Crossman v Taylor

Date of hearing: 27, 28, 29, 30 September, 1, 8, 26, 27, 28, 29 October, 2 November, 6 December 2010

Counsel for the Plaintiff: Mr R J Whitington QC with Mr B J Doyle

Counsel for the Defendants: Mr M Hoile with Mr G Finlayson

Solicitor for the Defendants: Grope Hamilton Lawyers

IN THE FEDERAL COURT OF AUSTRALIA SOUTH AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION SAD 32 of 2010

JUDGE: BESANKO J DATE OF ORDER: 29 JUNE 2011 WHERE MADE: CANBERRA VIA VIDEO LINK WITH ADELAIDE

The plaintiff bring in draft minutes of orders reflecting the conclusions in these reasons and the parties be at liberty to make further submissions on the appropriate orders. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court's website.

IN THE FEDERAL COURT OF AUSTRALIA SOUTH AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION SAD 32 of 2010

JUDGE: BESANKO J DATE: 29 JUNE 2011 PLACE: CANBERRA VIA VIDEO LINK WITH ADELAIDE

A. Introduction 1 In this proceeding the plaintiff, Lynette Crossman, claims damages or compensation from the first defendant, Brendan Taylor. The second defendant, White Marina Pty Ltd, took no active part in the proceeding for reasons which will become clear. 2 The principal events which are relevant to the plaintiff's claims took place between July 2005 and about February 2010. The plaintiff and the first defendant were in a personal relationship for part of that period and were engaged to be married in May 2006. The relationship came to an end and there is now considerable antagonism between the plaintiff and the first defendant. 3 The plaintiff's claims relate to a joint venture between her and the first defendant which involved the acquisition and operation of a marina for houseboats on the River Murray near Mannum. The joint venture vehicle was the second defendant and it in turn was the trustee of a discretionary trust called the White Marina Trust. The second defendant acquired the business and commenced operating it in August 2006. The business ceased trading in February 2010. 4 Earlier in this proceeding I determined as a separate issue an application by the plaintiff under ss 232 and 233 of the Corporations Act 2001 (Cth) ('Corporations Act') for orders directed towards achieving the sale of the second defendant's business. In substance, I made the orders sought by the plaintiff and my reasons for doing so are set out in Crossman v Taylor (No 2) [2010] FCA 707 ('Crossman v Taylor (No 2)'). 5 The plaintiff's claims against the first defendant rely on three causes of action. 6 The plaintiff's first cause of action is for loss or damage caused by misleading or deceptive conduct engaged in by the first defendant in contravention of s 56 of the Fair Trading Act 1987 (SA) ('Fair Trading Act'). The misleading or deceptive conduct is said to consist of representations made by the first defendant to the plaintiff before the plaintiff made her decision to enter into the venture. The principal representation relates to the financial contributions each party would make to the venture. Both parties made contributions to the venture but, over the course of the venture, the contributions made by the plaintiff substantially exceeded those made by the first defendant. The contributions consisted of lump sum payments, payments by a party to a third party for the benefit of the second defendant, and transfers of property to the second defendant. There was an issue raised as to whether the contributions were loans to the second defendant or contributions to the trust property of the White Marina Trust. I will deal with that issue later in these reasons, but at this stage I will simply refer to the payments made to, and other benefits conferred on, the second defendant as contributions. Over the period in question some payments were made the other way, that is, by the second defendant to one or other of the parties. The plaintiff's case was that at the date of trial the net contributions she had made to the second defendant totalled an amount of $661,444.23 and the net contributions the first defendant had made to the second defendant totalled an amount of $195,018.15. 7 The plaintiff's case is that she would have not entered into the venture, or made the contributions, but for the representations made by the first defendant, particularly the representations about the contributions to be made by the parties. She seeks to recover from the first defendant under s 84 or s 85 of the Fair Trading Act damages or compensation of $661,444.23 and an amount for interest of $216,168.76. She accepts that to the extent the first defendant pays these sums to the plaintiff he should be subrogated to the plaintiff's rights against the second defendant. 8 The second and third causes of actions advanced by the plaintiff involve alternative claims for damages or compensation. In other words, she does not seek damages or compensation in relation to the first cause of action and damages or compensation in relation to the second or third causes of action. 9 The plaintiff's second cause of action is based on ss 232 and 233 of the Corporations Act. The claim is that the first defendant engaged in various acts before and during the venture which mean that the affairs of the second defendant were conducted in a manner which contravened one or both of s 232(d) and s 232(e). For ease of reference I will refer to this cause of action as the oppressive conduct cause of action. The plaintiff seeks an order under s 233 for damages or compensation which will result in an equalisation of the contributions made by her and by the first defendant. The amount claimed is $341,297.42 taking into account an entitlement to interest, or $233,213.04 excluding an entitlement to interest. The amounts are calculated by adding the respective contributions and then dividing the total by two. That calculation gives a notional figure for equal contributions. The first defendant then pays the plaintiff an amount which will bring his contribution to that figure and reduce the plaintiff's contribution to that figure. 10 The plaintiff's third cause of action is based on an alleged breach by the first defendant of fiduciary duties which the plaintiff alleges he owed to her. The claim is that the venture was in the nature of a quasi-partnership and that the first defendant owed the plaintiff fiduciary duties in addition to the fiduciary duties he owed to the second defendant. She claims as equitable compensation an amount which will result in an equalisation of each party's contributions. In other words, the amount claimed is calculated in the same way as the amount claimed in relation to the second cause of action. As I have said, the plaintiff cannot recover, and does not seek to recover, both the amount of her contributions and an amount which would 'equalise' the contributions. 11 The representations which form the basis of the plaintiff's Fair Trading Act cause of action were made orally and in circumstances where only the plaintiff and first defendant were present. The credibility and reliability of each of the plaintiff and the first defendant is therefore an important issue in the case. Each of them gave evidence. The bulk of their evidence-in-chief was presented in written form, that is, by way of written statement or affidavit and each was cross-examined at length. In the case of each of them there was a substantial attack on their credibility and reliability. 12 In addition to the evidence of the parties, each party called witnesses and tendered documents in support of her or his case. 13 The structure of these reasons is as follows. Section B sets out my findings of fact in relation to the issues in the proceeding. Section C sets out the relevant legal principles for the Fair Trading Act cause of action and my conclusions in relation to that cause of action. Section D sets out the relevant legal principles for the oppressive conduct cause of action and my conclusions in relation to that cause of action. Section E sets out the relevant legal principles for the fiduciary duty cause of action, and my conclusions in relation to that cause of action. Section F sets out my conclusions in the proceeding. 14 In Section B I have, subject to a number of qualifications, tried to deal with events in chronological order. The first qualification is that where the evidence of a witness who deals with a limited number of issues first becomes relevant I have decided that it is convenient to deal with all of their evidence at that point. Secondly, where it is necessary for me to make a finding about an important statement or representation alleged to have been made I have gone on to address the particular matters said by one or both parties to be relevant to the finding which should be made even where that involves a consideration of later events. Although I address the particular matters at that point the finding I make is made having regard to all the evidence and in particular the credibility and reliability of the witnesses. Finally, there are certain matters which span the life of the venture and which it is convenient to deal with as a whole at the end of Section B. They are certain alleged acts of oppressive conduct and matters of a bookkeeping or accounting nature concerning the second defendant's financial records and the quantum of the plaintiff's claims.

