and his own assessment that there was scope for Prides' management and marketing performance to be greatly improved. 95 In summary, I find that College Co has made out the alleged misrepresentations against Ms Walsh only to the extent that: · progressively from September 1993 to 3 December 1993, Ms Walsh was aware that the 1993 financial performance for Prides would be significantly worse than that projected, by reason of the delay in the awarding of a Jobskills contract for 1993/94; however, it should be noted that the context of that finding was that the income to Prides from such a contract would then be received in 1994 and so increase the 1994 projected revenue to the same extent; · from 3 December 1993, Ms Walsh was aware that there were no, or only slight, prospects of Prides being awarded a Jobskills contract for 1993/94, so that the 1993 results for Prides would be significantly worse than projected, and the 1994 results for Prides would also be significantly worse than projected. 96 In respect of each of those matters she did nothing to correct the representation that the projections for each of 1993 and 1994 as conveyed in the "Income Budget for 1994" and reinforced up to the time of the Deed were reasonable and realistic. I shall refer to those representations, which I have found to be not correct in the manner identified, as "the representations" for the balance of these reasons.

97 As noted earlier in these reasons, College Co was registered only on 29 September 1993 and was first proposed as the vehicle to take over Prides on 14 October 1993. 98 Ms Walsh contended that the representations were not made to College Co, and so it could not succeed in its claim against her. 99 I reject that submission. First, the representations were in my judgment repeated and maintained during October and November 1993 in ongoing discussions, including discussions about the "Income Budget for 1994" document and the other documents produced by Ms Walsh at the meeting on 2 August 1993. Secondly, cl 19.1 of the Deed contains a warranty by Ms Walsh as to the accuracy of the information provided "to College Co or its officers or agents prior to the Settlement Date". I find that that warranty concerns the representations, as well as concerning other representations. 100 Ms Walsh contended that the representations were all true on 2 August 1993 and remained true up to 3 December 1993, by which time College Co had determined to acquire Prides. Thus, she submitted, she had not misled College Co at any material time. I reject that submission also. I find that the representation relating to the delayed receipt of revenue from any Jobskills contract for 1993/94 was expressly referred to and maintained in discussions up to 3 December 1993. When Ms Walsh learnt on 3 December 1993 that no such contract was to be awarded to Prides, at least subject to Prides' "appeal" through Senator Crowley, I find her failure to convey that information itself constituted misrepresentations. That failure was in breach of her ongoing obligation to disclose that change of circumstances, as the representation concerning the prospect of obtaining a 1993/94 Jobskills contract was an ongoing one. To her knowledge, it continued to be of moment to the deliberations of College Co. See eg Jones v Dumbrell [1981] VR 199. Her silence, in the context of the other communications, was in my judgment misleading: Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31. 101 It is convenient at this point to note that counsel for College Co accepted that College Co through Mr Keig, Mr Burrowes and to a lesser extent Ms Roulston also at material times had the knowledge of those persons concerning Prides and its affairs, acquired by them in the earlier months of 1993 when Midland was first considering the acquisition of Prides, and when they were doing so as a syndicate before identifying College Co as the chosen vehicle for their plans. That information included the contents of the Leadenhall report and Mr Fisher's views in his letter of 9 July 1993.

