HEARD : 2, 5 - 9, 28 NOVEMBER, 3, 5, 10 DECEMBER 2007, 29 FEBRUARY 2008

Action for damages for negligent misstatement, deceit, and misleading or deceptive conduct - Whether misrepresentations or misleading or deceptive conduct - Whether reliance

Damages for acquisition of commercial investment property in reliance on misrepresentations and misleading conduct - Measure of damages for capital loss - Damages for loss of rental income - Damages for loss of investment opportunity - Whether exemplary damages available - Whether interest should be ordered - Whether expert evidence as to value admissible

Supreme Court Act 1935 (WA), s 32

Trade Practices Act 1974 (Cth), s 51A, s 52, s 75B, s 79, s 82

Akerhielm v De Mare [1959] AC 789

Argy v Blunts & Lane Cove Real Estate Pty Ltd [1990] FCA 51; (1990) 26 FCR 112

Atra v Farmers & Graziers Co-op Co Ltd (1986) 5 NSWLR 28

Automasters Australia Pty Ltd v Bruness Pty Ltd [2004] WASCA 229

Banning v Wakka [2007] WADC 17

Bembridge v Just Spectacles Pty Ltd [2006] WASC 185

Bride v Australian Bank (Unreported, WASCA, Library No 960565, 25 September 1996)

Broome Cassell & Co [1972] UKHL 3; [1972] AC 1027

Commonwealth v Cornwall [2007] HCA 16; (2007) 229 CLR 519

Commonwealth v Murray (1988) Aust Torts Reports 80-207

Cotogno v Lamb [No 3] (1986) 5 NSWLR 559

Crystal Auburn Pty Ltd v I L Wollermann Pty Ltd [2004] FCA 821

Davie v Edinburgh Magistrates [1953] SC 34

Demagogue Pty Ltd v Ramensky [1992] FCA 557; (1992) 39 FCR 31

Derry v Peek [1889] UKHL 1; (1889) 14 App Cas 337

Elders Trustee & Executor Co Ltd v E G Reeves Pty Ltd [1987] FCA 332; (1987) 78 ALR 193

Frank Davies Pty Ltd v Container Haulage Group Pty Ltd (No 1) (1989) 98 FLR 289

Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1

Gebauer Nominees Pty Ltd v Cole [No 2] [2008] WASCA 41

Gould v Vaggelas [1984] HCA 68; (1985) 157 CLR 215

Grincelis v House [2000] HCA 42; (2000) 201 CLR 321

Hatt v Magro [2007] WASCA 124; (2007) 34 WAR 256

Henville v Walker [2001] HCA 52; (2001) 206 CLR 459

Houghton v Arms [2006] HCA 59; (2006) 225 CLR 553

Humphries v The Queen (1987) 73 ALR 31

Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563

Lamb v Cotogno [1987] HCA 47; (1987) 164 CLR 1

Marks v GIO Australia Holdings Ltd [1998] HCA 69; (1998) 196 CLR 494

Neilsen v Hempston Holdings Pty Ltd (1986) 65 ALR 302

O'Neill v Medical Benefits Fund of Australia [2002] FCAFC 188; (2002) 122 FCR 455

Pappas v Soulac Pty Ltd [1983] FCA 3; (1983) 50 ALR 231

Pine River Pty Ltd v Scorda [2001] WASC 105

Pollack v Volpato [1973] 1 NSWLR 653

Potts v Miller [1940] HCA 43; (1940) 64 CLR 282

Pownall v Conlan Management Pty Ltd (1995) 12 WAR 370

Rio Tinto Exploration Pty Ltd v Graphite Holdings Pty Ltd [2007] WASCA 276

Sanders v Glev Franchises Pty Ltd [2002] FCA 1332

Sellars v Adelaide Petroleum NL [1994] HCA 4; (1994) 179 CLR 332

Townsend v Roussety & Co (WA) Pty Ltd [2007] WASCA 40; (2007) 33 WAR 321

Wakka v Brewer and Banning, Inquiry No 17 of 2002, REBA, 31 December 2004, 26 April 2005

Wardley Australia Ltd v Western Australia [1992] HCA 55; (1972) 175 CLR 514

Whitfeld v De Lauret & Co Ltd [1920] HCA 75; (1920) 29 CLR 71

XL Petroleum (NSW) Pty Ltd v Caltex Oil (Australia) Pty Ltd [1985] HCA 12; (1985) 155 CLR 448

York v Rowe (Unreported, WASC (Franklyn J), Library No 1865, 12 February 1991)

Yorke v Lucas (1983) 49 ALR 672

2 The proceedings (in their current form, in this court) are an action for damages (including aggravated and exemplary damages) in respect of economic loss or damage.

3 The loss or damage is pleaded to be by conduct in contravention of Trade Practices Act 1974 (Cth) s 52 (TP Act) or Fair Trading Act 1987 (WA) s 10 (FT Act). Those provisions as is well known proscribe engaging in 'conduct' that is 'in trade or commerce ... that is misleading or deceptive or is likely to mislead or deceive'. No issue arises in this case as to the satisfaction of the requirements for the possible application of both provisions to the conduct in question.

4 The loss or damage is also pleaded to be by reason of misrepresentations whose maker was aware or was reckless as to whether or not they were misrepresentations or ought to have been aware they were misrepresentations. These are claims at common law for deceit and negligent misstatement.

5 The conduct and misrepresentations pleaded are representations by the first defendant for which the second defendant, who was its sole director and secretary, was the maker or in which he was involved (the representations).

6 The loss or damage pleaded was on the plaintiff's purchase in reliance on the representations of a property in Armadale (the Armadale property) of which the first defendant was the registered proprietor and which at the time of acquisition was leased for a service station and an automotive workshop.

7 I begin with a description of the proceedings in this court, and outline the basic matters of fact in this case. I briefly review the course of the trial. I then turn to identify the issues between the parties and my findings on each.

8 These proceedings have their origin in proceedings in the Local Court (the Local Court proceedings). Those proceedings were No 17065 of 2003, commenced by summons 17 September 2003. Those proceedings were a claim by the plaintiff against the defendants for 'loss incurred in the purchase of [the Armadale property] as a result of misleading or deceptive conduct'. The plaintiff was not represented by solicitors at that time. Substituted particulars of claim and amended substituted particulars of claim prepared by solicitors subsequently engaged by the plaintiff were later filed in those proceedings.

9 By order of 14 November 2005, the proceedings, by then in the Perth Magistrates Court as the relevant Local Court had by then become, were transferred into the District Court. The District Court proceedings were initially CIV 332 of 2004 but became CIV 2797 of 2005. A statement of claim was filed in those proceedings.

10 Still later, by order made by consent on 17 November 2006, following an unsuccessful attempt to have the proceedings transferred into the Federal Court, the District Court proceedings were transferred into this court, to become CIV 2265 of 2006 (the present proceedings).

11 The pleadings in the present proceedings comprise a further further re-amended statement of claim filed on 7 November 2007 was the result of leave to amend that was granted on the second day of the trial (the statement of claim), further amended defence to further re-amended statement of claim (the defence), and the plaintiff's amended substituted reply, which was the result of leave to substitute granted on the seventh day of the trial (the reply).

12 The trial was conducted over 12 days, including the final day which was given over to closing submissions. Evidence was given by a number of witnesses over the period 2 November 2007 to 10 December 2007, of whom the principal ones were the following:

• The two directors of the plaintiff who acted for it throughout the events in question in this case: one is Angela Cecilia Theresa Frigger (Mrs Frigger), an accountant by profession and also a registered tax agent, who among other activities between 1984 and 1986 worked for an accounting firm as an insolvency accountant and auditor and between 1986 and 1989 as a small business advisor, and who is currently the secretary and the only accountant employed by the plaintiff and has about 400 clients in her accounting business; the other director of the plaintiff is Hartmut Hubert Josef Frigger (Mr Frigger), a process and commissioning engineer by profession who has worked as an engineer since 1981, and who consults to the plaintiff as a process and commissioning engineer; Mr and Mrs Frigger collectively (the Friggers) have since 1980 owned and rented out a number of residential properties and since 2001 through the plaintiff 'owned' two commercial investment properties, including the property the subject of the present proceedings;
• Martin Paul Banning (Mr Banning or the second defendant), who is the sole director of the first defendant, has been actively involved in the purchase, sale and running of various service station properties, including the property the subject of these proceedings since its acquisition in 2000 until the completion of its sale through the first defendant;
• Cassandra Carina Marklew (Ms Marklew), who worked in the office of the second defendant at times material to these proceedings;
• Mark Edward Penrose (Mr Penrose), who is a qualified motor mechanic and who between 2002 and 2004 conducted a business, Penrose Automotive using a workshop bay at the property the subject of the present proceedings under a lease entered into with the first defendant; and
• Three valuers, all called for the plaintiff (there were no valuers called by the defendants): David Stewart Liggins (Mr Liggins), Jeffrey Allen Spencer (Mr Spencer) and Richard Leigh Holmes (Mr Holmes) who is also an auctioneer.

The initial stage: the advertising of the Armadale property

13 At all material times the plaintiff was a company duly incorporated and registered in Western Australia under the Corporations Act 2001 (Cth) (Corporations Act). The plaintiff was also at least at some times material to these proceedings the corporate trustee of a superannuation fund for the Friggers. This fund is the Frigger Super Fund.

14 At all material times the first defendant was a trading or financial corporation or both a trading and a financial corporation incorporated and registered in Western Australia pursuant to the Corporations Act. At all material times the first defendant was the registered proprietor of certain land situated at and known as 269 South Western Highway, Armadale together with certain improvements on that land (the Armadale property). This was the state of affairs until the transfer of the Armadale property to the plaintiff. The land forming part of the Armadale property is Lot 12 on Diagram 73423 being the whole of the land comprised in Certificate of Title Volume 1913 Folio 146.

15 On or about mid-February 2003 the first defendant placed advertisements in the 'For Sale' section of The West Australian newspaper for the sale of the Armadale property. Advertisements appeared in issues on 15 February 2003 and 22 February 2003.

16 A copy of one of the advertisements, in the issue of 22 February 2003, is in evidence (as part of Exhibit 1) and read as follows:

INVESTMENT $695,000

5,000sqm prime hwy posn SOR 50% leased, returning $64,000 pa net, 50% vacant land. 92279481

17 The Friggers had been searching a suitable investment property for some nine months prior to the time this advertisement appearing. As a result of either first or the second advertisement they contacted the second defendant.

18 As a result of that contact, on 24 February 2003 the first and second defendants faxed to the plaintiff a document headed 'For Sale Cnr South West Hwy & Dickens Place, Armadale Brief Details' (Exhibit 1, annexure 'ACTF2') (the brief details document) the document reading as follows under that heading:

A modern privately leased BP Service Station/Roadhouse and workshops occupy half the 4,843 sqm corner site with 2 secure leases in place. Both commenced on the 01/07/2001, one for 10 years with a 10 year option with the commencing rental of $40,000.00 pa + GST + outgoings and the other for 5 years with a 5 year option with the commencing rental of $20,000.00 pa + GST + outgoings, both businesses are extremely successful.

The remainder of the site is vacant and the present owners have been advised that the City of Armadale may support a Liquor Store application, although a number of other uses could be considered.

The asking price is extremely reasonable at $695,000.00.

19 After seeing this advertisement, the Friggers had a number of conversations with the second defendant. The plaintiff says that certain representations were made by the second defendant, some of which repeated elements of the brief details document, and some of which went beyond those elements. One set of those oral representations the plaintiff says was made by the second defendant to Mr Frigger during this period, was that

• the lessees were always punctual with their payment of rent and outgoings;
• all payments were up to date; and
• the Service Station was making a profit on the sale of fuel of $0.08 per litre.

20 The defendants deny or do not admit any such representations or any of the others the plaintiff relies upon were in fact made.

21 At the end of February 2003 the Friggers visited the Armadale property to look at it.

22 On or about 10 March 2003 following a conversation between the second defendant and Mr Frigger, the former delivered copies of the leases of the BP Service Station/Roadhouse and of the automotive workshop to the home of the Friggers.

23 The lease of the BP Service Station/Roadhouse (Exhibit 99 annexure 'HHJF3') named the first defendant as lessor, Northdown Enterprises Pty Ltd (Northdown) as lessee and Mr Rodney William Strid (Mr Strid) and Mrs Mary Helen Strid (Mrs Strid) as guarantors, and had as its date of commencement 1 July 2001. This lease (the Northdown lease) included that:

• the term was 10 years from the date of commencement with an option to renew for 10 years thereafter (the first Northdown option period), and two further options to renew for the same period each (the second Northdown option period and the third Northdown option period);
• monthly rental of $3,333 with provision for increase by 2 1/2% on each anniversary of the date of commencement and with payment of 50% of all variable outgoings including council rates and land tax; and
• the use and occupation of the premises was to be 'only' for the purpose of conducting the business of 'Service Station/Convenience Store/Food'.

24 The lease of the workshop (Exhibit 99 annexure HHJF4) named the first defendant as lessor and Mr Penrose as lessee and had as its date of commencement 1 July 2001. This lease (the Penrose lease) included that:

• the term was five years from the date of commencement with an option to renew for a period of five years (the first Penrose option period), and two further options to renew for the same period each (the second Penrose option period and the third Penrose option period);
• monthly rental of $1,666.66 with provision for increase by way of rent review to CPI increases on each anniversary of the date of commencement and with payment of 50% of all variable outgoings includings council rates and land tax; and
• the use and occupation of the premises was to be 'only' for the purpose of conducting the business of 'Automotive Repairs'.

25 On or about 12 March 2003 the plaintiff says that in a telephone conversation between the second defendant and Mr Frigger the former confirmed to the latter that the tenants were up to date with rental and outgoings and punctual with payments. The defendants deny any such confirmation was provided. At a meeting on 13 March 2003 between the second defendant and the Friggers at the Friggers' home at which the former provided contracts for the sale of the Armadale property the second defendant said among other things that the tenants were up to date. On 21 March 2003 the Friggers inspected certain documents relating to the Armadale property at the office of the second defendant, where the plaintiff says the second defendant told them the tenants had paid everything on time and there were no monies outstanding by the tenants. The defendants deny any such representations were made on any of these occasions and refer to conversations on these dates in different terms.

The conclusion of negotiations for the sale and purchase of the Armadale property

26 Following negotiations between the parties, a price of $665,000 for the Armadale property was arrived at, to be apportioned between the land and improvements. Two contracts were entered into accordingly, both on the form of the Real Institute of Western Australia 'Contract for Sale of Land or Strata Title by Offer and Acceptance' that incorporated the '2000 Joint Form of General Conditions for the Sale of Land'. These contracts were written by the second defendant and on 13 March 2003 he brought them to the home of the Friggers for execution.

27 By one form of offer and acceptance (Exhibit 1, annexure ACTF3), bearing the signature of Mrs Frigger dated 13 March 2003 and the signature of the second defendant also so dated, 'Computer Accounting and Tax Pty Ltd 29 Gairloch St Applecross' as 'the Purchaser' offered to purchase the 'land situated at and known as BP Service Station and Land', and 'Professional Services of Australia Pty Ltd 9 Lacey Street Perth' as 'the Vendor' accepted the offer to purchase (the land contract). The 'Purchase Price' was stated as $365,000.

28 By the other form of offer and acceptance (Exhibit 1, annexure ACTF4), bearing the signature of Mrs Frigger dated 13 March 2003 and the signature of the second defendant also so dated, 'Computer Accounting and Tax Pty Ltd 29 Gairloch St Applecross' as 'the Purchaser' offered to purchase the 'land situated at and known as Plant and Equipment Fixtures and Fittings only', and 'Professional Services of Australia Pty Ltd 9 Lacey Street Perth' as 'the Vendor' accepted the offer to purchase (the improvement contract). The 'Purchase Price' was stated as $300,000.

29 Both the land contract and the improvements contract contained a condition in the following terms:

Vendor to provide all available documentation to purchaser including building & tanks prior to settlement.

30 On 21 March 2003, following a request made by the Friggers of the second defendant to inspect files relating to the Armadale property including the tenants' files, the Friggers inspected a file provided to them at the office of the second defendant. The plaintiffs say that certain documents were not included in that file. Those documents were a letter dated 2 August 2002 from Northdown to the first defendant concerning payment of outstanding water rates and telling the first defendant that Penrose did not have the money to pay his share of those rates; a letter dated 19 February 2003 from the first defendant to Northdown telling it and Penrose of impending legal action against both for unpaid overdue current rates and taxes; a fax dated 24 February 2003 from the first defendant to Northdown calling for payment of 50% of outstanding council rates and charges; and a fax dated 25 February 2003 from Mr Penrose to the first defendant disputing that the rates were payable by him and requesting copies of documents, and annotated by the second defendant to the effect that copies had already been provided and no further time for payment would be allowed. The defendant says all of those documents were in fact provided as part of the file at the inspection, a file which was in fact a quite substantial bundle of documents.

The settlement of the sale of the Armadale property

31 By a fax sent 2 April 2003 from the first defendant to the plaintiff, the former transmitted a notice that the contracts dated 13 March 2003 were by then unconditional and asked the plaintiff to sign the notice. By a fax sent the same day to the first defendant Mrs Frigger transmitted a signed copy of the notice.

32 Settlement did not in fact occur until 1 May 2003. Prior to settlement Mrs Frigger sought to arrange through the defendants a meeting with the tenants of the Armadale property and to inspect the fixtures but was unsuccessful. A visit to the site appears to have occurred not long before settlement involving one or both of the Friggers in which there was some exchange with the tenants. There is no common ground as to what occurred in that exchange.

33 Mrs Frigger acted in the settlement, as part of which she ascertained there were amounts owing to the City of Armadale for unpaid rates on the Armadale property and to the State Revenue for unpaid land taxes, at least.

34 On 1 May 2003 the second defendant made a request in writing to Mr Penrose that he pay his portion of outstanding rates and land taxes pursuant to the Penrose lease.

35 On 2 May 2003 the second defendant commenced proceedings in the Local Court against Northdown for payment of its portion of outstanding rates and land taxes pursuant to the Northdown lease.

36 On 6 May 2003 the plaintiff by a facsimile to the second defendant called for a $20,000 reduction of the purchase price for the acquisition of the Armadale property alleging that prior to settlement the first defendant was in dispute with Northdown in respect of outstanding rates and land tax and alleging also that Mr Penrose had had discussions with the second defendant in April 2003 regarding what he had called the high rent he was paying under the Penrose lease by comparison with the rents payable under comparable leases and the turnover of Penrose Automotive. On the same day the first defendant by a facsimile to Mrs Frigger denied the allegations and among other things referred to an inspection at the company's office at which apart from certain documentation relating to tanks, plans and drawings 'all other information' had been provided in a file made available to the Friggers.

37 On or about 25 June 2003 the Friggers received a letter from Mr Penrose in which he asked for a reduction in rent and time to pay the July rent.

38 On 15 July 2003 Mr Frigger by facsimile to Mr Penrose agreed to reduced the rental under the Penrose lease to $1,200 monthly until further notice.

39 By letter dated 16 July 2003 Mrs Frigger gave Northdown notice of default for not keeping its business open from 10 July 2003.

40 Following a number of exchanges between the plaintiff and Northdown, by letter dated 31 July 2003 Mrs Frigger gave Northdown notice of repossession and termination of the Northdown lease for failure to remedy the default the subject of the notice of default of 16 July 2003.

41 By a facsimile of 6 August 2003 Mr Frigger informed Mr Penrose that the reduction of rent under the Penrose lease no longer applied.

42 By deed of lease dated 15 September 2003 (the Goad lease) the plaintiff 'as trustee for the Frigger Super Fund' granted Goad Resources Pty Ltd a lease of the BP Service Station on the Armadale property. The Goad lease included that

• the term was five years from 15 September 2003 with two options to renew of five years each;
• a monthly rental of $3,700 per calendar month or $44,400 per annum, plus GST with provision for rent review in accordance with CPI increases each year of the lease and by market value in the option year renewals, plus 67% of all variable outgoings including council rates and land taxes; and
• the premises be used solely as a BP service station/convenience shop/lunch bar.

43 On 15 September 2004 by document headed 'Final Notice' from 'H & A Frigger', payment of rent for October 2004, interest on outstanding amounts, water rates for two quarters, Armadale council rates for one quarter and rent increase for July and August were demanded from Mr Penrose.

44 On 2 October 2004 the plaintiff issued a notice of recovery of possession to Mr Penrose and commenced an action in the Local Court.

45 On 2 June 2006, following the repossession of the workshop where Mr Penrose had conducted his business and efforts to re-lease them, those premises were leased to a Mr Domenic Palumbo trading as Nick Palumbo Auto Repairs. The lease was for a term of seven months from that date with an option to renew for 36 months from 1 January 2007. The rental was $1,110 per month including GST (the Palumbo lease). The Palumbo lease was not renewed. Subsequent efforts to lease the workshop have not been successful.

46 The substantive issues in this trial go to whether there were representations that were false or conduct that was misleading as pleaded, whether there was negligence or fraud for the purposes of liability at common law in negligent misstatement or deceit, who was liable for the conduct in question, was there reliance on that conduct, what loss or damage was suffered thereby, whether aggravated or exemplary damages are recoverable, and whether interest should be awarded as claimed.

47 Before reaching those issues, I deal with issues of credibility and a preliminary issue having to do with the capacity in which the plaintiff brought these proceedings.

48 The credibility of the principal witness for the plaintiff, Mrs Frigger, was strongly contested in the closing submissions for the defendants. Similarly, the credibility of the principal witness for the defendants, Mr Banning, was contested in the closing submissions for the plaintiff. It is necessary at this point that I review and make determinations on those submissions, beginning with the credibility of Mrs Frigger.

49 With respect to her, there was reliance on five matters. One was what were said to be inconsistencies in evidence she had given by affidavit to this court in these proceedings having to do with the capacity in which the plaintiff brought these proceedings. Another was what was said to be false evidence given under oath to the District Court in CIV 1305 of 2005, being in an affidavit in support of an application to obtain orders for the release of all the documents held by previous solicitors of Mrs Frigger's which related to what became the current proceedings, as well as what was said to be a false application to that court to remit fees, in proceedings that became these ones in this court. Another was what said to be the lodgement by her with the Commissioner for State Taxation of incomplete documentation in connection with the acquisition of the Armadale property thereby attracting, initially, lower stamp duty in respect of that acquisition. Another was what was said to be a failure to discover highly material documents obtained from a solicitor who had previously acted for the plaintiff. And the final one was said to be an application to the bank for funds for the acquisition that was false in material particulars.

50 I deal with each of these separately, before assessing them in combination together with other matters going to the credibility of Mrs Frigger.

51 The inconsistency principally relied upon is that between an affidavit sworn 10 April 2007 (Exhibit 68) and that sworn 24 April 2007 (Exhibit 73), both in the present proceedings in opposition to an application for security for costs. In cross-examination Mrs Frigger's attention was drawn to [14] of the former and [12] of the latter, in relation to which she also referred to [11] of the same affidavit.

The Armadale Property was purchased by the Plaintiff in its own right and not as trustee for the Frigger Super Fund. There was a point in time when the Plaintiff had considered transferring the Armadale Property to the Frigger Super Fund but that transaction did not eventuate. In the preparation of the witness statements of myself and my husband Hartmut Frigger (who is also a director of the Plaintiff) in these and in separate proceedings prior to me engaging solicitors to act on behalf of the Plaintiff, I assumed that the transfer of the Armadale Property to the Frigger Super Fund would still take place and they were prepared on that basis. But no such transfer took place and the Armadale Property is owned by the Plaintiff in its own right as it always has been.

The Armadale Property was initially purchased by the plaintiff in its capacity as trustee for the Super Fund. However, following advice that my husband and I received, in November 2005, it was resolved that the Armadale Property be transferred from the Super Fund to the plaintiff in its own right by way of an undeducted contribution and this was attended to. Consequently, the Armadale Property is no longer owned by the Super Fund but by the plaintiff in its own right. Annexed hereto marked 'ACF6' is a copy of the balance sheet of the Super Fund as at 30 June 2006 which confirms that the Armadale Property is no longer an asset of the Super Fund. Annexed hereto marked 'ACF7' is a copy of the profit and loss statement of the Super Fund for June 2006 which shows that no rental income was earned by the Super Fund in this period.

I crave leave to refer to paragraph 14 of my affidavit in these proceedings sworn 10 April 2007 prepared by my solicitors Bowen Buchbinder Vilensky. In that affidavit it was stated that the Armadale Property was purchased by the plaintiff in its own right and not as trustee for the Super Fund. Due to a misunderstanding that paragraph was prepared by my solicitor contrary to my instructions and is factually incorrect. Due to a lack of time, I read my affidavit sworn 10 April 2007 in a hurry and inadvertently did not notice the error in paragraph 14 in relation to the capacity in which the Armadale Property was purchased by the plaintiff.

54 Mrs Frigger testified that it was in fact the information in the two paragraphs of the later affidavit that was incorrect. She stated that those paragraphs came about as a result of the pressures she was under at the time arising from the death of her father and the present litigation, and the difficulties for her working with new solicitors (cross-examination, 7 November 2007, ts 719).

55 There was other testimony of Mrs Frigger and other evidence as to the capacity in which the plaintiff had acquired the Armadale property. That evidence and other testimony was that the plaintiff had done so as trustee for the Frigger Super Fund or was to a similar effect. I turn to those matters now.

56 There was evidence given in the action by the plaintiff against Mr Penrose that the plaintiff was claiming as trustee of the Frigger Super Fund (cross-examination of Mrs Frigger, 7 November 2007, ts 703; 746 - 748 and Exhibit 74).

57 There was an affidavit of Mrs Frigger, sworn 7 July 2005 and filed in the action by Mrs Frigger against her former solicitor Mr Nigam (Exhibit 54), in which she deposes that the Armadale property 'was purchased in the name of the Company as trustee for the Frigger Super Fund' and annexes the transfer of land form lodged with the Department of Land Administration (ACTF 36 part of Exhibit 1). That transfer shows what appears to be the handwritten addition to the transfer of the words 'as Trustee for Frigger Super Fund', words which are also crossed out. It is common ground the crossing out was at the instance of the Department, on the basis that trusts could not be shown on the transfer. There is another annexure to the affidavit of 7 July 2005, in the form of a letter by Mrs Frigger to the directors of the plaintiff dated 1 September 2003 (Exhibit 54, [3(f)] and attachment 5), where she stated she intended to commence an action against the defendants. This was an action which she said had to be in the company's name as 'the title to the property remains in the Company's name, although the beneficial owner of the property is the Frigger Super Fund and the trustees of the Fund since 1 July 2003 are [the Friggers]'.

58 There was also the stamp duty assessment in respect of the acquisition of the Armadale property dated 17 June 2003 (Exhibit 1, ACTF 35) on which the 'Parties to Instrument' are shown as the first defendant and 'Frigger Super Fund'.

59 There were also particulars of claim of 8 November 2004 (Exhibit 65) and amended particulars of claim (Exhibit 67) in Local Court action 16079 of 2004 being the action by Mrs Frigger against Mr Penrose. In those particulars (Exhibit 65, [6] unchanged in Exhibit 67, the latter which was lodged it would seem in relation to the substitution of the plaintiff for Mrs Frigger as plaintiff in that action) there is a statement that the plaintiff 'as trustee of the Frigger Super Fund purchased the [Armadale property] on 1 May 2003 from [the first defendant]'. There was a letter dated 4 October 2004 from Mrs Frigger to Mr Penrose (Exhibit 59) to do with the termination of the Penrose lease, which was signed by Mrs Frigger as 'Trustee of the Frigger Super Fund Owner of [the Armadale property]'.

60 The Goad lease showed the plaintiff 'as trustee for the Frigger Super Fund' (ACTF 54 to Exhibit 1).

61 And the proposal for business insurance signed on 13 June 2003 in respect of the Armadale property (Exhibit 76) was put in the name 'Computer Accounting & Tax Pty Ltd as Trustee for Frigger Super Fund'.

62 There was also evidence from Mrs Frigger in cross-examination (7 November 2007, ts 663) that she might have told the valuer Mr Spencer, apparently at the time of instructing him to prepare what became the valuation report for the Armadale property dated 31 March 2005 (Exhibit 104), that 'the property was a good super fund investment'. In the document 'Plaintiffs' Submissions on Law' dated 23 April 2004 in the Local Court proceedings in No 017065 of 2003 which eventually became the present proceedings, submissions Mrs Frigger agreed she had made (cross-examination, 5 November 2007, ts 505), she said:

The Plaintiffs were looking to invest superannuation funds in a safe commercial property that would pay a reliable income in the long term.

63 The 'Plaintiffs' at that time were the plaintiff and the Friggers.

64 Apart from the affidavit of Mrs Frigger of 10 April 2007, the principal evidence that the plaintiff acquired the Armadale property in its own right appears to be evidence from Mrs Frigger as to the restriction on borrowing by superannuation funds and evidence of the financial statements of the Frigger Super Fund at the time and following the acquisition of the Armadale property.

65 As to the matter of borrowing, the funds for the acquisition of the Armadale property had been borrowed by the Friggers from BankWest. Those funds had in turn been lent by them to the plaintiff. With respect to that on-lending, I note the following from the cross-examination of Mrs Frigger (5 November 2007, ts 492 - 493):

In paragraph 25 of your witness statement you say, and this is exhibit 1, in the first sentence:

We intended to purchase the property in a similar way to the purchase of the Edward Street property, to take advantage of substantial tax benefits for small businesses, especially capital gains tax discounts on property purchases. This was the main reason why the Armadale property was purchased by CAT in its own right?

---That's correct.

What tax benefits?---Capital gains tax do you mean or normal?

What tax benefits was this purchase going to generate for you?---The interest on the loan was a tax deduction, the depreciation on the buildings was a tax deduction and if we sold the properties, then there's certain ways that you can discount total capital gains if you reinvest the money in another property or another investment or if you roll over the capital gain into a superannuation fund, so those are the kinds of tax benefits I was talking about.

In fact, you go on to say that this was the main reason why the Armadale property was purchased by CAT in its own right?---Correct.

What were the other reasons?---There was no other reason why CAT purchased it in its own right. It was for tax reasons basically, yes, and, sorry, we also wanted to be paid back the money that we had borrowed, so we wanted CAT to pay us back the money.

Do you mean to say in that paragraph that it would not have been as advantageous for the property to have been purchased by Computer Accounting and Tax in its capacity as trustee of the Frigger Super Fund?---No, they are similar types of benefits; for instance, deductions for depreciation, certainly capital gains tax benefits in a superannuation fund, so the benefits between the two are very similar. The main reason for purchasing it specifically in CAT was to get the interest in the deduction which you don't get in the Frigger Super Fund because the super fund is not allowed to borrow.

66 As to the financial statements of the Frigger Super Fund for the relevant periods, I note the following cross-examination of Mrs Frigger in which she was asked to confirm she had argued in the past that the transfer of land form for the Armadale property showed the plaintiff had acquired the property in its capacity as trustee (6 November 2007 ts 669 - 670):

It's a very difficult question for me because this has been a huge job, as I say, almost from the day of settlement. I can only say, when I look back now at the last four and a half years, what our intentions were when we bought it. We bought it in the name of the company for those reasons I have already said. We could get the interest as a tax deduction and then the loan would be repaid to us - when I say "us", my husband and I - and then we were going to transfer it as an (indistinct) transfer to the Frigger Super Fund. All along that has always been our position, until about the end 2005 when eventually I had what I would consider to be adequate legal representation, and that's the time when I sat down with my solicitor - am I allowed to continue?

SIMMONDS J: You can continue to answer the question, yes?---I understood then the significance of the capacity et cetera, et cetera and at that stage is when I decided I'm not going to get the Frigger Super Fund involved at all in this matter. It started in the company's name; it's going to stay in the company's name. Then when I looked back to see how I had treated the transaction in the financial records I had done everything in the name of the company and so I said, "Well, I don't even have to do anything as far as that is concerned because it has been declared." The income had been declared as the company's income, the depreciation was in the company's tax return. Rates and taxes, any kinds of expenses that I had incurred had all been in the company and so by luck or I don't know what it is, it just had not happened as an asset of the Frigger Super Fund and I actually didn't have to do anything, to reverse any transactions or do anything of the sort. Looking back now it is very easy for me to see a very clear picture of it but during those months from 2003, 2004, 2005 it was very hard.

67 The financial statements are for the periods 1 July to 30 June in each of 2002/2003, 2003/2004 and 2004/2005. For the Frigger Super Fund they form parts of the audited fund income tax and regulatory return and computer generated fund income tax and regulatory returns for those periods (Exhibits 85 - 87). For the plaintiff they form parts of its tax returns returned from the Australian Taxation Office and the plaintiff's copies (Exhibits 89 - 91).

68 Much was made in the cross-examination of Mrs Frigger about missing pages from the audited returns compared with the computer generated documents in respect of the Frigger Super Fund (7 November 2007, ts 765 773) as well as different numbers shown in at least some of them. Her explanation was that the computer generated documents' pages included pages for calculations not part of the audited return. It was not made clear to me how these differences meant these statements should not be taken at face value. Rather, the explanation for the differences appears to me to be one that was both plausible and not shaken.

69 There are no entries in the balance sheets for the Frigger Super Fund corresponding to the Armadale property. However, there are entries in the balance sheets for the plaintiff of 'BP Service Station Armadale'. This of course is consistent with the testimony of Mrs Frigger last quoted.

70 It was put to me that the financial statements, which were prepared by Mrs Frigger, should not be taken at face value. The submission to me was that she had shown a capacity to prepare financial records 'to suit a purpose'. Reliance was placed on two matters.

71 One matter was a balance sheet prepared for the plaintiff as at 30 June 2005 a copy of which was annexed to an affidavit of Mrs Frigger sworn 27 June 2005 in District Court No 1305 of 2005 (Exhibit 54), the action by Mrs Frigger against Mr Nigam. The purpose of this affidavit was apparently to show why Mrs Frigger, who was representing herself, had begun the action relating to the acquisition of the Armadale property in her own name when the Armadale property had been acquired in the name of the plaintiff. Part of that reason was that, as the balance sheet was meant to show, the plaintiff was 'technically insolvent' and under the Corporations Act 2001 (WA) a company might 'not incur debts', presumably such as debts in bringing litigation, while it was 'insolvent' (Exhibit 54, [3(e)]).

72 A copy of the same balance sheet was also attached to a letter dated 30 June 2005 to 'The Registrar' of the District Court (Exhibit 72) from Mrs Frigger in which she applied to remit fees in District Court CIV 332 of 2004, the action which ultimately became the present proceedings. This balance sheet showed as the only significant asset of the plaintiff '269 S W H'wy Armadale'. The purpose of attaching the balance sheet was to show that the application should be granted as the plaintiff had incurred losses 'from the claims in this matter' and 'the balance sheet of the company shows negative equity ... resulting from this matter'.

73 Mrs Frigger acknowledged in cross-examination (7 November 2007, ts 726), when asked to compare that balance sheet with a copy of the balance sheet forming part of Exhibit 91, that the latter had 'a great deal more in it' including a further holding of real estate at Edward Street, Perth, but going beyond that holding. She earlier testified in cross-examination (7 November 2007, ts 671) that

Is that a correct statement of the financial affairs of the company as of June 2005?---Well, it doesn't include the property at 140 Edward Street, Perth so it does not state the full picture. It is part of the picture.

Why doesn't it include a major asset, namely, the Edward Street property?---At the time, as I said, I was unrepresented and I believed that I was showing a picture of the company only in regard to this property that was the subject of this dispute. Looking back now, I can see that that was probably not the right thing to do but at the time I thought that was the whole issue of the argument, that was where the company was at with this particular asset and that's how I showed it. I have no explanation for it. When I look back now I know that was not the correct thing to do but when I did it I thought it was correct.

74 She further acknowledged in cross-examination (7 November 2007 ts 673) that when in her affidavit (Exhibit 54, [3(e)]) she stated the plaintiff 'is technically insolvent based on the valuations of the subject property by Stuart Paterson and Jeff Spencer' she had meant to refer not to the 'entire company' but to the Armadale property. She added that the District Court judge before whom she appeared indicated to her he did not understand her to mean what the words 'technically insolvent' said.

75 She further acknowledged in cross-examination (7 November 2007, ts 728) that in the application to remit fees (Exhibit 72, Form 2) she had included that the balance sheet showed 'negative equity'. She added that the words 'resulting from this matter' also appeared in that passage.

76 I find it difficult to understand how an accountant such as Mrs Frigger, who has been a Certified Public Accountant since 1985 and who acknowledged having at the time of the trial an accounting practice with 400 clients, would present balance sheets like those annexed to the affidavit and attached to the application (cross-examination, 7 November 2007, ts 673), in that form for any purpose. At the same time I note her further testimony about those documents when she acknowledged her understanding at the time of the purposes for the descriptions of the financial position of the plaintiff she provided.

77 In my view, the balance sheets annexed to her affidavit and attached to her application do not, when that testimony is considered with the manner of its presentation before me, show me that I should conclude she prepared the balance sheets for the Frigger Super Fund and the plaintiff forming part of Exhibits 85 - 91 so as to conceal the fact that the plaintiff had acquired the Armadale property as trustee for the Frigger Super Fund rather than in its own right. The only purpose for such concealment that might be suggested on the evidence before me would be to claim a deduction for interest on borrowed funds by way of evasion of the limitation that a superannuation fund is 'not allowed to borrow' to finance the acquisition of fund assets. Such a purpose was not put to Mrs Frigger. In any event her testimony is clear and plausible in explaining that the Friggers had structured the acquisition of the Armadale property as one by the plaintiff in its own right so as to permit the deduction of interest, but on the basis that the property would subsequently be transferred into the Frigger Super Fund. The reason given by Mrs Frigger in her testimony before me for the description of the effect of the transaction in the affidavit of 24 April 2007, in terms of her confusion between what was done and what was ultimately to be done, is in my view a believable one when account is taken of that explanation. It is one that on all the evidence I believe.