B. the Facts 15 The plaintiff gave her evidence in a careful and considered fashion. By contrast, the first defendant was evasive and at times paused for some time before giving his answer. I formed the view that his pauses resulted from an overriding concern not to give an answer which he thought might be damaging to his case rather than a concern to tell the truth. However, as far as possible I have tried to reach my conclusions on credibility and reliability on the basis of contemporary materials, objectively established facts and the apparent logic of events (see Fox v Percy (2003) 214 CLR 118 at 129 [31] per Gleeson CJ, Gummow and Kirby JJ). 16 For the reasons set out below I formed the view that the plaintiff was an honest and reliable witness. Again, for the reasons set out below, I formed the view that in a number of significant respects the first defendant was not a credible or reliable witness. I do not accept his evidence except where it is corroborated by other evidence which I do accept. In reaching these conclusions I have considered all of the challenges to honesty and reliability. Those challenges relate to a wide range of topics and they are dealt with below. I have considered the challenges to credibility and reliability individually and collectively. 17 The plaintiff called four witnesses. They were Ms Jody Sitters, a bookkeeper, Mr Hugh McPharlin, an independent accountant, Mr Nic Minicozzi, a solicitor, and Ms Cheryl Galloway, a clerical assistant. They were all honest and reliable witnesses and I accept their evidence. The first defendant did not challenge the honesty or reliability of these witnesses. 18 The first defendant called three witnesses. They were Mr Jim Daly, a former employee of the second defendant, Mr Klaus-Peter Wegener, the principal of a building firm, and Ms Julianne Price, a friend of the first defendant. I formed the view that Mr Daly and Mr Wegener were not reliable witnesses and I do not accept their evidence unless it is corroborated by other evidence which I do accept. Ms Price gave evidence on two relatively narrow issues. In the end I do not think her evidence is of assistance in resolving the issues in this case. 19 The plaintiff is a naturopath. In 2005 she owned a clinic in Adelaide and she conducted her practice from that clinic. Her practice was a successful one and it generated a substantial income. The plaintiff owned a property at Coffin Bay, Port Lincoln, (the Coffin Bay property) which she planned to develop. The plaintiff had been married previously and she has children and grandchildren. 20 In 2005 the first defendant had a background in real estate sales and had some experience in managing a marina for houseboats. Between 1994 and 1996 he managed a marina for houseboats near Mannum called 'Kia Marina Houseboat Hire'. He had for many years had an interest in houseboats and he bought his first houseboat in 1987. In 2005 he owned a houseboat called 'Flat White'. It had cost him $560,000 to have built. At that time Flat White was moored at another marina near Mannum which operated under the name, 'Temptation Houseboat Holidays'. The operators of that marina were Henry and Beverley Laskowski. In April 2006 the first defendant entered into a contract for the construction of a second houseboat. That contract involved a substantial financial investment on the part of the first defendant. The houseboat was constructed and was given the name 'White Water'. It was owned by Maritime Ten Pty Ltd, which was a company controlled by the first defendant. 21 Some time well before February 2006 the first defendant was interested in purchasing Temptation Houseboat Holidays. It seems that in May 2005 Mrs Laskowski sent the first defendant a Form 2 for the business, being a trading statement for the business for the previous three years. It is this marina which was subsequently acquired by the second defendant and I will refer to it, depending on context, as the marina or marina business. 22 The plaintiff and the first defendant met in July 2005. At that time the first defendant was living in Sydney and the plaintiff was living in a house at Hyde Park in Adelaide. The plaintiff leased that house. The plaintiff and the first defendant commenced a personal relationship and in December 2005 the first defendant moved into the plaintiff's house at Hyde Park. They lived together in that house until March or April 2007. 23 The plaintiff's claims against the first defendant are based largely, but not entirely, on conversations she had with the first defendant before 4 April 2006. The significance of that date is that the second defendant was incorporated on 4 April 2006 and the plaintiff and the first defendant became the directors and shareholders of the company. Each of them held one $1 share in the second defendant. The White Marina Trust was established by trust deed executed on 5 April 2006 and the second defendant was the trustee of the Trust. The White Marina Trust was a discretionary trust and the class of beneficiaries were the plaintiff and her children and the first defendant and his children. The first defendant has no children. The second defendant and the trust were established with a view to the purchase of the marina business. 24 The relevant conversations between the plaintiff and the first defendant took place between July 2005 and early April 2006. The important conversations appear to have taken place in about February and March 2006 although there were no doubt conversations either side of this period. On the evidence it is not possible to identify the dates of any of the conversations more precisely than that. 25 At an early stage in their personal relationship, the first defendant told the plaintiff that he had substantial assets and he identified Flat White, an apartment at King Street in Sydney (the King Street apartment), a residential property at Kara Street in Lane Cove in Sydney, a town house at Moana, South Australia, a shack on the River Murray, two Jeeps, a Porsche motor vehicle, jet skis, a speedboat and a motor cruiser boat moored on Sydney Harbour. 26 The first defendant also told the plaintiff that he had been a real estate agent for 30 years and that he had been very successful. He told her he had previously owned Kia Marina on the River Murray near Mannum and that it had been a successful business. The first defendant did not say anything to the plaintiff to indicate that he had any substantial debts. The first defendant took the plaintiff to see the property at Lane Cove, the property at Moana, the Flat White houseboat, the motor cruiser and the speed boat. 27 Again at an early stage in their personal relationship, the first defendant told the plaintiff that he wished to return to Adelaide to live and that there was a marina he would like to purchase. He identified it as the marina at which he moored Flat White. The first defendant made statements to the plaintiff which led her to believe that the existing marina business was run down. The first defendant denied saying to the plaintiff that the business was run down and gave evidence that it was not. I prefer the plaintiff's evidence. It is consistent with the works subsequently done by the second defendant and the plans for further works discussed by the parties. 28 The first defendant took the plaintiff on excursions on Flat White and she was able to observe the condition of the existing marina business. 29 The first defendant told the plaintiff that the asking price for the marina business including one or two houseboats was $1.2 million. He told the plaintiff that he might be able to acquire the marina business and assets for about $650,000. He told the plaintiff that he was planning to fund the purchase with a bank loan. 30 The first defendant's plans came to a head in February 2006. At about that time he prepared in the presence of the plaintiff a handwritten sheet showing his assets and liabilities. The document was tendered in evidence. It showed a substantial excess of assets over liabilities. It shows an estimated value of $1.2 million for the King Street apartment, and a liability in respect of that apartment of $823,000. The handwritten sheet also showed an asset in the amount of $60,000 for 'commission'. The evidence establishes and it is not disputed that that was a reference to real estate commissions owed to the first defendant by third parties. 31 The first defendant's counsel cross-examined the plaintiff at length about her knowledge of the first defendant's assets both at this time and later. The plaintiff was cross-examined about her knowledge before she decided to enter into the venture and before settlement of the likely price which could be achieved on the sale of the King Street apartment and the first defendant's commitments under the contract to construct White Water. The first defendant never made clear what findings of fact he was seeking in relation to this topic. Presumably he was contending that his financial position was such that it was unlikely that he would make a statement about providing contributions to the second defendant over and above the sum of $250,000 which he did contribute. The findings I make are that the plaintiff believed that the first defendant had substantial assets and, in particular, the King Street apartment and the outstanding real estate commissions. No doubt she knew he had liabilities. That much is plain from the handwritten sheet previously referred to and from the fact that he approached her for funds to assist him in the purchase and development of the marina. However, none of the evidence on this topic leads me to doubt her evidence about what the first defendant said to her about contributions or her belief that he could and would match her contributions to the second defendant. 32 The first defendant told the plaintiff that he was having difficulties in raising finance for the purchase of the marina. He asked the plaintiff to lend him a sum of money. The plaintiff's recollection as to the precise amount the first defendant mentioned is not clear, but she said that it was in the order of $350,000. The plaintiff told the first defendant that she did not have 'free funds' and that to provide the funds she would have to borrow on a line of credit facility which she had with Bank SA. She said that she would have no security if she simply lent funds to the first defendant. In taking this approach the plaintiff also had in mind her need for funds in relation to the proposed development of the Coffin Bay property. 33 The first defendant denied saying to the plaintiff that he was having difficulty or trouble getting finance, but I prefer the plaintiff's evidence. The first defendant was cross-examined on this topic and I consider that he was guarded on this topic (as he was on a number of topics) because he did not want to say anything that he thought might damage his case. Although he said in his affidavit that he would be 'stretched' at a purchase price of $750,000 plus plant and equipment or his cash reserves would be 'stretched', when it was put to him in cross-examination that at '750' he would be 'stretched' he said 'possibly'. 34 The first defendant was cross-examined about his ability to purchase the marina at a purchase price of $750,000. The cross-examination proceeded on a premise as to the amount of the bank loan which was different from the amount ultimately lent to the second defendant by the ANZ Bank. At a purchase price of $750,000 plus the first defendant's estimate of expenses of $35,000 to $40,000 and a loan from the ANZ Bank of $550,000 (the loan was in fact $500,000) the first defendant would have had to contribute $240,000 from his own moneys. As I understand it that was about the limit of the funds he had readily available. The first defendant said that he would need $100,000 for working capital and contingencies. There was also the costs associated with the making of improvements to the marina. I think the evidence establishes that with a bank loan of $550,000 the first defendant may have been able to purchase the business at a price of $750,000 plus expenses but there would be no funds for working capital and contingencies and improvements. At a purchase price of $650,000 he would have some funds for working capital and contingencies, but no funds for improvements. The first defendant needed the plaintiff to be involved if the purchase of the marina business was to proceed. The fact that he had asked her for a loan of $350,000 seems to make that conclusion quite plain. 35 The cross-examination of the first defendant about these matters also revealed something about the first defendant's state of mind concerning the improvements which might be carried out at the marina. At a purchase price of $750,000 plus expenses of $35,000 to $40,000, a loan from the bank of $550,000, a contribution from the first defendant of around $300,000 and a loan from the plaintiff of $350,000 an amount of $410,000 would be potentially available for improvements to be made to the marina. 36 The conversations were taking place in a context where the first defendant's primary purpose in acquiring the marina business was to provide him with a facility where he could operate his own houseboats under his control. 37 After the plaintiff rejected the suggestion of her providing a loan the first defendant raised with her the prospect of them buying the marina business together. The plaintiff's initial response to that suggestion was that she would not agree to do that. She needed funds for her proposed development of the Coffin Bay property and she had had no experience in operating a marina for houseboats. The first defendant continued to raise the subject with the plaintiff and he told her of his experience in operating a marina, his plans for the marina and the skills he could bring to the conduct of a marina business. 38 I think the first defendant was very enthusiastic about the purchase of the marina and that he had substantial plans for its improvement. Those plans called for the involvement of the plaintiff and he was keen to have her involved. I do not accept the first defendant's evidence that he wanted to purchase the marina alone and that it was the plaintiff who was anxious to be involved in the venture. 39 The first defendant showed the plaintiff a document which set out the profit and loss figures for the marina business conducted by its existing owners. Those figures showed that the business generated no more than a modest profit. The plaintiff examined the figures and said to the first defendant that there was no money in the business. The first defendant said to the plaintiff that the existing owners had no business expertise and had let the business deteriorate. The first defendant told the plaintiff that he could lift the operation of the marina to a whole new level and make it a high-class operation with a better class of houseboats. He also said that he had a particular interest in tourism and his contacts would enable him to make the business a success. 40 The first defendant's evidence about the matters I have mentioned to this point was unsatisfactory. I mention some particular examples. First, while the first defendant agreed in cross-examination that he was very enthusiastic about the purchase of the marina business, when asked whether he encouraged the plaintiff to take an interest in the venture he said that he 'may have', 'I don't know', and 'I don't remember'. I do not believe that the first defendant would be in a state of uncertainty about whether he encouraged the plaintiff to take an interest in the venture or that he would have forgotten about it. Secondly, I do not accept the first defendant's evidence that he was not enthusiastic about the viability of the business or that his state of mind was that on the purchase of the marina business 'we could just get by'. Again, I do not believe that the first defendant and I think that all of the evidence leads to the conclusion that he was optimistic, if not very optimistic, about the potential of the business. Thirdly, the first defendant was clearly wrong in his evidence-in-chief when he said that he showed the plaintiff the twelve-page document he said that he faxed to his accountant on 19 January 2006. It was put to the plaintiff in cross-examination that she had seen the document in January 2006. However that was plainly wrong because some of the documents had been created after January 2006. The first defendant accepted in cross-examination that his evidence-in-chief was wrong, but he suggested, somewhat faintly, that someone, presumably on the plaintiff's side, had caused the mistake by putting the documents together in the way he presented them. 41 It is the plaintiff's case that during the conversations between her and the first defendant the first defendant made a number of important statements about the venture and how it would operate. I turn now to examine five of the statements the plaintiff said the first defendant made to her. 42 First, the first defendant told the plaintiff that he anticipated a purchase price for the marina business of $650,000 and that he intended to pay that by borrowing $500,000 from the ANZ Bank and making a contribution of approximately $250,000 from his own funds. He said to the plaintiff: I will only go into this venture if you promise to meet the initial funding that I provide, and if we then continue to contribute 50/50 to the funding of the business at all times. 43 Secondly, he told the plaintiff that his previous marina had 47 berths whereas the marina business they proposed to purchase had only 10 berths and should be a 'piece of cake' to operate. He said that he would buy speedboats and hire them out at $500 per day. He said that he would develop cabins on the marina property under a shared ownership arrangement and those cabins would be used as rental accommodation. 44 Thirdly, he told the plaintiff that once the marina business was established it could largely be run by staff without the need for either the plaintiff or himself to be involved. 45 Fourthly, he told the plaintiff that upon the purchase of the marina business they could refurbish and improve the facilities. In addition to generating an income they could make a capital gain in the long term. 46 Fifthly, he told the plaintiff that all major decisions affecting the conduct of the marina business would be discussed between them and decisions would be taken jointly. 47 Finally, he told the plaintiff that in addition to his initial contribution of about $250,000 he would be able to raise his share of funds by selling the King Street apartment and collecting the commissions of $60,000 owed to him. 48 With respect to the first statement, the first defendant's evidence was that he said something to the effect that if the plaintiff put in $250,000 'or so' as he had done then the first defendant and the plaintiff could own the 'place' together. He denied making any statement which referred to contributions beyond this amount. The final statement is linked to the first statement. The first defendant denied discussing contributions other than agreeing with the plaintiff that if she put in $250,000 they could buy the property together and use that money to do some renovations. I will analyse both the first and final statements together after I have dealt with the other statements. 49 With respect to the second and third statements, the first defendant admitted that the parties did discuss how they might increase income and that he did say that once they had taken over and settled down it may be possible to pay a manager to run things without any involvement from them. I accept the plaintiff's evidence with respect to these statements. 50 With respect to the fourth statement the first defendant said that he did say that spending about $200,000 on the marina would improve facilities for customers, staff and owners, and should add value. He did not say (and he did not believe) that any particular or overall expenditure would or could significantly increase income in the near term. In this context there was evidence from both the first defendant and the plaintiff about their long term plans in relation to the house on the marina property. The first defendant said that the capital gain was not an important 'topic' because they did not intend to resell at a profit and that their plan was to live in the house on the marina property and make it their home. The plaintiff said that she did not suggest to the first defendant and the first defendant did not suggest to her that the reason for going into the marina business was to provide an opportunity for her or them to live by the River Murray. She never aspired to live by the river and she told the first defendant on a number of occasions that the ultimate objective was to develop her coastal property at Coffin Bay and to retire in Port Lincoln. 51 It is necessary in the context of examining the evidence about the fourth statement to mention the evidence of Ms Price who, as I have said, was a witness called by the first defendant. 52 Ms Price said that she had known and been friends with the first defendant since 1985. The first defendant was the best man at her wedding to her former husband, Mr Peter Price. 53 Ms Price gave evidence of two conversations; one which it is not possible to date with any precision, but which probably took place in about May 2006 and the other which took place in August 2009. 54 Ms Price said that at a dinner held at a city restaurant in about May 2006 the plaintiff told her and other members of the group at the dinner of her plans with the first defendant to buy a house and marina at Mannum. The plaintiff told the group that she and the first defendant were going to live together at the marina. She said that she was going to commute to Adelaide for two or three days per week to maintain her naturopath practice and words to the effect that 'they were going to improve the house to live in for their life together'. 55 Ms Price said that in late August 2009 the plaintiff contacted Ms Price by telephone and asked her to help her in maintaining her personal relationship with the first defendant. She was crying and said she was afraid of losing the first defendant. Ms Price said that she did not want to get involved at which point the plaintiff stopped crying and began making comments of a disparaging nature about the first defendant. Ms Price asked the plaintiff not to call again. Cross-examination of Ms Price revealed that there was more to this conversation. It seems that during the conversation the plaintiff raised a concern she had about the first defendant's mental state and that there was some discussion of his mental state and whether he needed help. Ms Price became very angry with the plaintiff. The evidence did not clarify the exact context of the conversation. Even if Ms Price gained the impression that the plaintiff wished to maintain her relationship or a relationship with the first defendant it is not clear to me in what way this is relevant to any of the issues in the proceeding. The suggestion made by the first defendant seemed to be that the plaintiff has fabricated her claims in order to injure the first defendant. In the context of such a submission I should also mention an email from the plaintiff to the first defendant dated 19 February 2010 which is said by the first defendant to show the bitterness and anger the plaintiff felt towards the first defendant following (so it was said) her discovery that he had commenced a relationship with another woman. I accept that there is probably considerable bitterness between the plaintiff and the first defendant and I accept that the failed personal relationship is probably at least a cause of that bitterness. However, I firmly reject the suggestion that the plaintiff has fabricated her claims in order to injure the first defendant. As I have said, I formed the view that the plaintiff was an honest and reliable witness. 56 I accept that the plaintiff and the first defendant intended to live in the house on the marina property and in fact they did so for a period in 2007. However, it appears that the plaintiff either also spent a part of her week living at Hyde Park or commuted from the marina on some of the days of the week. I do not think that the plaintiff had any plans to retire from her practice as a naturopath and insofar as she had plans for her retirement, I accept her evidence that she was planning to retire to Port Lincoln. For present purposes the important finding I make is that the acquisition of the house was not the reason the parties purchased the marina business and both of them considered that improvements would add value to the property. I accept the plaintiff's evidence with respect to the fourth statement. 57 With respect to the fifth statement, the first defendant's evidence is that he agrees that once the plaintiff promised to put in $250,000 they agreed that they would be involved together. I accept the plaintiff's evidence with respect to the fifth statement. 58 I turn now to examine the findings which should be made in relation to the first and final statements. The findings are crucial to the plaintiff's Fair Trading Act cause of action. The plaintiff's case is that the effect of the statements was that she and the first defendant would contribute to the business on a 50/50 basis and that the first defendant had the means to do so. The first defendant's case is that he and the plaintiff agreed to contribute $250,000 each and that he did contribute $250,000 although that amount has subsequently been reduced in the records of the second defendant due to payments and benefits he has received from the second defendant. 59 In support of their respective cases with respect to the first and fifth statements both parties advanced matters which they contended were of particular relevance and it is to those matters that I now turn. They are important to a determination of the issues but, as I have said, all matters relevant to credibility and reliability must be taken into account. 60 Both parties relied on what was said about improvements to the marina property as evidence supporting their version of what was said. 61 The plaintiff's evidence was that although there were some improvements which the parties envisaged would be carried out immediately or as soon as possible, there were discussions about a whole range of improvements which were costed at well in excess of $250,000 and that it was in that context that the first defendant made the statement he did about contributions and his ability to make them. By contrast, the first defendant's evidence was that, with a bank loan of $500,000, it was envisaged that the bulk of his contribution of $250,000 would go in making up the balance of the purchase price of $660,000 and associated expenses. The first defendant's evidence was that the improvements which the parties discussed were costed by him at about $220,000 and the plaintiff's contribution of $250,000 would be used to meet that cost. Some time later other improvements were discussed between the parties but they were only ideas or possibilities. 62 The first defendant prepared some handwritten notes of possible improvements to the marina property and calculations of projected income, expenses and profit of the marina business. Those notes are in the first defendant's handwriting although there are some additions in the plaintiff's handwriting. The paper used was mainly vertically lined paper but two pages are graph paper. The original notes were received in evidence and marked as exhibit D6. 63 The plaintiff produced a copy of the original document as part of her evidence-in-chief. It was document 5 as referred to in her first written statement and was part of exhibit P1. Document 5 consists of 20 pages and is numbered in the book of documents as pages 32 to 51 inclusive. There was a good deal of contention about document 5 and the focus of the parties was those pages in document 5 dealing with improvements (that is, pages 32 to 45 inclusive) rather than the notes containing calculations of projected income, expenses and profit of the marina business. 64 The parties discussed proposed improvements to the marina by reference to the notes. The plaintiff's evidence was that the improvements shown in document 5 were discussed at about the time the first defendant suggested she take an interest in the venture and that the discussion involved the improvements and matters shown on pages 32 to 45. The first defendant made the suggestions as to individual improvements, their probable cost and contractors and workmen who might be engaged to carry out the work. The costing of the improvements shown on the summary sheet (that is, page 32) is in excess of $500,000. The plaintiff's evidence was that although the first defendant identified improvements they should do in particular, document 5 contained the first defendant's proposal for a scope of works and his likely estimate of costs. The plaintiff's understanding was that her initial contribution would go towards these works and that thereafter the parties would contribute on a 50/50 basis. The improvements that she said the first defendant identified in particular were as follows: 1. Renovation of the house or log cabin on the property. I will refer to this building as the house. 2. Conversion of part of the toilet block into an office and service area, and improvements to the main toilet facilities. 3. Improvements to the shed, including the addition of a mezzanine floor for storage. 4. Landscaping of the site. 5. Installation of an upgraded electricity supply on the site and to the moorings. 6. Construction of bitumen roads on the site, and a road from the main road directly into the marina rather than through the property of the landlords. 7. Improvements to the boat ramp. 65 The first defendant's evidence was that document 5 was in fact a number of documents. The improvements discussed before settlement were those shown on page 43. He referred to that document as his action list. Those improvements were costed by the first defendant at $200,000 plus, according to the first defendant, $20,000 for contingencies and $30,000 for staff. The other pages detailing improvements were discussed between the parties after settlement and were only ideas. The first defendant's submission was that the plaintiff was not telling the truth about document 5 and that she had attempted to mislead the Court by advancing the documents as one document. She had also arranged or shuffled the documents so that they were in an order which suited her case. 66 With respect to what the parties envisaged by way of improvements, the first defendant also relied on a letter to houseboat owners sent by the second defendant in October 2006 which was two months after settlement. It advised houseboat owners that improvements would be carried out at the marina and listed the proposed improvements. The list is not said to be an exclusive one but the listed improvements are not dissimilar to the improvements shown in the document the first defendant described as his action list. 67 I have considered the evidence about document 5 and the improvements carefully. I have decided that the plaintiff's evidence should be accepted. 68 I accept that the plaintiff found document 5 in her records and that when she did so it was one document. If the documents are out of order then that was not as a result of an intentional act on her part. The improvements referred to in document 5 were discussed between her and the first defendant before she made her decision to enter into the venture. The discussions probably took place in February 2006 although it is possible that they took place slightly later and after she had expressed to the first defendant some interest in entering into the venture. The plaintiff conceded in cross-examination that it is possible the document described by the first defendant as his action list (page 43) was discussed in about June 2006. It seems to me that even if that was the case it does not make any material difference. 69 By contrast the first defendant's evidence on the topic of improvements was unsatisfactory and I do not accept it. 70 The first defendant accepted in cross-examination that work to the house is not referred to in his action list and yet work to the house was carried out shortly after settlement. He said that in about June 2006, Buildesign, which was a building firm which carried out substantial improvements to the marina property, was engaged to perform work on the house to the value of about $80,000. The money to be spent on the house was not within the plaintiff's contribution of $250,000 but, said the first defendant, the plaintiff expressly agreed to pay this amount herself. The first defendant agreed that there was no reference in his affidavit to an agreement by the plaintiff to pay the sum of $80,000 for improvements to the house. The topic of improvements was squarely an issue in the case and I think that if there had been such an agreement it would have been referred to in the first defendant's affidavit. It is not. In addition, the first defendant's evidence as to the role played by the plaintiff in suggesting improvements was unconvincing. No doubt she had views, but I find quite implausible the first defendant's evidence suggesting that he did not play the dominant and major role in formulating proposed improvements. He was the one who had had experience in operating a marina; he was the one who had a houseboat and was intending to acquire another; he was the one who had conceived the idea of buying the marina business and he was the one who was to manage and market the marina. The plaintiff had no knowledge of the operation of a marina other than what she had picked up since meeting the first defendant. The letter to houseboat owners in October 2006 does not lead me to a different conclusion. As I have said, the items listed in the letter bear some similarity to the items in the action list. However, the list in the letter does not purport to be exclusive, there is no reference to improvements to the house (I acknowledge of course that one would not expect there to be as those improvements do not concern houseboat owners) and it is clear that at the time the letter was sent the second defendant was in any event carrying out a good deal more by way of improvements than the improvements referred to in the letter. 71 I reject the first defendant's challenge to the plaintiff's credit in relation to her evidence concerning the improvements discussed and I accept her evidence on that topic. The scope of the improvements discussed provides no support for the first defendant's evidence concerning the first and final statements. 72 There is a matter related to the improvements discussed by the parties which is conveniently addressed at this point. It is the improvements actually carried out by the second defendant. Improvements were carried out to the marina property by the second defendant after settlement and for the most part those improvements were carried out between August 2006 and March 2007. Buildesign was responsible for carrying out a number of the improvements to the buildings on the property including the office, shed and house. By 31 March 2007 the plaintiff had made contributions to the second defendant totalling about $566,000 and the first defendant had made contributions totalling about $257,000. The first defendant sought to meet the suggestion that the plaintiff would not have contributed so much had he not made the first and final statements by seeking to establish that amounts in excess of her agreed contribution of $250,000 were the result of improvements carried out at the plaintiff's insistence. 73 The second defendant spent over $750,000 on the marina property. It is not possible to determine the precise amount spent on the house because for the most part the invoices rendered by Buildesign did not identify its charges with respect to particular buildings. The plaintiff did an estimate which, although imprecise, does provide something of a guide : $ House 253, 927.35 Office 98,816.52 Shed 106,157.30 Marina external 270,775.46 Plant and equipment 38,781.83 Kyancutta 32,092.86 Miscellaneous (unaccounted for) 17,040.23 Total 817,591.55