102 College Co contended that Ms Walsh, in making the representations, had acted fraudulently. In considering that question, I have borne in mind the seriousness of the allegation: Briginshaw v Briginshaw (1938) 60 CLR 336. For reasons which appear below, in the particular circumstances that may not matter. There is no question of the deed being rescinded. However, it is a serious allegation and I should address it. 103 I am not prepared to find that Ms Walsh's failure to disclose, up to 3 December 1993, that there was no Jobskills contract for 1993/94 in place was fraudulent. 104 I have referred above to the level of understanding of Mr Keig and Mr Burrowes and Ms Roulston about the annual awarding of Jobskills contracts, and the time of tenders. That came from their experience of other dealings with DEET through Midland. It is also significant that, in its statement of claim, College Co alleges that Ms Walsh represented that "Prides had made an application to DEET to continue as a Jobskills Broker for 1993 and 1994", and that there was no anticipated decrease in Jobskills contract finding in 1994 but $150,000 had been allowed for as a worst case result. I do not find that they were told, incorrectly, in August 1993 or subsequently to 3 December 1993, that a Jobskills contract for 1993/94 was in fact in place. The delay in DEET awarding such contracts meant that the revenue from such a contract, when awarded, would be received more during the 1994 year of Prides, but until 3 December 1993 Ms Walsh had no particular reason to expect that no such contract would be awarded to Prides. 105 The picture is more dramatic from 3 December 1993. Ms Walsh clearly appreciated the significance of the letter from DEET of that date, as her subsequent communications during December 1993 demonstrate. The evidence does not show that there were any particular occasions during December 1993 when, in the course of negotiations, she deliberately avoided the opportunity to disclose that letter. Her correspondence reveals an apparently vehement belief in the wrongness of the decision not to award Prides a Jobskills contract for 1993/94. Her awareness of the implications to Prides of the non-awarding of such a contract, and the oblique reference to the decision of DEET in her memorandum to the Board on 27 January 1994 (set out below) support the inference that she consciously elected in December 1993 to fail to correct the representation that Prides by then had, or would get, a Jobskills contract for 1993/94. Unless she were then of the strong belief that the decision would be reversed, in my judgment the conclusion is almost irresistible that she was fraudulent in the relevant sense in failing to disclose the decision of DEET communicated by its letter of 3 December 1993: John McGrath Motors (Canberra) Pty Ltd v Applebee (1964) 110 CLR 656. The fact that she has elected not to give evidence on the matter gives comfort in the drawing of that inference adverse to her. In reaching that conclusion, I have carefully considered the content and tone of her communications with Senator Crowley and with officers of DEET during December 1993. Those communications do not, in my view, demonstrate a basis upon which Ms Walsh could have had sanguine expectations of the reversal of the decision about which she was concerned. 106 Counsel for College Co contended that damages should be assessed upon a similar basis to that in Munchies Management Pty Ltd v Belperio (1988) 58 FCR 274, so that it was in the particular circumstances entitled to recover damages on the basis that it should recover the amount paid for Prides less the real value of Prides at settlement, plus the amount by which its financial position deteriorated by reason of its endeavours during 1994 to keep Prides afloat. Prides' trading during 1993 produced, after extraordinary items, a loss of $81,974 and before taking account of those items, a profit of $50,673. The "price" of $900,000 was, it was submitted, therefore at worst from its point of view, based on a multiplier of about eighteen when the appropriate multiplier should have been at the lower end of the scale of 3.5 to 6. 107 Munchies (above) concerned the assessment of damages under ss 82 and 87 of Trade Practices Act 1974 (Cth). The High Court in Marks v GIO Australia Holdings Ltd [1998] HCA 69; 158 ALR 333 has determined that damages awarded for infringement of the provisions of Pt V of that Act are sui generis. They are not assessed by analogy with the measure of damages in tort or contract. I do not therefore approach the measure of damages necessarily in the way contended for. In the result, any different approach may produce much the same result. 108 In Gould v Vaggelas (1985) 157 CLR 215, Gibbs CJ at 220 explained that the measure of damages in deceit will be the amount which represents the loss suffered by reason of the representee altering its position in reliance upon the misrepresentation, although usually the starting point will be the difference between the real value of the property or business acquired at the time of purchase and what was paid for it. It is necessary for College Co to prove that it did suffer financial loss as a result of the misrepresentation: Gans v Riley (1913) 15 CLR 731. 