Cross v Queensland Newspapers Pty Ltd - [2008] NSWCA 80 - NSWCA 2008 case summary — Zoe

NSWNSWCA

Cross v Queensland Newspapers Pty Ltd

[2008] NSWCA 80

Court of Appeal (NSW)|2008-09-30|Before: Mason P, Beazley JA, Basten JA, Cooper AJ

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Court

Court of Appeal (NSW)

Decision date

2008-09-30

Before

Mason P, Beazley JA, Basten JA, Cooper AJ

Source

Original judgment source is linked above.

Judgment (99 paragraphs)

[1]

Introduction 3 This is an appeal from a decision of Cooper AJ in which his Honour found that the respondent had established the defence of truth to a defamatory imputation contained in a newspaper article published in The Courier-Mail on 20 June 2003. The defamatory imputation was that the appellant had "ripped off Mum and Dad investors by selling them investment properties at exorbitant prices" (the defamatory imputation). 4 The appellant, through a series of companies, including Park Trent Investments Pty Limited (Park Trent Investments); Park Trent Real Estate Pty Limited (Park Trent); Cross Country Realty Pty Limited (Cross Country Realty); and Easy Plan Financial Services Pty Limited (Easy Plan), had for a period of approximately 12 years, engaged in the sale of real estate on the Gold Coast in Queensland. The trial judge found, at [659], that the appellant was the person in effective control of these companies. That finding is not in issue on the appeal. It will be convenient, therefore, to refer to the activities of those entities as the activities of the appellant, unless there is a reason to specifically identify the entity involved in a particular transaction or stage of a transaction. 5 The appellant conducted his operations pursuant to a business practice which has been termed "marketeering". The practice of marketeering involves the receipt of commissions and fees by persons who are directly or indirectly involved in the sale, promotion for sale, or the provision of services in connection with the sale of residential property. In the case of related entities engaged in such practices, the effect is that the group as a whole benefits from the one transaction, because each receives a fee for the particular service offered. The practice of marketeering is regulated in Queensland by the Property Agents and Motor Dealers Act 2000 (Qld). Relevantly, the legislation requires disclosure by parties engaged in marketing real estate of the relationship between the parties and the benefits, if any, that they or other persons receive from the sale: see in particular Form 27b, "Selling Agent's Disclosure to Buyer". 6 In this case, the appellant was marketing parcels of strata title units within various real estate developments on the Gold Coast in South East Queensland. The real estate was released by developers in 'stages'. It was often the case that there was a price increase with the release of a new stage. The appellant was not a developer and the developers whose projects the appellant was selling were not associated with the appellant, other than through the appellant's marketing of the real estate. The appellant, through his companies, acted in a number of different capacities, including as promoter, financial adviser, real estate agent and financier in respect of the developments. In the four year period from 1999 to 2003, the appellant, through his companies, effected sales of approximately 1,200 properties utilising this practice. 7 The appellant's marketing methods included radio and newspaper advertising, telemarketing, "cold calling" and other promotional activities, including the holding of seminars and the publication of brochures. As part of the "service" provided to potential investors, the appellant provided discounted air fares and hotel accommodation for clients flying to Queensland. When in Queensland, persons employed by the appellant's companies, known as "runners", would show potential investors a number of properties with the aim of securing the sale of at least one property. If a purchaser was interested, a deposit would be taken and a contract signed immediately, that is, before the investor returned home. Invariably, the contract would be subject to finance. The contract contained a "cooling-off period", which, it appears, was five days from the date of signing a contract. 8 The selling price of properties was fixed by the developers and included a fee of between 8 to 10 per cent for marketing costs, payable to the entity marketing the projects. The appellant was only one of many operators engaged in this particular type of real estate activity. On average, the appellant's marketing fee was approximately $14,000 per sale. The appellant also received fees for services rendered in each of the capacities to which I have referred, including the standard commission set by the Real Estate Institute of Queensland. 9 It was part of the overall marketing strategy that properties be negatively geared. Thus, if the property was to be rented out, the aim was that the rental income would equal the mortgage repayments. (It was not always clear from his Honour's findings whether these were repayments of capital or interest only, although nothing turns on this detail.) The taxation benefits of negative gearing were also part of the strategy. The appeal of this marketing strategy to investors was that clients could purchase investment properties at little or no cost to themselves.

[28]

Essential findings of trial judge 19 The "Gold Coast estate" referred to in parts of the newspaper article was a development in River Springs. As at the date of the article, the appellant had not effected any sales in that development. However, a property had been offered for sale in River Springs to a Mr and Mrs Barry (the Barry transaction). The trial judge relied upon this transaction in support of his finding that the defence of truth had been established. It will be necessary to return to the Barry transaction later in these reasons. It is sufficient at this stage to note that his Honour considered this transaction relevant to the defence of truth. 20 The respondent also relied on a total of 17 sales in other developments, (the details of which were contained in a document which became Ex F in the proceedings) as establishing the defence of truth. This was a permissible approach in accordance with the principles in Maisel v Financial Times Ltd (1915) 84 LJKB 2145; (1915) 112 LT 953; (1915) 31 TLR 192. Of those 17 properties, his Honour found that there had been two transactions, being sales to a Mr and Mrs Weir (the Weir transaction) and to Mr and Mrs Wilson (the Wilson transaction), that had been at an exorbitant price. It is convenient to note at this point that his Honour also found that the Barry transaction involved a property being offered for sale at a price which had "outstripped the market". 21 There was evidence of another 11 properties (listed in Ex 91) where the valuation was said to be substantially lower than the purchase price. His Honour considered that the contemporaneous valuations in respect of those properties received by the clients or their financiers were more reliable than the retrospective valuations of those properties made by the expert valuers, Mr Duncan and Mr Hamilton, who had been retained by the appellant and the respondent respectively. 22 The respondent also relied upon the appellant's 'system' of "Red Alerts", which involved a system of notifications by Cross Country Realty, usually directed to the appellant's attention, when it appeared that a transaction was not likely to proceed. In the period December 2002 to June 2003, nine sales did not proceed because finance was refused, as valuations received by the proposed purchasers, or their financiers, were lower than the purchase price. In addition there were Red Alerts sent to the appellant in May/June 2003 in respect of purchasers of properties in River Springs, indicating, on the respondent's argument, that the appellant was continuing to market properties in River Springs after he had formed the view that the price had "outstripped the market". His Honour considered, at [665], that it was apparent from this material that a "pattern" had begun to emerge. His Honour held, at [671]-[672], that it was the combination of all these factors that satisfied him that the defence of truth had been established.

[30]

The contention 26 The respondent filed an Amended Notice of Contention (the Contention) in which it asserted that the truth of the defamatory imputation was established by the larger case it had sought to make out at trial. The respondent's 'larger' case had, relevantly, three factual aspects: the evidence contained in the Red Alerts; the evidence in respect of other sales that did not proceed because independent valuations came in at less than the purchase price (the Ex 91 material); as well as a case based upon the failure of properties to achieve the projected rate of capital growth that the appellant had represented would be achieved. This part of the case was based upon the evidence presented in Ex 120, which was a schedule of the increase (or decrease) in capital growth of property sales effected by the appellant, as compared to the median capital growth rate for properties in a particular development. 27 The respondent also contended the defence of truth had been established by the evidence that the effect of the appellant's marketing strategy was such that investors were misled and "ripped off". Contrary to their understanding, the properties had not been selected for them as good investments, but as properties that would achieve maximum commissions for the appellant and his companies. Accordingly, investors were not able to act in a prudent and knowledgeable manner in purchasing the properties offered for sale by the appellant. The effective consequence was that the market value of the properties based on orthodox valuation principles: see Spencer v The Commonwealth [1907] HCA 82; (1907) 5 CLR 418, could not (or at least may not be able to) be determined. It was submitted that this made it necessary for the respondent to establish the defence of truth by the 'larger' case that it had sought to run. 28 The respondent also contended that the failure of the appellant to properly complete the prescribed Form 27b, "Selling Agent's Disclosure to Buyer", required by the Property Agents and Motor Dealers Act (Qld) concealed the true relationship amongst the appellant's entities from prospective purchasers, thereby ensuring that investors were not aware that they were not receiving independent advice. 29 The respondent also raised in the contention the other defences referred to at [13]. 30 For the purposes of determining the appeal, I propose to deal first with each of the Barry, Weir and Wilson transactions and his Honour's findings in respect thereof. I will then deal with the other bases upon which the respondent sought to establish its defence of truth. 31 It is relevant at this stage to foreshadow that should the appellant be successful in establishing that the trial judge erred in the manner in which he dealt with the defence of truth, there is a question as to what this Court should do. In particular, there is a question as to whether this Court should determine the defence of truth, as well as the defences of contextual truth, fair comment and the question of damages or whether all issues should be remitted for trial. The parties agree that this Court should not deal with the defence of qualified privilege.

[31]

Structure of the primary judgment 32 Before dealing with the issues raised on the appeal, an understanding of the structure of the primary judgment is required. 33 Having introduced the proceedings, including setting out the defamatory imputations and the defences (the "Introduction"); the relevant entities connected with the appellant ("Dramatis Personae"); and the background of the appellant's marketing techniques ("Background"), his Honour, in a section entitled, "What happened in South East Queensland", then dealt, property by property, with the evidence in respect of the 17 properties contained in Ex F. Evidence had been given in the proceedings by the purchasers in five of these transactions (his Honour, at [148], wrongly records that there were four witnesses). Otherwise, the respondent's case was based on documentary evidence. His Honour found that two transactions, that is, the Weir and Wilson transactions, were sales at exorbitant prices. 34 In considering the Weir and Wilson transactions in this section of the judgment, his Honour, for the most part, dealt with the evidence in an adjectival way, save for the evidence of Mr Hamilton, the respondent's valuer. He was critical of Mr Hamilton's evidence, as I explain below. His Honour also dealt with the Barry transaction in this section of the judgment finding, at [581], that the property had been offered for sale at an exorbitant price. 35 His Honour then dealt with the Red Alerts and Ex 91, again in an adjectival way. 36 The next major section of the judgment was entitled "IS THE FIRST IMPUTATION SUBSTANTIALLY TRUE?" In this section, his Honour first dealt with the meaning of the defamatory imputation. He considered, at [600], that the phrase "Mum and Dad Investors" fitted the description of the witnesses who had attended "a Park Trent seminar", namely: "… middle-class, middle-aged couples who are interested in buying real estate as an investment in order to increase the capital value of their assets." 37 His Honour, at [601], defined the term "ripped off" to mean "cheated" or "swindled" or "taken advantage of". 38 His Honour then, at [602], interpreted the imputation to mean that "… 'the [appellant] cheated ordinary middle-class, middle-aged customers who wanted to invest in real estate as a means of increasing their capital assets by selling them investment properties at exorbitant prices'." 39 His Honour did not define "exorbitant price". For reasons that I give below, this may have been a critical omission. 40 His Honour next stated that he had considered all the submissions and then moved to the section, at [605]-[658], entitled "Considerations". In this section of the judgment, he reviewed various transactions, including the Weir and Wilson transactions. His Honour found, at [605], that the evidence established that advice had been given to intending purchasers by the appellant's companies and representations were made that the scheme marketed was "a means for increasing the capital wealth of the proposed purchasers". His Honour further found that the intending purchasers were "given to understand that Park Trent's interests were [the intending purchasers'] interests" and that the prospective purchasers had no knowledge of real estate values on the Gold Coast. His Honour, at [607], considered that "…the stage was set whereby these intending purchasers could be ripped off by charging them exorbitant prices for the real estate they were to be sold." 41 His Honour, at [608], posed the question whether the investors "were in fact ripped off by being charged exorbitant prices for their real estate". In the succeeding paragraphs, from [610]-[658], his Honour dealt with the transactions in which the purchasers had given evidence. In respect of the first of these transactions, the sale to Mr and Mrs Stumbles, his Honour stated at [614], that for reasons given, he did not accept Mr Hamilton's valuation. 42 The next transaction was that of Mr and Mrs Stark. In the course of dealing with this particular property earlier in his judgment, his Honour was critical of Mr Hamilton's valuation, concluding at [311], "I shall have more to say about his erroneous assumptions in reaching his valuations later". In the section entitled "Considerations", his Honour, at [621], was again critical of Mr Hamilton's evidence, stating that Mr Hamilton "… does not give any evidence that those other properties would have increased in value to any greater extent than the subject property did."