78 This takes me to the matters of false evidence under oath to the District Court in CIV 1305 of 2005, being in an affidavit in support of an application to obtain orders for the release of all the documents held by previous solicitors of Mrs Frigger's which related to the current proceedings, as well as what was said to be a false application to that court to remit fees, in proceedings that became these ones in this court. I have already dealt with these matters.

79 I turn then to the matter of the lodgement by Mrs Frigger with the Commissioner for State Taxation of incomplete documentation in connection with the acquisition of the Armadale property. For the defendants there was reliance on the later re-assessment to stamp duty with a penalty of both the land contract and the improvements contract. That penalty was subsequently reduced. The re-assessment itself was after only the land contract had been assessed to stamp duty. I was referred to a document obtained under cover of a letter dated 11 July 2007 in a notice of decision under the Freedom of Information Act 1992 (WA) also dated 11 July 2007 in which it was stated only the land contract was lodged for stamping at the Office of State Revenue (Exhibit 139, supplementary witness statement of Mr Banning dated 27 November 2007, 'MPB27' and 'MPB28', 1).

80 However, Mrs Frigger gave evidence she had provided both documents to the Office of State Revenue for assessment to stamp duty in June 2003 (Exhibit 1, [107]; cross-examination, 7 November 2007, ts 659). The notice of decision was not put to her, notwithstanding the date on which it was sent to the second defendant; however, in cross-examination it was put to her she had only provided the land contract for assessment (7 November 2007, ts 659), a proposition she rejected. I also note the condition on both the land contract and the improvements contract indicating that each was subject to the simultaneous and successful settlement of what on the evidence before me was the other contract (see cross-examination of Mrs Frigger, 7 November 2007, ts 660, 662) 'annexed hereto'. She testified that officers of the 'State Revenue Department' who had visited her to show her the two contracts had said that such a clause was never used for two contracts forming parts of the same transaction. However, it was not put to her she had attempted thereby to mislead those responsible for the assessment to stamp duty in respect of the transaction. In view of the evidence as to the terms of the condition, I am unable to conclude that Mrs Frigger's credibility is called into question by what she did, or did not, lodge for assessment of stamp duty.

81 I turn now to the matter of what for the defendants was put to me as the failure to discover highly material documents obtained from a solicitor who had previously acted for the plaintiff under subpoena. These were documents obtained from the firm of the solicitor a Mr Nigam who had previously acted for the plaintiff in relation to proceedings (District Court CIV 1305 of 2005) that became the present proceedings. It was put to me there was no explanation proffered for this omission.

82 However, as I understand the cross-examination of Mrs Frigger, when it was put to her she had failed to produce all of her documents to her solicitors for them to make a decision and advise her on what she had to discover in the present proceedings, and reference was made to the affidavit in her proceedings against Mr Nigam of 27 June 2005, she provided an explanation. She said (7 November 2007, ts 666):

I genuinely didn't believe that anything that happened between Mr Nigam and I had anything to do with these matters.

83 While it is not altogether clear from that passage that she is providing an explanation as to all of the documents held by Mr Nigam obtained from him under subpoena for the purposes of these proceedings, I consider the question would have led her to understand that was what she was being asked to deal with. Thus, I do not consider she has failed to provide an explanation. Nor do I consider that the explanation she has provided is so implausible as to go to her credibility.

84 I turn now to the final matter put to me for the defendants as to the credibility of Mrs Frigger. That was the matter of an application to BankWest for finance for the acquisition of the Armadale property. That application (Exhibit 50) showed the purpose of the finance to be refinancing and home improvements and listed as an asset held by the Friggers the Armadale property while also showing them deriving rental income from it. There was also what appeared to be correspondence, signed by Mrs Frigger from 2002 and referring to rent from the Armadale property, on the file from BankWest concerning the finance which was ultimately provided (Exhibit 52).

85 In her cross-examination Mrs Frigger acknowledged having signed the loan application (Exhibit 50 and 7 November 2007 ts 641) and that the information was provided by the Friggers. However, I note the date of the application (19 March 2003) was after the date of the land contract and the improvement contract, and the matters of the relevance of that fact, and of whether or not any part of the finance was intended by her to be used for housing purposes, was not explored with her in cross-examination. She also denied telling the bank the Armadale property was owned by the plaintiff (6 November 2007, ts 655). Further, her evidence that she did not recognise the 2002 documents (6 November 2007 ts 653) was not explored with her.

86 On that evidence, I do not consider I should conclude on that account that Mrs Frigger's credibility on other matters should be doubted.

87 I have asked myself whether or not, considering the previous matters in combination, I should conclude that I should doubt the credibility of Mrs Frigger, at least on matters material to me where there is a difference in the evidence between hers and that opposed to hers. I have concluded I should not. This does not mean I should believe her evidence in each such case, however. I consider that depends on an evaluation of the evidence in each case.

88 However, it is appropriate I indicate my conclusion on the capacity in which the plaintiff acquired the Armadale property. That is because in my view the submissions on the credibility of Mrs Frigger required me to evaluate all of the evidence put to me on that issue.

89 I have concluded that the plaintiff acquired the Armadale property in its own right and not in its capacity as trustee for the Frigger Super Fund. While there is undoubtedly conflict in the evidence in relation to that matter, including the evidence from Mrs Frigger herself, I consider that the weight of the evidence supports the conclusion I have reached. I particularly rely on the explanation for having the plaintiff acquire the property in its own right in terms of the borrowing considerations, and the potential for confusion engendered by the intention not long after that acquisition to have the plaintiff transfer the property into the Frigger Super Fund. It is common ground that no such intention was ever fulfilled.

90 With respect to Mr Banning, it was put to me for the plaintiffs I should take account of five matters. One was findings by the Real Estate and Business Agents Supervisory Board, and both the District Court and this court, that (as it was put to me) were adverse to his credibility in matters such as these. Another was what appears to have been put to me as a misstatement on a matter not otherwise material in these proceedings, one that Mr Banning had in effect admitted he had made. Another matter was what was put to me as indications by Mr Banning in his cross-examination that he suffered from selective memory loss. Still another matter was inconsistencies in his evidence on material issues. And the final matter was what was said to be the inconsistency between his evidence at least at material points with most of the contemporaneous documentation in evidence before me.

91 I believe I can defer consideration of the last two matters. They go to issues with respect to which I make findings below.

92 As to the first matter, Mr Banning was cross-examined on whether he recalled findings in two sets of proceedings (5 December 2007, ts 1162 - 1174). One was before the Real Estate and Business Agents Supervisory Board, Wakka v Brewer and Banning, Inquiry No 17 of 2002, REBA, 31 December 2004, 26 April 2005, appeal dismissed except as to penalty sub nom Banning v Wakka [2007] WADC 17. The other was York v Rowe (Unreported, WASC (Franklyn J), Library No 1865, 12 February 1991). The findings in the first which Mr Banning in my view admitted he recalled having been made but also said were under appeal in this court were of being dishonestly a party to the re-documenting of certain sale transactions in at least one respect. Findings in the second which were put to Mr Banning were that he had been a party to the giving of certain evidence in the proceedings that was untruthful. Mr Banning testified he did not recall that evidence.

93 I permitted this line of questioning over the objection of counsel for the defendants, on the basis I would rule on the admissibility of the evidence at the conclusion of the proceedings. I also permitted the two decisions of the Board to be given an MFI number (171) so that their admissibility could be considered at the same time.

94 I incline to the view, on Humphries v The Queen (1987) 73 ALR 31, 35 - 36 (Fox J), 36 (Forster J) (although see 45 (Kelly J)), and Heydon J D, Cross on Evidence (7th Aust ed, 2004) [19015] and [19030], that the questions should not have been asked, and thus the answers were inadmissible. In any event, I am of the view the answers should have no or no significant weight in my deliberations. They do not represent frequent findings that evidence of Mr Banning, whether in proceedings such as these, or more generally, has been disbelieved by courts or tribunals. They represent at most findings for two occasions only. Further, it is not clear to me that the full context of the findings was put to Mr Banning: see Humphries 45 (Kelly J). Finally, the findings by the Board are the subject of appeal in this court.

95 It follows in my view that no assistance is to be gained from MFI171, whether as an exhibit (which I would not be inclined to allow it to be), or (as the plaintiff put it to me) a public document. The same would apply to York. The matter in both is entitled to no or no significant weight in my deliberations.

96 This takes me to the matter of what was put to me as a misstatement on a matter not otherwise material in these proceedings that Mr Banning had in effect admitted he had made to the Friggers.

97 The matter was put to me in this way. After the delivery to the Friggers on 10 March 2003 of the Northdown Lease and the Penrose Lease Mr Frigger had telephoned Mr Banning to inquire if an offer for the Armadale property at $650,000 was acceptable. Mr Banning had responded that he could not accept the offer until he had discussed it 'with his partners' (Exhibit 1, witness statement of Mrs Frigger, [43]). In his cross-examination, Mr Banning had acknowledged he was the sole director of the first defendant at least at the time of discussing with the Strids, the owners of Northdown, the adding of a room for café facilities at the service station on the Armadale property (3 December 2007, ts 1006). It was put to me as I understood this submission that, when he admitted the reference to 'we' in his testimony 'we will go ahead with the room providing you do such-and-such' was to the company, he was conceding he had no partners.

98 However, I do not find any such concession clearly made. Nor was I directed to any other testimony in which the matter was squarely put to Mr Banning. The matter of whether or not Mr Banning had others involved in the business of the first defendant whom he might have considered his 'partners' was simply not in evidence before me other than in the passage from the witness statement of Mrs Frigger I have referred to. While I consider that evidence sufficiently establishes an identification between the second defendant and the business of the first defendant, to the extent at least of showing his actual authority to act in that business as he did, I consider the present submission fails at the outset.

99 This takes me to the matter of what were put to me as indications by Mr Banning in his cross-examination that he suffered from selective memory loss. Two examples were put to me.

100 One related to his testimony as to the contents of the file or folder of documents relating to the Armadale property that was provided to the Friggers for their inspection on 21 March 2003. I will consider that testimony later in these reasons, in relation to the issue of reliance on the representations and other conduct in this case.

101 The other related to what he could remember of the decision in York. He admitted in cross-examination that, while he could not remember the references in the reasons of Franklyn J to untruths he had been responsible for and to his deliberate collusion with another he could remember other parts of the judgment. What he could remember was not explored in cross-examination.

102 The judgment had been delivered about 16 years previously. Mr Banning had earlier testified he had not read the judgment.

103 In those circumstances, I do not consider the evidence of partial recollection of the contents of the judgment has a significant bearing on Mr Banning's credibility.

104 The factual issue and legal significance of the capacity in which the plaintiff acted in the acquisition of the Armadale property was strongly contested during these proceedings. The resolution of the issue for which the defendants contended was put to me by their counsel as being fatal to the present proceedings.

105 The plaintiff contended that the evidence established it acquired the Armadale property in its own right. However, on the second day of the trial, 5 November 2007, the plaintiff sought and I granted (for the reasons appearing in 5 November 2007, ts 441 - 443) leave to amend the statement of claim to refer to it suing in its own capacity 'or, alternatively, in its capacity as trustee of the Frigger Superannuation Fund'. This followed amendments to the defence by leave granted in October 2007 to plead that the plaintiff had acted in the acquisition as trustee for the Frigger Super Fund.

106 The defendants contended that the evidence established that the plaintiff's action in the acquisition of the Armadale property was not in its own right but in its capacity as trustee for the Frigger Super Fund, and that subsequently but before the commencement of the present proceedings the plaintiff ceased to be a trustee for the Frigger Super Fund, being replaced as trustee by the Friggers. On 17 September 2003 the present proceedings had been commenced in the then Local Court of Western Australia showing as plaintiffs the present plaintiff and the Friggers. On 9 July 2004 an order was made in the Local Court granting leave for the Friggers to have themselves removed as plaintiffs in the proceedings. In November 2005 they ceased to be trustees of the Frigger Super Fund being replaced by the plaintiff, it having been intended that the plaintiff was 'reinstated retrospectively' to 1 July 2003 (cross-examination of Mrs Frigger, 7 November 2007, ts 725).

107 The legal significance of the earlier cessation, the defendants said, was that the plaintiff could not thereafter bring an action in its own right because it held the Armadale property in trust as trustee and suffered no loss, while (in any event, it would seem) it could not sue as trustee because of that cessation. I took it that the defendants further submitted the later cessation with intended retrospective effect could not overcome this latter problem.

108 Nor, the defendants contended, could the Friggers, as the replacement trustees, be substituted as plaintiffs, as the relevant limitation period for liability under the state statute at least (three years after the date the cause of action accrued: FT Act s 79(2)) had expired. I note, however, that no application for substitution or re-instatement of the Friggers as plaintiffs was ever made to me. Also, it was not clear to me why there could be the same objection to any such application as regards the other causes of action, at common law (six years after the cause of action accrued: Limitation Act 1935 (WA) s 38(1)(c)) at least. As regards the federal statute, in closing submissions the defendants contended that the plaintiff had 'not pleaded the [TP Act] for specific reasons' (for which the limitation period is also 6 years after the cause of action accrued: TP Act s 82(2)). However, not only had the plaintiff pleaded the TP Act (see further further re-amended statement of claim, prayer for relief, b)), but the passage in the opening submissions of counsel for the plaintiff on which the defendant relied (2 November 2007, ts 361 - 362) in my view offers no support for any contention that the plaintiff was making no such claim, or abandoning one previously made, against both defendants.

109 More fundamentally, however, I consider that, even if the defendant's factual contentions were upheld (and I have already indicated the reasons for my conclusion that they should not be upheld), the capacity in which the plaintiff acquired the Armadale property, whether in its own right or as trustee for the Frigger Super Fund, is not a matter which affects any right to relief which it otherwise has in the present proceedings as against the defendants. That is because trustees are not at common law recognised as having separate legal personality from themselves in a personal capacity: Elders Trustee & Executor Co Ltd v E G Reeves Pty Ltd [1987] FCA 332; (1987) 78 ALR 193, 253 (Gummow J) and authorities there cited, aff'd (1988) 84 ALR 734.

110 Elders Trustee & Executor Co Ltd was recently applied in this court in Gebauer Nominees Pty Ltd v Cole [No 2] [2008] WASCA 41, [50] (Steytler P, McLure JA and Newnes AJA). In Gebauer the claimant in an arbitration was initially described as 'The Hotrox Charcoal Unit Trust', which early in the arbitration was amended to 'Hotrox Charcoal Company'. The claim was for loss caused by breaches of obligations in a lease which named 'Hot Rox [sic] Charcoal Company' ([48]) as lessee and which was signed for the lessee by two individuals, a Mr Cole and a Mr Mullally, in whose names 'The Hotrox Charcoal Company' was registered as a business name. After making a determination as to liability, and as part of an interim award, the arbitrator gave leave to amend the name of the claimant to 'Gerhard Joseph Cole as trustee for The Hotrox Charcoal Unit Trust trading as Hotrox Charcoal Company'. An affidavit of Mr Cole had been provided to the arbitrator in which Mr Cole deposed that Mr Mullally had resigned as a trustee, leaving Mr Cole as sole trustee. The arbitrator also refused an application by the respondent Gebauer to add Mr Mullally as a party. On an application to this court for leave to appeal against the interim award on a question of law the primary judge ordered (Steytler P, McLure JA and Newnes AJA)

so far as relevant for present purposes, that the interim award amending the name of the claimant in the arbitration proceedings be set aside and the issue of the identity of the claimant and the costs of the application to amend the name of the claimant be remitted to the arbitrator for further consideration and determination [27].

111 Relevantly for my purposes the Court of Appeal determined that the primary judge had erred

in concluding that in order to determine the application to amend the description of the claimant it was first necessary for the arbitrator to find whether the lessee was Messrs Cole and Mullally or The Hotrox Charcoal Unit Trust. The Trust is not an available alternative because, not being a separate legal entity, it cannot be a party to a contract [55].

112 The basis for this conclusion appears from the judgment of the court as follows ([49] - [52]) where, after referring to the description of the lessee, the signature of the lease by Messrs Cole and Mullally and the registration of the name 'The Hotrox Charcoal Company' in their names, the court went on:

Mr Cole, however, says that the business name was owned by himself and Mr Mullally as trustees for The Hotrox Charcoal Unit Trust. That is immaterial. It is clear that a trust is not a separate legal entity, so a trustee cannot contract as agent for a trust. As it is not a separate legal entity, The Hotrox Charcoal Unit Trust could not be a party to the lease.

It is also immaterial whether or not Messrs Cole and Mullally entered into the lease as trustees. Trustees are not distinct legal persons in a representative capacity, separate from themselves in a personal capacity. As Gummow J explained in Elders Trustee & Executor ... 253, it is fundamental that the common law does not recognise a trustee as having assumed an additional or qualified legal personality.

This means that in the ordinary course the personal liability of a trustee in respect of contracts he or she enters into in the course of the performance of the trust is not limited or qualified: Octavo Investments Pty Ltd v Knight [1979] HCA 61; (1979) 144 CLR 360, 367, Re Johnson (1880) 15 Ch D 548, 552.

Of course, while a trustee is personally liable on any contract which he or she enters into as trustee, the law does permit a trustee to contract with a third party on the basis that the trustee's personal liability is limited - for example, to the extent of their right to indemnity from the trust funds - but clear words are necessary to limit what is prima facie the unlimited personal liability of a trustee. A trustee's liability will not be limited to his or her right to indemnity from the trust funds simply because the other contracting party knew the person was a trustee; nor will a statement that a person contracts 'as trustee' be sufficient to exclude full personal liability: Helvetic Investment Corporation Pty Ltd v Knight (1984) 9 ACLR 773. There must be evident a clear intention of the parties that the liability of the trustee is to be limited: see Ford & Lee, Principles of the Law of Trusts (3rd ed, 1996) [14010].

113 I should note that, as in Gebauer, no question of the last kind arises in this case.

114 The court then went on to deal with a further matter, as follows ([56]) (emphasis added):

There is a further matter that arose on the hearing of the appeal. The respondent accepts that the arbitrator erred in ordering that Mr Cole as trustee for The Hotrox Charcoal Unit Trust be substituted as the claimant. Gebauer accepts that the proper claimants are Messrs Cole and Mullally. The respondent [the claimant in the arbitration] also accepts that the proper claimants are Messrs Cole and Mullally but wants the matter referred back to the arbitrator for him to determine whether the proper claimant is those gentlemen in their capacity as trustees of The Hotrox Charcoal Unit Trust. A technical difficulty for the respondent is that there was no relevant amendment application before the arbitrator or the primary judge. A more significant consideration is the potential for the parties to waste further time and money arguing about whether the proper claimants are Messrs Cole and Mullally or Messrs Cole and Mullally as trustees of The Hotrox Charcoal Unit Trust. That would be a sterile debate. The absence of any reference to the lessee's capacity as trustee in the name of the party would not prevent the respondent (claimant) from proving in the damages claim that the lease was trust property as would be the damages flowing from the breach.

115 In the face of these authorities I am of the view that it matters not for my purposes whether the plaintiff acted in the acquisition of the Armadale property, and brings the present proceedings, in its own right, or as trustee for the Frigger Super Fund. Further, if the plaintiff did so act in the latter capacity, it does not matter whether or not the plaintiff ceased to be the trustee for the Frigger Super Fund at the date referred to. That is apart from the fact there is no evidence title to the Armadale property was ever transferred from the plaintiff to any one else, and there is no contention by the defendants that it had been. That is because, if the plaintiff acted in the purchase, including on the subsequent representations as pleaded by the plaintiff, as the trustee of the Frigger Super Fund, it seems to me, on Gebauer, any resultant causes of action would be held by the plaintiff for the benefit of the Frigger Super Fund.

116 These views are subject to a further point I reach at the end of this section of my reasons.

117 I consider that the two authorities on which the defendants relied for a different conclusion do not in fact lead to such a conclusion. Indeed I read the first as supporting the conclusion I have reached.

118 Bride v Australian Bank (Unreported, WASCA, Library No 960565, 25 September 1996) concerned an appeal against the refusal by a master of leave to amend statements of claim, which pleaded claims by the plaintiffs in their capacities as trustees for a business, to plead in the alternative that the plaintiffs claimed as the partners in that business. The claims arose out of the enforcement of security agreements entered into by the plaintiffs. The appeal failed.

119 However, the court disagreed with the master who had concluded that the amendment was one to introduce a new party and thus one to which Rules of the Supreme Court O 18 r 6 applied. Rather the amendment was one to alter the capacity in which the plaintiffs sued: 7, (Heenan J, with whose judgment Wallwork and Franklyn JJ agreed). This was an amendment to which O 21 r 5(4) read with r 5(2) applied. The former is for amendments to alter the capacity in which the plaintiff sues 'if the capacity in which, if the amendment is made, the party will sue is one in which at the date of issue of the writ or the making of the counterclaim, as the case may be, he might have sued'. The latter states:

Where an application to the Court for leave to make the amendment mentioned in paragraph (3), (4) or (5) is made after any relevant period of limitation current at the date of issue of the writ has expired, the Court may nevertheless grant such leave in the circumstances mentioned in that paragraph if it thinks it just to do so.

120 The court concluded that the appeal should be dismissed on the basis that the plaintiffs were bankrupt as at the date of the issue of the writ, with the effect under Bankruptcy Act 1966 (Cth) s 58 that the relevant causes of action had vested in their trustee in bankruptcy and remained so notwithstanding their subsequent discharge from bankruptcy. There had been an assignment of those causes of action to the plaintiffs in January 1995; however, it was not contended the assignment had retrospective effect. Thus the plaintiffs could not have sued in their personal capacity at the earlier date (9).

121 The plaintiff in this case was not in an equivalent position. Indeed I note the following, from the judgment of Heenan J (10 - 11):

In general terms, it is highly desirable that the Court make orders to ensure, as is stated in O18 r6(2)(b) that all matters in dispute in the cause or matter may be effectually and completely determined. If the respondents or any of them have been guilty of misconduct such as that alleged in the statements of claim, it is in the interests of justice that they be made to account for such conduct. To that end, the precise identity of the plaintiffs and of the capacity in which they sue is irrelevant. However, the plain fact is that when they issued the writ the appellants were not entitled to sue in their personal capacity. Their obtaining of the deed of assignment in January 1995 has not cured that fundamental defect. The question as to whether it is just to grant the leave sought does not arise in this case.

122 The last matter does not arise at this point in the case in any event. Counsel for the defendants put the argument on the present issue in the terms I have previously indicated. However, in relation to those terms, I have already dealt with the matter of whether or not a trustee who as trustee enters into a contract can be said to suffer loss from such entry, and whether or not any change in trustee affected the claim the plaintiff might make.

123 The other authority cited by the defendant is Henville v Walker [2001] HCA 52; (2001) 206 CLR 459 [6] (Gleeson CJ). There the action the subject of the appeal in that case, which included a claim for damages under TP Act s 82 for a contravention of s 52 of that Act, was brought by Mr Henville for himself and as trustee for the Henville Property Trust, as first and second plaintiffs, who became in the subsequent proceedings first and second respondents and first and second appellants, respectively. His Honour noted that throughout the trial and appeal proceedings the difference between the two such parties had been treated by all concerned as 'immaterial', which treatment he referred to as follows ([6], footnote omitted):

This, no doubt, was convenient. I will do the same. But it might have masked a possible issue that was never litigated. There was no claim for contribution by the respondents against the first appellant, upon the basis he owed a duty to the trust, and was therefore under a coordinate liability. I express no opinion as to whether such a claim would have been available. The possibility was not the subject of argument in this court.

124 There was no question raised in this case of any claim for contribution between the defendants and the plaintiff in any capacity.

125 I agree that the quoted passage is a strong indication that a difference in the capacity in which the plaintiff sues might be material. However, I do not consider it is material in the respects the defendants contend in this case to be fatal to the present action.

126 However, it seems to me that the matter of the capacity in which the plaintiff acted in the acquisition of the Armadale property is at least potentially relevant in these proceedings in two other respects.

127 One is evidentiary, as going to the credibility of Mrs Frigger. I have rehearsed that evidentiary relevance above.

128 The other is the bearing of the capacity in which the plaintiff so acted on the losses it claims. It is not in question that the plaintiff borrowed the funds required for the purchase of the Armadale property, nor that superannuation funds are not permitted to borrow to acquire fund assets. I have already considered those matters in connection with my determinations as to credibility. However, I note that the plaintiff has pleaded losses arising out of the loss of an opportunity to make alternative investments. If in fact at all material times it was unable to make those latter investments because of the restriction just described, no such losses could be recovered, as I will explain in the context of a similar point below. However, as I have determined that the plaintiff did not acquire the Armadale property in its capacity as trustee, I do not consider the question arises in this case.

Were representations made or was there conduct capable of being misleading or deceptive?

129 I begin by noting that as to a number of the representations and forms of conduct below it was put to me by the defendants that they, or the meaning of them contended for, were not sufficiently pleaded. I disagree. All of those representations and forms of conduct, and meanings, were in my view sufficiently (if not always elegantly) pleaded: see further further re-amended statement of claim [6] - [10A] and 16, read with [30] - [39] and [41] - [44].

130 I also note that the case as fought before me and as put to me by both sides in their closing submissions appeared to me to be on the basis that representations were made or conduct engaged in which did or did not lead the Friggers to enter into the land contract and the improvements contract on 13 March 2003. My focus in this section will accordingly be on evidence as to representations or other conduct engaged in occurring before that date. However, I will in subsequent sections of these reasons address later conduct, including some alleged repetition of representations or conduct engaged in, for its relevance to the issue of causation through reliance.

131 I consider first the representation that each tenant, Northdown and Mr Penrose, conducted a business from the premises they leased that was 'extremely successful'.

132 There can be no dispute words to this effect were used in the brief details document from the first defendant to the Friggers. Further, in cross-examination Mr-Banning said (3 December 2007, ts 1048) this:

I put it [the words in the brief details document 'both businesses are extremely successful'] in to attract a purchaser on the basis of extremely successfully, and as far as I was concerned the businesses were extremely successful or successful.

133 Below I will consider whether or not the representation was false, misleading or deceptive. At this point I need to consider the submission of the defendant that a representation to the effect of this one was incapable of being a false representation, or of being misleading or deceptive conduct, as the representation was a mere puff. For this purpose, I put to one side the possibility that a statement may not be a representation under the general law, because it is not one understood to be or intended to be a false statement of fact but nonetheless may be misleading or deceptive conduct under the TP Act and the FT Act: see on that possibility Lockhart C, The Law of Misleading or Deceptive Conduct (2nd ed, 2003) [4.14]. No argument was directed to me on this point. I consider that the defendants' submission must be approached as meant to be dispositive for both common law liability and liability under the statutes.

134 There is support for the defendants' submission with respect to liability under the statutes in Sanders v Glev Franchises Pty Ltd [2002] FCA 1332 and the authority to which it referred of Pappas v Soulac Pty Ltd [1983] FCA 3; (1983) 50 ALR 231 234 - 235 (Fisher J), a passage also referred to, with apparent approval, in Bembridge v Just Spectacles Pty Ltd [2006] WASC 185 [32] (Murray J). In Sanders [271] - [273] Kenny J said this:

In Pappas ..., Fisher J held that a number of the statements made by the vendor's agent (a Mr Spencer) to the purchasers of a shopping centre were of this kind. His Honour said, at 234-235:

'It is important to appreciate that many of the statements alleged or admittedly made by Mr Spencer were wholly or in part statements of opinion, not capable of being objectively proved to be true or false. They were also essentially the type of introductory comments, in the nature of puffery, made at the start of negotiations for the purpose of attracting the interest of a possible purchaser.

As such they became irrelevant or of little, if any significance when detailed information is subsequently given a fortiori, to a potential purchaser with commercial experience To the extent that they are essentially puffery, it is proper to be reluctant to elevate them to the status of potentially misleading conduct.'

His Honour held, at 238, that a statement by Mr Spencer that the shopping centre was a good investment was 'the type of puffing which would normally fall from a selling agent and which was incapable of being proved to be correct or incorrect'. See also Hanave Pty Ltd v LFOT Pty Ltd [1998] FCA 1051 (31 August 1998) per Moore J and Kaytonruby Pty Ltd v Glev Franchises Pty Ltd [1998] FCA 650, at p 29. In Kaytonruby, Ryan J held that a representation to the effect that Pizza Haven was a success story was in the nature of puffery.

In the present case, the representations pleaded in pars 7(1)(a), 7(1)(i) and 7(2)(a) of the statement of claim (that Pizza Haven was extremely successful; that a Pizza Haven franchise was an attractive investment; and that the first respondent would organize an aggressive marketing campaign) were in the nature of puffery. They were the kind of puffing that one might ordinarily expect to be made at the commencement of negotiations on behalf of a franchisor seeking to sell franchises.

In the case of the representations pleaded in pars 7(1)(a) [that Pizza Haven chain was extremely successful with a proven track record of profitability] and 7(1)(i) [that Pizza Haven franchise was an attractive investment]; their significance for the applicants' decision faded away when the applicants received more detailed financial information of the kind contained in the Disclosure Document. In any event, I doubt that the applicants would have placed any reliance upon these representations, if they were present to their minds when they signed the Ormond franchise agreement. It may be recalled that there was no evidence that the applicants were ever made aware of the contents of the letter of 5 September 1990 sent by Reyes to Taylor, referring to 'a proven track record of profitability'; and any representation as to Pizza Haven's success was, practically speaking, overtaken by the details in the Disclosure Document. Furthermore, the applicants had by then taken Hughes' advice on the suitability of a franchise as an investment for them. They made up their minds on this matter based on Hughes' advice (which took into account information in the Disclosure Document, the Brighton figures and the trading figures for the Victorian stores), Taylor's experience, and the availability and experience of Skilling (see below).

135 I consider that in this case the representation in question was made at the start of negotiations with an entity, the plaintiff, whose principals were a qualified accountant of many years standing who was highly experienced (Mrs Frigger) and an engineer (Mr Frigger), both of whom also had experience as investors in and managers of commercial property. Further, there was a period of about two and a half weeks between the making of the representation in question and the execution of the land contract and the improvements contract during which the Friggers visited the Armadale property walking into the service station and looking around the shop, and Mr Frigger in a telephone conversation with the second defendant in early March 2003 sought and shortly thereafter obtained copies at least of the Northdown Lease and the Penrose Lease.

136 There is evidence from the second defendant (Exhibit 138 [41] and [42]) that in that conversation Mr Frigger asked him not only for the leases but also for 'rentals and bank statements', and Mr Banning provided him with copies of all of these documents. They were said to have comprised, as well as copies of the leases, copies of monthly bank statements and tenant statement/tax invoice documents from 21 September 2001 to 15 April 2003 (Exhibit 138, annexure MPB7). The bank statements and tenant statement/tax invoices appear to relate only to rental payments, not any payments for outgoings. Having regard to the evidence as to when those documents were sent, those for the last two months could not in any event have formed part of those sent, although nothing was made of this in the cross-examination of the second defendant. Mr Frigger in cross-examination denied asking for any more than the documentation of the leases at or about that time (8 November 2007, ts 828 - 829), while Mrs Frigger in cross-examination denied a request for such other documents was ever made or that she had been provided any such documents (7 November 2007, ts 634).

137 There is also evidence that during this period, on or about 12 March 2003 in a telephone conversation between Mr Frigger and the second defendant the latter confirmed to the former that there were no problems with payments from tenants under their leases and that everything had been paid. I return to this alleged representation below. For the moment I put it to one side.

138 However, I consider that the representation in question cannot be treated as a mere puff. There was no detailed disclosure provided or that on the evidence the parties expected to be provided in relation to the business of the tenants corresponding to the disclosure statement in Sanders. Even accepting that a request was made of the second defendant for rentals and bank statements, it seems to me that that request, and the documents the second defendant testified had been provided (Exhibit 138, annexure MPB7) go to the matter of what the current rent was under the Northdown lease and the Penrose lease. It will be recalled that rental was subject to adjustment as a result of a 'rent review'.

139 True it is that the second defendant gave evidence that on his understanding built up from 30 years of advertising businesses, following provision to prospective purchasers of material of the sort in the brief details document it was up to those purchasers to do their own investigation for due diligence and make up their own minds as to whether to proceed with the purchase (cross-examination, 3 December 2007, ts 1048). I put aside the condition in each of the land contract and the improvements contract that the vendor would provide 'all available documentation' to the purchaser. It was not suggested in this case that the contracts were not binding and enforceable in accordance with their terms subject to this condition, and I am not able to see how such a question arises on the forms of the contracts. Compare Townsend v Roussety & Co (WA) Pty Ltd [2007] WASCA 40; (2007) 33 WAR 321 [66] (Buss JA), [1] (Wheeler JA) and [2] (McLure JA). There is an issue in this case whether or not 'all available documentation' was provided to the purchaser and if it was whether or not the plaintiff's loss was caused by the defendants' conduct. See Townsend [74] - [75] (Buss JA). However, no reliance was placed on the condition as confirming that in this case a prospective purchaser would have relied on its own inquiries and not what was provided at the beginning of the negotiations. Indeed, the condition coming when it did might be taken to indicate the opposite, to the extent of the documents provided under that condition.

140 However, it is in my view of particular importance in this case that the matter of the position of the tenants was of significance to the Friggers, and I am satisfied this was known to the second defendant and was the subject of a specific representation forming part of the brief details document. This in my view prevents the matter being treated as the corresponding representation was treated in Sanders. I conclude the matter of the position of the tenants was of significance to the Friggers, and that that was known to the second defendant, for the following reasons.

141 It was the evidence of Mr Frigger (Exhibit 99, [25] - [32]) confirmed by the second defendant (Exhibit 138, [36] - [37]) that as a result of the advertisements (or one of them) of the Armadale property in The West Australian in February 2003 Mr Frigger telephoned the second defendant in relation to the Armadale property. There are differences between their evidence as to what was said in that conversation. However, there appears to be no difference between their evidence, that as a result of that telephone conversation the brief details document was sent to the Friggers.

142 Mr Frigger's evidence was that in that telephone conversation he said to the second defendant it was important to the directors of the plaintiff that the Armadale property had tenants with long term leases as the plaintiff did not want the property vacant and earning no income. This was important as the purchase price of the property was to be borrowed, as indeed it was. There is no evidence from the second defendant that confirms such a statement was made to him, but there is also no evidence from him or otherwise to the contrary.

143 I note the following passage in the cross-examination of Mr Frigger which the defendants appeared to rely upon as showing that he had withdrawn his assertions that anything was discussed in the conversation other than the location of the Armadale property (7 November 2007, ts 827 - 828):

O'TOOLE, MR: Mr Frigger, you became aware that this property in Armadale was for sale in early February. No, I withdraw that. It was in early February 2003, was it not, when you became aware that the property at Armadale was available for sale?---Yes. I think it was first advertised in the middle of February. I am not sure of the exact date.

Would you agree that on 24 February 2003 you telephone [sic] Mr Banning to inquire about the property?---Yes, that's correct.

And he gave you the address of the property?---Yes.

And some brief details about the property?---No, not much details at that time.

I'm sorry?---Not much details at that time.

But some details?---Where it was, I don't remember any more details, not at that time.

MENDELOW, MR: Is this during the telephone call?

SIMMONDS J: Yes?---Yeah, no at that time not. I called him later on again.

O'TOOLE, MR: I'm sorry?---At that time he didn't give me more details.

He just gave you the address, did he?---The address, petrol station and I mean, I had the advertisement in front of it and I think he might've confirmed that, that's

Yes, right. Did he send you a fax, facsimile summary of the property?---Yes, he did.

144 I did not understand that evidence in cross-examination as counsel for the defendants contended. While it may indeed have negatived any representations being made in that conversation by the second defendant as to matters not appearing in the advertisements (something to which I return below) I do not consider it went to the matter of what Mr Frigger explained to the second defendant about the plaintiff's interest in the Armadale property.

145 Further, it is notable that the advertisement of 22 February 2003 did not have any language relating to the success let alone the degree of success of the tenants' businesses, where the brief details document had the language previously quoted. Further the advertisement did not make any reference to 'secure' leases, while the brief details document did. I have noted that the brief details document was sent not only to the Friggers but also to 'a number of other people' (cross examination of second defendant, 3 December 2007, ts 1080). While it seems to me it has not been shown the brief details document was prepared specifically for the Friggers, I should conclude on the balance of probabilities it was sent to respond to what was said by Mr Frigger in the telephone conversation. While Mr Frigger's evidence was not altogether satisfactory at all points, as I will indicate below, I note the importance of the tenants to the Friggers given their investment purpose and the method for funding the acquisition to both of which I have earlier referred. Mr Frigger generally impressed me as a witness who sought to testify from as accurate a recollection as he could achieve.

146 I have concluded it was more probable than not that the importance of the tenants was mentioned to the second defendant at the earliest opportunity.

147 In those circumstances, whether or not the plaintiff contributed to its own loss through an unreasonable failure to inquire into the business of the tenants, a matter I return to, I do not consider the representation in question was one incapable of being a false representation or the making of it was incapable of being misleading or deceptive conduct.