109 College Co contended that the misrepresentations induced it to acquire Prides, and that it would not have done so had it been aware that there was no Jobskills contract in place for 1993/94. 110 I do not find that that was the case. Each of Mr Keig, Mr Burrowes and Ms Roulston deposed to that fact, but each did so in relation to a composite of representations not all of which I have found to have been made out. It is also very difficult for any person to address such an issue in hindsight, as any such consideration is likely to be influenced by the course of events after the transaction was entered into. The question must be addressed as if College Co learnt from Ms Walsh in December 1993 and before the Deed was executed that there was no Jobskills contract in place for 1993/94, and also learnt of the terms or impact of DEET's letter of 3 December 1993, that therefore Prides' financial performance in 1993 would be considerably worse than projected in the "Income Budget for 1994" document and that its financial performance in 1994 was likely to be considerably worse than projected in that document unless the "appeal" to Senator Crowley was successful. I have indicated that I accept that those persons mentioned were each truthful witnesses, but despite that I am not persuaded that the College Co decision would have been not to proceed with the transaction at all. In my judgment, faced with that information, the likelihood is and I find that College Co would have re-negotiated certain terms of the Deed but would otherwise have proceeded with the transaction. I will refer below to the terms upon which that re-negotiation would have occurred. 111 My reasons for that conclusion are as follows. College Co through its directors adopted the individual views of the directors that they could run Prides much more efficiently and profitably than Ms Walsh. That view stemmed from their comparison between their manner of operating Midland, and Ms Walsh's skills of management. They saw the potential to reduce significantly the costs of Prides' operations in relation to its revenue. They also formed the view that their collective expertise would enable them to market Prides to the private student market more effectively than Ms Walsh, and so to improve significantly its revenue flow from that source without any real increase in costs. Their interest was, to a substantial degree, focussed upon those prospects. Those assessments led them to proceed, notwithstanding the concerns identified by Leadenhall and the fact that the due diligence processes recommended by Leadenhall were not carried out. They also proceeded, notwithstanding the firmly negative observations of Mr Fisher in his memorandum of 9 July 1993. Thereafter, they were aware of the fact that the Jobskills contracts were awarded annually, after 1 July of each year and at least initially, they were specifically aware that no Jobskills contract for 1993/94 had been awarded. They expected one to be awarded. The inquiries on that issue thereafter do not reflect any real attempt to satisfy themselves that a contract had been awarded. In particular, it would have been a routine step to inspect existing contracts, even if they accepted that they should not approach DEET directly. I noted above the provision in the Deed concerning Jobskills. There is no evidence that, at settlement or in the period thereafter, there was any attempt to have the "Jobskills Fees" quantified for the purposes of settlement, or to inspect or reconcile the bank account apparently held for the purpose of those fees, either in relation to moneys received but not expended, or monies received in effect on trust for the payment of wages of participants. When Ms Walsh reported to the Prides' committee on 27 January 1994, in terms of the document set out below, there is no evidence of that report prompting immediate concerns. Although cryptic in relation to the status of any then existing arrangements with DEET, it was sufficiently pointed to invite an immediate investigation concerning the status of existing Jobskills contracts if that issue were critical. No such investigation took place. The concerns then raised were not pursued beyond the meeting. On the same occasion, Ms Walsh produced a document headed "Projected Income - 1994" which had no provision for the receipt of Jobskills revenue during 1994. Again, there is no evidence that that document produced any adverse response or concern particular to that omission. Those matters, including my impression of the attitudes of those persons to proceeding with the transaction, lead me to the finding that even if Ms Walsh had conveyed accurately the status of dealings with DEET regarding any 1993/94 Jobskills contract, College Co would still in some way have proceeded with the transaction. 112 I will return to that matter below. It is bound up with the question of the quantum of damages. Ms Walsh submitted that the failure of Prides, and of College Co as a consequence, in 1994 was caused by the manner of operation of Prides during 1994 rather than in consequence of any over investment in Prides by College Co by reason of any representations made by her. It is therefore necessary to consider the evidence on that aspect as well.