If one excludes Kyancutta (see [144], [145] below) the figure is over $750,000. 74 This does not support the first defendant's assertion. Furthermore, the plaintiff said and I accept that decisions about the improvements to be carried out to the house were joint decisions whereas decisions about improvements to the office and shed were made by the first defendant. The first defendant was supervising or 'project managing' the carrying out of the improvements. 75 The first defendant called Mr Wegener with a view to supporting his case that a number of improvements resulted from the plaintiff's insistence and in some cases extravagance. 76 Mr Wegener gave evidence of the scope of works carried out by Buildesign in the second half of 2006 and the early months of 2007. He gave evidence of conduct by the plaintiff which, on his account, led to an increase in the scope of works. In particular, he gave evidence of three events. First, he said that the plaintiff directed Buildesign to carry out work at her parents' property at Wudinna which work resulted in an additional cost to the second defendant of over $20,000. Secondly, he gave evidence of the plaintiff requiring the kitchen benches in the house to be redone at an additional cost of $10,000. In that context, he gave evidence of an argument between the plaintiff and the first defendant about the kitchen benches during which the plaintiff allegedly said: It's my fucking money! I'll spend it the way I want to. I deserve it. He gave evidence that the plaintiff then burst into tears and left the room. Thirdly, he gave evidence of the plaintiff insisting on changes to the bathroom in the house so as to install new windows "so that there would be a continuous view from and to the spa inside the bathroom from and to the unfenced rural backyard". 77 Mr Wegener was an unsatisfactory witness. His estimate of the cost of the original scope of works was in the vicinity of $100,000. The plaintiff's estimate was $150,000 to $200,000 excluding the cost of the bathrooms in the house. I think the plaintiff's estimate is more likely to be accurate bearing in mind that improvements by Buildesign were to be carried out to the house, office and shed. Mr Wegener's estimate of Buildesign's total account for work on the marina property was $350,000 to $370,000. The documentary evidence established that Mr Wegener's estimate was an overestimate by a considerable margin and he could not explain in a satisfactory way the reason for his overestimate. The documentary evidence establishes that Buildesign's charges for work done on the marina property was about $235,000 and that for the most part it was the first defendant who completed the cheque stubs and noted payments on Buildesign's invoices. Mr Wegener's inaccurate estimate caused me to doubt his reliability. 78 Buildesign did carry out work on the property of the plaintiff's parents although it was at Kyancutta not Wudinna as asserted by Mr Wegener. That was done by reason of an arrangement between the plaintiff and the first defendant and was linked to a payment of $38,000 made to the second defendant by the plaintiff on 21 August 2006. I discuss the details of the payment of $38,000 and the arrangement between the plaintiff and the first defendant below (at [144], [145]). It was the first defendant who first approached Mr Wegener about the prospect of Buildesign carrying out work on a property at Kyancutta. It was the first defendant who completed the cheque stubs for the cheques which were used to pay Buildesign for the work done at Kyancutta. 79 With respect to the kitchen benches, they were made by cabinetmakers Ebert and Jonas, and not by Buildesign. The plaintiff said, and I accept, that the measurements for the kitchen top were never varied from the plans. The plaintiff said, and I accept, that she did not use the words attributed to her by Mr Wegener in the course of a conversation with the first defendant. 80 With respect to the bathroom, the plaintiff said, and I accept, that at an early stage of the building work she was asked by the first defendant to view changes that had been made. The plaintiff was not happy with the changes and it was agreed that the framework between the two bathrooms would be shifted. Mr Wegener said that no significant further work would be involved. The windows in the bathroom were changed at the plaintiff's suggestion and with the first defendant's agreement. Mr Wegener said that little (if any) additional cost would be involved because he could use the windows which were to be replaced on an existing job. 81 I accept the plaintiff's evidence that increases in the scope of works to be carried out by Buildesign were agreed between the plaintiff and the first defendant save for a few decisions made 'on the spot', to use the plaintiff's words, by the first defendant. Even if the plaintiff had some firm ideas about improvements to the marina property the evidence establishes that they were really quite minor in terms of costs. 82 I turn now from the topic of improvements to another area of the evidence which the first defendant contends supports his evidence with respect to the first and final statements. 83 The first defendant points to the fact that the plaintiff failed to raise the allegation about equal contributions on occasions where one would have expected her to do so if they had been true. 84 In August 2008 there was a dispute between the plaintiff and the first defendant and each party instructed solicitors. Correspondence passed between the solicitors for the respective parties and various allegations of misconduct were made. In the correspondence from the plaintiff's solicitors there was no reference to any statement or undertaking by the first defendant to make contributions to the second defendant equal to those of the plaintiff. That was a strong reason, submitted the first defendant, to disbelieve the plaintiff's evidence that any such statement was made or undertaking given. I have carefully considered that submission, but in the end I have decided that it should be rejected. 85 The context of the letter from the plaintiff's solicitors was a response to a letter from the first defendant's solicitors alleging that the plaintiff had unlawfully removed from the marina, company property, being pot plants, company records and other items. In that context the absence of a reference to the statement or undertaking is not a reason to disbelieve the plaintiff's evidence. Furthermore, the plaintiff was recovering from a serious illness at that time. In May 2008 the plaintiff became very ill with a collapsed left lung and a partial collapse of the right lung, pleurisy and pneumonia. She was hospitalised for about two weeks and was unable to work for about two months. She was limited in what she could do for a period thereafter. 86 The first defendant also submitted that it was significant that the plaintiff did not mention the statement or undertaking in her email to him dated 14 December 2009. That email reveals that the plaintiff's immediate concern was the ongoing operations of the second defendant and again I do not think that the absence of any reference to the statement or undertaking is a reason to disbelieve the plaintiff's evidence. 87 I find that the first defendant made the six statements to the plaintiff to which she deposed ([42]-[47] above). I reject all of the first defendant's challenges to the plaintiff's credibility and reliability, both those I have already discussed and those discussed hereafter in these reasons. 88 There were other matters discussed between the parties at or around the time the plaintiff was deciding whether to enter into the venture. They are relevant to the plaintiff's case and I now turn to consider them. 89 In the course of the conversations between the parties the first defendant showed the plaintiff rough projections which he had prepared. These projections showed that the business would be profitable. 90 The plaintiff was aware that in order to provide funds to the marina business she would have to draw on her line of credit facility and that she was required to pay interest on that facility. She told the first defendant that the proposed operator of the business would have to pay interest on her borrowings with Bank SA. She told him that she wanted her accountant to calculate on a monthly basis the amount of interest which she paid to Bank SA and that she expected to be reimbursed on a monthly basis 'once the company was up and running'. The first defendant agreed to that. 91 The first defendant gave evidence that he did not agree that the venture company would pay interest on the plaintiff's contributions calculated by reference to the interest the plaintiff would be paying on her line of credit. Furthermore, he said that the parties did not address the question of whether the contributions each party made to the venture would be loans or some other form of contribution. He asked me to reject the plaintiff's evidence on these matters. In addition to his evidence he pointed to a number of other matters which he submitted should lead to the rejection of the plaintiff's evidence. 92 First, he submitted that it was inherently unlikely that the parties would have reached an agreement that the proposed operator of the business would pay interest in view of the fact that it was unlikely the proposed business would generate sufficient income to be able to pay interest. He referred to the fact that the second defendant would be paying interest on the loan from the ANZ Bank. He also referred to the profit and loss figures of the existing business which he had shown to the plaintiff (see [39] above). I do not place any weight on this consideration. The first defendant had experience in conducting a marina business, owned a houseboat and was planning to buy another. The business was going to make substantial improvements to the marina. The first defendant was very enthusiastic about the venture and he conveyed that enthusiasm to the plaintiff. I think he considered that he could conduct a profitable business and I do not think that he would not have been deterred by an arrangement whereby the business paid the plaintiff's interest charges. 93 Secondly, the first defendant pointed to the fact that for a time after settlement the records of the second defendant showed the plaintiff's contribution to the second defendant as capital introduced and did not record a liability of the second defendant to pay interest to the plaintiff. It does seem to be the case that for a time the plaintiff's contributions appear in the general ledger of the second defendant as 'Capital Introduced' and that there was no regular recording of an interest charge. Furthermore, the plaintiff did not send accounts to the second defendant for the interest charge. It also seems to be the case that Mr Saris, who prepared the second defendant's balance sheet, recorded the plaintiff's contributions as a shareholder's loan under 'Issued Capital' for the 2007/2008 financial year, although he did record her contributions under 'Current Liabilities' for the 2008/2009 financial year. The plaintiff opened on Mr Saris as a witness she would call, but she did not call him as a witness. I was told by the plaintiff's counsel, without objection from the first defendant, that Mr Saris had prepared a statement which had been filed and served. The first defendant referred to the way in which the arrangements were initially recorded in the second defendant's records and submitted that the only reason for the changes was an attempt by the plaintiff to improve her position. He submitted that the plaintiff's failure to call Mr Saris means that I can more confidently reach that conclusion. It is convenient for me to deal with this submission and the next submission together. 94 Thirdly, the first defendant pointed to draft agreements the plaintiff had her solicitors prepare in 2008 which recognised the contributions as loans and contained an obligation on the second defendant to pay interest to the plaintiff. She was asking the first defendant to execute those agreements but he did not do so. The first defendant submitted that there would have been no need for the draft agreements to record the contributions as loans carrying interest if there had been a pre-existing agreement to that effect. He submitted that this was yet another example of the plaintiff trying to improve her position. 95 I have considered these matters carefully but they do not lead me to reject the plaintiff's evidence. 96 The context in which the conversations took place is one in which the plaintiff would be borrowing money to make her contributions and the agreement she alleges is that interest would be paid when the company was up and running. In that context such an arrangement is not unusual or such as to throw doubt on the plaintiff's evidence. 97 With respect to the way in which the contributions were recorded in the second defendant's records, I accept the plaintiff's evidence that the second defendant's books and records were a 'mess' at the beginning of the venture and that there had to be a recharting of the accounts in about March 2007. It seems that the plaintiff did not know how the contributions should be recorded and that she had some notion that they should be referred to as capital because the moneys were used to develop the property. Ms Sitters came in and 'cleaned up' the accounts and then later Mr Saris 'went through it and brought it up to date'. She said that it was Mr Saris who made the changes to the second defendant's balance sheet and that he did not discuss those changes with her. The first defendant submitted that I should infer from the plaintiff's failure to call Mr Saris that the plaintiff knew that the contributions were capital contributions to the trust and not loans attracting interest. I decline to draw that conclusion because I accept the plaintiff's evidence. In the circumstances I do not need to consider whether the other requirements of what is sometimes said to be the rule in Jones v Dunkel (1959) 101 CLR 298 are satisfied. 98 I should add in the context of discussing the fact that Mr Saris did not give evidence that the first defendant identified a couple of other areas where Mr Saris may have been able to give relevant evidence. Those areas are the reasons the parties went to see him in September 2007 ([160]-[161] below) and the reasons income from the Lyn Crossman Trust was included in taxation returns of the White Marina Trust. However, the only matter where the first defendant identified the inference I should draw related to the changes to the balance sheet and, as I have said, I decline to draw the inference for which the first defendant contends. 99 With respect to the draft agreements prepared by the plaintiff's solicitors, there are two draft Domestic Partnership Agreements prepared by Peter Marker and Associates in the period of March to June 2008. The recitals (which are said to be true and correct) contain an acknowledgment of the second defendant's indebtedness to the parties. The draft agreements also contain quite detailed provisions dealing with what is to occur on the separation of the parties or the death of one of the parties. There is also a draft deed between the parties which bears the year 2008 and draft loan agreements. The draft loan agreements provide for the repayment of principal and interest on the sale of the leasehold and business. I do not think that these draft agreements amount to an acknowledgement or admission by the plaintiff that there was no agreement or understanding that the plaintiff's contributions were loans carrying interest. If anything they confirm her understanding that they were loans carrying interest. I think the proposed new arrangement as to the payment of interest may be explained by reference to the open-ended nature of the original statement (that is, when the company was up and running) and the changed circumstances of the business. From the plaintiff's point of view the business was obviously failing and had to be sold. Furthermore, I accept the plaintiff's evidence that the first defendant's concern at the time of the draft agreements was the plaintiff's failure to make him a beneficiary of her life insurance policy, not the characterisation of the contributions or the fact that the draft agreements provide for the payment of interest to the plaintiff. 100 The contributions made by the parties were not subscriptions for share capital. After two shares were issued at the outset no additional shares were issued. The contributions were either loans or contributions to the property of the trust. In the latter case they would only be recoverable on the winding up of the trust and if there were sufficient funds available. 101 The conduct of the parties at about the time of settlement and thereafter was consistent with the contributions being loans to the second defendant. Various payments were made to the plaintiff by the second defendant which support the conclusion that the contributions were loans. Those payments are discussed below. They are the repayment by the second defendant of part of the sum of $38,000 paid by the plaintiff on 21 August 2006 (see [144]-[145] below), the payments to the plaintiff of $30,000 and $35,000 respectively in 2008 (see [166]-[167] below) and the interest payments to the plaintiff by the second defendant in the second half of 2009 (see [174] below). 102 I find that at about the time the plaintiff decided to enter into the venture the first defendant agreed to the proposed operator of the business paying interest on the plaintiff's contributions on the terms deposed to by her. I find that the contributions were loans and were understood to be loans. 103 At the time of the conversations leading to the plaintiff's decision to take an interest in the venture she understood that the ANZ Bank would take security over the assets of the marina business and because she wanted as much protection as possible she told the first defendant that he needed to provide the ANZ Bank with a mortgage over his property at Moana. The first defendant's evidence was to the contrary, but I accept the plaintiff's evidence. 104 The plaintiff's understanding as to the ownership of the property at Moana was that it was owned by the first defendant but that he owed his mother $150,000 in connection with the purchase of either that property or of Flat White. I reject the first defendant's evidence that he told the plaintiff that his mother had a half interest in the property at Moana. 105 The plaintiff told the first defendant that she wanted her accountant, Mr Con Saris, to be the accountant for the venture. She wanted to make sure that the books for the business were kept in order. The first defendant agreed that Mr Saris would be the accountant for the venture. 106 In the conversations at or about the time of the plaintiff's decision to enter into the venture there was a discussion between her and the first defendant about the terms upon which the first defendant would moor his houseboats at the marina. As I understand it, the practice at the time was that houseboat owners who moored their boats at the marina would pay mooring and management charges and would pay other charges for goods and services supplied such as replacing items on the boats, laundry and cleaning. If a booking for the hiring of a houseboat by a third party was made through the marina then the owner would pay a commission on the hiring fees to the marina. If a booking was arranged by the owner then no commission was paid to the marina on that booking. As I understand it, if a booking was arranged through a third party such as the Houseboat Hirers' Association then the owner would pay a commission to that party. 107 The plaintiff and the first defendant agreed that the first defendant would pay mooring and management charges and fees for goods and services with respect to his houseboats. The parties discussed whether the first defendant would pay commission in the same way as other houseboat owners. 108 The plaintiff's evidence was that initially the first defendant was reluctant to agree to the payment of commission with respect to his houseboats. In resisting the idea he referred to the fact that he would be working at the marina. Eventually he agreed to pay commission in relation to his houseboats. 109 As I understand the first defendant's evidence on this topic he agrees that the question of commissions was discussed but he denies that it was agreed that he would pay commissions on the hire of his houseboats in the same way as other houseboat owners. 110 Both parties referred to subsequent events which they contended supported their version of the conversation. 111 The second defendant had a website advertising its facilities and services. The first defendant also had a website in relation to his houseboats. The second defendant kept booking forms and those forms contained provision for recording the party who had arranged the booking. Except for a period in late 2009 when the first defendant was in the United States of America he took the majority of bookings. He had a mobile telephone and bookings could and often were taken outside business hours. When the first defendant took bookings for his own boats he recorded the fact that the booking had been arranged through the owner, namely, himself. 112 Leaving aside a short period in late 2009 the second defendant never sent an invoice to the first defendant for commissions and the first defendant never paid commissions with respect to his houseboats. On his case there was no agreement that he do so and, in any event, in the case of his houseboats all of the bookings were arranged by the owner, namely himself. 113 Although the plaintiff contends that there was such an agreement she accepts that it is not possible to calculate the commissions the first defendant ought to have paid. That is because of the recording practices he adopted. The plaintiff attempted to provide an estimate of commissions which should have been paid by the first defendant but it seemed to me to be no more than a rough estimate. 114 After settlement, and from time to time, the second defendant sent letters to houseboat owners concerning the terms and conditions of mooring their boats at the marina. The first defendant appears to have received similar letters to those sent to other houseboat owners. 115 In November or December 2006 the plaintiff prepared cash flow projections for the second defendant's business. The book which contains the projections which she prepared was received in evidence and became exhibit P4. The plaintiff discussed the projections with the first defendant. The projections contained estimates as to hiring fees and the likely frequency at which various houseboats at the marina would be hired. The first defendant tended to downplay his role in the formulation of the assumptions which lay behind the estimates, but I have no doubt, having regard to his experience and expertise and the plaintiff's relative lack of experience and expertise, that he was the principal source of the estimates with respect to these matters. It is true that commissions are not included in the expenses of Flat White or White Water, where the income and expenses of individual boats appear, but as far as I can see they are not included in the expenses of the other houseboats. The significant point is that commissions with respect to the first defendant's houseboats are included in the projections for the second defendant's business. I reject the first defendant's submission to the contrary. 116 The cashflow projections were also discussed with a representative of the ANZ Bank in the period leading up to an extension of the loan facility from that bank from $500,000 to $750,000. Both the plaintiff and first defendant were present during that discussion. The plaintiff subsequently sent a copy of the cashflow projections to the ANZ Bank. 117 In July 2007 the second defendant was looking to increase its loan facility with the ANZ Bank. In fact later in 2007 the ANZ Bank extended the facility by $175,000 (see [164] below). In a letter from the plaintiff to the ANZ Bank dated 27 July 2007 financial details of the marina business and of the plaintiff and the first defendant were provided to the bank. The expenses of Flat White and White Water did not include commissions. I think that this was because the first defendant was not in fact paying commissions rather than because there was no agreement or understanding that he do so. 118 In 2008, the plaintiff prepared a document entitled 'White Marina Business Overview'. This document was prepared at a time when the second defendant was attempting to sell the business. I accept the plaintiff's evidence that the reference 'n/a' appearing next to the commissions for Flat White and White Water was there because the first defendant was not paying commissions, not because there was no agreement or understanding that he do so. 119 Mr Daly gave evidence which was relevant to the question of whether there was an agreement or understanding that the first defendant pay commissions with respect to the hiring of his houseboats. He also gave evidence relevant to other matters and it is convenient for me to deal with all of his evidence at this point. 120 Mr Daly was employed by the second defendant in about November 2007 and his duties at that stage were cleaning boats and small maintenance tasks. In about August 2008 he started performing some managerial functions after other employees resigned. In late 2009 he was involved in taking bookings for houseboats at the marina. He left the employ of the second defendant in January or February 2010. 121 Mr Daly said that at about the time he was first employed at the marina (that is, November 2007) the plaintiff said to him: Brendan does not pay commission on bookings for his boats because he handles his own bookings and does his own dog-work. That arrangement is fine with me. 122 I do not accept that evidence. I found Mr Daly to be an unsatisfactory witness. I have reached the conclusion that he was an unsatisfactory witness having regard to his evidence as a whole. Some matters are more important than others and in what follows I proceed chronologically rather than in order of importance. Overall I formed the view that his evidence was tailored to portray the plaintiff in an unfavourable light. 123 Mr Daly gave evidence that in August 2008 he was 'summoned' by the plaintiff to her house at Hyde Park. He said the plaintiff offered him money to secure a mooring away from White Marina. Mr Daly accepted in cross-examination that the plaintiff had made a polite request that he attend her house and that she had been polite and civil when he arrived. His use of the word 'summoned', although not in itself particularly significant, was part of an overall feature of his evidence, namely, an attempt to portray the plaintiff in an unfavourable light. The circumstances surrounding the plaintiff's offer were never made clear and the plaintiff denied making such an offer. I accept the plaintiff's evidence. 124 Mr Daly referred to an occasion when the plaintiff instructed him to refuel her son's motor vehicle, an instruction which he did not carry out. Later he discovered that the plaintiff's son had refuelled his motor vehicle himself. On occasions Mr Daly was instructed by the plaintiff to refuel his motor vehicle where he had been doing some 'running around' on behalf of the business. He said that records were kept of any vehicle refuelling and those records were provided to the plaintiff on a regular basis. The point being made about this incident is not entirely clear, but if it is that there was something improper about the plaintiff's conduct, it would also have been appropriate for Mr Daly to mention that the plaintiff's son performed work at the marina. He did not mention that. 125 Mr Daly said that he was not aware of houseboat owners being directed by the first defendant to pay money of the second defendant to the first defendant. He said that all the invoicing was dealt with by the plaintiff's staff. However, he said that such an activity could not have occurred without him being aware of it, as he was a port of call for all accounts and billing inquiries and any such activity would have shown as an unpaid houseboat owner account and come to his attention. He said the plaintiff never raised any issue of that nature with him during his tenure at the marina. I do not accept that Mr Daly played such a role in the accounting aspects of the marina business that I should prefer his evidence to that of the plaintiff and Ms Sitters. 126 Mr Daly was cross-examined about his alleged conversation with the plaintiff in November 2007 concerning the first defendant paying commissions. His evidence was unconvincing. He could not recall when he had a conversation with the plaintiff and he said that it could have been in the middle of 2009. When asked to relate the conversation he said that the plaintiff had said something to the effect that the arrangement was an unsatisfactory arrangement. 127 Mr Daly said that the first defendant went to New South Wales for a period in 2009. He was quite uncertain as to whether that was in July or October 2009. 128 Mr Daly said that when the first defendant went to the United States he handled bookings at the marina. He ensured the first defendant paid commission and that bookings were dealt with on a 'first cab off the rank' basis. Mr Daly said that he had conversations with the plaintiff when the plaintiff said that she disagreed with the first defendant's practice of giving preference to his houseboats. He could not remember how many conversations he had or when they took place. 129 Mr Daly referred to an email from a Mr Phillips to the first defendant dated 11 February 2010 complaining about various matters. Mr Daly said that he did not discuss the matters with the first defendant and that he had been sworn to secrecy by the plaintiff as to his involvement in the matters. 130 Mr Daly said that in November 2009 Ms Sitters spent a day making travel and accommodation bookings for the plaintiff to take a holiday in Queensland and that the second defendant was billed for that work. That allegation was not put to Ms Sitters during her cross-examination and having heard Mr Daly cross-examined on the matter I am satisfied that he has exaggerated the incident. 131 Mr Daly said that the plaintiff told him not to tell the first defendant about various aspects of what went on at White Marina. He gave the following examples: 1. The proposed sale of a jet ski by the second defendant. 2. The planting of ornamental trees at the marina using the second defendant's money. This occurred in the latter part of 2009. Mr Daly said that this occurred at a time when staff superannuation was not being paid to employees of the second defendant and bond returns were not being made to customers. 3. The removal of company records from the marina by the plaintiff and an associate. 132 These matters have a context which removes any unfavourable impression about the plaintiff's conduct which might otherwise arise. The negotiations for the sale of the jet ski took place at a time when the second defendant was in desperate need of funds and the plaintiff was making contributions, and the first defendant was not. The ornamental trees cost a small amount of money and were being planted on the second defendant's property and at a time when sale of the marina property was likely. Furthermore, it seems that Mr Daly only became aware later that staff superannuation was owing. 133 Mr Daly said he never had to chase the first defendant for the payment of his accounts, nor did he recall the first defendant 'being any more in arrears than any other boat owner'. I prefer the evidence of the plaintiff and Ms Sitters on this point; they were in a much better position to know about this matter than Mr Daly and, in any event, Mr Daly's evidence is contradicted by the second defendant's records. I do not think his evidence on this point should be given any weight. 134 With respect to a booking for a party from Switzerland which went led to difficulties, Mr Daly made a statement - 'they expressed surprise to me that the boat was not available' - which he was not in a position to make. He admitted that in cross-examination. 135 Mr Daly made a statement in his affidavit which I ruled inadmissible but which counsel for the plaintiff introduced in cross-examination. It was quite misleading. He said that one of the houseboat owners at White Marina, a Mr Guy Phillips, who owned a houseboat called Liquid Gold, had no objection to the first defendant preferring Flat White over Liquid Gold in terms of bookings. He did not mention, until it emerged in cross-examination, that on a number of occasions Mr Phillips had complained to him about the first defendant preferring his own boat, the first of which was possibly in May 2009. The picture which he was prepared to present in his affidavit was quite misleading. 136 Mr Daly said that the first defendant preferred his own houseboats and I accept that evidence. Otherwise, I do not accept Mr Daly's evidence where it is in conflict with the evidence of the plaintiff or her witnesses. 137 The first defendant sought to make something of the fact that the letter from the plaintiff's solicitors in August 2008 indicated that the plaintiff was aware that the first defendant was not paying commission with respect to his two houseboats. I do not consider that to be a reason to reject the plaintiff's evidence about the conversation with the first defendant concerning commissions. In the letter the plaintiff through her solicitors was in fact asserting that the non payment of commissions was an example of the 'misuse of Trust property'. 138 I find that during a conversation between the parties the first defendant agreed to pay commissions on the hiring of his houseboats. 139 During the conversations at or about the time the plaintiff decided to take an interest in the venture the plaintiff took notes of what was discussed at one such conversation. Subject to one qualification, she was able to remember the conversations without referring to those notes. The one qualification was that in relation to the conversation with the first defendant concerning the payment by the first defendant of commissions in relation to the hiring of his houseboats she said that she had a 'substantial independent memory'. 140 The plaintiff said that the notes were made by her during a conversation with the first defendant at her house at Hyde Park. She said that she kept a file concerning the marina property and that she put the notes in the file. The file contained documents relating to the acquisition of the marina property and the operation of the business. I received the notes as admissions (Evidence Act 1995 (Cth) s 81 ('Evidence Act')). I think the notes were also admissible under s 69 of the Evidence Act and probably s 64. The notes confirm some aspects of the plaintiff's evidence although I make it clear that I would make the same findings irrespective of the notes. 141 After the plaintiff had agreed to take an interest in the venture she and the first defendant had a meeting with Mr Saris. Mr Saris gave them advice to the effect that a discretionary trust was the most suitable vehicle for them to use to own and operate the proposed business. As I have said, the second defendant was incorporated on 4 April 2006 and the White Marina Trust was established by trust deed executed on 5 April 2006. In relation to the trust deed there is one indication that to a point the plaintiff was careful to protect her interests. When she came to execute the trust deed the plaintiff noticed that only the first defendant was named as an appointor and she amended the clause in the deed to add her name as an appointor. 142 The plaintiff and the first defendant were engaged to be married in May 2006. Although she set out a history of her relationship with the first defendant in her first written statement the plaintiff does not mention the fact of her engagement. The first defendant submitted that this non-disclosure was of great significance because it showed that the extent to which the plaintiff was prepared to go in not disclosing facts which were damaging to her case. The fact of the engagement was said to indicate that all the events occurred in the context of the 'rise and fall' of a personal relationship. When the plaintiff was asked in cross-examination why she had not disclosed her engagement she said that she thought she had disclosed it in earlier affidavits she had sworn in the proceeding. It transpired that she had not. I accept the plaintiff's explanation. Other than her engagement to the first defendant the plaintiff disclosed the course of her relationship with the first defendant in some detail. 143 The contracts for the purchase of the lease and the business were signed in early June 2006. The purchase price of the lease, including GST, was $610,000 and the purchase price of the business was $50,000. Before settlement on 23 August 2006 the plaintiff made the following lump sum contributions to the second defendant: $10,000 on 18 July 2006; $15,000 on 11 August 2006; $7,000, $38,000 and $3,000 on 21 August 2006. The first defendant did not dispute the fact that the plaintiff made these contributions. The first defendant made the following lump sum contributions to the second defendant before settlement: $25,000 on 1 July 2006; $30,000 on 3 July 2006; $200,000 on 21 August 2006. 144 The lump sum contribution by the plaintiff of $38,000 on 21 August 2006 came about after the first defendant had come to her clinic in a panic saying that they were due to settle that day and were $38,000 short. The plaintiff obtained $38,000 from her bank and gave it to the first defendant. It transpired that they were not short of funds and the sum of $38,000 was not required at settlement. At that point, the plaintiff and the first defendant agreed that the plaintiff would leave the funds with the second defendant until she needed the funds to make improvements to her parents' house at Kyancutta and in that event she would withdraw the funds from the second defendant. 145 The first defendant gave evidence-in-chief and was cross-examined about these events. His evidence was unsatisfactory. In his affidavit the first defendant denied the plaintiff's account that when it became clear that the sum of $38,000 would not be needed on settlement the plaintiff said that she would leave the money in the account of the second defendant until she needed the money for improvements to her parents' property. In the plaintiff's second written statement filed and served after the first defendant had filed and served his affidavit the plaintiff produced cheque butts which had been completed by the first defendant and which showed payments to Buildesign in relation to her parents' property at Kyancutta. In cross-examination the first defendant accepted that the plaintiff had said what she alleged but he said that she had done so some considerable time after she had paid the sum of $38,000 to the second defendant. I do not accept that evidence. I think that it would have been in the first defendant's affidavit if it had been true. 146 Settlement on the purchase of the marina lease and marina business took place on 23 August 2006 and the name of the marina was changed from Temptation Houseboat Holidays to White Marina. The assets purchased by the second defendant were as follows: 1. A lease from the owner for an original term of 84 years (together with a right of renewal for 99 years) and an annual rental of $8,000 plus GST subject to review; 2. Improvements on the leasehold property consisting of the marina development itself, the house, a shed and a toilet block; 3. A lease granted by the owner over their land providing access to the property; 4. Items of plant and equipment; 5. Goodwill of the business. 147 The plaintiff said that each and every one of the first defendant's statements as set out below were influential in her decision to take an interest in the venture. 1. His statement that each of them would contribute 50/50 to the funding of the business at all times. 2. His statement that he was in a position to provide his share of the funds required. 3. His statement that all of the major decisions affecting the conduct of the business would be taken by them jointly. 4. His statement that the venture would produce a capital gain for them. 148 I have found that statements to this effect were made by the first defendant to the plaintiff. 149 I am mindful that evidence of reliance on representations given after loss and damage has been suffered should be scrutinised with care. I have done that and I accept the plaintiff's evidence that she relied on the statements and, in particular, (for the purposes of the Fair Trading Act cause of action), the statements about the contributions to be made by the parties and the ability of the first defendant to make his contributions. 150 After settlement, the plaintiff and first defendant set about carrying out improvements to the marina property. As I have said, most of the improvements were carried out between August 2006 and about March 2007. The improvements consisted of the following: 1. Refurbishment of the house; 2. Creation of an office in the toilet block and a workstation; 3. Landscaping; 4. Construction of bituminised roads on the site; 5. Improvements to the existing shed including the provision of a mezzanine floor for storage purposes; 6. The construction of the road; 7. The excavation of the marina to a greater depth and slightly greater width; 8. Improvements to boat ramp; 9. Creation of a utilities area for general storage and refuse; 10. Upgrading of the electricity systems of the marina including installation of outside lighting and provision of power to the mooring sites; 11. Improvements to signage. 151 During the period from settlement to 31 March 2007 the plaintiff made the following lump sum contributions to the second defendant: $130,000 on 6 September 2006; $150,000 on 3 October 2006; $100,000 on 9 November 2006; $100,000 on 5 December 2006. The first defendant did not make any lump sum contributions to the second defendant during this period. The plaintiff's lump sum contributions at 31 December 2006 and at 31 March 2007 stood at $553,000 and the first defendant's contributions stood at $255,000. 152 The first defendant was on site during the carrying out of the improvements and he was, as he said to the plaintiff, 'project managing' the improvements. At that time each party was a sole signatory on the second defendant's cheque account and the first defendant wrote a number of cheques to contractors to pay for the improvements carried out over this period. From time to time the first defendant would telephone the plaintiff and tell her that the second defendant did not have funds available to pay contractors and ask her to transfer funds to the second defendant's cheque account so that this could be done. 153 As the plaintiff's contributions to the second defendant came to exceed those made by the first defendant in the second half of 2006 she raised with the first defendant the question of when he was going to collect his outstanding real estate commissions and sell his King Street apartment. I find that she did this on a number of occasions in the latter part of 2006. Some time after the plaintiff first raised the matter with him the first defendant told her that he had already collected his real estate commissions and that he had used them to pay personal expenses. 154 The first defendant's evidence about what he told the plaintiff concerning the collection of outstanding real estate commissions was unsatisfactory. The plaintiff said in her first statement that he told her that he had collected the commissions during one of the conversations (not the first) which she had with him in the second half of 2006. In his affidavit the first defendant denied that allegation but he did not say that he had told the plaintiff in February 2006 that he had collected the commissions. Under cross-examination he said that he had in fact collected the commissions in late January or early February 2006 and that he had told the plaintiff that he had done so at that time. It seems to me that if he had told the plaintiff in February 2006 that he had collected the commissions that would have been in his affidavit in response to the plaintiff's first statement. Another unsatisfactory feature of his evidence is that he seemed to waver between saying that he told the plaintiff and that the plaintiff would have been aware of the fact from overhearing his telephone conversations with agents. 155 As far as the sale of the King Street apartment is concerned, in response to the plaintiff's inquiries the first defendant assured the plaintiff that he was going to sell the King Street apartment and that he would provide the proceeds to the second defendant and that in that way the plaintiff would be able to draw out money so as to equalise the contributions made by them. The first defendant told the plaintiff that he should get about $1.3 million for the apartment. She understood that the liability with respect to the apartment was 'eight hundred and something' and that the first defendant would pay the net proceeds to the second defendant. Over the years that followed, the plaintiff continued from time to time to raise with the first defendant the need for him to sell the King Street apartment and provide the net proceeds of sale to the second defendant. The first defendant was in the habit of responding that he would do that but that the time was not right because the property market was depressed. 156 The first defendant submitted that I should not accept the plaintiff's evidence that she raised with the first defendant on a number of occasions over the years the need for him to sell the King Street apartment. He referred to the information provided to the ANZ Bank in July 2007 which showed future income from the King Street apartment. I reject this submission. The fact is she had pressed him to sell the apartment and he had not done so. In those circumstances it was not unreasonable to include future income from the apartment in the projection as well as expenses including mortgage repayments which, as I read the projections, led to a negative cash position. 157 In January 2007 the first defendant told the plaintiff that the second defendant required further funds in order to complete the improvements on the property. This is another fact which illustrates why the first defendant's claim that the plaintiff was responsible for the enormous increase in the scope of works must be rejected. At all events, the plaintiff told the first defendant that she was not in a position at that time to put any further funds into the second defendant. The ANZ Bank was approached to extend the facility and the bank agreed to advance a further sum of $250,000 under the original loan facility. 158 In March or April 2007 the plaintiff and the first defendant left the house at Hyde Park and took up residence in the house at the marina. That did involve spending part of the week in Adelaide or the plaintiff commuting between the marina and Adelaide. 159 During the first half of 2007 the plaintiff pressed the first defendant to return to the real estate business so that he could earn money and contribute to the second defendant. Between July and September 2007 the first defendant returned to real estate work with Toop and Toop. 160 In September 2007 the first defendant raised with the plaintiff the question of whether she would change her will so that in the event of her death her share of the marina business would pass to him. He also asked her to make arrangements so that he would benefit from her $2 million insurance policy. The plaintiff spoke to her lawyer and subsequently told the first defendant that the benefit of her life insurance policy would remain with her children. The first defendant became upset and angry. At about this time the plaintiff and the first defendant agreed that they would have a meeting with Mr Saris with a view to Mr Saris providing advice to the first defendant as to the best way he could realise his assets and make up his share of funding of the company. At this point the marina business was running at a loss and none of the interest payments incurred by the plaintiff on her line of credit facility were being paid by the second defendant. 161 The parties met with Mr Saris on a date in September 2007. Mr Saris advised them that they should sell the marina business. The first defendant was optimistic about the future prospects of the business and he said that internet marketing had only recently been established. Various proposals were discussed. During the meeting Mr Saris pointed out to the plaintiff and first defendant that the former had contributed significantly more to the marina business than the latter. He asked the first defendant how he was going to make up his contribution. The first defendant said that it was the wrong time to sell the King Street apartment. Mr Saris then asked the first defendant about other assets. The first defendant said that he was not keen to sell anything. Mr Saris said that the directors were at risk of the second defendant trading while it was insolvent and that they ran the risk of it going into liquidation. At that point the first defendant said that if that happened he would 'buy the business back cheap'. There was then an argument between Mr Saris and the first defendant. Eventually it was agreed that the first defendant would undertake marketing for the business and draw $1,154 per week. It was agreed that the first defendant should be given six months to improve the business such that it became profitable. The plaintiff considered that she had no alternative but to give the first defendant a further six months to see if the marina business could be made profitable. 162 The first defendant said that part of the plaintiff's evidence about this meeting was obviously incorrect and was a reason I should reject her as a witness of credit. He pointed to the plaintiff's evidence that Mr Saris had with him the taxation return for the business for 2006/2007 whereas other evidence in the case established that that taxation return was dated May 2008. I do not think that this is a reason to disbelieve the plaintiff's evidence. It is likely Mr Saris would have had drafts of the financial statements for the second defendant for the financial year which had just passed and that the plaintiff was simply mistaken as to the precise document to which he had referred. 163 Shortly after this meeting, the first defendant began drawing the sum of $1,154 per week from the company. The first defendant said that it was agreed that these payments were to be treated as wages. A payment authorisation for one such payment shows the payment as a drawing. The first defendant had written on the document. The first defendant instructed his counsel to put to the plaintiff in cross-examination that the typed words 'Annual Drawings' had been put on the document after he had written on it. That was not a proposition he supported when he was asked about the topic in cross-examination. 164 At the end of September 2007 the plaintiff had an altercation with the first defendant and she moved back permanently to her house at Hyde Park. The plaintiff said that the personal relationship between them effectively ended late in 2007 or early in 2008. 165 On 12 November 2007 the ANZ Bank agreed to extend the facility it accorded to the second defendant by another $175,000. That was the result of discussions between the plaintiff and first defendant which had started in July 2007. The funds were needed to make further improvements to the marina and to meet outstanding expenses. At about this time, the plaintiff was again encouraging the first defendant to return to the real estate business so that he could contribute to the second defendant's funds. She was also pressing him to sell the King Street apartment. However, his response to the latter suggestion was to tell the plaintiff that the market was depressed and that it was not the right time to sell. 166 The addition to the facility provided by the ANZ Bank to the second defendant of $175,000 was applied in the following way. First, the sum of $80,000 was drawn down by the second defendant and used for general working purposes and a portion was spent on completing improvements. Secondly, in March 2008 the sum of $30,000 was paid to the plaintiff to enable her to have some relief in terms of the interest charges under the line of credit facility and difficulties with her cash flow. The first defendant agreed to this payment to the plaintiff. Thirdly, the sum of $30,000 was used to remedy the fact that the company's account was overdrawn. Finally, in September 2006, the sum of $35,000 was paid to the plaintiff, again to provide her with some relief in terms of her cash flow difficulties. Again, the first defendant agreed to this payment to the plaintiff. 167 I do not accept the first defendant's evidence that he did not agree to the two payments to the plaintiff of $30,000 and $35,000 respectively. His evidence concerning the payment of $35,000 was particularly unsatisfactory. He in fact signed the authorisation for payment. He said he did not recall signing the document and then proffered the observation that the authorisation had been altered. The alterations were entirely innocent as the evidence showed. Despite the fact that the evidence showing that there was no other explanation but that he authorised the transaction the first defendant maintained that the plaintiff had taken the sum of $35,000 without his knowledge and consent. 168 The taxation return for the White Marina Trust for the 2006/2007 financial year was signed by the plaintiff on 1 May 2008 and it included the minutes of a Trustee General Meeting allegedly held on 30 August 2007. The minutes were signed by the plaintiff. The first defendant made a number of submissions about these documents. He submitted that the fact that the plaintiff had signed the document as trustee when the second defendant was the trustee reflected adversely on her credit. I reject that submission. It seems to me understandable that the plaintiff who had responsibility for the financial records of the second defendant would sign the document. He also contends that he did not attend a meeting on 30 August 2007 and the plaintiff's willingness to sign a minute recording the fact that he did reflected adversely on her credit. It may be that a degree of informality was adopted and I have taken the first defendant's submission into account. It does not cause me to doubt the honesty or reliability of the plaintiff with respect to the issues in the case. The first defendant also referred to the fact that the taxation return refers to income from the Lyn Crossman Family Trust and he submitted that Mr Saris could have thrown light on why it was included. I do not think this submission leads anywhere because I do not think the income from the Lyn Crossman Family Trust is relevant to any issue in the case. 169 The six-month period discussed at the meeting with Mr Saris in September 2007 expired in March 2008. At that point the business had not improved and was still making a loss and the parties had ceased cohabiting. In early May 2008 the parties discussed the possible sale of the marina business. The first defendant told the plaintiff he had a proposal for separating their interests and paying the plaintiff back the money she had put into the marina business. The first defendant discussed other potential investors who he said might be prepared to buy the plaintiff out for about $800,000. 170 As I have said, the plaintiff became very ill in May 2008. 171 In about July 2008, the plaintiff and the first defendant agreed that the marina business should be sold. Knight Frank Australia Pty Ltd ('Knight Frank'), which is a firm of commercial real estate agents, was appointed sales agent under a commercial sales agency agreement which was executed by the plaintiff and the first defendant on 5 July 2008. The agreement was due to expire on 31 October 2008. No price was specified in the agency agreement but the plaintiff and the first defendant had discussed a price in the range of $2.5-3 million. Knight Frank needed certain information about the property and business in order to market it. They had difficulty obtaining the required information from the first defendant and in the end it was never provided. By August 2008 the first defendant had told the plaintiff that he was not going to let the Knight Frank representative on the marina property and was not going to co-operate with Knight Frank. He accused the plaintiff of tricking him into signing the agency agreement. 172 In October 2008, the plaintiff and the first defendant engaged Toop and Toop in conjunction with First National to sell the marina business. They executed a rural sales agency agreement in early October 2008. It was initially for a period to 8 January 2009 but it was extended to May 2009 by a subsequent agreement executed in January and February 2009. When the time came to consider an extension of that agreement the first defendant had decided that he no longer wished to sell the marina business. He would not sign a further sales agency agreement. 173 By 30 June 2009 the plaintiff had provided financial accommodation to the second defendant in amounts totalling $826,773.80. She did that by borrowing from lending institutions, selling an investment property, selling a vehicle and borrowing funds from family members. At the same date the first defendant's contributions to the second defendant were an amount totalling $180,272.67. 174 In the middle of 2009 the plaintiff decided that she could no longer afford to pay the interest charge on her line of credit facility. The plaintiff and the first defendant agreed that she would receive a monthly payment from the second defendant of $5,500 and that her loan account would be reduced accordingly. I reject the first defendant's evidence that he did not agree with the plaintiff that the second defendant would pay the plaintiff $5,500 per month or any amount. Furthermore, I find on the balance of probabilities that monthly financial documents of the second defendant showing transfers of interest to the plaintiff were sent to the first defendant. The first four transfers to the plaintiff involved $5,000 because the plaintiff considered that she could bear the balance of $500. After discussing the matter with Mr Saris the agreed amount of $5,500 was paid between October 2009 and December 2009. 175 In about the middle of 2009 the plaintiff and the first defendant had a discussion about resolving the second defendant's financial problems,. The first defendant said that he was going to go to Sydney to make arrangements for the sale of the King Street apartment and thereby avoid paying commission on the sale of the apartment. He would put funds into the company and that would enable the plaintiff to draw out some funds from the second defendant. The first defendant mentioned an amount of $150,000. Although the first defendant had intended to be in Sydney for a period of only four to six weeks, when in Sydney he decided to stay there longer. 176 In August 2009 there were discussions about the possible sale of the second defendant's jet ski to a Mr Guy Phillips who, as I have previously said, moored his houseboat, Liquid Gold, at the marina. 177 The plaintiff visited the first defendant in Sydney between 26 and 31 August 2009. One topic of discussion between them was the sale of the King Street apartment. The first defendant said that he had not had any buyers put pen to paper and that he was having difficulty with the tenants in his marketing of the property. Another topic of discussion was state of the second defendant's finances. The first defendant said that Mr Saris was not a 'creative' accountant and that they should go and see his accountant, Mr Anson. 178 On 7 September 2009 the plaintiff wrote an email to the first defendant referring to the cash flow difficulties of the second defendant. 179 The plaintiff met with Mr Anson on 16 September 2009 and she explained the difficulties the second defendant was experiencing. She said that the first defendant was in Sydney trying to sell his apartment. 180 In October 2009 the first defendant returned to Adelaide for a period of three to four days. The plaintiff and the first defendant drove to the marina and they discussed the financial position of the second defendant. The plaintiff told the first defendant that she was in dire financial straits because of the money she had advanced to the second defendant. She said they needed to do something urgently otherwise she would lose her Coffin Bay property. Again, the first defendant said that he was trying to sell his King Street apartment but that he had encountered difficulties because the tenants were making it difficult for prospective purchasers to inspect the property. He told the plaintiff that he had a couple of people interested but that they had not made any offer. 181 At this time, the first defendant said that he would personally contribute $10,000 in funds to the business on the fifteenth day of each month for six months to ensure that at least the company's mortgage obligations could be met. He said he would sell the King Street apartment, Flat White and his Porsche to generate funds for the business. He said he would put the proceeds realised from those sales into the business so that the plaintiff could be repaid part of her loan funds so as to equalise the contributions and that he would pay to the second defendant the sum of $8,000 which he claimed was due to him for the sale of a houseboat which had been kept in the marina and sold by a local agent. 182 The first defendant made a payment of $10,000 to the second defendant on 15 November 2009. Thereafter he did not make any further payments. Shortly prior to 17 November 2009 the first defendant came back to Adelaide and visited the marina. On 17 November 2009 he left for a holiday in the United States. Before he left the first defendant gave the plaintiff the name of a person he said would be trying to find a buyer for the King Street apartment in his absence. 183 The first defendant admits that he misled the plaintiff and, by omission, Mr Anson, about the sale of the King Street apartment. In the latter half of 2009 the plaintiff and Mr Anson believed that the first defendant was still trying to sell the apartment so that he could raise funds to put into the second defendant, whereas the true position was that he had signed a contract of sale and purchase on 6 August 2009 and he had settled on the sale on 10 September 2009. In the period from August to November 2009 he made statements to the plaintiff leading her to believe that he was trying to sell the apartment and he did not inform Mr Anson that he had sold the apartment. His explanation for lying to the plaintiff, namely, that he thought she would then prevail on him to put the net proceeds into the second defendant, does not in any way explain or mitigate the misleading nature of his conduct. Clearly, he was prepared to mislead others in order to advance or protect his own interests. For the most part the net proceeds from the sale of the King Street apartment were used by the first defendant to discharge personal liabilities. This conduct reflects poorly on the first defendant. 184 The plaintiff continued to use her personal funds to make payments to creditors of the second defendant. In addition, the wages of Ms Bullock who was performing services for the second defendant were being met by the plaintiff. The plaintiff felt that she had no alternative but to keep the second defendant afloat in the hope that the first defendant could be persuaded to sell the business or to make his contribution. She said and I accept: The further promises he made to me from time to time to sell down assets and pay the proceeds to the company so that I could recover some of my funds played a part in encouraging me to support the company. 185 The second defendant did not make any interest payments to the plaintiff after December 2009 because it could not afford to do so. 186 In February 2010 the plaintiff decided that she could no longer continue to support the company. By reason of the fact that there were a significant number of creditors' accounts to be paid she decided that she had no alternative but to cause the company to cease to trade. Effectively, the company ceased to trade in February 2010. 187 Some of the employees in the plaintiff's clinic did administrative work for the first defendant from time to time and the plaintiff and the first defendant agreed that a charge for those services would be made to the company. From July 2009 the plaintiff was being paid by the second defendant for Ms Jade Bullock's wages, rather than the amounts being accumulated in the plaintiff's account with the second defendant. 188 Under the lease for the marina property the rent payable was due for review in early 2009. During 2009 and the first part of 2010 the landlord of the marina property and the second defendant were engaged in discussions about the review of the rent paid under the lease. It is not necessary for me to go into the details of the reasons the discussions were so prolonged. It is sufficient for me to say that one reason was that the parties were negotiating an amendment to the rent review clause in the lease. The plaintiff's case is that the first defendant frustrated the rent review process and that this was an aspect of the oppressive conduct of the second defendant's affairs. 189 Mr Nicola Minicozzi is a legal practitioner of many years standing. He acted for the second defendant in the rent review process. He was an honest and straightforward witness and I accept his evidence. In any event the plaintiff's case on this issue turns on the inferences which can be drawn from the correspondence. 190 In my earlier decision of Crossman v Taylor (No 2) at [29]-[34] I set out in chronological order details of various events which occurred in relation to the rent review process. The plaintiff does not contend that the first defendant did anything to frustrate the rent review process between April and December 2009. 191 In light of that it is necessary for me to make findings only with respect to events in 2010. On 21 January 2010 the first defendant told Mr Minicozzi that he, Mr Minicozzi, could take instructions with respect to the rent review process solely and directly from the plaintiff and that he would confirm that instruction in writing. He confirmed the instruction in writing on the same day. Thereafter Mr Minicozzi continued to negotiate with the landlord's solicitor including a proposal to amend the rent review clause. On 21 March 2010 the first defendant contacted Mr Minicozzi by email and advised him that he agreed with the proposed variation to the lease and with the appointment of Mr Michael Harrington from McGees as valuer. On 22 March 2010 Mr Minicozzi advised the landlord's solicitors that the proposed Memorandum of Extension of Lease was acceptable to the tenant. On 30 March 2010 the first defendant wrote to Mr Minicozzi and advised him that he did not want to proceed further without further information. This proceeding had been commenced by the plaintiff on 26 March 2010. Mr Minicozzi subsequently received a document entitled 'Memorandum' which had been prepared by the first defendant's solicitors. He provided comments on that document to the plaintiff. 192 It remains for me at this point to address two topics which involve events which occurred over the course of the venture. First, I will address various acts and omissions alleged by the plaintiff to constitute oppressive conduct in the second defendant's affairs. Secondly, I will address the bookkeeping and accounting evidence the plaintiff called to establish the general accuracy of the second defendant's records and the quantum of her claim. 193 With respect to the non-payment of commissions, I have found that it was agreed between the plaintiff and the first defendant that the latter would pay commissions with respect to his houseboats where the booking came through a company channel. I have found the first defendant did not pay commissions on the hiring of his houseboats. I am satisfied from the plaintiff's evidence that some of the bookings for the first defendant's houseboats came through the second defendant's business. I accept her evidence about the booking by Mr and Mrs Cooke and her evidence that on more than one occasion she overheard the first defendant direct inquiries from the second defendant's website to the one or other of the websites for his boats. In addition, the first defendant admitted to the plaintiff that most of the bookings for his houseboats came through the marina business. Furthermore, the first defendant admitted in an email to his finance company dated 9 April 2008 that inquiries and bookings for his houseboats were coming through the second defendant's website. Even though there was an agreement it was very difficult for the plaintiff to force the issue because of the fact that the first defendant did not keep the records in a way which would enable her to do so and because he collected all deposits and hiring fees paid by hirers of his houseboats. 194 As I have said, the plaintiff prepared an estimate of 'lost' commissions. Her estimate of what the second defendant would have received had the first defendant honoured his agreement to pay commissions was $75,000. That figure is based on 90 per cent of the bookings coming through the marina business. 195 With respect to whether the first defendant preferred his houseboats, I am satisfied that the first defendant did prefer his own houseboats. The first defendant admitted to the plaintiff that he did so. Mr Daly said that the first defendant preferred his own boats. I am also satisfied from the plaintiff's evidence that from time to time over the years houseboat owners complained to the plaintiff about the first defendant's practice of preferring his own boats. 196 The first defendant's evidence about this topic was most unsatisfactory. He was cross-examined at length about whether he preferred his own houseboats when arranging bookings of houseboats at the marina. His evidence during his attempt to explain the statement in his affidavit that he preferred his own houseboats 'all else being equal' was marked by evasiveness. His eventual explanation of that statement namely, that he meant that he preferred it if his houseboats were hired is an explanation I simply do not accept. Furthermore, during his cross-examination on whether he preferred his own houseboats the first defendant at one point said that the plaintiff had suggested to him that the second defendant operate only the first defendant's houseboats from the marina. That had not been previously raised by the first defendant. I do not believe that evidence and I think he invented it in order to avoid giving what he considered unfavourable evidence with respect to the topic of whether he preferred his own houseboats. In cross-examination the first defendant said that he did not have an arrangement with the plaintiff under which his houseboats would be prioritised. Counsel for the plaintiff put to the first defendant the following statement which he had made in an affidavit filed earlier in the proceeding: The arrangement with Ms Crossman was always that we would prioritise the booking of my boats. 197 He was asked how he could reconcile these two statements. His explanation that the arrangement was that the first defendant's houseboats would be prioritised but 'in actual fact' that did not happen was most unconvincing. 198 With respect to the allegation that the first defendant failed to pay his accounts to the second defendant in a timely fashion, I am satisfied from the plaintiff's evidence and the records produced that the first defendant is indebted to the second defendant for goods and services provided to him in relation to his houseboats. I am also satisfied that from time to time over the years he has been slow to pay his accounts and has been pressed by the second defendant to do so. 199 With respect to the allegation that the first defendant used the second defendant's funds and property, I am satisfied on the basis of the plaintiff's evidence and the documents that the following transactions took place: 1. On 10 June 2008 the first defendant deposited a sum of $2,000 cash belonging to the second defendant into his personal ANZ credit card account. 2. On 4 July 2008 the first defendant transferred a sum of $10,000 from the second defendant's account to his credit card account without the plaintiff's knowledge. On 9 July 2008 the payment was reversed after the plaintiff had complained to the ANZ Bank. 3. On 5 July 2008 the first defendant deposited a sum of $5,000 cash belonging to the second defendant into his personal ANZ credit card account. 4. From time to time the first defendant kept cash belonging to the second defendant for recycling funds and canoe hire. 200 In addition to these matters it seems that the first defendant has used the second defendant's recorded telephone service and website for his own business purposes. 201 With respect to the allegation that the first defendant has used the second defendant's assets after it stopped trading, I am satisfied that since the marina business ceased operating in February 2010 the first defendant transferred registration of the Mercedes van owned by the second defendant into his own name and that he has continued to operate a marina business from the marina property. The first defendant's explanation for transferring the registration of the Mercedes Benz van from the second defendant's name into his name is difficult to accept. He said that he was concerned that the plaintiff would sell the van at an undervalue and provide the proceeds to the second defendant. Even if true it suggests that his concerns were not the needs of the second defendant. 202 With respect to the allegation that the first defendant sought to obtain exclusive control of the business, I am satisfied that between the period from August 2006 to February 2010 the first defendant took control of the mobile telephone number used in the second defendant's advertising and diverted the landline telephone numbers to the mobile telephone number. In July or early August 2008 the first defendant arranged for all emails sent to the public email address of the business to be directed only to his own personal email account. On 18 February 2010 the first defendant removed certain records of the second defendant from the marina property. 203 With respect to the allegation of underperformance by the first defendant, the acts or omissions identified by the plaintiff were very general in nature. I do not propose to make findings as to these matters as I do not need to do so in view of my conclusions in relation to the oppressive conduct cause of action. 204 I turn now to the bookkeeping and accounting evidence the plaintiff called to establish the general accuracy of the second defendant's records and the quantum of her claim. 205 Ms Sitters is a bookkeeper who conducts her own business under the name 'AdminEzy'. At the time of the relevant events she conducted her business from an office in Strathalbyn in South Australia. She performed bookkeeping services for the second defendant. As I have said, I accept her evidence. 206 Ms Sitters performed bookkeeping services for the second defendant from January 2007. She was engaged by the second defendant at that time and she visited the marina about once a fortnight from January 2007 to June 2008. After about June 2008 she had 'remote access' to the second defendant's computer records and she would only visit the marina occasionally. 207 The second defendant owned a computer and maintained its bookkeeping data by using the MYOB ('Mind Your Own Business') computer software. The computer was kept at the marina until February 2010. After that, it was kept at the plaintiff's clinic. 208 Ms Sitters described the MYOB system and the improvements she introduced to the second defendant's accounting system. It is not necessary for me to set out the details. She said that access to the MYOB data file could only be obtained by entering a password and that the only persons who had password access were herself, Ms Galloway, an administrative staff member of the second defendant, Ms Jade Bullock and a female person called Chelsea. The plaintiff and the first defendant did not have password access and neither ever asked Ms Sitters to provide them with password access. Ms Bullock ceased carrying out services for the second defendant in February 2010. 209 Ms Sitters described how she made regular entries in the general ledger. There is nothing to suggest that her practices were not appropriate. 210 Ms Sitters created the loan accounts for the shareholders, initially describing them as equity accounts, but after seeing a balance sheet prepared by Mr Saris she re-labelled them as loan accounts. Ms Sitters said that until some time in the 2008 financial year the account in the general ledger for shareholders' contributions referred to capital introduced. She made the change from 'Brendan Capital Introduced' to 'Brendan Loan'. She said that 'it was to do with the end of year accounts for 2007 but that wasn't done until 2008, around that time'. She said that was probably done in July 2008 or thereabouts and at the same time as a record was made of the second defendant's liability to the plaintiff in respect of interest. The plaintiff never sent any invoice to the second defendant for the payment of interest by it to her. 211 The balance sheet apparently prepared by Mr Saris shows the contributions in the 2007/2008 financial year under the heading 'Issued Capital' as 'Shareholders Loan A/c' and in the 2008/2009 financial year as 'Current Liabilities'. Ms Sitters thought that she had seen it in July 2008 because that is when she made the changes to her general ledger descriptions and it was the balance sheet which prompted the changes. 212 Ms Sitters described how she would record a transaction where one of the shareholders met an expense of the second defendant. She said that sometimes the first defendant, who from time to time would use his Visa card to make such payments, would be late in providing receipts or would not provide them at all. 213 Ms Sitters recorded appropriately payments by the second defendant to the plaintiff in relation to interest on her line of credit facility and payments by the second defendant to the plaintiff by way of payment of expenses incurred in connection with improvements to the property of the plaintiff's parents. 214 Ms Sitters said that Mr Saris made adjustments to the profit and loss reports produced by Ms Sitters using MYOB, prepared balance sheets, prepared the taxation returns for the business and lodged all quarterly BAS reports. He performed some interest calculations in respect of the plaintiff's line of credit with Bank SA. 215 When Ms Sitters went to the marina between January 2007 and June 2008 the first defendant was almost always there, whereas the plaintiff was rarely present. It seems that the first defendant took limited interest in the day to day financial operations of the marina business. He never raised any concerns with Ms Sitters about the bookkeeping practices of the business. 216 The first defendant and his company (Maritime Ten Pty Ltd) owe money to the second defendant in relation to Flat White and White Water. Ms Sitters said she was not aware of the first defendant ever paying commissions in respect of his houseboats. 217 Ms Cheryl Galloway is an administrative assistant who worked for the plaintiff at her clinic. She commenced working for the plaintiff at her clinic in August 2006 and from that date she carried out work for the second defendant from time to time. As I have said, I accept her evidence. 218 Ms Galloway carried out some bookkeeping functions for the second defendant for a period of one week in January 2007. Prior to February 2010 she also carried out some non-bookkeeping functions for the second defendant such as typing correspondence and filing. 219 From February 2010 Ms Galloway has assisted the plaintiff in handling the second defendant's accounts payable. She received the bills from the plaintiff and entered them in the second defendant's MYOB electronic data file. In addition, she has from time to time attended to the payment of accounts. To the best of her recollection all of the accounts were paid by the plaintiff using her personal funds. On occasions she did the banking for the second defendant. In addition she was involved in the return of bonds and she has typed letters for the second defendant on instructions from the plaintiff. 220 Since 2010 Ms Galloway has produced on a monthly basis a financial position spreadsheet for the second defendant. Those spreadsheets show the current balance of the second defendant's bank account, cheques not yet cashed, anticipated income receipts and accounts payable. An example of such a spreadsheet was tendered in evidence. In the course of her oral evidence, Ms Galloway produced an updated version of the spreadsheet which showed the position at the time she gave evidence. In addition to the updated version, Ms Galloway produced supporting documentation (where it was available) for the various items. 221 Ms Galloway performed two other exercises of an accounting nature. 222 First, she undertook a review of the plaintiff's loan account from 1 July 2009 to the date she gave evidence. She identified and produced the documentation which she could locate which supported the entries in the general ledger. 223 Secondly, in relation to a subject in the plaintiff's loan account, being 'Items Purchased' she searched for and located the documents she could which supported the entries. With respect to some items she could not find any supporting documentation. She also located the documents identifying expenditure on capital items and by reference to the invoices identified what the items related to. She was involved in the exercise which resulted in the production of exhibit P7, that is, by reference to the invoices and accounts, the identification in exhibit P7 of capital expenditure relating to the house and the business and, as to the latter, the expenditure which related to the office, the shed, the external part of the marina and plant and equipment. 224 Mr Hugh McPharlin is a chartered accountant. He was well-qualified to express opinions on the matters he addressed and I accept his evidence. At the request of the plaintiff he prepared a report dealing with various accounting questions and that report was tendered in evidence. In view of the issues in this case it is not necessary for me to discuss his opinions on all of the questions he was asked to address. 225 There are two particular topics dealt with by Mr McPharlin in his evidence which are important. 226 First, Mr McPharlin described the accounting software programme used by the second defendant (MYOB). He explained the extent to which he was able to verify the entries in the second defendant's accounting records which are relevant in terms of the issues in this case. He acknowledged that he had not carried out an audit or a review in accordance with Australian Accounting Standards. He acknowledged that some of his 'corroborative evidence' in Appendix 10 to his report was not an original document and in some cases was simply another document from the same record-keeping system. These limitations on Mr McPharlin's examination of the second defendant's records are clear. Nevertheless, the exercise he carried out provides support from the conclusion that the second defendant's accounting records are generally accurate. 227 Secondly, Mr McPharlin performed a calculation which related to the amount owed to the plaintiff by the second defendant as shown in the latter's records. He deducted the interest charged as recorded in the second defendant's account and then did his own calculation of interest by reference to interest rates charged by Bank SA from time to time on the line of credit facility. The Bank compounded interest monthly. Mr McPharlin performed his calculations on that basis. 228 The bookkeeping and accounting evidence called by the plaintiff establishes that the records kept by the second defendant were and are, generally speaking, accurate. I think that the plaintiff has established the quantum of her claim and I accept Mr McPharlin's calculation of interest. 229 I accept that the items the plaintiff claims were transferred to the second defendant by her were transferred with the first defendant's agreement. The first defendant denied that he agreed to any of the plaintiff's property being transferred to the second defendant. However, his explanation of why, in those circumstances, he had executed the Rural Sales Agency Agreement with Toop and Toop which shows the items as part of the property of the second defendant was evasive and unconvincing. The first defendant admitted that the items were kept on the marina site and some use, albeit limited, made of them by the second defendant. 230 The bookkeeping and accounting evidence called by the plaintiff also establishes that the second defendant has by way of assets the marina business which is the subject of a contract of sale and purchase, debtors, a land tax refund and a small amount in an ANZ trading account. Some of the accounts for debtors are quite old and they include amounts owing by the first defendant. There is reason to doubt the extent to which outstanding accounts will be recovered. In terms of liabilities there is a debt to the ANZ Bank which almost equals the purchase price of the marina business under the contract of sale and purchase. There are outstanding creditors other than the plaintiff and first defendant. Leaving the plaintiff and first defendant aside, the second defendant has an excess of liabilities over assets of $46,002.38. If the plaintiff and first defendant are accorded equal status with other creditors then on the best view of the second defendant's financial position the plaintiff might receive a very small dividend. However, I think that having regard to the age of the debtors' accounts and the possibility of fees and other expenses, there is no realistic prospect of the plaintiff recovering her loan and interest from the second defendant and I so find.