148 Furthermore, I conclude that on the same evidence just rehearsed, the representation that the businesses of the tenants were extremely successful meant and would have been understood by the second defendant to have meant at least that the businesses were financially viable and thus able to meet all of their financial obligations under their leases as when they fell due for discharge. Those obligations were at least the ones referred to in the brief details document. That reference was to 'commencing rental ... + GST + outgoings'.

149 I note in this regard the evidence from the second defendant in his cross-examination (3 December 2007, ts 1046 - 1047) as follows:

MENDELOW, MR: Mr Banning, do you know the difference between describing a business as a successful business and an extremely successful business?---Do I know the difference between describing a business? Yes.

What is the difference?---Well, a successful business, they pay the rent. I describe it that way because they pay the rent on time, the outgoings on time. They're always busy and so on.

If you could answer my question?---Well, no, I can't.

Are you able to explain to his Honour what you understand the difference to be between saying a business is successful as opposed to saying it is extremely successful?---No, I can't answer that. I'm sorry.

You can't answer?---No, I can't answer it. They mean the same

Why is that, Mr Banning? Why can't you answer it?---Well, they just mean the same thing to me, just a successful business.

You say that means the same ?---They paid the rent on - extremely successful to me would mean they paid the rent every time, all the time on time, paid all the charges that were sent to them and so on, were busy every time. I went out there, they were busy and so on.

You would agree that there is a difference between describing a business as a successful business and an extremely successful business, would you not?---It could be, yes.

Not 'could be', there really is, isn't there?---Well, there could be. There is, yes.

There is. Is your evidence that there is a difference or there could be a difference?---There could be a difference. Well, there could be a difference, yes.

What could that difference be, Mr Banning, in your own terms, in your own words?---Well, a successful business could be one that they were late paying the rent now and again, didn't pay the outgoings on time. An extremely successful business would be that they paid everything on time.

So you agree that there is a difference between those two kinds of business?---Well, you asked me to formulate a difference which I've done.

Now, I have asked you the next question: you would agree that there's a difference between the two concepts between a successful business and an extremely successful business?---Well, only in the way you put it to me for me to explain it, yes.

150 It is true there is no evidence from the Friggers that they understood the representation in those terms. However, no such evidence was necessary in my view. This is because of the context of the earlier telephone conversation between Mr Frigger and the second defendant and the words used in the brief details document that followed it.

151 The plaintiff also pointed to the statement in the brief details document that there were '2 secure leases in place'. There was no submission that this representation was a mere puff, and in my view none could be sustained in view of the evidence as to the telephone conversation between Mr Frigger and the second defendant previously considered, and the lack of a reference to secure leases in the advertisement in The West Australian of 22 February 2003.

152 The plaintiff put to me as I understood the submissions for it that the representation meant that not only were there enforceable leases in place but there was no reason to doubt the tenants would see out their terms; in addition, the circumstances of the tenancies they created made it free from doubt that the rental and outgoings payable under them would continue to be duly paid for the remainder of their terms.

153 I accept that the representation carried a meaning of the former sort. Contrary to the position pressed on me for the defendants, I do not consider the meaning in a commercial document involving a prospective purchaser who had in my view made it clear to the second defendant that it was seeking an income stream should be restricted to one concerning the prospects of success in litigation against the tenants. Rather, that meaning should extend in the way the plaintiff put forward. I also note the reference to 'extremely successful businesses' in the brief details document which formed part of the context of the reference to 'secure leases'.

154 However, I do not consider that representation carried a meaning of the latter sort. That meaning was not readily conveyed by the words in question, even when read with the prior telephone conversation and the reference to 'extremely successful businesses' in the brief details document. Nor was there evidence from the Friggers or the second defendant that the words were understood in that way. Whether the representation contributed to an impression of a related kind is something to which I will return shortly.

155 I should add that to the extent the meaning contended for which I have accepted was conveyed was one of a future matter a question arises of the application of TP Act s 51A and its state counterpart FT Act s 9. I consider that the representation included an element as to a future matter, to which it might be argued those provisions apply. I will return to the question of whether the representation was misleading within those provisions below.

156 I consider next whether or not there was a representation made that each tenant was punctual and up to date with payment of rent and outgoings, that there was no reason to believe there would be default in those respects in the future under either of the leases, and that there was no dispute between the first defendant and either of the tenants relating to payment of rental or outgoings.

157 It was put to me by the plaintiff that that impression was created by the brief details document. The creation of that impression was said to be misleading or deceptive conduct under the statutes. Reference was made to McMahon v Pomeray Pty Ltd [1991] ATPR 52,851, 52857 (Hill J), Townsend [90] - [93] (Buss JA) and Lockhart [5.21]. I understood the submission to be that it was the making in the brief details document of the references to 'secure' leases and 'extremely successful' businesses of the tenants, in the context of the statement as to rental and outgoings, that created the impression. The conduct represented by the making of those references might not properly be described as a representation to the effect of the impression referred to. However, it would at least be capable of being misleading or deceptive conduct under the statutes: see Demagogue Pty Ltd v Ramensky [1992] FCA 557; (1992) 39 FCR 31, 40 - 41 (Gummow J), quoted with approval in Townsend [89] (Buss JA). Further, while no argument was directed to me to the effect any such conduct was in fact incapable of founding liability in tort for misrepresentations, I am of the view that it was capable of doing so: see Fleming J G, The Law of Torts (9th ed 1998) 696 and authorities at 696 n 16.

158 I have already indicated that I do not consider that the reference to 'secure' leases on its own should be taken to mean that the circumstances of the leases made it free from doubt that the rental and outgoings payable under them would continue to be duly paid for the remainder of their terms. Further, I do not consider that the reference to 'extremely successful' businesses of the tenants on its own should be taken to mean that the tenants had indeed met their obligations under the leases.

159 However, it seems to me that the making of those references together with and in the context of the statement as to rental and outgoings was misleading or deceptive conduct within the statutes at least to the extent the person engaging in the conduct was aware that there were instances of non-payment of amounts due under the leases for outgoings, or of matters giving a reason to believe there would be default in those respects in the future, or of a dispute between the first defendant and either of the tenants relating to payment of rental or outgoings. Any doubt I might otherwise have on that account is removed when I consider the wider context of what I have found occurred in the prior telephone conversation of Mr Frigger with the second defendant.

160 I will consider below the issue of whether or not there was such awareness by the person engaging in the conduct at the time the conduct occurred. Assuming there was such awareness the references were at best 'half-truths' which made it misleading or deceptive to fail to disclose what the person engaging in the conduct was aware of: see McMahon 52,858 (Hill J), quoted with approval in Townsend [90] (Buss JA).

161 I do not consider it fatal to such a conclusion that the plaintiff was a corporation whose principals, the Friggers, had the expertise and experience they did. I do not see in the authorities any exclusion for such persons, and no reason for one presents itself to me. It seems to me that a half truth is less likely to be found where the person to whom conduct is directed may be expected to be less likely to take the conduct at face value. However, in this case the context to the brief details document in the form of the prior telephone conversation as I have found it to have been in my view removes that as a significant consideration.

162 As I understood its submissions, the plaintiff also put it to me there was other conduct of the defendants representing or creating the impression that each tenant was up to date with payment of rental and outgoings, that there existed no reason to believe that either of the tenants would default in making such payment, and that there existed no dispute between the first defendant and either of the tenants relating to payment of rental and outgoings. There was also a representation that the tenant under the Northdown Lease was making a profit on the sale of fuel of eight cents a litre.

163 As to the matters of payment of rental and outgoings, no reason to believe that either of the tenants would default in making such payment, and no dispute between the first defendant and either of the tenants relating to payment of rental and outgoings, there is evidence from Mr Frigger (Exhibit 99 [56] and [57]) of a telephone conversation he had with the second defendant on 12 March 2003 in which Mr Frigger put a price for the Armadale property of $665,000 to the second defendant. It was Mr Frigger's evidence that during that conversation he said he wanted to ensure that the tenants were up to date with their payments of rent and outgoings and that the tenants were punctual with their payments. His evidence was that the second defendant replied there were no problems with payments under the leases and everything was paid.

164 There is also evidence from Mr Frigger (Exhibit 99 [67]) that at the meeting at the home of the Friggers on 13 March 2003 when the land contract and the improvements contract were executed Mr Frigger again asked the second defendant about the tenants and he again said their payments were up to date. Mrs Frigger gave evidence to the same effect (Exhibit 1 [50] and [51]).

165 Both the Friggers clearly maintained this evidence in cross-examination, indicating that the assurances as to payments were not qualified in any way (respectively, 8 November 2007, ts 832; and 7 November 2007, ts 634).

166 The second defendant's evidence was that he had previously been asked for copies of the leases, rentals and bank statements and had supplied them, evidence to which I have previously referred. His evidence was further (Exhibit 141, [18]) that at the meeting of 13 March 2003 he was asked by Mrs Frigger whether the tenants were up to date with their rent, and he replied

that they were as per the bank statements and the other documents she had received except for the rates and taxes and I explained that the tenants were disputing the rates assessment of the City of Armadale and refusing to pay. Mrs Frigger told me that didn't worry her.

167 I do not believe the second defendant's evidence as to the qualifications he placed on his response. I prefer the account given by the Friggers. There were admissions in or in relation to the earlier proceedings in the Local Court of a statement by the second defendant at that meeting that the two tenants had always paid their rents and outgoings on time (Exhibit 169, particulars of defence dated 30 December 2003, [11] and Exhibit 170, email of 21 April 2004 from solicitors for the defendants to Mr Frigger attaching statement of agreed and disputed facts, [10] thereof). There was no qualification to that statement. In his cross-examination as to this evidence (5 December 2007, ts 1146 - 1153) his evidence appears to be that he could not account for these documents, but that (ts 1147):

I explained what I said to the Friggers as far as the rent, the outgoings, problems with the Armadale City Council and so on. I did explain that to them.

168 Further, the second defendant when cross-examined as to the account in his evidence for this trial (Exhibit 141 [18]) appeared to change it, to one of having at the meeting of 13 March 2003 provided information as to outgoings otherwise than in response to a question whether the tenants were up to date with rent (3 December 2007, ts 1082 - 1083):

So on your own version of events, you're saying you waited until 13 March to raise this issue with the Friggers?

---Well, I didn't really have any contact with them before that except for they rang me up and asked me if I would drop off the leases, the bank statements and the rental statements to their home, which I did, on 10 March I believe it was. I didn't have a conversation with them then. Mr Frigger was at the front door and I handed them to him and I walked back to my car and drove away.

On your own version of events, who raised that question of outgoings first? Did you volunteer it?---At that meeting of 13 March, I did, yes.

You raised it first, did you?---Mm.

You just simply volunteered it?---No. I just explained the whole situation. I started off the conversation by saying that when I bought the place - I told them the whole history. When I bought the place, I had the land valued at $150 a square metre. I didn't know whether I was going to keep the service station on it but I had a soft spot for service stations. I had leased the service station out. I went right through it with them; told them about the problems with the Armadale City Council; told them the situation with the rates there. Mrs Frigger's comment to that was, 'I'm not interested in that.' They pay the rates. That was their answer to that.

And on your version of events, you're saying that it wasn't in response to a question by the Friggers whether the tenants paid the rental on time?---No. They already had all that. I had delivered that on the 10th. I had delivered to them on 10 March all the bank statements which showed every payment was made on time; I delivered all the rental statements, every one of them; and then I delivered also the leases.

My question to you was the context within which you say you raised the issue of rates and taxes with them. You are saying ?---Well, you were

You have just given his Honour to believe that you raised it, you volunteered that information ?---I discussed the

unsolicited. Is that correct?---I discussed the whole situation with them at that meeting when the contracts were signed and I told them exactly the situation: who paid the outgoings; who didn't pay the outgoings; the situation with the City of Armadale; the whole lot.

Mr Banning, my question is: who raised that issue first?

---I believe I did.

So you just volunteered that information?---No. I was explaining the thing to them. You know, they were trying to buy a service station from me for a lot of money and I sat down there and explained to them the situation. I told them if they didn't like the service station, they could bulldoze it down. The land was worth $250 a square metre. I told them that as well.

169 At the same time I am not prepared to find he did not provide to the Friggers with the leases the tenant statements/tax invoices and the bank statements previously referred to. I have already indicated my view that such further documentation would show the rental from the commencement of the leases. However, provision of those documents would in my view have been misleading or deceptive conduct as to punctual payment of outgoings, no reason to believe that either of the tenants would default in making payment of rent or outgoings, and no dispute between the first defendant and either of the tenants relating to payment of rental or outgoings, if the person engaging in that conduct was aware of matter to the contrary. Whether there was such awareness is something I return to below.

170 Further, provision of those documents as well as the leases would be consistent with the evidence of Mr Frigger that in the telephone conversation in which he asked for the leases he indicated he wanted to ensure that the tenants were up to date with their payments of rent and outgoings and the tenants were punctual with their payments, and he stated he got the response from the second defendant that there were no problems with payments under the leases and everything was paid.

171 On that basis, I also consider it more likely than not that the second defendant was asked a question to that effect and did provide a reply to that effect.

172 I further find on the basis of the body of evidence I have considered that the second defendant did at the meeting of 13 March 2003 state that the payments of the tenants were up to date.

173 That leaves the matter of the representation that the tenant under the Northdown lease was making a profit on the sale of fuel of eight cents a litre. The evidence of this representation principally relied upon by the plaintiff is that of Mr Frigger. It is that after seeing the advertisement of the Armadale property published on 15 February 2003 he had a telephone conversation with Mr Banning. In that conversation the second defendant said that because the petrol station was an independent business the business owner 'made 8 cents a litre profit whereas those businesses that were not independent would only make 4 cents a litre profit' (Exhibit 99, [31]). The second defendant's evidence was that he said no such thing (Exhibit 141, [73]).

174 I have already quoted the cross-examination of Mr Frigger in which he was questioned as to this conversation (8 November 2007, ts 827 - 828), and Mr Frigger does not return to the matter elsewhere in his cross-examination. The matter was not returned to in re-examination. In the face of that cross-examination, I consider I am unable to conclude that on the balance of probabilities the representation as to profit was made.

175 Finally, there was the representation that the City of Armadale might or would support a liquor store application for the vacant portion of the Armadale property or that that portion might or would be suitable for such an application.

176 There is evidence from Mr Frigger that he was told by the second defendant in the first telephone conversation between the two men that it was possible to put a liquor store on the vacant portion of the land (Exhibit 99, [30]).

177 In his cross-examination, there was the following passage (8 November 2007, ts 832):

He at no time said to you that the shire would approve or support the construction of a liquor store on the vacant land?---Yes, he said it to me on the phone in my second conversation with him. He would support it.

178 Later in his cross-examination there is the following passage (8 November 2007, ts 838):

Can I suggest to you the liquor store matter wasn't an issue for you at all?---Of course it was an issue if people promise you that and you want it.

It certainly wasn't a sufficient issue for you to make any investigation on your own, was it, in relation to it?

---No, I did make an investigation about the liquor store on my own, because that was said it may be possible to put a liquor store on there, so that's how I took it.

You didn't even ask Mr Banning ?---Yes, I talk to him about it. Yes, he talked me into this liquor store business. He made everything sound very nice.

179 It was put to me that Mr Frigger had withdrawn his evidence (Exhibit 99 [30]) as to a representation concerning the possibility of putting a liquor store on the vacant portion of the Armadale property. That withdrawal was said to have been in the cross-examination I have quoted previously (8 November 2007, ts 827 - 828). However, in view of the later exchange in cross-examination I have quoted, I am unable to accept that submission.

180 I also note the terms of the brief details document that

The remainder of the site is vacant and the present owners have been advised that the City of Armadale may support a Liquor Store application, although a number of other uses could be considered.

181 In the face of that document, I conclude a representation in those terms was made. However, I am unable to conclude that a stronger one (if that is what the reference to the possibility of putting a liquor store on the vacant portion of the Armadale property was) was made or at least could on the evidence operate after the subsequent supply of the brief details document.

182 I have taken account of Mr Frigger's reference to the representation having been made in the 'second conversation' he had with the second defendant. That would appear to be a reference to the conversation that on his evidence occurred in early March 2003, after he and Mrs Frigger had visited the Armadale property and in which he had asked the second defendant for copies of the lease documents (Exhibit 99, [44]). However, I consider it unlikely any such representation was made at that point, given the character of the conversation the subject of Mr Frigger's evidence then. I consider it much more likely that any statement about a liquor store had occurred in the earlier or first conversation Mr Frigger had had with the second defendant, after Mr Frigger had seen an advertisement about the Armadale property, and before the brief details document was faxed to the Friggers on 24 February 2003. I consider that the likely error Mr Frigger made in that respect was not that of a witness seeking to reconstruct events but of one making a mistake as to the timing of one in a series of events closely related to each other in time and subject-matter.

183 I have noted the evidence from Mr Frigger as to subsequent representations made by the second defendant as to the liquor store.

184 One was at the meeting on 13 March 2003, where on Mr Frigger's evidence the second defendant said it was possible to put a liquor store on the vacant land (Exhibit 99 [68]). The second defendant denies any such representation was made (Exhibit 141 [82]). His evidence was that based on the correspondence received from a Mr Iain Williams, a Mr Kevin Broughton and a Mr Louis Fouché to which I return below he 'believed at the time that appropriate planning approval for such a development might be obtained' (Exhibit 141 [83]). I will there indicate that such a belief in my view could reasonably arise from that correspondence and such a belief so derived is in my view indicated by the brief details document. In the face of that document and the evidence of the second defendant in respect of that belief so derived I do not consider it likely he would have made the stronger statement attributed to him.

185 The other representation was on 21 March 2003 when the Friggers were inspecting documents at the offices of the second defendant. The evidence is that (Exhibit 99 [79]):

Banning also told my wife and I that the local council supported the operation of a liquor store on the Property. However, when I inspected the folder, I did not see any documents relating to the operation of a liquor store on the Property.

186 The second defendant again denies any such representation was made then (Exhibit 141 [98]). Again I consider support for that denial is to be derived from the evidence of the brief details document and the belief of the second defendant as to the matter derived as I have indicated. In addition, there is no evidence Mr Frigger followed the matter up with the second defendant at that time, notwithstanding what he said he did not see in the file at the inspection.

187 It follows I have found the following to have been made out:

1. a representation that each tenant, Northdown and Mr Penrose, conducted a business from the premises they leased that was 'extremely successful', meaning at least that the businesses were financially viable and thus able to meet all of their financial obligations under their leases as when they fell due for discharge (the tenants' businesses representation);
2. a representation that there were '2 secure leases in place' meaning that not only were there enforceable leases in place but there was no reason to doubt the tenants would see out their terms (the secure leases representation);
3. there was misleading or deceptive conduct within the statutes that created the impression that each tenant was punctual and up to date with payment of rent and outgoings, that there was no reason to believe there would be default in those respects in the future under either of the leases, and that there was no dispute between the first defendant and either of the tenants relating to payment of rental or outgoings, at least to the extent the person engaging in the conduct was aware that there were instances of non-payment of amounts due under the leases for outgoings, or of matters giving a reason to believe there would be default in those respects in the future under either of the leases, or of a dispute between the first defendant and either of the tenants relating to payment of rental or outgoings (the impression as to compliance with and no dispute about financial obligations under the leases);
4. a representation that the payments of the tenants were up to date (the tenants' payments representation); and
5. a representation that the vendor of the Armadale property had been advised the City of Armadale might support a liquor store application for the vacant portion of the Armadale property (the representation as to possible support for a liquor store application).

188 I turn now to the issue of whether the representations were false or there was misleading or deceptive conduct.

Were the representations false or was there misleading or deceptive conduct?

189 I consider first the tenants' businesses representation.

190 I have found that this representation was false, both in respect of the business of Mr Penrose and in respect of the business of Northdown. My reasons for those findings are these.

191 As to Mr Penrose, there is the evidence, represented by his affidavit (Exhibit 9) sworn on 9 September 2004 in the action in the Local Court (017065 of 2003) which ultimately became these proceedings, as follows ([(6)] - [(13)]):

(6) During the 18 months from 1 July 2001 to December 2002, I found it difficult to meet the monthly lease payments.

(7) I was unable to and did not pay the Water rates and Council rates for 30 June 2002 and Land taxes for 31 December 2001 and 31 December 2002.

(8) I informed Banning in August 2002 that I was unable to pay the rates and taxes referred to in 7 above.

(9) In February 2003 I obtained information from the Small Business Development Corporation regarding benchmark lease payments for business premises such as mine.

(10) In February and March 2003 I telephoned Banning several times and advised him that I was unable to pay the monthly lease payments of $1892 as my business was not earning a turnover high enough to pay me a wage and pay all the expenses of the business. I advised Banning that according to the Small Business Development Corporation benchmarks the monthly lease payments for my leased premises were much higher than lease payments for similar premises.

(11) During the telephone conversations referred to in paragraph 10 I requested a meeting with Banning to negotiate new lease payments. Banning continually put off meeting with me and eventually refused to make an appointment with me.

(12) Banning requested that I continue running my business and continue paying $1892 per month whilst he would endeavour to sell my business for $40,000.

(13) Banning advised me that he was selling the freehold property over which I had a lease and advised me not to inform any prospective buyers of the freehold that I intended to sell my business as it may affect the sale of the freehold.

192 True it is that the evidence as to inability is at least in part in the form of statements made after the representation was made. However, I consider that the evidence goes to show a condition existing at that time. It does not seem to me that there was any reason on the evidence to believe there had been a sharp reversal of fortune between that date and March 2003

193 The inability referred to in [(7)], [(8)] and [(10)] above derives support from the financial statements for the business of Mr Penrose for the taxation years ending 30 June 2002 and 30 June 2003 (Exhibits 10 - 14). Those financial statements show taxable income and operating profit for the former year of $7,311.00 and $8,457.00 respectively for the former year and of $4,243.00 and $1.00 respectively for the latter year.

194 The evidence in the affidavit of Mr Penrose and in his financial statements was not challenged with him. Mr Penrose impressed me as a truthful witness. I have noted the evidence that Mrs Frigger obtained this affidavit from Mr Penrose in the context of discussions with him for the reduction of his rent. However, I consider that does not impair the credibility of that evidence, in view of my assessment of his truthfulness, and the support for the contents of that affidavit from other sources.

195 However, I have noted the evidence of Mr Penrose (cross-examination 6 November 2007 ts 596) that he had built the business at the Armadale property 'from scratch basically' and that the business 'provided for [his] wife and your children'. This evidence in my view is far from establishing the business was an 'extremely successful' one in the sense I have associated with those words.

196 I have also noted the evidence of Mrs Frigger in her cross-examination (7 November 2007 ts 734 - 735) that as at 6 October 2004 Mr Penrose was 'perfectly capable of paying his rent and outgoings'. I further note her earlier evidence in cross-examination (7 November 2007 ts 734) that both Northdown and Mr Penrose had paid rent to the Friggers, although 'we had to struggle to get Mark Penrose's rent for May'. However, she had also made it clear in that cross-examination that the assessment was as at 6 October 2004 and was based on 'the information that I had' (ts 735), and she had the belief at that time that Mr Penrose's business turnover had 'increased dramatically' and that he could 'easily afford the full rent and outgoings payable under the above lease' (ts 734). I do not see this evidence as giving me a reason to doubt the veracity of Mr Penrose's evidence.

197 I have also noted the evidence of the second defendant (Exhibit 138 [74]), as follows:

Because Mr Penrose paid his rent on time each month and his portion of the outgoings regularly, I had no reason not to believe his business was operating successfully and every reason to believe that it was from Mr Penrose's attendance to the rent payments.

198 However, I consider this evidence was far from a clear statement that outgoings were paid as required under the Penrose lease.

199 It appears to have been put to me, however, that a determination of financial viability could not be made simply on evidence of the kind here, without expert evidence. I disagree. In my view, the success of the business in financial terms at a level sufficient to ensure the tenant was in a position to discharge all of its payment obligations under the Penrose lease is a matter in respect of which a determination can be made on evidence of the kinds I have considered here.

200 As to Northdown, there was material sought to be placed into evidence for the plaintiff in the form of financial statements forming parts of taxation returns for the 'RW Strid Trust' for the financial years ending 30 June 2001 and 30 June 2002 showing substantial losses, of $165,431.00 and $197,972.00, respectively (part of MFI 136).

201 The admissibility of this material was objected to on the basis that the relevance of the financial statements had not been established. This was as the connection between the RW Strid Trust and the business of Northdown had not been established.

202 I disagree that that connection had not been established. As part of the evidence put to me in respect of the financial statements there were bank statements for Northdown for the relevant period (also part of MFI 136). These showed that throughout the company was trustee for the RW Strid Trust and had the same address as the service station address the subject of these proceedings. The taxation returns for the RW Strid Trust showed its 'main business activity' as 'Service Station Operation - Mainly Petrol Retailing', identified the 'business name of the main business' as 'Daves Roadhouse (Armadale)' with its business address as '269 South West Highway Armadale', that is, the address of the Armadale property. Subject to relevance, all of these records are, it seems to me, clearly admissible under Evidence Act 1906 (WA) s 79C(2a). Their relevance having been established, I have decided to overrule the objection and admit the material into evidence.

203 There is also evidence in the form of the letter dated 19 February 2003 from the first defendant to 'The Directors Northdown Enterprises Pty Ltd c/- Dave's Roadhouse 269 South Western Highway Armadale WA 6112', with an endorsement 'CC Mark Penrose' (Exhibit 24). That letter refers to complaints from 'Penrose Automotive' about certain water damage to 'the building', and adding that (as I previously indicated)

We ... take this opportunity to advise both of you that your failure to pay the overdue and current rates and taxes as presented, is about to result in legal action, with all and any costs directed to yourselves.

204 There is also evidence in the form of a facsimile of 24 February 2003 from the second defendant to Northdown showing as its subject 'Rates Owing - 269 South West Highway, Armadale' (Exhibit 158) and stating

Attached is a letter from the City of Armadale regarding the outstanding rates and charges on the above property.

The lease is precise and you are aware that you are responsible for 50% of the outgoings. Consequently, unless $3,706.07 is paid by the 03/03/2003, legal action will be instituted without further notice.

You may pay the sum outstanding direct to the City of Armadale, if you so wish.

205 Further, there is evidence in the form of the letter sent by fax dated 25 March 2003 (Exhibit 28 from the first defendant to Northdown (at the same address as for the letter dated 19 February 2003 headed 'Outstanding Shire Rates' which is Exhibit 24) and reading:

Despite your assurances that the above would be paid, we have been advised that they have not, consequently if by the close of business on the 26/03/2003 the Shire advises those rates are still outstanding, a summons will be issued and served on the 27/03/2003.

206 In the event, on 2 May 2003, proceedings were commenced by the first defendant against Northdown for payment of outgoings (Exhibit 138, [33]).

207 It is true that on 28 July 2003 at a pre-trial conference the action was settled and the first defendant was paid the sum of $4,000 (Exhibit 138, [34]). Further, as I will indicate below, there was a dispute between Northdown and the first defendant as to the extent of any obligation of the former to the latter in respect of those outgoings.

208 However, I do not consider that settlement indicates that it was simply the dispute that prevented payment. I note for this purpose the financial statements previously referred to, the fact that on 10 July 2003 Northdown had closed the business at the Armadale property and vacated the premises (Exhibit 1, 'ACTF48') and the fact that on 23 March 2004 a liquidator of Northdown was appointed in COR 26 of 2004 (Exhibit 188). I consider I should infer from this material in accordance with the civil standard of proof that there were financial difficulties under which Northdown was labouring at 24 February 2003 which were contributing to its non-payment of rates at that time.

209 I have noted the second defendant's evidence (Exhibit 138, [73]) as follows:

Because Mr and Mrs Strid paid the rent on time each month and paid their portion of the outgoings regularly, I had no reason not to believe their business was operating successfully and every reason to believe that it was from the attendance by the [sic] Mr and Mrs Strid to the rent payments.

210 However, as with the corresponding evidence as to Mr Penrose, I consider this evidence was far from a clear statement that outgoings were paid as required under the Northdown lease. Also, in my view this does not meet the evidence as to the non-payment of rates to which I have referred.

211 I turn then to the issue of the falsity of the secure leases representation.

212 I have found this representation was also false. My reasons for that conclusion are these.

213 I begin by noting that it appeared not to be in contest before me that the Northdown lease and the Penrose lease were fully enforceable in accordance with their terms. Indeed, the first defendant took enforcement action on the former, and the plaintiff took enforcement proceedings on the latter. There is no evidence the plaintiff ever suggested that either of the leases was not so enforceable.

214 However, I consider the evidence establishes, both in respect of the Northdown lease and the Penrose lease, that there was reason to doubt the tenants would see out their terms.

215 As to Mr Penrose, there is the evidence previously referred to as to the financial viability of his business such as to meet his payment obligations under the leases as they fell due. I further note the evidence that not long after settlement of the acquisition of the Armadale property Mr Penrose contacted the Friggers and sought to renegotiate the rental under the Penrose lease (Exhibit 1, [113] - [117]; Exhibit 99 [99] - [104]). I consider that evidence provides the reason to doubt I have referred to.

216 I have noted there is also evidence of a dispute concerning the payment due from Mr Penrose in respect of the most recent assessment of rates on the Armadale property (Exhibit 25, facsimile of 25 February 2003 Mark Penrose to the first defendant, attention second defendant). The existence of such a dispute at the time of the execution of the contracts is also indicated by the testimony of the second defendant I have previously quoted from (cross-examination, 3 December 2007, ts 1082 - 1083) as well as other such evidence (cross-examination 5 December 2007 ts 1137). The second defendant characterised the dispute as one not with him but with the City of Armadale, as to the increases in rates under their most recent assessment (cross-examination 3 December 2007 ts 1009). I consider that characterisation does not affect the present point. However, the extent to which that threatened the future of Mr Penrose's tenancy is not clear from that evidence, or from other evidence. I do not go further into it.

217 As to Northdown, there is also the evidence previously referred to as to the financial viability of its business such as to meet its payment obligations under the leases as they fell due. I consider that evidence provides the reason to doubt I have referred to.

218 I further note the evidence as to a dispute between Northdown and the first defendant as to an obligation on the latter to provide a 'restaurant extension' or café at the service station at the Armadale property (Exhibit 156, facsimile dated 3 March 2003 from Northdown to the first defendant, attention second defendant). This appears to be a dispute extending back to at least 3 October 2001 (Exhibit 142, facsimile dated 3 October 2001 from the first defendant to Northdown). This dispute appears at times to have been part of some acrimonious exchanges between the second defendant and the Strids and there are indications from the Strids that Northdown was of the view that the lack of the extension might contribute to the closing down of the site (Exhibit 154, facsimile of 5 February 2002 from Northdown to the solicitor for the first defendant). However, given the duration of the dispute, and the continuation of the service station at the site I am not satisfied the dispute as to the restaurant extension provided a reason to doubt that Northdown would see out its lease.

219 I further note that there is also evidence of the same dispute concerning the payment due from Northdown for rates due from it in respect of the most recent assessment of rates on the Armadale property as that concerning the payment due from Mr Penrose on that account (Exhibit 164 facsimile of 3 April 2003 from the second defendant to the first defendant's solicitor; and cross-examination of second defendant, 3 December 2007, ts 1082 - 1083). However, there is also evidence that following an instruction by the second defendant to send a 'strong letter in keeping with our correspondence in the hope that they will pay it' (Exhibit 164) the first defendant's solicitor sent a letter dated 4 April 2003 to Northdown (Exhibit 165) in which Northdown's attention is drawn to 'the default provisions of the lease which give our client upon an un-remedied breach a right to retake possession of the premises' and the letter concludes:

Unless the default is remedied by close of business 25 April 2003 our client will take such steps as are lawfully open to it to take and will do so without further notice to you.

220 The terms of the latter letter may have simply been, as the evidence of the second defendant indicates (cross-examination, 5 December 2003 ts 1128), an effort to 'clear these areas up' before settlement of the acquisition of the Armadale property. I note that this letter came after the contracts had been executed (on 13 March 2003) and a notice that they were unconditional had been signed for the plaintiff (on 2 April 2003). However, the letters taken together in my view indicate that the matter was capable of being the subject of a credible threat to terminate the Northdown lease. On that basis I consider that evidence provides the reason to doubt I have referred to.

221 I should note that I have reached my conclusion as to the secure leases representation without resort to TP Act s 51A or FT Act s 9.

(1) For the purposes of this Division, where a corporation makes a representation with respect to any future matter (including the doing of, or the refusing to do, any act) and the corporation does not have reasonable grounds for making the representation, the representation shall be taken to be misleading.

(2) For the purposes of the application of subsection (1) in relation to a proceeding concerning a representation made by a corporation with respect to any future matter, the corporation shall, unless it adduces evidence to the contrary, be deemed not have had reasonable grounds for making the representation.

(3) Subsection (1) shall be deemed not to limit by implication the meaning of a reference in this Division to a misleading representation, a representation that is misleading in a material particular or conduct that is misleading or is likely or liable to mislead.

(1) For the purposes of this Part, where a person makes a representation with respect to any future matter (including the doing of, or the refusing to do, any act) and the person does not have reasonable grounds for making the representation, the representation shall be taken to be misleading.

(2) The onus of establishing that a person had reasonable grounds for making a representation referred to in subsection (1) is on the person.

(3) Subsection (1) shall not be taken to limit by implication the meaning of a reference in this Part to a misleading representation, a representation that is misleading in a material particular or conduct that is misleading or is likely or liable to mislead.

224 I previously noted that the secure leases representation included a representation as to future matter. See Thomson, Miller's Annotated Trade Practices Act (at 23 June 2008) [1.51A.15] and authorities there cited. To the extent that representation does include a representation as to a future matter, these provisions would apply to it.

225 It will be noted the provisions are not in the same terms. In particular there is a doubt that it has been suggested arises in respect of TP Act s 51(2) whether or not it only establishes an evidentiary onus for a defendant to meet. See Miller [1.51A.37]. There appears to be no authority addressing the point in this state, although the matter appears to be noted in Hatt v Magro [2007] WASCA 124; (2007) 34 WAR 256 [36], [37] (Steytler P), [63] (Wheeler JA) and [64] (Pullin JA). However, as that source indicates the weight of authority appears to support the position, made clear by FT Act s 9(2), that the final onus is on a defendant to establish reasonable grounds.

226 It was not altogether clear to me what grounds, if any, were relied upon by the defendants for the purpose of the statutes. However, in any event it seems to me the awareness by the second defendant of the matters that I have determined gave rise to the reason to doubt it would make it impossible to discharge the burden of proof in this case.

227 In the event, it is not necessary for me to reach a final view on the application of TP Act s 51A and FT Act s 9 in this case.

228 I consider now the impression as to compliance with and no dispute about financial obligations under the leases. On the evidence I previously reviewed in this section of my reasons, and my findings on that evidence, I consider there was awareness by the second defendant of non-payment of outgoings by both tenants, and disputes by them as to those obligations, which would make that impression a misleading or deceptive one. The fact that the disputes might not provide a reason to consider the tenant concerned would not see out their lease does not in the context of the present representation detract from that awareness giving rise to that misleading or deceptive impression. Indeed, I note for this purpose the evidence of the second defendant, previously quoted (cross-examination, 3 December 2007, ts 1082 - 1083) that he had raised the matter of the disputes as to rates with the Friggers on 13 March 2003. While I found that he did not in fact do so then I consider his evidence indicates he saw the matter as one relevant to them.

229 I consider next the tenants' payments representation. On the evidence I previously reviewed in this section of my reasons, and my findings on that evidence, I consider this representation was false. There was and had been non-payment of certain outgoings by both of the tenants.

230 I consider next the representation as to possible support for a liquor store application. I consider that it has not been established this representation was false. The following are my reasons for this conclusion.

231 There was evidence in the form of a witness statement with its attachment of Mr Louis Fouché who in 2000 was employed as Planning Services Manager for the City of Armadale (Exhibit 133) that the establishment of a retail liquor outlet at the Armadale property would require an 'Amendment to the Town Planning Scheme No 2'. The attachment, a letter dated 31 October 2000 from the Manager to the second defendant, provides information as to what would be required from the second defendant to make application for the amendment, advises 'it may be appropriate to engage a Town Planning consultant' to prepare the amendment, and confirms that the information in the letter 'does not provide any confirmation that approval will be granted for any of the uses'.

232 There was also evidence in the form of a witness statement (Exhibit 135) of Iain Williams, who in 2001 had been employed as Project Manager and Building Designer by Esam Williams Commercial Planners and Design Consultants, attaching a letter dated 11 June 2001 from Esam Williams signed by Mr Williams to the first defendant, attention the second defendant. In that letter the following appears

... following discussion with the Manager of Planning of the City of Armadale, Mr Louis Souche [sic] has said that 'there is a reasonable likelihood of the application being approved, with no guarantee of approval'.

233 There is also a witness statement of Kevin Broughton, a principal of Broughton Planning in 2001 (Exhibit 134), attaching a letter dated 8 October 2001 to Banning Holdings, at the same address as that for the first defendant in the Esam Williams letter, from Broughton Planning and signed by Mr Broughton. In that letter there is a statement that a rezoning of the land to 'General Industry' with an 'additional use provision which will allow a liquor store to be approved' would be one among several forms of rezoning that would 'allow a liquor store to be approved'. Immediately following this statement the following appears:

Discussions held between Iain Williams (of Esam Williams) and City Officers indicate that a rezoning of the land to 'Shopping/Commercial' [another such form of rezoning] will not be supported however a rezoning to 'General Industry' will.