113 The essential events are not really in issue. Ms Walsh contended that there are a number of matters identified in the defence, in cross-examination of College Co witnesses, and from the evidence of Mr Lee and Mr Matheson, involving alleged mismanagement by College Co appointees, in particular Ms Roulston, which caused or contributed to the demise of College Co. She classified those matters as constituting contributory negligence. They are: (1) Changes by Ms Roulston, so that student enrolments were received only at the start of term dates, rather than as previously, on an ongoing basis. It was contended that students were impulsive, and so must be taken on when they are ready to start, rather than be told to wait a number of weeks until the start of the next term. (2) The opening of serviced offices on the second floor of Prides' premises, which generated a significant loss and negative cash flow. (3) Tenders for DEET Jobskills work and other government contracts in 1994, prepared by Ms Roulston, were poorly prepared, lacking in detail, and were therefore unsuccessful.

(4) Certain Government traineeship contracts were run so poorly they were not renewed.

(5) In February 1994, various new photocopiers and computers were purchased at significant expense, not provided for in the budgets.

(6) Poor internal record keeping including accounting records.

114 The findings below reflect my conclusions in the light of all the oral evidence, including the evidence of Mr Lee who was on the committee during 1994, and the documentary material. Again, where a finding has been made on a significantly contentious topic, I have expressed my reasons for my conclusions in some detail, but otherwise the picture is set out reflecting essentially uncontested material. 115 Following settlement in January 1994, College Co took control of Prides. Ms Roulston was appointed Managing Director in charge of its day to day running. In fact, Ms Roulston started work on 10 January 1994, shortly before settlement. Ms Walsh was designated as marketing director, with the specific responsibility of recruiting private sector students. Both Mr Keig and Mr Burrowes were also appointed to the committee, together with the solicitor for College Co, and Mr Lee. The independent chairman was Mr Warren Wood. 116 Difficulties were promptly experienced. Ms Roulston described how the presence of herself and Ms Walsh on the campus did not engender a comfortable relationship, and the arrangements Ms Walsh had made to fulfil her role as marketing director without keeping Ms Roulston fully informed. Certain existing staff who had been appointed by Ms Walsh and were familiar with her work systems were slow to accept changed systems which Ms Roulston sought to impose. The problems seem to have been typical teething and personality problems. 117 Ms Roulston found the manual accounting systems hard to use to generate reliable figures, and obtained approval to obtain a computerised accounting system. The urgency for such a system was generated by the manual accounting system producing figures which did not support Ms Walsh's budgeted projections. 118 There was early concern that the student enrolments were below those anticipated. Ms Walsh prepared and tabled at the Prides' meeting of 27 January 1994 a document entitled "Tendering Concerns" which included the following: "Jobskills has been with Prides for two years and unfortunately, although being the most lucrative program financially, has also been the costliest to install and fraught with DEET [anomalies.] December 1992 resulted in Jobskills being in with wages payments (via DEET) by $143000. December 1993 saw Jobskills DEET wage payments behind by over $20000 with Prides owing DEET $20860 for Jobskills contract No. 1. [Anomalies] in Jobskills tendering processing in 1993 saw Ms Walsh presenting a report to Senator Rosemary Crowley who was alarmed and took the concerns up with the Minister in Canberra. Prides are sill awaiting the response from the Minister. Unfortunately in 1992 and 1993 JOBSKILLS DEET staff were reprimanded by Canberra in December of both years. The complaints came in from other brokers as well as Prides. DEET Jobskills staff members become [sic] very aggressive towards brokers when although they knew the complaints were valid, no-one likes to be reprimanded." 119 The penultimate paragraph of that quoted extract is clearly a reference to the communications made by Ms Walsh with Senator Crowley following DEET's letter of 3 December 1993 indicating that Pride's tender for a 1993/94 Jobskills contract had been unsuccessful. 120 Ms Walsh also prepared and tabled at that meeting a document entitled "Projected Income - 1994". It described the projected income for the Adelaide campuses as $1,000,000 and the break-up as follows: "ADELAIDE