C. The Fair Trading Act Cause of Action 231 Section 56(1) of the Fair Trading Act 1987 (SA) provides that a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. Section 56(2) provides that none of succeeding provisions in Part 10 Division 2 limits by implication the generality of s 56(1). 232 Section 54(1) provides that, for the purposes of Part 10 (which includes s 56), a representation as to a future matter will be taken to be misleading where the person making the representation did not have reasonable grounds for making it. Section 54(2) provides that a person will be taken not to have had reasonable grounds for making the representation unless he or she adduces evidence to the contrary, and s 54(3) provides that subsection (1) does not limit by implication the meaning of a reference in Part 10, inter alia, to conduct that is misleading or is likely or liable to mislead. 233 Part 11 Division 3 of the Act contains the remedies for, inter alia, misleading or deceptive conduct. Section 84 provides as follows: 84 - Action for damages (1) A person who suffers loss or damage by conduct of another in contravention of a provision of Part 10 (other than section 57) may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention. (2) An action under subsection (1) may be commenced at any time within three years after the date on which the cause of action accrued. 234 Section 85 relevantly provides as follows: 85 - Orders for compensation (1) If in proceedings under this Act the Supreme Court or the District Court is satisfied that a person has suffered, or is likely to suffer, loss or damage by reason of a contravention of this Act, then whether or not any other order is made or relief granted in those proceedings, the Court may, for the purpose of compensating that person or preventing or reducing the extent of the loss or damage, make orders under this section against the person who committed the contravention or a person involved in the contravention. (2) Whether or not other proceedings have been instituted under this Act in relation to a contravention of this Act, the Supreme Court may - (a) on the application of a person who has suffered, or is likely to suffer, loss or damage by reason of the contravention; or (b) on the application of the Commissioner on behalf of one or more such persons made with the written consent of each such person, make orders under this section, for the purpose of compensating such a person or preventing or reducing the extent of the loss or damage, against the person who committed the contravention or a person involved in the contravention. 235 At the relevant time, that is, 2006, these provisions largely mirrored provisions in the Trade Practices Act 1974 (Cth) ('Trade Practices Act') (now the Competition and Consumer Act 2010 (Cth)). Although there were some differences between the terms of the sections in the two Acts they are not material differences for the purposes of the issues in this case. Both parties argued the case on the basis that the cases dealing with the equivalent sections in the Trade Practices Act were relevant to the sections of the Fair Trading Act which are in issue in this case. 236 In circumstances where I have reached the conclusion that an award of damages in the plaintiff's favour should be made under s 84 of the Fair Trading Act, it is not necessary for me to consider whether this Court, as distinct from the Supreme Court (or District Court), can award relief under s 85 of the Fair Trading Act. In my opinion, the ancillary order which the plaintiff submits follows from the primary order, that is, that in specified circumstances the first defendant be subrogated to the plaintiff's rights against the second defendant, can be made under s 22 or s 23 of the Federal Court of Australia Act 1976 (Cth). 237 In this case the misleading or deceptive conduct is said to consist of statements made by the first defendant to the plaintiff before the plaintiff entered into the venture and they are said to be representations. Paragraph 8 of the Statement of Claim is in the following terms: 8. Prior to the acquisition of the shares of the second defendant and the Business, the first defendant also represented to the plaintiff: 8.1 the plaintiff and the first defendant would contribute equally to the funding of the Business in the form of loans to the second defendant; 8.2 the first defendant was willing and able to provide his 50% share of the funding contributions required from time to time to operate and develop the Business out of his own resources; 8.3 the plaintiff and the first defendant would be entitled to play an equal part in the management and conduct of the Business and the affairs of the second defendant. 238 In his Amended Defence the first defendant denies making the representations alleged in paragraphs 8.1 and 8.2. He pleads, relevantly, that he said to the plaintiff that he would be able to make a contribution of funds of up to $200,000 and that the plaintiff said that she should be able to make a contribution of funds. He denies the representation in paragraph 8.3 although he pleads that he and the plaintiff 'discussed and agreed that they would play an equal part in the management of White Marina'. 239 The plaintiff pleads other representations in her Statement of Claim. These are representations made by the first defendant in October 2009 concerning the payment by the first defendant to the second defendant of a sum of $10,000 per month and the sale of assets by the first defendant and contribution of the proceeds of sale to the second defendant. These representations were referred to in the Statement of Claim as the 'Further Representations'. They are part of the history and, potentially at least, of the oppressive conduct cause of action. However, they do not form part of the plaintiff's Fair Trading Act cause of action. The plaintiff relies solely on the representations allegedly made to her by the first defendant before she entered into the venture. 240 The plaintiff's misleading or deceptive conduct case may be narrowed even further. It is not said by the plaintiff that the loss or damage she claims under the Fair Trading Act was caused by the representation pleaded in paragraph 8.3 of the Statement of Claim. Therefore the plaintiff's Fair Trading Act cause of action comes down to the two representations pleaded in paragraphs 8.1 and 8.2. 241 The issues in relation to that case are as follows. The first issue is whether the representations pleaded by the plaintiff were made to her by the first defendant. In other words, did the statements which I have found were made by the first defendant to the plaintiff constitute representations about the matters pleaded in paragraphs 8.1 and 8.2? The second issue is whether the representations, which it is not suggested were not conduct, were made 'in trade or commerce'. The third issue is whether section 54 (representations with respect to future matters) has any relevance to the issues in the case. The plaintiff pleads that to the extent that the representations or any of them constituted representations as to any future matter, the first defendant did not have reasonable grounds for making such representations within s 54 of the Fair Trading Act. The fourth issue is whether the representations constituted misleading or deceptive conduct within s 56 of the Fair Trading Act. The fifth issue is whether the plaintiff was induced to act in some way by misleading or deceptive conduct. The sixth and final issue is whether the plaintiff's act or acts involved or resulted in loss or damage and, if so, the amount of that loss or damage.