234 I accept as put to me for the plaintiff that none of the evidence from Mr Fouché indicates that the City of Armadale would or might support a liquor store application. However, the representation in question (in the brief details document) was that the 'present owners have been advised that the City of Armadale may support a Liquor Store application' (emphasis added). That there had been such advice in my view emerges clearly from the letters from Esam Williams and Broughton Planners referred to. There is nothing in the evidence from Mr Fouché inconsistent with that advice.

235 Thus, I have concluded that the tenants' businesses representation, the secure leases representation and the tenants' payments representation were all false.

236 In addition, I have concluded that there was misleading or deceptive conduct within the statutes that created the impression that each tenant was punctual and up to date with payment of rent and outgoings, that there was no reason to believe there would be default in those respects in the future under either of the leases, and that there was no dispute between the first defendant and either of the tenants relating to payment of rental or outgoings.

237 I turn now to questions of fault in relation to those matters.

238 Before doing so, I should note that, of course, no question of fault arises to the extent the representation or conduct falls within the statutes as conduct that is misleading or deceptive. See Miller [1.52.35] and authorities cited there.

239 No argument was directed to me as to whether or not there was a duty of care owed by the defendants to the plaintiff in respect of the representations or misleading conduct, which I assume for this purpose to be caught at common law. However, I consider there was such a duty in this case, so owed. There was here sufficiently pleaded and proved a request for information, from some one who could reasonably be expected to have it by virtue of their special access to it, reliance on whom was reasonable (as I will shortly explain), and who was some one who had a financial interest in the transaction. See Halsbury's Laws of Australia [300-10].

240 As to breach of the duty, the second defendant knew at the time of the representations I have found to be false, and the conduct was engaged in which I have found to be misleading, that he lacked reasonable grounds to believe the representations were true or the conduct was not misleading in respect of the secure leases representation and tenants' payments representation, the conduct creating the impression that each tenant was punctual and up to date with payment of rent and outgoings, that there was no reason to believe there would be default in those respects in the future under either of the leases, and that there was no dispute between the first defendant and either of the tenants relating to payment of rental or outgoings.

241 In respect of the issue of lack of reasonable grounds to believe the tenants' business representation, however, the matter is less clear, given what the second defendant testified he gathered as to the financial condition of the tenants from their payment record. I have referred to that evidence of his earlier.

242 At the same time in respect of Northdown I note the evidence in the form of the facsimile of 5 February 2002 from Northdown to the solicitor for the first defendant (Exhibit 154) I previously referred to in connection with the dispute as to the restaurant extension. That facsimile made a number of references to the financial condition of Northdown indicating a potential for future difficulty in meeting the company's obligations under the Northdown lease, most notably 'we have no money as the establishment of the business at this location has consumed what little we had', '[t]he business cannot support any additional costs and any costs to defend these ridiculous charges from Martin Banning will make the business not viable' and '[t]oday, the service station business is very marginal, especially for independents'. The second defendant in cross-examination stated he could not recall seeing the letter, but accepted he 'probably' had seen it, and that his solicitor at that time would send letters received out to the second defendant, or the second defendant would come in to look at them (3 December 2007 ts 1022). He added that he had dismissed the matter at the time as what he would expect of tenants seeking a better arrangement, and added that he was guided by their history of paying the rent (ts 1022 - 1024). However, I note in that respect there was the subsequent history of demand for payment in respect of rates to which I have earlier referred.

243 In respect of Mr Penrose, there is the evidence in the form of the letter dated 2 August 2002 from Northdown to the first defendant, attention second defendant (Exhibit 157) in which the following appears:

We tried to arrange with Penrose to pay the water rates direct as a joint [sic] as per your instruction but Mark informed us that Penrose do not have the money to pay them.

244 In cross-examination the second defendant stated he did not remember receiving this letter (3 December 2007 ts 1052). However, as was put to him, there appears to have been evidence from him that the letter had been held in his office (Exhibit 139 annexure 'MPB29'; and 3 December 2007 ts 1052 - 1053). The letter was received as an exhibit subject to objection as to it being received as evidence of the truth of its contents. However, I do not consider the objection meets the present point, of what I should infer the second defendant knew as a reason not to believe truth of the tenants' business representation.

245 There is evidence that the second defendant did not trust matter from Northdown: see the letter dated 21 December 2002 from the first defendant signed by the second defendant to Mr Strid of Northdown (Exhibit 147), and the acrimonious correspondence between the first defendant and Northdown previously referred to. However, there is no evidence of the second defendant making any further inquiry into the matter.

246 In the face of the evidence I have referred to, I consider that the second defendant had no reasonable grounds to make the tenant's business representation he did.

247 This would in my view satisfy the element of fault for the purposes of the claim for damages for negligent misstatement against both the second defendant and (as I will explain in the next section of my reasons) the first defendant for which he was acting.

248 This is the issue of the fault required for the tort of deceit. There is no question but that if the element is met then (there being in my view, from the nature of the representations I have found to be false and the conduct I have found to be misleading, in the context in which they arose, an intention the plaintiff rely on those matters), subject to the plaintiff having suffered loss thereby, there is liability for that tort. See Fleming 694 - 702.

249 In my view it does not clearly follow from what I have found for the purposes of negligence that it has been established the second defendant was aware the relevant representations were untrue or the relevant conduct misleading or was at the least reckless as to the truth or falsity of those representations and as to the misleadingness or lack of it of the relevant conduct. The present element appears to go to a lack of honest belief in the truth of what was represented, or the lack of misleadingness of the relevant conduct. See Derry v Peek [1889] UKHL 1; (1889) 14 App Cas 337, 361 (Lord Herschell); and Commonwealth v Murray (1988) Aust Torts Reports 80-207; BC8801861, 6 - 8 (Priestley JA), 1 (Kirby P) and 1 (Samuels JA). However, no argument was addressed to me on this point by the defendants.

250 I note the authorities that indicate a lack of reasonable grounds is at best a guide to a lack of honest belief in the matters referred to. See Halsbury's Laws of Australia [110-5140] and authorities cited in n 7. In addition, I must bear in mind the character of the imputation of this element of fault and I should not lightly find the second defendant has been guilty of such a lack of honest belief. See Halsbury [110-5155] and authorities cited in n 3.

251 Further, the question is not whether there was a lack of honest belief in the truth of the representation or the lack of misleadingness of the conduct on an objective consideration of the sense of the representation or the conduct. Rather it is whether or not a defendant honestly believed the representation to be true or the conduct not to be misleading in the sense in which he intended them: see Akerhielm v De Mare [1959] AC 789, 805 - 806 (PC), quoted with approval in Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563, 578 - 579 (Brennan, Deane, Gaudron and McHugh JJ); and see Halsbury [110-5145] and authorities there cited.

252 The second defendant in this case testified as I have indicated that he considered the fact the tenants had paid their rentals and their outgoings as they had paid them showed he had not made misrepresentations.

253 I have concluded, not without some difficulty, that it has not been established that the meaning placed on the tenants' business representation and the secure leases representation is 'so far removed from the sense in which it would be understood by any reasonable person as to make it impossible to hold that the defendant honestly understood the representation to bear the meaning claimed by him and honestly believed it in that sense to be true': Akerhielm 805. While I do not consider the representations to be ambiguous in the respects that made them false or misleading, I consider that to be on an objective view. True it is that on the evidence in respect of those representations the second defendant was aware of and adverted to the terms of the representations he was making, such that in my view the issue addressed in Krakowski 580 - 581 (Brennan, Deane, Gaudron and McHugh JJ) did not arise in this case. However, I do not consider it has been proved that he lacked an honest belief in the truth of those representations, in view of the terms of them as I have found those terms to be.

254 However, I consider the matter is otherwise in respect of the tenants' payments representation, as well as the lack of misleadingness in the relevant conduct that created the impression that each tenant was punctual and up to date with payment of rent and outgoings, that there was no reason to believe there would be default in those respects in the future under either of the leases, and that there was no dispute between the first defendant and either of the tenants relating to payment of rental or outgoings. There are direct contradictions between what he knew and the plain terms of the representation and the character of the conduct. I have therefore concluded in respect of that representation and that conduct the meaning relied upon by the second defendant is 'so far removed from the sense in which it would be understood by any reasonable person as to make it impossible to hold that the defendant honestly understood the representation to bear the meaning claimed by him and honestly believed it in that sense to be true'.

255 As I understand the authorities, it is sufficient to satisfy the fault requirement for liability in deceit to find the lack of an honest belief as I have just done. I do not have to go further to determine whether the form of that lack was an awareness of untruth or misleadingness or recklessness as to such matters. However, I will return to this matter below, in respect of the matter of the liability of the second defendant under the TP Act.

256 Further, it is not necessary for me at this stage to address whether or not there was an intention to cheat or injure as by causing a person to transact on the basis of the representation or conduct. Such an intention is not required for liability in deceit. See Krakowski 579 - 581 (Brennan, Deane, Gaudron and McHugh JJ). However, later in these reasons I will need to return to this matter, for what bearing it might have on the award of exemplary or aggravated damages in this case.

257 It appears not to have been in dispute that, if the false representations and misleading or deceptive conduct were made out, the maker of the representations and the person who engaged in the relevant conduct, was the second defendant, acting for the first defendant. He was of course the sole director of the first defendant. On that evidence, and the evidence of his identifying himself with the business of the first defendant to which I earlier referred, I consider it to have been shown he was acting for the first defendant throughout within the scope of his actual authority.

258 Thus, on my conclusions as to negligence and awareness, and although no argument was directed to me on this point, it seems to me to follow that, subject to my conclusions as to the remaining elements of liability in the sections of my reasons after this one, both the first and the second defendant have been shown to be liable for the representations and the conduct engaged both at common law and for the purposes of FT Act s 10: see Houghton v Arms [2006] HCA 59; (2006) 225 CLR 553 [29] - [42] (Gleeson CJ, Hayne, Gummow, Heydon and Crennan JJ); FT Act s 79 read with s 82(2).

259 Further, it seems to me to follow that, on the same proviso, the first defendant was liable for the representations and the misleading or deceptive conduct under the TP Act: see TP Act s 82 read with s 84(2).

260 As to the liability of the second defendant under the TP Act, liability under TP Act s 82, the provision principally relied upon by the plaintiff, depends upon a finding that he was 'involved in the contravention' of s 52, where 'involved' is to be understood in terms of s 75B. A person is not 'involved' in a contravention if that person is unaware of 'the essential facts or matters which must be proved to establish the contravention': Yorke v Lucas (1983) 49 ALR 672, 680 - 682 (Full Federal Court: Bowen CJ, Lockhart and Beaumont JJ) (the quotation is from 682). That in turn requires that the second defendant have been aware that the relevant representations were false and that the relevant conduct was misleading.

261 In my view on the findings I made in the previous section of these reasons, I have concluded that the second defendant was aware of the contravention only in respect of the tenants' payments representation and the misleading impression I have found, and thus was involved in that contravention only. This is because, on reviewing the evidence in relation to that representation and that conduct, I have concluded that the second defendant did not simply lack an honest belief in the truth of the representation and the lack of misleadingness of the conduct. He was aware that the first was untrue and the second was misleading. I have so concluded from the terms of the representation and the nature of the conduct, and what he knew in relation to the subject matter of both.

262 It follows the second defendant is also on the same proviso liable under TP Act s 82 for damages in respect of that representation and that conduct.

263 It is of course not sufficient that there were false representations or misleading or deceptive conduct, either at common law or under the statutes. There must also be (apart from the other elements I have referred to) loss suffered as a consequence of those representations or that conduct. In this case that raises two issues. The first is dealt with in this section. It is whether or not the plaintiff relied upon the representations and conduct or any of them in entering into the acquisition of the Armadale property. The second is dealt with in the following section. That is whether or not any loss from so doing for which compensation is due at common law or under the statutes has been made out, and the related question, of how to measure that compensation.

264 I consider there is clear evidence from them both that Mrs Frigger and Mr Frigger would not have entered into the acquisition of the Armadale property if they had known the truth or what made the conduct misleading (respectively, Exhibit 1 [188] - [191]; and Exhibit 99 [155], [156]). This is supported by the inference that I would draw from the nature of the representations and the conduct in question in the context of the evidence I have indicated I accepted as to the importance of the subject-matters to the Friggers: see Gould v Vaggelas [1984] HCA 68; (1985) 157 CLR 215, 236 (Wilson J) and 250 - 251 (Brennan J).

265 However, in this case it appears to have been put me that by reason of the disclosure made to the Friggers in the inspection of documents at the office of the second defendant on 21 March 2003 there was no reliance on the representations or conduct because the Friggers had actual knowledge of the true facts or it showed that they had not relied on the representations or conduct in entering into the acquisition of the acquisition of the Armadale property.

266 I put aside the evidence as to disclosure at the meeting on 13 March 2003, which I have rejected for the reasons I previously gave.

267 I have noted that the disclosure relied upon came after the entry into the acquisition of the Armadale property. That, however, would not prevent the argument being made that by reason of what the Friggers learnt then they did not take an opportunity thereby presented to avoid the acquisition, which was thus not caused by the representations or conduct: see Townsend [68], [74] and [75] (Buss JA). Further, the failure so to act with such knowledge may also go to show that the entry into the acquisition was not in reliance on the representations or conduct, in the sense of it being one of the causes, if not the sole cause, of the loss or damage suffered thereby: Townsend [98] - [101].

268 There are thus two issues presented. One is whether or not there was disclosure of information which would have indicated the truth or the misleadingness. The second issue is whether the Friggers as a result became aware of the truth and the misleadingness.

269 The plaintiff put to me that even if both issues are resolved in favour of the defendant, the representations and conduct could continue to be an 'operative inducement' and would in this case. I was referred to the testimony of the second defendant that he regarded what he knew as consistent with the tenants' businesses being 'successful'. On the face of it there would be difficulty accepting that proposition, at least in that form, in view of Gould v Vaggelas 236 (Wilson J), where his Honour said reliance would be rebutted where the representee 'was possessed of actual knowledge of the true facts and knew them to be true'. However, it may be that the proposition being put to me was that the Friggers would not from that knowledge know the facts to be true, in view of what the second defendant was able to believe. I would not readily come to that conclusion, given the terms of the representations and the nature of the conduct. However, in view of my findings in this section of my reasons I do not consider I have to reach a final view on the matter.

270 That is because I have concluded the disclosure was not made to the Friggers on 21 March 2003. My reasons for that conclusion are these.

271 The evidence of the Friggers was that at the inspection on 21 March 2003 a manila 'folder' was presented to them as containing the only documents relating to the Armadale property, and the contents of that folder were limited to copies of invoices that the first defendant had issued to the two tenants and copies of drawings of the property showing the buildings and the location of the pipes and tanks (Exhibit 1 [72], [73], [180] - [184]; and Exhibit 99, [77], [80] and [149] - [153]). It will be recalled that the land contract and the improvements contract both contained a condition calling for the vendor to provide 'all available documentation to purchaser including building & tanks prior to settlement'. I have previously found that the second defendant had delivered to the Friggers' home the Northdown lease and the Penrose lease copies of tenant statement/tax invoices and bank statements. It is not clear from the evidence whether the invoices were further copies of some of the same documents or not.

272 The Friggers were tested in cross-examination on their evidence as to the contents of the folder.

273 Mrs Frigger maintained (cross-examination 8 November 2007 ts 790-791) that the folder did not include other documents put to her, being the letter dated 19 February 2003 from the first defendant to Northdown (Exhibit 24), the letter dated 24 February 2003 from the first defendant to Northdown (Exhibit 158), the facsimile of 25 February 2003 from Mr Penrose to the first defendant attention the second defendant (Exhibit 25), and a facsimile of 27 February 2003 from Mr Penrose to the first defendant attention the second defendant (Exhibit 1, annexure ACTF93).

274 I have previously considered each of those documents except for the last. It reads:

Dear Mr Banning,

Re: Rates Owing - 269 South West Hwy

As stated by you on my previous fax, I'm fully aware that I have received copies of the total amount owing on the current rates. Due to the significant increase from the previous year, I believe I'm entitled to a statement showing a full breakdown of this amount to achieve clarification of this amount. When I receive this statement I would be more than happy to arrange payment of this amount.

275 It appears to be common ground that the reference to matter 'stated by you on my previous fax' is a handwritten annotation by the second defendant on the facsimile of 25 February 2003 from Mr Penrose to the first defendant (Exhibit 25) reading (as shown on Exhibit 1, annexure 'ACTF92') as follows:

Both of you have had copies of every outgoing you are due to pay you can't stall any longer our advices stand

276 Mr Frigger was also taken to the four documents to which Mrs Frigger was taken in her cross-examination just described, and maintained they were not in the folder, although he conceded his focus at the inspection had been on the drawings (8 November 2007, ts 831 and 835 - 836).

277 He was also questioned as to the thickness of the file, and said this (cross-examination 8 November 2007 ts 837):

The file, Mr Frigger, I put it to you, that was presented to you at Mr Banning's house was a file of about 100 millimetres, 150 millimetres thick?---No, it was not 150 millimetres thick. It was only 10 or 15 millimetres, something like that, very small file. I was surprised by myself, and then we asked for the drawings and then we got the drawings eventually.

Why were you surprised, Mr Frigger?---Yeah, because I expected the drawings there as well. He didn't deliver them straight away.

278 The second defendant for his part gave evidence that he had 'no reason not to believe' that at the inspection on 21 March 2003 the file made available to the Friggers contained rather more documents, including correspondence between the first defendant and the tenants, solicitors correspondence 'including copy correspondence between my solicitors and the Strids, ... the leases and various invoices including rates and water rates notices' (Exhibit 138, his witness statement of 30 October 2007, [65]). His evidence was also that 'as far as I am aware all documents except the bank statements relating to the Property were on the file' (Exhibit 138 [63]).

279 He also gave evidence (Exhibit 139, his witness statement of 27 November 2007, [20] and [27] and annexure MPB29) in rather more detailed form as to the contents of the file. The list of documents comprised (apart from two sets of 'Bundle Tenant Statement/Tax Invoice') items for which dates were indicated of June 1997 to 19 March 2003. More than 140 items are listed. Subsequently at trial a bundle of copies of the documents the second defendant testified were so listed was admitted as Exhibit 140 (referred to in Exhibit 139 [28] as annexure MPB30 but not annexed). The bundle is a very thick one.

280 Included in the list in MPB29 and in Exhibit 140 are the four documents with respect to which Mrs Frigger and Mr Frigger were cross examined.

281 Further, in cross-examination there is the following exchange (3 December 2007, ts 990 - 991):

Yes, starting from a few pages back. It has got a heading List of Documents Held on 1 and Second Defendant's File March 2007?---MPB29, yes.

SIMMONDS J: Yes, I see?---That's my evidence.

MENDELOW, MR: Yes, and those are all the documents that are relevant to this - that relate to this property?---That I can - yes.

You can what?---I said yes, they are.

And how certain are you of that?---As certain as I can be, very certain.

Does that mean that you actually specifically recall that to be the position?---That means that I recall - yes, I do. I've been through them before.

And your recollection is absolutely clear on that, is it?

---As clear as it can be, yes.

In paragraph 28 of exhibit 139 you would agree with me that you're stating in no uncertain terms that those documents were then but are not now in your possession (indistinct) the file which was made available to the Friggers on 21 March 2003?---Which page was that on, sorry?

Page 6 of exhibit 139. It's paragraph 28?---Sorry?

Paragraph 28?---Yes.

You would agree that that tends to show that you're fairly certain of that, aren't you?---I'm fairly certain of that, yes.

282 A short while later in that cross-examination (3 December 2007 ts 992), when the second defendant had pressed on him that he was in no position to recall the inclusion of all of the documents on the file he referred to in his first witness statement (Exhibit 138 [65]) he said:

I sat in the boardroom for an hour with the Friggers going through just about every document on the file and, as I said to you before, I've been through these documents here, listed here, and as far as I'm concerned every one of them was there.

283 However, apart from the varying terms in which the second defendant stated his recollection of the matter, I note that he conceded in his cross-examination a number of documents relating to the Armadale property were not included (3 December 2007 ts 990 - 1053). They were not listed among the documents listed as included in his evidence in chief (Exhibit 139, annexure 'MPB29'). Those documents were communications from Northdown to the solicitors of the first defendant or to the first defendant and from the first defendant or its solicitor to Northdown bearing dates from 3 October 2001 to 2 August 2002 (Exhibits 142, 144 - 155 and 157). These documents included ones indicating difficult relations between the tenants and the first defendant in which possible legal proceedings were referred to (for example, Exhibits 150 and 151) as well as repeated (if not strong) references by Northdown to financial difficulties or similar in its business (for example, Exhibits 146, 152) and a reference to a payment problem for the business of Mr Penrose (Exhibit 157).

284 The second defendant testified that documents were not included that went to matters going back 'years before' and added 'everything else since that time was on the file' (ts 996), although as emerged subsequently this was not correct. He later testified that documents were not included because they were no longer 'relevant' (ts 1001), referring to the matter of the restaurant extension as a dispute that came to 'die', at least so far as he was concerned, in 2001 (ts 999). He later added that documents were not included that were in his solicitor's office (ts 1012). He testified he would not agree he 'didn't accept everything that the Strids said' (ts 1004), although there had been difficulties in the 'early days' of the Northdown lease (ts 1004, referring to Exhibit 147), difficulties which had all been resolved. The last reference as to resolution of difficulties is in my view impossible to square with the evidence I have previously considered on relations between Northdown and the first defendant over the period of the Northdown lease, and the dispute as to the rate of the City of Armadale.

285 I consider this evidence to be most unconvincing as to what was and was not on the file. I consider that the second defendant has shown he was in fact unable to recall with any precision what was on the file.

286 Further, if the four documents put to the Friggers as contained in the file had been there, it seems to me highly unlikely in view of my earlier findings as to the importance to them of matters of the business of and relations with the tenants that they would not have raised the matters there with the second defendant. There is no evidence that they did, nor any reason to consider that they had by then ceased to attach any importance to the matter. Indeed the contrary is in my view shown by the plaintiff's letter dated 6 May 2003 to the second defendant as director of the first defendant (part of Exhibit 168) referring to matters they had discovered as to the serving of a summons for unpaid rates and taxes in respect of the 'BP Service Station' and discussions they allege had occurred between the second defendant and Mr Penrose concerning his rent and his inability to pay it.

287 I consider that I should put the second defendant's evidence on the contents of the file or folder to one side.

288 However, there is also the evidence of the secretary to the second defendant, Ms Marklew. She was at all material times a person who worked for the second defendant as his receptionist and secretary. Her evidence was that (Exhibit 182 [4]) for 'much of the time' during 2002 and 2003 she had the

oversight of rental properties and their tenancies owned by Mr Banning or companies associated with Mr Banning, in that I was responsible for making the sure the rent and outgoings were paid or collected on time, sending out statements and so on.

289 Much was made before me by counsel for the plaintiff of her use of 'oversight', and I was invited to conclude she did not understand what the term involved and was using language put to her by the second defendant. However, I consider it is quite clear from her evidence what she understood it to mean for her, whether or not the word was correctly used in that context. Nor would I conclude from that use that she had contrived her evidence to support that of the second defendant.

290 Her evidence also was that in about March 2003 she made copies of 'both leases over the Property and of all the rental and bank statements concerning the two tenancies' from the 'file relating to the Property' (Exhibit 182 witness statement 29 October 2007 [10]). I would infer this was for the purpose of the delivery of those documents to the home of the Friggers I have earlier considered.

291 Her evidence is further that on 21 March 2003 at the second defendant's request she took 'the file, a manila folder, from the filing cabinet in Mr Banning's room' and put it on the boardroom table for inspection by the Friggers (Exhibit 182 par 14). She refers there to the file as one that had 'become very thick and really too large for the manila folder'.

292 Ms Marklew did not give evidence as to the contents of the file as it was put to the Friggers, however. She did testify that she typed and proof read letters sent to the tenant, including the letter dated 19 February 2003 to Northdown (Exhibit 24) I have previously considered, and she further testified that 'letters that are received from the tenants by fax or by mail I do not read them. I just file them into the cabinet' (cross-examination 10 December 2007 ts 1224), adding that (ts 1226 - 1227):

Did that file - you say you were responsible for keeping that file. Is that right?---I was responsible for filing into that file which was quite numerous. Documents, rates and taxes and a lot of correspondence and things like that were put in that file.

How many files were there in Mr Banning's office as at ?---Regarding 269

At March 2003?---Regarding 269 South

No, generally?---Generally how many files in his filing cabinet?

Yes?---Approximately maybe up to about 130-odd files.

Did you used to do the filing for Mr Banning?---I did all the filing for Mr Banning, that's correct.

You didn't know the thickness of each file, did you, of 130 files?---I didn't know every thickness of each file, no, I did not.

The file that you say you placed on the table for the Friggers to read, did that contain all of the documents relating to this property?---Everything relating to the property except for the bank statements were in a bank statement file and if Mr Penrose did any servicing on Mr Banning's vehicles, that was on the vehicle file.

Right?---But the leases and all outgoings were all on that file, and correspondence.

293 She admitted, however, that the letter of 19 February 2003 meant her statement in her evidence in chief (Exhibit 182 [7]) that 'during the period of my supervision of the property both tenants paid their rent each month on time and also did so with the outgoings' was 'not really worded correctly' (ts 1225).

294 She also testified as follows (cross-examination 10 December 2007 ts 1226):

It's correct to say, is it not, that you never opened the file to see what was in it prior to providing it to the Friggers on that day?---No. No, I just

So you don't know ?---I just pulled out

You don't really know what was on the file because you didn't read it through before you put it to ?---No.

- - - them on that day?---No.

295 She further testified that two documents were on the file, being the letter dated 30 January 2002 from the first defendant to Northdown (Exhibit 150) and a letter dated 29 January 2002 from the first defendant to Mary Strid (Exhibit 183), neither of which was referred to on the second defendant's list of what was on the file provided to the Friggers (Exhibit 139, annexure MPB29). Indeed the first was a document that in cross-examination the second defendant specifically stated was not in the file (cross-examination 3 December 2007 ts 1010). Ms Marklew testified that the second defendant must have 'overlooked' these documents. She also testified she could not be 'certain' that every document relating to the Armadale property was on the file, although it was 'her responsibility as a secretary to do all the filing' (cross-examination 10 December 2007 ts 1232). She also testified that she had refreshed her memory from a document which was not tendered into evidence as privilege was claimed in respect of it on the basis it had been prepared for the purposes of other proceedings. She further testified that she was unaware there was a dispute as to land tax as well as rates assessed by the City of Armadale (cross-examination 10 December 2007 ts 1334 - 1335). The existence of a dispute as to both had been acknowledged by the second defendant (cross-examination 5 December 2007 ts 1137 - 1139 and Exhibit 167).

296 I consider that, while Ms Marklew endeavoured as best she could to recall what was on the file presented to the Friggers, she could not testify with any precision as to its contents. I consider I should take from her evidence at most that the file was a thick one. I do not consider, however, that she was able to add more than that to the second defendant's evidence.

297 It seems to me it would be surprising if the file or folder did not contain more documents than the Friggers' evidence indicated. Thus, I note that there is no reference in the Friggers' evidence to rates or land tax assessment notices, which I would have expected the file or folder to contain. Such notices are referred to in the second defendant's evidence (Exhibit 139, MPB29).

298 It also appears to me it would be surprising if the file/folder did not contain correspondence between the first defendant and its tenants.

299 However, I do not need to pursue those matters. That is not only because the matter of whether documents of those sorts other than the specific documents referred to were in the file or folder was not put to the Friggers in cross-examination but also because, even if there had been documents of those sorts in the file, without an exploration of what was or might have been in them it is not the case that I have reason to consider they would have alerted the Friggers to the matters which made the relevant representations false and the relevant conduct misleading.

300 I conclude then that there was no disclosure in the inspection of 21 March 2003 of the sort that might go to show the Friggers did not rely on the relevant representations and relevant conduct. There was no other disclosure relied upon for the defendants than the evidence of the second defendant as to what was said at the execution of the contracts on 13 March 2003. I have already dealt with that evidence. Nor is there any other evidence in my view sufficient to raise an issue of such other disclosure.

301 Nor was it put me that the plaintiff had failed to make reasonable inquiries into the subject matters of the relevant representations and relevant conduct. This is except for the relevance of expected inquiries to the question whether the tenants' business representation was a puff, with which I dealt earlier. I have noted that Mrs Frigger acted in the settlement of the acquisition of the Armadale property and in so doing ascertained there were unpaid rates and taxes. However, this in my view would not have disclosed to her that there had been a failure by the tenants to discharge their obligations to their landlord or necessarily made it negligent to proceed without investigating the matter. Indeed there was an adjustment at settlement to reflect the amounts unpaid.

302 No other argument was addressed to me as to the effect of any such failure to investigate. Of course, at all material times there was no provision in the TP Act corresponding to the present s 82(1B). At those times the law as to the effect of failure to make reasonable inquiries appears to have been that any such failure was relevant to a claim under TP Act s 82 only so far as it went to show lack of actual reliance (Lockhart [10.16]) or such a level of negligence as to show that the representation or conduct could not have been the real inducement to enter into the transaction (Argy v Blunts & Lane Cove Real Estate Pty Ltd [1990] FCA 51; (1990) 26 FCR 112, 136; 94 ALR 719 (Hill J); Miller [1.82.63]). I consider I am not called on to explore those matters to any larger extent than I have.

303 For the same reasons I do not consider that I am called upon to explore the effect on liability at common law or under FT Act s 10 of Law Reform (Contributory Negligence and Tortfeasors Contribution) Act (WA) s 4, read with s 3 'Negligence'.

What loss or damage was suffered by the representations?

304 I leave aside for separate treatment the matter of the plaintiff's claim for aggravated or exemplary damages.

305 The plaintiff claims that loss or damage was suffered by reason of its reliance on the relevant representations and the relevant conduct of two sorts.

306 One sort of loss or damage was that entailed in entry into the acquisition of the Armadale property, which it was claimed would include the loss of rental in respect of the Northdown lease and the prospective loss of rental from 15 September 2008 (being the date of the expiry of the Goad lease) to 30 June 2011 (the date the Northdown lease would have expired) in the event the plaintiff was unable to re-lease the service station either at all or at the same rental as under the Northdown lease. See further further re-amended statement of claim [40]. I will call the loss or damage claimed of this first sort the acquisition loss.

307 The other sort of loss or damage was the loss of an opportunity to invest the sum put into the acquisition of the Armadale property by acquiring with a similar sum an investment property in the Perth real estate market in or about March 2003. That property, it was claimed, would have been worth the amount paid for it and enjoyed the capital appreciation that would otherwise have been gained beyond the lesser capital appreciation in fact derived from the Armadale property and would also have derived higher rental returns on that investment property. See further further re-amended statement of claim [40A]. I will call the loss or damage claimed of this second sort the investment opportunity loss.

308 I first deal with that part of the investment opportunity loss relating to higher rental returns.

309 In closing oral submissions counsel for the plaintiff put this as the difference between the rental income actually received at least to 29 February 2008 (the date of closing submissions) and the rental income that would have been earned had the property been rented. I was referred to the evidence as to total rental receipts from the Armadale property to the date of trial, being the payments made under the Northdown lease, the Penrose lease and the Palumbo lease. I am satisfied it would be necessary to total what on the evidence to which reference was made in the submissions of counsel for the plaintiff (Exhibits 180 (part); MFI 136 (part, being invoices to the lessee), a part which I would admit as a business record of the plaintiff; and Exhibit 1 annexures ACTF33 and ACTF54) ought to have been paid over the periods during which the respective leases subsisted, from 1 May 2003 to 29 February 2008, and to deduct from that total what on the evidence (being the evidence as to the periods during which either no rent was paid or a reduced rent was paid) were the amounts not paid in the periods during the subsistence of those leases.

310 Counsel for the plaintiff also put to me I should take into account the reports on rental returns on residential and commercial property in Perth over the period 2003 to 2007 in two of the reports of the valuer Mr Liggins (Exhibits 6 and 8) to determine what the plaintiff would have earned during the period 1 May 2003 to 29 February 2008 from its alternative property investment.

311 However, the range of annual returns there shown on the most up to date data (Exhibit 8), on an investment of $665,000 (the total purchase price for the acquisition of the Armadale property), is (for residential property) from 2003's $13,000 to the second quarter of 2007's $19,509, with the corresponding figures for commercial property being $49,875 to $63,658. That range does not appear to me to establish, when account is taken of the rental under the Goad lease and the possibility that the plaintiff would have invested in residential property, that a loss on this account has been proven.

312 In any event I consider that no damages should be awarded on this account. That is because on the evidence the Friggers were looking to rental income to enable them to meet the servicing cost of the finance to acquire their new investment property. To award such damages, it would be necessary for me to have evidence from which I could find what surplus if any there was of such rental income over such servicing cost for the investment they lost compared with the corresponding figure for the investment they made in the Armadale property. I did not have any evidence of either surplus.

313 I turn then to the remainder of the losses for which compensation is claimed.

314 The parties directed their attention both to whether or not any acquisition loss or investment opportunity loss was shown to have resulted from any reliance by the plaintiff on the relevant representations and the relevant conduct, and the evidence with which to measure that loss.

315 The defendants put to me that no loss was shown to have resulted from that reliance in either case; further, the evidence as to the measurement of that loss could not relied upon, and, as there was no other evidence from which it was possible to measure what loss the plaintiff suffered, the plaintiff was not entitled to recover any damages for such losses in these proceedings.

316 I deal separately with the two sorts of loss, beginning with the acquisition loss.

317 I begin with the plaintiff's claim for the difference between the total of the sums it expended at settlement under the land contract and the improvements contract and the 'true value' of the Armadale property as at the date of entry into the contracts, 13 March 2003. This is the general measure of recovery in deceit and negligent misstatement and is the rule of practice for claims under TP Act s 82: see Lockhart [11.17] and authorities in n 104; and [11.29]; see also Henville [22] - [24] (Gleeson CJ) and Wardley Australia Ltd v Western Australia [1992] HCA 55; (1972) 175 CLR 514, 530 (Mason CJ, Dawson, Gaudron and McHugh JJ). I call this a capital loss claim.

318 It was put to me that I should not take from Henville that in a capital loss claim the plaintiff is not required to identify that portion of the value differential which is related to the relevant representations or the relevant conduct. Here the plaintiff had not done so, and so had not established any loss. However, I can find no support in Henville and such common law authority as Potts v Miller [1940] HCA 43; (1940) 64 CLR 282, 296 - 298 (Dixon J), referred to in Henville [24] (Gleeson CJ), for the proposition on which this argument rests. Nor does Wardley offer it any support; indeed the contrary appears from the passage at 530. I reject the argument.

319 The total amount paid for the Armadale property was $701,875.00, being the sum of the amounts paid under the land contract ($365,000) and the improvements contract ($300,000) and stamp duty after re-assessment and penalties ($36,875.00) (Exhibit 1, [109] and [110]). In accordance with the general measure and rule of practice referred to, from this capital loss must be deducted the true value of what was received. This is 'what price freely contracting, fully informed parties would have offered and accepted for it': Marks v GIO Australia Holdings Ltd [1998] HCA 69; (1998) 196 CLR 494 [49] (McHugh, Hayne and Callinan JJ). I consider that to this should be added the stamp duty that would have been payable in respect of the transaction had its true value been identified: Pine River Pty Ltd v Scorda [2001] WASC 105 [111] - 112] (Steytler J) and Crystal Auburn Pty Ltd v I L Wollermann Pty Ltd [2004] FCA 821 [165] - [166] (Goldberg J).

320 The principal evidence with respect to that true value was from Mr Spencer. He produced three valuation reports, dated 31 March 2005 (Exhibit 104), 1 March 2007 (Exhibit 105) and 25 May 2007 (Exhibit 106), as well as a witness statement dated 23 November 2007 (Exhibit 137).

321 The report of 31 March 2005 (Exhibit 104) provides valuations as at 'March 2003' and 'March 2005'. The report of 1 March 2007 (Exhibit 105) provides a valuation as at '27 February 2007'. The report of 25 May 2007 (Exhibit 106) provides 'corrections and some further explanation perceived necessary for Court purposes'. The witness statement (Exhibit 137) provides further corrections and confirms that the valuations in the reports (Exhibits 104, 105 and 106) represented opinions he was able to reach 'even if no regard' was paid to the 'service station rental evidence' for the properties listed to which reference had been made in those reports.

322 I focus here on the valuation as at March 2003. The valuations for the later dates must be considered, as I will explain below, in relation to the claim for investment opportunity loss.

323 The valuation as at March 2003 was $392,000. This valuation was of 'the BP Service Station land and buildings at 269 South Western Highway, Armadale as at 13 March 2003 and 13 March 2005', 'inclusive of fuel tanks, roof mounted air conditioning, plumbing, lighting and fixtures', but excluding 'bowsers' (Exhibit 105). There are no separate valuations of any of the component elements referred to. It also appears (from Exhibit 105, Appendix II 'Instructions' read with p 1) that the valuation did not take into account a '2-post hoist or compressor'. However, those two items were included in the sale of the Armadale property (see Exhibit 1 [104] ACT32). There is separate valuation evidence as to those items, from the second defendant and a Mr Holmes (Exhibit 70), which I will shortly reach.

324 For the defendants, it was submitted that there was only valuation evidence as to the subject-matter of the land contract. I took that submission as putting to one side the evidence as to the '2-post hoist or compressor'. The subject-matter of the land contract as described in it was 'BP Service Station and land'. However, the subject matter of the improvements contract was described in it as 'Plant and equipment fixtures and fittings only', which would clearly include at least some of the components of the property covered by the valuation by Mr Spencer. Further, his first valuation report (Exhibit 104) makes reference to both contracts without indicating he had distinguished between their subject-matters so far as his valuation was concerned. Nor was it in contest that the Armadale property was sold as a going concern to purchasers acquiring it for investment purposes. I consider then that, save for the two-post hoist and compressor, Mr Spencer had valued the Armadale property as comprising the combined subject-matters of the two contracts. Thus I do not accept the defendants' submission.