[34]

Background facts to the Barry transaction 48 Mr and Mrs Barry (the Barrys) responded to an invitation to view an investment in the River Springs development and arrangements were made via Park Trent for them to travel to Queensland to do so. They were requested to bring documentation, which would be required by the finance company, Easy Plan, should they decide to proceed with a purchase. 49 After they had agreed to travel to Queensland, the Barrys contacted Neil Jenman, a real estate agent who had been involved in campaigning against the sort of scheme that was being marketed by the appellant. Mr Jenman referred Mr Barry to the solicitor, Tim O'Dwyer. Mr O'Dwyer in turn contacted Greg Stoltz, the journalist who wrote the article in The Courier-Mail. Mr Stoltz indicated he was interested in looking at the matter and telephoned Mr Barry to ascertain his concerns about the proposal. Mr Barry said he was "worried about the possibility of being ripped off". 50 The Barrys travelled to Queensland on 13 June 2003 and were shown a property within the River Springs Country Club development (River Springs). The purchase price was $249,000. They paid a $1,000 holding deposit, but did not sign a contract at that time, stating that they wished to seek legal advice. In the meantime, Mr Stoltz spoke to a valuer, Ian Brosnan, and gave him details of the property that the Barrys had been shown. Mr Brosnan informed Mr Stoltz that a price of $249,000 was "a good $50,000 off the mark. It is too high". 51 The appellant, in his evidence, whilst not agreeing that the price of $249,000 was $50,000 above the market value, said that there had been increases in the price of the properties in this development from $199,000 to $249,000 and that the increased price had "outstripped the market". The appellant said that when the price increased, he approached the developer of the River Springs project and informed him that he would not be involved in any further selling of properties in that development. The appellant dated this conversation as early April 2003. 52 The trial judge referred to the following two passages of evidence given by the appellant in explanation of his reasons for deciding not to sell any further properties in River Springs. The first passage occurred during the course of the appellant's evidence in chief: "A: We aim to find properties that would perform for our clients and when prices increased, which we were involved on this all the time, we sell it to the price increase [sic]. We don't get involved after the price increases. All developers if their rate of sales are vast and high, they move their prices upwards very quickly to take advantage of extra profits. We only stay in the product until they move the prices. If they move the prices, we stop selling them immediately.

[43]

The procedural fairness complaint 61 The appellant makes a number of complaints about his Honour's finding in respect of the Barry transaction. He raised an initial challenge that he had been denied procedural fairness, having regard to the way the respondent conducted its case in respect of this transaction. It was submitted that the details of the Barry transaction were not included in the respondent's particulars of truth, but had only been particularised in relation to the defence of qualified privilege. The appellant submitted that he was prejudiced because, had he been aware that this transaction was to be relied upon in support of the defence of truth, he would have adduced valuation evidence to demonstrate that the contract price was not exorbitant, just as he had done in respect of other transactions that had been expressly particularised. Consequently, he had been left in the position that there was evidence to support the respondent's case, being Mr Stolz's evidence that the valuer Mr Brosnan had told him that the property was "a good $50,000 off the mark", to which he had had no opportunity to respond. (I will refer to this as the Brosnan valuation.) 62 This issue was debated, on and off, in various ways during the course of the hearing of the appeal. Reduced to its essential aspects, the appellant's complaint was that there had been a denial of procedural fairness because his Honour had relied upon the Brosnan valuation in circumstances where, because the Barry transaction was not specified in the particulars of truth, the appellant had not had an opportunity to meet that evidence by adducing its own expert valuation. Nor had the appellant had the opportunity to cross-examine Mr Brosnan, as he was not called as a witness. 63 The respondent accepted that the Barry transaction itself had not been particularised in the particulars of truth, but pointed out that the material relating to the Barry transaction was disclosed pre-trial, particularly in answers to interrogatories. The respondent further explained that the purpose of using the Barry transaction was not as a particular of truth, but to establish that the appellant was selling properties in River Springs at a time when the purchase price had exceeded the market value of the properties in that development: see para (f) of the particulars of truth. 64 Senior counsel for the respondent also explained that it had not been necessary for him to call Mr Brosnan as a witness, because of the appellant's 'concession' that the properties in the River Springs development at the time of the proposed sale to the Barrys had "outstripped the market". Further, the respondent informed the Court that it had not purported to rely on the Brosnan "valuation" evidence at trial. Rather, what was in issue on this aspect of the respondent's case at trial was whether or not the appellant was selling properties at River Springs at a price that was in excess of their market value. The Barry transaction afforded evidence of that, and thus of the broader allegation, particularised in paras (f) and (g) of the defence of truth. 65 His Honour, at [558], referred to Mr Brosnan's comments made to the journalist, Mr Stoltz, that the purchase price was "a good $50,000 off the mark". At [564], his Honour next moved to a consideration of the appellant's evidence, noting that River Springs was released in stages and sold well, and that the developer increased the price from $199,000 to $249,000. He stated that the appellant's "explanation for this transaction is quite revealing". His Honour also referred to the appellant's evidence of the conversation he had with the developer (see [52]-[53] above), concluding at [571]: "Here we have Mr. Cross conceding that he knew before mid June 2003 that the new price of the property would not 'perform for our clients' and that he believed that the new price 'took the edge off it for our clients, and there were better products available in the market place'. Yet he still offered one of those properties for sale to Mr and Mrs Barry in mid June 2003." 66 His Honour did not dismiss the possibility that the Barrys had gone to the Gold Coast with the intention of setting a trap, so as to form the basis of an exposé by A Current Affair. However, he was not concerned about that. Rather, as his Honour stated at [580]: "On his own admission, [the appellant's] organisation had offered them a property for sale at a price which he described had 'outstripped the market', would not 'perform for our clients' and which he believed had taken 'the edge off it for our clients, and there were better products available in the market place'." 67 His Honour concluded, at [581], that this was "clearly a case where the plaintiff offered to Mum and Dad Investors a property which was exorbitantly overpriced". When dealing with this transaction in his "Findings", his Honour found that there had been a "clear attempt" to sell the property, which the appellant had agreed was at a price that "had outstripped the market", "would not perform for his clients" and that there "were better products available in the market place". 68 It is apparent from the foregoing that the respondent had utilised the statement by Mr Brosnan to Mr Stolz to cross-examine the appellant. Having obtained the concession from the appellant that once the purchase price reached $249,000 it had "outstripped the market", the respondent found it unnecessary to call Mr Brosnan to establish that matter. An analysis of his Honour's reasoning reveals that he based his finding that this was a transaction where "Mum and Dad Investors" had been offered properties at "exorbitant prices", not on the Brosnan 'valuation', but upon the appellant's evidence. 69 It follows that there has been no breach of procedural fairness and this ground should be rejected.

[45]

This was applied in Herald & Weekly Times Ltd v Popovic [2003] VSCA 161; (2003) 9 VR 1 at [274]. 72 His Honour's finding at [581] in respect of the Barry transaction was that this was a case where the appellant "offered to Mum and Dad Investors a property which was exorbitantly overpriced" (emphasis added). The appellant contends that this finding did not correspond with the defamatory imputation and therefore could not constitute a finding that the imputation was a matter of substantial truth. In particular, the appellant submitted that there was no finding, and no evidence, that the Barrys had been "ripped off". The appellant submitted that, to be "ripped off", it was necessary for a person to suffer a detriment and there was no evidence that they had suffered any detriment. Further, the imputation was that investors had been "ripped off" in a particular way, namely, by the "sale" of property at an "exorbitant price". It was submitted that there was no sale and no evidence of an "exorbitant price". 73 The appellant also argued that even if his evidence that the "price had outstripped the market" could be considered as a concession, the nature and extent of the concession had to be analysed closely and compared with the imputation. It was submitted that the imputation was one of grossly improper conduct amounting to a fraud. A concession that the price had "outstripped the market", was not a concession that matched the imputation. It followed on the appellant's submission that this transaction had to be ignored for the purposes of determining whether the substantial truth of the imputation had been established. 74 It is convenient first to consider the submission that the appellant's evidence did not amount to a concession that the Barry transaction involved a purchase price that was exorbitant. In determining whether the appellant's submission on this should be accepted, it is necessary to have regard both to the nature and the extent of the appellant's concession and the use that could properly be made of it. As I have already indicated, at [55] ff, the evidence was more extensive than the passages reproduced in his Honour's judgment. Initially, in his evidence in chief, the appellant said that he only stayed in a particular project until the price moved and once the price moved, he stopped selling immediately. This evidence was substantially modified in cross-examination, at least insofar as properties in the River Springs project were concerned. He explained that there had been a staged increase in the sale prices in that project over five years, from $199,000, to $230,000, to $250,000. He then said that when the price increased to $249,000, they didn't proceed with sales to clients who had first shown interest in the properties when the price was $199,000 (see passage at [53] above). 75 His Honour, although setting out that evidence, did not otherwise refer to it. In my opinion, when that passage is taken in conjunction with the appellant's evidence that the increase of $50,000 "took the edge off it for our clients", the appellant appears to be saying that it had taken "the edge off it" for those who had shown interest at the price of $199,000, but who had not purchased at that price. That would be understandable. A $50,000 increase from the time of inspection (when the price was $199,000) would almost as of course be thought to have "outstripped" at least that person's expectation of a good investment opportunity. 76 However, even if the appellant's concession should be read more generally, to the effect that a price of $249,000 had "outstripped the market" and had taken "the edge off" an investment in River Springs (regardless of the price when the client first looked at a property) and that there were better properties in the market, it is still not a concession that the price was exorbitant. 77 It will be recalled that I have said (at [39]) that the trial judge did not refer to the meaning of "exorbitant". "Exorbitant" means "grossly excessive": The Australian Concise Oxford Dictionary (1995); "exceeding the bounds of custom, propriety, or reason, esp. in amount or extent": The Macquarie Concise Dictionary, 2nd ed, (1996). In my opinion, as a matter of ordinary English, none of the expressions used by the appellant, taken singly or in combination, amounted to a concession that the price was grossly excessive. In particular, a statement that the developer took the "price advantage out of the product" is not a concession that the price was exorbitant. Accordingly, to the extent that his Honour's finding that Mr and Mrs Barry were offered a property at an "exorbitant price", was based on the appellant's 'concession', I am of the opinion that the finding was not open to him. As that was the only evidence upon which his Honour's finding was in fact based, it follows that the Barry transaction did not support that part of the defamatory imputation relating to sales at an "exorbitant price". 78 The respondent also placed some emphasis upon the fact that the Barry transaction established that the appellant continued to market properties in River Springs after he believed that the price had "outstripped the market", which was a central allegation in para (f) of the particulars. It was submitted that "sale", as contained in the defamatory imputation, included offering a property for sale. I do not agree with this submission. The defamatory imputation was specific in its terms: it was of "sales" which because of the exorbitant prices at which the property was sold, meant that purchasers were "ripped off". A 'sale' in that sense means a sale that had resulted in a binding contract, that is, one where title had been transferred and the purchaser had become the owner of the property. That is the meaning accorded to the defamatory imputation by his Honour and is, in my opinion, correct. 79 The respondent advanced a variant of this submission, to the effect that it was sufficient for the respondent to establish that the appellant had introduced one of the prospective purchasers to property in this development, in circumstances where he knew that the price had "outstripped the market". It was submitted, therefore, that as the appellant's evidence that he had stopped selling in River Springs had been rejected by the trial judge, it was open for the Court to find that the appellant was in fact selling lots there in the normal course of his business, and that the Barry transaction was not an isolated attempt to sell a property in that development after April 2003. In my opinion, the Barry transaction alone would be an insufficient basis for such an inference to be drawn.