The nature of the representations made by the first defendant 242 A representation may form the basis of misleading or deceptive conduct and the representation may be express or it may be implied or it may be a combination of both. In determining what if any representation was conveyed by a statement it is necessary for the Court to consider not only the words used but also the surrounding circumstances. The question is an objective one which the Court itself must determine. This is the test for determining whether conduct is misleading or deceptive (Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 ('Butcher') at 625 [109] per McHugh J; Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 at 341-342 [102] per Gummow, Hayne, Heydon and Kiefel JJ) and it seems to me that the same applies to the question of the representations (if any) conveyed by statements made by a defendant. As the test is an objective one neither the understanding of the representee or the intention of the representor is decisive (North East Equity Pty Ltd v Proud Nominees Pty Ltd [2010] FCAFC 60 at [46]-[49]). 243 The statements made by the first defendant are set out in [42] and [47] above. They must be considered together and with the other statements made by the first defendant and having regard to the context in which the statements were made. That context included the fact that the parties contemplated substantial improvements to the property, joint ownership and management of the second defendant and control of the White Marina Trust and the possibility of a capital gain or added value to the marina property. 244 The first defendant submitted that even if I was against him in terms of the statements he made to the plaintiff concerning contributions, nevertheless any representations should be limited to the acquisition of the marina business or, in the alternative, to contributions required for the marina business. 245 In the factual context in which the representations were made the first submission cannot possibly be correct. Even on the first defendant's own case as to the statements he made extended beyond the mere acquisition of the marina business. 246 In support of his alternative submission the first defendant said that the representations would not include contributions used for the installation of kitchen bench tops, alterations to the bathroom or the provision of an organic garden. I reject the submission. In the factual context in which the representations were made there is no reason to distinguish between the business on the one hand and the house and garden on the other. The parties were not buying a house which happened to have a marina. They were buying a marina business which included a lease over land which had a house on it. They had in mind considerable improvements and the possibility of a capital gain when they sold the business. There is nothing in the factual context to suggest that the parties distinguished between the marina business and the house. 247 I have said earlier in these reasons that the contributions were loans. I would add that even if I am wrong I do not think the issue of whether the contributions were loans or contributions to the trust property is decisive. The plaintiff pleads that the representations related to loans to the second defendant but having regard to the way in which the case was conducted I do not think that the first defendant would have conducted his case any differently if the pleaded representations were simply that contributions were made to the second defendant. Nor would it have made any difference to the result. The position might have been otherwise if the critical question was whether the plaintiff expected to get her money back. However, that is not the case and the plaintiff's evidence is that she would not have entered into the venture and made the contributions but for the statement that the parties would contribute 50/50 to the funding of the business and that the first defendant was in a position to make such contributions. 248 Although the statements can be analysed in terms of the two representations pleaded in paragraphs 8.1 and 8.2 I think that in essence there was one representation and it was to the effect that the first defendant intended to and was financially able to contribute to the funding of the business in the same amount as the plaintiff contributed to the funding of the business in the form of loans to the second defendant.