PROJECTED INCOME - 1994 …………………………………….. $1 000 000 As at 24/1/94 - ACTUAL INCOME - $518963

1994 at 24/1/94 + or - Private enrolments 865000 273700 -591300 Government contracts 135000 245263 +110263

SUMMARY 1000000 518963 -481037 SUMMARY: As at 24/1/94 $481037 short for total year projected income. Adelaide always receive at least one additional traineeship intake in second half of year. Past history shows further enrolments in February and at commencement of Terms II and III. Further Jobtrain contracts will be available for tender in second six months plus some still awaiting decisions currently. Plus individual ATY enrolments and ATY contracts (one is anticipated shortly from Marion area)." 121 It is apparent, having regard to the 'Income Budget for 1994', that Ms Walsh was including only the private tuition fees, including for advanced certificate in graphic design students, to reach the figure of $865,000. It also appears that the "Government contracts" entry refers to the "Government Adelaide" line in the "Income Budget for 1994" as the figures correspond. No reference is therefore made to Jobskills income. The Mount Gambier figures were on a separate sheet. The evidence does not indicate that that document prompted reference to the figures earlier provided in the "Income Budget for 1994". That is surprising, as the "Income Budget for 1994" (excluding the Mount Gambier revenue figures) was for revenue of $1,404,500. The major missing element was the Jobskills contract revenue estimated at $350,000. The shortfall projected for 1994 projected was not therefore the $481,037 provided for in the document entitled "Adelaide Projected Income - 1994" but in reality, a figure in excess of $800,000. It is the more surprising as the document entitled "Tendering Concerns" referred specifically to ongoing issues regarding Jobskills tendering. Mr Keig confirmed that, at that meeting, Ms Walsh when speaking to her report referred to outstanding issues with respect to Jobskills contracts and that she was "waiting for confirmation from the Government as to the current situation", ie. the entire Jobskills program. Mr Burrowes did express concern about that information. Ms Walsh said that she was dealing with the problem. She did not accurately explain the real position. No investigation beyond discussion at that meeting was undertaken at the time. The obvious and dramatic discrepancy to which I have referred was not apparently further pursued. 122 There was a meeting of directors on 10 February 1994. Mr Burrowes was on leave and did not attend. 123 On 21 February 1994, an employee, Mrs Matheson, telephoned Mr Keig to express her concerns at the way Ms Roulston was running Prides. Her express concerns were with increased staff numbers incurring greater wages, and the failure to run existing Government programs including job training courses properly in accordance with the terms of those contracts. She complained that Ms Roulston was rude or unwelcoming to Ms Walsh. She also disputed that Ms Roulston's criticisms of Prides' existing staff skills or adequacy were correct. She resigned from Prides on 8 April 1994, as she was distressed by what was happening. During late 1993, Prides had tendered to DEET for, and had been awarded, a number of contracts for Career Start traineeship programs. They commenced in 1994. They led to Prides receiving in the early months of 1994 very much increased revenue from such contracts than anticipated in the 1994 projection on the "Income Budget for 1994". Mrs Matheson had been the DEET contact point at Prides for those contracts. In early 1994, she was removed by Ms Roulston from the role of administering those contracts and of dealing with DEET in respect of them. 124 It had been recognised by Mr Keig in his draft business plan to Midland that Ms Walsh had played an integral role in Prides' marketing and tendering, and that her energy and efforts maintained her profile with employers. One problem with Prides that he perceived was that she had too much administrative work to do to fully realise her potential. However, from early 1994, Ms Roulston determined that she would undertake the tendering for contracts, and the dealings with DEET to the exclusion of Ms Walsh and Mrs Matheson. She did not have the level of success previously enjoyed by Prides with respect to Government tenders. During 1994, both Mr Keig and Ms Walsh intervened to try and improve the success rates. Mr Keig's investigations in late 1994 with major Government clients resulted in him identifying a litany of woes of those clients regarding College Co management or the lack of it. Those concerns, as he discovered and said in evidence, lay at the feet of Ms Roulston. He noted: "There are far too many cases of indifference or poor quality training to be a co-incidence and Prides will suffer short-term because of this. … If I had not accompanied Pamela on several client calls recently, I would not have believed how much College Management had fouled up government relations in one short year. Indeed, I would probably not have believed Pamela if I had not heard some of the comments first hand. Our reputation in the private sector is untouched but in so far as trainees, government tenders, etc. we have to spend substantial time to ensure we overcome the negative image and then achieve job outcomes for students. Indeed the latter should be alongside financials for monitoring the progress of the business. I cannot understand how one person could have done such a poor job given her experience, qualifications and education." He adopted those views in his evidence, although he did not ascribe the ultimate failure of Prides solely to those matters. 125 A separate issue concerning DEET also arose shortly after the meeting of 10 February 1994. On 21 February 1994, DEET wrote to Prides expressing concern regarding a debt said to be owing. College Co, through Ms Roulston, arranged for an external audit of Prides' outstanding obligations to DEET. It confirmed that monies were still outstanding. The letter had been a follow-on letter to a similar letter of 12 January 1994 to Prides, and requests made of Ms Walsh orally in January and February 1994. The issue related to money said to be outstanding from earlier Jobskills contracts. Ms Walsh did not accept the audit result. She maintained that all accounts had been properly settled, despite DEET's threat of legal action. On 5 May 1994, DEET informed Prides that it would not be eligible for further Jobskills contracts while it had outstanding debts. This galvanised action by Prides through Ms Roulston. The change in proprietorship was explained to DEET, and the fact that Ms Walsh was responsible for the outstanding debt. Ms Roulston told DEET also that Prides or College Co would pay the debt if the issue was not resolved. She expressed an anxiety to "continue as a Jobskills Broker" and highlighted that DEET was "a major client" of Prides. DEET on 17 May 1994 responded, pointing out that the selection process for brokers for 1994/95 had not commenced but urging payment of the balance outstanding before that process started. It was apparent to Prides that, without that issue having been resolved, it would not be granted a 1994/95 Jobskills contract. The issue was resolved before tenders for the 1994/95 year were invited. Accordingly, in my judgment, ultimately the issue was no real significance to the resolution of issues before the Court. 