[47]

(a) the Weir transaction 81 The Weirs were targeted by Park Trent Investments through a telemarketing campaign in November 2002, conducted by Park Trent Investments, relating to tax minimisation investment opportunities. They attended a seminar that specifically focussed on investment properties and the Weirs, who were interested in the proposal, arranged to be visited at home by a Park Trent Investments representative. As a result of the home visit they agreed to a partly-funded trip to the Gold Coast to inspect property. At the Gold Coast, they were met by a representative from Cross Country Realty, who showed them the area and also took them to the office of Easy Plan, where they were met by the manager, Kathryn Gray. They discussed their financial situation with Ms Gray. She informed them that Park Trent Investments and Easy Plan were separate entities and that Park Trent Investments only referred clients from interstate. 82 Thereafter, the Weirs inspected a number of properties and expressed an interest in a property at "Lakeside on Varsity". They inspected the property twice and then returned to Ms Gray at Easy Plan, who told them that they needed to make a decision that day as to whether they wanted to purchase the property. Having decided to proceed, they signed an application for a loan from their own bank, Citibank, and paid a deposit of $1,000. The Cross Country Realty representative recommended that they see Donald Dickie, a solicitor, and they did so. 83 The contract price was $264,000, with a completion date of 28 days from the date of contract. The contract was explained to them by someone in Mr Dickie's office, although the Weirs said that the documentation was gone over "fairly quickly". They were told that there was a cooling-off period of five days. 84 They returned to see Ms Gray, who told them that their application to Citibank had been declined. She did not tell them why this was so, but did inform them that she could arrange for a loan of $40,000 from Citibank, with the balance of $229,500 to be loaned by the Adelaide Bank. The Weirs agreed to this proposal. They were provided with documentation required under the Property Agents and Motor Dealers Act, including Form 30b, "Warning Statement". That form advised purchasers to obtain an independent valuation. They did not do so. 85 On 19 December 2002, Citibank sought a valuation of the property from Hely & Associates. On 23 December 2002, Citibank sent a facsimile to Ms Gray at Easy Plan in the following terms: "I had the valuer contact me regarding the purchase property in Queensland and he advised that his colleague valued an identical unit and was valued at $205,000.00.

[51]

He has already had other valuers make an assessment on this development and is not willing to use other valuers." (Emphasis added) 87 On 28 January 2003, the Weirs were advised that Home Loans Centre Management Pty Limited had approved finance for $229,500. The transaction proceeded and the contract was completed on 19 February 2003. Sometime later, Mr Weir tried to amalgamate that loan with the Citibank loan. An officer from Citibank informed him that the valuation of the property had come in at $240,000, instead of the contract price of $264,000. As I understand the evidence, that valuation was one done at the time of purchase. Approximately two years later, when he went to sell the property, real estate agents in the Robina area advised Mr Weir that if the property was sold, it would fetch between $270,000 and $280,000. 88 The Weirs rented the property out, the rent being equal to their total monthly mortgage payments. They sold the property on 19 November 2004, almost two years after purchase, for $280,000, representing an average increase in value of 3.17 per cent per annum. 89 The expert valuers, Mr Duncan and Mr Hamilton, each valued this property. Mr Duncan (the appellant's valuer) valued the property as at December 2002 at $264,000, that is, at the sale price. He valued the property at $300,000 as at October 2006. 90 Mr Hamilton (the respondent's valuer) valued the property at December 2002, being the date of purchase, at $215,000. In reaching that valuation, Mr Hamilton adopted the following methodology. First, he looked at sales effected by Cross Country Realty and Park Trent Investments, and then at sales effected by others in the same development, noting a strong consistency between the two. He then looked at units in other complexes, where the prices ranged from $155,000 to $202,000. He concluded, at [424]: "An investor fully cognisant of the Gold Coast real estate market, acting without compulsion, would not be prepared to pay the asking price of $264,000.00 for Lot 16.

[54]

Furthermore, there is no evidence from him that the other property would have yielded a greater increase in value over the years to 2006 than did the subject property." (Emphasis added) 93 This finding concluded his Honour's analysis of the Weir transaction in the early part of his judgment. Notwithstanding this finding, his Honour concluded in his "Findings", at [664], that the sale to the Weirs was at an exorbitant price. It appears that he based this conclusion on his 'consideration', at [636], that it was significant that Citibank had a 'valuation' of this property at $205,000 and had asked Easy Plan to advise the Weirs of this. His Honour observed that Easy Plan had not done so and commented, at [637], that that the Citibank 'valuation' was $59,000 below the purchase price. His Honour, at [639], also referred to Mr Hamilton's market valuation as at the date of purchase of $215,000 and commented on the resale price of $280,000. His Honour then stated at [640]: "This evidence clearly establishes that Mr and Mrs Weir were sold a property at a very high price and one which was well above the market value as valued at that time. What is even more significant is that this valuation was not disclosed to them notwithstanding the request of Citibank." 94 The appellant makes a number of complaints about his Honour's reasoning that lead to his finding that the Weirs had been sold the property at an exorbitant price. First, he complains that there is an inconsistency in his Honour's reasoning, in that, at [425], his Honour had found that Mr Hamilton's valuation of $215,000 was not an opinion as to market value, and his Honour's later apparent reliance on that valuation at [639], because of the fact that he made uncritical reference to it in the section "Considerations". 95 Next, the appellant submitted that in order for the trial judge to reach a conclusion that the purchase price was exorbitant, it was necessary for his Honour to make a finding as to what the market value was. His Honour did not do so. Further, the appellant said that unless his Honour's reasoning at [423]-[425] in fact involved a rejection of Mr Hamilton's evidence, his Honour had failed to engage in the necessary process of resolving the conflict in the evidence of the two expert valuers. If his Honour did reject Mr Hamilton's valuation, at [423]-[425], then the apparent acceptance of it at [639] meant that his Honour's reasons were internally inconsistent. 96 Senior counsel for the appellant submitted that these underlying problems with his Honour's reasoning process were not ameliorated by the findings at [636] ff, in which his Honour appears to have based his finding of a sale at an exorbitant price by reference to the Citibank 'valuation' of $205,000. It was submitted that the finding itself was infected by error, or, at least, that the evidence was of such dubious weight that it did not provide a sufficient basis for his Honour's ultimate conclusion that the sale had been at an exorbitant price. 97 Two particular criticisms were made of the Citibank 'valuation' of $205,000. First, it was said that the evidence was derived from multiple hearsay, that is, it was a statement made by an unknown person, said to be a valuer, based upon a statement about another property made by another person, also said to be a valuer, to a Citibank employee who was not a valuer, which was then conveyed to Ms Gray. Further, there was in fact no evidence as to whether there was a valuation of the Weirs' property at all, as opposed to a valuation of other properties in the same complex, no evidence of the qualifications of the persons who had valued those other properties and no evidence of the valuation methodology that had been used. Secondly, the 'valuation' of $205,000 was inconsistent with information Citibank gave to Mr Weir that the valuation of the property had been $240,000. 98 It was submitted, therefore, that to treat the 'valuation' of $205,000 as being "of significance" as his Honour did at [636], ignored every other piece of relevant evidence that was before him. It also overlooked the fact that his Honour had recorded Mr Duncan's valuation of this property without critical comment and had previously rejected Mr Hamilton's valuation. Further, it ignored the fact that two years after purchase, the property was resold for $280,000, an increase of $16,000 over the purchase price. 99 There was some discussion during the course of the appeal as to the basis upon which the evidence of the 'valuation' of $205,000 and the further evidence of the valuation of $240,000 was admitted. However, as the admissibility of the evidence was not challenged at hearing, senior counsel for the appellant confined his submission to the weight of such evidence. He submitted that this evidence, and especially the evidence of a 'valuation' of $205,000, should have been accorded little or no weight. It was further submitted that even if the property had been valued at $240,000, as advised to Mr Weir, it could not be said that a differential of $24,000 (a purchase price of $264,000 minus a valuation of $240,000) or, approximately 9 per cent from the actual purchase price, could properly found a conclusion that the purchase price was exorbitant. 100 The respondent contended that the trial judge was entitled to rely upon the Citibank 'valuation' of $205,000. It was also submitted that it was open to the trial judge to accept that the reference to this 'value' in the facsimile forwarded by Citibank to Ms Gray, was evidence that the property was worth substantially less than the purchase price of $264,000, and that the sale price was therefore exorbitant. The respondent also relied on the failure of Ms Gray to pass on this information to the Weirs, as requested by Citibank, either as an admission, or as corroboration of the proposition that the Citibank 'valuation' was correct. 101 I do not agree with this last submission. His Honour did not make a finding that Ms Gray's failure to pass on this information had the legal consequences for which the respondent now contends, although at [636], he found it "of significance" that Citibank had a 'valuation' of $205,000 and that Easy Plan had not passed on that 'valuation' as requested. His Honour did not explain what that "significance" was. As Ms Gray did not give evidence, it may have been open to his Honour to draw a Jones v Dunkel inference: [1959] HCA 8; (1959) 101 CLR 298. However, a Jones v Dunkel inference would not have been a sufficient basis for finding that the failure to pass on the information as requested was an admission, or corroborated its correctness. There was no cross-examination of the appellant to the effect that the 'valuation' had not been passed on because Ms Gray allegedly knew it was correct. If the evidence was to be treated as an admission or as corroborating the Citibank 'valuation', the appellant should have had an opportunity to deal with it. Accordingly, I would reject this as an available basis for accepting the Citibank 'valuation' of $205,000. 102 The respondent also submitted that his Honour appeared to have accepted Mr Hamilton's valuation of $215,000, having regard to his reference to it at [639], and it was likely that his Honour had done so because it was corroborated, to some extent, by the Citibank 'valuation' of $205,000. The purport of these submissions was that there was evidence upon which his Honour was entitled to conclude that this sale had been at an "exorbitant price". 103 The respondent further submitted there was other evidence that indicated properties in the same locality as the Weir property were being sold at an overvalue. Reference was made to a Red Alert dated 10 January 2003 in respect of Lot 59 Villa Petros. The Red Alert stated that the loan to the purchasers of that property had been declined by Citibank, because "'EASY PLAN FINANCIAL SERVICES' IS NO LONGER ACCREDITED WITH CITIBANK!!" 104 The Court was informed that Villa Petros was one of the developments in southeast Queensland. It was submitted that this evidence demonstrated that Citibank was of the opinion that properties being offered in this area (and in respect of which applications were made to it) were overpriced. Accordingly, it was submitted that it was open to his Honour to accept the Citibank 'valuation' of the Weir property at $205,000, because it was consistent with the view that Citibank had taken of the property values in the area generally. 105 The valuation of Lot 59 Villa Petros was apparently $29,000 under the "required amount". There was no evidence as to what the required amount was. It may have been the purchase price or it may have been the amount that the proposed purchasers sought to borrow. Nor was there any evidence of the purchase price. In any event, the fact there was evidence of other properties with valuations less than 'something', does not support a finding that the market value of the Weir property as at the date of purchase was $205,000. Further, the Red Alert stated that the loan had been declined because Easy Plan was no longer accredited with Citibank. There could have been any number of reasons for this. 106 Accordingly, although Easy Plan was referring clients for loans when the valuations did not match the purchase price, I would not be prepared to infer that the evidence relating to Lot 59 Villa Petros supported the trial judge's finding that the sale to the Weirs was at an "exorbitant price". Finally, as the purchase price of this Lot is not known, no inference that a valuation $29,000 below the required amount involved a sale at an "exorbitant price" can be drawn. If, for example, the sale price was the same as the Weirs', "$29,000 under" would represent a difference of 10 per cent which, in my opinion, is not an exorbitant difference in margin. 107 Another reason the respondent advanced as to why it was open to his Honour to accept the Citibank 'valuation' of $205,000, was because after the initial advice from Citibank, Ms Gray approached Citibank and, it appears, requested that another valuation be undertaken by a different valuer. This request was refused, as the valuation manager advised that he was satisfied with the valuer's decision, that he had already had other valuers make an assessment on this development and he was not willing to use other valuers. This evidence goes no higher than indicating that the valuation manager was satisfied with the valuation he had for this property. In any event, the Court cannot be satisfied that the Citibank 'valuation' was in fact a valuation of $205,000. 108 Mr Weir had been told by Citibank that they had a valuation of the property of $240,000. Assuming that was so, it is readily calculable that $205,000 is 85 per cent of $240,000, which is a fairly common ratio upon which a mortgagee will lend. The trial judge made no reference to this evidence when dealing with this transaction in the "Considerations" section of his judgment. In my opinion, it was an error for his Honour to have overlooked it. Had his Honour had regard to Mr Weir's evidence on this point, it is unlikely that he would have uncritically accepted the Citibank 'valuation' of $205,000. At the least, he would have had to deal (and should have dealt) with the fact that there was evidence that suggested that the Citibank 'valuation' was not $205,000. 109 There is another reason the 'valuation' of $205,000 should not have been accepted uncritically. It will be recalled that on 28 January 2003, the Weirs were advised that Home Loans Centre Management Pty Ltd had approved finance in the sum of $229,500 for the purchase. There was no evidence as to whether that financier had a valuation of the property, although it might be expected that some valuation of the property was required before the loan was approved. Interestingly, $229,500 is approximately 87 per cent of the purchase price of $264,000, which, as I have said, is within the range of a common ratio lent by mortgagors on the basis of first mortgage security. 110 When these factors are taken into account, together with the shortcomings in Citibank 'valuation' evidence (see [97]-[101] above), I am of the opinion that the Citibank 'valuation' of $205,000 was not of sufficient weight or cogency to be the basis of a finding of "exorbitant price" as found by his Honour. 111 The respondent finally relied upon the fact that the actual profit on the resale of this property represented a return of 3.17 per cent on his gross outlay, as compared to an average capital growth rate for that subdivision of 12 per cent. It was submitted that when all of these factors were taken into account, the evidence established that the property had been sold to the Weirs at an exorbitant price. It will be convenient to deal with this submission when dealing with the respondent's contention in relation to the failure of properties sold by the appellant to achieve either the represented capital growth, or a capital growth comparable to the median growth of properties in the area.