Whether the representations were made in trade or commerce 249 The facts which are relevant to a consideration of whether the representations were made 'in trade or commerce' within s 56 of the Fair Trading Act are as follows. The representations were made by one of two parties proposing to enter a business venture together to the other party and they concerned the establishment and operation of the venture. The business was established and for a number of years it operated through a company and a trust. The company plainly conducted a commercial enterprise providing goods and services to third parties (that is, houseboat owners and hirers) and to the first defendant in relation to his houseboats. At the time the statements were made the representor was operating a business (that is, the hiring of Flat White) which he was proposing to conduct in connection with the business of the proposed venture. The representations were about investment in the business venture and were part of other statements and discussions of a commercial character, for example, the payment of interest on loans, joint management and the payment of commissions on the hiring of the first defendant's houseboats. 250 At the time the statements were made (that is, February 2006 or thereafter) the second defendant and the White Marina Trust had not been established. The plaintiff and the first defendant were in a personal relationship at that time and they were living together at the plaintiff's rented house at Hyde Park. The relationship must have been quite a strong one when the statements were made. The first defendant had returned from Sydney and a few months later in May 2006 the parties were engaged to be married. There was a good deal of argument about whether the plaintiff wanted to live by the river and indeed wanted to retire to the house on the marina property. My findings in relation to this topic are set out above (at [56]). 251 The starting point in considering whether the representations were made in trade or commerce is the decision of the High Court in Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594. The plurality (Mason CJ, Deane, Dawson and Gaudron JJ) noted that the word in s 52 of the Trade Practices Act 1974 was 'in' trade or commerce not the words 'with respect to' trade or commerce. Their Honours referred to two possible constructions of the phrase, being a broad construction of conduct undertaken in the course of, or as incidental to, the carrying on of an overall trading or commercial business but not of its nature of a trading or commercial character and a narrower construction of conduct 'which is itself an aspect or element of activities or transactions which, of their nature, bear a trading or commercial character' (at 602-603). The plurality said that the narrower construction was the proper construction. Their Honours said (at 604): What the section is concerned with is the conduct of a corporation towards persons, be they consumers or not, with whom it (or those whose interests it represents or is seeking to promote) has or may have dealings in the course of those activities or transactions which, of their nature, bear a trading or commercial character. 252 The meaning of the phrase 'in trade or commerce' in the context of the Fair Trading Act 1999 (Vic) s 9(1), was considered by the High Court in Houghton v Arms (2006) 225 CLR 553. The question in that case was whether representations by employees of a corporation acting in trade or commerce were personally liable under the Fair Trading Act even though the employees were not engaged in trade or commerce themselves. The High Court held that they were, saying at 565 [33] and [34]: In Concrete Constructions, Mason CJ, Deane, Dawson and Gaudron JJ construed the expression "in trade or commerce" as referring only to conduct with the character of an aspect or element of trading or commercial activities or transactions. The representations to the effect that in order for Mr Arms effectively to operate the auscellardoor web site, he would not be required to obtain from the wineries any documentation other than a form with provision for banking details, undoubtedly were of this nature. Moreover, in his judgment in Concrete Constructions, Toohey J emphasised that, while in most cases, the focus would be on the nature of the business of the party making the representation, s 52 was not so limited; in particular, the section did not, in terms, refer to the trade or commerce of any particular corporation. Accordingly, statements made by a person not himself or herself engaged in trade or commerce may answer the statutory expression if, for example, they are designed to encourage others to invest, or to continue investments, in a particular trading entity. 253 The High Court referred with approval to a passage in the reasons for judgment of Sackville J in Fasold v Roberts (1997) 70 FCR 489 at 531. That passage is as follows: These cases support a number of propositions which shed light on the test formulated by the High Court in Concrete Constructions: (i) A person undertaking public presentations, such as exhibiting films or publishing advertisements, engages in conduct in trade or commerce if the presentations are designed to advance or protect the commercial interests of the exhibitor or the publisher, or of trading entities represented by the exhibitor or publisher: Glorie; Tobacco Institute v AFCO. (ii) Altruistic motives will not necessarily prevent the public presentation being in trade or commerce, depending on the other circumstances of the case: Glorie. (iii) A person may make public statements designed to influence trading patterns, yet not make those statements in trade or commerce. Even statements designed to persuade people to buy a particular commodity, if made by a Government representative, are not necessarily made in trade or commerce: Kerin. (iv) Public statements by a person not engaged in trade or commerce himself or herself, may be made in trade or commerce if designed to encourage others to invest, or continue investments, in a particular trading corporation: Meadow Gem. (Citations omitted.) 254 On the face of it, the first defendant's representations were designed to encourage the plaintiff to make investments or contributions to a proposed business and although not public statements, they would seem to be in trade or commerce having regard to their nature and the matters to which they related. What arguments might be put against this conclusion? 255 First, the point might be made the first defendant's representations were made before the second defendant and the White Marina Trust were established. However, that does not seem to me to be a valid point of distinction. In any event, the contributions were made to the second defendant when it was established and operating and when the representations were still acting as inducements to the plaintiff. Furthermore, there was an existing business at the time the representations were made, namely, the first defendant's houseboat business which was going to be operated in conjunction with the proposed business. 256 Secondly, the point might be made that the representations were made in a context where the representor and the representee were in a personal relationship. I think the plaintiff is correct in her submission that just as it cannot be said that the existence of familial relations between parties to an agreement means that there cannot be an intention to create legal relations (see, for example, Roufous v Brewster (1971) 2 SASR 218) or that a person engaged in a spiritual calling does not intend to enter legal relations with the relevant religious body (Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95 at 110 [38] per Gaudron, McHugh, Hayne and Callinan JJ; at 121 [74] per Kirby J), the fact that there is a personal relationship between the parties does not mean of itself that the representations of one of the parties to the other were not made in trade or commerce. 257 Thirdly, the point might be made that the second defendant's business was operating a marina and all that that entailed and it was not in the business of receiving investments. I do not think that this is a valid point of distinction because I think the raising of finance by the second defendant bears a direct relationship with its trading and commercial activities such that statements in the course of such activity or in preparation for such activity are in trade or commerce. The approach of the majority in Hearn v O'Rourke [2003] FCAFC 78 ('Hearn v O'Rourke') supports such an approach. 258 In Hearn v O'Rourke the Full Court of this Court considered the meaning of the phrase 'in trade or commerce' in s 52 of the Trade Practices Act 1974 (Cth). The first respondent was a film director and the second respondent was a company of which the first respondent was a director. The company produced films and documentaries for profit. The second respondent made a film in which the applicants took part and in which they were interviewed. The conduct complained of consisted of representations by the first respondent about the subject of the film and the matters about which he wished to interview them. On an application to strike out the applicants' claim the trial judge upheld the respondents' contention that the relevant conduct was not 'in trade or commerce'. Finn and Jacobson JJ (Dowsett J dissenting) held that the trial judge had misapplied the observations of the majority in Concrete Constructions. 259 The majority said that the representations were not to be characterised as having been made in trade or commerce simply because they were made in the course of the respondents making a documentary film. They must have been made in dealings with the applicants and their respective parents 'in the course of an activity which, of its nature, bears a trading or commercial character' (at [8]). The majority held that the trial judge had erred in concluding on a strike out application that the relevant conduct was not 'in trade or commerce'. They noted that the first respondent's conduct occurred in the course of the second respondent's production of a film for profit and that it was aimed at securing the applicants' participation in interviews which would provide primary material for the proposed documentary. The majority said that the second respondent was engaged in producing a film for profit. Without the appropriate interviews there could be no film. Therefore, securing such interviews was central to the activity of producing a film for profit. 260 The majority did not suggest that the relationship between the applicants and the second respondent was a commercial one (at [11]): Nonetheless we are satisfied that the conduct impugned could possibly be found to have occurred in a dealing with the applicants which was integral to an activity of the second respondent which was itself of a commercial character. A little later the majority said (at [13]): The activity in question may be able to be characterised as bearing a trading or commercial character although the particular dealing which carries the activity into effect and in which the impugned conduct occurs does not of itself give rise to a commercial relationship. 261 I think that in a similar way it can be said in this case that without finance the second defendant could not engage in its trading or commercial activities. 262 I find that the first defendant made the representations in trade or commerce within s 56(1) of the Fair Trading Act.