325 There was no contest before me that the Armadale property ought to be valued on the basis its highest valued use was as a service station property (including some vacant land). Mr Spencer's valuation reports were all to that effect, and they included (Exhibit 104 Appendix III) transactions as to industrial land in Armadale over the period 6 February 2000 to 25 June 2003 which would strongly support that conclusion. He acknowledged he had obtained the sale prices from Landgate, which provides records of sale transactions used by valuers, as I will indicate. He also acknowledged he had relied on other industrial land sale evidence not set out in his valuations (cross-examination 28 November 2007 ts 1017 - 1019). However, while this may for reasons explored below in relation to other transactions he relied upon using Landgate data represent inadmissible evidence of comparable transactions, I do not find I should not consider his opinion as to the highest and best use of the Armadale property, based on his assessment of market price differentials for service station and vacant land prices, to be evidence I should treat as inadmissible. The evidence he relied upon would in my opinion represent part of a body of non-specific hearsay within the authorities I reach below. In any event, I did not understand it to be put to me that his opinion as to highest and best use should be rejected.

326 The valuation reports by Mr Spencer gave 'emphasis to the traditional capitalisation and sale comparison methods of valuation' (Exhibit 104, 12). However, the latter method appears from his report to have been used in aid of the former, as I will indicate.

327 The former method involves the determination of a fair net market rental for the subject property and then a rate at which that rental should be capitalised, so as to produce the 'market value' of the subject property (Exhibit 104, 15). The capitalisation rate is expressed as the percentage of the market value of the property represented by its fair net market rental, and thus the multiplier used to produce the market value is the reciprocal of the capitalisation rate so expressed. It follows that the higher the capitalisation rate, the lower the market value.

328 For the purpose of determining a fair net market rental for the Armadale property, Mr Spencer's evidence was that it was 'generally accepted rental valuation practice' to assess the rent on the basis of separate rental rates for 'each trade component derived from the analysis of market rental evidence and then to add to this rent an allowance for shop trade' (Exhibit 104 12). The trade components were fuel turnover (involving the assignment of a figure per litre for that turnover as used for the purpose of the relevant lease) and gas turnover, as well as in suitable cases an allowance for workshop bays on the basis they were separately leased.

329 He referred in his first valuation report (Exhibit 104 Appendix IV) to 'service station rental evidence pre-2004' for rents fixed for 9 service stations at the date of entry into the service station lease or pursuant to rent reviews set to market rentals as at the date of review. Those dates for the fixing of rent were from 1 October 2000 to December 2003. In his witness statement (Exhibit 137) he stated that the valuation opinions he expressed in his first report were ones 'I continue to hold even if no regard be had to' five listed service stations. It was pressed on me that his opinions were fatally or at least seriously undermined by this evidence, which contradicted what his first, second and third valuation reports had said, expressly or by implication, as to the relevance of all nine service stations. Indeed in his cross-examination he had returned to his position prior to the date of his witness statement.

330 However, I did not understand his evidence to be contradictory. Rather I understood him to be testifying that his valuation opinions were ones he was able to reach on a smaller basket of service station evidence.

331 It was also put to me that what remained in the basket was made up of rental evidence that was inadmissible. I was referred to, among other authorities, Pownall v Conlan Management Pty Ltd (1995) 12 WAR 370 and Automasters Australia Pty Ltd v Bruness Pty Ltd [2004] WASCA 229. I take the principles being invoked to be those set out in the following from Automasters [28] - [29] (Steytler J), [1] (Murray J) and [40] (Wheeler J):

It should, first, be said that an expert giving opinion evidence must provide the tribunal of fact with sufficient information to enable it to evaluate the validity of the expert's conclusions: Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305; (2001) 52 NSWLR 705 at 729 [59], per Heydon JA. That means that the expert should state the facts or assumptions upon which his or her opinion is based: Makita at 735ff; National Justice Compania Naviera SA v Prudential Assurance Co Ltd (The 'Ikarian Reefer') [1993] 2 Lloyd's Rep 68 at 81 - 82 and Pownall ... at 389 - 390. That, of course, is because a tribunal of fact must, so far as is reasonably possible, examine and assess the substance of the opinion. It cannot merely rely upon the expertise of the expert. In Holtman v Sampson [1985] 2 Qd R 472 at 474 (in a passage quoted in Makita at 735), D M Campbell, Macrossan and Thomas JJ said:

'... it is a primary tribunal's duty to find ultimate facts, and, so far as it is reasonably possible to do so, to look not merely to the expertise of the expert witness, but to examine the substance of the opinion expressed. But that is not to say that a tribunal may not accept the opinion of an expert witness. In cases where the experts differ, the lay tribunal will apply logic and commonsense to the best of its ability in deciding which view is to be preferred or which parts of the evidence are to be accepted.'

Where an expert relies upon the existence of some fact in support of an opinion, that fact must be proved by admissible evidence: R v Abadm [1983] 1 WLR 126 at 131; Pownall, at 375 - 376 and 389 - 390; English Exporters (London) Ltd v Eldonwall Ltd [1973] Ch 415 at 422 - 423; Makita at 731 - 732, 737 - 738 and 743 - 744; and McNeil v Commissioner of Taxation [2003] FCA 958; (2003) 202 ALR 35 at 52. Where an expert opinion is based entirely on inadmissible evidence, the opinion will itself be inadmissible: Pownall at 378. Similarly, where the inadmissible evidence is so intertwined with the admissible evidence that they cannot be separated, the whole body of evidence will be rejected: Pownall at 376 - 377; Steffen v Ruban [1966] 2 NSWR 622. However, where the inadmissible evidence can readily be ascertained and discarded, leaving admissible evidence in support of the opinion, the opinion should be admitted, subject to weight: Pownall at 378.

332 I agree with the defendants' submission that it is necessary for there to be direct and admissible evidence for the remaining four service stations given their role as comparable properties in Mr Spencer's assessment of net market rental value.

333 The remaining four service stations and the evidence as to them were as follows.

334 The first was a Shell service station at the corner of Mandurah Road and Singleton Beach Road, Singleton. Mr Spencer testified he had been involved in a rental determination in valuing it for the lessor in 2005 (examination-in-chief 9 November 2007 ts 901). There was also evidence in the form of a rental determination dated 19 October 2005 of the valuer, a Mr Richardson, to whom it appears Mr Spencer made his rental submissions (Exhibit 129). However, in his first valuation report Mr Spencer refers only to the original lease entered into in November 2000 whose rental was annually adjusted to the Consumer Price Index, and whose first adjustment to market value after commencement was the subject of the Mr Richardson's determination. An extract from the original lease is also in evidence (Exhibit 127); however, that copy of the document is not stamped, and it is not clear to me how I am in a position to take account of it as admissible evidence in view of Stamp Act 1921 (WA) s 27(1). At the same time, I must note Mr Spencer's involvement with the subject property which in my view gave him 'first hand knowledge' of it, including the lease details. Further, the lease details appear in Mr Richardson's rental determination, which appears to me to be a document admissible as a business record of the lessor and the lessee (for both whom it was prepared), under Evidence Act s 79C(2a). See Atra v Farmers & Graziers Co-op Co Ltd (1986) 5 NSWLR 281, 286 (Wood J). I consider there was a sufficient evidentiary basis for the inclusion of this property in the basket. I have noted that in cross-examination Mr Spencer testified he had relied for all of the turnover figures for the service station on information passed on to him by some one else who it appears was not the fuel supplier (28 November 2007 ts 1015). However, although the question is a closer one than for the next property I reach, because the source is not directly identified, I consider I can infer it was from the lessor, as it was for the lessor he was preparing a report. For the reasons given in relation to the next property I do not consider the fact that there is no evidence he investigated the truth of what he was told disqualifies the subject property from inclusion in the basket.

335 The second property in the reduced basket was a Shell service station in Malaga. Mr Spencer testified he had made a rental determination for the lessor 'some years ago' which he shortly thereafter said was August 2003 (examination-in chief 9 November 2007 ts 898). There was an extract (Exhibit 124) from what appears to be the lease that ended immediately prior to the commencement of the lease referred to in the first valuation report, the immediate relevance of which to the detail about the service station in the first valuation report is not apparent. I put it to one side. However, I consider Mr Spencer's first hand knowledge of the service station at the material time was sufficient to provide an evidentiary basis for the inclusion of this property in the basket. It is the case that Mr Spencer testified in cross-examination, when he was asked if he had 'independently investigated' the fuel turnover, that he 'had investigated the fuel and seen figures and information from Shell and the landowner' (28 November 2007, ts 1015). It seems to me that his evidence was as to how he arrived at one of the assumptions on which he proceeded in the valuation exercise for which the lessor retained him. That method would seem to me to have been a reasonable one, and it was not suggested to him it was otherwise. It does not seem to me that a sufficient evidentiary foundation for the use of the subject property required it be shown he had gone further, to verify that the information he received was correct.

336 The third service station was a Caltex one, at the corner of Beechboro Road and Mulga Street in Beechboro. Mr Spencer testified he had made a rental determination for the lessee in May/June 2005 (examination-in-chief 9 November 2007 ts 897). The letter of instruction to Mr Spencer from the lessee, stating among other things values for fuel (including autogas) turnover over time, and including a copy of the lease, and a pair of photographs of the premises which Mr Spencer testified he took and which appear to be have been for the purposes of his determination for the lessee, is in evidence (Exhibit 123). I would consider this latter body of evidence to be admissible under Evidence Act s 79C(2a) as a business record of the lessee's: Atra 286. I consider there was a sufficient evidentiary basis for the inclusion of this property in the basket.

337 The fourth service station was another Caltex station, in Langford. Mr Spencer testified he had a familiarity or involvement with the property resulting from the work he had done for a valuation of it for the lessor in 2001 or 2002 (examination-in-chief 9 November 2007 ts 899) and his knowledge of it was 'intimate' compared with his knowledge of others that he had 'general knowledge of' and 'market information on' (examination in chief 9 November 2007 ts 922). There is also in evidence a copy of a letter from the lessee, Caltex, confirming to the lessor terms of a lease of what appears to be the property (Exhibit 125). Some of the data there, including the fuel turnover figure and the amount per litre, correspond to data in the first valuation report (Exhibit 104, Appendix IV). Mr Spencer testified that he obtained the fuel turnover figure from the landowner and Caltex (cross-examination 28 November 2007 ts 991) and as I understood his evidence testified that the information from Caltex came from the letter (Exhibit 125) (cross-examination 28 November 2007 ts 1016) which I would consider to be a business record of Caltex: Atra 286. It would appear from this body of evidence that Mr Spencer had been involved with the subject property in relation to the lease the details of which appear in his first valuation report and from that involvement he had obtained the details in that valuation report. I consider there was a sufficient evidentiary basis for the inclusion of this property in the basket.

338 I consider shortly the details as to the property in the basket and Mr Spencer's opinion as to the net market rental of the Armadale property as at 13 March 2003 based upon them. However, I have noted the objection that Mr Spencer did not testify he had used the same method for determining market rental for them as he was using for the Armadale property. I consider that objection misplaced. The evidence he gave as to his involvement with each of the properties and as to the actual rentals in respect of them was such that in my view he had shown the basis in his own knowledge for his derivation of the figures for the components he used to describe those rentals. It was also such that in my view he had shown the basis in his own knowledge for his assessment of the actual rentals for them as to the extent to which they were net fair market rentals. Mr Spencer had considerable experience as a valuer of service station properties and had published in the area. There was no direct challenge to his expertise in this field.

339 I have noted, however, what was put to me by counsel for the defendant for two of the transactions (Exhibits 120 and 124) to which his reports referred as providing the bases for his opinions that his account of their details was not altogether accurate. However, I put aside Exhibit 124, to which I consider he was not in fact making reference. As to the other transaction, I do not consider that the difference relied upon (a rent review provision for review to CPI and market, rather than as Mr Spencer's account indicates to CPI only) as of such significance as going to qualify the credibility of Mr Spencer's evidence.

340 I have also noted what was put to me by counsel for the defendants by reference to statements in two of the rental determinations tendered (Exhibits 128 and 129) which might be seen to be at odds with his witness statement (Exhibit 137), where he indicates his ability to rely on his experience. However, I do not consider the latter reference (Exhibit 137, [3]) to be a statement (as was suggested to me) that he considered he did not need to draw on comparable transactions, but rather of his capacity to evaluate the information from comparable transactions in light of his experience. So understood the tension referred to disappears, in my view.

341 Finally, I note what was put to me by counsel for the defendants as to Mr Spencer's physical condition during the trial. He was in fact not well early in the trial, and at points during his testimony on the two occasions later in the trial when he testified appeared not to have fully recovered from that condition. However, assessing his testimony on both occasions and the way in which he gave it, as well as his responses to my inquiries about his ability to continue to testify, I do not consider Mr Spencer's ability to provide evidence then, including through his witness statement, and through the reports that appear to have preceded the onset of the condition, was compromised in any way.

342 For the determination of a capitalisation rate, Mr Spencer's first valuation report referred to service station sales evidence which comprised 12 transactions over the period September 1998 to March 2004. However, in his witness statement (Exhibit 137 [10]) Mr Spencer said he was able to reach the conclusions he did in his valuation reports without regard to certain transactions, including I infer certain transactions referred to in Appendix I (being transactions not referred to in Exhibits 115 - 131). Counsel for the defendants submitted that with the exclusion of those transactions six were left, and no issue was taken with that reduction by counsel for the plaintiff.

343 Mr Spencer was recalled, and the witness statement (Exhibit 137) was admitted into evidence, after he had completed earlier testimony. This was at the instance of the plaintiff. As will become apparent, Mr Spencer was cross-examined on the properties in Appendix 1 following that recall. Objection was taken to such cross-examination as not arising out of the witness statement. In my view the objection was misplaced. In his witness statement Mr-Spencer disclaimed the need to rely on all of the supports for, while re-affirming on that more limited basis, the opinions in the earlier valuation reports. The cross-examiner was entitled to explore both the more limited basis and the evidence as re-affirmed.

344 With respect to the six transactions, I consider Mr Spencer acknowledged in his cross-examination that he had in a number of cases only visited the sites or at least discussed them with the owner and the lessee, and in all cases had determined the sale price from Landgate published data (28 November 2007 ts 986 - 997, 1011 - 1012). This latter evidence I took as confirmation he had not been involved in the sales of the properties referred to, although in the case of two on the reduced list (Exhibit 104 Appendix I) he testified he had been involved in valuing them. I took that to be a reference to his having been involved in valuing their fair market rentals.

345 This was the case for a Peak Service Station in Glen Forrest, which in Appendix I is shown as having been sold to its tenant on 7 August 2003. The matter of when Mr Spencer had valued its fair market rental was not explored in his evidence. However, I consider it likely on his evidence he had so valued it prior to the sale.

346 However, Mr Spencer had also been involved in what I took to be a fair market rental value determination in the case of a Peak Service Station in Lynwood also on the reduced list and shown as sold in December 1999. His involvement had begun, it appears, prior to the date of his first valuation, thus prior to 31 March 2005, although it appears to have continued after that date (cross-examination 28 November 2007 ts 993).

347 The Landgate data (Exhibit 115) carried warnings as to the need to verify the data, in the following terms:

The user of the information must confirm the validity of the information by other means. Failure to do so in legal or professional matters may damage the party and in such event no liability will be extended by the Western Australian Land Information Authority to the approved user of the data or third parties acting on such whatsoever.

348 Mr Spencer's testimony was that valuers 'typically' use the Landgate information in the 'marketplace ... as an authoritative source of sale evidence' (cross-examination 28 November 2007 ts 990 - 991). Indeed this evidence was confirmed by the testimony of the valuer Mr Liggins, who also testified that, while errors were not unknown, they were on transactions with which he had been associated 'minimal' (6 November 2007, examination-in-chief ts 529; cross-examination ts 558; re-examination ts 562). Mr Spencer testified that in the case of one of the properties he also searched the transfer of land 'as a double check' (cross-examination 28 November 2007 ts 991). That property was the Peak Service Station in Glen Forrest. At the same time Mr Spencer acknowledged that the Landgate data (Exhibit 115) for the acquisition of the Armadale property showed the sale price as $365,000 which as has been indicated was the consideration under the land contract and did not account for the other part of the acquisition represented by the improvements contract, a matter which was not indicated on the transfer of land for that acquisition which Mr Spencer had also viewed. However, in view of his earlier testimony as to what was owned by the owner of a service station property, and his involvement in the fair market rental value determination of the Peak service station at Glen Forrest, I do not conclude from that he was acknowledging the possibility of a similar situation in respect of that property, and the possibility was not put to him.

349 Further, I would reach the same conclusion in respect of the other property on the reduced list for which Mr Spencer testified he had done fair market rental determination, the Peak Service Station in Lynwood.

350 Mr Spencer was questioned as to the security of the tenancy position at the point of sale of the properties on his list (Exhibit 104 Appendix I). Mr Spencer's first valuation report had stated that the quality of a tenant was a material consideration in determining the 'acceptable investment yield' (capitalisation rate) from the property. Quality in this sense had to do with whether or not the tenant was a 'blue chip' public company such as BP Australia or Woolworths and whether or not it was in 'financial difficulty' (see Exhibit 104 page 15). In his cross-examination he also testified that the quality of the management of the tenant was also relevant (28 November 2007 ts 985, 1011).

351 I should note that in his valuation of the Armadale property as at 13 March 2005 Mr Spencer provided for a deduction for a 'letting up/vacancy allowance incl. 6 months loss of rent' of $35,000 (Exhibit 104 page 15). This deduction appears to me to relate at least in part to the matters just referred to as subsumed within the determination of the capitalisation rate, although the matter was not explored in cross-examination. In any event, it seems to me to relate to loss of rent the recovery of which I address shortly. To the extent that loss is compensable, as I conclude it is, there is it seems to me an element of double recovery on this account. Taking account of the further explanation of the deduction in Mr Spencer's third valuation report (Exhibit 106 page 2) I would reduce the deduction to leave only the amount for 'contingencies' there referred to, $8,300.

352 Although he did not directly respond to this line of questioning about the security of the tenancy position, I conclude his answer is to be found in his evidence that he was able for the properties in his first valuation (Exhibit 104 Appendix I) to determine whether or not the rental figure (where one was provided) and the capitalisation rate were reasonable (cross-examination 28 November 2007 ts 997; and see ts 1011 - 1012) from his familiarity with the subject property to which he was able to apply his general experience, such as to infer shop turnover from appearances as to trading and fuel turnover. Indeed this was a method he had applied to the Armadale property (cross-examination 28 November 2007 ts 1011 - 1012).

353 I have concluded that, as to the transactions with respect to the two Peak service station properties, at Glen Forrest and Lynwood, there was a sufficient evidentiary basis for their inclusion in the basket of service station sales evidence. However, I have also concluded that as to the other transactions on the reduced list there has not been a sufficient evidentiary basis laid for their inclusion. These conclusions result from the lack of first hand knowledge of the subject properties sufficient to convince me he could provide admissible evidence as to the transactions in question.

354 There was a further matter in the assessment of the market value of the Armadale property as at 13 March 2005. That was the portion which was vacant land, representing undeveloped land occupying about 2,000 sqm. Mr Spencer's rental evidence and sales evidence did not appear to include any property with such a feature. Mr Spencer's first valuation stated that, while following the acquisition of the Armadale property the plaintiff had applied for and been granted subdivisional approval, the 'market generally' in March 2003 would have regarded the land as 'not readily subdivisible' but as 'surplus land' available for 'any extension of the existing use', which would however have been 'perceived as an unlikely event in the short to medium term' (Exhibit 104, 4). In his second and third valuation reports he indicates that this was intended as a reference to the unsuitability of the Armadale property for profitable subdivision, due to the 'likely need for expensive site works and other factors' (Exhibit 106 page 1) relative to the 'low industrial value of the land' (Exhibit 105 page 11). The latter appears to be a reference to sales evidence for 'Armadale industrial land' (Exhibit 104 appendix III), while the former was based on his assessment of the topography of the Armadale property and at least in part a source, 'Rawlinsons 2004 Comparative Cost Estimates for Retaining Walls' (an extract from which is Exhibit 117). Mr Spencer's evidence was that text was a source to which valuers have regard (examination-in-chief 9 November 2007 ts 888). The defendants submitted that a sufficient admissible basis had not been laid for that conclusion, as the Rawlinsons document was hearsay, and in view of Mr Spencer's acknowledgement of the difficulties in determining the cost of fill and associated works (Exhibit 105).

355 I disagree. The Rawlinson material appears to me to be an example of non-specific hearsay of the sort on which experts may rely for my purposes. Nor was Mr Spencer's evidence as to how he could conclude as he did notwithstanding the difficulties to which he testified such I should reject it. The matter, it seems to me, at most goes to weight. I consider that I should give it significant weight. This is in view of the evidence as to Mr Spencer's qualifications and experience as a valuer.

356 In respect of the evidence as to sales of Armadale industrial land (Exhibit 104 Appendix III) Mr Spencer acknowledged in cross-examination that he had determined the sale prices shown from the Landgate data referred to, while stating he had inspected each of the properties. However, I understood this latter reference in the light of his evidence as to market price trends for vacant industrial land in his second valuation report (Exhibit 105, 6, 11) to be a reference to his assessment of the reasonableness of the Landgate data, an assessment which in my view it would be reasonable to expect him to be able to make of the value of vacant land at the relevant time. I consider that the sales evidence in this case was admissible as a basis for Mr Spencer's opinion as to how a reasonable buyer would have approached the vacant portion of the Armadale property in March 2003.

357 There was a further element of Mr Spencer's assessment of the fair market value of the Armadale property I need to consider. It was the amount he assigned in his first valuation report as at 13 March 2003 for the rental of the workshop bay the subject of the Penrose lease ($6,000) (Exhibit 104 page 13).

358 In that valuation report he provided a table of service station workshop rental evidence from a single lessor, a petroleum supplier (Exhibit 104 Appendix II). This was a set of figures which he acknowledged in cross-examination was provided to him by the lessor without Mr Spencer providing further elaboration (28 November 2007 ts 1013 - 1014). However, his other acquaintance with the properties if any was not explored in cross-examination, and there is detail in respect of a number of the properties which suggests he had some direct knowledge of them. In any event in his witness statement (Exhibit 137) he stated he was able to arrive at the same conclusion without regard to Appendix II. I note in that regard that one of the properties in his service station rental evidence (Exhibit 104 appendix IV), the Shell service station Singleton, had an 'additional allowance of $5,300 per annum for service bays'. In view of this latter evidence I consider there was a sufficient evidentiary foundation laid for the assessment he provided.

359 However, I must still assess the evidence of Mr Spencer as to the fair market value of the Armadale property as at 13 March 2003 by reference to what I have found is the admissible foundation for it to determine if I may take account of it: Automasters [28], [29]. In my view, there is a sufficient foundation for that purpose. In that regard I note Mr Spencer's evidence that a relatively small set of properties or transactions may be sufficient for a valuer to arrive at such an opinion (a matter on which he was not tested), and the still smaller set of both I have considered was the only admissible foundation is in my view not too small for that purpose.

360 However, I must still consider the evidence as so founded together with all of the other evidence in this case in order to form my own independent judgment as to the fair market value of the Armadale property: Davie v Edinburgh Magistrates [1953] SC 34, 40; and Cross on Evidence [29075].

361 I have concluded that on all of the evidence I must at least adjust the valuation of $392,000 provided by Mr Spencer. I have already referred to one such adjustment, of $8,300, to produce a total of $400,300.

362 Further, I consider his opinion as to the net fair market rent and the allowance for the workshop bay is that at which I consider on the evidence I would arrive, in view of the supports for it he admissibly provides. These include not only those I have referred to but his assessment of the fuel throughput he obtained from the supplier, the traffic volumes he observed on his visits to the site and related to the non-specific hearsay material as to traffic volumes (Exhibits 118 and 119) in evidence before me and the traffic through the shop at the Armadale property he related to fuel turnover and traffic volumes. However, I am not convinced that the capitalisation rate he uses, 12.5%, is appropriate. It is significantly higher than the rate, 11.63%, he provides for the one admissible transaction (the sale in December 1999 of the Peak service station in Lynwood) for which such a rate is provided, and, although the lessee is given as Peak, there is his evidence that he regarded that entity as one that was not 'blue chip' in the sense in which he appeared to use that word, although of greater investment value than 'a mum and dad or Goad or whatever' (cross-examination 28 November 2007 ts 925). Further, I note that the other admissible transaction (Peak, Glen Forrest) provides a sales value of $410,000 as at 7 August 2003, at a time of falling values for service stations due on his evidence to increasing competition, for a sale to Peak and with a similar service station land area and a similar style of service station, albeit at a location with higher traffic flows.

363 I consider in those circumstances that a fair market value of $410,000, including the adjustment I referred to is appropriate. This equates to a capitalisation rate of 12.23%.

364 I also need to take account of the items not included in Mr Spencer's valuation, of two hoists and a compressor. The statutory declaration of the second defendant prepared for the purposes of the settlement of the sale of the Armadale property (Exhibit 1 ACTF32) puts a combined value for those items at $4,750. This is substantially more than the corresponding value put on them by the valuer called by the plaintiff, Mr Homes, of $1,750, in his report of 20 February 2007 (Exhibit 70).

365 I prefer the evidence of the second defendant. Mr Holmes in his evidence acknowledged he had not inspected the hoist and did not know what model of 'Tecalemit two post hoist' it was; further his valuation was as at a date some two years later, although he also testified that he would not have expected the items to have depreciated 'substantially' from March 2003, while also acknowledging the matter depended on wear and tear (cross-examination 9 November 2007 ts 715). Mr Banning was not tested on the evidence referred to, which was of the value as at the date of acquisition of the Armadale property.

366 As to the claim for lost rental on the Northdown lease, it appears that this was to be treated as subsumed in the investment opportunity loss claim, as I have previously indicated.

367 However, I consider I must also take account of the claim for lost rental, which of course was pleaded and not abandoned. The relevant principle appears from Henville [28] - [31] (Gleeson CJ) for both deceit and claims under TP Act s 82:

In Gould, a case of deceit which induced the purchase of a business, Gibbs CJ said[221-222]:

'There is no reason in principle why the defrauded purchaser should not recover damages for all the loss that flowed directly from the fraudulent inducement (unless, possibly, the loss was not foreseeable). If the purchaser, besides paying more for the business than it was worth, has suffered additional losses which resulted directly from the fraud he ought to be compensated for them. Of course, the court must be satisfied that the loss did result directly from the fraud and not from some supervening cause such as the folly, error or misfortune of the purchaser himself ....'

'Moreover, for a loss to be recoverable it must be clear that it is suffered as a direct consequence of the deceit and is not referable to something else such as the purchaser's ineptitude in the conduct of the business.'

The principles concerning measuring damages for deceit resulting in the purchase of an asset, where there was consequential loss following the retention of the asset, were considered by the House of Lords in Smith New Court Securities Ltd v Scrimgeour Vickers (Asset Management) Ltd [[1997] AC 254]. In that case approval was given to Doyle v Olby (Ironmongers) Ltd [[1969] 2 QB 158], including a passage in the judgment of Winn LJ who said [168]:

'It appears to me that in a case ... where there has been a tortious wrong consisting of a fraudulent inducement, the proper starting-point for any court called upon to consider what damages are recoverable by the defrauded person is to compare his position before the representation was made to him with his position after it, brought about by that representation, always bearing in mind that no element in the consequential position can be regarded as attributable loss and damage if it be too remote a consequence: it would be too remote not necessarily because it was not contemplated by the representor, but in any case where the person deceived has not himself behaved with reasonable prudence, reasonable common sense, or can in any true sense be said to have been the author of his own misfortune. The damage that he seeks to recover must have flowed directly from the fraud perpetrated upon him.'

The passages quoted from Peek v Derry and Gould indicate that the qualification expressed by Winn LJ may not cover all cases where consequential loss would be regarded as too remote. Subject to that comment, similar principles are appropriate to the application of s 82 of the Act in a case such as the present, and they were the principles which Anderson J was seeking to apply.

368 This principle extends to recovery of loss of an opportunity if that is properly proved: Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1, 12, to which I will return below.

369 I note that the first part of the claim extends only to the loss of amounts that would have been payable but that were unpaid to the plaintiff under the Northdown lease until the Goad lease began. It seems to me that consistently with the principles to which I have referred the plaintiff is entitled to recover that amount. The amount is equal to the rental (exclusive of GST) and outgoings payable under the lease that were not paid. I do not consider that account also needs to be taken of the rental payable under the Goad lease, even although that rental was higher than the corresponding amount payable under the Northdown lease. I consider that goes to loss of prospective future rental, which I now turn to.

370 The amount in question on the evidence before me was $4,999.50 being the difference between the rental that would have been paid under the Northdown lease from 1 May 2003 until the date of commencement of the Goad lease (15 September 2003) but was not (see Exhibits 60 - 63).

371 I am unable to accede to the separate claim for prospective loss of rental from any termination of the Goad lease before the expiry of what would otherwise have been the term of the Northdown lease (without renewal). There was no sufficient evidence as to that prospective loss. To determine it, account would need to be taken of the somewhat greater rental under the Goad lease, with allowance for its short term, offset by its options for renewal. The Goad lease appears to me to go to mitigating the prospective loss referred to. There was indeed evidence to which I will shortly come that would indicate some prospect at least of renewal of the Goad lease.

372 This takes me to the second head of claim, that for investment opportunity loss.

373 There is no doubt such a claim may be made both under the statutes and at common law: see Lockhart [11.34] and Gates 12 (per Mason, Wilson and Dawson JJ at 13), where the following appears:

Because the object of damages in tort is to place the plaintiff in the position in which he would have been but for the commission of the tort, it is necessary to determine what the plaintiff would have done had he not relied on the representation. If that reliance has deprived him of the opportunity of entering into a different contract for the purchase of goods on which he would have made a profit then he may recover that profit on the footing that it is part of the loss which he has suffered in consequence of altering his position under the inducement of the representation. This may well be so if the plaintiff can establish that he could and would have entered into the different contract and that it would have yielded the benefit claimed. ... The lost benefit is referable to opportunities foregone by reason of reliance on the misrepresentation.

374 Two matters must be distinguished in this regard, however. One is the hypothetical course the plaintiff would have followed but for the defendants' contravention. The other is the assessment of the loss suffered thereby. See Lochart [11.35].

375 With respect to the first, the hypothetical course the plaintiff would have followed but for the defendants' contravention, the plaintiff must discharge its burden of proof that 'an alternative opportunity to earn income was available, was being sought and would have been taken' (Lockhart [11.35], footnotes omitted). See Gates 13, 14; Sellars v Adelaide Petroleum NL [1994] HCA 4; (1994) 179 CLR 332, 353 (Mason CJ, Dawson, Toohey and Gaudron JJ); Neilsen v Hempston Holdings Pty Ltd (1986) 65 ALR 302 at 316 - 317 (FC Pincus J); Frank Davies Pty Ltd v Container Haulage Group Pty Ltd (No 1) (1989) 98 FLR 289, 315 (NSW SC, Hodgson J). Once that burden is discharged, and provided there is such evidence as is reasonable for that purpose the court will assess the degree of probability of benefit from that opportunity had it been taken up, even if that probability is less, even substantially less, than even: Lockhart [11.35]; Commonwealth v Cornwall [2007] HCA 16; (2007) 229 CLR 519 [38] (Gleeson CJ, Gummow, Kirby, Hayne, Heydon and Crennan JJ); Sellars 350 (Mason CJ, Dawson, Toohey and Gaudron JJ); and O'Neill v Medical Benefits Fund of Australia [2002] FCAFC 188; (2002) 122 FCR 455 [33] (Carr, Moore and Marshall JJ).

376 I note in particular the following from Neilsen 316 - 317, a case concerning misrepresentations inducing the purchase of a motel:

As to the third head of additional loss, the claim for earnings which would otherwise have been made with the capital used in purchase of the motel, I reject the applicant's suggested basis for assessment of those earnings; it has been derived from a hypothesis that the applicant would, but for the purchase of this unprofitable motel, probably have bought another, profitable, one.

Again Gates' case, supra, is the guide: [quoting the passage above]

I accept that the applicant was, at the time, looking for a motel, as is evidenced by his having entered into the instant transaction. Whether he would, had he not entered into it, in fact have bought another motel seems to be entirely speculative and the return he would, in that event, have received is equally so. Any purchaser who has been induced by misrepresentation to buy an unprofitable business is likely to be able to assert, at least if the business is one of a common kind, that had it not been for the misrepresentation, he would probably have bought a similar but profitable business; yet it has never been the practice to award such claimants damages on the basis of their having made a hypothetical successful purchase. This general possibility is not, in my opinion, what the members of the High Court had in mind when they spoke of deprivation of "the opportunity of entering into a different contract ... on which he would have made a profit". In my view, the way to calculate the value of the use of the capital is to take a rate of interest appropriate to a reasonably safe loan assumed to have been made by the applicant.

377 However, there was evidence in this case, not challenged, that the plaintiff through the Friggers were experienced property investors and prior to the acquisition of the Armadale property had been seeking out an investment opportunity for some nine months. They had been looking at 'mainly commercial real estate', at least in Applecross, Attadale, Coolbellup, South Perth, Carine, Osborne Park, Malaga, Scarborough, Welshpool, Willetton and Myaree (Exhibit 99 [18] and [19]; Exhibit 1 [25], [28] and [30]). Some of the property they looked at was vacant land.

378 However, their evidence is also that they had embarked on this search having decided to use the equity on their home in Applecross as the security of other property to borrow the funds required for an investment. The investment would be in the range of $600,000 to $800,000. Their evidence is further that because the funds would be so acquired 'it was very important to me that the rental income be a reliable and secure sources [sic] of income to service the debt' (Exhibit 1 [25] and [191]; see also Exhibit 101 [7]. This evidence, as well as that as to the length of their search and its outcome in the acquisition of the Armadale property, appear to me to show that their concern was to find a tenanted commercial property that met their specifications, even though they had looked at vacant land, and even though Mrs Frigger's evidence was that it was 'not out of the question' they would acquire residential property (examination-in-chief 5 November 2007 ts 454).

379 I consider then that the opportunity that is relevant for my purposes is an investment property, defined as either commercial or residential property, which was securely tenanted or at least would readily be so tenantable. There was evidence, in the length of the search the Friggers had conducted, that property of the sort they would have taken up was not easily to be found.

380 However, there is evidence from Mr Liggins that I consider establishes such opportunities did exist at the relevant time, as his evidence is of a 'very active' Perth property market, covering both commercial and residential sectors, including tenanted commercial properties (Exhibit 6 pages 4, 5; and see Exhibit 7, annexure).

381 However, I consider also that the opportunity was one requiring finance involving the use of the Friggers' home as security. I have already referred to the importance to the Friggers of the deductibility of the costs of servicing that finance. There was of course the evidence in the acquisition of the Armadale property itself that finance was obtainable for this purpose. However, there was evidence also that the bank that provided the finance had done so on the misapprehension that the Friggers already owned and were earning income from the Armadale property (re-examination of Mark David Addison, the home loans manager for the bank who had approved the loan, 3 December 2007 ts 1075 - 1076), and granted the finance on the basis that the loan application was a housing loan one (loan application documents, Exhibit 50; examination-in-chief of Mr Addison 3 December 2007 ts 1071 - 1072). At the same time there was also evidence that the Friggers' credentials, in terms of their asset position, rental income and loan history with the bank, for the purpose of securing that finance, the subject of comments in the loan assessment documents indicated the following to Mr Addison (cross-examination, 3 December 2007 ts 1073 - 1074):

Again, those comments would indicate that but, again, having not - having never assessed business loans before, they may look for different things but they certainly are favourable comments, but I'm not saying that would give them the ability to get a business loan, yes.

Yes, okay?---Mm.

But even if it was a housing loan, those would be favourable comments?---Absolutely.

382 I consider this evidence qualifies the effect of the evidence of the approval of the housing loan, but not so as to cause me to find the plaintiff had failed to show that it was more likely than not they would have been able to secure finance for a business loan to permit them to acquire the Armadale property.

383 The plaintiff having discharged its burden as to causation in respect of the loss of opportunity claimed, I turn to consider the evidence adduced to permit me to value that opportunity.

384 For this purpose there are the expert reports of Mr Liggins (Exhibit 6, 19 April 2007; Exhibit 7, 25 May 2007; and Exhibit 8, 16 October 2007) and his testimony. There is also the evidence of Mr Spencer as to the appreciation in the value of the Armadale property.

385 Mr Liggins' first report (Exhibit 6) uses as its method a comparison of rates of increase in the amounts shown as the consideration for the sale of residential properties in selected suburbs and Perth generally over the periods commencing in 2003 and ending in 2006; and a comparison of rates of increase in the amounts shown as the consideration for the sale of selected commercial properties, isolating four properties for this purpose, sold at a date no earlier than June 2002 and re-sold about three years later, no later than November 2006. His most recent report updated the first to 31 March 2007 and 30 June 2007. He used for the purpose three sources of data on sales transactions to which on his evidence valuers commonly resort, although it appears one source relied upon (the Real Estate Institute of Western Australia showing annual median house price increases for Perth) secured its median data from another of the three sources (Landgate published data). The third source used 'weighted average' quarterly figures from the Australian Bureau of Statistics to show the percentage changes quarter by quarter over the corresponding period. He also testified that his method was one which valuers commonly employ, although he later appears to qualify this by acknowledging there was 'no textbook on this' although he added 'any other valuer would do the same what [sic that] I have done'. (See examination-in-chief 6 November 2007 ts 529 - 533 and 560.)