126 I find that it was in about April to May 1995, College through Mr Keig and Mr Burrowes first realised that Prides did not in fact have a Jobskills contract for 1993/94. Even up to the Board meeting of 14 April 1994, Ms Roulston as Managing Director reported that "currently paper work is still outstanding for the 1992/93 contract as well as the 1993 contract" and expressed an intention to tender for the 1994/95 contract in July 1994. By that stage, College Co through Mr Keig had recognised a significant shortfall in the budgeted revenue as the anticipated Jobskills payments of $105,000 each to be received in February and May 1994 were not received. 127 There were also ongoing concerns by Mr Keig, Mr Burrowes and Ms Roulston about student numbers. Private student enrolments were less than half of the one hundred and eighty five projected (although the full year was still to be completed). The income was much less than the projected income. As at September 1994, one hundred and nine new students had enrolled, with twelve withdrawals, but seventeen were carry over students from 1993. 128 During 1994, Prides previously operated courses of three, six and twelve months' duration. Enrolments were taken in January and February 1994 for February 1994 starts. Mrs Roulston determined that Prides would accept enrolments only at term starts, and not on a rolling basis. That had been its previous practice. Mrs Matheson confirmed that during 1993 there were students starting virtually each week of the first four months of the year. I do not conclude that that changed policy was the only reason why student enrolments were at the low level experienced during 1994, but I accept the evidence that it was one reason for that matter. I suspect, but do not have sufficient information to be satisfied, that the poor relationship between Mrs Roulston and Ms Walsh also impacted adversely on private student numbers, especially as it was one area where Ms Walsh was to have become more active. 129 One step taken by Prides in 1994 was to develop the second floor of Prides' premises for the purposes of serviced offices. No material was presented in evidence to explain that decision or its economic justifiability. It occurred early in 1994, and I find was intended to increase cash flow at an acceptable expense. In my judgment, that action was not taken in an attempt to react to any misperceptions generated by Ms Walsh as to Prides' trading prospects. It was planned and undertaken too early to have had that character, although its timing was partly prompted because student numbers were not initially as high as expected. The evidence shows that as early as November 1993, a designer had been engaged by College Co to draw up plans for that development. I conclude that the real reason it occurred was simply a decision that part of Prides' premises could be put to better use. There is no acceptable evidence as to the real cost of that development, or the economic consequences of it. The oral evidence indicates that the facility was not used to anywhere near its potential. 130 There was a cash crisis. On 14 July 1994, the College Co directors met and adopted a revised budget for calendar year 1994. It included provision for Prides to be granted a Jobskills contract for the 1994/95 year. It contemplated further borrowing from the bank. At the same time, and for the first time, the Prides' financial accounts for year ended 31 December 1993 were made available. I have referred earlier to the drastic discrepancies between those results, and the budget provided for 1993, in the "Projected Income for 1994" document. It is not surprising that those actual results provoked a strong reaction. At that point, Mr Burrowes in particular was most concerned as "the budget bears no resemblance to reality". Mr Burrowes then specifically focussed also on the fact that student numbers for 1994 were many less than the projection. He confirmed that there was no ongoing DEET Jobskills contract. He sought from Mr Messenger, on behalf of College Co, his comments and responses to these concerns. Further crisis meetings of Prides took place on 28 July 1994 and on 11 August 1994. A decision was made to seek a further overdraft facility of $190,000 and to explore the sale of an interest in Prides to an outsider investor. A chartered accountant with expertise in developing survival strategies for businesses in crisis was engaged. Communications with DEET concerning the 1994/95 Jobskills tender then in place indicated its tender was likely to be unsuccessful. That transpired to be the case. Other attempts to save the company were unsuccessful. Ms Roulston resigned as Managing Director in November 1994. On 14 December 1994 the liquidator was appointed to College Co. 131 The topics of record keeping, accounting and reporting to the committee, were also addressed in evidence. I found the most helpful evidence came from Mr Lee. He is a vastly experienced operator in what he called the "Proprietary College Industry", both in years and breadth of activity. In 1990, he assisted Ms Walsh in refinancing the operations of Prides, and in improving its marketing for private students, and in the improvement of its curriculum. He provided a loan of $50,000 to Prides at the time. He had only minor dealings with Mr Keig, Mr Burrowes or Ms Roulston prior to the settlement. He was asked, and agreed, to become a committee member of Prides following the transaction. He first attended a meeting in March 1994. At one stage he was asked to consider being an equity participant, through an investment in the vehicle that became College Co, but he declined for reasons unrelated to Prides' performance. 132 In his capacity as a committee member of Prides, Mr Lee had the opportunity to observe the operations of Prides for most of 1994. He was very critical of those operations. In particular, he observed that there was little financial information provided to the committee by management. In effect, no profit and loss statements or balance sheets for 1994 operations were provided at any time. Only cash flow budgets were presented. There was much discussion about the absence of such material at committee meetings. The minutes confirm his oral evidence that he warned of the problem of continuing to make decisions without proper financial data. The provision of such data was to have been the responsibility of Mr Burrowes, but he was often away or too busy. It is self evident that timely historical accounting information is an important tool to ongoing decision-making. The absence of such information meant that decisions were taken on items of expenditure without the ability to assess properly their commercial wisdom. Mr Lee identified specifically the acquisition and performance level of the computer equipment agreed to be purchased in March 1994, and for which ultimately the proposal to expend $73,355 on that equipment was authorised and incurred. 133 Beyond those findings, I am unable to make any specific findings as to the consequences of the quality of financial recording and reporting during 1994. 134 There was no evidence concerning any changes in Prides' overseas marketing during 1994. 135 It is necessary to consider the consequences of those findings in relation to the claim for damages generally. However, there are two discrete matters which I first address.