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(b) the Wilson transaction 112 The Wilsons attended a seminar conducted by Park Trent Investments in about August 1998. They were told about Gold Coast property investments and, in particular, about a property known as "The Director Suites" at Main Beach. They were given brochures by Park Trent Investments that set out the benefits of investing in such properties. They were also told that there would be a rental guarantee and that capital growth on the Gold Coast was high. The Wilsons were sufficiently interested to leave their contact details and were subsequently visited at their home by two representatives of Park Trent Investments. On this visit, Park Trent Investments said that units being sold on the Gold Coast would be a sound investment. They provided the Wilsons with a property investment analysis, which indicated a capital growth projection of 6 per cent per annum. 113 The Wilsons decided to buy a one bedroom unit off the plan. Of particular importance to them in their decision to purchase the property was a guarantee of a 7 per cent rental return provided by an unrelated party, Bassineau Pty Limited (Bassineau). Early in 1999, the Wilsons travelled to the Gold Coast and viewed the block of units. For reasons not presently relevant, they were offered another unit in the same complex at the same price and they decided to purchase that unit. The purchase price of $246,700 included $16,000 worth of furniture. 114 The Wilsons obtained two loans to finance the deal. Completion of the sale took place on 26 February 1999. Unfortunately for the Wilsons, Bassineau did not honour its rental guarantee and at least by September 2001, it had gone into liquidation. The Wilsons later sold the unit in June 2003, four years after purchase for $238,500, sustaining a 'loss' of $8,200. The unit was sold again on 22 June 2005, for $245,000, still below the price paid by the Wilsons six years earlier. 115 Mr Duncan valued the property as at the date of purchase at $246,700, that is, at the purchase price. He then valued the property as at October 2006 at $255,000. Mr Hamilton valued the property as at 7 January 1999 at $160,000. 116 After dealing with the facts relating to the purchase, His Honour, at [327], referred to the rental guarantee, which he said was "so important to Mr Wilson". His Honour then stated, at [334], that "the problem with the transaction", that is the Wilsons' purchase of this property, "was that Bassineau did not honour its guarantee". 117 His Honour, at [352] ff, after referring to Mr Hamilton's valuation methodology (being the same methodology he had used in relation to the other properties, including the Weirs'), stated: "[352] Of significance is the fact that Mr Hamilton changes the reasons for his conclusions.

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[356] He agrees that they are not and that they are probably making a reasonable profit on the development but then places the blame upon the fact that they are paying too much for the land because they cannot have much control over the other costs of developing." 118 His Honour did not otherwise reach any conclusion in respect of the Wilson transaction in this part of his judgment. In the "Considerations" section of the judgment, at [625]-[628], his Honour referred to the apparent "attractiveness" of the purchase, having regard to the Bassineau guarantee, and that the Wilsons ended up "very much out of pocket" in a sum of $14,590.96, as a result of the failure of that guarantee. His Honour then repeated the prices at which the property was on-sold in June 2003 and June 2005 respectively, and stated at [629], that this represented a "substantial drop from the original purchase price" and, at [630], that it was "[c]learly … an unsatisfactory investment". 119 In "Findings" at [664], his Honour concluded that the sale to the Wilsons was at an exorbitant price. 120 The appellant advances similar arguments about his Honour's reasoning in respect of the Wilson transaction as he does in respect of the sale to the Weirs. First, he submitted that his Honour did not make any finding as to the market value of the property as at the date of purchase. Secondly, at [352]-[356], his Honour appeared to have dismissed the valuation evidence of Mr Hamilton as not being well based. Thirdly, his Honour made no criticism of Mr Duncan's valuation evidence, which was that the value of the property as at the date of purchase was, in fact, the purchase price. 121 The appellant also contended that his Honour's finding, at [630], that "this was an unsatisfactory investment", was based not only on the drop in the resale price, but also included the problems that the Wilsons had encountered with Bassineau not honouring its guarantee: see [627]-[630]. The appellant also pointed out that his Honour made no finding that the Wilsons were "ripped off". It was submitted that his Honour's finding amounted to no more than that this was a less than satisfactory investment. The appellant contended, therefore, that there was no or no sufficient evidence upon which his Honour could base a finding that the truth of the imputations had been substantiated by reference to the Wilson transaction. 122 The respondent resisted this line of argument, contending that his Honour's finding that this was an unsatisfactory investment clearly flowed from the drop in the sale price, because, by the time of the resale, the influence of the failure of Bassineau to honour its guarantee had long passed. The appellant pointed out, however, that this was not the way his Honour's judgment was structured, and further, his Honour did not make any finding to the effect for which the respondent contended. In my opinion, the appellant's understanding of this part of his Honour's judgment is correct and the finding that this transaction was an "unsatisfactory investment" related both to the failure of the Bassineau rent guarantee and the drop in the purchase price on the resale of the property. That finding does not, however, mean that the original purchase price was "exorbitant". The question is whether there was any evidence that supported, or could support, that finding. 123 The respondent contended that, notwithstanding the manner in which his Honour dealt with Mr Hamilton's evidence at [352]-[356] and notwithstanding the absence of any adverse comment in respect of Mr Duncan's valuation evidence relating to this property, his Honour must have in fact rejected Mr Duncan's evidence. This submission was based upon the cross-examination of Mr Duncan and a comparison of his methodology with that used by Mr Hamilton. 124 Mr Duncan valued the property at three points: 7 January 1999, being the date of purchase; 1 July 2003; and 19 October 2006. In respect of the 1999 valuation, Mr Duncan had considered four comparable sales, three within the same complex as the Wilsons and one outside the complex, being a property in Lennie Avenue in the same suburb, which was older and which he described as a "slightly inferior" property. However, in respect of the 2003 and 2006 valuations, Mr Duncan only relied upon sales within the same complex as the Wilsons'. The respondent submitted, therefore, that Mr Duncan's valuation was flawed, and as I understood the submission, explained why his Honour must have, at least implicitly, rejected Mr Duncan's valuation of this property. In my opinion, even if Mr Duncan's valuation is flawed, that does not mean that Mr Hamilton's evidence as to the market value of this property was, or ought to have been, accepted. 125 In his valuation report, Mr Duncan also described the property market between 1999 and 2003. He stated that the property market in the last quarter of 1999 was "relatively stable". However, as at July 2003, the property market within South East Queensland had experienced a period of almost unprecedented growth, with median values in Main Beach recording a 22 per cent per annum increase in the preceding three years. The growth cycle ended during the middle of 2004, with an approximate 3 per cent increase in property values from July 2003 to mid-2004, followed by a decline. He stated that during 2003, the South East Queensland localities were still considered a good market for investment properties below $350,000, for strata titled units, duplexes and townhouses. However, in cross-examination, Mr Duncan said that the significant property growth would not have applied to one-bedroom units (the Wilson property being a one-bedroom unit). 126 There is some credence for this view when regard is had to the Lennie Avenue property. That property appreciated at approximately 12 per cent per annum in the three year period 2000-2003, which was half the median growth rate for properties in this locality. In other words, the Lennie Avenue property, being a one-bedroom property, did not achieve the median capital growth for units on the Gold Coast. However, it needs to be acknowledged that the Wilsons' unit only achieved a growth rate of just over 1 per cent per annum in the same period, if the value of the furniture is ignored in the original purchase price, a matter I explore below. 127 The respondent pointed out that the Wilsons' property fell within this profile (being a property with a value under $350,000), but rather than having had the benefit of increases in property value, it had been sold at a loss in June 2003. Having regard to Mr Duncan's evidence, this submission throws up the 'bluntness' of the statistical profile and dictates that care needs to be taken with using median growth rates to determine the value of a property at any particular point of time. 128 The respondent further urged this same argument by reference to the increase in the capital growth rate of the Lennie Avenue property that Mr Duncan had used as a comparable sale for the purposes of his 1999 valuation. That property was sold on 12 October 1999 for $235,000, on 23 December 1999 for $244,000, and again on 17 March 2003 for $337,000. There was then a later sale in 2005 for $435,000. Therefore, in the (approximately) three year period from late 1999 to 2003, there had been a capital growth of Lennie Avenue of approximately 38 per cent 129 The respondent said that it might have been expected that the Wilson property would have experienced at least the same growth rate as the slightly inferior unit. It followed, on this argument, that the value of the Wilsons' unit in 1999 was substantially less than $246,000. The underlying reasoning of this argument was referred to as the "reverse engineering" valuation process, that is, by taking the growth rate for a comparable property, or the median growth rate of properties in the area, compared to the later sale prices, the market value of the unit could be determined at an earlier point of time. 130 The respondent submitted, therefore, that although the trial judge did not expressly reject Mr Duncan's evidence, this Court, looking at the whole of the evidence, should conclude that it was reasonably open to the trial judge to reject, and it should be inferred that he had in fact rejected, Mr Duncan's valuation of this property and accepted Mr Hamilton's valuation. I would reject that any such inference is available. An analysis of this type might ground an argument that the trial judge erred in some way. It would not support an inference that his Honour had implicitly accepted Mr Hamilton's evidence that had been the subject of his express criticism, and had implicitly rejected Mr Duncan's evidence that he had not criticised. In any event, the fact is his Honour did not engage in any reasoning process relating to this evidence. 131 I deal below with the legal principles that govern the proper approach to the evaluation of competing expert opinions. Before doing so, I wish to deal with a qualification that I consider should be noted in respect of the respondent's analysis of the value of the Wilson's unit and his Honour's findings in respect thereof. 132 The Wilsons' unit was purchased for $246,700, including furniture valued at $16,000. On a simple mathematical approach, this would mean that the real estate component of the purchase price was $230,700. (A simple mathematical approach may, of course, not be correct, but at least it provides some gauge against which subsequent sales should be measured.) When a price of about $230,700 is compared to the purchase price of $235,000 for the slightly inferior Lennie Avenue unit in October 1999, it might possibly be inferred that the realty component of the purchase price more accurately reflected its then market value. 133 There is a further relevance for this consideration. His Honour found that the Wilson unit had been on-sold on two occasions at prices below the original purchase price. Although it is not apparent from the evidence whether the subsequent sales included furniture, Mr Duncan gave evidence that the furniture would only have nominal value. Accordingly, there needed to be some qualification made when comparing the original price to the subsequent sale prices, to take account of the fact that there was this component for furniture in the original price. His Honour's approach did not take this factor into account.