386 From these data he derived (in Exhibit 6) an average annual percentage increase for the Perth residential property market over the period from the commencement of 2003 to the end of 2006, of 18.30%, which he applied to the investment of $665,000 on 13 March 2003 to 12 March 2007, to produce the sum of $1,302,449. His most recent report (Exhibit 8) used the period 1 April 2003 to 30 June 2007, using 20.98% as the annual rate of increase to produce the sum of $1,499,190. The greater rate of increase used resulted from the use of the average of annualised data rather than simply the average of quarterly data, over a longer period and using the Perth market as whole rather than a figure derived in part from the average for selected suburbs (examination-in-chief 6 November 2007 ts 539).

387 From the data for the selected commercial properties he derived (in Exhibit 6) an annual average percentage increase for Perth commercial properties over the period from the commencement of 2003 to the end of 2006, of 25%, which he applied to the investment of $665,000 on 13 March 2003 to 12 March 2007 to produce the sum of $1,623,535. His most recent report (Exhibit 8) used the period 1 April 2003 to 30 June 2007, using the same 25% as the annual rate of increase to produce the sum of $1,725,006.

388 I have noted the defendants' submissions as to the method for the residential market. That method (in his most recent report) involved the selection of data from REIWA as the basis for deriving the average annual percentage increase in residential prices for Perth (defined it would appear, as Landgate did, as the metropolitan area and Mandurah). Mr Liggins used (in Exhibit 8) the average of the percentage increase in the median price of residential land in Perth over the years and part of a year to derive his average annual increase figure. He appears not to have weighted these annual averages, for example by reference to the number of transactions in the periods under review. However, I see no reason from the Landgate data relied upon to consider that there were such differences in the number of transactions or other characteristics of the data as to make his method an inadequate way of deriving the increase he did when the median price for Perth as a whole was used, rather than for particular suburbs, for which somewhat lower values, by about 10% of the rate of increase for Perth as a whole, appear (see Exhibit 6 appendix 4). Nor do I consider the difficulty he appears to have had understanding what the cross-examiner was seeking to have him address (see 6 November 2007 ts 554- 557), and his acknowledgement he was 'not an expert in statistics' (and so could not explain what the 'weighted average' for the ABS data was referring to (see 6 November 2007, ts 544, 554)), as indicating I should conclude he lacked the expertise to provide an opinion on this subject. I note that his evidence that the method he employed was much more commonly one for price increases for a particular suburb (6 November 2007 ts 553).

389 I have also noted the submissions as to the admissibility of his opinions as derived from Landgate data. I was referred again to Automasters and the authorities it cites. However, here it seems to me the objection is misplaced: the matter is one of valuing an opportunity, for which aggregate data, rather than data as to comparable transactions, would be appropriate.

390 The matter is different, however, as to the opinion Mr Liggins expressed as to commercial properties. Here Mr Liggins indicated there were no indices which could be relied upon as for residential properties, because there were 'many factors' which affected value that were 'not applicable to residential properties', including capital expenditure on improvements; terms and conditions of the lease (leases varied significantly), financial strength of the tenants, whether the rent was above or below market rental and the alternative uses for the land (Exhibit 6 page 4). I have noted that these factors were also ones referred to expressly or impliedly by Mr Spencer in his reports.

391 For that reason Mr Liggins, on the assumption 'that any property acquired by the plaintiff would have been tenanted or would of become tenanted at prevailing commercial rates', obtained from Landgate data as to sales between 2005 and January 2007 of 'non-residential' properties in the Perth metropolitan area which had been purchased in 2003 or 'just prior' (Exhibit 6 p 5). From the 12 properties to which he refers, he eliminated eight on various bases, before settling on four which showed annual increases in value of 17.6%, 22.3%, 28.85% and 33.8% respectively. He then averaged these increases to produce the 25% (rounded down as previously referred to). His evidence was that he visited all of the properties and except for the second verified with the parties the sale price data (cross-examination 6 November 2007 ts 558). I would exclude that second value, as one in respect of which there is not sufficient evidence to cause me to weight it at a significant value, even although the question is it seems to me one of weight and not admissibility.

392 I consider that the commercial property data shows a wide variety of rates of appreciation indeed. There is no question here of applying the method of comparing transactions, but rather one of finding, if not the average of rates of increase, an indicative range. It is within that range that Mr Liggins locates his 25%, which he refers to as 'realistic'.

393 Indeed the range of rates of appreciation appears on the evidence I have to be in fact wider than that just described. Two of the transactions he excluded, as reflecting 'exceptional returns' which 'should not be viewed as being normal or frequent occurrences' (Exhibit 6, 7), showed annual rates of increase of 39.1% and 41.5%.

394 This may also be seen by reference to Mr Spencer's report as to the capital appreciation on the Armadale property over the period 13 March 2003 to March 2005 (Exhibit 104). For this purpose he used the actual market rental (under the Goad lease) to which he added $12,000 annually for the workshop and a capitalisation rate of 11%, but again with no allowance for the vacant land because of prevailing lot values and the continuing costs of readying the land for resale, for a current market value as at March 2005 of $523,000. There appears to be no comparable sale evidence, being a sale or sales in 2005, on which he relied for this assessment.

395 However, the reduction in the capitalisation rate in my view is sufficiently explained in his second valuation report (Exhibit 105). In that report he updated the market value of the Armadale property to 1 March 2007 by reference to a 'more recent list of service station sales and rental evidence' (Exhibit 105 page 7). He was not cross-examined as to his acquaintance with respect to the additional eight properties there referred to, none of which appears to be excluded by his witness statement (Exhibit 137), except for one, for which he said he had been involved in a rental determination (28 November 2007 ts 1015) and two others for which his evidence appears to be that he had no similar involvement (ts 1016 - 1017). From this as well as his assessment of the stabilisation of service station rents in terms of cents per litre since March 2005 (when his assessment was 1.4 cents per litre for fuel and 1.5 cents per litre for gas sales) after a period of decline, he was able to arrive at a figure of 1.3 cents per litre as a figure that was 'fairly similar' (Exhibit 105 page 6). From his assessment that '[a]cceptable net yields to service station investor purchasers have reduced somewhat commensurate with reductions in acceptable net yields for commercial and industrial property' (Exhibit 105 p 11), he retained the capitalisation rate from the assessment for March 2005, 11%. From the substantial increases in the value of land over the period since March 2005 (Exhibit 105 page 6) and land values for a range of local industrial sites he listed (Exhibit 105 page 11- 12) he derived a figure for the vacant land value of the Armadale property as at 1 March 2007 of $360,000 less cost of fill, retaining walls and other items of $200,000 to yield $160,000, discounted for a six month delay for getting further approvals and servicing, and adjusting downwards to $150,000.

396 However, while I consider that allocation for vacant land value to be appropriate (and no objection was taken to it, except for the allowance for retaining walls, to which I have already referred), I have difficulty with the assessment in March 2007 which in the market rental assessment takes no account of the actual rent receivable under the Goad lease at the time (of $45,153.36). This is notwithstanding his statement that 'we have adjusted for this differential' (Exhibit 105, 11; compare 12). There seems to have been no reason to discount away the rental under the Goad lease: Mr Spencer in his evidence stated he had spoken to Mr Goad and 'got the impression that he's likely to stay on there' (cross-examination 28 November 2007 ts 1028). I also have difficulty with the lack of any allowance for the workshop when allowance was made as at March 2005. It would appear likely that this assessment was influenced by the continuing difficulty in re-leasing the workshop. However, it seems to me to be more appropriate to use the figure for the workshop given earlier in the assessment for March 2005, of $6,000 (Exhibit 104 page 14).

397 Adjusting for those differences, it seems to me that the appropriate net fair market rental as at 1 March 2007 was the Goad lease amount of $45,153.36 plus $6,000 for the workshop. This should be capitalised at 11%, producing the amount of $465,030. To that should be added the amount of $150,000, to produce a fair market value for the Armadale property as at 1 March 2007 of $615,030.

398 I would not take account of the two hoists and the compressor in this regard. It was not shown to me that there would be any significant difference made to the total given Mr Homes' evidence referred to earlier of low rates of depreciation of used equipment of that sort, although of course allowance must also be made for wear and tear, and his evidence that there was a work order on the hoists when he was valuing them.

399 Mr Spencer's valuation, considered without regard to the added items, equates to an annual appreciation of 14.5%, which somewhat below the bottom of Mr Liggins' range.

400 In my view it would be appropriate to recalculate Mr Liggins' annual appreciation for commercial property by excluding the property whose rate of increase was 22.3% I earlier considered and including the 14.5% for the Armadale property. I consider that the inclusion of the Armadale property is justified as a type of investment, a service station property with independent operators, which the Friggers themselves had chosen. At the same time, I must note Mr Spencer's evidence that other service station properties, those with blue chip tenants, larger volumes and the ability to access discounting arrangements with supermarkets, were over the subject period faring better than properties without those attributes (Exhibit 105 page 4). The Friggers might have invested in a service station of that sort, if one had been available in at their price.

401 However, so doing produces a recalculated average of 24%. This of course is not much different from the average he arrived at. I consider then that there is no sufficient reason to depart from his average, which produces a commercial value at 30 June 2007 of $1,725,006. There was no evidence of any appreciation since then, and I consider that I should take that figure for my purposes.

402 However, to arrive at the appropriate value for the lost opportunity, it seems necessary to take account of the lower rates of return for residential property. I do not consider that I should use as Mr Liggins does (in Exhibit 8) the REIWA data. That is because he appears to have used the same percentage rate of increase throughout, rather than using what appear to be figures closer to the actual changes in median values over that period. There is a somewhat similar problem for the commercial properties figure, of course. None of his selected properties involved purchase and resale transactions that matched the period in question. However, the figure for the Armadale property did, on the evidence I will shortly reach from Mr Spencer as to its value at the date of trial; and there were the actual purchase and resale transactions over the different period to which his evidence related.

403 I consider that the percentage rates of increase for residential properties I should use are those he supplies from Landgate, which his evidence indicates is the best primary source, and on which the REIWA data draw. That produces a figure for residential value of $1,438,960, the figure he provides (Exhibit 8).

404 I consider that it is necessary to take account of the possibility that the plaintiff might have invested in either the residential or the commercial property markets. I would do that by taking the mid-point between the commercial and the residential values, or $1,581,983, from which the original capital investment of $665,000 should be deducted, to produce a capital appreciation of $916,983.

405 From this capital appreciation I must deduct that for the Armadale property over the same period. That appreciation was on the assessments I have made from $410,000 to $615,030 or $205,030.

406 The difference in amounts for capital appreciation, representing the damages for opportunity cost loss, would thus be $711,953, before the final allowance referred to at the end of this section of my reasons.

407 I have considered whether or not a further adjustment needs to be made to this amount, in relation to the investment of $665,000, to allow for contingencies. Such contingencies would be a particularly disadvantageous bargain, such as a purchase in a low performing suburb, or an error in assessing the value of the transaction. At the same time, however, allowance would need to be made for the contingency that the Friggers would have done better than the figure allows for here.

408 I consider that balancing the matters out there is no reason to adjust the figures.

409 I have noted that Mr Spencer in his evidence opined that there would be little or no change in the value over the period between 1 April 2007 and the date of trial, in late November 2007 (cross-examination 28 November 2007 ts 938). However, I note the latter evidence rests on his view as to the stabilisation of market rentals for service stations, and it seems to me it does not take account of any increase in the value of the vacant land. At the same time, I cannot (for example) simply apply Mr Liggins' rate of increase for commercial property to the vacant land, without evidence, which I lack, about the relationship between the value of vacant industrial land in Armadale and the average Mr Liggins derived. I consider then I have no reason to adjust Mr Spencer's figure further.

410 Finally, I need to reduce the damages in respect of investment opportunity loss by the amount of the stamp duty that would have to have been paid to attain it. The best evidence I have of that duty is the amount actually paid on the acquisition of the Armadale property, of $36,875 (excluding any penalty), the deduction of which produces a final figure of $675,078.

Are aggravated or exemplary damages recoverable?

411 Neither exemplary nor aggravated damages are available for contravention of the statutes: Lochart [11.9].

412 However, exemplary damages are recoverable in deceit: Fleming 703. At the same time, it would appear that aggravated damages, which are concerned with the impact of a defendant's conduct on the plaintiff's feelings, are not available to a corporation, which of course the plaintiff is: Fleming 274.

413 In my view, however, this is not a suitable case for an award of exemplary damages.

414 I consider the following, from Cotogno v Lamb [No 3] (1986) 5 NSWLR 559, 586 - 587, aff'd Lamb v Cotogno [1987] HCA 47; (1987) 164 CLR 1, sets out the considerations I must use in determining whether or not an award is appropriate:

An award of exemplary damages acts as an example to all those in the community who might engage in wrongdoing involving a conscious and contumelious disregard of another person's rights. Nor should it be thought, as the argument for the defendant appeared to maintain, that exemplary damages constitute an historical anomaly which no longer serve any useful purpose. The sanctions of the criminal law are not always sufficient to protect the weak and the disadvantaged against the oppressive conduct of the powerful and the wealthy. An award of exemplary damages also serves another useful social purpose: it helps to remove the sense of grievance which the plaintiff feels when he has been the victim of insulting behaviour ... I think that the average Australian would expect that the victim of conscious wrongdoing committed in contumelious disregard for his rights should receive more than a person who has received comparable injuries without such conduct ... the courts in interpreting and applying the law should apply the standards and respond to the demands of the average, responsible member of the community.

415 At the same time I also note that such awards are 'rare': Pollack v Volpato [1973] 1 NSWLR 653, 656 - 657 (Hutley JA).

416 Counsel for the plaintiff put to me that I should take account of considerations of the way in which it was said the defendants had conducted themselves in these proceedings or of findings in respect of the second defendant in other proceedings, being those to which I earlier referred in my address of the issue of the credibility of the second defendant's evidence.

417 I disagree. It seems to me the concern to which punitive damages responds is to mark the particular character of the defendant's wrongful conduct, not the subsequent conduct of any litigation unless at least that is part of the wrongful conduct relied upon as giving rise to other relief: see Whitfeld v De Lauret & Co Ltd [1920] HCA 75; (1920) 29 CLR 71, 77 (Knox CJ). The matter is even stronger in respect of other litigation. The matter of the way a person has conducted himself in litigation appears to me (putting aside orders of a case management kind) at most to be a matter for costs.

418 Punitive damages may be awarded for conduct that is not malicious: thus, reckless conduct can attract an award of punitive damages: The Laws of Australia [33.10.200].

419 However, it seems there must be 'conduct showing a conscious and contumelious disregard for the plaintiff's rights': XL Petroleum (NSW) Pty Ltd v Caltex Oil (Australia) Pty Ltd [1985] HCA 12; (1985) 155 CLR 448, 471 (Brennan J); Fleming 273. In this case, I have found that the second defendant was aware that the tenants' payments representation was untrue and the impression I have found was misleading. However, I have also noted the defendant's evidence he believed (with some justification in my view, although not sufficient to cause me to arrive at different findings than those I have previously referred to) that he was dealing with relatively sophisticated investors who he expected to be conducting their own inquiries, and who in fact did so in a range of respects. Further, I do not consider it has been shown he considered as a result of his conduct he was in a position to procure a transaction by which he would be taking advantage of them, and therefore is a person who must through an award of exemplary damages be shown that 'tort does not pay' (Broome Cassell & Co [1972] UKHL 3; [1972] AC 1027, 1130, Lord Diplock, quoted in XL Petroleum 471, Brennan J). I do not consider it has been shown he believed or was reckless as to whether or not the transaction was one that was disadvantageous to them. While I have found his conduct has fallen short in the respects I have indicated, I do not consider it has been shown that in that conduct he was acting in 'conscious and contumelious disregard for the plaintiff's rights'.

420 The plaintiff has claimed interest on the damages awarded to it from the date on which the losses occurred for which the damages are compensation to the date of judgment pursuant to Supreme Court Act 1935 (WA) s 32.

421 Supreme Court Act s 32(1) confers a discretion to award interest in the following terms:

In any proceedings for the recovery of any money (including any debt or damages or the value of any goods), the Court may order that there shall be included, in the sum for which judgment is given, interest at such rate as it thinks fit on the whole or any part of the money for the whole or any part of the period between the date when the cause of action arose and the date when the judgment takes effect.

422 The most commonly recognised purpose, if not the sole purpose, of such an award is as described in Grincelis v House [2000] HCA 42; (2000) 201 CLR 321 [16], to which reference is made in Rio Tinto Exploration Pty Ltd v Graphite Holdings Pty Ltd [2007] WASCA 276 [46] (McLure JA) as follows:

The function of an award of statutory interest is to compensate a plaintiff for the loss or detriment which he or she has suffered by being kept out of his or her money during the relevant period: Grincelis ... [16]. The relevant period is that between the date when the cause of action arose and the date when judgment takes effect (s 32(1) of the Act). The High Court noted in Grincelis that there may be a further purpose of encouraging early resolution of litigation.

424 The plaintiff in this case was an investor seeking at the time of the acquisition of the Armadale property a suitable investment opportunity. Its cause of action, whether at common law (in deceit or negligent misstatement) or under the statutes, arose no later in my view than the date of settlement of the transaction: see Pine River [115] - [118] (Steytler J). It seems to me that it is appropriate in the exercise of my discretion I should order the payment of interest on the capital loss on the acquisition of the Armadale property from the time of settlement, on the basis the plaintiff has been denied its money since then.

425 Different considerations apply, in my view, to the claims for loss of rental under the Northdown lease and to the loss of the investment opportunity. The losses in those two cases were prospective as at the date of settlement. On the basis on which I am exercising my discretion, I have determined, as to the former, interest on the amounts unpaid should run from the dates on which each of the respective amounts that were not paid became due and payable. As to the latter, I consider the loss is claimed as at the date of the commencement of the trial, and that is the date from which, in my view, interest should run.

426 I will hear from the parties as to the orders that should be made to give effect to these reasons, including orders as to costs.

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : COMPUTER ACCOUNTING AND TAX PTY LTD -v- PROFESSIONAL SERVICES OF AUSTRALIA PTY LTD [2008] WASC 133 (S)

HEARD : 2, 5 - 9, 28 NOVEMBER, 3, 5, 10 DECEMBER 2007, 29 FEBRUARY, 17 DECEMBER 2008, 6 APRIL 2009

Costs of action - Approach to be adopted where more than one cause of action and plaintiff largely but not entirely successful - Costs ordered as percentage

Reserved costs - Orders made for some but not all such costs - Application for certain costs of Magistrates Court proceedings

Certificate for costs of transcript - Whether provision should be made for only a proportion of such costs on basis costs should be shared by the parties

Special costs orders - Jurisdiction under Legal Practice Act 2003 (WA) s 215(2) - Approach to be adopted to exercise of jurisdiction - Some but not all orders applied for made

Practice and procedure - Leave to re-open consideration of matter after hearing but before delivery of judgment - Fresh evidence

Costs of this application - Approach to be adopted - Order for costs in the cause

Copyright Act 1968 (Cth), s 43

District Court Act of Western Australia Act 1969 (WA), s 78(a)

Legal Practice Act 2003 (WA), s 215

Rules of the Supreme Court 1971 (WA), O 66 r 1(1), O 66 r 12(1)

Sentencing Act 1995 (WA), s 89(1)

Cazaly Iron Pty Ltd v Minister for Resources [No 5] [2008] WASCA 181

Computer Accounting & Tax Pty Ltd v Professional Services of Australia Ltd [2008] WASC 133

EDWF Holdings 1 Pty Ltd v EDWF Holdings 2 Pty Ltd [2008] WASC 275 (S)

Esther Investments Pty Ltd v Markalinga Pty Ltd (1992) 8 WAR 400

Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S)

Green v Wilden Pty Ltd [2005] WASC 83 (S)

Heartlink v Jones as Liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S)

Hodgkinson v Doepel & Associates Architects Pty Ltd [2006] WASC 237 (S)

JH Lever & Co Pty Ltd v Maniotis [2006] FCA 1668

Keen v Telstra Corp Ltd [2006] FCA 834

Mackenzie v Albany Finance Ltd [2003] WASC 100 (S)

Moody v French [2008] WASCA 67

Osborne v Landpower Developments Pty Ltd (in liq) [2003] WASCA 117

Permanent Building Society v Wheeler (1993) 10 WAR 569

Phillips Fox v Westgold Resources NL [2000] WASCA 85

Scherer v Counting Instruments Ltd [1986] 2 All ER 529

SDS Corporation Ltd v Pasdonnay Pty Ltd [2004] WASC 26 (S2)

Verdell Pty Ltd v F & G Nominees Pty Ltd [2002] WASC 58 (S2)

1 This is an application by the plaintiff for orders as to costs following judgment in the trial of this action. That judgment was Computer Accounting & Tax Pty Ltd v Professional Services of Australia Ltd [2008] WASC 133. The orders on judgment dated 9 July 2008 provided for this application.

2 The application canvasses a range of matters, being the liability for the costs of the action; costs of the transcript of the trial and other hearings; certain reserved costs; and special costs orders to uplift the maximum allowances under certain items in the relevant costs determination of the court.

4 However, before doing so, I provide a short account of the procedural history of this action. That history is of a lengthy and fairly complicated kind, and has some importance to a number of the orders sought by the plaintiff.

5 In addition, I refer to a hearing to consider further material of which the defendants had become aware following the hearing on 17 December 2008 of the plaintiff's application.

6 I describe the character of the action in very basic form here; I go into that character in more detail in the next section of these reasons. In this section I am concerned rather to refer to the major procedural steps taken in the action.

7 I draw for this account on Computing Accounting & Tax [8] - [12] and [106], with a correction for the number of days of the trial, which ran over 11 days, including the last day given over to closing submissions, not 12 days with that inclusion, as shown in the judgment.

8 These proceedings have their origin in proceedings in the Local Court. Those proceedings were No 17065 of 2003, commenced by summons on 17 September 2003. Those proceedings were a claim by the plaintiff, and its two directors and shareholders, Hartmut Huber Josef Frigger (Mr Frigger) and Angela Cecilia Theresa Frigger (Mrs Frigger), against the first defendant and against Martin Paul Banning (Mr Banning, now deceased) for loss incurred in the purchase of a property in Armadale (the Armadale property), then leased as a service station and an automotive workshop, as a result of misleading or deceptive conduct. Substituted particulars of claim and amended substituted particulars of claim prepared by solicitors subsequently engaged by the plaintiff were later filed in those proceedings.

9 On 9 July 2004 an order was made in the Local Court granting leave for Mr and Mrs Frigger to have themselves removed as plaintiffs in the proceedings.

10 By order of 14 November 2005, the proceedings, in the Perth Magistrates Court as the relevant Local Court had by then become, were transferred into the District Court. The District Court proceedings were initially CIV 332 of 2004 but became CIV 2797 of 2005. A statement of claim was filed in those proceedings.

11 Still later, by order made by consent on 17 November 2006, following an unsuccessful attempt to have the proceedings transferred into the Federal Court, the District Court proceedings were transferred into this court, to become CIV 2265 of 2006 (the present proceedings).

12 The pleadings at the time of trial comprised a further further re-amended statement of claim filed on 7 November 2007 which was the result of leave to amend that was granted on the second day of the trial (the statement of claim), further amended defence to further re-amended statement of claim (the defence), and the plaintiff's amended substituted reply, which was the result of leave to substitute granted on the seventh day of the trial (the reply).

13 On 9 July 2008 judgment was delivered in the action. Mr Banning died after that delivery, and the present second defendant was substituted for him by order yet to be extracted. I will from now on when referring to the 'defendants' subsume by that term the first defendant and both second defendants.

14 Initially in the Magistrates Court the plaintiffs were self-represented. Subsequently, the plaintiff retained four different firms of solicitors of record.

The further hearing of the plaintiff's application

15 The plaintiff's application as to costs was initially heard on 17 December 2008.

16 On 20 January 2009, counsel for the defendants, in the course of counsel's representation of another person, became aware of certain matters. He became aware of them as a result of inspection on a discovery in proceedings which had been instituted against the person he represented by Mr and Mrs Frigger. The plaintiff in the present action had been substituted as plaintiff in those proceedings. They were Magistrates Court No 5093 of 2008. They arose out of the representation of the plaintiff in what became the present action. The matters of which counsel became aware were contained in an invoice for counsel fees (the fresh evidence) of the then counsel for the plaintiff in the present action. Those matters included the amount charged per day by counsel for the first six days of the trial in the present action. Special costs orders are sought by the plaintiff in respect of counsel fees paid for those days, among others.

17 On 17 February 2009 at a hearing before me I was informed of the commencement by originating summons of proceedings in this court in CIV 1216 of 2009. Those proceedings were to have counsel for the defendants relieved of the implied undertaking in respect of the discovery in Magistrates Court No 5093 of 2008. That relief was sought for the purposes of disclosing the fresh evidence to me and to the solicitors for the defendants in the present action. I agreed to allow time for the proceedings in CIV 1216 of 2009 to be determined.

18 By chamber summons filed 6 March 2009 the defendants sought an order that the delivery of judgment on the plaintiff's costs application be stayed until further order.

19 On 12 March 2009 Le Miere J made orders in CIV 1216 of 2009 in terms of the originating summons in those proceedings.

20 On 16 March 2009 following a hearing before me I made orders that delivery of judgment on the plaintiff's costs application would be stayed until a hearing had taken place to consider the fresh evidence and reserved the costs of the defendants' application by chambers summons of 6 March 2009.

21 On 6 April 2009 the hearing called for by the orders of 16 March 2009 took place.

22 I consider below the fresh evidence and related matters.

23 The plaintiff's 'Minute of Proposed Orders on Special Costs Application' filed 28 October 2008 (the plaintiff's minute) seeks an order the defendants pay the plaintiff's costs of the action, to be taxed.

24 The defendants' 'Minute of Proposed Costs Orders' filed 12 December 2008 seeks an order that the defendants pay 70% of the plaintiff's costs of the action to be taxed 'in accordance with the applicable Courts' determinations'.

25 To provide the background to these competing orders, I must first describe the nature of the action in more detail, the issues canvassed in the judgment and the resolution there of those issues. I will then review the principles that in my view should guide the exercise of my discretion as to costs, before applying those principles.

26 The action as tried was for damages (including aggravated or exemplary damages) in respect of economic loss or damage for representations by the first defendant for which Mr Banning was the maker or in which he was involved. Liability was rested on contraventions of Trade Practices Act 1974 (Cth) s 52 and Fair Trading Act 1987 (WA) s 10, and on negligence and deceit. The economic loss claimed was on the plaintiff's purchase from the first defendant of the Armadale property.

27 The substantive issues in the trial were the following, as described in Computer Accounting & Tax [46]:

The substantive issues in this trial go to whether there were representations that were false or conduct that was misleading as pleaded, whether there was negligence or fraud for the purposes of liability at common law in negligent misstatement or deceit, who was liable for the conduct in question, was there reliance on that conduct, what loss or damage was suffered thereby, whether aggravated or exemplary damages are recoverable, and whether interest should be awarded as claimed.

28 There was one further substantive issue, however. It had to do with the capacity in which the plaintiff had acted at certain material times. I reach it shortly.

29 The decision in Computer Accounting & Tax with respect to the substantive issues save for the further one was as follows.

30 As to the issue whether representations were made or conduct engaged in capable of being misleading or deceptive, I concluded that, of the representations or forms of conduct relied upon, most, numbered 1 to 5 in the judgment [187], including the principal representations or forms of conduct relied upon by the plaintiff in the action, were established.

31 As to the issue whether the representations made or forms of conduct engaged in were false or misleading or deceptive, I concluded that, of the five such representations or forms of conduct, all but one were shown to be false or misleading or deceptive.

32 As to the issue whether there was negligence in relation to the representations or forms of conduct engaged in that were false or misleading or deceptive, I concluded a breach of the duty of care in respect of each of them had been shown.

33 As to the issue whether there was awareness or recklessness sufficient for the tort of deceit in respect of all four of these representations or forms of conduct, I concluded this was made out in respect of two of the four.

34 As to the issue who was liable, I concluded both the first defendant and Mr Banning were liable for the four representation or forms of conduct at common law (at least in negligence) and under the Fair Trading Act, and as to the first defendant under the Trade Practices Act, but as to Mr Banning under that statute only in respect of two of the representations made or forms of conduct engaged in.

35 As to the issue whether there was reliance on the four representations made and forms of conduct engaged in, I concluded there was such reliance in all cases.

36 As to the issue of whether there was loss or damage, and of what sorts, I concluded I had insufficient evidence to establish loss of investment opportunity to gain higher rental returns, although I also noted the plaintiff did not press that claim in closing submissions; loss on making the acquisition by paying too much for the Armadale property was made out, albeit at an amount arrived at by adjustment of the amount claimed; and loss of an opportunity to make an advantageous capital investment (capital investment opportunity) was also made out, albeit at an amount arrived at by adjustment of the amount claimed.

37 As to the issue whether aggravated or exemplary damages were recoverable, I concluded they were not.

38 As to the issue whether interest was recoverable, I concluded that it was.

39 There was a further substantive issue, however, as I have indicated. It was the subject of significant evidence and argument at trial, and produced an amendment of the plaintiff's statement of claim during the trial. It concerned whether the plaintiff had acted at the material times as trustee for the Frigger Super Fund (the superannuation fund of Mr and Mrs Frigger), in which case the defendants' contention was that the plaintiff had suffered no recoverable loss, but rather any such loss suffered was that of the Frigger Super Fund. The matter of whether there was a factual foundation for this contention occupied some considerable trial time, and was resolved against the defendants. Further, I determined that, even had the resolution of the factual issue been otherwise, the defendants' contention would have failed.

40 I turn now to consider the principles in my view relevant to the exercise of my discretion as to the costs of the action.

41 My discretion should 'generally' be exercised to award the successful party its costs: Rules of the Supreme Court 1971 (WA) (SC Rules) O 66 r 1(1).

In the absence of any special order -

(a) where the statement of claim contains more than one cause of action and the plaintiff succeeds on one or more causes of action and the defendant succeeds on another or others, costs shall be allowed to the plaintiff on the cause or causes of action on which he succeeds and to the defendant on that or those on which he succeeds, in the same manner as if separate actions had been brought.

43 In the leading authority on this rule, Permanent Building Society v Wheeler (1993) 10 WAR 569, 572, 574 - 575 (Anderson J), the following appears:

I take 'cause of action' as being a factual situation, the existence of which entitles the plaintiff to obtain the remedy sought against the defendant(s): see Letang v Cooper [1964] EWCA Civ 5; [1965] 1 QB 232 at 242, per Diplock LJ.

...

In my opinion the approach required by the rules of this Court is that, once it is seen that separate causes of action are involved, and that the plaintiff has succeeded on only one or some, the defendant is prima facie entitled to his costs on the other or others. However, in my experience, this Court will not make such an order as of course. The court will always look at the realities of the case and attempt to do substantial justice. Thus it may be that, although it is strictly correct to say that different causes of action are involved, there may have been only one contest in substance. This will often be so when all causes of action arise out of the one course of dealings, the one transaction or the same facts. Where that is the situation there will usually be one order for the general costs of the action, moulded as necessary to ensure that, however rough and ready it may be, substantial justice is done: see Godden v Alford [1960] WAR 235 at 237. However, even in such cases it may be shown the successful party has in some relevant way misconducted himself or that the issues or causes of action on which the successful party has failed were unreasonably raised by that party. This would bring into operation different principles.

In my opinion, unless it can be said that the two causes of action on which the plaintiff failed had been 'unreasonably raised' this is not a case in which it would be fair to take the easy course by awarding costs to the plaintiff on the issue on which it was successful and costs to the second and fourth defendants on the other issues.

44 On the account of the issues in this case I have earlier set out it appears to me the plaintiff had complete success or, when the importance of the matters on which it succeeded is considered against the importance of the matters on which it did not, was largely successful as to all of them. The matter in which the plaintiff did not have complete success did not in my view contribute significantly to the length of the trial or otherwise represent matters of significance at least to the extent indicated by the defendants' minute.

45 I am of the view there were a number of 'causes of action', being principally different representations or forms of conduct, and the factual bases for deceit and aggravated damages or exemplary damages.

46 However, in my view, while there may or may not have been only 'one contest in substance' (on which see Permanent Building Society 575 and the approach his Honour took in that case), it would not in any event be appropriate to award costs to the defendants on the 'causes of action' on which the plaintiff failed where all of the causes of action pleaded arose out of one course of dealing and were reasonably raised.

47 Doing the best I can I would award costs to the plaintiff with a percentage reduction from those costs to reflect the areas and degrees of lack of complete success the plaintiff sustained: see on this approach Phillips Fox v Westgold Resources NL [2000] WASCA 85 [28] (Owen J); and Mackenzie v Albany Finance Ltd [2003] WASC 100 (S) [18] (McLure J). That reduction in my view should be 10%.

48 I turn now to the matter of costs of the transcript of the trial and other hearings.

Certificate for transcript of the trial and other hearings

The Plaintiff's [sic] be awarded court fees for transcript of trial and other hearings in the Supreme Court in the sum of $ .

50 At the hearing counsel for the plaintiff confirmed the plaintiff did not ask the court to set a sum for this item. Rather the matter should be treated as a request for a certificate for the transcripts in question, with the amount for them to be left to the taxing officer.

There be a certificate for one-half of the costs incurred by the Plaintiff in obtaining a transcript of the trial. The taxing officer is directed to make allowance for one-half of the costs of obtaining the transcripts of such interlocutory hearings as may be considered to be reasonable.

52 It may be seen there is no contest over a certificate for the costs of the transcript of the trial, except as to the proportion of the costs to be certified for; it may also be seen that there is a contest over the certificate for the costs of the transcript of other hearings.

53 As to the division of the costs of the transcript of the trial, for the defendants it was put that it was reasonable to expect a party to confer with the opposing party in relation to obtaining such a transcript. Had such conferral taken place, it was said, the parties would have agreed to share the cost of obtaining the transcript.

54 I agree that it is desirable parties confer with a view to sharing costs where such cost sharing is reasonably possible. I was told the parties in this case shared the costs of inspection of certain documents in the possession of a former solicitor for the plaintiffs, although it may be noted that I had called for joint inspection, and it was not explained to me how the costs had been shared.

55 However, it is clear to me that in many circumstances sharing of costs may not be reasonably possible, or may not be on an even sharing basis.

56 In this case, as counsel for the plaintiff reminded me, I had asked for the parties in making their closing submissions at trial to make specific references to transcript page numbers. Even without such a request, I would expect parties in a trial as a matter of routine to have given serious consideration to securing the transcript on a running basis: see Kendall C and Curthoys J, Civil Procedure in Western Australia (at 6 January 2009) [34.5.8A]. Indeed, it appears that the plaintiff at least had proceeded in this case on the basis of securing the running transcript. Whether the ensuing use of the transcript by annotation or otherwise would preclude copying of it for the defendants was not clear to me. Of course if there were a practice of sharing the cost of transcript a party would, once the transcript was obtained and as a matter of course, make a copy of that transcript against the possibility of such sharing. However, I was not told of any such practice of sharing and I am not aware of one.

57 There may, however, be a particular difficulty with transcript, of the trial or of other hearings. It is that of copyright in the transcript, which counsel for the plaintiff referred to me. Whether or not Copyright Act 1968 (Cth) s 43 would authorise copying for another party of transcript obtained by a party was not made clear to me. However, the copyright warning carried on transcript that is made available to a party on payment of the relevant fee would in my view make it reasonable for a party not to consider sharing the transcript with the other party by copying it, at least in the absence of an approach by the other party. It was common ground there had been no such approach here.

58 In my view, on the foregoing, it is appropriate I give a certificate for the trial transcript in this case without reduction.

59 As to the costs for transcript of other hearings, the matter in my view resolves to whether or not those costs were necessarily or reasonably incurred: see Legal Practitioners (Supreme Court) (Contentious Business) Determination 2006 (2006 Determination) Table item 33. I consider that the certificate the defendants' minute provides for does not add anything to that provision, except as to the proportion of costs recoverable, which I would not consider it appropriate to specify for the reasons previously given. There is not, it seems to me, the same reasons as in the case of the trial to obtain the transcript of such hearings. On that basis, I do not consider a certificate for such costs is appropriate.

60 I turn now to the matters of certain costs reserved at the hearings to which the parties' competing minutes refer. At the end of my consideration of those matters, I address a further one, of a similar sort, not the subject of any reference in either of those minutes.

61 I turn then to the first matter of reserved costs.

Reserved costs: the defendants' application of 17 January 2006

62 This was an application to join a Mark Edward Penrose as a defendant in the proceedings. The application was discontinued by the defendants.

63 The plaintiff's minute cl 2(a) calls for the reserved costs of the application to be awarded to the plaintiff. The defendants in their written submissions indicated they did not object to the order sought by the plaintiff. There should thus be an order in the terms sought.

64 However, I have noted the defendants' minute cl 2a would make the costs payable by the defendants fall under the general order for costs of the action. Thus on that provision the reserved costs in question would be one for 90% of them, on the order for the costs of the action I would make. However, it is not clear to me why the reserved costs in question should be so reduced when the defendants discontinued the application. I would thus make the order in the terms first described.