136 On 20 April 1995, it is alleged that College Co, through the liquidator, entered into an agreement with Prides, Hales, Metropolitan, Denver Business College Inc ("Denver"), a corporate vehicle of Mr Lee, and the directors of College Co whereby Denver took over control of Prides, Hales and Metropolitan effectively for $133,839. The indebtedness of Prides to Ms Walsh and PWEC was released. The indebtedness of Prides to College Co was also released for a payment of a discounted sum. 137 It was not explained why those allegations were made. The document was not adduced in evidence. It is not a suggested that the liquidator of College Co acted in any way improperly in entering into that transaction. It was entered into by College Co on the advice of the consulting accountant, and in an attempt to reduce its indebtedness. Apart from some brief cross-examination, there was no evidence to suggest that it was not reasonable in the circumstances. It reflected the fact that the liquidator had been unsuccessful in attempts to have new equity capital introduced in to Prides, or in other respects to turn around its business.

138 It was accepted by counsel for College Co that there was no evidence indicating that College Co through its directors regarded any communications by Ms Walsh or by Mr Messenger to have been made by or on behalf of PWEC. That was an entirely appropriate acknowledgment. Any communications were in their respective personal capacities or on behalf of Prides. PWEC was involved in the transaction, on the evidence, only as a vehicle through which Ms Walsh provided her services to Prides before and after the settlement of the transaction, and as a vehicle through which Ms Walsh advanced $50,000 to College Co as part of its advance of $200,000 to Prides at that settlement. 139 In those circumstances, I do not find that PWEC made the representations to College Co which I have found were made by Ms Walsh herself, or that Ms Walsh made those representations as a director of and on behalf of PWEC. The claim based upon breach of the warranty in clause 19.1 of the deed is a claim against Ms Walsh only. It is not pursued against PWEC. 140 Accordingly, in my judgment, the claims against PWEC at common law and for breach of s 52 of the Trade Practices Act 1974 (Cth), fortified in respect of projections by s 51A of that Act, must fail. The prayer for relief also claims for PWEC repay to Prides the sum of $500,000 paid by College Co to Prides "and paid on to" PWEC. The evidence does not establish that that occurred, and in fact shows that the $500,000 advanced by College Co into Prides was applied in other ways. In that respect, the claim against PWEC must also fail. Damages 141 The information upon which I am asked to assess College Co's damages is scanty. I do not have any actual financial statements covering Prides in respect of any period after 31 December 1993. Settlement had taken place without Prides' final 1993 figures being available. On 4 March 1994, a balance sheet as at 1 January 1994 was presented. It did not represent Prides' actual 1993 calendar year figures. It was a post-sale balance sheet. It showed a shortfall of assets against liabilities of $124,682, but including the loan liabilities of $400,000 to PWEC and $500,000 to College Co. I do not have any financial statements of College Co during 1994 or up to April 1995. I do not have the documents which disclose the detail of how Prides' business was ultimately disposed of. In particular, although I have noted above the allegations in the defence on that score, there was no evidence which showed what arrangements, if any, were entered into concerning the debt of College Co of $400,000 to PWEC, or concerning the service contract with PWEC to provide Ms Walsh's services to Prides. I was not told in any detail how the assets and liabilities of Prides altered during 1994. The valuation of its stock plant and equipment as at September 1993 was some $375,000. I suspect that did not materially alter during 1994, as certain new equipment was obtained against which any depreciation of existing equipment would be offset. There is evidence that College Co increased its borrowing from National Australia Bank during 1994 to onloan to Prides to provide Prides with additional working funds which had not come from its trading operations as expected, and some evidence from which I infer that that increased borrowing was of the order of $125,000 - $130,000. 142 The assessment of damages in those circumstances is a very difficult one. I have found that Ms Walsh made actionable misrepresentations to College Co, and that those representations played a role in College Co acquiring control of Prides upon the terms upon which it did. I have also found that, even if the true state of affairs were conveyed to College Co, it would have proceeded to obtain control of College Co. I think the terms would have been a little different, but essentially the objective of obtaining control of a "debt free" Prides, save for debt by loans advanced by College Co, would have been maintained. The necessary loans would therefore have remained in the order of $500,000. I find that the PWEC debt of $400,000, which was heavily subordinated in any event, would have been renegotiated adversely to Ms Walsh's interests if the true state of affairs had been known. It may have been reduced, or its priority ahead of the $200,000 component of College Co's investor funded loan removed. I do not think it matters, because the probability is that renegotiation of those matters would not have worked to the detriment of College Co, in the events which have happened. That is simply because the liquidation of College Co is likely to have resulted in neither of those liabilities being of any value, and during 1994 those matters did not impinge on how Prides was run. However they were renegotiated, their existence did not cause or contribute to the downfall of Prides and there is nothing to indicate that their existence led to College Co receiving for Prides less than it would otherwise have done. I have carefully considered whether the renegotiation might have led to Ms Walsh being required to provide further monies personally to Prides, as distinct from through a loan to College Co. I am not able to find that that would have occurred. I do not have sufficient information to draw any such conclusion. 143 In my judgment, the renegotiation was likely to have required some additional warranty from Ms Walsh about the level of revenue during a relatively brief period of about six months to reflect the revenue which had previously been anticipated but which was then unlikely to have been received. Beyond that period, there would be a new financial year with fresh contracts to be tendered for, and for which Ms Walsh was not to be responsible. I do not think that that warranty would have been exclusively related to Jobskills contract revenue, as Prides had a number of other contracts with DEET and was continuing to tender for them. In fact, in respect of Jobtrain or other DEET contracts it proved in the early months of 1994 to have been very successful. The evidence is not precise, but the revenue from other DEET contracts in those months appears to have been about $100,000 greater than budgeted. The revenue expected in the relevant period from Jobskills contract for 1993/94 was, I have found, in the order of $400,000 - $410,000. I do not think that a warranty would have been in that amount. There would have been negotiations. In the context of the expectations of College Co for Prides, including its expectations that the management and marketing skills it could introduce would be beneficial, I conclude that the warranty procured in the nature of a performance guarantee from Mrs Walsh would have been expressed in a way which reflected an expectation of $250,000 revenue from a 1993/94 Jobskills contract. 144 It follows that, in my judgment, the failure of Ms Walsh to disclose the real state of affairs regarding the Jobskills contract tender meant that College Co did not procure a warranty from Ms Walsh of that order. Having regard to the increased Jobtrain contract revenue, I find that the net result is that College Co has an entitlement to claim from Ms Walsh during the second half of 1994 the sum of $150,000. 145 I do not find that the loss of that entitlement led to the failure of Prides or the liquidation of College Co. I simply do not have sufficient information to do so. Having found that College Co suffered some damages from Ms Walsh's misrepresentations, I must do my best to quantify that loss, even with "a degree of speculation and guesswork": Enzed Holdings Ltd v Wynthea Pty Ltd (1984) 4 FCR 450. It is simply too speculative to consider what, if any, different commercial decisions College Co or Prides' committee would have taken in the early months of 1994 had they known of the facts concerning the Jobskills tender for 1993/94. They may have been more cautious in incurring expenditure. They may have been more assiduous in seeking detailed financial information. They may have elected to operate Prides on a day to day basis a little differently. Those matters are entirely speculative. I do not think it is proven that the administrative changes which Ms Roulston introduced would not have been made in any event. As I have found, to a significant extent, those changes did alter Prides' capacity to generate revenue from Government contracts and to some degree from private students. They also made some difference to Prides' administrative costs. As I have found earlier in these reasons, College Co had a clear vision about how it could and would operate Prides once it acquired control of Prides and I do not find that Ms Walsh's misrepresentations would have altered that vision or, in any real way, its implementation during 1994. 146 In approaching the assessment of damages in that way, I have not overlooked that the primary and general measure of the assessment of damages when there has been a misrepresentation about the affairs of the business is the difference between the price paid for the business and its value at the time of purchase: Kizbeau Pty Ltd v WG & B Pty Ltd (1995) 184 CLR 281; Gould v Vaggelas (above). In my judgment, this is not a case where that can be done. College Co did not buy Prides' business, but assumed control of it by a change in its committee. The "price" was the refinancing of its existing trading debts into debt provided by College Co, and the expectation was that the benefits of control would flow through interest paid on vendor finance, and I suspect later on through fees for other services provided by College Co or its shareholders. The net earnings of Prides were not available to be distributed to College Co directly. The decision as to the amount of College Co's financing by loan was not a function of any assessment of net maintainable earnings, but of the existing level of trade debt. Those considerations have led me to the view that to apply some price earnings multiplier to the 1993 actual trading profit of Prides to determine its value, and to subtract that figure from the "price" of $900,000 would be entirely artificial and erroneous. In addition, I am not persuaded that the 1993 trading profit of Prides, in isolation, is necessarily the appropriate base for such an exercise where the trading result in 1992 had been over $300,000 profit and in 1990 and 1991 equally dramatic losses. I have endeavoured, on the limited material available, to compare College Co's financial position prior to the Deed and after the Deed, and so far as possible to identify the extent to which it is worse off by reason of the misrepresentations which I have found: Toteff v Antonas (1952) 87 CLR 647 per Dixon J at 650. In my view, the peculiar circumstances of this case warrant the adoption of a method of assessing damages other than that conventionally applied: cp. South Australia v Johnson (1982) 42 ALR 161; Ellul and Ellul v Oakes (1972) 3 SASR 377; Starborne Holdings Pty Ltd v Radferry Pty Ltd (Federal Court, Drummond J, 27 April 1998, unreported). 147 Counsel for College Co did not contend that damages for breach of the warranty in the Deed should be assessed differently from damages for misrepresentation, whether fraudulent or not. However, I note that damages for breach of warranty should be assessed as if the warranty were true: eg. Pennant Hills Restaurants Pty Ltd v Barrell Insurances Pty Ltd (1981) 145 CLR 625 per Gibbs CJ at 637. If that approach were adopted, Prides would have had the benefit of a Jobskills contract for 1993/94 generating additional revenue during 1993 of about $200,000 and during the first six months of 1994 of $210,000. In respect of the 1993 income, that would have affected its 1993 profit but it is not shown that that would have impacted directly in any particular way upon College Co's position once it took over Prides. Probably the debts existing at 31 December 1993 would have been less, so that Prides would not have started its trading in 1994 with existing debts of $124,682 (as shown by the 1 January 1994 balance sheet prepared to show the balance sheet immediately following settlement). The expense of earning that additional revenue is not established, but there would have been some. I cannot make any finding of a dollar amount. The consequences during 1994 would have been a more cautious approach to expenditure, but the detail of how that would have been effected is not able to be ascertained. There would also have been a greater sense of urgency to obtain reliable financial data earlier in 1994, and perhaps earlier awareness of and attention to the fact that Prides was not obtaining the repeat business from government contractors which it had anticipated. I do not find that Prides would then have traded profitably, or that College Co would have survived, but in my view it would have been able to dispose of Prides' business upon better terms and without such a debt burden as that it had undertaken. As noted earlier, there are no balance sheets of College Co in evidence, but some evidence suggests that it increased borrowing from the National Australia Bank to onloan to Prides to provide working capital during 1994. In my judgment, the figure of $150,000 which I have arrived at for damages would also fairly reflect College Co's losses calculated from the alternative that is contractual perspective. 148 The method by which damages has been assessed does not require me to further reduce the damages for contributory negligence, as I have not proceeded on the basis that, but for the representations, College Co would not have proceeded with the transaction or would not have failed. Conclusion 149 In my judgment College Co should obtain judgment against Ms Walsh for $150,000. College Co claims interest on its damages under s 51A of the Federal Court of Australia Act 1976 (Cth). In my view a lump sum should be fixed under s 51A(1)(b). The damages reflect past losses. In determining the appropriate lump sum I have considered the nature of the claim, and the basis upon which College Co has succeeded, together with the course of the proceedings. In my discretion, I award the sum of $32,000 for interest. 150 There is judgment for College Co against Ms Walsh in the sum of $182,000 including interest. I will hear the parties as to costs. I certify that the preceding one hundred and fifty (150) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mansfield.

Associate: Dated: 12 February 1999 Counsel for the Applicant: Mr G Stevens

Solicitors for the Applicant: Murray & Associates

Second Respondent appears by its director, by leave

Dates of Hearing: 9 - 13 February 1998

Date of Judgment: 12 February 1999