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Appellable error on the valuation case 134 In CSR Ltd v Della Maddalena [2006] HCA 1; (2006) 224 ALR 1, Hayne J, at [110] and [114], held that the trial judge was required to examine why experts differed in their opinions, not just to express a preference for particular witnesses over others. See also Kirby J (Gleeson CJ agreeing) at [42] and [58]. This principle is not new and has been the subject of frequent judicial application. In Flannery v Halifax Estate Agencies Ltd [2000] 1 WLR 377, Henry LJ said, at 382: "… where the dispute involves something in the nature of an intellectual exchange, with reasons and analysis advanced on either side, the judge must enter into the issues canvassed before him and explain why he prefers one case over the other. This is likely to apply particularly in litigation where as here there is disputed expert evidence …" 135 Flannery v Halifax Estate Agencies has been applied in New South Wales: see, for example, Moylan v Nutrasweet Company [2000] NSWCA 337; Wiki v Atlantis Relocations (NSW) Pty Limited [2004] NSWCA 174. 136 The principles governing the assessment of expert evidence is a particular application of the judicial obligation to give reasons. In The Waterways Authority v Fitzgibbon; Mosman Municipal Council v Fitzgibbon; Middle Harbour Yacht Club v Fitzgibbon [2005] HCA 57; (2005) 221 ALR 402, Hayne J analysed the nature of the appellable error usually encompassed in an appeal ground based on "inadequate reasons". His Honour said: "[129] Reference was made in argument to the "'sufficiency' of the primary judge's reasons. When it is said that a judge did not give 'sufficient' reasons for a decision there may be some doubt about what principles are engaged. Reference may be being made to the duty of a judicial officer 'to make, or cause to be made, a note of everything necessary to enable the case to be laid properly and sufficiently before the appellate Court if there should be an appeal [including] not only the evidence, and the decision arrived at, but also the reasons for arriving at the decision'. To fail to make or cause to be made such a note may invoke principles of procedural fairness and constitute a failure to exercise the relevant jurisdiction.

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[130] In the present case, however, reference to the 'sufficiency' of the primary judge's reasons is not to be understood as seeking to invoke only those principles. Rather, because the primary judge was bound to state the reasons for arriving at the decision reached, the reasons actually stated are to be understood as recording the steps that were in fact taken in arriving at that result. Understanding the reasons given at first instance in that way, the error identified in this case is revealed as an error in the process of fact finding. In particular, it is revealed as a failure to examine all of the material relevant to the particular issue." (References omitted) 137 Cooper AJ analysed the evidence of the respondent's expert valuer Mr Hamilton. It is apparent from his Honour's reasons, at [352]-[356], that he did not accept the basis upon which Mr Hamilton alleged that the purchase price was excessive. His Honour specifically found, at [425], that Mr Hamilton's valuation of the Weir property was not "an opinion as to the market value". 138 His Honour then summarised Mr Hamilton's evidence in respect of the Wilson transaction and recorded Mr Hamilton's concession that the excessive purchase prices for these properties were not due to excessive fees being charged by marketeers, but rather due to the fact that marketeers had been "highly successful" in increasing the interest in property and that developers were paying too much for the land. His Honour noted, at [424], that Mr Hamilton had used the same valuation methodology, relevantly, for both the Weir and Wilson properties. On that premise, his finding that the valuation of the Weir property was not "an opinion as to the market value" must also apply to the Wilson transaction. 139 His Honour did not make an express finding that he accepted Mr Duncan's valuation evidence, although he did not express any criticism of it. Nor did his Honour make any finding as to the market value of either the Weir or Wilson properties. Having regard to the criticism made of Mr Hamilton's evidence and the absence of criticism of Mr Duncan's evidence, it might have been expected that his Honour had, at least implicitly, accepted Mr Duncan's evidence. However, he clearly did not. Had he done so, he would not have found that the purchase prices were exorbitant. 140 The respondent acknowledged that, apart from the criticisms of Mr Hamilton's evidence at [352]-[356], his Honour failed to make any express finding as to which valuation evidence he accepted. It submitted, however, that his Honour must in fact have accepted Mr Hamilton's evidence of the Weir property, because his Honour referred to it in the section "Considerations" at [639]. If that is so, there is an internal inconsistency in his judgment. 141 It was also submitted that his Honour's conclusion that the sale was at an exorbitant price was based upon the evidence to which his Honour referred at [336]-[337], namely, that the Wilsons had sold the unit in 2003 for a loss of $8,200 and that the property had been sold again in 2005 for a price $1,700 below the price paid by the Wilsons six years previously. This was certainly the basis upon which his Honour made his finding. However, the drop in the purchase price does not take account of the matters to which I have referred above, and in particular, does not deal with the question whether the purchase price of the Wilsons' unit should be based on the realty only, or whether it should also include the furniture. 142 Notwithstanding his analysis of Mr Hamilton's evidence, his Honour overlooked making a clear finding as to whether he rejected that evidence and did not make any finding in respect of Mr Duncan's evidence. His Honour was not required to accept Mr Duncan's evidence. However, a finding was necessary, given the extent of the obligation to which I have referred above: see Waterways Authority v Fitzgibbon; and was particularly necessary in this case, given the reliance by the respondent on the Citibank 'valuation' of $205,000 and the Red Alert and Ex 91 evidence upon which the respondent relied. 143 The case advanced by the respondent involved a vast quantity of material. It would not have been an easy task to organise, analyse and assess each category of evidence, or the manner in which each category of evidence related to, or was affected by, the other material upon which the respondent relied. It is possible that the omission to make clear findings in respect of the evidence of the expert valuers may have lead his Honour into error in placing reliance, as he did, on that other material, notwithstanding the inadequacies in that evidence to which I have referred. However, whatever the cause of the error, his Honour did not state whether he accepted either valuer and, it follows, did not express reasons as to if and why he preferred the evidence of one or other expert. see CSR Ltd v Della Maddalena. 144 The other criticism made of his Honour's reasoning process was that it was internally contradictory. I have also reached the conclusion that this submission should be accepted. The criticism of Mr Hamilton's evidence, followed by an apparent reliance upon it in relation to the Weirs at [639] in "Considerations", demonstrates why this is so. Further, in finding at [636]-[637] that the Citibank 'valuation' of $205,000 was a contemporaneous valuation of the property, his Honour failed to deal with Mr Weir's evidence that he had been advised that the valuation was $240,000. I have already indicated (at [108]) that his Honour should have dealt with that evidence before deciding that there was in fact a Citibank 'valuation' of $205,000 and, if so, whether the latter figure could be relied upon as evidence to support a finding that the purchase price was exorbitant. There was also the problem that his Honour did not acknowledge the evidentiary deficiencies in the 'valuation' of $205,000 to which I have referred at [96]-[99] above, and, in my opinion, accorded it weight that it could not, on the whole of the evidence, properly bear.

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Other bases to support the defence of truth 145 The conclusion that I have reached in relation to the valuation evidence is sufficient to allow the appeal. However, as the respondent directed particular energy in seeking to demonstrate that there was other evidence upon which the defence of truth was substantiated, it is appropriate that I deal with those matters. This part of the argument effectively dealt with the issues raised on the Contention and focussed on the 'larger' case that the respondent had run at trial. 146 In advancing this 'larger' case, the respondent submitted that the question whether properties had been sold at exorbitant prices could not be approached solely on a "valuation" basis in accordance with the principles in Spencer v The Commonwealth. The well-established valuation principle, stated in Spencer v the Commonwealth by Griffiths CJ at 432, is that the market value of land should be the price that a willing purchaser would at the date in question have had to pay "to a vendor willing to sell it for a fair price but not desirous to sell". Isaacs J, at 440, referred to the purchaser as being a "hypothetical prudent purchaser". The respondent submitted that the effect of the appellant's marketing techniques meant that investors targeted by the appellant did not fall into the category of knowledgeable and prudent purchasers. The purchasers were not 'knowledgeable' because, being interstate investors, they were buying into an unfamiliar market and believed that Park Trent Investments was searching out the best properties for them, when that was not the case. Further, the sale prices at which the properties were being offered were non-negotiable, so that there was no hypothetical 'reaching agreement as to price', as required in a conventional valuation case. 147 Because of this anticipated difficulty, the respondent sought to justify the defamatory imputation as a matter of truth in a number of ways additional to a conventional valuation basis. First, there was the appellant's Red Alert system and the evidence in Ex 91 indicating that valuations obtained by prospective purchasers were lower than the purchase price. Secondly, there was evidence introduced through the schedule which became Ex 120, that the capital growth of property sold by the appellant had not achieved the level of capital growth that had been represented to potential purchasers. It was also submitted that the failure of the Weir and Wilson properties to achieve not only the represented growth rate of 6 per cent, but also the much greater growth rate achieved on the Gold Coast during the period 1999-2003, led to the inference that the purchase price of these properties was exorbitant. 148 It was submitted that it was thereby open to the trial judge, on the whole of this evidence, to reject Mr Duncan's valuations, the effect of which was that the purchase price represented the value of the property.

[64]

Red Alerts: the low valuation material 151 There were references in a number of the Red Alerts indicating that prospective purchasers had decided not to proceed because of low valuations. There were eight such references, relating to seven properties, in the period December 2002 to June 2003. In the first, relating to 19 Villa Petros, there was a reference to a "low valuation". There are references to two different shortfalls, one of $15,500, and another of $25,000. It is not clear what the basis for these different references is and there is no statement of the price of the property. 152 In a Red Alert dated 10 January 2003, in respect of 59 Villa Petros, there is a reference to a Citibank valuation as being $29,000 under the required amount. Again, there is no indication of the price of this property. 153 A Red Alert dated 24 March 2003, in respect of 67 Merton Street, states that the valuation for the property "has come in $23K under". A Red Alert of 8 May 2003, in relation to Lot 23 San Capistrano makes a reference to the valuation being "very low". There is no reference to the purchase price in respect of either property. 154 The next series of Red Alerts upon which the respondent relied related to three different purchasers in the Central Park development at Robina. In a Red Alert dated 16 May 2003, there was a reference to a "low" valuation in the case of Lot 5. A Red Alert dated 12 June 2003 stated that the prospective purchasers of Lot 32 and Lot 36 Central Park had terminated their purchases due to "low valuations" (it is possible that the reference to "Lot 32" is a typographical error and should be "Lot 30"). A subsequent Red Alert dated 16 June 2003 also referred to the "bad valuation" received by the prospective purchasers of Lot 36 Central Park. There was other material (not a Red Alert) indicating that one valuation for Lot 36 had come in at approximately "$30K below". Presumably, this meant $30,000 below the purchase price. Again, there was no reference to the purchase price in respect of any of these properties. Further, there is no evidence that any of these purchasers incurred a loss as a result of terminating the contract, although there is a reference to a "bond" being in place in respect of two of the properties. 155 In my opinion, none of this evidence, of itself, was sufficient to establish the truth of the imputation. In the first place, there was no sale shown in relation to any of the Red Alerts. Nor was there evidence, nor any basis for finding that any investor had been "ripped off". There was no evidence of the purchase price and there was no evidence of what the valuations were in respect of the properties, other than a reference in three cases, to the valuations being between $23,000 and $30,000 below, presumably, the purchase price. At the most, the Red Alert material was evidence that in late 2002 and the first half of 2003, seven properties (out of an unknown number of properties) had valuations that were less than the purchase price.

[65]

Red Alerts: the River Springs material 156 The first transaction the respondent relied on in this category was the prospective purchase by Mr and Mrs Dos Ramos (the Dos Ramoses) of Lot 60, River Springs, at a price of $237,000. It appears that the Dos Ramoses were sent a contract, but they did not return it and, as at 19 May 2003, the vendor's solicitors were seeking advice as to what was happening with the sale. A facsimile was forwarded to the appellant, advising him of this on 19 May 2003. This appears to have been a follow-up to a Red Alert sent on 8 May 2003. The document also bears a number of handwritten notations. Relevantly, one dated "20/5/03" states, "Ron [the appellant] to see client re new sale". There was no identification of what development was involved in relation to any "new sale". 157 Senior counsel for the respondent submitted that the proposed Dos Ramos contract of sale must have been issued on about 3 May 2003, as the practice with Red Alerts was that they were brought into existence and forwarded to the appellant during the contract cooling-off period, which was five days after the date of exchange. It was contended that the inference should therefore be drawn that the appellant was actively pursuing investors in respect of the River Springs development, notwithstanding his evidence that the price had "outstripped the market" and he had stopped marketing that project. The respondent also submitted that material demonstrated that lots in River Springs were being sold after the appellant's conversation with the developer in April. 158 There are a number of problems with drawing those inferences from the Dos Ramos transaction. In the first place, it is not clear when the contract was first sent to the Dos Ramoses. Secondly, it seems that the contract was not exchanged, as it had not been properly executed. The cooling-off period related to contracts that had been exchanged. There was other evidence that indicates that from time to time the cooling-off period was extended. Finally, the contract price of $237,000 was not within the category of price that the appellant considered had "outstripped the market". That evidence was directed to a purchase price of $249,000. Also, as I have stated above, there was no evidence as to whether any "new sale" was in the River Springs development. 159 A further Red Alert related to a proposed purchase by Mr and Mrs Haustorfer of Lot 101 River Springs. This proposed sale was of a three bedroom "low dwelling" for a purchase price of $237,000. A facsimile, in similar terms to that sent in respect of the Dos Ramoses, was sent to the appellant on 19 May 2003 by a staff member at Cross Country Realty. The purchase was in "stage 4B" of the development, which was the same stage as the property inspected by the Barrys. The Red Alert records that the solicitors believed they had to alert the vendors, presumably, it would seem, to the fact that the sale did not appear to be proceeding. The facsimile bears a number of handwritten notes, including one dated "20/5/03", stating "Ron to see client" and a further note dated "29/5/03", in terms, "Now Proceeding Re: Ron Cross". This transaction was also one that was below the price that the appellant said had "outstripped the market" and there is no evidence, either of when the contract was entered into, or what the contract price was. 160 The next Red Alert related to a proposed purchase by Mr and Mrs Brabec of Lots 96 and 128 River Springs. On 20 May 2003, Cross Country Realty sent a Red Alert to the appellant. The information contained in this Red Alert is somewhat confusing, but it does state that the developer's sales and marketing manager had "no knowledge of the properties and if they have been put back on the market. Or what price they would be". There is a handwritten note dated "20/5/03" on the facsimile, that "Ron" was to see the clients and "sell a choice home to them", and another stating that "Lot 96 NOW $269 000" and "Lot 128 $247 000". There is no evidence to establish in which development the "choice home" that "Ron" was to show the clients was; no evidence that the appellant followed up the clients; nor any evidence that these lots were still being sold by the appellant, or that they were ever sold at the prices stated. Accordingly, no inference can be drawn from this material that the appellant was continuing to market properties in the River Springs development. 161 There was another Red Alert dated 20 May 2003 regarding the Brabec transactions. (There is a reference to lot 95, which is likely to be a typographical error for Lot 96.) The Red Alert states, "These two sales have been in the system for approx 6 months". These two lots, marketed to the Brabecs at a price of $224,00, were not within the price category that the appellant considered had "outstripped the market". Further, these two transactions cast doubt on a strict insistence on the five-day cooling off period. 162 The next Red Alert, dated 12 June 2003, related to six separate transactions. It was not addressed to the appellant and does not appear to have emanated from Cross Country Realty. The respondent relied upon the document in respect of a proposed purchase by Mr Stubbs of Lot 69 River Springs. In that regard the document states: "Mr Stubbs, terminated he went directly to Richardson & Wrench and advised them that he wouldn't be proceeding.

[68]

Properties with low valuations: Exhibit 91 164 There was other evidence relating to low valuations. In a facsimile (Ex 91) from Easy Plan to Park Trent Investments, all properties with low valuations as at 28 March 2003 were listed. There were 11 such properties. These are set out at judgment [593]. However, an analysis of the material in Ex 91 reveals that in six of the transactions, the differential between the purchase price and the valuation was between 2.9 and 5.2 per cent. One involved a differential of 7.1 per cent and only two were greater than 10 per cent, involving a differential of 10.4 per cent and 10.8 per cent respectively. The property that had a valuation 10.4 per cent lower than the purchase price was the subject of a second valuation, where the differential was 8.6 per cent. The remaining two transactions had differentials of 9.2 per cent and 9.3 per cent. 165 His Honour concluded that the material in Ex 91 evidenced a "pattern" that valuations came in lower, or substantially lower than the purchase price. This was part of the combination of material that satisfied his Honour that the appellant was "in fact ripping off Mum and Dad investors by selling them investment properties at exorbitant prices". However, in reaching this conclusion, his Honour did not engage in any analysis of the sales and the differential between the sale price and valuation. His Honour did not identify the percentage differences between sale price and market value set out in the previous paragraph. He merely stated, at [667], that "the valuation was substantially lower" than the purchase price. 166 It is not known from Ex 91 whether the sales were completed. Nor is it known whether these properties were sold to alternative purchasers if the sales were not completed. Nor is the basis of the valuation known. As none of these matters are known, it can not be said that anyone was "ripped off". There were only two properties with a variant slightly greater than 10 per cent. I would not conclude that purchase prices of between 2.9 and 10.8 per cent greater than a valuation was exorbitant, or exorbitant to an extent that an investor would be "ripped off" in purchasing the property at such a price. A variation of about 10 per cent between valuation and purchase price is unsurprisingly and could not be considered to 'exceed the bounds of reason', so as to make the purchase price 'grossly excessive', that is, exorbitant. Accordingly, I am of the opinion that Ex 91 does not permit an inference that the purchase price of properties marketed by the appellant were exorbitant.

[69]

Failure to achieve represented capital growth rate: Exhibit 120 167 The third way in which the respondent sought to demonstrate that the appellant had sold properties at exorbitant prices was by demonstrating that on resale the properties had not achieved the median capital growth achieved by properties on the Gold Coast. The respondent's case in this regard was that in circumstances where a market was affected by "marketeering", the sale price of all of the properties in the relevant development were set at a specific level, which, on the respondent's case, was at an "artificial level" in the sense that they were artificially affected by the large number of property buyers in the same development. Accordingly, a methodology had to be devised to determine whether the original purchase price was higher than the "true market value". It was submitted that an appropriate methodology was to look at the resale price of the properties, in circumstances where the resales were not subject to the "marketeering" influence. Exhibit 120 was thus prepared by the respondent's legal advisers to demonstrate this. Forty-seven of the 107 properties listed in Ex 120 had been resold. The annual capital growth of the properties that were resold was charted against the annual capital growth for residential units generally in the area. 168 The respondent contended that it was apparent from Ex 120 that each property resold achieved a capital growth rate that was well below the median market capital growth rate for properties in the same geographical area. Further, only one of the 47 properties that had originally been sold by the appellant achieved a return per annum above 6 per cent, which was the return that had been represented to prospective investors. Eleven of the properties showed a negative capital growth. 169 It was said, therefore, that the original purchase price must have been exorbitant because the properties did not achieve the growth rate that had been represented to the investors and as had been achieved generally in the area. It was submitted, therefore, that there was a rational basis upon which his Honour could have come to the view that properties had been sold at an exorbitant price. 170 There are a number of difficulties with reliance upon Ex 120 to, in effect, 'reverse engineer' the valuation of the properties as at the date of purchase from the appellant. The analysis presented in Ex 120 compares the capital growth rate achieved by a small cohort of properties sold by the appellant with the median average growth rate in the area. The median was derived from all sales in the area across the range of one, two and three bedroom units, regardless of position, amenity or condition. There was also no evidence of position, amenity, or condition of the 47 units that formed the basis of this submission. Further, Mr Duncan had given evidence that the capital growth for one bedroom units had not achieved the same remarkable capital growth as had larger units. 171 The respondent also sought to rely upon the evidence in Ex 120 to demonstrate that the Weir and Wilson transactions had been sales at exorbitant prices. The Weirs and the Wilsons had purchased one-bedroom units. If Mr Duncan's evidence is correct, then it would not be expected that their units would have achieved the same capital growth and, accordingly, the 'reverse engineering' approach to valuation would not have been appropriate, or at least would have needed to have been approached with care, in respect of those properties. 172 There is also a question whether Ex 120 at trial represented a fair sampling from which the 'rational' conclusion for which the respondent contended could be drawn. The evidence was that the appellant sold approximately 300 properties each year. The sample in Ex 120 contained less than 150 properties purchased over approximately four years, of which 47 originally sold by the appellant had been resold. In my opinion, without the assistance of expert evidence that this represented a fair sampling, or alternatively without independent evidence of valuation, or that this was a reasonable basis upon which a valuation could be made retrospectively, I am of the opinion that the material in Ex 120 would not, of itself, support the conclusion for which the respondent contends. 173 There is also the possibility that the data, or at least some of it, in Ex 120 was internally compromised. The Wilson transaction, which was included in Ex 120, provides an example. The price on the resale of the property was compared with the original total purchase price. As I have explained, I consider that some allowance should have been made for the fact that the original purchase price included the cost of furniture. 174 There was a significant issue on the appeal as to whether the respondent had in fact advanced the case based on Ex 120 in the manner that it sought to do on the appeal. At trial, the respondent made only a limited use of Ex 120, namely, to cross-examine Mr Duncan. This undoubtedly explains why his Honour did not deal with a case based on Ex 120. Nonetheless, the respondent submitted that the trial judge must have appreciated the force of the material, because for example, at [412], his Honour referred to the average increase in value of the Weir property of 3.17 per cent. That figure was taken from Ex 120. 175 There are a number of difficulties with the respondent's reliance upon this particular reference in relation to the Weir property. His Honour's reference, at [412], to the average capital growth rate of this property was an adjectival reference only. He did not undertake any analysis of the material in Ex 120 and in particular, did not analyse the median capital growth rate of units in this area, or otherwise consider what was the cause of the difference in the median capital growth rate and the growth rate of the Weir property. 176 Further, although his Honour referred to the annual capital growth rate of the Weir property at [412], his Honour did not refer to it in his "Considerations", nor did he refer to it in his "Findings" (see [664]). It is not apparent that his Honour did rely upon the failure of the Weir property to achieve either the represented capital growth rate or the median capital growth rate for the area in reaching his determination. It is unlikely that his Honour would have done so, given that the respondent did not use Ex 120 for that purpose at trial. If a finding on this was necessary, I would conclude that his Honour did not rely upon this evidence to reach his determination that there had been a sale at an exorbitant price. 177 The respondent submitted that Mr Wilson's evidence, in which he said that his experience with this purchase was "all bad", also supported the substantial truth of the imputation, because his unit had achieved capital growth of less than 1 per cent per annum, compared to an average 9.5 per cent capital growth rate for properties in the area. However, Mr Wilson's evidence that his experience was "all bad" was given in the context of cross-examination as to the problems that he had, both in relation to the rental guarantors, Bassineau, and the drop in purchase price. I also reiterate that there is a question as to the base figure that should be used in determining the growth rate for this property. 178 Even accepting that the material in Ex 120 established that the properties sold by the appellant (or at least a sufficient number to demonstrate that it was not a chance occurrence) failed to achieve the median capital growth rate for properties in the area, and in fact, achieved several percentage points under the median, the question remains whether this process of proof establishes that the properties were originally sold by the appellant at exorbitant prices, that being an essential part of the imputation. His Honour did not determine that question by reference to Ex 120. Can, and should, this Court determine that question on the basis of the material in Ex 120? 179 I have already referred to the various problems with making findings based solely on Ex 120. However, the fundamental difficulty with reliance upon this material was the limited way the respondent used it at trial, namely, to cross-examine Mr Duncan to substantiate the claim that, based on a 'reverse engineering' valuation approach, properties had been sold at exorbitant prices. Mr Duncan rejected this proposition and there was no expert evidence that supported such an approach. In my opinion, although the analysis contained in Ex 120 may have established that the appellant's representations as to future capital growth had not come to fruition, it does not establish that the sales were at "exorbitant prices", nor does it establish that investors were "ripped off". This is not to deny that the analysis may have had some valid forensic use. Of itself, however, it simply did not establish the truth of the defamatory imputation.

[70]

The 'dishonesty case' 180 The respondent also submitted that the defamatory imputation had to be considered in the light of the representations made to the investors, namely, that these properties would perform as investment properties. However, the evidence established that a number of properties had not performed as investments, because they had achieved less than average capital growth rates. The dishonest representations also included representations that the appellant was seeking out better investments for them than they could get under their superannuation schemes; and that they were negotiating with developers to get the best possible return for them. There was also the failure to disclose the multiple commissions that the appellant received in respect of each sale. 181 It was said that, instead of finding a property at the best possible price for the individual investor as was asserted in the advertising, the appellant had an arrangement with developers, who had set the price. It was submitted that the appellant then sought purchasers for those properties and, if successful, was entitled to a prearranged commission, which comprised: a marketing fee; a real estate fee; a shared brokerage fee of a finance company; a referral fee; a trailer; and a commission paid by the developer. 182 It was contended that this 'fundamental dishonesty' underscored the appellant's activities and explained why the respondent's defence of truth was not necessarily a straightforward 'valuation case', but was about a method of marketing property as an investment. It was submitted that was an integral part of the marketing pitch was that the properties would achieve significant capital growth so as to offset the negative gearing aspect of the transaction. 183 The respondent faced an unenviable task in demonstrating that the above facts established the substantial truth of the defamatory imputations. Mr Hamilton, the valuer called on behalf of the respondent, conceded that "the prices charged by the developers are the same whether a marketeer is used in the sale or not" and therefore, by inference, did not have a long-term effect of inflating the price of the properties that were being developed and sold by this method: see judgment [353-356]. 184 The respondent also said that this part of its case was made out on the evidence of Mr Weir and Mr Wilson, as each gave evidence that no profit had been made on the investment. The evidence, however, was not so categorical. Mr Weir said, "we only made 15 thousand overall at the end of the day we probably [made] 2 to 3 thousand on the whole thing". Mr Wilson said, "the loss on purchase to sale was $8000". That evidence in itself needs to be qualified to take into account the cost of the furniture. 185 The respondent further submitted that the truth of the defamatory imputations was also supported by the fact that the Queensland Parliament had seen fit to introduce the Property Agents and Motor Dealers Act 2000 (Qld) which required a disclosure of the relationship between the various entities. The appellant had failed, at least in some cases, to make the appropriate disclosures as required when completing Form 27b, "Selling Agent's Disclosure to Buyer". The respondent submitted that the reason the appellant failed to make the necessary disclosures in Form 27b was because to do so would affect his capacity to sell. 186 In my opinion, these matters, namely, the misrepresentations and the undisclosed commissions, do not of themselves establish the substantial truth of the imputation that persons were "ripped off" by being 'sold' properties at "exorbitant prices". The respondent argued, however, that the article in The Courier-Mail was directed to the activity, known at least in Queensland, as "marketeering", the notoriety of which was said to be that the person engaged in the "marketeering" fails to disclose to the investor that they are in fact acting on behalf of the vendors, rather than for the proposed purchaser. 187 This is not an answer. The respondent had to establish the truth of the defamatory imputation. The fact that the relationship between the appellant's various entities was not disclosed, does not mean that the actual sales were at an exorbitant price. That fact had to be independently proved. To the extent that there was evidence of the effect of the commissions on the purchase price, Mr Hamilton said that they did not artificially inflate the purchase price. 188 In my opinion, the respondent's argument based upon the dishonest representations made by the appellant and the failure to disclose that the appellant's various entities were related, does not establish the truth of the imputation. 189 It follows, therefore, that the appeal should be allowed. 190 That raises two questions: first, whether the Court should remit the matter for redetermination of all outstanding matters and secondly, whether the matter should be remitted at all, because any damages to which the appellant might be entitled would be insubstantial, since the respondent would be able to prove the truth of the contextual imputation. I will deal with the second argument first.

[88]

19 Park Trent and Everest are now back in business." 196 The appellant pleaded that the second publication conveyed two imputations: the first that the appellant was a "law breaker"; the second, that he was a "rip off merchant". The trial judge found that the imputation that the appellant is a "rip off merchant" was a matter of substantial truth: see judgment [686]-[738]. The essential basis for his Honour's determination was that the appellant had systematically failed to make the required statutory superannuation contributions for the benefit of his employees and that this amounted to a "rip off" of his employees. A second basis for his Honour's finding was that the appellant had diverted funds away from one of his companies that was in liquidation. 197 The appellant contended that on the assumption that his Honour erred in finding that the defence of truth was established in respect of the defamatory imputation, then the defence under s 16 to the contextual imputation must fail, because the contextual imputation was not capable of "swamping" the defamatory imputation. In short, it was submitted that the two imputations related to different aspects of the appellant's reputation and that he must have suffered some harm over and above the harm that he suffered from the contextual imputation, for which he was entitled to an award of damages. 198 The respondent contended that this misstated the principles underlying the defence of contextual imputation. It was submitted that the correct approach was to consider two imputations that differed in substance and to then consider the matters that went to prove the substantial truth of the competing imputations in order to determine the impact of that material on the reputation of the appellant: see John Fairfax Publications Pty Limited v Zunter. 199 There is no defence of contextual truth available in Queensland. However, if the defence of truth to the contextual imputation is made out, the respondent submitted that it was entitled to rely on the same material in the mitigation of damages in respect of the defamatory imputation in Queensland: Howden v Truth and Sportsman [1937] HCA 74; (1937) 58 CLR 416 at 431; Howden v Truth and Sportsman Ltd (No 2) (1938) 38 SR (NSW) 287 at 290; Cohen v Mirror Newspapers Ltd [1971] 1 NSWLR 623 at 627; John Fairfax Publications Pty Limited v Zunter at [50]; Whelan v John Fairfax [2002] NSWCA 1028; (2002) 56 NSWLR 89 at 102-108. 200 The question as to whether the defence provided under s 16 has been made out involves, first, a factual enquiry and then an evaluative judgment as to whether, by reason that the contextual imputation is a matter of substantial truth, the imputation complained of does not further injure the reputation of the appellant. In my opinion, those matters cannot be determined without seeing and hearing the party defamed. If the Court was to enter upon the process of making findings on these matters for the first time it would be engaging not in an appellate process, but in a primary fact finding process. Whilst there are occasions when this Court does make its own findings of fact, I do not consider it appropriate to do so in a case such as this when there has been no primary determination by the trial judge. In short, I do not consider that an evaluation of the appellant's reputation should be made without hearing or seeing the appellant in evidence.

[89]

What this Court should do 201 The appellant has succeeded in establishing that his Honour erred in his determination that the defence of truth had been made out. The real question, however, is whether this Court could be satisfied that the defence of truth had not been made out on the evidence adduced at trial. If the evidence did not establish the defence of truth, then, even though the primary basis upon which the appeal has succeeded related to the deficiencies in the reasoning process, there would be no basis for remitting this defence for rehearing. 202 This question is best considered by reference to each of the bases upon which the respondent sought to prove its defence. First, there was the valuation case. That case failed, in the sense that the trial judge rejected Mr Hamilton's evidence as being evidence of market value. Regardless of whether his Honour accepted Mr Duncan's evidence, the respondent bore the onus of proving the truth of the imputation. It did not do so through Mr Hamilton. 203 There were, of course, the other aspects of the valuation case. There was that part of the case based upon the Citibank 'valuation' of $205,000. However, that case was frail and, in my opinion, for the reasons I have given, insufficient on its own to establish that there had been a sale at an exorbitant price. In any event, that evidence only related to the Weir transaction and the defamatory imputation referred to "Mum and Dad Investors", meaning more than one investor. 204 When the evidence of Mr Hamilton is discarded, the only evidence in respect of the Wilson transaction that supported a finding that the property was sold at an exorbitant price, was the resale of the property allegedly at a loss. That is not a foregone conclusion. For the reasons I have given, other evidence would be needed to satisfy me that the original purchase price was exorbitant, before I would be prepared to reach that conclusion. There was no other such evidence. But even if there was other evidence, or alternatively, even if the price on resale lead to a conclusion that the original sale had been at an exorbitant price, the respondent would again be confronted with the problem that the defamatory imputation related to investors. It would not be sufficient, to establish the truth of the imputation to find that there had been an exorbitant sale to one investor. For the reasons I have given, I am of the opinion that the evidence did not establish that in relation to the Weir transaction. Accordingly, even if there was evidence to support the finding in respect of the Wilson transaction, that would not suffice. For the reasons I have given, I do not consider that a sale at an exorbitant price was established in respect of the Wilson transaction. 205 The defence could not be established based solely on the Barry transaction, for the simple reason that in that case, there had been no sale and nobody was "ripped off". In any event, I am of the opinion that the evidence was insufficient to establish that the purchase price of the property that the Barrys had intended to purchase was exorbitant. In particular, the appellant's 'concession' or admission did not go that far. 206 The second basis upon which the respondent sought to establish its defence was through the evidence of the Red Alerts and the material in Ex 91. For the reasons I have given, that material did not establish the defence of truth. 207 Next, there was the case based upon Ex 120. At trial, the respondent had only relied upon that case defensively, in the sense that it had used it to cross-examine Mr Duncan. Mr Duncan did not accede to the propositions advanced in cross-examination and accordingly, there was no expert evidence to support the 'reverse engineering' approach to the case. 208 Finally, for the reasons I have already given, the 'dishonesty' case, based upon the failure to disclose the relationship between the appellant's various entities, did not establish the truth of the defamatory imputation. 209 When the matter is analysed in that way, I am of the opinion that the respondent did not establish the truth of the defamatory imputation. Accordingly, notwithstanding that the appellant has succeeded on the basis that the trial judge failed to give adequate reasons, which usually requires the matter to be remitted for redetermination, this Court should find that the defence of truth has not been made out. 210 The respondent, in its Amended Notice of Contention, also relied upon the defences of comment and qualified privilege (New South Wales) and qualified protection (Queensland). The question of damages may also need to be determined, if those defences are not proved. Both parties agreed that the defence of qualified privilege/qualified protection needed to be remitted for determination. The respondent submitted, therefore, that the matter should be remitted on all issues, including the defence of truth. In Pateman v Higgin [1957] HCA 62; (1957) 97 CLR 521, Kitto J said at 527: "… it remains … a sound general proposition from which to start in the consideration of each particular case according to its own circumstances that if there is to be a new trial it ought to be of the case as a whole unless the Court thinks that 'they shall do more injustice by setting the matter at large again'."