Reserved costs: directions hearings on 3, 7 and 14 May 2007

65 The plaintiff's position was that these reserved costs should follow those of the action: plaintiff's minute cl 2(b) read with cl 1. The defendants' position was that the plaintiff should pay the defendants' costs of those hearings with a specific inclusion I will reach: defendants' minute cl 4.

66 The directions hearing on 3 May 2007 before me was held on the application of the plaintiff for leave to rely upon certain expert reports, for leave to rely upon certain witness statements of non-expert witnesses, being Mr and Mrs Frigger, and for a time for service of non-expert witness statements for the defendants.

67 There had been trial orders made by Le Miere J on 22 February 2007, providing for a trial listed to commence on 7 May 2007 for six days, and for trial documents and non-expert witness statements. The only orders for expert evidence had been made by the District Court in January 2006 and provided for service of or disclosure as to such evidence by a date long since passed. Expert reports for which leave had been sought included one, directed to the matter of investment opportunities in the Perth real estate market at certain times (and therefore relevant to the plaintiff's claim for loss of capital investment opportunity), which was of some complexity and technicality. That report had been provided to the defendants 11 working days before the day listed for the commencement of the trial, 7 May 2007.

68 Further, the orders of Le Miere J for non-expert witness statements for the plaintiff had called for these to be provided for service no later than 10 working days before the trial, where the witness statements of Mr and Mrs Frigger had been served with their annexures on 2 May 2007. Both witness statements were substantial. The orders of Le Miere J provided for witness statements for the defendants by five working days before the trial. No such witness statements had been provided by the hearing of 3 May 2007.

69 At the hearing of 3 May 2007, I determined it was appropriate orders be made for the trial of preliminary issues as to the conduct relied upon to justify relief sought and causation of the purchase of the Armadale property, to commence on Tuesday 8 May 2007, to allow for the return of subpoenas on Monday 7 May 2008. Thus, (if those orders were made) the matter of the assessment damages for loss, including the loss of investment opportunity, would be left for a separate hearing.

70 In the event, subpoenas were returned on Monday, 7 May 2007. However, following exchanges between the parties over the previous weekend with a view to producing a revised set of trial orders, including a list of preliminary issues for the trial, and following submissions from the parties, I vacated the trial date of 8 May 2007, and called on the parties to confer with a view to producing new trial orders.

71 The defendants' minute includes an order for any costs thrown away 'as a consequence of the vacation of trial dates on 7 May 2007'.

72 In the event a hearing was held on 14 May 2007 to consider competing sets of trial orders (both of which included orders as to expert evidence), to replace those of Le Miere J; to consider the defendants' application to have the action removed from the trial list; to consider an objection to produce certain documents made at the return of subpoenas on 7 May 2007; to consider an application for leave to the plaintiff to amend its re-amended statement of claim; and to deal with inspection of documents that were with a previous solicitor for the plaintiff. I made orders at the hearing in the first, fourth, and fifth respects, I dismissed the application in the second respect and I provided for further submissions in relation to the third respect. I made an order for costs thrown away in relation to the amendments to the pleadings for which I had given leave. On 15 October 2007 I ordered costs in relation to the third respect 'in the cause'.

73 Counsel for the plaintiff referred me to submissions made for the defendants at the hearing of 7 May 2007 in support of the removal of the action from the trial lists. Those submissions were that the defendants had been unable to inspect documents, the plaintiff's non-expert witness statements were late and some of its expert reports were also late. Counsel for the plaintiff put to me that none of those matters individually should be seen to displace what the parties appeared to accept was the usual approach to costs of hearings in the nature of directions ones, that of costs in the cause. In any event I consider that is the proper approach to the costs of that hearing, as it was predominantly, if not exclusively, a hearing to produce new trial directions.

74 As to the inability to inspect documents, counsel for the plaintiff drew to my attention prior opportunities to inspect of which the defendants had not availed themselves and the fact the documents were not available at the late stage requested was because they had been or were in the process of being incorporated into the trial bundle.

75 I note the confirmation of a number of these matters in the affidavit of Mrs Frigger sworn 12 October 2008 in support of the plaintiff's application for special costs orders and reserved costs (the affidavit of Mrs Frigger of 12 October 2008).

76 However, I have also noted what counsel for the defendants put to me, from the affidavit of David Vilensky, of the then solicitors for the plaintiff, sworn 2 May 2007 for the hearing of 3 May 2007 (the Vilensky affidavit of 2 May 2007). That affidavit indicated that at least some of the documents were unavailable because they were with the previous solicitors for the plaintiff. At the same time I note that the opportunity to inspect documents was being taken late in the proceedings, and previously the defendants had sought only copies of particular documents. It is true that subsequently to 14 May 2007 there was further discovery provided by the plaintiff, and amendments to the statement of claim were provided for, both at the hearing on 3 May 2007 and subsequently. However, in my view the discovery and the amendments were at least in significant part in response to the case for the defendants as it became clearer over this period. That case was in substantial part that of the capacity in which the plaintiff was acting at all material times.

77 As to the late non-expert witness statements, counsel for the plaintiff put to me that that lateness was due to the diversion of the plaintiff's resources into preparation for the defendants' application for security for costs to which I return below. Further, the defendants had filed the witness statements of their non-expert witnesses after the due dates for them provided for in the trial orders of 14 May 2007.

78 In respect of the last matter, in my view it has some but limited bearing on my assessment of the plaintiff's submissions. That history of late filing does not seem to me to have a bearing on the diligence with which the plaintiff would have seen to compliance with the trial orders of Le Miere J. At most that history goes to show that, even if there had been compliance with the trial orders of Le Miere J, the defendants at all material times might not have been in a position to proceed to trial on the due date. However, the defendants were in a position to proceed to trial on 2 November 2007 notwithstanding their lateness in relation to their non-expert witness statements. They did seek to have that date adjourned or vacated as I have indicated, but on another basis which I will consider below.

79 Counsel for the defendants pointed out that in the Vilensky affidavit of 2 May 2007 no mention is made of lateness of the non-expert witness statements for the plaintiff as being due to the security for costs application. However, I accept that it is likely, in view of what appears to be considerable work by Mr and Mrs Frigger that went in to that hearing, that that work significantly affected their ability to prepare the witness statements for trial. Later in these reasons I address that work and why that work was done. Further, I am not convinced the security for costs application, coming when it did, was one the possibility of which the plaintiff might reasonably have been expected to plan for.

80 As to the expert reports for the plaintiff that were late, counsel for the plaintiff relied on the fact the principal such report, relating to the claim for loss of capital investment opportunity, simply confirmed the increase in real estate values using several indices, and the defendants indeed never filed any expert reports of their own. However, I note that considerable trial time was devoted to the subject matter of that report, and supplemental ones updating it, and the order for trial of other matters as preliminary issues I had indicated should be made was the result of my view of the complexity and technicality of the report.

81 In the event, I have determined that the appropriate costs order as to the costs reserved from the hearings of 3 May 2007 and 14 May 2007 is that there be no order as to those costs.

82 I consider the contribution of the plaintiff to the necessity to arrive at new trial orders makes it appropriate not to award costs in the cause.

83 At the same time, I am convinced that that necessity was also substantially contributed to by the conduct of the defendants. This conclusion makes it appropriate not to order costs for the defendants.

84 I have also concluded that the appropriate order for the reserved costs of the hearing of 7 May 2007 is the same, with a saving.

85 I accept that the hearing was in significant part given over to the return of subpoenas, and I would make a saving for the costs of that.

86 However, the hearing of 7 May 2007 was the result of the orders for the trial made on 3 May 2007, and led directly to the hearing on 14 May 2007. The reason the matter did not proceed to trial on preliminary issues was the inability of the parties to find a definition of such issues. The necessity to arrive at such a definition arose from the circumstances both parties contributed to as I have indicated that had produced the orders made on 3 May 2007 and led to the orders made on 14 May 2007.

87 I consider a saving should be made for the costs in relation to the return of the subpoenas on 7 May 2007, as costs in the cause. As I have indicated, I made an order for costs in the cause with respect to submissions arising out of the return of one of them. In my view it would not be appropriate to deal otherwise with the costs of that subpoena at the hearing on 7 May 2007, or the costs of the other subpoenas on that day.

88 I turn now to the next matter of reserved costs.

Reserved costs: the defendants' application to amend the defence on 15 October 2007; the plaintiff's application for freezing orders on 8 and 11 January 2008

89 The defendants' application was discontinued by the defendants.

90 On 8 January 2008 at an ex parte hearing I granted the plaintiff's application for freezing orders and adjourned the matter to a further hearing to be relisted on the defendant's application; while on 11 January 2008 on the defendants' application Hasluck J varied the freezing orders.

91 The plaintiff's minute [2(d)] and [2(e)] call for the costs reserved in each case to be awarded to it, and the defendants in their written submissions indicated they did not object to the orders sought by the plaintiff. There should in my view be an order in the terms sought by the plaintiff.

92 I have noted the defendants' minute cl 2b and cl 2c includes the costs payable by the defendants under the general order for costs of the action. This would make the order one for 90% of the reserved costs in question. However, as with the first matter of reserved costs considered above, it is not clear to me why the present reserved costs, one for an application discontinued by the defendants, and one by the plaintiff that was successful to protect a future judgment under which the plaintiff was substantially successful should be so reduced. I would make the order in the terms first described.

93 I turn now to the remaining matter of reserved costs from the plaintiff's minute.

Reserved costs: the plaintiff's request for appointment of a receiver heard on 9 July 2007

94 By letter dated 5 June 2008 and minute of receiver order filed 5 June 2008 the plaintiff applied for the appointment of a receiver by reason of alleged breaches of the freezing orders, as deposed to by Mrs Frigger in her affidavits sworn 30 January 2008 and 5 June 2008. An affidavit in opposition to the application, of Mr Banning sworn 8 July 2008, was handed up in court at that hearing but not formally filed. On 9 July 2008, before there had been a hearing of the merits of the plaintiff's application, judgment was delivered. However, at the hearing that day I directed the parties to confer about the continued need for the application.

95 I should also note that, on 21 November 2008, on a separate application by chamber summons of the plaintiff dated 8 August 2008 I made an order for the appointment of a receiver in respect of some but not all of the assets for which application was made, and ordered that costs of that application be reserved.

96 The plaintiff's position was that it should be awarded the reserved costs of the earlier request: see plaintiff's minute cl 2(f). The defendants' position was no provision for costs should be made, at least until the request was heard and determined, or formally discontinued.

97 In my view, I am not in a position, where the request was not pressed, and a separate application of a similar kind was brought subsequently, to determine liability as to costs. In my view, the position put to me by the defendants is to be preferred, even although it may be likely to mean in effect (if not in form) no order as to costs, as it seems to me unlikely the plaintiff will bring the earlier request forward for determination or discontinue it, unless the defendant seeks its costs.

98 I turn now to a further matter of reserved costs not dealt with in the plaintiff's minute.

99 Prior to the hearing on 17 December 2008 counsel for the plaintiff by letter to the court dated 16 December 2008 indicated an order would also be sought for the costs incurred in the Magistrates Court (by which I assumed was also meant the Local Court) proceedings in this matter. Those costs, the letter indicated, had been awarded to the plaintiff there, and comprised filing and service fees for the originating summons of 17 September 2003, a chamber summons for an order the defendants file a defence, which order was made by Magistrate Whiteley on 9 July 2004, and an expert fee for a licensed valuer for a report obtained for the assessment included in the sum awarded in the summary judgment for the plaintiff in August 2004. However, on 8 February 2005, it was said, the District Court had ordered those costs be reserved to the trial judge.

100 At the hearing before me, counsel for the plaintiff indicated he would not press for an order in the same terms as in the Magistrates Court, on the basis the amounts concerned would be included in any order that the costs of the action follow the event. As I have indicated earlier, that is the substance if not the form of the order I have indicated I would make.

101 However, it is not clear to me that, if the District Court order remains as it is, that that would be the result: see District Court Act of Western Australia Act 1969 (WA) s 78(a).

102 In my view, the matter of the costs in the Magistrates Court referred to requires greater development than it received at the hearing before me on 17 December 2008. As put by the defendants' counsel, the date of receipt of the plaintiff's letter made submissions by the defendants in relation to the matter particularly difficult; indeed my programming orders for the hearing of 17 December 2008 had called for submissions including any further submissions by the parties to be filed and served by 11 December 2008.

103 At the same time, I cannot dismiss the plaintiff's application as to the costs in the Magistrates Court the subject of the District Court order as simply made too late. This is given the reservation of the costs to me, and the undoubted difficulty in discovery of that order in proceedings as complicated procedurally as these have been.

104 Accordingly, I will hear further from the parties as to the order to be made in respect of the costs in the Magistrates Court the subject of the District Court order.

105 I turn now to the special costs orders sought by the plaintiff, beginning with a review of the general principles that appear to me to guide the exercise of jurisdiction to make such orders.

106 My jurisdiction to make special costs orders in this case lies in Legal Practice Act 2003 (WA) (2003 LP Act) s 215, which reads as follows:

215. Effect of determination

(1) Subject to sections 221 and 241 of this Act and section 14 of the Legal Aid Commission Act 1976 -

(a) the taxation of bills of costs of legal practitioners, as between legal practitioner and client or party and party; and

(b) any other aspect of the remuneration of legal practitioners the subject of a determination,

is regulated by a legal costs determination in force under section 210.

(2) Despite subsection (1), if a court or judicial officer is of the opinion that the amount of costs allowable in respect of a matter under a legal costs determination is inadequate because of the unusual difficulty, complexity or importance of the matter, the court or officer may do all or any of the following -

(a) order the payment of costs above those fixed by the determination;

(b) fix higher limits of costs than those fixed in the determination;

(c) remove limits on costs fixed in the determination;

(d) make any order or give any direction for the purposes of enabling costs above those in the determination to be ordered or taxed.

(3) Nothing in subsection (1) is to be construed as limiting the power of a court, a judicial officer or a taxing officer of a court to determine in any particular case before that court or judicial officer the amount of costs allowed.

(4) If a legal costs determination is in force under section 210 in respect of any business referred to in section 210(2), any other subsidiary legislation fixing or purporting to regulate the remuneration of legal practitioners in respect of that kind of business is of no force or effect.

107 The 2003 LP Act when it came into force on 1 January 2004 displaced the former source of the court's jurisdiction, SC Rules O 66 r 12(1), which was a wider provision, and was repealed effective 1 March 2007. See on that displacement SDS Corporation Ltd v Pasdonnay Pty Ltd [2004] WASC 26 (S2) [97], [98] (Roberts-Smith J), followed in most other authorities in the court, on which see Hodgkinson v Doepel & Associates Architects Pty Ltd [2006] WASC 237 (S) [29] (Simmonds J). However, as I will indicate, I consider, as I did in Hodgkinson, that at least some of the principles developed in relation to former O 66 r 12(1) may be applied to 2003 LP Act s 215(2) also.

108 At this point I should note that it may readily be suggested that once the court has formed the opinion with its components referred to in Heartlink v Jones as Liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S) [11] (Martin CJ) the court has a discretion. It may further be suggested that that discretion is not only as to the form of the orders it may make as described by LP Act s 215(2)(a) - (d). That discretion includes whether or not to make any order. The present section of these reasons is concerned with the principles that the authorities indicate should guide the court in determining whether or not it should form the opinion with the two components described. The next section of these reasons addresses the matter of the discretion and its exercise.

109 Special costs orders may be made under 2003 LP Act s 215(2)(b) or (c) to lift the hourly rate allowed for in a particular item in the relevant costs determination in force, or to lift the time allowed for in the particular item in that determination (see the orders I made in Hodgkinson (S)), or for both (see Cazaly Iron Pty Ltd v Minister for Resources [No 5] [2008] WASCA 181).

110 For my purposes a convenient summary of the principles to be applied to the making of orders under 2003 LP Act s 215(2) is to be found in Heartlink [11] - [23], [25], [26] (Martin CJ), as follows:

In that factual context, I return to s 215(2) of the Legal Practice Act. The first question that arises for my consideration is the nature of the task performed by the court under that section, and, in particular, the question which the court is required to address. Before the court can make an order under the subsection, the court must form an opinion which has two components. The first is that 'the amount of costs allowable in respect of a matter under a legal costs determination is inadequate', and the second is that the inadequacy arises because of the 'unusual difficulty, complexity or importance of the matter'.

The question posed to the court under s 215(2) will almost always arise before taxation has occurred. It is of course the responsibility of the taxing officer to tax the bill and identify with precision the amount that should be allowed in respect of the particular claim for costs. Section 215(2) also falls to be construed in the context of the well-known principle that at least in respect of costs as between party and party, the principle is that the successful party should be compensated by the unsuccessful party for their costs (see O 66 r 1, Rules of the Supreme Court 1971 (WA)).

Those two considerations provide a guide to the proper approach to be taken to the question posed to a court when an application is made under s 215(2). The policy considerations that should guide a court when addressing an issue under s 215(2) are, firstly, that the court should not usurp the role of the taxing officer and, secondly, that at least where party and party costs are concerned, the court should make an order that would give effect to the general principle of allowing the successful party to be compensated for their costs by the unsuccessful party, where appropriate.

There are two alternative ways in which one might approach the question of inadequacy posed by s 215(2). The first would be to require an applicant for an order under that subsection to satisfy the court that the bill to be taxed will, on the balance of probabilities, tax at an amount that is greater than the limit that would be imposed by the item in the relevant costs determination, which is therefore inadequate. The alternative approach would simply be to require an applicant for an order under the section to satisfy the court that there is a fairly arguable case to be put before a taxing officer to the effect that the bill to be taxed should tax out at more than the limit that would be imposed by the costs determination.

On this alternative view of the section, the court could arrive at the conclusion that the limit was inadequate because the maintenance of the limit would preclude the applicant from presenting a fairly arguable case to the taxing officer. The considerations to which I have referred, and in particular the view that the court should not, under this section, usurp or anticipate the role of the taxing officer, lead me to conclude that the latter of those two alternatives is the preferred approach to an application under s 215(2).

It therefore seems to me that the requirement of inadequacy will be demonstrated if the applicant shows that there is a fairly arguable case that the bill to be presented to the taxing officer may tax at an amount which is greater than the limit that would be imposed by the relevant costs determination. Of course, as I have pointed out, that is only the first question which the court must address. The second question is whether that inadequacy arises because of the unusual difficulty, complexity or importance of the matter.

It is common ground between the parties that the word 'unusual' qualifies only the expression 'difficulty' and does not qualify the words 'complexity' or 'importance'. Another issue was, however, raised in argument in relation to those words, and that concerns the meaning to be given to the word 'importance'. Heartlink submits that the criterion of importance cannot be met having regard to the interests of the parties only, but must, in order to be satisfied, import an element of importance to the community.

I cannot see any reason in policy or principle why the word 'importance' should be construed in this way. If it had been the intention of the legislature to require the court to give consideration to an issue of community or public importance, then I think it would have been reasonable to expect the legislature to use words that would connote that meaning, such as the well-known phrase 'public importance' which is found in a number of other legislative provisions.

It seems to me that by reference to 'importance' in this context, the legislature is allowing the court to have regard to the question of whether the work done was appropriate to the significance of the issues that arose in the litigation. Significance can arise either because of the significance of the issues to the parties or because of the significance of the issues to other prospective parties or to the public or to the community generally. In this case, the issues raised were of considerable significance to the liquidators in the practice of their profession, and in respect of whom serious allegations were made.

Another consideration that appears to me to be significant to the construction and application of s 215(2) also arises from the time at which that determination is to be made. Because it is a determination which will ordinarily be made in advance of taxation, it should be made as a matter of impression rather than as a matter of detailed evaluation. An approach which would require an applicant to demonstrate that a limit is inadequate by reference to a detailed evaluation of a draft bill for taxation would carry the risk that what has elsewhere been described as 'satellite litigation' (and which I would describe as parasitic litigation), might assume a life and dimension of its own, disproportionate to its significance.

Such an approach should be discouraged, because it is in the interests of the parties and of the public for disputes with respect to costs to be resolved as quickly and as efficiently and as inexpensively as possible.

Accordingly, approaching the matter as one of impression, the question which I pose to myself is whether the limit of $27,456, which would be imposed if I do not grant the application sought, would be inadequate because it would preclude the liquidators from advancing to the taxing officer a fairly arguable case that their bill should tax at an amount greater than that. Approaching that question as a matter of impression, having regard to the affidavits which have been filed and which I have read, and having regard to the affidavit evidence of Mr McLeod to which I have referred, I am satisfied that the amount to which the liquidators would be limited under item 11 is inadequate in the sense that I have described.

I turn then to the second question for my determination under s 215(2), which is the question of whether that inadequacy arises because of the 'unusual difficulty, complexity or importance of the matter'. ...

...

Of course, nothing that a court does in determining an application under s 215(2), can in any way bind or impinge upon the decisions to be made by the taxing officer as to whether or not work was appropriately and reasonably done, or as to the proper amount to be allowed in respect of that work. In my view, the question for determination at this point of the proceedings is not whether the bill will, in fact, tax out at more than the limit, but rather whether there is a fairly arguable case that it may tax out at an amount above the limit.

It would be quite consistent with that approach for a taxing officer to conclude, after considering the bill in detail, that in fact the amount to be allowed on taxation is less than the limit. So it will be entirely for the taxing officer to determine whether or not the work was properly and appropriately done and, if so, the amount properly allowed. ...

111 In respect of the component as to inadequacy of the opinion the court must form before it can make an order under LP Act s 215(2), I note the following from Green v Wilden Pty Ltd [2005] WASC 83 (S) [182] (Hasluck J) where his Honour was drawing on the lessons of the authorities on O 66 r 12(1):

There is no reason why the amount of work involved in the preparation of a case cannot of itself show that the costs allowable by a legal costs determination are inadequate: see Schmidt v Gilmour [1988] WAR 219. In complex litigation it may be necessary to supply detailed affidavit evidence to support an application for an order increasing the scale allowance: Geraldton Building Co Pty Ltd v Christmas Island Resort Pty Ltd (1994) 13 WAR 242 at 248.

112 The plaintiff appears to rely heavily on this passage from Green, in drawing on the affidavit of Mrs Frigger of 12 October 2008. There Mrs Frigger sets out (in annexure 'ACTF 1') amounts apparently charged alongside some (limited) descriptions, or amounts paid (to nominated persons), or both, under headings which appear to be intended to relate to items from the 2006 Determination. The amounts shown significantly, either individually or in total or both, exceed the amounts shown for or calculable from the item in question in the 2006 Determination.

113 However, as the defendants point out, the affidavit does not contain any further description of the work done, nor does it provide any indication of the time occupied by the work or the hourly rate used. Indeed, as the defendants also point out, there is as an annexure to the affidavit of a solicitor in a firm of solicitors which had previously acted for the plaintiff in the present action a letter from the plaintiff to that firm in which there is a complaint that the firm had 'grossly overcharged' the plaintiff: see the affidavit of David Vilensky sworn 14 April 2008 annexure DV5. There is no indication there had been any reduction on that account in the affidavit of Mrs Frigger of 12 October 2008.

114 In my view the most that can be extracted for my purposes from the affidavit of Mrs Frigger of 12 October 2008 is that the charged or paid amounts exceed the relevant maximum allowed amounts (or allowances) from the 2006 Determination. It is not apparent to me, however, whether that was the result of the hours worked or the hourly rate or some combination of the two. In those respects the evidence provided in support here is like that in EDWF Holdings 1 Pty Ltd v EDWF Holdings 2 Pty Ltd [2008] WASC 275 (S), [6], [7] (Martin CJ), where the Chief Justice said this:

The first defendant relies upon an affidavit of its solicitor. He deposes to his estimate of the costs which were billed to the first defendant in relation to the particular items the subject of the application. However, the affidavit provides no details or particulars whatever to support the estimates which he has made. The affidavit does not depose to the professional time spent in relation to each item, or as to the practitioners involved, or as to the rates used when calculating the fees charged to the first defendant. It follows that the evidence is of little or no value, because it does not enable any meaningful comparison to be undertaken of the work allowed in the relevant item of the relevant costs determination, and the work actually performed. The affidavit also annexes invoices rendered by junior counsel. However, those invoices are equally unhelpful, as they do not identify the professional time spent on any particular aspect of the case, or the rate at which fees have been rendered.

Despite the porosity and inadequacy of the evidence proffered in support of the first defendant's application, as the questions to be addressed under s 215 of the Act are to be addressed as matters of impression rather than detailed evaluation (Heartlink ... [20] and Leighton Contractors Pty Ltd v Construction, Forestry, Mining and Energy Union [No 4] [2006] WASC 317 (S) [13]), I will do the best I can on the materials available.

115 Assisted by these remarks from EDWF Holdings 1, I conclude that the affidavit of Mrs Frigger of 12 October 2008 offers no support for any conclusion, in the terms of Heartlink [14], that 'there is a fairly arguable case to be put before the taxing officer to the effect that the bill to be taxed should tax out at more than the limit that would be imposed' by the 2006 Determination. However, I may still arrive at such a conclusion, as a matter of impression rather than detailed evaluation, on all of the materials before me. Those materials, as I will explain, include what I know of the action in the relevant respect from my position as the presiding judicial officer or from the file materials or from both: see EDWF Holdings 1 [8], [9].

116 I should note that I have arrived at this conclusion as to the affidavit of Mrs Frigger of 12 October 2008 without taking account of the fresh evidence. At the hearing of 6 April 2009 to consider the fresh evidence counsel for the defendants, as I understood him, submitted that that evidence went to show that certain information in the affidavit was incorrect, called into question the accuracy of the 'analysis' in the affidavit (see EDWF Holdings 1 [6] quoted above) and in any event made the information in the affidavit misleading. As I consider that that affidavit offers no support for the making of any special costs orders under LP Act s 215 I need not consider the position in that regard if I agreed with counsel's submission that the affidavit contains incorrect, inaccurate or misleading information.

117 However, counsel for the defendants made a further submission, resting on the submissions just referred to, that the conduct of the plaintiff in relation to the affidavit of Mrs Frigger of 12 October 2008 and in relation to the fresh evidence was misconduct that had the potential to mislead the court. Such misconduct, counsel for the defendants said, was thus relevant to the exercise of the court's discretion under LP Act s 215 whether or not to make any special costs orders it might otherwise make. Indeed, counsel for the defendants submitted, that misconduct should result in the denial of such orders. I return to those further submissions below, where I consider the discretion those submissions invoke.

118 I further note from Verdell Pty Ltd v F & G Nominees Pty Ltd [2002] WASC 58 (S2) [14] - [15] (Wheeler J), setting out as emerging from the authorities certain 'general propositions ... in relation to the task of the judge who determines whether or not a special costs orders should be made', the following:

If the Judge has been the trial Judge, he or she will be able to draw on experience of the trial, which will be of great assistance in understanding the issues involved, and in appreciating the extent to which, for example, detailed preparation for cross-examination appears to have been necessary, or work appears to have been necessary beyond normal court sitting times to respond to matters arising suddenly during the course of the trial. Whether or not the Judge has been the trial Judge, a perusal of the pleadings, the transcript, and the submissions, together with the materials which may relate to interlocutory applications, will be of great assistance in understanding whether it was necessary for additional work to be done.

Whether or not the Judge has been the trial Judge, there may be work done of which the Judge is not aware. For example, there may have been unusually voluminous discovery, which is not reflected in the actual number of documents tendered at trial, or there may have been consultation with potential expert witnesses or research of issues of law which were not in the end reflected in the trial. Such work may not have been unnecessary in the light of what was known at the time, but may have resulted in agreement between the parties or a decision by one or another party to abandon an issue which at first appeared to arise. In those cases, it will be necessary for affidavit material to be placed before the Judge explaining in general terms what work was done and why it was done, and giving some indication of the time occupied by such work. It will, of course, be necessary to establish that, prima facie, costs appear to have been incurred which exceed those allowable under the scale. Whether this material is produced in the form of a computer printout, or a draft bill, or a summary prepared by the practitioner having carriage of the file, does not appear to me to matter. If the step is taken of producing a detailed schedule or a computer printout or the like, the Judge will not examine the material line by line, looking for possible duplication or overlap, or enquiring about the way in which every 10 minutes was spent.

119 True it is her Honour was referring to the jurisdiction under former O 66 r 12(1), which at the time of her Honour's judgment read as follows:

Where the Court is of opinion that a special order as to costs should be made by reason of the unusual complexity or importance of the case or for any other good or sufficient reason the Court may order that any particular allowances in any relevant scale be raised or a limit removed and in giving any such direction the Court may fix a limit within which the Taxing Officer may allow such costs.

120 However, I do not consider that the differences between O 66 r 12(1) and the 2003 LP Act s 215(2) make her Honour's general propositions inapplicable to the latter. In particular, I consider on the basis of those general propositions that the judge may (as where the matter related to the trial or another hearing, and she or he was the presiding judge) be able to form the opinion as to inadequacy based on her or his understanding of the proceedings without affidavit support: see also EDWF Holdings 1 [8], [9]. However, it might be otherwise where the judge from whom the order is sought lacked such an ability (as where she or he was not the presiding judge, and the information about the matter is insufficient for the purpose): see Verdell [15] above.

121 Counsel for the defendants put to me, however, that the court must have material before it indicating whether or not an uplift is sought in respect of time spent, or hourly rate, or both (depending on the item in the relevant determination in respect of which the uplift is sought). The supporting material in this case in the form of the affidavit of Mrs Frigger of 12 October 2008 does not condescend to that level of detail.

122 I do not agree with this submission. I do not consider that such a limitation is to be extracted from Verdell in her Honour's application of the general proposition she set out there: see [24], [25] and [26]. Further, it seems to me such a limitation is also difficult to square with the general principles in Heartlink [20].

123 It is true that the limitation referred to derives support from Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S) [22], [23] (Pullin J), which I quoted and applied in Hodgkinson (S) (see especially [39]). However, in my view of the authorities it is possible to ask for the relevant costs to be taxed without regard to the limit or limits applicable under the relevant item, and if the materials before the judge, including her or his own awareness of the matters in the proceedings, are sufficient for the purpose, conclude there is a fairly arguable case to be put before the taxing officer that the costs should be allowed at the times and hourly rates or one or the other relied upon, regardless of the limit or limits in question: see Cazaly [9], [10] (Buss JA); and EDWF Holdings 1 [9] and [10]. Here, I understood the plaintiff to be seeking an uplift of both types of limit under the relevant scale item.

124 However, before an uplift of either kind is possible, there must be sufficient basis in the materials before the court for an order providing for such an uplift to be made.

125 In respect of the other component of the opinion the court must form before it can make an order under LP Act s 215(2), as to whether or not any inadequacy arises because of the unusual difficulty, complexity or importance of the matter, I note in respect of the matter of which term or terms in 2003 LP Act s 215(2) 'unusual' qualifies there is strong support for the 'common ground' in Heartlink [17] to be found in SDS Corporation (S) [102] - [106] (Roberts-Smith J); see also Green (S) [182] (Hasluck J).

126 Below I will consider the aspects of the proceedings in this action relied upon by the plaintiff to show that 'unusual difficulty, complexity or importance'.

127 There are at least two further points. One concerns what relevance if any to the making of a special costs order there is in the defendants' conduct in the litigation to which attention was directed before me by both sides. The other concerns the relevance of GST.

128 As to the relevance if any of the conduct in the litigation of the party against whom a special costs order is sought, it seems to me such conduct might go to show the unusual difficulty, the complexity or the importance to which 2003 LP Act s 215(2) refers.

129 In this case, some of the forms of conduct relied on by the plaintiff do go to show one or more of those matters, and are referred to in that connection below. Those references are in the discussion of special costs orders in relation to the timing of the defendants' security for costs application heard in April 2007; and the impact, on the pleading out of the statement claim, on the directions hearing of 29 October 2007 and on the trial, of the way in which the defendants raised the issue of the capacity in which the plaintiff claimed. There is also in the discussion of the special costs orders sought in relation to the trial the further matter of late witness statements from the defendants.

130 However, it was not made evident to me how the remaining forms of conduct relied on by the plaintiff (see its written submissions for the hearing on 17 December 2008, [42], [44] - [46] and [48] - [52]) went to show the unusual difficulty, the complexity or the importance referred to in s 215(2).

131 At the same time, it may be that the conduct of the party against whom a special costs order is sought may be relevant to the exercise of the discretion whether or not to make any order. I reach that discretion in the next section of these reasons. I consider there the possible relevance of the conduct relied upon by the plaintiff.

132 As to the matter of GST, I note the submissions of counsel for the defendants that, as I understood them, because the plaintiff was a GST registered entity amounts for payments to legal representatives should be reduced to allow for GST recoverable by the plaintiff: in this connection I was referred to Keen v Telstra Corp Ltd [2006] FCA 834; GST Ruling GSTR 2001/4; and JH Lever & Co Pty Ltd v Maniotis [2006] FCA 1668 [13]. Those authorities appear to concern what amounts may be recovered from the other side on a party and party taxation, not how I should approach the question of the adequacy of a scale item in a costs determination like the 2006 Determination. However, assuming I must for that purpose reduce each item by 1/11 the effect as I apprehend it is not to reduce the amount concerned in any way material to my deliberations, as will become apparent.

133 Finally, I note that the relevant costs determination for my purposes is put by the plaintiff as the 2006 Determination. Although the contrary was put to me by the defendants, it seems to me that is the only relevant costs determination for my purposes.

134 Thus, I note that all of the uplifts sought in the plaintiff's minute are prefaced as follows:

The Taxing Master, in taxing the bill of costs of the Plaintiff, do make reasonable allowance for the following items having regard to the work done but without regard to the limits imposed by the Supreme Court Scale of Costs applicable from 1 July 2006 for the following scale items:

135 1 July 2006 is, as those words indicate, the date from which the 2006 Determination applies: see cl 3(3) which reads:

This determination does not apply to the remuneration of practitioners based on costs incurred before 1 July 2006.

136 Before proceeding further, I must address the matter of the fresh evidence considered at the hearing of 6 April 2009 in relation to the matter of the discretion whether or not to make special costs orders once the court is of the opinion with the two components described. I must do so because, if the defendants' submissions in that regard are upheld, there would be no question of my making any of the special costs orders the plaintiff seeks.

137 There is clearly a discretion which is enlivened when the court has formed the opinion with the two components referred to in Heartlink [11].

138 However, in my view that discretion is not confined to making all or any among the orders referred to in 2003 LP Act s 215(2)(a) - (d). Such discretion includes whether or not to make an order of any of those kinds.

139 On this view the word 'may' in s 215(2) is not one which simply confers a power which must be exercised by making all or any among the orders in s 215(2)(a) - (d). Compare Moody v French [2008] WASCA 67 [47] (Steytler P, Wheeler, McLure and Buss JJA) on 'may' in Sentencing Act 1995 (WA) s 89(1).

140 I consider there is support for the view I hold from Flotilla [37] (Pullin J), on the former SC Rules O 66 r 12(1) which 2003 LP Act s 215 displaced. I do not consider that displacement affects that support from Flotilla. There is also support for the view I hold to be derived from another authority on O 66 r 12(1), Esther Investments Pty Ltd v Markalinga Pty Ltd (1992) 8 WAR 400, 406 - 409 (Malcolm CJ) (on delay in making an application for a special costs order under that sub-rule).

141 In this case I do not need to consider how if at all the exercise of the general discretion as to costs in O 66 r 1(1) might affect a special costs order. However, it seems to me authorities on the exercise of that general discretion are of assistance to me in determining how the discretion under LP Act s 215 should be exercised. In particular it seems to me that misconduct in relation to seeking a special costs order under s 215 might result in the court exercising its discretion under that provision to refuse an order it might otherwise have made. See the discussion of authorities on the denial under O 66 r 1(1) of costs to a successful party in Civil Procedure in Western Australia (at 11 April 2009) [66.1.4A].

142 As I indicated earlier, the defendants said that the fresh evidence shows the matter in the affidavit of Mrs Frigger of 12 October 2008 was inaccurate or incorrect. The defendants said that the inaccuracy or incorrectness was such as to call into question the accuracy of the 'analysis' described in the affidavit ([6], below) and in any event made information in it misleading. They further submitted that those features of the affidavit were such that the conduct of the plaintiff in certain respects was misconduct which had the potential to mislead the court. Those respects were putting the affidavit forward; relying upon it at the hearing of 17 December 2008, particularly when its accuracy in the respect said to be contradicted by the fresh evidence was challenged; refusing to consent to the court being informed of the fresh evidence when invited to do so by waiving the obligation of non-disclosure in respect of that evidence; and continuing to insist on the accuracy of the affidavit. The defendants said that such misconduct was relevant to the exercise of the court's discretion under LP Act s 215(2) whether or not to make any special costs order it might otherwise make. Indeed, the defendants said, such misconduct should result in the refusal to make any such special costs order. I take the submissions as including that the misconduct was deliberate, at least once the fresh evidence was drawn to the attention of the plaintiff's legal representatives.

143 For the purpose of assessing whether or not in the light of the fresh evidence the affidavit of Mrs Frigger of 12 October 2008 was incorrect or inaccurate as alleged, the defendants drew my attention to the following portions of the affidavit.

144 The defendants drew my attention to affidavit [6], which reads as follows:

I analysed the itemized bills of costs by allocating a scale item number from the Supreme Court Scale of Costs Table applicable from 1/7/06 to each line item on the invoices, based on the proceeding or legal service for which the line item was charged. This is a common analysis that accountants perform in their professional work. I then input the amount of each line item into a MYOB accounting program according to that analysis. I compared the total amount charged for each hearing or service against the applicable scale item allowed on the table, which is shown in the submission as paragraphs 7.4 - 7.12. Annexed hereto and marked 'ACTF 1' is a report produced from MYOB program showing the results of the analysis.