Whether there were representations with respect to future matters within s 54 of the Fair Trading Act 263 As I have said, under s 54(1) where a representation is one with respect to a future matter it is deemed to be misleading unless the representor had reasonable grounds for making the representations. By reason of subsection (2) a representor is deemed not to have reasonable grounds 'unless the [representor] adduces evidence to the contrary'. The plaintiff pleaded s 54 of the Fair Trading Act but in a conditional way, that is, to the extent the representations were with respect to future matters. 264 This Court has grappled with the question of what constitutes a representation with respect to a future matter on a number of occasions: Ting v Blanche (1993) 118 ALR 543; Miba Pty Ltd v Nescor Industries Group Pty Ltd (1996) 141 ALR 525; Sykes v Reserve Bank of Australia (1998) 88 FCR 511 ('Sykes'). It seems to me that the effect of Sykes is that a representation is not precluded from being characterised as a representation with respect to a future matter by reason of the fact that impliedly it is also a representation as to the existing state of mind of the representor. At the same time a representation which, viewed in context and having regard to the words used, relates to a representor's state of mind or belief is not necessarily a representation with respect to a future matter simply because the representor's state of mind is as to a future matter (Sykes: Heerey J at 514-516; Sundberg J at 519-521). I do not think the third member of the Court, Emmett J, said anything inconsistent with those propositions (see 534-536). 265 In this case the representations are properly characterised as a representation as to the representor's intention (that is, to make contributions) and a representation as to the representor's financial capacity to contribute. The representation as to intention appears to be a representation as to the first defendant's present intention and there does not appear to me to be any question of a representation with respect to a future matter. The representation as to financial capacity may involve not only a statement about present capacity but also a statement with respect to a future matter namely, financial capacity to make a contribution when required. 266 In the latter event, the first defendant will be taken not to have reasonable grounds and the representation will be taken to be misleading unless the first defendant adduces evidence that he has reasonable grounds for making the representation. This Court has also grappled with the effect of the deeming provision in the Trade Practices Act equivalent of s 54(2): McGrath v Australian Naturalcare Products Pty Ltd (2008) 165 FCR 230. It is clear enough that where the representor adduces no evidence to support a defence of reasonable grounds then he or she is taken to have made a misleading representation. That proposition is sufficient to dispose of the issues in this case and for reasons which will become clear it is not necessary to address the other difficult questions identified by Stone J (at 247 [73]) and discussed by Allsop J (at 274-284 [162]-]197]).

Whether the representations were misleading or deceptive 267 The first defendant gave evidence under cross-examination that he had no intention of making contributions beyond his contribution of $250,000. His representation that he did intend to match the plaintiff's contributions was false and, I hold, misleading or deceptive. 268 The first defendant gave evidence under cross-examination that he did not have the financial capacity to make contributions beyond his contribution of $250,000. He did not adduce any evidence that he had grounds to think that he might be able to do so at some point in the future. In fact such evidence as there is, is quite clearly to the contrary. If the representation as to financial capacity was as to a present matter it was false and I hold misleading or deceptive, and if as to a future matter then it was misleading by reason of s 54(1) of the Fair Trading Act.

Whether the plaintiff relied on the representations 269 It is well-established that the misleading or deceptive conduct of a respondent need not be the sole cause of the innocent party's conduct which gives rise to that party's loss or damage and that it is sufficient if it is a cause of the innocent party's conduct: I & L Securities Pty Limited v HTW Valuers (Brisbane) Pty Limited (2002) 210 CLR 109 ('I & L Securities'). As I have said I accept the plaintiff's evidence that the representations made by the first defendant about his willingness and capacity to make contributions influenced her decision to take an interest in the venture. They also influenced her decision to make the contributions she subsequently made to the second defendant. I did not understand the first defendant to submit that at a particular point in time the plaintiff must have known that he was not going to contribute and thereafter such contributions as she made were made voluntarily and at her own risk. Such a submission would in any event fail. It seems that until quite late in the course of events the plaintiff was still looking to the first defendant to sell his King Street apartment. Furthermore, she considered, in my view quite reasonably, that to have any chance of recovering her contributions the second defendant had to be maintained pending the sale of the business. With that in mind she assisted the second defendant in the payment of its creditors. 270 Simply to contend as the first defendant did that the contributions were voluntary is not to the point. It is true that they were not made under a contractual or other legal obligation. However, the important point is that they were made in reliance on the representations made by the first defendant as to his willingness and ability to make contributions. 271 I find that the plaintiff has established a sufficient causal link between the representations and her contributions to the second defendant.