[95]

Order that the respondent pay the appellant's costs of the appeal and, if otherwise eligible, have a certificate under the Suitors' Fund Act 1951 (NSW). 213 BASTEN JA: The question raised by the present appeal is whether the trial judge, Cooper AJ, erred in upholding a defence of truth as having been established by evidence tendered by the respondent before him. 214 The relevant defamatory imputation was that the appellant had "ripped off Mum and Dad investors by selling them investment properties at exorbitant prices". In his judgment, Cross v Queensland Newspapers Pty Ltd [2006] NSWSC 1340 at [601] his Honour said: "The term 'ripped off' means 'cheated' or 'swindled' or 'taken advantage of'." 215 His Honour did not seek to define "exorbitant", a term which has a range of meanings extending from the bland to the colourful. At one end of the range, it means merely "exceeding ordinary or proper bounds", whilst at the other end it means "grossly or flagrantly excessive": Oxford English Dictionary, 2nd ed, 1989. It is clear that in context of the imputation, it should be understood as involving a degree of moral obliquy, read in the context of use of the colloquialism, "ripped off". The failure of the trial judge to give separate consideration to the meaning of exorbitant was therefore largely immaterial. 216 A second matter of concern was the gravamen of the imputation. The evidence relied upon involved both complaint about marketing techniques and complaint about the prices at which properties were sold. In part, these were related, but not entirely. Running seminars, paying for airfares for prospective purchasers and intensive follow-up were all means of putting pressure on prospective purchasers and were expensive practices which no doubt tended to raise the cost of the marketing process. What was not entirely clear was whether the reference to "exorbitant prices" was intended to limit the nature of the swindle to price, or whether it also called attention to the nature of the pressure which must have been imposed on the prospective investors for them to have purchased properties at such prices. 217 These refinements of analysis may be thought inappropriate in relation to understanding an imputation in a defamation case, rather than determining a civil claim by a purchaser based on misleading or deceptive conduct. On the other hand, the reference to exorbitant price may be seen to have reflected the inclusion in the article of a claim by a valuer that some properties had been overpriced by up to $50,000 or, presumably, between 20% and 25%. Once it was shown that this figure could not be relied upon in its terms, other issues might have come to the fore. However, from the way the case was run in this Court and in the Court below, the focus of the argument was upon the question of price. 218 For the reasons given by Beazley JA, the conclusions reached by the trial judge are ultimately not sustainable. Further, there is a real doubt as to whether the defence of truth should be remitted for further consideration. Her Honour's conclusion that remittal is not appropriate requires consideration, in addition to the matters dealt with by her Honour, of three further and related factors namely:

[98]

(b) whether the business was still operating in May 2003 and sales were still made. 219 The first matter to consider is whether the prices were exorbitant because the practice described as "marketeering" gave rise to costs which were themselves exorbitant for properties of the kind under consideration and thus led to exorbitant prices. 220 This issue gave rise to difficulties as a matter of principle. The concept of an 'exorbitant price' involves the implicit concept of a benchmark price. Broadly speaking, the valuation of property will allow the establishment of a benchmark price in accordance with market pressures reflecting what might be negotiated by a willing but not anxious seller and a willing buyer: cf Spencer v The Commonwealth (1907) 5 CLR 418 at 441-442 (Isaacs J). The market price may take into account many factors, other than the costs to the developer (which in a tightening market may not be recoverable in full) nor be limited to the cost plus a reasonable profit margin (where the developer may obtain part of a premium which a purchaser would attach in expectation of appreciation over time at a rate greater than the general rate of inflation). Evidence that the developers increased their prices over time suggested that the market was strong enough to bear such increases: whether the ultimate beneficiaries were the purchasers, the developers or the marketers, was in a sense irrelevant. 221 If, on the other hand, the respondent sought to establish that misleading and deceptive conduct by the marketeers had given rise to a false market, which was not sustainable, the prices would have to be judged against some other standard. This approach would have required expert evidence which would probably have involved a comparison between comparable developments which were subject to marketeering pressures and those which were not, together with some assessment of subsequent sale values. Some of the difficulties in the valuation evidence, discussed by Beazley JA above, are reflected in the discussion in relation to similar issues in Australian Competition and Consumer Commission v Oceana Commercial Pty Ltd [2004] FCAFC 174 (reported, but not fully in relation to the evidential issues). 222 The practice described as "marketeering" is derived from the regulatory scheme prescribed in Queensland by the Property Agents and Motor Dealers Act 2000 (Qld), which does not outlaw the practice, but requires full disclosure of the relationship with and the benefits obtained by the selling agent from the vendor in the case of a completed sale. This purpose may be seen as complementary to the statutory provisions which make it an offence to give, offer, solicit or receive a secret commission as an agent: see, eg, Criminal Code Act 1899 (Qld), ss 442B, 442BA and 442EA. 223 Where a "secret commission" is received by an agent from a third party, the principal may be entitled to recover the amount paid to the agent in an action for money had and received: see R Meagher, D Heydon and M Leeming, Meagher, Gummow and Lehane's Equity: Doctrines & Remedies (4th ed, 2002) at [5-125], [5-200]. Assuming that some such remedy were available to a purchaser of land from the appellant, the question for present purposes would be whether the price paid was necessarily "exorbitant" because of an overpayment to the extent of such a commission. No doubt, if such a circumstance were established, it would be open to a fact-finder to conclude that the appellant had "ripped off" the investors by the amount of the secret commission. It would then be necessary to establish that the commission, arguably taken with other payments, might render the price "exorbitant". 224 One further factor which needs to be taken into account is the fact that the agent's fee was calculated on the inflated purchase price, a factor which, although it may not have increased the price greatly, would have resulted in an element of financial exploitation and thus been improper. Whether the cumulative effect of these considerations rendered the prices exorbitant is a matter for evaluative judgment. 225 The question ultimately is whether anything was made of these factors by the trial judge in reaching his conclusion that the defence of truth had been established. The issue of marketeering was noted in the judgment at [145] and again at [660], his Honour stating in his findings: "I am further … satisfied that the effect of representations made to potential purchasers at seminars, in-home visits, in pamphlets, in letters and in Personal Investment Analysis is to assure them that Park Trent Investments is there to look after their interests and that they can trust Park Trent Investments to achieve the stated goal of 'wealth creation'. There is no mention that Park Trent Investments is paid by the vendors of properties or that Park Trent Investments owes any duty to those vendors. There is no mention of the fact that Park Trent Investments' duty to vendors may conflict with its duty to purchasers." 226 Despite that finding, it does not appear that any other inference was drawn from this material which flowed into the conclusion that properties had been sold at exorbitant prices, although the findings noted may support an inference that the prices permitted little scope for capital growth in the immediate future and that their real attractiveness as investments had been overstated. On the other hand, there is a significant difference between selling properties at a price which allows for little capital growth and selling properties which are grossly overpriced. Neither the judgment nor the notice of contention sought in terms to rely upon any inference that the prices were exorbitant because of the undisclosed nature of the commissions. 227 The offending article was published on 20 June 2003. As noted by Beazley JA, his Honour relied upon the sales to Mr Wilson and to the Weirs as demonstrating exorbitant prices. The former was in February 1999 and the latter in November 2002. Once those instances of overpricing are rejected, one is left with what his Honour described as a "pattern" which emerged from the evidence of occurrences between December 2002 and June 2003: at [665]. The pattern emerged in part from evidence of a series of valuations at less than the proposed purchase prices (Exhibit 91) and the evidence of "red alerts" where lower valuations resulted in nine transactions being cancelled (Exhibit 82). The specific example of that occurring was the proposed sale to the Barrys, which did not take place. 228 The significance of the "red alerts" was that they demonstrated that the business was being carried on and sales were being attempted as late as May 2003. His Honour considered that it "may be that there were other transactions in this period which proceeded to conclusion": at [670]. However, he made no specific finding to this effect and it would have been difficult to do so on the evidence. The notice of contention filed by the respondent did not seek any more positive finding in this respect. 229 For these reasons, in addition to those given by Beazley JA, the appeal should be upheld. I further agree with her Honour's conclusion that the defence of truth is unavailable. Accordingly, the orders proposed by Beazley JA should be made. **********

Parties

Applicant/Plaintiff:

Cross

Respondent/Defendant:

Queensland Newspapers Pty Ltd

Legislation Cited (4)

Suitors' Fund Act 1951(NSW)

Defamation Act 1889(Qld)

Property Agents and Motor Dealers Act 2000(Qld)

Criminal Code Act 1899(Qld)

Cases Cited (26)

CITATION: Cross v Queensland Newspapers Pty Ltd [2008] NSWCA 80

Cohen v Mirror Newspapers Ltd [1971] 1 NSWLR 623 CSR Ltd v Della Maddalena [2006] HCA 1; (2006] 224 ALR 1 Flannery v Halifax Estate Agencies Ltd [2000] 1 WLR 377 Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 Herald & Weekly Times Ltd v Popovic [2003] VSCA 161; (2003) 9 VR 1 Howden v Truth and Sportsman Ltd [1937] HCA 74; (1937) 58 CLR 416 Howden v Truth and Sportsman Ltd (No 2) (1938) 38 SR (NSW) 287 John Fairfax Publications Pty Limited v Blake; David Syme & Co v Blake [2001] NSWCA 434; (2001) 53 NSWLR 541 CASES CITED: John Fairfax Publications Pty Ltd v Zunter [2006] NSWCA 227 Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 Maisel v Financial Times Ltd (1915) 84 LJKB 2145; (1915) 112 LT 953; (1915) 31 TLR 192 Moylan v Nutrasweet Company [2000] NSWCA 337 Pateman v Higgin [1957] HCA 62; (1957) 97 CLR 521 Spencer v The Commonwealth [1907] HCA 82; (1907) 5 CLR 418 The Waterways Authority v Fitzgibbon; Mosman Municipal Council v Fitzgibbon; Middle Harbour Yacht Club v Fitzgibbon [2005] HCA 57; (2005) 221 ALR 402 Whelan v John Fairfax [2002] NSWCA 1028; (2002) 56 NSWLR 89 Wiki v Atlantis Relocations (NSW) Pty Limited [2004] NSWCA 174

LOWER COURT MEDIUM NEUTRAL CITATION: Cross v Qld Newspapers Pty Limited [2006] NSWSC 1340

The respondent, in an Amended Notice of Contention, sought to prove the substantial truth of the defamatory imputation by its case based on the "low valuation" evidence and the failure of investment properties to achieve the projected growth rate that the appellant had represented against the area average (the "reverse valuation" evidence). It was contended that this evidence offered a more reliable method of valuation, as investors could not be considered prudent purchasers for the purposes of an orthodox valuation case: see Spencer v The Commonwealth [1907] HCA 82; (1907) 5 CLR 418. It was also contended that investors were misled and "ripped off" by the appellant's marketing strategy itself, as properties were not selected as good investments, but for the financial benefit of the appellant.

To make out the defence of truth, every material part of the imputation must be true, otherwise the defence fails. Howden v Truth and Sportsman Ltd [1937] HCA 74 (applied), Herald & Weekly Times Ltd v Popovic [2003] VSCA 161; (2003) 9 VR 1 (referred to).

The low valuation and reverse valuation evidence was insufficient of itself to establish the truth of the imputation.
The judicial obligation to give reasons extends to the assessment of expert evidence. The Waterways Authority v Fitzgibbon; Mosman Municipal Council v Fitzgibbon; Middle Harbour Yacht Club v Fitzgibbon [2005] HCA 57; (2005) 221 ALR 402 (applied).

The defence of contextual truth in NSW involves a factual enquiry and then an evaluative judgment as to whether, by reason that the contextual imputation is a matter of substantial truth, the imputation complained of does not further injure the reputation of the appellant. John Fairfax Publications Pty Limited v Blake; David Syme & Co v Blake [2001] NSWCA 434; (2001) 53 NSWLR 541 (considered), John Fairfax Publications Pty Ltd v Zunter [2006] NSWCA 227 (considered).

If the Court were to engage in the above process, it would be engaging not in an appellate process, but in a primary fact finding process. It is inappropriate in this case, where there has been no primary determination by the trial judge, for the Court to make an evaluation of the appellant's reputation.
The defences of qualified privilege, qualified protection, contextual truth, comment and an assessment of damages are to be remitted for determination at first instance. However, as the evidence adduced at trial was insufficient to establish the defence of truth, this defence is not to be remitted. Pateman v Higgin [1957] HCA 62; (1957) 97 CLR 521 (per Kitto J considered), CSR Ltd v Della Maddalena [2006] HCA 1; (2006] 224 ALR 1 (referred to), The Waterways Authority v Fitzgibbon; Mosman Municipal Council v Fitzgibbon; Middle Harbour Yacht Club v Fitzgibbon [2005] HCA 57; (2005) 221 ALR 402 (referred to).

[2003] VSCA 161

[2002] NSWCA 1028

(2003) 214 CLR 118

(2003) 9 VR 1

(1937) 58 CLR 416

(2001) 53 NSWLR 541

(1959) 101 CLR 298

(1957) 97 CLR 521

(1907) 5 CLR 418

(2005) 221 ALR 402

(2002) 56 NSWLR 89

(2006) 224 ALR 1