145 The object of the reference to 'paragraphs 7.4 - 7.12' is unclear, as counsel for the defendants pointed out to me. It is possible it is to what became paragraphs 31 - 40 in the plaintiff's written submissions for the hearing of 17 December 2008. In any event it is not clear to me what that lack of clarity added to the defendants' submissions.

146 The defendants also drew my attention to the numbered item 'Paid to counsel' under each of the headings 'Trial 2/11/07', 'Trial 5/11/07', 'Trial 7/11/07', 'Trial 8/11/07' and 'Trial 9/11/07' in the annexure 'ACTF 1' to the affidavit of Mrs Frigger of 12 October 2008. Those headings were for the first to the sixth days of the trial. Each numbered item 'Paid to counsel' showed an amount of '$7 700.00'. The defendants had in written submissions filed and served before and oral submissions at the hearing of 17 December 2008 particularly called attention to the size of the amounts for counsel's fees for the second and subsequent days of the trial relative to the allowance in item 19(c) in the 2006 Determination 'Counsel fee for the second and each successive day of hearing', of $3,102. That amount equates to the maximum daily rate for counsel inclusive of GST.

147 The fresh evidence is in the form of the document 'Memo of Counsel Fees' of the then counsel for the plaintiff, dated 16 November 2007 and directed to the then solicitors for the plaintiff. A copy of the memo is annexure 'ACTF 2' to the affidavit of Mrs Frigger of 4 March 2009 in CIV 1216 of 2009 in opposition to the originating summons in that proceeding. The memo sets out 34 numbered items, only one of which (item 34) includes a dollar amount. Item 34 is 'attending' at the court on 29 October 2007 and other dates which are those of the first six days of the trial. Item 34 ends with '(7 days @ $3 500.00 per day)'. That daily rate, as will shortly become clear, did not include GST.

148 Following that listing there are two unnumbered entries with a dollar total for each. One is for 'full day attendances' at the court, for seven days in all, being the seven days in item 34, showing for '7 days @ $3 500.00 per day' a total of $24,500. The other is for 'attendance exclusive of full day attendances at court on dates referred to above'. The two totals are then reduced, by slightly more than 10%, and GST is added, to produce a final total payable. After allowing for the reduction, counsel's daily rate, inclusive of GST, on the defendants' calculations with which no issue was taken by the plaintiff, was $3,402.74. That daily rate is 9.7% higher than the maximum daily rate for counsel in the 2006 Determination.

149 Counsel for the defendants drew to my attention also the magnitude of the contrast between that last amount and the much larger amount shown as 'Paid to counsel' for each of those trial days in the affidavit of Mrs Frigger of 12 October 2008. There was particular emphasis on the contrast for the second to sixth days of the trial for which, under the 2006 Determination, there is no provision, where this there is provision for the first day of the trial, of other days for 'preparation'. The allowance in the 2006 Determination for counsel fees for the first day of the trial by item 19(a) is in 'Fee on brief, ie first day of trial and preparation', and is for $12,408 (emphasis added). Item 19(a) refers to a time of '3 days preparation; 1st day of trial' for the 'fee earner', counsel. The amount of $12,408 equates to four days at the maximum daily rate for counsel of $3,102.

150 Counsel for the plaintiff submitted to me that the affidavit of Mrs Frigger of 12 October 2008 in the respects to which my attention had been drawn was not incorrect or inaccurate. The affidavit in those respects, and the rest of annexure ACTF 1, should be understood as a statement of the results of the best efforts of the deponent to allocate costs charged by counsel over the items from the 2006 Determination that refer to counsel as 'fee earner'.

151 A number of difficulties for a person in the position of Mrs Frigger in such an apportionment might be pointed to, counsel for the plaintiff said. These included how to deal with the proceedings on 7 May 2007, which appear in the affidavit as 'Trial 7/5/07' with an amount 'paid' to counsel of $11,200; and how to apportion amounts to items including a number in the memo items 1 - 33 which might be ones falling within item 19(a) in the 2006 Determination.

152 I note that neither of those difficulties would explain the amounts shown for the second to the sixth days of the trial in the affidavit. However, I understood the submission for the plaintiff as putting to me that counsel's trial related charges as identified by Mrs Frigger had been apportioned by her across the days of 'trial' after 7 May 2007 in equal amounts, except for the 10th day of the trial, which was a half day, for which counsel charged a half-day fee and for which the allocation was one-half of $7,700, or $3,850. This apportionment was it seems guided by the notification of costs received by Mrs Frigger from a previous solicitor indicating that counsel's cost of preparation for the trial would be one day's preparation for every day of trial (then put as a six day trial): affidavit of Mrs Frigger of 4 March 2009 in CIV 1216 of 2009, [5] and annexure ACTF 1.

153 Counsel for the plaintiff put to me that it would not be appropriate to consider whether or not the affidavit of Mrs Frigger of 12 October 2008 was incorrect, inaccurate or misleading by considering only the fresh evidence. Regard also needed to be had to the notification of costs and the other invoices for fees of counsel, including that showing charges by counsel relating for the tenth day of the trial. The latter invoice, as memo of counsel fees dated 11 December 2007, was annexed, with the other invoices of counsel, to the affidavit of Mrs Frigger sworn 2 April 2009 in the present proceedings. I note that counsel for the defendants had no objection to the consideration of that further material. Counsel for the plaintiff put to me that the reasonableness of the allocation made by Mrs Frigger was among the issues ultimately for the taxing officer.

154 In my view, when regard is had to the form of the statement in [6] of the affidavit of Mrs Frigger of 12 October 2008 the affidavit has not been shown to be inaccurate or incorrect in the respect relied upon. Of course a statement that is literally true may be misleading, and as I have said counsel for the defendants contended the affidavit contains misleading information. However, I do not consider that it has been shown the affidavit is misleading in those respects, given its lack of detail to which I have earlier referred.

155 Undoubtedly there are amounts in the invoices of counsel which cannot readily be related or be related at all to the trial. But it is not clear to me there were not in those invoices amounts which counsel for the plaintiff charged and which in total could be allocated to counsel fees for the trial as the affidavit [6] indicated.

156 At the same time the allocation is not one that sits easily with the fresh evidence considered on its own. Not only is there the 'full day attendances' total there, but also many of the numbered items in the memo (see particularly 5, 6, 11, 12, 19, 20, 21 and 33) do not clearly relate or relate at all to the trial, as counsel for the defendants contended. It may further be observed that, while the notification of costs was provided to the court for the purposes of the proceedings in CIV 1216 of 2009, the other invoices of counsel fees showing further amounts appear not to have been provided to the defendants until the filing and service of Mrs Frigger's affidavit of 2 April 2009. In my view it would have been better to have provided the other invoices with the notification to counsel for the defendants while indicating there was consent to all of that information including the fresh evidence being provided to me. This provision would have been for the purpose of permitting me to determine whether or not I should give leave to re-open to consider all or any of that material, applying the approach referred to in Osborne v Landpower Developments Pty Ltd (in liq) [2003] WASCA 117 [12] - [14] (McLure J), [47] (E M Heenan J). I return to that approach below.

157 Further, I consider that the allocation in the affidavit of Mrs Frigger of 12 October 2008 is not one that is easily accommodated within 2006 Determination item 19(c). At least some of the amounts for trial preparation which she includes in the daily counsel fees might appear more properly to go under 'Fee on brief', item 19(a).

158 For these reasons, leave to re-open the hearing of the plaintiff's application for costs following its hearing on 17 December 2008 but prior to delivery of judgment for the purpose of considering the fresh evidence, as well as the notification of costs and other invoices of counsel, should be given. I apply for this purpose the test referred to in Osborne [12] - [14] (McLure J), which is as follows:

There is some uncertainty as to the test to be applied to the exercise of the Court's discretion to permit the re-opening of a matter before orders are made. The High Court in Smith v New South Wales Bar Association [1992] HCA 36; (1992) 176 CLR 256 said at 266-267:

'If an application is made to re-open on the basis that new or additional evidence is available, it will be relevant, at that stage, to inquire why the evidence was not called at the hearing. If there was a deliberate decision not to call it, ordinarily that will tell decisively against the application. But assuming that that hurdle is passed, different considerations may apply depending on whether the case is simply one in which the hearing is complete, or one in which reasons for judgment have been delivered. It is difficult to see why, in the former situation, the primary consideration should not be that of embarrassment or prejudice to the other side. In the latter situation the appeal rules relating to fresh evidence may provide a useful guide as to the manner in which the discretion to re-open should be exercised.'

The rules relating to fresh evidence on appeal are well known. The appellant would need to show that there was a real possibility that the further evidence would have produced a different result if it had been admitted and that the further evidence would not have been available at the original hearing by the exercise of reasonable diligence: Australian Electrical Electronics Foundry & Engineering Union (WA Branch) v Hamersley Iron Pty Ltd (1998) 19 WAR 145 at 160, 162, 163. A similar test was applied in Watson v Metropolitan (Perth) Passenger Transport Trust [1965] WAR 88 on an application to re-open before judgment.

It is to be expected that a less stringent test would apply when leave to re-open is sought before reasons are delivered and orders made because the policy in favour of finality does not have the same force. In this case there was no deliberate decision not to adduce the evidence in the March affidavit but it may have been available at the earlier hearing by the exercise of reasonable diligence. It is unnecessary for me to decide that question because I propose to apply the less stringent test referred to by the High Court in Smith (supra). Relevant factors in the exercise of the discretion include the materiality of the evidence and whether the interests of justice would be advanced by its admission: Joyce v GIO (NSW) reported in Ritchie's Supreme Court Procedure, New South Wales, vol 2 p 8551-8552 and cited with approval by the High Court in Smith (supra) (at 267).

159 In my view, there was a real possibility the fresh evidence would have produced a different result if it had been admitted at the original hearing - although, as I will shortly explain, I consider it does not in the final analysis produce that result. In any event, the materiality of the fresh evidence is clear, and the interests of justice would be advanced by its admission. Further, there is no assertion by the plaintiff of embarrassment or prejudice by its admission, except for the revealing of counsel's rates in the affidavit of Mrs Frigger of 4 March 2009 in CIV 1216 of 2009. That form of embarrassment or prejudice is not to the plaintiff itself, however, and in any event was not pressed on me.

160 There is no suggestion the fresh evidence was available to the defendants at the original hearing by the exercise of reasonable diligence.

161 Finally, the considerations of materiality, advancement of the interests of justice and lack of embarrassment or prejudice to the plaintiff, all favour leave for the re-opening extending to the notification of costs and further invoices. While they were available to the plaintiff by the exercise of reasonable diligence, I am convinced there was no deliberate decision not to put forward that evidence at the hearing on 17 December 2008. Further, there was no objection by the defendants to their consideration.

162 However, in my view it was not misconduct of a kind which should result in denial of any special costs orders that the plaintiff and its legal representatives relied upon the affidavit of Mrs Frigger of 12 October 2008 as they did at the hearing of 17 December 2008, and did not provide the other invoices with the notification of costs, and did not consent to all of the information including the fresh evidence being provided to me, for the purpose I have indicated. I am not convinced that no reasonable professional judgment could have been formed that the allocation by Mrs Frigger in her affidavit of 12 October 2008 might be such as to be capable of ultimate acceptance by a taxing officer, and thus that that allocation supported a showing of inadequacy for the purposes of LP Act s 215(2).

163 Further, I note that at the least the daily rate charged by counsel for the plaintiff as shown in the fresh evidence is above that provided for in 2006 Determination, if not by a large margin.

164 On those bases, I have determined that I will not exercise my discretion to deny the plaintiff any special costs orders I might otherwise have made. Had I determined otherwise, a question might have arisen whether or not I should also take account of the conduct of the defendants on which the plaintiff relies, as I have earlier indicated, in determining whether or not finally to deny the plaintiff those orders. I note that a court has said, in considering whether or not to exercise the discretion as to costs of the action in O 66 r 1(2), that the 'whole battlefield of the action and the whole of the conduct of the parties in relation to the matter in dispute' may be relevant: Scherer v Counting Instruments Ltd [1986] 2 All ER 529, 533 (CA). However, as that judgment indicates, for the costs of interlocutory proceedings, where the matter is of a more limited kind, the net may not be cast so widely. I am not convinced it should be cast so widely in this case as to make the matters of the conduct of the defendants in the main action relied upon by the plaintiff relevant to the exercise of my discretion. At the same time, as I have said, I do not need to go further into the matter.

165 It is convenient at this point I indicate my conclusion as to the costs of the application for the stay of judgment, which was to permit consideration of the fresh evidence, and which in my view includes the costs of the hearings of 17 February 2009, 16 March 2009 and 6 April 2009. The defendants have been successful in that application, as indicated by the grant of leave to re-open. Notwithstanding my ultimate conclusion as to the impact of the fresh evidence on the making of special costs orders in this case, the defendants should be awarded their costs of that application.

Special costs orders: the statement of claim

167 The plaintiff's minute cl 4(a) refers to 'Statement of Claim Scale Item 1(b)'. The amount provided for in the 2006 Determination item 1(b) is $3,630, calculated on the basis of 10 hours of a senior practitioner's time at the maximum hourly rate for a senior practitioner.

168 The submissions of the plaintiff are that (as I understood them) there was unusual difficulty, or complexity, or importance, in amendments in three respects which should be seen to have to have produced an inadequacy. One respect was the pleading out of a loss of capital investment opportunity claim, introduced in the statement of claim while the action was in the District Court in June 2006, and particularised pursuant to leave I granted by the orders I made on 14 May 2007. Another respect was the amendments to the statement of claim by leave resulting particularly from 'informal' discovery by the defendants in February 2007 of documents relating to a dispute with one of the tenants of the Armadale property. The third respect was the amendment to the statement of claim by leave at trial resulting from the position taken by the defendants from about March 2007 onwards as to the inability of the plaintiff to show the claimed loss because the Frigger Super Fund had suffered that loss.

169 As the defendants point out, the amendment of a statement of claim by leave usually entails an order for the costs of the application to amend and any costs of the defendants thrown away. Such costs orders were made in each case. However, this does not address the matter of the costs of making the amendments. It is those costs with which I am concerned.

170 In my view the first and third respects referred to by the plaintiff were ones of unusual difficulty and of complexity as Computer Accounting & Tax indicates, in respect of the issues to which those amendments related: see [372] - [410] and [104] - [128] respectively. However, I am not convinced the second respect, the amendments resulting from 'informal' discovery by the defendants in February 2007 of documents relating to a dispute with one of the tenants of the Armadale property, was one of unusual difficulty or of complexity or of importance. The issue to which that respect related was in my view a relatively straightforward factual one: see Computer Accounting & Tax [156] - [169], [228].

171 It seems to me there is a fairly arguable case to put to the taxing officer that the pleading out of the amendments in the first and third respects only properly required hours of work by a senior practitioner for which the allowance by 2006 Determination item 1(b) would be inadequate. Approaching the matter as EDWF Holdings 1, Heartlink and Verdell indicate I should, I consider I should allow the taxation to proceed without reference to the hour's upper limit imposed by the relevant item in the 2006 Determination. However, I do not consider I have a basis for an uplift of the maximum applicable hourly rate for a senior practitioner in relation to that item. I have no evidence in that regard corresponding to the kind for counsel for the plaintiff which I reach in the section of these reasons after next.

172 I turn now to the next special costs order sought.

173 The plaintiff's minute refers in cl 4(b) to 'Getting up Scale Item 16'. The amount provided for in the 2006 Determination item 16 is $36,300 calculated on the basis of 100 hours of a senior practitioner's time at the maximum hourly rate for a senior practitioner.

174 The plaintiff's submissions were, as I understood them, that there was unusual difficulty or complexity or importance which could be seen in the seven items listed in the submissions. However, I leave out the seventh item, 'the procedural requirement to tender documents under s 79 Evidence Act', $28,002, the significance of which was not made clear to me. The six remaining items were the substantial size of the witness statements, including the amended and supplementary ones, of the Friggers; the large number of documents in the trial bundle; the large number of documents under the 50 subpoenas issued in this case; the large number of documents in the evidence of one of the valuers, a Mr Jeff Spencer, whose evidence related to the loss of capital investment opportunity claim; the 'proofing' of experts required; and the production of three sets of papers for the judge.

175 Approaching the matter as EDWF Holdings 1, Heartlink and Verdell indicate I should, I consider I should allow the taxation to proceed without reference to the hours upper limit imposed by the relevant item in the 2006 Determination. However, I do not consider I have a basis for an uplift of the maximum applicable hourly rate.

176 The size of and detail in the witness statements of the Friggers, including their amendments and supplements, and the number of documents in the trial bundle, many of which became exhibits, together with the documents and complexity of the valuation evidence in my view reflected the matters of unusual difficulty and of complexity that produced a trial extending over a significantly longer period (11 days) than had at first been anticipated (six days). That trial had called for lengthy written closing submissions (returned to below) and one full day of oral closing submissions, and resulted in a trial judgment of the length of Computer Accounting & Tax (107 pages).

177 While none of these taken individually might be sufficient to show the relevant difficulty and the complexity for the purposes of the element, their combination in my view does so. It seems to me then that there is a fairly arguable case to put to the taxing officer that hours of work by a senior practitioner were spent on the six items referred to me by counsel for the plaintiff for which the allowance made by the 2006 Determination item 16 would be inadequate. However, I consider I do not have a basis for an uplift in the maximum hourly rate for a senior practitioner under the 2006 Determination in relation to that item. I have no evidence in that regard corresponding to the kind for counsel for the plaintiff which I reach in the next section of these reasons.

178 I have noted the defendants pressed on me I should disregard any allowance for 'proofing' experts, on the basis that experts are retained to produce reports for the court, not to provide 'partisan evidence'. In my view, whether or not 'proofing' should interpreted as going to the provision of 'partisan evidence', some dealings with the valuers prior to trial, given the significance of the evidence of the valuers in a case such as this one, arguably were properly required. Whether or not such dealings were properly part of the hours of work sought to be taxed out is in my view a matter for the taxing officer.

Special costs orders: the defendants' security for costs application heard April 2007

179 The plaintiff's minute refers in cl 4(c) to 'Defendants' security of [sic] costs application Scale Item 10(a)'.

180 It was common ground this related to an application by the defendants dated 12 March 2007 which was heard by Le Miere J on 20 and 26 April 2007 and dismissed by him on the latter date, with costs to the plaintiff in the cause. Consent orders had previously been made on 19 March 2007, but without a hearing.

181 The amount provided for in the 2006 Determination item 10(a) 'Proceeding in Chambers [other than originating summons, originating motion or originating application]' is $9,306, which is for two days preparation and one days hearing, by counsel, and which equates to three days at the maximum daily rate for counsel.

182 The plaintiff's submissions were as I understood them that there was unusual difficulty, or complexity, or importance, which could be seen in the number of affidavits filed for the proceedings (nine) and their total size (260 pages), the total duration of the hearings (six hours is referred to, although the record of the hearing on the court's database for 20 and 26 April 2007 shows a total of just under 4 1/2 hours), and the timing of the application, coming as late as it did after having been foreshadowed in 2003 and made in the period shortly before the listed first day of the trial when the plaintiff was preparing for the trial.

183 I put aside the plaintiff's reference to its view the application was a tactic to delay the trial. I am unable to see what that adds to the other factors listed. Nor on the length of the hearings or on my inspection of the transcript of them, and subject to what I say below, do I see any clear indication any such tactic was pursued into those hearings.

184 This last point illustrates a difficulty I have evaluating the case for the present special costs order. I was not the presiding judicial officer on the hearing of the application.

185 However, I have, as I have indicated, reviewed the transcript of the hearings. I have borne in mind the number of affidavits and their total page length, which in my view indicate the importance to the plaintiff of the application. I have also considered the total length of the hearings, of just under one hearing day, which might count against the making of a special costs order (if not strongly), when account is taken of the one day allowed for in the 2006 Determination item 10(a).

186 I have also reviewed the draft judgment of Le Miere J. That judgment deals with a wide range of issues, including whether or not the discretion to make the order for security for costs was enlivened, and the relevance of the defendants' delay in making their application to the exercise of his discretion. I note that his Honour refers to three matters of 'particular significance' in his determination that he should not make the order sought by the defendants. Two of the three related to the matter of delay in the defendants making their application.

187 In all of the circumstances, approaching the matter as EDWF Holdings 1, Heartlink and Verdell indicate I should, I consider I should allow the taxation to proceed without reference to the upper limit imposed by item 10(a) in the 2006 Determination. I consider I have a basis for an uplift of the maximum daily rate for counsel used to calculate the upper limit in item 10(a) as well as an uplift in the number of days provided for in that item. I so consider because I have evidence of an hourly rate used by counsel for the plaintiff to charge for the work which hourly rate is above the maximum hourly rate for counsel under the 2006 Determination; I also have the considerations I will shortly describe.

188 The hourly rate for counsel for the plaintiff is shown as $350 per hour before GST in his memo of counsel fees dated 30 April 2007 annexed to the affidavit of Mrs Frigger of 2 April 2009. That hourly rate inclusive of GST, on the basis of the amount charged by counsel, equated to $375.51. That compares with the maximum hourly rate of $286 inclusive of GST under the 2006 Determination. That memo contains items relating to the security for costs application.

189 The considerations of the importance of the application to the plaintiff, facing a possible need to provide security for costs in a very short period before trial, considered with the features of the application referred to in the submissions of the plaintiff, leads me to conclude it is fairly arguable that time of counsel was properly required in and for the hearing of the application for which the allowance by 2006 Determination item 10(a) would be inadequate.

190 I turn now to the next special costs order sought.

Special costs orders: first day of trial 7 May 2007 as well as 2 November 2007

191 The plaintiff's minute refers in cl 4(d) to 'Counsel fees for two "first day" of trial 7 May 2007 and 2 November 2007 Scale Item 19(a)'. Counsel for the plaintiff explained that this special costs order was to allow for the plaintiff's position that the trial had two first days, and that the fate of the application for the present special costs order depended in part on that of the application for the reserved costs of that day. I have already indicated why I consider no order as to costs in respect of the failure to have a first day of trial on 7 May 2007 is appropriate, except as to the costs of the return of the subpoenas as costs in the cause.

192 It follows I would not make the special costs order sought. I turn now to the next special costs order sought.

Special costs orders: directions hearing on 14 May 2007

193 The plaintiff's minute refers in cl 4(e) to 'Directions Hearing on 14 July 2007 Scale Item 10(a)'. The reference to '14 July' was on the plaintiff's oral submissions an error: 14 May was meant.

194 So understood, it may be briefly dealt with, as the fate of the present application depended in part on the fate of the application for the reserved costs of that day. I have already indicated why I consider no order as to the costs of that day is appropriate.

195 It follows I would not make the special costs order sought. I turn now to the next special costs order sought.

196 The plaintiff's minute refers in cl 4(f) to 'Trial Scale Item 19(a), (c), (e) - (g)'. The amount allowable under the 2006 Determination is stated in the plaintiff's written submissions to be $50,787, which the plaintiff's minute would indicate to be the amount derivable from 2006 Determination item 19(a) (for the first day, including fee on brief) and item 19(c), (e) and (f) (for subsequent trial days). Counsel for the plaintiff at the hearing on 17 December 2008 told me the amount was arrived at by reference to counsel fees for items 19(a) and (c), which as I have already indicated set upper limits using the maximum daily rate for counsel; and to fees for a solicitor from the plaintiff's then firm of solicitors attending the trial, for item 19(e). Item 19(e) sets an upper limit by reference to the rate per hour of $363, which is the maximum hourly rate for a senior practitioner under the 2006 Determination. However, counsel for the plaintiff made no reference to a clerk or paralegal from the plaintiff's then firm of solicitors attending the trial for the purposes of item 19(f). That item sets an upper limit by reference to the rate per hour of $176 which is the maximum hourly rate for a clerk/paralegal under the 2006 Determination. It would appear then that the item references in the plaintiff's minute should be item 19(a), (c) and (e), as item 19(f) would not apply.

197 I have excluded the day for closing submissions as that day is on my understanding of the matter the subject of the next application for a special costs order, for closing submissions, below.

198 Finally, I note that the plaintiff's submissions did not as I understood them attempt to make a case for an uplift in respect of 2006 Determination item 19(g), referred to in the plaintiff's minute cl 4(f), which is for attendance on a reserved judgment. In any event, I see no case for such an uplift on the materials before me.

199 The plaintiff's submissions were, as I understood them, that there was unusual difficulty, complexity or importance which could be seen in the value of the judgment ($1,106,027); the duration of the relevant part of the trial (totalling from the records on the court's database approximately 49 hours, although the plaintiff's written submissions referred to the duration as 81 hours, which appears to include the final day of the trial); the number of documents in the trial bundle; the number of documents relevant to the capacity in which the plaintiff had acted at the material times that had to be discovered; the number of subpoenas (50); the lengthy cross-examination of Mrs Frigger; the cross-examination of the valuer Mr Spencer; and the late filing of the defendants' witness statements. There were also the orders of an 'interlocutory' kind made during the trial. All of these required more work after hours by the plaintiff's solicitors than normal.

200 It is undoubtedly the case that the number of documents that had to be discovered relevant to the capacity in which the plaintiff had acted became significant but only in the run up to the trial. That reflected the importance that was attached to the issue by the defendants and that only became evident during that period. That importance was reflected in the defence only when the defence was amended by leave granted in October 2007. There was in my view an element of unusual difficulty for the plaintiff's conduct of the trial produced by this relatively late change.

201 However, it is also undoubtedly the case, as counsel for the defendants put to me, that the number of days a trial involves cannot itself be a basis for concluding the present element is satisfied. Further, the number of witnesses involved in this case (19 witnesses) and the number of documentary exhibits (182 exhibits) are not out of the ordinary for trials of this length. Finally, the judgment sum is hardly out of the ordinary for a trial of the duration of this one in this court. All of these considerations go most directly to that part of the present element concerned with unusual difficulty, of course.

202 However, approaching the matter as EDWF Holdings 1, Heartlink and Verdell indicate I should, I consider I should allow the taxation to proceed without reference to the upper limits imposed by items 19(a) and 19(c) in the 2006 Determination. I consider I have a basis for an uplift of the maximum daily rate for counsel used to calculate those upper limits as well as for an uplift in the number and length of the days allowed for by those items. I so consider for two reasons. One is that I have evidence of a daily rate for counsel for the plaintiff used to charge for the work that is above the maximum daily rate for counsel under the 2006 Determination. The other reason is made up of the considerations I will shortly describe.

203 I have already referred to the plaintiff's evidence for the first to the sixth days of the trial. That evidence is in the memo of counsel fees dated 11 December 2007 attached to the affidavit of Mrs Frigger of 2 April 2009, that counsel charged fees for attendances at the court at the rate of $3,500 per day before GST. Using the total amount shown in that memo as charged after GST, that daily rate equates to $3,850 inclusive of GST. That compares with the maximum daily rate for counsel of $3,102 inclusive of GST under the 2006 Determination.

204 The matters referred to by the plaintiff I have not put aside, when considered in combination, reflect for me the matters of unusual difficulty and of complexity which I referred to in relation to the special costs order for getting up. It seems to me then that there is a fairly arguable case to put to the taxing officer that the fee on brief and the hours of work by counsel was properly required in and for the trial days 1 - 10 for which the allowances made in the 2006 Determination items 19(a) and (c) would be inadequate.

205 Further, I consider I should, by reference to the considerations I have just described, allow the taxation to proceed without reference to the hours on trial days which the 2006 Determination 19(e) might otherwise set as the upper limit. However, I do not consider I have a basis for an uplift of the maximum hourly rate for a senior practitioner in relation to item 19(e). I have no evidence in that regard corresponding to that for counsel for the plaintiff.

206 I turn now to the next special costs order sought.

207 The plaintiff's minute refers in cl 4(g) to 'Closing submissions Scale Item 19(c) and (e)'. The plaintiff's written submissions state the maximum allowable under the 2006 Determination is $5,643, which the plaintiff's minute would indicate as derivable from 2006 Determination item 19(c) (for counsel) and (e) (for a senior practitioner), which I take to be applied to the last day of the trial, that on which closing submissions were presented.

208 While as counsel for the defendants reminded me, there is no separate item in the 2006 Determination for closing submissions, I consider that the work on such submissions is appropriately to be referred to 2006 Determination item 19(c) and (e), for the last day of the trial.

209 The plaintiff's submissions as I understood them were that there was unusual difficulty, complexity or importance which could be seen in the large number of tendered documents to be gone through, the length of the trial transcript (to which as I have indicated I had called for specific references in the closing submissions) and the length of the plaintiff's written closing submissions including supplementary material called for (184 pages) and of the defendants' written closing submissions also including such supplementary materials (182 pages). I should add that I had anticipated when I called for written closing submissions that I would receive ones in such detail, and I found the submissions prepared to be of considerable assistance.

210 Approaching the matter in the manner EDWF Holdings 1, Heartlink and Verdell indicate I should, I consider I should allow the taxation to proceed without reference to the upper limit imposed by item 19(c) in the 2006 Determination applied to 29 February 2008, the last day of the trial. I consider I have a basis for an uplift of the maximum daily rate for counsel used to calculate that upper limit as well as the time length of the day provided for in that item. I so consider for two reasons. One is that I have evidence of a daily rate and an hourly rate for counsel for the plaintiff used to charge for the work above the corresponding rates for counsel under the 2006 Determination. The other reason is made up of the considerations I will shortly describe.

211 The evidence is in the memo of counsel fees dated 4 March 2008 annexed to the affidavit of Mrs Frigger of 2 April 2009, which shows counsel charged fees for attendance at the court on 29 February 2008 at the rate of $3,500 per day and charged fees for other work relating to that day at the rate of $350 per hour, in both cases before GST. I have already compared those rates plus GST with the corresponding rates under the 2006 Determination.

212 The matters referred to by the plaintiff, in combination, indeed in my view reflected the matters of unusual difficulty and of complexity to which I referred in relation to the special costs order for getting up. It seems to me then that there is a fairly arguable case to put to the taxing officer that hours of work by counsel were properly required in and for the trial day of 29 February 2008 for which the allowance made in 2006 Determination item 19(c) would be inadequate.

213 Further, I consider I should, by reference to the considerations I have just described, allow the taxation to proceed without reference to the hours on that trial day which the 2006 Determination 19(e) might otherwise set as the upper limit. However, I do not consider I have a basis for an uplift of the maximum hourly rate for a senior practitioner in relation to item 19(e). I have no evidence in that regard corresponding to that for counsel for the plaintiff.

214 I turn now to the next special costs order sought.

215 The plaintiff's minute refers in cl 4(h) to 'Freezing Orders Scale Item 10(a)'. It is common ground that this related to an application by chamber summons by the plaintiff dated 8 January 2008. Following an ex parte hearing before me that day I granted the application. The orders I made were varied on 11 January 2008 by Hasluck J on the application of the defendants following a hearing before him that day. In both cases costs were reserved to the judge hearing the application on the return date. I have previously referred to the allowance by 2006 Determination item 10(a).

216 The plaintiff's submissions as I understood them were that there was unusual difficulty, complexity or importance which could be seen in the application having to be on very short notice because of the risk to the plaintiff; the long ex parte hearing before me (2 hours and 45 minutes); the second hearing, before Hasluck J; and the requirement to comply with the freezing orders including advising third parties, checking the asset schedule of the defendants, extensive correspondence between the parties concerning compliance, breaches of the orders and requests for further information.

217 I have no affidavit evidence as to those last six matters. However, I consider that the feature of the application they appear to me to go to, the complexity of the defendants' affairs, is sufficiently made out by the matters put to me at the hearing on 8 January 2008, and appears to have led to the application to Hasluck J.

218 In my view approaching the matter as EDWF Holdings 1, Heartlink and Verdell indicate I should, I consider I should allow the taxation to proceed without reference to the upper limit imposed by item 10(a) in the 2006 Determination. I consider I have a basis for an uplift of the maximum daily rate for counsel used to calculate the upper limit in item 10(a) as well as for an uplift of the number of days provided for in that item. I so consider for two reasons. One reason is that I have evidence of an hourly rate used by counsel for the plaintiff to charge for the work which hourly rate is above the maximum hourly rate for counsel under the 2006 Determination. The other reason is made up of the considerations I will shortly describe.

219 The hourly rate for counsel for the plaintiff is shown as $350 before GST in his memo of counsel fees dated 4 March 2008 annexed to the affidavit of Mrs Frigger of 2 April 2009. That hourly rate inclusive of GST, on the basis of the amount charged by counsel, equated to $375.51. That compares with the maximum hourly rate of $286 inclusive of GST under the 2006 Determination. That memo contains items relating to the freezing orders application and hearings.

220 The considerations of the complexity of the affairs of the defendants coupled with the history of the hearings in relation to the freezing orders lead me to conclude there is a fairly arguable case to be put before the taxing officer that the hours of work by counsel in and for the hearing would be such that the maximum allowance made in the 2006 Determination item 10(a) would be inadequate.

221 I turn now to the final special costs order sought.

Special costs orders: directions hearing of 29 October 2007

222 The plaintiff's minute cl 4(i) refers to 'Directions 29 October 2007 Scale Item 10(a)'. It is common ground this is a reference to a hearing on that date before me to consider what in substance were three applications, one by the plaintiff, and two by the defendants. The plaintiff's application was for leave to file and serve a further expert's report. The defendants' applications were for further specific discovery of certain documents (including a related application to uplift from the court's file a previous affidavit of discovery for the plaintiff) and for vacating the trial dates. It will be recalled the trial was to begin on 2 November 2007. Following a hearing that occupied five hours 25 minutes, I granted the plaintiff's application and dismissed those of the defendants, with costs in the cause.

223 I have previously referred to the allowance by the 2006 Determination item 10(a).

224 The plaintiff's submissions as I understood them were that there was unusual difficulty, or complexity or importance which could be seen in the length of the hearing before me, involving applications by both parties, with six affidavits representing a total of 239 pages and the other papers filed for the hearing, comprising a chamber summons, minute of proposed orders, and memorandum of conferral.

225 I should immediately state that there is nothing of an unusually difficult, complex or important character necessarily to be derived from the combination of the foregoing items.

226 However, I note that the bulk of the hearing was devoted to the application for discovery as it related to the capacity in which the plaintiff had acted at the material times and the plaintiff's claim for lost investment opportunity. Those matters were of major importance in the trial shortly to be held as indicated by the defendants' position that the fate of their application to vacate the trial dates turned on the fate of their application for discovery, and those matters were of some complexity, as is indicated in Computer Accounting & Tax.

227 Approaching the matter as EDWF Holdings 1, Heartlink and Verdell indicate I should, I consider I should allow the taxation to proceed without reference to the upper limit imposed by item 10(a) in the 2006 Determination. I consider I have a basis for an uplift of the maximum daily rate for counsel used to calculate the upper limit in item 10(a) as well as for an uplift of the number of days provided for in that item. I so consider for two reasons. One reason is that I have evidence of an hourly rate used by counsel for the plaintiff to charge for the work which hourly rate is above the maximum hourly rate for counsel under the 2006 Determination. The other reason is made up of the considerations I will shortly describe.

228 The evidence is in the memo of counsel fees of counsel for the plaintiff dated 16 November 2007, annexure '2' to the affidavit of Mrs Frigger of 4 March 2009 (that is, the fresh evidence). This evidence shows counsel charged fees for attendance at the directions hearing of 29 October 2007 at the rate of $3,500 per day, and charged fees for other work relating to that hearing at the rate of $350 per hour, in both cases before GST. I have already compared those rates plus GST with the corresponding rates under the 2006 Determination.

229 The matters referred to by the plaintiff, when considered with the further matters I have just referred to, familiar to me as the judge who presided at the hearing on 29 October 2007, did indeed reflect the importance of the hearing to the plaintiff and the complexity of the issues addressed at that hearing, and lead me to conclude there is a fairly arguable case to put to the taxing officer that work by counsel was properly required for which the allowance made in 2006 Determination item 10(a) would be inadequate.

230 I turn now to the matter of the costs of this application.

231 The defendants' minute includes in cl 5 that 'there be no order as to the costs of this hearing'. No submissions were directed by either party to the matter, however.

232 I consider the general approach I should follow is that in Verdell [33] (Wheeler J) where her Honour said this:

So far as the costs of the application are concerned, I have made a number of special costs orders. The plaintiffs have been largely successful, and in particular, I have not accepted the defendant's submission that I should concern myself with questions of duplication arising out of changes of solicitor and the like. For reasons which I will come to later, I have also not accepted the defendant's submissions in relation to questions of extension of time. It therefore seems to me appropriate that the defendant pay the plaintiff's costs of this application to be taxed.

233 This approach is in my view an application of the general rule that a successful party is entitled to its costs.

234 In my view the plaintiff was largely successful in respect of the costs of the action, as successful as the defendants in relation to the application for the costs of the transcript, largely if not entirely unsuccessful as to reserved costs, and largely successful as to special costs. I leave out for this purpose the matter left over for further argument, as to the costs of the Magistrates Court proceedings, the costs reserved to the trial judge in the District Court.

235 My conclusion is that, assessing the likely financial significance of the items referred to as best I can, and the parties' relative success in the submissions put to me in relation to them, the appropriate order for the costs of the present application is that for the costs of the action which is costs in the cause. I exclude for this purpose the costs of this application in relation to the costs of the Magistrates Court proceedings, costs on which are reserved to await the outcome of the further hearing in relation to them.

236 I will hear from the parties as to the terms of the orders I should make to give effect to my conclusions, and as to the application with respect to the costs of the Magistrates Court proceedings.