Whether there was loss or damage within s 84 and, if so, the amount of loss or damage 272 The plaintiff claims that at the date of trial her contributions to the second defendant stood at a net figure of $661,444.23 and her entitlement to interest, as calculated by Mr McPharlin, stood at $216,168.74. Her claim against the first defendant is for the sum of $877,612.97. She claims that she has no reasonable prospect of recovering that amount from the second defendant. She has established that fact on the balance of probabilities (see [230] above). 273 The plaintiff's submission is that causation is straightforward and that it is appropriate to describe this case as a no-transaction case. In other words, the plaintiff's case is that she would not have entered into the venture or made the contributions but for the first defendant's representations. Had she not acted in this way she would have kept her money and not incurred the liability for interest on her line of credit facility. 274 The first defendant's submission is that the plaintiff's loss or damage is the fact that she cannot recover her loan and interest thereon from the second defendant. That has come about, so the first defendant submitted, because the company is unable to meet its liabilities, not because of any contravening conduct by the first defendant. The first defendant submitted that the Court is unable on the evidence to determine the reasons for the company's failure. Put another way, the first defendant's submission is that the plaintiff received what she bargained for or expected to receive when she acted on the contravening conduct. She received her share in the second defendant and her position under the trust and later, when she made the contributions, she received an asset, namely, the company's debt to her. 275 There are a number of well-established propositions about the operation of s 82 of the Trade Practices Act. First, the common law test of causation, if not the test of causation under s 82, is certainly of assistance when applying the section: Wardley Australia Ltd v The State of Western Australia (1992) 175 CLR 514 at 525 per Mason CJ; Henville v Walker (2001) 206 CLR 459 at 470 [18], 474-475 [35]-[36] per Gleeson CJ; 481-483 [65]-[72] per Gaudron J; 489-490 [96], 493 [106], 501-502 [103], 505 [140] per McHugh J, 507 [153] per Gummow J; 509-510 [165]-[166] per Hayne J; I & L Securities at 117-119 [19]-[25] per Gleeson CJ, 127-130 [52]-[61] per Gaudron, Gummow and Hayne JJ. 276 The common law test of causation requires the Court to take a practical and common sense approach to the issue: March v Stramare (E. & M. H.) Pty Ltd (1991) 171 CLR 506. In I & L Securities the plurality spoke of a cause in terms of a matter which materially contributed to the loss or damage (at 130 [62]). 277 Secondly, the contravening conduct need only be a cause of the loss and damage claimed: I & L Securities at 119 [25] per Gleeson CJ; at 128 [57], 130 [62] per Gaudron, Gummow and Hayne JJ. 278 Thirdly, s 82 does not import the common law tortious or contractual notions of remoteness and foreseeability, although they may be of assistance in particular cases: Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494 ('Marks') at 510 [38] per McHugh, Hayne and Callinan JJ; Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413 at 428 [30] per Gaudron J. 279 Fourthly, and this is perhaps no more than an aspect of the third proposition, the Court should not limit the scope of s 82 by analogy with common law or equitable doctrines. McHugh, Hayne and Callinan JJ made the point in Marks when they said (at 510 [38]): It can be seen, therefore, that both ss 82 and 87 require examination of whether a person has suffered (or, in the case of s 87, is likely to suffer) loss or damage 'by conduct of another person' that was engaged in the contravention of one of the identified provisions of the Act. That inquiry is one that seeks to identify a causal connection between the loss or damage that it is alleged has been or is likely to be suffered and the contravening conduct. But once that causal connection is established, there is nothing in s 82 or s 87 (or elsewhere in the Act) which suggests either that the amount that may be recovered under s 82(1), or that the orders that may be made under s 87, should be limited by drawing some analogy with the law of contract, tort or equitable remedies. Indeed, the very fact that ss 82 and 87 may be applied to widely differing contraventions of the Act, some of which can be seen as inviting analogies with torts such as deceit (eg, s 52) or with equity (eg, s 51AA) but others of which find no ready analogies in the common law or equity, shows that it is wrong to limit the apparently clear words of the Act by reference to one or other of these analogies. 280 More recently the High Court made the same point in Murphy v Overton Investments Pty Ltd (2004) 216 CLR 388 ('Overton Investments') at 407 [44]-[45]: This Court has now said more than once (64) that it is wrong to approach the operation of those provisions of Pt VI of the Act which deal with remedies for contravention of the Act by beginning the inquiry with an attempt to draw some analogy with any particular form of claim under the general law. No doubt analogies may be helpful, but it would be wrong to argue from the content of the general law that has developed in connection, for example, with the tort of deceit, to a conclusion about the construction or application of provisions of Pt VI of the Act. To do so distracts attention from the primary task of construing the relevant provisions of the Act. In the present case, analogies with the tort of deceit appear to have led to an assumption, at least at trial, that a person can suffer only one form of loss or damage as a result of a contravention of Pt V of the Act. … What kinds of detriment constitute loss or damage, when a detriment is to be identified as occurring or likely to occur, and what remedies are to be awarded, may all raise further difficult questions. 281 As Overton Investments illustrates, the Court is not bound to adopt the approach of requiring a plaintiff to identify a capital loss along the lines discussed in cases like Potts v Miller (1940) 64 CLR 282 or consequential loss as that term is understood at common law. The key question is whether the plaintiff has suffered loss or damage by the contravening conduct. 282 In this case I think that once it is accepted that the plaintiff would not have entered into the venture or made the contributions but for the first defendant's representations about his willingness and ability to make contributions then those representations are a cause of the plaintiff's loss or damage. Allowing for an event which breaks the chain of causation does not assist the first defendant because no such event has been identified by the first defendant or raised on the evidence. Furthermore, even if one imported into s 84 a notion of reasonable foreseeability that does not assist the first defendant because it was reasonably foreseeable that if he did not match the plaintiff's contributions there was a risk the plaintiff would not be able to recover her contributions.

Conclusion 283 In my opinion, the plaintiff is entitled to succeed on the Fair Trading Act cause of action. She is entitled to recover from the first defendant the sum of $661,444.23 and compound interest calculated to 30 June 2010 of $216,168.76.

D. Oppressive Conduct Cause of Action 284 In view of my conclusions in relation to the Fair Trading Act cause of action it is not strictly necessary for me to consider the oppressive conduct cause of action. However, it was argued in detail and it is appropriate that I express my conclusions with respect to it. In my opinion, the relief sought by the plaintiff is not relief that can or should be granted in relation to the conduct of which the plaintiff complains. 285 With respect to the oppressive conduct cause of action, the plaintiff seeks an order that the first defendant pay her the sum of $341,297.42 taking into account an entitlement to interest or the sum of $233,213.04 excluding an entitlement to interest. That, it is said, will equalise the contributions made to the second defendant by the parties. 286 The relevant provisions of s 232 and s 233 of the Corporations Act 2001 (Cth) are as follows: 232 Grounds for Court order The Court may make an order under section 233 if: (a) the conduct of a company's affairs; or (b) an actual or proposed act or omission by or on behalf of a company; or (c) a resolution, or a proposed resolution, of members or a class of members of a company; is either: (d) contrary to the interests of the members as a whole; or (e) oppressive to, unfairly prejudicial to, or unfairly discriminatory against, a member or members whether in that capacity or in any other capacity. For the purposes of this Part, a person to whom a share in the company has been transmitted by will or by operation of law is taken to be a member of the company. Note: For affairs, see section 53. 233 Orders the Court can make (1) The Court can make any order under this section that it considers appropriate in relation to the company, including an order: (a) that the company be wound up; (b) that the company's existing constitution be modified or repealed; (c) regulating the conduct of the company's affairs in the future; (d) for the purchase of any shares by any member or person to whom a share in the company has been transmitted by will or by operation of law; (e) for the purchase of shares with an appropriate reduction of the company's share capital; (f) for the company to institute, prosecute, defend or discontinue specified proceedings; (g) authorising a member, or a person to whom a share in the company has been transmitted by will or by operation of law, to institute, prosecute, defend or discontinue specified proceedings in the name and on behalf of the company; (h) appointing a receiver or a receiver and manager of any or all of the company's property; (i) restraining a person from engaging in specified conduct or from doing a specified act; (j) requiring a person to do a specified act. 287 The conduct which the plaintiff relies upon for the purposes of her oppressive conduct cause of action is said by her to fall within s 232(d) and (e). For convenience I will refer to the conduct simply as oppressive conduct. The order for payment of moneys is said by the plaintiff to be an order that is appropriate in relation to the second defendant within the terms of s 233(1). In the alternative, it is an order within the terms of s 233(1)(j). 288 The conduct alleged by the plaintiff to be oppressive conduct can be put into various categories as follows: 1. The failure by the first defendant to make equal contributions to the second defendant in accordance with his pre-venture statements; 2. The failure by the first defendant to pay commissions to the second defendant with respect to the hiring of his houseboats; 3. The first defendant's conduct in preferring his own houseboats when arranging or taking bookings; 4. The first defendant's conduct in seeking to obtain exclusive control of the business; 5. The first defendant's conduct in obstructing the sale of the business; 6. The first defendant's conduct in obstructing the rent review process; 7. The first defendant's failure to pay his accounts in a timely fashion; 8. The first defendant's improper use of the second defendant's funds and property; 9. The first defendant's conduct in making improper use of the second defendant's assets after it had ceased trading; 10. Underperformance by the first defendant. 289 The principal matter upon which the plaintiff relies for the relief she seeks is the first defendant's failure to make equal contributions to the second defendant in accordance with his pre-venture statements. The other matters are said by the plaintiff to 'go to prove or to reinforce the oppressive nature of the primary conduct, although the plaintiff does not specifically seek any separate or [sic] compensation in relation to that conduct'. It is said that the further elements of oppression have the consequence that 'the relief sought by the plaintiff (an effective equalisation of their contributions) is conservative'. 290 I start with the pre-venture statements about contributions. An understanding between parties prior to the incorporation of a company may be relevant to an aspect of the conduct of a company's affairs after incorporation. For example, an understanding that the parties will jointly manage a company's affairs may be relevant to an oppressive conduct claim where one of the parties is excluded from management. A statement about contributions the parties will make to the company may give rise to a pre-incorporation understanding between the incorporators of the company. However, I do not think that of itself a subsequent failure to meet an understanding about contributions is part of the conduct of a company's affairs within s 232 as distinct from conduct by one incorporator towards another. I acknowledge that there is a wide inclusive definition of a company's affairs in s 53 of the Corporations Act but I do not think that overcomes the difficulty. The understanding might be a matter relevant to the context of an oppressive conduct cause of action as indeed it was in my earlier decision in this proceeding; however, I do not think that of itself a failure to meet an understanding about contributions is oppressive conduct in the conduct of a company's affairs. 291 There are two authorities which support this view. 292 In Weatherall v Satellite Receiving Systems (Australia) Pty Ltd [1999] FCA 218 Whitlam J considered an application to dismiss a proceeding brought by the applicant, a member of a company, against the company and other respondents. The applicant alleged the existence of a memorandum of understanding between himself and two individual respondents, and that those respondents had failed to fulfil their obligations according to the understanding. He sought relief under, inter alia, s 246AA of the Corporations Law. In the course of his reasons Whitlam J said (at [13]): The authorities establish that conduct inconsistent with arrangements and understandings between shareholders may be so unfair that it amounts to oppression: Raymond v Cook (1998) 29 ACSR 252 and Fexuto v Bosnjak Holdings Pty Ltd (1998) 28 ACSR 688, 29 ACSR 290, and 30 ACSR 20. However, s 246AA is concerned with the manner in which 'affairs' of a company are being conducted and, whilst s 53 of the Law gives an extended definition of 'affairs' for the purposes of s 246AA, it cannot be said that Mr Wang's failure to pay UST has anything to do with his position as a director or member of the Company so as to constitute conduct in its 'affairs'. In my view, such a failure is not 'corporation-related'. 293 Whitlam J dismissed the proceeding with costs. 294 In Re Leeds United Holdings Plc [1997] BCC 131, Rattee J considered an application to strike out proceedings under s 459 of the Companies Act 1985. Three parties had been directors of a football club for some years, and had decided to restructure it. They proposed that the shareholders' agreement should include pre-emption rights, but this was never finalised. They incorporated a new company to acquire the club. One of the members later complained that decisions were being made without consulting him, and when an offer was made for the club which two of the directors recommended to shareholders, the third brought a petition alleging the affairs of the company were being conducted in a manner unfairly prejudicial to the member. The basis for this claim included a legitimate expectation on the member's part in relation to the pre-emption rights. Rattee J struck out the petition as an abuse of process. In the course of doing so, he considered the meaning of 'company's affairs' and said: However, there is, in my judgment, another ground on which the proceedings under s 459 are misconceived. In my judgment, the legitimate expectation which the court has held in other cases can give rise to a claim for relief under s 459 must, having regard to the purpose of the section as expressed in s 459(1), be a legitimate expectation relating to the conduct of the company's affairs, the most obvious and common example being an expectation of being allowed to participate in decisions as to such conduct. An expectation that a shareholder will not sell his shares without the consent of some other or other shareholders does not relate in any way to the conduct of the company's affairs and therefore, cannot, in my judgment, fall to be protected by the court under s 459. 295 The wording of the section considered by Rattee J does differ from s 232 but to my mind the differences are not such that a different principle applies in the case of s 232. 296 There is a second and more fundamental problem with the plaintiff's oppressive conduct cause of action. Even if the failure to meet the understanding is conduct in the second defendant's affairs, I cannot see how the conduct can lead to the relief sought by the plaintiff. It might conceivably lead to other forms of relief such as the sale of the company's business, the purchase of the complainant's shares or the winding up of the company but I do not think that it can lead to an order for the payment of a sum of money by one incorporator to another for the failure to meet an understanding or expectation. The fact is that an order equalising contributions will not improve the second defendant's financial position or indeed affect it in any way. Indeed the only effect on the second defendant of the orders sought by the plaintiff will be by way of the ancillary order put forward by the plaintiff. 297 In Section B I have made findings of fact concerning the other acts of oppressive conduct alleged by the plaintiff. It is unnecessary for me to examine what part of that conduct amounts to oppressive conduct within s 232. In my opinion, even if I can make an order for the payment of damages or compensation under s 233 I would only do so if there was a direct link between the oppressive conduct and the compensation or damages claimed. That would be so whether the conduct is considered as a whole or individual acts are considered. I cannot see any sufficient link between the conduct summarised in [288] and the compensation or damages sought by the plaintiff. 298 In the circumstances it is not necessary for me to consider the other arguments advanced by the first defendant as to why the plaintiff's oppressive conduct cause of action must fail. Those arguments included an argument that relief could not be granted under s 233 where the alleged oppressive conduct had come to an end and an argument that as a director and equal shareholder of the second defendant the plaintiff was and is able to bring any alleged oppressive conduct to an end and therefore the sections were not engaged. 299 I should record the fact that I reject the first defendant's submission that the oppressive conduct cause of action should be rejected because the plaintiff was aware of the alleged oppressive conduct in August 2008 and yet took no action. There were considerable developments after August 2008 and in any event I would not entertain such an argument in the absence of a proper plea and particulars.

E. The Fiduciary Duty Cause of Action 300 As with the oppressive conduct cause of action, it is not strictly necessary for me to consider the fiduciary duty cause of action in view of my conclusions in relation to the Fair Trading Act cause of action. However, it was argued in detail and it is appropriate that I express my conclusions with respect to it. I conclude that the fiduciary duty cause of action had not been made out for two reasons. First, I do not think that there was a fiduciary relationship between the plaintiff and the first defendant once the second defendant was incorporated and operating the business. Secondly, and in the alternative, I do not think that there is a sufficient causal link between the equitable compensation claimed by the plaintiff and the alleged breach of fiduciary duty. 301 The parties chose to conduct their venture through a company and discretionary trust and not through another legal structure such as a partnership. Had they conducted the venture through a partnership they would have owed fiduciary duties to each other. In electing to operate through a company they undertook fiduciary duties to the company but not, on the face of it, fiduciary duties to each other. 302 It is true that the second defendant was a two-person company and that the genesis of the arrangement was very similar to what one would find in the case of a two-person partnership. It is also true that the categories of fiduciary relationships are not closed: Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 ('Hospital Products'). However, those matters having been said, there is nothing by way of an express statement or clear conduct to indicate that the parties intended to create legal obligations over and above the obligations which attended the legal structure they adopted after taking accounting advice. 303 In this respect, this case is similar to Friend v Brooker (2009) 239 CLR 129. In that case the High Court rejected an attempt to use the equitable doctrine of contribution to avoid the consequences of the selection by the parties of the corporate structure. French CJ, Gummow, Hayne and Bell JJ said (at 161 [88]): That selection brought with it the attendant legal doctrines of corporate personality and limited personal liability. Moreover, at the time of the incorporation of the Company, the Companies Act 1961 (NSW) was in force and this (and the successor legislation) provided for the breakdown of relations between the controllers of closely held companies by such provisions as those for winding up on the just and equitable ground under s 222(1)(h) and for oppression suits under s 186. (Footnotes omitted.) 304 The second and alternative reason I reject the fiduciary duty cause of action is as follows. As I understand the plaintiff's submission it was that the first defendant preferred his own interests over the joint interests of the plaintiff and himself. In other words, he was in a position of conflict of interest and duty and it is said that he profited by advancing his own interests at the expense of the joint interests. He did this by allowing the plaintiff's contributions to exceed his own and then by not contributing funds to the second defendant, by refusing the plaintiff's request to quit the business in September 2007 and at various times thereafter and by continuing to operate the second defendant's business for the benefit of his separate houseboat hiring business. 305 There are a number of difficulties with this argument. The first is in identifying the point in time when the first defendant first advanced his own interests at the expense of the joint interests. On the evidence it is difficult to determine the point in time when the first defendant first preferred his own houseboats over other houseboats at the marina. In any event, there is no direct link between the profit made by the first defendant by preferring his own houseboats and the loss claimed by the plaintiff. Secondly, in so far as it is argued that the first defendant's refusal to agree to the sale of the marina business was an act by the first defendant whereby he preferred his own interests over the joint interests then, even if September 2007 is taken as the relevant date, the plaintiff has not established the profit made by the first defendant after that date and has certainly not established that any profit made by the first defendant is reflected in the loss she claims. Finally, I reject the plaintiff's argument that I can approach the matter broadly and award equitable compensation which equalises contributions as a 'sufficient proxy' for the profit the first defendant made by preferring his own interests over the joint interests. I know of no principle which would allow me to do that. 306 Before leaving my discussion of this cause of action I should record the fact that I reject the first defendant's submission that the plaintiff gave informed consent to a practice whereby the first defendant preferred his own boats. That was said to be based on the plaintiff's knowledge before entering into the venture that the first defendant would conduct a business involving his houseboats in conjunction with the second defendant's business. The first defendant referred to Queensland Mines Ltd v Hudson (1978) 52 ALJR 399. However, fully informed consent in circumstances such as the present required the fiduciary to disclose not only that he would conduct his business in conjunction with the principal business but also how he would conduct that business. That was not done in this case and the first defendant's submission must be rejected.

F. Conclusion 307 In my opinion, the plaintiff succeeds on her Fair Trading Act cause of action and she is entitled to the amount she claims in relation to that cause of action. The question of ancillary and other orders will need to be addressed. 308 The plaintiff is to bring in draft minutes of order which reflect the conclusions in these reasons and the parties are at liberty to make further submissions on the appropriate orders. I certify that the preceding three hundred and eight paragraphs (308) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko.