Evans & Ors v Brannelly & Ors [2008] QDC 269

Australian Securities and Investment Commission Act 2001 s 12DA, s 12EP, s 12GR

Civil Liability Act 2003 s 28(1), (3), s 30

Atkins v Interprac Financial Planning Pty Ltd [2007] VSC 445 - followed.

Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 592 - applied.

Delmenico v Brannelly [2008] QCA 74 - applied.

Downey v Carlson Hotels Asia Pacific Pty Ltd [2005] QCA 199 - applied.

Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241 - applied.

Prestia v Aknar (1996) 40 NSWLR 165 - applied.

San Sebastian Pty Ltd v The Minister [1986] HCA 68; (1986) 162 CLR 340 - applied.

Shrimp v Landmark Operations Ltd [2007] FCA 1468 - followed.

State Superannuation Board (NSW) v Federal Commissioner of Taxation (1988) 82 ALR 63 - considered.

RA Perry SC and J Chapple for the first and second defendants

Quinn and Scattini lawyers, later Slater and Gordon Lawyers for the plaintiffs

**[1] These six actions were heard together before me. The plaintiffs, separately, invested various sums of money to a company Bayshore Mezzanine Pty Ltd which was part of the Westpoint group of companies and lost their money when that company went into liquidation with the collapse of the Westpoint group. The plaintiffs came to do so following contact they had with the first defendant, a natural person who was relevantly a director and agent of the second defendant, which in turn was an authorised agent of the third defendant. The third defendant is currently subject to a deed of company arrangement under Part 5.3A of the Corporations Act,[1] and the actions did not proceed against the third defendant. The second defendant is the same company in each of the six actions; the first defendant is the same agent of the second defendant in five of the six actions, and a different agent of the second defendant in the sixth action.[2]

[2] On the face of the pleadings the claims were advanced in negligence, for breach of contract, for breach of the Corporations Act 2001, and for misleading and deceptive conduct in breach of the Trade Practices Act, the Australian Securities and Investment Commission Act ("ASIC Act"), and the Fair Trading Act. At the trial, however, only the causes of action in negligence and for misleading and deceptive conduct under the ASIC Act were advanced, although at one stage the plaintiffs did submit that if the ASIC Act did not apply to the transactions then the plaintiffs were entitled to recover under the Trade Practices Act, which was made inapplicable only because the ASIC Act applied.

[3] The pleadings in the six cases were strikingly similar, to an extent which in the light of the evidence at the trial was shown to have been unjustified.[3] Although there are substantial common issues involved, what passed between the individual plaintiffs and the first defendants was subject to variation to a greater extent than one might have expected from the pleadings. As a result there were numerous objections to evidence on the ground that the evidence was not consistent with the pleadings. These I dealt with by receiving the evidence subject to relevance, and eventually I decided that in order to avoid constant disruption to the flow of the trial I would treat all evidence in the trial as being received subject to relevance (p 163), and work out at the end of the trial just what was relevant to the various allegations in the pleadings.[4] The rest of the evidence was received simply as background evidence.

[4] Because of the differences in the factual situations, it is going to be necessary to some extent to deal separately with the six different actions, at least so far as the facts are concerned. Because of this approach, it is convenient to set out an account of what happened as disclosed by the evidence of the various plaintiffs, but on the basis that not everything that is referred to in the account is necessarily relevant to the determination of the issues on the pleadings.

[5] Mr Evans was born in February 1952 in England. He was educated there, and obtained a law degree from the University of London. He spent some time in various activities before he obtained employment in the insurance industry, in which he stayed, in England or in Australia, until about 2006: p 306. After some brief experience with a marine insurer, he obtained employment with a Lloyds' broker, and came to Australia when the opportunity arose to work for an insurance broker in Australia who was associated with the Lloyds' broker.[5] In England he was involved in the process of placing risk for the brokers with various Lloyds syndicates; in Australia, he was involved in both placing risk and processing claims. Although this involved some business activity, it does not sound to me like the sort of experience which would assist him in assessing effectively the appropriateness of investing in promissory notes issued by Bayshore Mezzanine Pty Ltd.[6]

[6] In 2003, after he and his wife sold a house in Sydney, he had surplus funds of about $200,000 to invest: p 306. The money sat in the bank for some time, because he was very cautious about how to deal with it. Eventually, he began to purchase shares over the internet using a Commonwealth Securities account and he ultimately invested about $40,000 in this way: p 307. He saw an advertisement in the newspaper for investing in the retirement and aged care industry through the second defendant, and either telephoned for more information or cut out a coupon and sent it in. In response he received some information in relation to the Prime Retirement and Aged Care Fund: Exhibit 45. With this were copies of documents headed "Your Rights to Privacy", "Financial Services Guide Deakin", and "Brannelly The Professional Perspective".

[7] In respect of this, Mr Evans said he was impressed by the logo which identified the second defendant as "advisers to the professions", and by the statement "this investment has been approved by a research team and is available for new investments", which suggested that there were more than one person involved in vetting and analysing opportunities as they arose: p 309. He was not, however, attracted to that particular investment, being concerned by the references to tax advantages and deferred tax, which suggested to him that it might cause problems in relation to income tax. Because he was not particularly attracted to the investment he only skimmed through the various documents forwarded with the letter: p 709. He received some follow up calls from Mr Paul Brannelly, in which he asked for time to consider it further, essentially to be polite: p 310.

[8] Mr Evans subsequently received a further letter from the defendant dated 18 July 2005: Exhibit 46. This was the first reference to an investment in Bayshore Mezzanine Pty Ltd, which he ultimately did make. He said he was immediately attracted by the relatively high return, and the fact that it was a fairly short-term investment: p 310. The reference to the "limited opportunity to introduce investors" suggested that there was some sense of urgency about this, and he noted that it was described as an "excellent opportunity to invest". He said he had not heard of high yielding promissory notes before, but assumed they were an established way of raising capital in the property development industry. The minimum investment of $50,000 struck him as very high. He noted that the company had an established record of over 20 years, which impressed him.[7] The fact that $6.5 million had already been raised suggested that there was a sense of urgency about the investment, and he was impressed by the various favourable things said about the Westpoint group: p 311. It suggested that that group had a formula by which they were able to offer relatively attractive rates of return.[8]

[9] Mr Evans understood the letter as saying that the company had a second ranking mortgage, which he understood was over specific property, and a second-ranking charge over the assets of the company: p 311. He knew what a mortgage was, and understood that a second ranking mortgage was probably just as good security, but perhaps there was someone else taking priority: p 312. He had no clear understanding of what a charge was. He read the letter as indicating that he would be holding the second ranking mortgage as the lender,[9] and that he would have the benefit of the second ranking charge. He understood the reference to Westpoint Corporation providing a guarantee of the company's obligations under the loan as suggesting a second layer of safety. He knew what a guarantee was. He took from the letter that he would be getting the benefit of the guarantee himself: p 313. He noted the reference to this being the most appealing project at present, as indicating that the second defendant was giving this a ringing endorsement.

[10] He took from the second page that the building was already substantially completed and that these funds were just required to build some additional floors to complete the project, and noted that the Westpoint group had net tangible assets of $80 million, that the return was attractive, that there were no fees, that pre-sales covered 80% of senior debt and mezzanine debt, which he thought would minimise his risk, and the guarantee from Westpoint group and the charge over the Bayshore Port Melbourne Trust referred to as one of the "Investment Highlights": p 313. Again he thought that he as an investor would be getting the benefit of the guarantee and the charge. The reference to the opportunity being open for a limited period suggested some sense of urgency. He could not recall whether there was anything else attached with the letter, but he did not think that he had the information memorandum at that stage: p 314.

[11] Subsequently Mr Evans spoke to Mr Brannelly on the telephone[10] and told him that it looked a better opportunity than the Prime investment, and more suited to his purposes; Mr Brannelly responded that it was an excellent opportunity: p 314. Mr Evans next received from the defendant a letter dated 27 July 2005 which had attached to it a copy of the information memorandum: Exhibit 47.[11] Mr Evans noted that the letter was similar to the letter of 18 July, although the amount that had already been raised had increased to $10 million, which he thought was significant given the short time: p 317. This implied some urgency in the matter: p 318. He thought it was consistent with the earlier letter. He had a look at the information memorandum but did not read it in any great detail: p 319, p 350. He said he paid very little attention to the diagram on p 2 of the information memorandum: p 320. He did not notice anything which was inconsistent with what had been said in either of the letters from the defendant. Sent with the letter was a newsletter "Westpoint On Point" from the Westpoint group, which also said something about the Bayshore Port Melbourne project; he looked at it but he did not notice anything which was contrary to what he understood Mr Brannelly had told him: p 319.

[12] There then followed a couple of telephone conversations, after which he had a meeting with Mr Brannelly since he wanted to ask him a few more questions: p 321. He met him one day in the period 5-9 August, he could not clearly remember just when, in Mr Brannelly's office.[12] Mr Evans said that he wanted to make sure that there were no down-sides to the risk he was taking before committing any funds, and Mr Brannelly talked generally about the Westpoint group. He emphasised they were a substantial company, and had been in business for 20 years, and he had been dealing with them for some time. He said that his clients were happy to roll their investments over into other Westpoint projects. Mr Evans asked Mr Brannelly whether, if the money were used for some project other than the Bayshore project, that would affect the security that he was supposed to have in the current Bayshore project, and how that related to his mortgage over the Bayshore project: p 322. He said that the response was an assurance that there was 100% cover over the Bayshore project. Mr Brannelly said not to worry, your investment will be secure. Mr Evans also asked what the chances were of the remaining apartments not being sold, and Mr Brannelly replied that 80% had been sold and there would be no problem in selling the remainder: p 323.

[13] Mr Evans recalled saying to Mr Brannelly that he could not afford to lose the money: p 324. He said that of the two emotions involved in investing, greed and fear, he had a minimum of greed and a maximum of fear of losing money, and said specifically he was more concerned about the return of his principal than the return on his principal. He said that in response Mr Brannelly was at all times confident and authoritative about the Westpoint group, and did emphasise the guarantee again. He said in 20 years Westpoint had not reneged on any obligation. Mr Evans detected a bit of irritation from Mr Brannelly at this point, and said that he was sorry, he was just trying to get his head around the risk involved, to which Mr Brannelly replied "There is risk in everything we do."[13]

[14] Mr Evans said he thought of the guarantee and felt comfortable in making the investment, and he completed the application form and handed over a cheque for $50,000: p 325.[14] He subsequently received a letter dated 9 August 2005 from the defendant: Exhibit 48. Part of it, asserting that he had been provided with general information only and that he had decided to make an investment based on his own research, struck him as being a bit odd, but he did not take the matter up with Mr Brannelly: p 327. Mr Evans was subsequently sent by Bayshore Mezzanine Pty Ltd a letter enclosing a promissory note and a schedule of interest payments he was to receive on it: Exhibit 49. He said that what he had received, and what he had not received, including the principal, were as set out in the document Exhibit 50.

[15] Mr Evans said that he was not told prior to investing in Bayshore that the investment was a high-risk investment: p 331. Had he been told that it was a risky investment, or particularly a high risk investment, or that the investment was with a company incorporated only in 2001, or that a promissory note was really nothing more than an unsecured IOU, or that there was no mortgage securing the investment, or that he did not have the benefit of a guarantee from Westpoint and associated entities, he would not have invested as he did: p 332. He was not aware of the contents of Exhibit 17, a press release from ASIC in 2004 advising that ASIC was investigating the practice of Westpoint Corporation raising money by the issue of unsecured promissory notes in this way. Had he been, he would not have made the investment, nor if he had been told that this was a scheme which ought to have been registered under the Corporations Act but was not registered: p 333. He did not receive a mortgage securing his investment or a charge of any sort, or a guarantee from Westpoint or any related companies: p 333.

[16] Mr Courtney was the first plaintiff to give evidence. He is a pharmacist born in 1954: p 19. Apart from practicing as a pharmacist, he had to some extent invested in shares through a broker using funds in a self-managed superannuation fund: p 20. This it seems was done very much on the broker's advice. He had also contributed from the fund to a small property development on the Sunshine Coast, which he went into with two other people: p 21. He had heard of the second defendant as financial advisers, because it had been commonly involved in presentations organised by a professional body of community pharmacists, giving information about superannuation and investment: p 22.

[17] In May 2004 Mr Courtney arranged to meet the first defendant, Mr Matthew Brannelly, seeking some advice (p 23) which was ultimately not acted on. In connection with this the defendant provided the plaintiff with written advice dated 24 May 2004: Exhibit 9.[15] Following that written document there was a meeting in which it was explained, and Matthew Brannelly recommended particular investments[16] which ultimately Mr Courtney did not make: p 36-7. In the process of assessment of his financial position he was asked to sign, and did sign, an agreement with the second defendant: Exhibit 10.[17] He said he received a number of brochures from the defendant over a 12-month period.

[18] In about July 2005 Mr Courtney attended a couple of seminars, at one of which a representative of Kebble was introduced, who referred, apparently in fairly general terms, to Westpoint: p 42, p 66. He received some promotional material, a copy of which became Exhibit 11. Subsequently he telephoned Matthew Brannelly's office (p 43), but spoke to another man who offered to send out some information (p 44) and who subsequently forwarded an information memorandum apparently produced by Westpoint dealing with the Bayshore project (Exhibit 1) under cover of a letter: Exhibit 12. Mr Courtney said he read the information memorandum: p 45.[18] He identified a number of attractive features, but did not know what a promissory note or a charge was, or just what a second ranking mortgage was.

[19] There was later a telephone conversation when Matthew Brannelly rang.[19] Mr Courtney told him that a business he had an interest in had recently been sold and as a result he had some funds to invest, that he had heard of an investment he thought might be appropriate for him at a recent seminar and that what he really wanted was Mr Brannelly's opinion about Westpoint as a corporation and about the security of the particular investment: p 48, p 110. Mr Brannelly provided him with some information about Westpoint and also about this specific investment. He said that they were a well-established group with a 20-year track record of success. They had completed a large number of projects and currently managed about $300 million worth of commercial property, and had substantial net assets of the order of $80 million. He said the investment would be through promissory notes of a company Bayshore Mezzanine and that company would in turn lend the funds to Westpoint to develop the project: p 48. Mr Courtney did not ask what a promissory note was, nor was he told.

[20] Mr Brannelly said the investment had a couple of forms of security, a mortgage and a charge: p 49.[20] Mr Courtney knew what a mortgage was; Mr Brannelly did not explain a charge: p 50. He said that both were to Bayshore Mezzanine in which Mr Courtney was to be an investor. He was also told that the Westpoint guarantor group would guarantee the loan obligation owed to Bayshore Mezzanine. Mr Brannelly said his investment was secured by that guarantee: p 51, p 76.[21] He said the project was scheduled to complete that year and was 95% pre-sold, and the pre-sales covered both the senior debt and the mezzanine debt. There were going to be additional units as part of the project to make it more attractive. Construction progress was good. Those factors substantially reduced any capital risk associated with the investment.

[21] Mr Courtney then said a number of things to Mr Brannelly which indicated approval of the investment, and Mr Brannelly ended by saying that he would recommend the investment to Mr Courtney: p 52, p 99. Risk really was not mentioned. Not long after the conversation he received a letter dated 18 August 2005: Exhibit 13. He read the letter and noticed various things about it. He subsequently completed the promissory note application form and sent it together with his cheque under cover of a letter dated 23 August 2005: Exhibit 14. He subsequently received a further letter from the defendant dated 29 August 2005 (Exhibit 15) and a letter from Bayshore Mezzanine Pty Ltd dated 31 August 2005 enclosing the promissory note issued 29 August and a payment schedule: Exhibit 16.

[22] Mr Courtney said that he was never told that an investment in a promissory note issued by that company was a high risk investment, or that Bayshore Mezzanine Pty Ltd would not have a second ranking mortgage over the property or a second ranking charge over the development company, or that apart from the commission being paid to the second defendant there was an extra 13% in commission being paid to others. Had he been told any of these things, or not been told that Mr Brannelly recommended the investment, he would not have made the investment: pp 61-2. He was not told of the contents of an ASIC media release of 25 May 2004 (Exhibit 17); had he been, he would not have made the investment: p 63. Mr Courtney received two monthly payments from Bayshore Mezzanine Pty Ltd and has not received anything else from that company; the payments were $2,104.11 on 30 September 2005, and $2,038.36 on 31 October 2005: p 64.

[23] Mr and Mrs Summergreene both gave evidence. Mr Summergreene was born in 1940 and after being educated to year 10 completed an apprenticeship as a builder, working in that industry until 1984, when they moved to Queensland and purchased a school bus business: p 501. He was the driver and mechanic for the business. They disposed of that business in 2002, although he continued to drive for the business for some time thereafter: p 502. They had purchased three rental properties over a period of time, and made some modest investments in shares, generally on the advice of Mrs Summergreene's father, although they purchased some Telstra shares on their own initiative: p 472, p 502. Mrs Summergreene was born in 1943, educated to year 11 and then did secretarial work until her first child was born, after which she did some part-time secretarial work: p 471.

[24] Mr Summergreene saw an advertisement in the paper. In response he made contact with Mr Paul Brannelly in January 2005: p 502, p 473. Mr Summergreene told Mr Brannelly that they were interested in investing funds down the track; he said they were going to sell an investment property and that would produce the funds they wanted to invest: p 503. He said that they were looking for a safe, secure investment for the funds.[22] Security was a matter of importance to Mrs Summergreene, because she expected to have a capital gains tax liability as a result of the sale of the property which would have to be paid after the end of the financial year: p 474. She also preferred monthly payments on the investment.

[25] Subsequently they received a letter dated 14 January 2005 from the defendant: Exhibit 66. Mr Summergreene noted that the investment referred to in the letter (the Prime Trust) was said to have been approved by a research team, but otherwise he left it to Mrs Summergreene to look at it: p 504. She also noted that part, which she treated as a recommendation, the return and that the investment had tax advantages, and involved monthly payments, but it appeared to be a longer-term investment than they were interested in: p 475. Thereafter the defendant rang on a number of occasions inquiring as to whether they were ready to invest money, but at that stage they had not sold the property: p 504.

[26] The next event was receipt of a letter from the defendant dated 28 February 2005: Exhibit 67. Mr Summergreene recalled that they discussed it, but essentially he left it to his wife to take care of: p 504. She took from the first paragraph of the letter that this was a recommendation (p 475, p 477), and noted that they were recommending only funds in which risk factors were minimised. She noted what was said in that letter about the Westpoint group, which she said made it sound like a worthwhile company: p 477. She also noted that there were no fees associated with the investment, and that there were substantial pre-sales in place, that it had a registered second mortgage over the property and a second ranking charge over the developer, and that it was supported by a guarantee from Westpoint itself, so that it sounded like a very safe investment: p 478. She did not at the time appreciate the significance of a second ranking mortgage, and did not know what a second ranking charge was. At that stage they still did not have the money available to invest.

[27] They received a further letter from the defendant dated 18 July 2005: Exhibit 68. Both of them noted the reference to an excellent opportunity to invest in high yielding promissory notes offering 14%, which Mrs Summergreene said she took as a recommendation: p 481, p 505. Neither knew at the time what promissory notes were. They noted the favourable things said about Westpoint, which sounded like a successful company (p 481, p 505), and noted that it was providing a guarantee for the company's obligations under the loan and securities. Mr Summergreene said that he understood that this was a reference to Westpoint guaranteeing the loan that an investor would make: p 505. Mrs Summergreene put the same interpretation on the guarantee: p 484, p 583. She though that a promissory note was something like shares, and that the guarantee meant that it would be a safe investment: p 482. She also thought that they would get the benefit of the mortgage referred to in the letter, she knew what a mortgage was, and she noted that the purpose of the additional funding was to build additional floors which she took as an indication that the project was doing well: p 483. They noted the favourable things that were said about Westpoint (p 484, p 505), the absence of entry fee, exit fee or management fee, and the high level of pre-sales of the property, and again the reference to the guarantee from the Westpoint group and a charge over Bayshore Port Melbourne Trust: p 484 and p 505. The reference to the limited period of time indicated to them that something needed to be done fairly quickly: p 484.

[28] Mrs Summergreene also noted a disclaimer which referred to the defendant's not giving financial advice and that it was for information purposes only, but she thought that he was in the letter giving advice, which was why they contacted him: p 485. Mr Summergreene did not know what an unsecured promissory note was (p 505) but knew what a mortgage was, though not a second ranking mortgage, or a charge: p 506. He thought the letter suggested that this development was the most appealing to an investor. He noted much the same things as his wife had noted, and was also attracted by the short term, by the absence of entry and exit fees, by the pre-sales and by the guarantee from the Westpoint group: pp 506-7.

[29] Mrs Summergreene said that she subsequently had a telephone conversation with Mr Brannelly in which she asked what was meant by a second rank mortgage and a second rank charge because, she said, she told him that if it was anything like a second or third mortgage they wanted nothing to do with it: p 485. She said his response was that it was fully backed by Westpoint and that there was no problem: p 486.[23] It was only in hindsight that she realised that he had not actually answered her question. She said that she also asked him how secure it was, because she said they could not afford to lose money and that they were not going to put it in something that was risky; he replied that he had been dealing with Westpoint for nine years and he had had no trouble with them and they had never not fulfilled their obligation during that time, and that it was fully guaranteed by Westpoint: p 486. She asked what the term of the promissory notes was, because they needed to pay capital gains tax and he said that it was to June 2006: p 486.[24] She said she also asked him about whether there were monthly returns, and he said that he had been dealing with them for nine years and they had never reneged on paying. He also said that they would send a notification of when the money would be paid, and that they were still taking money because some of the others were coming out of the scheme and the money was being repaid.

[30] The investment property was sold, with settlement around 20 September: p 488. Prior to then, Mrs Summergreene again telephoned Mr Brannelly and asked him what he would recommend that they put the money into because the money was due then within a short space of time, and asked him to send out what he then recommended: p 488.[25] She said that it had to be something safe and secure. Subsequently they received from the defendant a letter of 20 September 2005: Exhibit 69. This was consistent with what Mr Brannelly said, that he would send some information in the mail: p 489. This letter was very similar to the letter in July and Mrs Summergreene said the same things stood out: p 491. Mr Summergreene said that he relied on the statement in the letter that it was an excellent opportunity to invest with a company with an established record, and noted the favourable things said about the Westpoint group, which he said sounded like Mr Brannelly was guiding them towards a secure investment: p 507. He noted the comment that "we consider [Bayshore] to be the most appealing [Westpoint project] at present": p 508. He also noted that they were adding additional floors and sourcing more capital to fund this additional expense. He interpreted the letter as a statement that Westpoint was the place to put their investment money. He also noted the reference to the absence of fees, that pre-sales were 80%, that the construction was underway for completion, and the guarantee from Westpoint and the charge over Bayshore was the security: p 509.

[31] With the letter came a copy of the information memorandum, Exhibit 1. Mr Summergreene said that he looked at it but did not understand it, and he cannot work a balance sheet: p 509.[26] He did not see anything in there inconsistent with what had been said in the letters from the defendant. Mrs Summergreene also said she did not understand that document, and just relied on what the defendant had said in his letter: p 491, p 644. After considering this letter, Mr and Mrs Summergreene decided to go and see Mr Brannelly, because they wanted to see Mr Brannelly face to face before deciding to invest: p 510. Mr Brannelly's notes record a meeting on 23 September 2005: Exhibit 117, p 1114.

[32] Mrs Summergreene said that they said to him they were not prepared to hand over $100,000 without knowing that their money was going to be safe; the defendant replied that Westpoint was fully guaranteeing Bayshore and he had been associated with them for nine years, but the company had been going for 25 years and had never missed a payment: p 492. One of them asked what was meant by a second ranking mortgage, and was it something like a second or third mortgage, and he just told them in response that there was a mortgage over Bayshore and it was all fully backed by Westpoint: p 493.[27] Mrs Summergreene said she told him that she hoped their money was safe because they could not afford to lose it: p 493. They checked when the money would be repaid and were told June 2006, and that they would get a letter with the promissory note giving dates on which payments were to be made. There was some conversation about additional floors being added to the building and the defendant said that pre-sales had done really well and that that was why they had found it necessary to add additional floors.

[33] Mr Summergreene said that they also mentioned that they wanted a short term because of the possibility that they would have to pay capital gains tax on the sale of the investment property: p 510.[28] He recalled his wife saying that it must be secure, and Mr Brannelly saying that it was secure and that he recommended the investment. He did not recall any elaboration on how it was secured: p 510. His wife had said that they could not afford to lose this money and it had to be secure: p 511. The defendant made a phone call during the meeting to see whether they were still accepting funds, and then said they were and that some investors' money was coming out because their terms were finishing and they were still looking for new investors to put money into the project: p 511. Mr Summergreene said that Mr Brannelly had said that the company was secure, he had dealt with the company for nine years and never had any problems: p 511.[29] They then decided that they would invest, and Mrs Summergreene took out the cheque that had already been written out and the application form and they handed it over: p 494, p 512, p 633. They were given a receipt and told interest would be paid monthly into an account and they provided the relevant account details.

[34] They subsequently received a letter dated 23 September 2005: Exhibit 70. Mrs Summergreene was concerned about the assertion in the letter that the investment was based on their own research, which she described as a load of rubbish: p 494. She also did not understand what Deakins had to do with the matter because at that stage she was not dealing with Deakins: p 496. However, she did not then follow this up with Mr Brannelly, on the basis that the money had already been paid over. She had not in fact done any research herself, or told Mr Brannelly that. They subsequently received a letter with the promissory note: Exhibit 71. They received one payment of interest, but nothing else: p 512. Details of what was received and not received are set out in Exhibit 72. In May 2006, after problems had arisen, they wrote to the defendant: Exhibit 73. The reply from the defendant became Exhibit 74.

[35] Mr and Mrs Summergreene said that they were not told that it was a high risk investment, and if they had been told that, or that it was a risky investment, they would not have made the investment: p 498, pp 512-3. They said that if they had been told the promissory note was nothing more than an IOU, or that there was no guarantee to the investors from the Westpoint group, or if the investment had not been recommended by the defendant, they would not have made the investment: pp 498-9, pp 513-4. Neither had been told the content of Exhibit 17, and would not have made the investment if they had: p 500, p 514. If they had been told that it was something that ought to have been registered under the Corporations Act but was not they would not have made the investment: p 500, p 514.

[36] Mr Andrew was born in 1931; he is currently retired, after a lifetime in the gas supply industry: p 121. He had some investment experience, at a fairly basic level; he had put some money in a bank in Jersey to obtain a tax benefit, he had invested in shares through an investment program promoted by a company, and he had invested some money on the stock market, essentially by focusing on new companies being floated and selling on the basis of a formula: p 122. Mr Paul Brannelly's name was given to him by a friend[30] and he telephoned Mr Brannelly and asked him if he had any investments that he might be interested in: p 123. He said that he wanted an investment which was secure and short term: p 129. He said he had about $200,000 to invest, and Mr Brannelly said he would look into it and get back later: p 123.[31]

[37] Mr Andrew subsequently received two letters from Mr Brannelly; one dealing with the Prime Retirement and Aged Care Property Trust (Exhibit 21) and one in relation to Bayshore Port Melbourne: Exhibit 22. The latter had attached to it a copy of the information memorandum[32] and Mr Andrew read both the letter and the information memorandum: p 128. Mr Andrew identified a number of things in the letter which he said caught his eye and on which he said he relied when making his decision to invest $97,000 in Bayshore Mezzanine Pty Ltd: p 128. He said that as a result of the letter he had the impression that he would be getting the benefit of the guarantee referred to under the heading "Investment Highlights": p 131.[33]

[38] Having read this material he decided to invest in Bayshore, and rang Mr Brannelly and told him that he probably would be investing: p 132.[34] On 5 August 2005 he sent off a form together with his cheque for $97,000: Exhibit 23. He received in reply a letter from the defendant: Exhibit 24. Some time later he received a further letter dated 12 October 2005 from the defendant in relation to the investment in Bayshore Mezzanine Pty Ltd: Exhibit 25. This related to what was to happen to the investment after it had matured, and after that letter and after (he thought) a telephone discussion with Mr Brannelly he decided to roll the investment into the Westpoint Investment Fund: p 134. Before that could happen, however, Bayshore Mezzanine Pty Ltd went into liquidation; he received three payments in respect of interest but he has not received anything else. The details of the amount invested and the payments received are set out in Exhibit 26.

[39] Mr Andrew said that if had have been told the investment was a high risk investment, or that it was with a company which did not have 20 years experience, or if Mr Brannelly had not described the investment as an excellent opportunity, or if Mr Brannelly had told him that the promissory note was really just an IOU, or that he was not getting a guarantee to support his investment, he would not have made the investment in Bayshore Mezzanine Pty Ltd: p 135. If he had been told about the contents of Exhibit 17, he would not have invested, nor if he had been told that in 2004 the Supreme Court of Western Australia decided that the Bayshore information memorandum did not comply with the requirements of the Corporations Act: p 136. He said he did not remember Mr Brannelly ever saying anything about the risk involved in the investment: p 137.

[40] Mr Radcliffe was born in August 1939: p 419. He trained as a teacher and spent most of his working life as a primary school teacher, rising to become principal of a State primary school before he resigned in 1993 to set up as a writer and publisher of primary school textbooks, including both workbooks for students and preparation books for teachers: p 420. He does most of the writing himself for the books that are published. When he retired in 1993 he received a superannuation payout which he put into a self-managed superannuation fund. With some of the money he has purchased real estate, but the balance was put in the bank or a credit union until around 2000 when he obtained some financial advice from the Commonwealth Bank, as a result of which he invested money in the Bank's super bonds: p 421. He then obtained advice from a financial adviser, as a result of which he invested money in Navigator and Colonial First State. He has also invested in another investment vehicle, as a result of seeing an advertisement.

[41] In October 2004 he saw an advertisement in a newspaper placed by the second defendant, as a result of which he contacted a Mr Paul Brannelly: p 422. Mr Radcliffe telephoned and said that he was putting $100,000 into his super fund, he was looking for secure investments that paid monthly or quarterly distributions that he could reinvest, and he wanted some financial advice on where would be the best place to park the money: p 422. He said Mr Brannelly mentioned Prime Retirement and Aged Care Property Trust, which he said was a strong performing trust, and that he had a research team and recommended this particular investment, and asked if Mr Radcliffe would like to see the PDS for the investment: p 423. Mr Radcliffe said he would.[35]

[42] Following this, Mr Radcliffe received a letter from the defendant dated 22 October 2004 concerning the Prime Trust: Exhibit 51.[36] The letter also referred to a research team,[37] which Mr Radcliffe regarded as of some significance, as was the reference towards the end of the letter to a well-regarded national independent research organisation, together with a number of things specifically about the Prime Trust. He did not at that time make any investment, but on 14 March 2005 he again telephoned Mr Brannelly, identified himself again and explained that he was looking for secure investments that provided a regular distribution, and asked him some questions about the Prime Trust: p 424.

[43] Mr Radcliffe subsequently received another letter from the defendant, dated 8 March 2005: Exhibit 52. He noted in the letter the reference to the defendant having been in operation for 40 years[38] providing financial services to a select clientele of executives and self-employed business people. He also noted a statement that "we endeavour to recommend only those funds in which risk factors are minimised as much as possible." The letter contained some general things about the Westpoint group, which Mr Radcliffe read and which he was impressed by.[39] He also noted the general statement that investments were secured by a second ranking mortgage and a second ranking charge, and a guarantee from Westpoint which he described as the clincher for him: p 425.[40] He also noted a statement towards the end that it was increasingly difficult for the average person to make fully informed investment decisions, and he took from that that the second defendant were experts.

[44] Mr Radcliffe was offered another copy of the PDS for Prime and he asked for it, and shortly afterwards he received a letter dated 14 March 2005 from the defendant which did enclose a further copy: Exhibit 53. He noticed again the reference to the research team, and a number of things which were specific to Prime. On 22 March he invested $100,000 in the Prime trust: p 425. He subsequently received a letter from the defendant dated 26 April 2005: Exhibit 54. This letter was similar to Exhibit 52, and Mr Radcliffe noted much the same things about it: p 46.

[45] On 27 June he again telephoned Mr Brannelly saying he had additional funds to invest, and Mr Brannelly referred to Prime again, and then brought up the subject of Bayshore which was part of Westpoint, which he said had a great track record in property development: p 538.[41] He said it was a very solid investment and offered an information memorandum: p 427. Subsequently, Mr Radcliffe received a letter dated 28 June 2005: Exhibit 55. An information memorandum, a copy of Exhibit 1, was either sent with that letter or sent separately; he said he received one: p 427.[42]

[46] Mr Radcliffe identified a number of things in the letter on which he relied when making his decision to invest, in particular the excellent return, and the guarantee from the Westpoint group and Westpoint's record of success: pp 427-430. He did not understand what a second ranking charge was, and did not place any great significance on that or the reference to a second ranking mortgage: p 429, p 522. He read a copy of Exhibit 1, and it seemed to him to support what the defendants had said about the investment: p 431. He decided to invest in Bayshore (p 546), and telephoned the defendant on 4 July[43] to confirm that the investment was still available, and then invested $100,000 through his superannuation fund: p 431.[44] He received a promissory note for the investment from the company: Exhibit 58.

[47] Mr Radcliffe went to see Mr Brannelly in his office on 25 July 2005 and provided him with a short summary of his financial situation: p 434, Exhibit 75.[45] He declined a full financial review of his circumstances, since he had already obtained that elsewhere not long before.[46] He said that he was looking to put more money into a super fund and looking for secure investments providing a quarterly and monthly distribution which could be reinvested. The defendant referred to Prime trust, and said that Bayshore was looking for some more funds: p 463. Following the meeting he received a further letter from the defendant: Exhibit 59. The letter was similar to earlier letters sent to him by the defendant.

[48] Mr Radcliffe subsequently invested a further $100,000 in each of the Prime trust and Bayshore Mezzanine: p 464.[47] He received further correspondence in relation to the investment: a letter from the defendant Exhibit 62, a letter from Bayshore Mezzanine Pty Ltd of 1 November 2005 - Exhibit 63 - and a further letter from the defendant suggesting rolling over the Bayshore investment into the Westpoint income fund: Exhibit 64. Mr Radcliffe was interested in rolling over that investment, and adding a further $50,000 (p 467), but ultimately that did not proceed.

[49] Mr Radcliffe was never told that the investment in Bayshore Mezzanine Pty Ltd was a risky investment or a high-risk investment, or that a promissory note was no more than a simple IOU; if he had been told any of these things he would not have made the investment: p 468.[48] He would not have made the investment if he had not been told that his investment was guaranteed,[49] or if it had not been recommended by the defendant. He would not have invested had he known the contents of the ASIC press release Exhibit 17, or if he had been told that the investment ought to have been registered under the Corporations Act but was not: p 469. The amount he invested and the four payments received in relation to the investments were set out in a schedule: Exhibit 65.

[50] Mr Pegg, who was born in 1951 and has retired following a career as a Telecom technician, gave evidence that he was one of the directors of this company which was the trustee of the CEP Superannuation Fund: p 153. He gave some investment history. He had bought a house in Ipswich which he sold five years later, and then together with a friend and his wife purchased a block of shops at Geebung which were done up and sold, and they purchased a block of eight two-bedroom units in South Brisbane. Then his friend's marriage broke up, and he ended up owning the flats with his friend's ex-wife, whom he ultimately bought out; the flats were later sold: p 153. He had some shares which he inherited from his father's estate, which essentially he just left as investments. He obtained some shares in the float of the Commonwealth Bank, and because of an account initially with a building society he ended up with shares in Bendigo Bank: p 154.

[51] Mr Pegg had set up a self-managed superannuation fund into which he paid his redundancy money when he left Telstra, and he purchased shares with the money in that fund acting on the advice of a stockbroker,[50] up until 2005 when the stockbroker he had been dealing with left: p 154. He went to a seminar run by Atlantic Three Financial, which impressed him and he made some investments with that company, some of which were successful and some of which were not: pp 155-7. He had also made an investment with a property syndicate in Canberra, which was successful (pp 155-6). Overall, although there were a range of investments made at different times,[51] it does not strike me as a particularly sophisticated investment approach. Investments in the stock market were conducted simply on the basis of following advice given to him by a stockbroker,[52] but otherwise essentially he was persuaded to invest in various ways by people who were trying to sell the investments. This did not show that he was willing to take risks but only that he was not sufficiently astute to avoid them.

[52] Mr Pegg first made contact with the defendant after seeing an advertisement in a paper in March 2005 relating to the Prime Retirement and Aged Care Trust: p 158. He spoke by telephone to Paul Brannelly[53] and asked for information about it, and that turned up in a letter dated 24 March 2005: Exhibit 27.[54] Ultimately an investment was made in that as well. The defendant sent Mr Pegg a letter concerning the Bayshore Port Melbourne investment dated 18 July 2005: p 162, Exhibit 28.[55] He had not previously heard of Westpoint or of Bayshore Port Melbourne: p 164. He understood the letter as saying that the company that his money would be going into was the company which had a second ranking mortgage over the development property: p 165. He was aware that attached to the letter was a document headed "Disclosure"; he did not read it in detail but did note that it referred to a product disclosure statement: pp 167-8.

[53] After reading the letter Mr Pegg had some questions for Mr Brannelly, and he made notes of these on a sheet of paper: Exhibit 29, pp 168-170. On 22 July 2005 he telephoned Mr Brannelly's office on his mobile and spoke to a receptionist and said he wanted a PDS, and asked Mr Brannelly to call him back on his mobile after 3 pm: p 168.[56] He said that later the same day, Mr Brannelly did call him back: p 220. He had a conversation with Mr Brannelly, in which he asked him the various questions, and made notes of his answers on Exhibit 29.[57] That document was not disclosed until just before the trial, but Mr Pegg gave an explanation as to how that came about.

[54] He had that day been with a friend at a social function, and after the function at the friend's house a number of digital photographs taken at the function were printed, presumably using a colour printer: p 246. He took these photographs when he went home, and the sheet with the questions and answers on it was put with the photographs and taken home with them. Although he had a file in relation to this investment (p 221), at this stage he had not received much documentation in relation to Bayshore, and it may be the file had not yet been started; in any event, this sheet was not then put into that file, but left with the photographs which were filed separately, and ultimately put away in an archive box. It was only recently, when thinking about the impending trial, that he realised that the social function had been on the same day as this conversation, and he dug out the photographs and found the sheet with his notes of the questions and answers with them: p 247.

[55] That strikes me as a plausible explanation. My impression of Mr Pegg in the witness box was that he was an honest witness, and, notwithstanding a challenge by the defendant to the provenance of these notes (pp 221-2), I accept that Exhibit 29 represents his contemporaneous note of the conversation, and that the conversation on that day between Mr Pegg and Mr Paul Brannelly occurred as recorded in Exhibit 29. For reasons given later, I do not generally accept Mr Paul Brannelly as a reliable witness. Some conversation between them that day is consistent with the opening paragraph of the defendant's letter of 22 July, Exhibit 30: "Further to our recent telephone conversation ..." (emphasis added). What was attributed to the defendant was the same as what he was saying in the letters. Mr Brannelly's notes Exhibit 114 record a conversation said to be on 26 July 2005, "CP phoned PB. Had queries on Bayshore and Prime. All OK. CP will send in application forms for both funds." That suggests that at some time the plaintiff asked some questions about Bayshore and received answers which satisfied him. These notes may have been written up later, for the wrong date.

[56] That exhibit lists the questions and answers as follows:**

"1. What exactly is the $20 mill being raised for - was the original finance not sufficient.

1. 20 mill to mainly cover costs for addit[ional] floors approved for Twes A & B and to finish off.

1. Has there been any contractor or industrial problems causing additional costs.

1. Westpoint have their construction group - they do not have those sort of problems.

1. How good are the guarantees for the security of an investment in Bayshore.

1. Very secure - W/Point group guarantee the investment - they have assets of 80 mill and Bayshore Mezz has a 2nd Mortgage over the property.

* If you are sure it is secure then send me the Info Mem, any info you have on the interview with Carey referred to in the letter.

**[57] At that stage Mr Pegg said he had not finally made a decision about the investment: p 176. He received on 25 July 2005 a letter dated 22 July 2005 from the defendant: Exhibit 30.[58] Mr Pegg said that he relied on the fact that the amount which had already been taken up had increased in a matter of a few days as suggesting to him that it was an attractive investment; the reference to the high ratio of pre-sales; the fact that the group was not dependent on others which he said fitted with what he had been told on 22 July by Mr Brannelly; the fact that the company in which he would be investment would have a second ranking mortgage; that this was said to be the most appealing project available at present; that the capital was being raised for the construction of additional floors; that the group had net tangible assets of $80 million; and the reference to Kebble being a boutique merchant investment bank: pp 177-8.

[58] Mr Pegg read the information memorandum and noted that there was no reference in that to the additional floors, but decided that the explanation was that the letters from the defendant contained more recent information than was available at the time the information memorandum was published: p 179, p 226. Otherwise, he did not detect any inconsistency.[59] He then signed application forms both for Prime (Exhibit 31, dated 26 July 2005) and Bayshore: Exhibit 32, undated. These were sent with his cheques to the defendant[60] who sent a letter acknowledging receipt of them: Exhibit 33. Mr Pegg was concerned about the evidence making statements in that letter, but did not do anything about it: p 181. He subsequently received a letter from Bayshore Mezzanine Pty Ltd enclosing the promissory note dated 1 August 2005 and an interest schedule: Exhibit 34. Later he received correspondence from the defendant (Exhibit 39) and from Bayshore Mezzanine about rolling his investment over into the Westpoint Income Fund, and signed on 23 November 2005 the forms to do this, but again there was no evidence they were ever acted on.

[59] Mr Pegg said that if Mr Brannelly had told him that the promissory note was really nothing more than an IOU, or that there was no second ranking mortgage in place, or any second ranking charge in place, or if he had been told about the risks associated with the investment, or that it was a high risk investment, he would not have made the investment: pp 182-3. If he had been told of the content of the ASIC media release Exhibit 17, or if he had been told that there was in 2004 a decision of the Western Australian Supreme Court that the issue of the promissory notes required registration under the Corporations Act but had not been registered, he would not have made the investment: p 184. He received three payments of interest but otherwise received nothing back in relation to his investment, as set out in the schedule Exhibit 35.

[60] I should make some general remarks on the question of credibility, although generally where there is need to resolve a specific inconsistency between different oral testimony I have made a specific finding which is recorded or reflected in my reasons elsewhere. My overall impression of the plaintiffs were that they were honest witnesses though some of them obviously had difficulty in recalling matters of details. I am conscious of the fact that it is likely that they were going to be recalling, and particularly going to be emphasising in the course of their oral evidence, those matters which could be said to be favourable to them, and would be less likely to recall or emphasise matters which may not be favourable to them, possibly because they were not matters to which they attributed any great significance at the time. Nevertheless, my overall impression of them was that they were honest and reasonably reliable, though not necessarily so in matters of detail.

[61] Their evidence-in-chief was generally more reliable than their cross-examination. I often had the impression that the witnesses did not really understand the questions asked in cross-examination, which was conducted in a badgering, pressured way, attempting to force the witnesses to say particular things. The questions were often difficult to follow, and put the witnesses under considerable pressure.[61] Mrs Summergreene in particular seemed to become quite upset at times under cross-examination. In these circumstances, if there are differences I generally prefer what was said in evidence-in-chief, and do not necessarily accept everything said under cross-examination.

[62] With regard to the defendants, Mr Matthew Brannelly struck me as particularly nervous in the witness box. Although he seemed at times to be trying to give honest evidence to the best of his recollection, he was very defensive and self-justifying in a way which suggested that much of his evidence was reconstructed. I found some of the things he said inherently implausible, such as the assertion that he was told by Deakins not to investigate products himself: p 901.[62] Mr Martinovic, who used to work for Deakins, was not aware of any such policy: p 931. There is also the consideration that he denied (p 779) having a telephone conversation with Mr Courtney which was admitted in the amended defence, both as to the occurrence of "a discussion" (para 9(a)) and as to his having made the statements alleged in paragraph 7(c), most of what was alleged to have been said in the conversation. In the circumstances, I reject his evidence as to this. There was I think little else in the way of direct conflict between his evidence and that of Mr Courtney; insofar as there was any specific conflict with which I have not otherwise dealt, I prefer the evidence of Mr Courtney.

[63] The one witness of whom I formed a distinctly unfavourable impression was Mr Paul Brannelly. That was particularly because of one piece of evidence that he gave, his assertion that he told all the plaintiffs with whom he dealt that the investment was a high risk investment. This emerged almost incidentally during cross-examination on p 1089, when he had accepted that an investment in Bayshore Mezzanine promissory notes was a high risk investment. In answer to a question as to whether he ever advised any of the plaintiffs that it was in fact high risk, he replied "As I mentioned before, I always stated that mezzanine funding is high risk initially but there are factors which reduce that risk." He repeated the proposition that he had said that to the plaintiffs at p 1090, claiming that it was the very first comment when the Westpoint products were mentioned to them. He conceded that this was not set out in any of his letters, nor was it recorded in the notes that he made of his dealings with the plaintiffs, though he said that this was because he was not recording everything that was said (and see p 956), and continued:**

"I'm saying again that the very first thing I said to anybody when the Westpoint mezzanine funds were mentioned was that it was high risk but there are factors which mitigate against that risk. And that was repeated at other times."[63]

**He said that he had made that statement to everybody he dealt with, and that he had told his solicitors and barristers that that was his practice: p 1090.

[64] The proposition that the plaintiffs were expressly warned that this was a high risk investment was plainly material to the plaintiffs' cases as pleaded. But it was not raised in any of the defences, nor was it put to any of the plaintiffs that any such thing had been said.[64] The proposition that such a warning had been given was not led in evidence-in-chief, despite the fact that all of the plaintiffs were asked whether they were told that it was a high risk investment, and all said they were not, and all said that if they had been told that they would not have invested in these promissory notes. From what I saw and heard of the various plaintiffs, I had the distinct impression that in particular Mr and Mrs Summergreene and Mr Evans would have definitely not invested in the promissory notes had they been told expressly that they were a high risk investment; indeed I think it unlikely that any of the plaintiffs would have done so. I simply cannot accept the proposition that they all did so notwithstanding that they had been expressly warned of this. In all the circumstances I find that this warning was not given by Mr Brannelly, and that his statements to that effect were false. That reflects adversely on his credibility overall. The fact that Mr Brannelly claimed to have said these things was, however, in effect an admission that they were warnings which ought to have been given.

[65] Another matter which was unsatisfactory was the preparation of the typewritten versions of his handwritten notes, which form part of the respective exhibits. They do not correspond exactly. Mr Brannelly said that the reason for this was that the notes were prepared to inform others of what had happened with these (and other) investors, with a view to his handing them over when he left the company: p 906. But in Exhibit 116 the typewritten version for the meeting on 25 July 2005 includes: "PB explained he was only giving general advice not personal advice". That did not appear in the handwritten notes. Mr Brannelly said this was an inference from what was in the handwritten notes (p 1119) and it was necessary so the rest of the notes would make sense: p 1120. These are not plausible explanations for what looks very like an exercise in manufacturing evidence.[65]

[66] There were some other matters about his evidence which I thought were unsatisfactory. At one point he appeared to be saying that the letters sent out to the various plaintiffs were all individually submitted to the third defendant and approved by it before they were sent: p 910. However, under cross-examination he conceded that all that had been approved by the third defendant were form letters, not each individual letter sent out: p 1071.[66] Some things that he said particularly under cross-examination amounted to concessions which I am prepared to accept, partly because they were against interest and partly because they were generally speaking concessions about matters which were fairly obvious anyway. Overall, however, I was not impressed by his reliability, and as a general proposition where there is any conflict between his evidence and the evidence of another witness, particularly the plaintiffs, I prefer the evidence of the other witness. Indeed, I am wary about accepting his evidence even if it was not directly contradicted.

[67] Mr Johnston's[67] evidence suffered from two difficulties. It seemed to me that he was hardly objective in relation to a matter of this nature, because of the position that he occupied; he was in effect the person in charge of a professional association of investment advisers (p 972), so that ordinarily he would be concerned in advancing the interests of investment advisers and defending them if they came under attack: Exhibit 120. Despite this, it seemed to me that much of his evidence was quite frank. His evidence also suffered from the difficulty that he gave it by telephone in circumstances which were scarcely conducive to calm deliberation. To begin with, he was speaking from a hotel room he was supposed to be checking out of (p 1011), and ultimately I adjourned so as to give him time to vacate the room and relocate. Then he was giving his evidence from an airport, where he was initially waiting for, and subsequently missed, an aeroplane: p 1058. In these circumstances I suspect that at times he did not give questions that he was asked the careful consideration that they really required. I am overall wary about Mr Johnston's evidence, but am prepared to accept quite a bit of it; essentially where I have referred to his evidence or cited it without indicating that it is rejected, I accept that evidence.

[68] Mr Child's evidence I thought was generally honest and reliable, although much of it suffered from the difficulty that it was not directly relevant to the matters actually in issue in the action, for one reason or another. There were I thought not very many matters of importance where there was a direct divergence between Mr Child and Mr Johnston; a number of apparent inconsistencies seem to me to be better characterised as differences in emphasis. As a general proposition, particularly bearing in mind concerns that I had about Mr Johnston's evidence, where there is a direct conflict I prefer the evidence of Mr Child, subject to any specific findings that I have made elsewhere. There was I think no occasion for me to be concerned about the credibility of any of the other witnesses.

[69] It is necessary then to work through the current statements of claim and identify those matters which are either admitted or proved, dealing with issues raised in that pleading and the current defence as they arise. I will deal first with the Evans action. A second further amended statement of claim in this matter was filed on 3 December 2007. This includes amendments which were made by leave given on 15 October 2007. A notice of intention to defend and defence was filed on 2 October 2006; an amended defence was filed on 3 October 2007, and a further amended defence filed 26 November 2007. That document was responsive to the statement of claim filed on behalf of the plaintiff on 3 December 2007, though it was in fact filed earlier, since the amendments were known from 15 October 2007. Then on 13 December 2003 there was a further amendment allowed, in terms of para 60 in Exhibit H: p 1023.

[70] At all material times the first defendant engaged in the provision of financial and investment advice for reward, and acted as a director and agent of the second defendant.[68] The second defendant was an authorised agent of the third defendant.[69] At all material times the first defendant held himself and the second defendant out as being competent or qualified to give financial and investment advice.[70] The second defendant was a company duly incorporated according to law, a business providing financial and investment advice, a corporation within the meaning of that term as used in the Trade Practices Act 1974, liable for the actions of the first defendant, and a financial corporation within the meaning of that term as used in the ASIC Act.[71]

[71] The third defendant was a company duly incorporated according to law, a business providing financial and investment advice, the holder of an Australian Financial Services licence issued by the Australian Securities and Investment Commission on 1 October 2003 being licence number 231159, conducting business via an advisory network, an Australian Financial Services licence holder that authorised the second defendant and the first defendant to provide investment advice under the third defendant's licence, a corporation within the meaning of that term as used in the Trade Practices Act 1974, liable for the actions of the first defendant and liable for the actions of the second defendant.[72]

[72] The third defendant issued or published to the general public, including the plaintiff, a document described as a financial services guide version 4 February 2005 in which the third defendant made or authorised the following express representations to be made:

(i) Deakin Financial Services conducts business via an advisory network. Each advisor is authorised under Deakin's licence;

(ii) Where Deakin has appointed a corporate entity as an authorised representative, employees of that company who give advice will also be authorised by Deakin;

(iii) Deakin is ultimately responsible for any advisory services the advisor provides.[73]

[73] The first, second and third defendants' conduct was conduct in trade or commerce within the meaning of those words as used in the Trade Practices Act 1974 and the Fair Trading Act 1989 and the Australian Securities and Investment Commission Act 2001.[74] Insofar as the first or second defendants did anything as alleged in paragraphs 7 to 11, or omitted to give the advice referred to in paragraph 20, of the statement of claim they were acting as agents for the third defendant.[75] The plaintiff was a consumer within the meaning of that term as defined in s 6 of the Fair Trading Act and s 4B of the Trade Practices Act and s 12BC of the ASIC Act.[76] Paragraph 1(i) was proved by the evidence of the plaintiff and the first defendant.

[74] Paragraphs 2, 3 and 4 related to an alleged agreement for reward to provide financial and investment advice to the plaintiff. I am not persuaded that there was ever any such agreement. Ultimately the plaintiff did not press the case on the basis of contract, so it is not necessary for me to say anything very much about this. In relation to the matters alleged in paragraph 3 of the statement of claim, a letter dated 18 July 2005 enclosing a document entitled "Brannelly - the professional perspective" was sent.[77]

[75] It was admitted that the first and second defendants sent a letter dated 27 July 2005 with a promissory note application form for Bayshore Mezzanine Pty Ltd, which was included in a copy of the information memorandum: Exhibit 47. I find that on 9 August 2005 the plaintiff completed the promissory note application form and handed it, together with a cheque for $50,000, to the first defendant at the office of the second defendant.[78]

[76] It is in issue on the pleadings whether the first and second defendants forwarded the application form to the third defendant or to Bayshore Mezzanine Pty Ltd, and there was no evidence on the basis of which I could make a finding about this matter;[79] the allegation that they dealt with the sum of $50,000 in the same way was not pleaded to and was therefore deemed to be admitted. There was no evidence that the first and third defendants received a payment from Bayshore Mezzanine Pty Ltd in respect of the plaintiff's investment of $50,000; it was admitted that the second defendant received a payment from the third defendant in respect of that investment: para 10(j). There was no evidence the first defendant received a payment from the second defendant. It was admitted by the defendant during evidence that the third defendant had authorised the first and second defendants to recommend at least some Westpoint products to investors, including relevantly this one: p 778.

[77] I find that at the time the various communications from the first and second defendants were made to the plaintiff the first defendant was aware that the plaintiff was seeking advice on serious financial matters, and that, from the time of the telephone conversation between the plaintiff and the first defendant following the receipt by the plaintiff of Exhibit 46,[80] the plaintiff was giving consideration to investing in Bayshore Port Melbourne development. This finding is based on my acceptance of the evidence of the plaintiff as to the communications that he had with the defendant, as summarised earlier. From the point of view of the plaintiff these were serious financial matters, I accept that he was seeking advice on them, and I accept that he communicated that to the defendant. I find that in the visit when the decision was made to invest, the plaintiff sought advice from the defendant in relation to investing in Bayshore Mezzanine and said things which indicated that he was worried about making the investment and concerned about security, and that he was seeking the defendant's advice as to whether he should invest in that way.

[78] I am not prepared to find that the first and second defendants knew or should have known that the plaintiff believed that they had expertise in promissory notes and the property industry, or were experienced and knowledgeable about trade in promissory notes or property, but I find that they should have known that the plaintiff believed that they had expertise in property investment and were experienced and knowledgeable about property investment. That follows from the facts that they were engaged in the provision of financial and investment advice, and that they had held themselves out to the plaintiff as having expertise in the provision of financial and investment advice, and that the plaintiff had sought advice and assistance from them in relation to the proposed investment.

[79] I find that the first and second defendants ought to have known that the plaintiff would rely or was likely to rely on any representations made by them as to the quality of the promissory notes as an investment, the value of the promissory notes in comparison to other investments and securities, and the price, safety and reliability of the promissory notes in comparison to other investments. That follows from what had passed between them. It must have been apparent to the defendant during the visit that the plaintiff was hesitant and uncertain about the investment,[81] and was being influenced favourably towards it by the advice that was being given. In addition, the advice both written and oral was couched in terms which encouraged reliance, the advice and representations were obviously intended to be relied on, and in those circumstances it is a reasonable inference that the defendants should have known that the plaintiff would rely or was likely to rely on that advice in making an investment in the promissory notes recommended.

[80] I also find that the first and second defendants should have known that the plaintiff would rely on the advice and the representations and would thereby be induced to make the investment in Bayshore Mezzanine Pty Ltd. This is on the basis that the terms of the advice and representations were likely to induce the plaintiff to make the investment referred to, as is apparent from their content.

[81] In relation to the matters raised in paragraph 9 of the defence, I am not prepared to find that the plaintiff chose to invest in Bayshore Mezzanine Pty Ltd based on his own analysis and assessment. I find that the plaintiff made no analysis or assessment of the proposed investment, and that his decision to invest was based entirely upon what was communicated to him by the defendants.[82] With regard to the matters referred to in paragraph 9(d), I find that the letters of 18 July 2005 and 27 July 2005 (but not 9 August 2005) did have attached to them a document which included the passage pleaded. Insofar as the document stated that the plaintiff had not sought advice and was not given advice the document was false. In other respects the passage was irrelevant. It does not demonstrate that advice was not sought and was not given; it merely confirms that the defendant was economical with the truth. Advice does not cease to be advice as a result of having tacked on to it a false statement that it is not advice.

[82] As to paragraph 9(e) of the defence, I find that there was attached to the letters of 18 July 2005 and 27 July 2005 a document containing the statement referred to in this paragraph of the defence. The comments I just made apply to that paragraph as well.[83] The letter of 9 August 2005 contained the statement alleged in paragraph 9(f) of the pleading. The proposition that Mr Evans had decided to make the investment based on his own research was a lie. It was obvious from the plaintiff's evidence that he did not do any research himself, and he did not say that he told the defendant that he had done any research himself, nor was it suggested in cross-examination or alleged by Mr Brannelly in evidence that he did. In those circumstances the defendant must have known that the plaintiff had not done any research himself, and therefore must have known that a statement to that effect was false. The only effect of this document is that, as an attempt to pretend that the facts were other than they were, it shows guilty knowledge on the part of the defendant, and arguably amounts to an implied admission that his prior communications had been misleading and deceptive.

[83] The letter went on to refer to transactions being "made without personal advice ie advice relating to your personal situation". The defendant had been provided during the visit with some information about the personal situation of the plaintiff. The defence proceeded on the basis that advice was given only if it was personal advice, and only personal advice if it was given as a result of a specific retainer to give advice after a full consideration of the plaintiff's financial situation. There may be a legislative context in which that is a relevant consideration,[84] but it is irrelevant to liability at common law, and irrelevant to the question of whether conduct was misleading or deceptive.

[84] Whether or not there has been some detailed consideration of the whole financial position of a person, if a financial adviser purporting to act as a financial adviser says to a person, in substance, "you should invest in X", that adviser is giving advice to that person, and it is advice about the suitability of that investment for that person. If an investment adviser purporting to act as such says to a person in substance "people should invest in X" or "X is a good investment" then that is advice as to the suitability of that investment as a general proposition, though it is not necessarily advice as to the suitability of that investment for the particular person in question. However, where such advice is given in circumstances where there is nothing said to suggest that a general suitability of X as an investment is inapplicable to the particular person addressed, and where the investment adviser knows that that person is contemplating making an investment, in my opinion that is in substance also advice that "you should invest in X". I find the arguments in favour of a much more limited concept of advice advanced on behalf of the defendants wholly unpersuasive and I reject them.

[85] It was alleged in paragraph 6 of the statement of claim and I find that the first and second defendants owed a duty to the plaintiff to exercise reasonable care and skill in the provision of advice and the making of representations. It was recognised in Hedley Byrne and Co Ltd v Heller and Partners Ltd [1963] UKHL 4; [1964] AC 465 that when a party seeking information from a party possessed of a special skill trusts him to exercise due care and that party knew or ought to have known that reliance was being placed on his skill and judgment, there was a duty of care owed by that party. That approach was adopted by the judgment of the High Court in Mutual Life and Citizens Assurance Co Ltd v Evatt [1968] HCA 74; (1968) 122 CLR 556.

[86] Barwick CJ at p 571 said that there would be a duty of care if the person giving the advice or information realised, or a reasonable person in that position would have realised, that he was being trusted to give information which the recipient believed the speaker to possess or to which the recipient believed the speaker to have access, or to give advice about a matter upon or in respect of which the recipient believed the speaker to possess a capacity or opportunity for judgment, in either case the subject matter of the information or advice being of a serious or business nature. The speaker must realise or ought to have realised that the recipient intended to act upon the information in connection with some matter or business of serious consequence and the circumstances must be such that it is reasonable for the recipient to seek or accept or rely upon the utterance of the speaker. All of those requirements were present here.

[87] In San Sebastian Pty Ltd v The Minister [1986] HCA 68; (1986) 162 CLR 340, the majority said at p 357:**

"The maker of a statement may come under a duty to take care through a combination of circumstances or in various ways, in the absence of a request by the recipient. The author, though volunteering information or advice, may be known to possess, or profess to possess, skill and competence in the area which is the subject of the communication. He may warrant the correctness of what he says or assume responsibility for its correctness. He may invite the recipient to act on the basis of the information or advice, or intend to induce the recipient to act in a particular way. He may actually have an interest in the recipient so acting."

**[88] In the present case the defendants had and held themselves out as having skill and competence as financial and investment advisers, and were in their correspondence and in the oral statements to the plaintiff inviting the plaintiff to act on the basis of the information and advice provided, and intending to induce the plaintiff to act on that information, by investing in Bayshore Mezzanine promissory notes. They had an interest in such an investment being made, because as admitted the second defendant received a payment from the third defendant as a consequence of the investment.

[89] In Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241, Brennan CJ said at p 252:**

"It is necessary for the plaintiff to allege and prove that the defendant knew or ought reasonably to have known that the information or advice would be communicated to the plaintiff, either individually or as a member of an identified class, that the information or advice would be so communicated for a purpose that would be very likely to lead the plaintiff to enter into a transaction of the kind that the plaintiff does enter into and that it would be very likely that the plaintiff would enter into such a transaction in reliance on the information or advice and thereby risk the incurring of economic loss if the statement should be untrue or the advice should be unsound."

[90] In the same case McHugh J said at p 275:

"The position in Australia to date with respect to liability for pure economic loss caused by negligent misstatement is that, absent a statement to a particular person in response to a particular request for information or advice or an assumption of responsibility to the plaintiff for that statement, it will be difficulty to establish the requisite duty of care unless there is an intention to induce the recipient of the information or advice, or a class to which the recipient belongs, to act or refrain from acting on it."

**[91] In the present case of course there was a statement to a particular person, all statements except the first were in response to a request for information or advice, and there was an intention to induce the plaintiff to act on the information or advice provided by making an investment in the promissory notes. These principles were reaffirmed by the High Court in Tepko Pty Ltd v Water Board (2001) 206 CLR 1. There have been no subsequent changes in the law in Australia in relation to negligent advice which would be of assistance to the defendants, and no subsequent authorities were referred to by the defendants' counsel. They were applied to a financial planner who was remunerated through commissions in Paige v FPI Ltd (2001) Aust Torts Reports 81-625.[85]

[92] The submissions on behalf of the defendants in relation to the question of duty were based on two propositions: that the plaintiff's claim was predicated on the allegation of their status as clients of the defendants, so that it would fail if they were not clients, and that the existence of a statutory regime in the form of the Corporations Act and the ASIC Act dealing with misleading and deceptive conduct of defendants negated the idea that the plaintiff suffered from any vulnerability and militates against the imposition of any common law duty of care.

[93] As for the former, paragraph 2 of the statement of claim was surplusage, and the duty was largely based on the propositions pleaded in paragraph 5 which I have found made out on the evidence. There were references to the plaintiff being a client of the defendant, or to the obligation to a client, in the statement of claim, for example in paragraph 3(a), which was pleaded in support of the allegation in paragraph 2 that there was a contract between the plaintiff and the defendant, which allegation has not been made out. The statement of claim pleaded a case for damages for breach of contract, in the alternative to a claim for negligence, but that claim has not been made out and was not pressed at the trial. That, however, does not mean that a claim in negligence cannot succeed, if the facts were such as to give rise to a duty of care.

[94] A contract, or a client relationship, is not a prerequisite to the existence of a duty of care, although no doubt if either had existed it would have been relevant to the existence of a duty of care and its content. It is clear from the authorities referred to that a duty of care can exist without a client relationship, in the sense that that was used in the submissions on behalf of the defendants. Of course, in a sense the plaintiff was in the position of a client in that he was the recipient of the advice as to investment, and as a result of his having accepted the advice and making the investments the defendant received remuneration. Whether or not he was regarded as a client really depends on whether the concept of being a client extends that far,[86] but that is not helpful in determining whether there was a duty of care.

[95] As to the question of whether the existence of the other statutory regime was relevant to a duty of care, again I am unable to see why the existence of a parallel statutory remedy would impact on the existence of a common law duty. It is well recognised that a duty of care can arise notwithstanding that there is a contractual obligation to take care, so that there can be parallel remedies in tort and contract, and it seems to me that there is no reason in principle why there could not equally be parallel remedies in tort and under the Corporations Act or the ASIC Act. The Court of Appeal upheld the existence of parallel liabilities in negligence and under the ASIC Act in Delmenico v Brannelly [2008] QCA 74. I reject this submission.

[96] It was not disputed that the second defendant sent the letter dated 18 July 2005 to the plaintiff: Exhibit 46. I find that in that letter the first and second defendants provided advice to the plaintiff with respect to investment in the Bayshore Port Melbourne development by investing in promissory notes to be issued by Bayshore Mezzanine Pty Ltd. For reasons given earlier I reject the defendant's submissions that that letter did not amount to giving advice. I find and it is obvious that the letter contained the express representations alleged in paragraph 7(b).[87] As to paragraph 13(d) of the defence, this was not made out; most of the express representations alleged in paragraph 7(b) were not contained in the information memorandum and did not accurately repeat what was contained in the information memorandum. There was otherwise no express pleading to the proposition that these were representations, which is therefore taken to have been admitted.

[97] I find that there was a conversation between the plaintiff and the first defendant between 18 July and 27 July 2005, but I am unable to find that the matters referred to in paragraph 8 were said by the plaintiff and the first defendant as alleged.[88] Accordingly I am not able to find that the representations alleged in paragraph 9 were made. As to paragraph 10, it was admitted that the second defendant sent a letter to the plaintiff dated 27 July 2005: Exhibit 47. For the reasons given earlier concerning Exhibit 46, I find that this letter provided written advice to the plaintiff with respect to investment in the Bayshore Port Melbourne development by investing in promissory notes, and made the express representations pleaded in paragraph 10(b) of the statement of claim, except for para 19(b)(i) where the letter concluded this passage with the words "in the next few months" rather than "in the next month or so"; (ii) where the letter began the passage with the words "Bayshore Port Melbourne" rather than "this" and used the word "have" instead of the word "has"; and (viii) with regard to the project term, since the project was said to be due for completion at the end of 2005, and the word "the" has been omitted before "Westpoint" in the security highlights. These errors of transcription are of no consequence, except for the date for completion.

[98] As to paragraph 10A, I accept that there was a meeting between the plaintiff and the first defendant at the first defendant's office on 9 August 2005.[89] I find that the plaintiff informed the defendant that he wanted to make sure that there was no downside risk in an investment in Bayshore Mezzanine before he committed any funds: 10A(a). It was admitted that the first defendant made the statements alleged in paragraph (b)(i), (ii) and (iv): para 16A(b). I accept the plaintiff's evidence that the first defendant informed him that there was security over the Bayshore project in respect of the whole of the investment even if some of the money were used for some other project: p 322. I accept the plaintiff's evidence that the first defendant said that 80% of the apartments had already been sold, and there would be no problem in selling the remainder (p 323), and that he should not worry his investment would be secure (p 322); insofar as paragraphs (v) and (vi) go further than this, I do not so find. I accept the plaintiff's evidence that at the conclusion of the meeting he handed the first defendant a completed promissory note application form together with his cheque for $50,000: p 325.

[99] It was then alleged in paragraph 11 that the defendant made a number of implied representations. These were pleaded as having been made impliedly by the making of the express representations referred to in paragraphs 7, 8, 10, and 10A, and to the extent that I have not found that such express representations were made they cannot be relied upon as a basis for alleged implied representations.[90] Paragraph (a) was withdrawn by the plaintiff. I am not prepared to find that the implied representation in paragraph (b) was made; the express representations referred to the promissory notes as being unsecured. I am not prepared to find the representations in paragraph (c)(i), (ii) and (iii) were made; although some of the passages relied on were ambiguous, when all of the representations relied on are taken together it is I think reasonably clear that these statements were made not in relation to Bayshore Mezzanine Pty Ltd, but in relation to the Westpoint Group. I find that the implied representation in paragraph (c)(iv) was made.

[100] As to the implied representations in paragraph (d) I find that it was represented that the capital raising would be limited to $20 million, had as at 18 July 2005 raised $6.5 million, had as at 22 July 2005 raised in excess of $10 million, and would be likely to be fully raised by the end of September 2005 or thereabouts. I find there was an implied representation that the Westpoint Group had net assets to the value of an amount in excess of $80 million. I find there was an implied representation that for each project undertaken by the Westpoint Group promissory notes would be issued by a company, and the company issuing the promissory notes had a second ranking mortgage over the development property for which the money was lent.[91]

[101] I am not prepared to find that there was an implied representation that the company issuing the promissory notes granted the noteholders a second ranking charge. There is necessarily ambiguity in the latter part of the sentence in the two letters:**

"In each project, this company has a second ranking mortgage over the development property and a second ranking charge over the special purpose company."

**However, I do not think that a natural inference to be drawn from that expression is that the second ranking charge was granted over Bayshore Mezzanine Pty Ltd in favour of the noteholders.[92] The other reference to a charge in both letters was to "a charge over the Bayshore Port Melbourne Trust" referred to as one aspect of the security under the "Investment Highlights". That suggested that the noteholders received the benefit of a charge but not over the company issuing the promissory notes, rather over the assets of the Bayshore Port Melbourne Trust.[93]

[102] I find that there was an implied representation that the loan from the plaintiff was to the company issuing the promissory notes and the performance of that company's obligations to the plaintiff was further secured by a guarantee by Westpoint Corporation and associated entities. That is the natural reading of the express statements under the heading "Investment Highlights": "Security: guarantee from Westpoint Group ...", and of the express statement "Westpoint Corporation and associated entities provide a guarantee for the company's obligation under the loan ...". That supports the inference that such a representation would have been understood by a reasonable person in the position of the plaintiff.[94] I also find that the five representations in paragraphs (h)(i) and (iii), (i), (k)(A), (l)(A), and part of (m) were made, the last of these to the extent that the repayment of the plaintiff's investments and interest was to be secured by a guarantee from the Westpoint Group, and a charge over the Bayshore Port Melbourne Trust. That is the reading of the statement headed "Security" under the heading "Investment Highlights" which would have been made by a reasonable person in the position of the plaintiff. There was no implied representation that the investor obtained a second ranking mortgage.

[103] As to paragraph 12, the plaintiff handed over his money and an application form on 9 August 2005, as a result of which Bayshore Mezzanine Pty Ltd issued a promissory note in his favour on 12 August 2005: Exhibit 49. I find that the plaintiff invested in the promissory note issued by Bayshore Mezzanine Pty Ltd in reliance on the advice and representations referred in paragraphs 7 to 11,[95] insofar as I have found that those representations were made,[96] on 9 August 2005. The exception to this is the representation in paragraph 11(f)(ii), which was not relied on as the plaintiff thought that he obtained the benefit of the second ranking mortgage. I have set out already Mr Evans' evidence as to what he relied on, which was fairly comprehensive. The whole tenor of Mr Evans' evidence was that he was relying on what the defendants were saying in relation to the investment in deciding to make it.[97] It is true that some of the matters that he referred to as matters he relied on were matters which were not specifically included in those paragraphs of the pleading, but most of them were, and it is not necessary to show that the only matters relied on were those matters pleaded and found to have occurred. In particular, I find that he relied on his obtaining the benefit of a guarantee from Westpoint and associated entities; without it he would not have made the investment. He attained the idea that there was a guarantee in his favour from those companies solely from the representations made by the defendant. The defendant's representations were the sort of thing that would naturally induce reliance, and in those circumstances it is not difficult to infer that there was reliance on them when the decision to invest was made.

[104] It is clear from the authorities referred to earlier that it is necessary to consider whether it was reasonable for the plaintiff to rely on the advice and the representations of the defendant, in order to determine whether there was a duty to take reasonable care in giving advice and making representations. I find that it was reasonable for the plaintiff to rely on those representations. The defendant had held itself out as being competent and qualified to give financial and investment advice. The second defendant's letterhead described itself as "Advisers to the Professions". Exhibit 45, the letter in relation to the Prime Retirement Trust, included a document headed "Brannelly the professional perspective" which stated "Brannelly has been providing exclusive and specialised financial services to small businesses, professionals and individuals for over four decades. ... Brannelly has forged a reputation as a leader in the financial services field and the company's expertise is reflected in the broad range of services it is able to offer. ... At Brannelly our focus has always been on achieving an even greater understanding of the specialised nature of our client's businesses and personal ambitions. The expanding scope of our services is directed at further meeting our clients' needs. It seems this philosophy to our service has been welcomed by our clients throughout Australia ... clients who value our professional perspective." There was also a statement in relation to the defendant's privacy policy, and there was the document from the third defendant which among other things said "Deakin Financial Services conducts business via an advisory network. Each adviser is authorised under Deakin's licence. ... When one or more of Deakin's authorised representatives ("your adviser") provides a financial service to you, your adviser will be acting for you and not for any financial institution." The third page of this document identified "your adviser Paul Brannelly ... is authorised to provide financial product advice and deal in financial products as a representative of Deakin ... ." The defendant by forwarding that document with the letter to the plaintiff was adopting that statement of its position or representing that those remarks applied to it. The whole tenor of Exhibit 46, and indeed the following letter Exhibit 47, was that the investment was recommended by the defendant. In the circumstances, in my opinion it was plainly reasonable for the plaintiff to rely on what he was being told by the defendant.

[105] It was admitted that it was a term of the promissory note that Bayshore Mezzanine Pty Ltd would pay to the plaintiff the sum of $50,000 on 30 June 2006 plus any outstanding interest at the rate of 12% per annum on a monthly basis in arrears plus 2% on the expiry date.[98] I accept that the plaintiff received three payments of interest but has otherwise received nothing from Bayshore Mezzanine Pty Ltd: Exhibit 50.

[106] As to paragraph 15, I find that at all material times Bayshore Mezzanine Pty Ltd was a company duly incorporated according to law,[99] it did not have an established record financial or otherwise over 20 years,[100] did not have a second ranking mortgage or second ranking charge over the development property known as Bayshore Port Melbourne situated at 45 Bay Street, Port Melbourne,[101] and that the directors of Bayshore Mezzanine Pty Ltd were not independent of Bayshore Port Melbourne Pty Ltd, Bayshore Port Melbourne Trust, the Westpoint Group of companies, and the Westpoint Guarantor Group of companies.[102]

[107] I am not prepared to find that Bayshore Mezzanine Pty Ltd did not generate or earn income and that its only assets were funds that it had borrowed from investors; the evidence suggests that money obtained from investors was relent, at interest, to other companies in the Westpoint Group of companies, and that that process generated income.[103] Its assets consisted of loans to other companies, and any income that happened to be in its hands from time to time. The evidence was to the effect that at least for a time Bayshore Mezzanine Pty Ltd was paying interest and repaying principal when that fell due and was not rolled over.[104] I find that commissions were paid on money invested with Bayshore Mezzanine Pty Ltd, 6% to the second defendant,[105] 10% to Kebbel (NSW) Pty Ltd or an associated company,[106] and 3% to Needlers End Nominees Pty Ltd.[107] There was also an allegation lurking in paragraph 15(g), which I think should have been in a separate paragraph, that Bayshore Mezzanine Pty Ltd was insolvent. Without more information as to the financial arrangements between Bayshore Mezzanine Pty Ltd and the other companies in the Westpoint Group, it is really not possible for me to make a finding about this one way or the other. On the evidence presently available I am not prepared to make this finding.

[108] As to paragraph 16, it was not disputed that the Bayshore Port Melbourne project had been the subject of earlier fundraising efforts.[108] I find that the project was initially to be completed in June 2003.[109] I am not prepared to find on the material presently available that by mid-2005 the Bayshore Development had raised more than $20 million by issuing promissory notes,[110] nor that Westpoint Constructions did not provide financial accounts for the financial year 2003/2004.[111] I have already found that Kebbel received 10% commission and Needlers End received 3% commission on all investments. I find that ASIC issued a warning about promissory notes as a form of investment in May 2004 (Exhibit 17), and that in 2005 there was unresolved action before the Western Australian Supreme Court between ASIC and Bayshore Mezzanine Pty Ltd. [112] However, there is no evidence before me that in the proceedings involving that company ASIC asked the court to find that investors were being misled.[113] There is no point to this allegation without this aspect, so it is not found. I am not prepared to find on the evidence that it was common knowledge within the financial advisory industry that in 2004 many financial planners including Bongiorno had removed the Westpoint products from their listings. Accordingly paragraphs 16(a) in part, (b), (e), (f), and (i) were proved.

[109] It was then alleged in paragraph 17 of the statement of claim that the various representations were false, misleading or deceptive because of certain facts which were then alleged. This really involves two propositions; first, that the true facts were as alleged in that paragraph, and second, that as a result the representations were misleading or deceptive. The defendants merely denied the allegations on the basis that the first and second defendants did not give any advice or make any representations to the plaintiff as alleged. To some extent I have found to the contrary. In those circumstances, strictly speaking they are to be taken to have admitted the factual allegations in paragraph 17. In any case, I am prepared to find on the evidence the facts alleged in paragraphs (a), (b), (c), (d), (f), (g),[114] (h), (i), (j)(i) as to the first and second defendants, (k)(ii), and (l). This follows from the actual structure of the Bayshore Mezzanine scheme, as set out in Exhibit 8 and the other exhibits, and was not contentious at the trial. The promissory notes did on the face of it offer a 14% return, though in the event that was not paid; indeed, for those plaintiffs who invested for a period of less than 12 months the return was actually slightly higher than 14% on a per annum basis.[115]

[110] I find that the first and second defendants did not apply their expertise as financial advisers to the question of whether people should invest in promissory notes issued by Bayshore Mezzanine Pty Ltd;[116] the evidence suggests that the third defendant did do so,[117] though not very well, since a careful consideration of the documentation from Westpoint in relation to the project reveals that there were difficulties with it which ought to have alerted a financial adviser to serious hazards with this investment. I shall deal with these later. I cannot find that the Bayshore Port Melbourne development was not completed by the due date because the pleading does not identify the due date. I find that Bayshore Mezzanine Pty Ltd does not have the money lent to it by the plaintiff, but it does not follow that money invested by the plaintiff and others was not used to complete the Bayshore project in the sense that it was put towards the construction costs for that project. There is no evidence as to what happened to the money,[118] but it may have been used for that purpose.

[111] There was a loan agreement in place between Bayshore Mezzanine Pty Ltd and Bayshore Port Melbourne Pty Ltd under which the money lent to that company was supposed to be used only for completing the Bayshore Port Melbourne development project, in the sense that it was put towards that end.[119] There was, however, no evidence of any mechanism or binding agreement requiring Bayshore Mezzanine to apply the money raised from investors in this way. I cannot find that the money was used other than for completing the project, or that any of the money was used for anything else, in circumstances where there was simply no evidence as to how the money was used.

[112] The question then becomes whether any of the representations which I have found to have been made were false, misleading or deceptive. In relation to the express representation in the letters of 18 July 2005 and 27 July 2005 that the investment highlights included "security: guarantee from the Westpoint Group and a charge over the Bayshore Port Melbourne Trust", that statement was obviously false, misleading and deceptive because there was no such security as part of the investment which Mr Evans was being offered. In relation to the letters, the natural reading of the words "Westpoint Corporation and associated entities provide a guarantee for the company's obligation under the loan ..." was that Westpoint Corporation and associated entities were guaranteeing the obligation of Bayshore Mezzanine Pty Ltd to the investors under the loan the subject of the promissory note, which was false, misleading and deceptive. The evidence showed that there was no such guarantee available or offered.

[113] Strictly speaking, of course, there was no loan between the plaintiff and Bayshore Mezzanine; the plaintiff paid to purchase an item of property, a promissory note, which conferred an enforceable obligation to pay a particular sum, with interest and premium, at a particular time. I accept that there was no collateral obligation to repay the money paid as a debt: Emu Brewery Mezzanine Ltd v ASIC [2006] WASCA 105; (2006) 32 WAR 204 at 215, 228. But the letter spoke in this passage of the promissory notes being "repaid", and the Investment Highlights spoke of "the repayment of the capital", and to an unsophisticated investor like the plaintiff the obvious interpretation of the expression "the company's obligations under the loan" was the obligation to pay under the promissory note, particularly as "the company" was a clear reference to the "special purpose company", here Bayshore Mezzanine, and that was the only obligation it had.

[114] The proposition in each of the letters that Westpoint group has substantial net assets in excess of $80 million was false, misleading and deceptive in view of my earlier finding. The same applies to the statement about the value of the group's assets in paragraph 10A(b)(iv). The evidence indicates that at no relevant time was that true. This was not a statement as to a future matter, and therefore it is not a question of whether the defendants had reasonable grounds for making the representation;[120] on its face it purported to be a statement of the situation at the time the representation was made, and it was not true at that time. It was therefore false, misleading and deceptive. These representations are in effect pleaded again as implied representations (para 11(e), (g), (m)); to the extent that that adds anything, I find that those implied representations were also misleading and deceptive.

[115] I also find that it was misleading and deceptive to represent that the opportunity was limited[121] (paras 7(b)(i), 10(b)(x)), that it was an excellent opportunity to invest[122] (paras 7(b)(ii), 10(b)(ii)), that the special purpose company had a second ranking mortgage and a second ranking charge in each project (paras 7(b)(v), 10(b)(iv)), that the first and second defendants had applied their expertise as financial advisers to the recommendation of investment in promissory notes issued by Bayshore Mezzanine Pty Ltd (para 11(h)), and that Bayshore Mezzanine Pty Ltd had a second mortgage over the land used for the Bayshore Port Melbourne project (para 11(f)(ii)). Overall, the representations in paragraphs 7(b)(i), (ii), (iv), (v), (vi), and (x) re security, 10(b)(ii), (iii), (iv), (v), (viii) re security, and (x), 10A(b)(iv) and (vi) that there was noting to worry about, and 11(e), (f)(ii), (g), (h)(i) concerning the first and second defendants, and (m) except in respect of the mortgage, were false, misleading and deceptive.

[116] Paragraph 18 alleged that a financial adviser exercising reasonable care and skill in relation to the relevant investments would have advised clients of various things. This paragraph was put in issue in the amended defence in paragraph 20(b). In circumstances where, for reasons that I have given earlier, the plaintiff was not a client of the defendant in the ordinary sense, these factual allegations are of no direct relevance, but I will deal with them quickly.[123] The facts in paragraph 18(a) to (e) and (g) to (i) were alleged as facts in paragraph 21A(a) to (e) and (h) to (j), and if the fact alleged in paragraph 21A(f) was true, that alleged in paragraph 18(f) was necessarily true. Paragraph 21A alleged a number of facts about Bayshore Mezzanine Pty Ltd, and its relationship with the development property and the holders of promissory notes. The only reference to paragraph 21A in the current defence of the defendants was in paragraph 20 where various things were said in respect of that and a number of other paragraphs, none of which were responsive to the factual allegations in paragraph 21A. The closest the pleading came to saying anything about paragraph 21A was in paragraph 20(f) of the defence where the defendants "deny that they knew, or ought to have known, of the matters pleaded in paragraphs 15-20 and 21A of the further amended statement of claim, as it is untrue." That did not amount to a denial of the facts alleged in paragraph 21A, or indeed any responsive pleading to it. The facts alleged there are therefore taken to be admitted pursuant to r 166(1), and that covers the facts alleged in paragraph 18.

[117] The next issue is whether the defendants knew or ought to have known of these facts. The defendants knew of the facts in (a) and (b) at the relevant time.[124] I infer that they knew the facts in paragraph 18(c), (g), and (h), which are so obvious from the material the defendants had that they must have known of these. It is not the case that they knew or ought to have known the facts alleged in paragraph 18(d), (e), (f), and (i). These were matters which were not readily ascertainable by someone in the position of the defendants,[125] and, in the case of (i), a matter of judgment which it has not been shown would have been accepted by any reasonable financial adviser.

[118] As to whether a financial adviser exercising reasonable care and skill would have advised of these matters, paragraphs (a), (b), and (c) were not made out, on the basis that there was no particular reason to give negative advice in these terms; such an adviser would not have advised to the contrary. No doubt accurate advice as to the extent to which the company Bayshore Mezzanine was protected, given that the intention was that the money paid to that company be on-lent within the Westpoint group, should have been given, but there was no particular reason to give it in these terms.[126] Paragraph (d) was not made out; given the proposed structure there was no reason why anyone would expect that Bayshore Mezzanine would have any significant equity capital. I am not persuaded that it ought to have been said that Bayshore Mezzanine was insolvent, or even arguably insolvent, prior to the time when the other members of the Westpoint group became insolvent, so paragraphs (e) and (f) were inappropriate.

[119] As to paragraphs (g) and (h) I accept and indeed regard as obvious the proposition that an investment adviser should have provided correct information to the client that the investment was unsecured so far as the client was concerned, and correct information as to the structure in place to protect the debt owed to Bayshore Mezzanine Pty Ltd, from which presumably the client was to be repaid when the note matured. The propositions in paragraphs (g) and (h) really follow from that situation, but in my opinion the important consideration is that the client should have been warned that the client had no remedy in the event of non payment by Bayshore Mezzanine Pty Ltd apart from an action as an unsecured creditor against that company or, if that company were in liquidation, proof of debt in liquidation.

[120] As to paragraph (i), again it seems to me that this proposition missed the point; the company Bayshore Mezzanine Pty Ltd was obviously intended to be part of the Westpoint group rather than something independent of it, and the proposed investment ought to have been assessed on that basis, that is, that it did not have the advantage which would have been conferred had there been an independent professional trustee in control of Bayshore Mezzanine Pty Ltd. I am not persuaded, however, that a reasonably careful investment adviser would have given the advice alleged in this paragraph in the terms pleaded. It follows that I am not persuaded that any part of paragraph 18 other than (g) and (h) has been made out.

[121] With regard to paragraph 19, having found that there was no relevant contract between the plaintiff and the defendant there could have been no breach of contract. It was alleged that the failure to advise the plaintiff of the matters referred to in paragraphs 15, 16, 17, and 18 amounted to a breach of the duty of care of the first and second defendants. That can only apply in relation to those paragraphs so far as the facts alleged in them have been found, and they were matters the defendant knew or ought to have known. With regard to paragraph 15(a), there was no breach of duty in failing to provide that advice, because it was obvious, and any investor would assume that that was the case. I am not persuaded there was a breach in failing to provide the advice in paragraph 15(b), in circumstances where what was said by the defendants to the plaintiff made it reasonably clear that Bayshore Mezzanine Pty Ltd was a new company formed specifically for the purposes of this project.

[122] On the other hand, I find there was a breach of duty of care in failing to provide the advice in paragraph 15(c), in circumstances where the letters sent to the plaintiff by the defendant did suggest that Bayshore Mezzanine had a second ranking mortgage and second ranking charge over the development property known as Bayshore Port Melbourne, when that was not the case.[127] In my opinion where misinformation or misleading information has been provided and ought not to have been provided, that was a breach of the duty of care, and also gave rise to a duty to correct the incorrect information which had previously been provided, which duty was also breached in this case.

[123] As to paragraph 15(g) there was a duty to disclose the commission so far as known to the first and second defendants, and, where it was reasonably foreseeable that additional commissions would have been payable to other entities, that fact ought also to have been disclosed. There was no breach of duty in failing to disclose that information, so far as it concerned the first and second defendants, however, because each of Exhibits 46 and 47 disclosed that they would receive a total of 6% commission. I am not persuaded that the defendants in fact knew of the extent of the commission payable to Kebbel (NSW) Pty Ltd or an associated company, or of that to Needlers End Nominees Pty Ltd, at the relevant time, nor that this information was reasonably available to them.[128] The commissions paid were very high (p 1008) which was a significant risk factor which ought to have been disclosed had it been known. Even the amount of commission paid to the defendants, 6%, was a relatively high commission for a fixed income investment, and ought to have been identified as a risk factor.[129]

[124] As to the facts alleged in paragraph 15(h), it was relevant in my opinion that the company to whom the funds were to be lent, Bayshore Mezzanine Pty Ltd, was not independent of the other companies in the Westpoint group, and did not have independent directors. However, I am not persuaded that it was a breach of the duty of care to fail to give this specific advice. Nothing which was said by the defendants to the plaintiff would have indicated or suggested that the company to which he was lending money was independent of the Westpoint group, and a number of things communicated would have suggested to the contrary partiality things in Exhibit 1. It may be that in principle advice ought to be given, either directly or indirectly, as to whether the investment vehicle was independent of the group but in the present case I am satisfied that there was such indirect advice given and in those circumstances I am not persuaded that there was any breach of duty as alleged in this respect.

[125] As to the facts in paragraph 16(a), in my opinion this was an important consideration which ought to have been disclosed if known. The material which was disclosed suggested that there had not been any other equivalent fundraising exercise in relation to this particular project, though there was a reference in the information memorandum Exhibit 1 to some other source of mezzanine finance in addition to the primary financier and the funds being raised through this offer of promissory notes to the public. In those circumstances in my opinion when the truth was different there was a duty to disclose that to the plaintiff. A financial planner aware of that information and exercising reasonable care and skill would have disclosed that information, because it was relevant to the assessment of whether to invest, particularly in circumstances where the material provided by Westpoint suggested that there had not been any other equivalent fundraising effort. However, it was not shown that the defendants were aware that there had been any prior fundraising in this way.[130] I suspect that they ought to have been aware of the earlier fundraising from general familiarity with the industry, but there was no evidence of this and on balance I am not persuaded that they ought to have known this. There was therefore no breach of duty on the part of the defendant in failing to disclose that information to the plaintiff.

[126] The facts alleged in paragraph 16(b), (e), (f), and (i) were all significant factors relevant to the decision to invest, and insofar as the defendants were aware or ought to have been aware of these in my opinion there was a breach of the duty of care on their part in failing to disclose this information. I cannot find that they were aware of any of these facts.[131] I am not persuaded that they ought to have been aware of these facts, except that they ought to have been aware of the ASIC warning issued in May 2004 referred to in paragraph (i). In my opinion this was something a reasonably careful financial planner would have been aware of, and would have taken into account when giving advice in relation to investment.[132]

[127] Apart from the fact that the warning itself indicated concern on the part of ASIC, the fact that such a warning had been given was also relevant to the prospects of success of such a fundraising effort and hence the project, and for those two reasons the existence of the warning should have indicated a risk factor associated with such an investment, a factor which ought to have been disclosed or warned about by a financial adviser exercising reasonable care and skill. I find that the material was readily available on the ASIC website,[133] and that this was therefore something which the defendant ought to have known, so there was a breach of duty in failing to disclose this information to the plaintiff. However, I am not persuaded that the defendant ought to have known about the facts alleged in paragraphs (b), (e), and (f), as this information was not readily available or not the sort of information which it has been shown a reasonably careful financial planner would have ascertained.

[128] With regard to the facts alleged in paragraph 17, in my opinion the duty of care required the disclosure of the information in paragraph (a) and there was a failure to disclose that information, both in failing to make clear the nature of an investment by way of promissory note, and in failing to make it clear that the promissory note was unsecured, particularly in circumstances where it was expressly asserted that there was security. There was no breach in relation to paragraph (b) but there was a breach in relation to paragraph (c)(ii) because of the express assertion that there was a security which was in fact not provided.

[129] I am not persuaded that there was a breach in relation to paragraph (d), because in my opinion the information provided adequately communicated that Bayshore Mezzanine Pty Ltd had not been in existence for any great length of time and that the twenty years applied to the Westpoint group as a whole. As to paragraph (f) I am not persuaded that these were matters which were in fact known, or ought reasonably to have been known, by the defendants and therefore there was no duty to advise the plaintiff of them. As to paragraph (g), the defendant had a set of accounts which indicated a much lower figure (Exhibit 4). I have not seen any reliable document which supported the figure of $80 million.[134] Mr P Brannelly could not say where the figure came from (p 1073), and no proper basis for such a figure has been shown and the defendant had a set of accounts showing a much lower figure: Exhibit 4. I find it was negligent to fail to advise that this was false.

[130] I find that there was a breach of the defendants' duty in failing to advise the plaintiff that the promissory notes were not issued by a company that had a second ranking mortgage over the development property, in circumstances where I have found that the defendants did expressly and impliedly represent that Bayshore Mezzanine had such a mortgage.[135] However, for the reasons given earlier I am not persuaded that there was any breach in relation to paragraph (h)(ii). For reasons given already, I find that there was a breach in failing to give the advice referred to in paragraph (i) that the obligation to repay the money to the plaintiff was not secured by a guarantee. The assertion that there was a guarantee of the investment was a blatant and gross breach of the duty to provide accurate advice about the nature of the investment. The same applies to paragraph (1).

[131] I have found that the first and second defendants did not apply their expertise as financial advisers to the projects undertaken by Westpoint. In my opinion there was a breach of the duty of care in failing to disclose that fact, in circumstances where, because of the factors which gave rise to a duty of care, the plaintiff was reasonably relying on the first and second defendants' expertise as financial advisers and they had impliedly represented that they had done so: para 11(h)(i). There was therefore a breach of duty in failing to advise the fact in paragraph (j)(i) to that extent. The matters alleged in paragraph (k) had not occurred at the time, and therefore there could have been no breach of duty in failing to inform the plaintiff of them.

[132] As to the matters referred to in paragraph 18, it was a breach of duty to fail to advise the plaintiff of the matter in paragraph (a) for the same reasons as for paragraph 17(h)(i), and paragraph (b) is essentially the same point. There was no breach for paragraph (c), which follows paragraph 17(h)(ii), nor for paragraphs (d), (e), and (f), since these are matters the defendant did not know, and ought not to have known, and on the basis of Exhibit 8 were not true, although there was a deemed admission. There was a breach in failing to advise as in paragraphs (g) and (h), as part of the duty to provide accurate information about the proposed investment in the light of what had been said. I am not persuaded that there was any breach in failing to advise as in paragraph (i), in circumstances where there was nothing to suggest that the proposed borrower was not an integral part of the Westpoint group.

[133] With regard to paragraph 20 I find that a financial adviser exercising reasonable care and skill in relation to the investment in Bayshore Mezzanine Pty Ltd would have ensured that the risks were clearly explained and understood by the plaintiff.[136] This arises because of the nature of the duty and the facts giving rise to that duty of care in giving advice and providing information, and because that duty came to be performed in circumstances where the investment was otherwise described as an excellent opportunity to invest, so there was an obligation to draw attention to relevant risks. In other words, it was negligent to describe the Bayshore Mezzanine Pty Ltd promissory note as an excellent opportunity to invest without drawing attention to the particular risks involved.[137]

[134] Paragraph 20(b) and (c) are not made out on the basis that I have not found that the instructions referred to in paragraph 8(a) were given. I find that a financial adviser exercising reasonable care and skill would have advised the plaintiff of the effect and implications of the fact that the investment proposed was an unregulated, high risk investment which was not capital guaranteed. This arose because the investment was a high risk investment, it was a form of investment which was not regulated,[138] there was no guarantee securing the borrower's obligation under the promissory note, and it was apparent from what was said by the plaintiff to the first defendant at the meeting in early August, which I find occurred, in the course of which I find that Mr Evans said the things referred to earlier, that the plaintiff was concerned about the security of his investment and was seeking advice as to whether this was a secure investment, which it was not.[139]

[135] I find that a financial adviser exercising reasonable care and skill in relation to investing in promissory notes with Bayshore Mezzanine Pty Ltd would have advised the plaintiff that the promissory notes provided no additional security to a mere agreement to pay money in the future: paragraph (e)(iii). This was because that was the situation with this form of investment, because promissory notes are an unusual form of investment,[140] the plaintiff was obviously not a sophisticated investor, and was obviously concerned with the security of his investment: p 1121. In these circumstances in my opinion a financial adviser exercising reasonable care and skill would have warned that promissory notes were a form of unsecured investment, and that they were just like a contractual obligation to repay money with interest in the future. As to whether such a financial adviser would have advised that the promissory note was little more than an IOU, and contained no restrictions on the manner in which the borrower used the money, I do not think the former allegation really adds anything of substance to the allegation in paragraph 20(e)(iii), and I am not persuaded that the existence or absence of restrictions on the way in which the borrower used the money was a matter of any particular consequence.

[136] I am not persuaded that the allegations in paragraph 20(f) and (g) were made out; given the circumstance under which the duty arose in the present case I am not persuaded that the scope of the duty extended to providing financial records of the relevant companies to the plaintiff. There is also the consideration that the plaintiff was obviously an unsophisticated investor, and there would have been little point in providing such information to him. As to (g), the information provided indicated that Bayshore Mezzanine Pty Ltd was to be lending the money borrowed to another entity, and in those circumstances it must have been obvious that that company was not going to be keeping the money itself so that it could in time repay the debt from its own funds; rather the intention was that it would repay the debt from the repayment of loans that it had made to the other company.

[137] As to paragraph 20(h), Bayshore Mezzanine Pty Ltd had no security over the land. The defendants ought to have known that from the material they had, and they ought to have advised of this.[141] Paragraph 20(i) alleged that a reasonably careful investment adviser would have investigated the accuracy of the statements in the information memorandum regarding independent directors, and upon discovering that that was false, would have advised against any investment in Bayshore Mezzanine Pty Ltd. Exhibit 1, the information memorandum, identified the directors of Bayshore Mezzanine as Norman Carey, who was said to be the managing director of Westpoint Management and Westpoint group, and Richard Beck, who was said to be associated with Westpoint Funds Management, and to be a leader of the Westpoint group. In these circumstances, it is not entirely clear how the information memorandum was describing the directors at Bayshore Mezzanine Pty Ltd as being independent, presumably in the sense of being independent of other members of the Westpoint group. Obviously they were not. Nothing has been shown to be inaccurate about what has been said about those directors in Exhibit 1. Perhaps I am missing something, but as presently advised I am not persuaded that this allegation has been made out.

[138] I consider that a financial adviser exercising reasonable care and skill would have advised the plaintiff that he was not lending money directly to the development company but rather to a company which did not own the real estate being developed: paragraph (j). Although this was ascertainable from the information memorandum, a copy of which is Exhibit 1, it was not clearly revealed in the information provided in the letters from the defendants, and was not specifically adverted to in anything said orally, and in the circumstances referred to earlier in my opinion the duty of care on the defendants did extend to drawing attention to this feature of the arrangement.[142] I am not persuaded that paragraph 20(k) has been made out; it ought to have been obvious to the plaintiff that what he was investing in was a real estate development, and that he was not going to make any profit as such from the development, other than the fixed interest promised on his money.

[139] I find there was a duty to advise the plaintiff that the security referred to as a guarantee from Westpoint group and a charge over Bayshore Port Melbourne Trust was not security given to the plaintiff as the investor, but security that was to be provided to Bayshore Mezzanine Pty Ltd: para 20(l). This arose because that was the true situation, the letters written by the defendant to the plaintiff had spoken of security in a way which I have found to be misleading, by saying that the plaintiff had the benefit of a guarantee and a charge, and in those circumstances there was a duty to disabuse the plaintiff of that notion. The information memorandum, which was provided to the plaintiff, was unclear about the significance of the guarantee,[143] and in my opinion in those circumstances a financial adviser exercising reasonable care and skill would have drawn attention to the fact that the guarantee was not one the benefit of which was available to the investor.

[140] I should perhaps add that the current pleading in response to paragraph 20, defence paragraph 21, simply said that the allegations are untrue as a matter of law because no contract existed between the plaintiff and the defendants (which was true but irrelevant to the allegation in paragraph 20), no duty of care existed (I have found to the contrary), and in the alternative if a duty of care existed then the first or second defendants did not breach that duty. Paragraph 20 was an allegation as to the scope and content of the duty of care which existed in the circumstances of the case, not an allegation of breach. Defence paragraph 21 was therefore irrelevant to the particular matter which was the subject of paragraph 20, to which there was no proper response. Arguably therefore there was a deemed admission of the allegations in paragraph 20 (pursuant to rule 166(5)). However, I am not prepared to go further than the findings I have already made in relation to paragraph 20 on the basis of that rule.[144]

[141] It was then alleged in paragraph 20A(a) that a financial adviser exercising reasonable care and skill and providing advice to a client would have known of the matters referred to in paragraphs 15 to 17 above. I have not found that all of the facts alleged in paragraphs 15 to 17 have been proved, but insofar as I have found that they were, I find that a financial adviser exercising reasonable care and skill in providing advice to a client would have known of most of those matters,[145] and indeed ought to have known of the same matters, which was in substance what was alleged in paragraph 20B. The whole point of people being financial advisers is that they hold themselves out as having some expertise in relation to potential investments, and that involves having an understanding of those investments, their advantages and disadvantages and the circumstances attending them, of the kind in these paragraphs, to the extent that I have found them proved. None of these were particularly sophisticated or complicated matters; most of them could be ascertained without much difficulty from an examination of the documents emanating from the Westpoint group and provided to the defendants, or to which the defendants must have had access.[146]

[142] It was further alleged that a financial adviser exercising reasonable care and skill would have advised clients of the matters referred to in paragraphs 15-17 above. This does activate the point raised by the defendants, that the plaintiff was not a client in the ordinary sense at the relevant time. That was true, and therefore this allegation, although to some extent true, was irrelevant. I have already made findings about the extent to which, in the circumstances of this case, the duty on the defendants required advising the plaintiff of matters referred to in paragraphs 15-17.

[143] Paragraph 20B alleged that at all material times a financial adviser exercising reasonable care and skill and providing advice to a client ought to have known of the matters referred to in paragraphs 15-17 above. It was not immediately apparent what that added to paragraph 20A(a), but in any case the context in which the allegation was made, of providing advice to a client, is irrelevant in circumstances where the plaintiff was not a client in the relevant sense. I have already found the extent to which a financial adviser exercising reasonable care and skill ought to have known of those matters.

[144] It was alleged in paragraph 21 that the first, second and third defendants would have been aware of all or some of the matters referred to in paragraphs 15-20 and 21A if they had exercised the level of care and skill of a reasonably competent financial adviser. I have already made findings about whether the defendants ought to have known of the facts alleged in paragraphs 15-17. For the reasons given earlier I find that they would have been aware of the facts in paragraphs 15(a), (b), (c), (g)(i), (h), 16(i), 17(a), (b), (c), (d), (g), (h), (i), (j)(i) re the first and second defendants, and (l). Paragraph 18 was an allegation about what advice would have been given by a financial adviser exercising reasonable care and skill in relation to an investment in a Bayshore Mezzanine promissory note. Insofar as it alleged facts, it follows from what I said earlier that a financial adviser exercising the level of care and skill of a reasonably competent financial adviser would have known of the matters alleged in paragraph 18(a), (b), (c), (g), and (h). Paragraph 19 was simply an allegation of breach, and so was irrelevant to paragraph 21. Paragraph 20 was also an allegation about things a financial adviser exercising reasonable care and skill in relation to that investment would have done when dealing with the plaintiff; to the extent that I have found in relation to paragraph 20 that that was the case, it necessarily follows that had the defendants exercised the level of care and skill of a reasonably competent financial adviser they would have been aware of those matters.

[145] In relation to them I find that the defendants ought to have known of the facts in paragraph 20(a), (d), (e), (h), (j), and (l), on the basis that these facts were reasonably obvious, in the light of the material which the defendants had or which was reasonably available to them. With regard to paragraph 21A, this closely parallels paragraph 18, and for the reasons given in relation to that paragraph the defendants ought to have known the facts alleged in paragraph 21A(a), (b), (c), (h), and (i).

[146] Paragraph 21(c) then alleged that the defendants had a duty to advise the plaintiff of all or some of the matters referred to in paragraphs 18, 20 and 21A of the claim. I have already found that there was a breach of the duty of care in failing to advise of the matters alleged in paragraph 18(a), (b), (g), and (h) for reasons already given, and for the same reasons there was a duty to give advice in those terms. Again, for reasons already given in relation to paragraph 20, in my opinion there was a duty to give the plaintiff the advice referred to in paragraph 20(a), (d), (e)(iii), (h), (j), and (l). In relation to paragraph 21A, this closely parallels paragraph 18, and for the reasons given earlier in my opinion there was a duty to advise the plaintiffs of the matters referred to in paragraph 21A(a), (b), (h), and (i).

[147] Paragraph 22 then alleged a breach of contract or breach of duty of care in failing to advise the plaintiffs of the matters alleged in paragraphs 18, 20 and 21A. For reasons given earlier there was no breach of contract, but there was a breach of their duty of care in failing to advise the plaintiff of the matters referred to in paragraph 18(a), (b), (g), and (h), paragraph 20(a), (d), (e)(iii), (h), (j), and (l), and paragraph 21A(a), (b), (h), and (i), for the reasons given earlier.

[148] Paragraph 23 then alleged that there was a breach of contract or breach of duty of care in making the representations referred to in paragraphs 7 and 11 and in the failure to advise the plaintiff of the matters referred to in paragraphs 18, 20, and 21A. I have already found that there was no contract to breach, and just dealt with the question of whether there was a breach of duty in failing to advise in respect of the matters referred to in paragraphs 18, 20, and 21A.

[149] As to whether there was negligence in making the representations referred to in paragraphs 7 and 11, I find that it was negligent to make the representation alleged in paragraph 7(b)(ii) on the ground that this was not an excellent opportunity to invest, for reasons given elsewhere, and it was negligent to represent that the Westpoint group had net assets in excess of $80 million, for reasons given earlier. It was negligent to advise that the company issuing the promissory notes had a second ranking mortgage over the development property and a second ranking charge over the special purpose company: para 7(b)(v). The defendants had no reasonable factual basis for making such an assertion, they knew there was no second ranking mortgage,[147] and that the charge was not second ranking was apparent from material which they had or which was readily available to them and from which a reasonably competent financial planner ought to have been able to ascertain that no such security was provided to Bayshore Mezzanine Pty Ltd. This representation and the equivalent in Exhibit 47 (para 10(b)(iv)) came to be made because this was true of earlier Westpoint projects where promissory notes were issued in a similar way,[148] and the defendant had standard form letters which were used for these projects, which were not modified with sufficient care when things were different this time: p 851. In this case, the operative negligence was sloppy document preparation.

[150] I find that there was negligence in making the representation that the Westpoint Corporation and associated entities provided a guarantee for the company's obligations under the loan, and that the security for the investment was a guarantee from the Westpoint group and a charge over the Bayshore Port Melbourne trust, in circumstances where it ought to have been obvious to an experienced financial adviser from the material available to the defendants that no guarantee was provided direct to the investors, and that the investors did not have a charge over the Bayshore Port Melbourne trust, and they must have known this. Accordingly there was a breach in making the representations alleged in paragraphs 7(b)(vi) and (x).

[151] As to paragraph 11, of those found to have been made, in my opinion it was negligent to represent as alleged in paragraph 11(e) that the group had net assets in excess of $80 million,[149] and in paragraph 11(f)(ii) that promissory notes would be issued by a company which had a second ranking mortgage over the development property for which the money was lent, and negligent to make the representations referred to in paragraph 11(g) (concerning the existence of a guarantee to the investors), (h) (because the first and second defendants had not applied their expertise as financial advisers to the project), and (m) (so far as it related to the guarantee and a charge over the Bayshore Port Melbourne trust) for reasons just given. In other respects, however, I am not persuaded that there was negligence in making the representations, even in relation to those representations which were in fact false. It is possible for a representor to make a representation which is in fact false without being negligent in doing so.

[152] Paragraph 24 then alleged that the plaintiff would not have proceeded with the investment had he been aware of the matters referred to in paragraphs 15, 16, 17, 18, or 20, and 21A. That paragraph covers a lot of ground, even confining it to matters found to be true. I accept the plaintiff's evidence that if he had been told the investment was risky or a high risk investment he would not have made it: p 332.[150] My overall impression of Mr Evans was that he was a very cautious investor who would have been easily deterred from making an investment, particularly by a statement of that nature.[151] I also accept his evidence that if he had been told that he was investing in just an unsecured IOU he would not have invested,[152] because he would only invest in secure investments, and that if he was told there was no mortgage securing the investment, or a guarantee to him from Westpoint and his associated companies,[153] he would not have made the investment: p 332. My impression from his evidence was that Mr Evans was particularly comforted by the presence of the guarantee, and would not have made the investment without it.[154]

[153] I also accept his evidence that had he been told of the ASIC involvement referred to in Exhibit 17 that he would not have made the investment,[155] being the sort of investor who would have been frightened off by that sort of thing: p 333.[156] Mr Evans also said at p 332 that he would not have invested if he had been told that the investment was with a company which was incorporated in 2001.[157] I am wary about this evidence because it seems to me that objectively what was conveyed by the defendants' letters and statements was that the loan was to a company which was specifically incorporated in order to be involved in this project, rather than to the Westpoint company itself which had been in existence for a long time. Ultimately evidence of how a person would have acted in a hypothetical situation in the past is opinion evidence, and it is open to me to reject that evidence without having any particular doubts about the honesty or general reliability about the witness, if the opinion strikes me as inherently implausible. It does and therefore I am not persuaded to make this finding on the basis of Mr Evans' evidence.

[154] As to the other facts alleged in these paragraphs, I suspect that if he had been told the amount of commission paid on the loan as alleged in paragraph 15(g) he may well have been wary about making the investment, but on the whole I am not persuaded that the disclosure of that information would necessarily have deterred him from making it. In view of my assessment of Mr Evans as a cautious investor, I consider on the whole that it is probable that had he been told of the matter alleged in paragraph 16(b) he would not have proceeded with the investment. In the same way, I consider that if he had been told the matters alleged in paragraph 17(g)[158] or (j)(i) concerning the first and second defendants,[159] he would not have made the investment, nor if he was told the matters alleged in paragraph 18(g) or (h).[160] The same applies to paragraph 21A(h) and (i). As to the matters referred to in paragraph 20, I also find that if the risks had been clearly explained to him and understood by him he would not have made the investment (para (a)).[161] Overall, paragraph 24 is made out in respect of paragraphs 16(b) and (i), 17(c), (g), (j)(i), and (l), 18(g) and (h), 20(a), (d), (e), and (l), and 21A(h) and (i), in whole or in part.

[155] It was then alleged in paragraph 25 that the representations referred to in paragraphs 7 to 11 constituted negligent misstatements. With regard to paragraph 7 I have already dealt with that matter in respect of the allegation in paragraph 23. With regard to paragraphs 8 and 9 those representations were not found, so they cannot have amounted to negligent misstatements. The representations in paragraph 10 were found, and this was not dealt with specifically in paragraph 23. For the reasons given in relation to paragraph 7(b)(ii) it was negligent to make the representation referred to in paragraph 10(b)(ii). For the reasons given in relation to paragraph 7(b)(iv) it was negligent to make the representation referred to in paragraph 10(b)(iii). For the reasons given in relation to paragraph 7(b)(v) it was negligent to make the representation referred to in paragraph 10(b)(iv). The reasons given in relation to paragraph 7(b)(vi), it was negligent to make the representation in paragraph 10(b)(v). For the reasons given in relation to paragraph 7(b)(x), it was negligent to make the representations alleged in paragraph 10(b)(viii).

[156] With regard to the representations in paragraph 10A, it was negligent to advise that there was a guarantee from Westpoint group being a solid company with $80 million of its own assets, in circumstances where the investment the plaintiff was proposed to make was not one the repayment of which was to him was guaranteed by Westpoint group, and there was no proper basis for the reference to $80 million. This follows from other findings made elsewhere. In addition it was negligent to say he had nothing to worry about, in circumstances where he had not been told of the risks involved, and in fact had quite a lot to worry about with this investment. I have already dealt in respect of paragraph 23 with the implied representations in paragraph 11 and whether they were negligent.

[157] I should say something about what ought to have been apparent to a reasonably careful investment adviser from the material available to the defendant in relation to Bayshore Mezzanine Pty Ltd, an issue raised by paragraph 60 in Exhibit H. This includes in particular the information memorandum Exhibit 1. The first thing that is obvious from this is that the investment involved lending money essentially to a property developer. That meant that the lender was exposed to the vagaries of the property development industry, an industry which is notorious for its numerous failures, sometimes of quite large and apparently well-established companies. It is I think significant that the defendants' expert said that he personally did not advise people to invest in the property development industry, essentially because he regarded the whole industry as just too risky: p 1035. The first warning sign which ought to have been apparent therefore in relation to this investment was the fact that it was in essence lending money to a property developer.

[158] The second consideration which is apparent from Exhibit 1, as a result of any careful consideration of the information it contains,[162] is that although it makes it clear that there is to be a senior debt financier, since there is a reference on p 1 to "senior debt" of $70.4 million, and a reference to a senior debt financier on p 2, nowhere does the document identify who the senior debt financier is. The defendant in the defence at paragraph 27(c)(iii) actually asserted that the plaintiff on reading this document ought to have been aware that a senior debt financier had not been secured; that plea was not justified, but it ought to have occurred to a careful investment adviser to wonder why the senior debt financier was not identified. In this context, I note that one of the specific criteria identified by Mr M Brannelly in his evidence in chief as to how this investment presented, that is to say why he regarded it favourably, was that the building had started which meant that all the initial pre-conditions of the bank who was the primary funder had been met: p 801 line 20. That assumes, however, that there is a primary funder in place; I would have thought that the failure to disclose that information, or even to assert expressly in Exhibit 1 that a primary funder was in place ought to have given rise to suspicion in the mind of a reasonably careful investment adviser.

[159] However, that is not the end of the matter; the document "Westpoint On Point" for May 2005, a copy of which was provided to the second defendant at about that time,[163] referred to Bayshore Port Melbourne on pages 5-6, and on p 6 said:**

"The 50.4 million senior debt required for stage 1 towers A and B and all buildings to podium level is now in place."

**[160] The irresistible inference from that statement is that not all senior debt required for the entire project was in place; either another senior debt financier was being sought for part of the project, or the senior debt financier had not yet committed to fund all of the senior debt required for the whole project. If that was so, plainly this feature upon which Mr M Brannelly said he placed such reliance was not present for this project. Having received that material, he ought to have been aware of that.[164]

[161] The next feature which is apparent from Exhibit 1 is that Westpoint carefully refrained from indicating how much of its own money was going into this project. The diagram for "Project funding on completion" does not distinguish between "Westpoint equity" and "project margin". This has the additional feature that it is not possible to determine from this document exactly what the profit margin for the project is. If it is relatively high (say $37 million) it means that Westpoint was putting virtually none of its own money into the project, curious behaviour for a company supposed to have a net worth of $80 million.[165] If on the other hand it was putting a significant amount of its own money into the project, it means the profit margin was quite small.

[162] There is also the consideration that the comparable column, in relation to revenue from sales, produces the same total as the project funding column only by ignoring the estimated selling expenses. In the sales analysis which follows the columns, it is apparent that the actual revenue from the sales will not be $157.6 million (the same as the total of the project funding figures) but $131.8 million. That means that once senior debt, mezzanine debt and the proposed Bayshore Mezzanine debt are all paid there will be only $11.4 million to go towards repaying any money put into it by Westpoint, or standing as the project margin.[166] That indicates a very high loan to value ratio, or conversely, a very low profit ratio, or possibly both. The defendants' expert conceded that these figures were unusually bad for a property development.[167]

[163] Even assuming that these figures can be taken at face value,[168] therefore, it seems extraordinary that a property development company which was supposed to be as good as Westpoint was putting together a project where the numbers stack up so badly, and was essentially putting it together on the basis of borrowed money. Any careful analysis of this document must give rise to the question of why a company like Westpoint was engaged in this project at all, when in property development terms it was such an obvious lemon. That I would have thought was an effective counter to another of the features identified by Mr M Brannelly as indicating that this was a desirable project, namely the strength of Westpoint as a property developer. The figures in Exhibit 1 simply do not make sense for a successful and strong, or even moderately competent, property developer.

[164] The next matter identified by Mr Brannelly was that he said the project was due for completion in 10 to 12 months: p 801 line 28. It is not entirely clear when this period ran from (presumably when he was told about Bayshore Mezzanine, in May 2005) but one of the features which strikes me as significant about Exhibit 1 is that it does not say when the project is due for completion. All it says is that as at 28 February 2005 construction is 78% completed. That suggests that completion is not all that long away, and the fact that the promissory notes were due to expire in mid 2006 would suggest that the intention was that the project would have been completed by then, but it seems curious that the document does not actually say when the project was expected to be completed. The omission of such an obviously significant fact suggests that Westpoint was being very careful not to commit itself even to an estimated completion date.

[165] However, this was not the only information available about the state of completion. The Westpoint On Point brochure referred to earlier, which Mr M Brannelly had[169] and had read, said under the heading "Construction Update":**

"Construction of the substructure is now more than 95% complete and the first stages of the superstructure are well underway. Construction of towers A and B, on the Bay Street side of the development, are progressing well and the lower level of these towers will soon be seen above the hoarding. Construction of towers C and D will commence shortly. Completion of these towers is expected to follow one or two months behind towers A and B."

**[166] Given that this document was dated May 2005, it struck me as obviously inconsistent with the statement in Exhibit 1 that the construction was 78% complete as at 28 February 2005. I am assuming that the term "towers" does mean something which rises to some significant extent above ground level, and the development is not essentially subterranean. Subject to that, however, they are obviously inconsistent, a fact Mr M Brannelly conceded when the discrepancy was pointed out to him in the witness box.[170] In my opinion a reasonably careful investment adviser ought to have detected this inconsistency[171] and ought to have seen it as a danger sign, suggesting that Westpoint was being less than frank about the actual progress of construction on this building.[172]

[167] The defendant in its letters to the plaintiff was inconsistent as to when the project was expected to be completed; Exhibit 46 referred to its being due for completion at the end of 2006,[173] whereas Exhibit 47 said that it was due for completion at the end of 2005. It has not been shown that the defendant had any reliable information as to the due date for completion of this project. It follows that insofar as Mr M Brannelly was relying on the imminent completion of the project as a factor particularly justifying the desirability of this investment, that reliance was misplaced. It seems to me, on the contrary, that the inconsistent information as to the state of completion of the project, and the absence of any firm indication as to how the project would be funded, stood as significant warning signs that this project was not a good investment.

[168] In my opinion any reasonably careful investment adviser ought to have reached that conclusion simply from an examination of the information in the information memorandum and the Westpoint On Point brochure. Mr M Brannelly conceded in the witness box that, had he realised this discrepancy at the time, he would not have offered this investment to the public: p 869.[174] Such a concession was in my view inevitable; it would have been an admission of irresponsibility to have answered that question in any other way. But it seems to me, as it seemed to me at the time, that that was tantamount to an admission of negligence on the part of the defendant. In response to the emergence of this issue, the pleading was amended to include paragraph 60, which is really based on the evidence of the defence witnesses. I find the allegations in paragraph 60 proved.

[169] There were other danger signs with this investment: it was at least unusual for mezzanine finance to be raised by issuing promissory notes to the public: Child p 684, Johnston p 987, p 1050. There was no information about the age of the pre-sales, and if (as was the case: Exhibit 8) most of them were long-standing, how many units had been sold recently. There was no information about how the actual costs of construction compared to the budget, or how the progress of the work compared with the construction schedule. Overall, there was suspiciously little hard factual information in Exhibit 1, or for that matter Exhibit 96.

[170] The defendant's response, of course, was that it relied on the third defendant. That in my opinion was no answer, so far as any duty of care on the part of the first and second defendants to the plaintiff was concerned; it may mean, of course, that the first and second defendants have a good claim for indemnity from the third defendant, but no such claim was before me, and the third defendant is in liquidation. The defendant did not sell all products on the Deakin approved list, so there was a deliberate choice to sell this one: p 1080. I consider that the first and second defendants did not discharge their duty of care to the plaintiff simply by relying on the third defendant, in circumstances where they had, and had read, information which ought to have alerted a reasonably careful investment adviser to the fact that there were significant problems with this investment. It is unnecessary for me to consider what the position would have been if the defendant knew nothing about the investment other than the fact that it was approved by the third defendant; in this case the defendant had quite enough information on this project to require considerable personal caution in dealing with it. In such circumstances, they ought to have been thinking for themselves.[175]

[171] It is extraordinary that the defendants should plead in paragraph 27(c) that it ought to have been obvious to the plaintiff, who had really no experience at assessing investments, that this investment was high risk, while still submitting that there was no negligence on their part in failing to detect the problems which were obvious from the documentation they had. Paragraph 27(c) also alleged that the Westpoint group did not have the cash flow to meet the funding requirements for the development, a proposition which is obvious but meaningless to someone in the plaintiff's position, and that the occurrence of any of the disclosed risk factors would have adversely affected the ability of Bayshore Mezzanine Pty Ltd to repay the priority debts. The difficulty with that is that although the information memorandum referred to a large number of risk factors, they were referred to in very general terms, in terms which suggested that what was being spoken about were essentially theoretical risk factors. This is best illustrated by the fact that they extended to matters such as "employment levels, government policies, and the general state of the Australian or local economy might affect the performance of the development." Saying this sort of thing to an unsophisticated potential investor is essentially meaningless.

[172] What someone in the position of the plaintiff needed was realistic and sensible advice as to the actual risks presented by investment in this project. Both Mr M Brannelly and Mr P Brannelly conceded that the project was a high risk investment. Just on an examination of these documents, it ought to have been apparent to a reasonably careful investment adviser that there were very serious problems with this investment so that it presented real and immediate rather than merely theoretical risks. Yet none of this was communicated to the plaintiff; rather the defendants spoke in glowing terms of this as an investment opportunity. The kindest thing that can be said about that is that it was very serious negligence.

[173] The problem here was that what the defendants were doing here was really just selling an investment product, regardless of its qualities as a product, or whether it was suitable for the plaintiff.[176] But they did so in the guise of investment advisers who were purportedly giving advice in the interest of the plaintiff. If people who call themselves investment advisers are going to act as financial product salesmen, they need to make it quite clear to the people with whom they are dealing that that is what they are doing, or they will be held to the duty of care appropriate if they are reasonably relied on as giving objective advice.

[174] Paragraphs 26 and 26A then pleaded a case based on contravention of s 52 of the Trade Practices Act, s 38 of the Fair Trading Act, and s 12DA of the Australian Securities and Investment Commission Act 2001 ("the ASIC Act"). What is pressed in relation to this is only the case under the ASIC Act, and I will deal only with that aspect of the pleadings.

[175] Paragraph 24 of the defence alleged that the alleged representations as pleaded in the further amended statement of claim related to the supply of financial services as that expression is defined in the Trade Practices Act 1974. In that Act s 4 provides that "financial service" has the same meaning as in Division 2 of Part 2 of the ASIC Act. Paragraph 25 went on to deny that there is entitlement to relief under the Trade Practices Act because of s 51AF of that Act, which provides in subsection (1) that this part (which includes s 52) does not apply to the supply or possible supply of services that are financial services. In spite of this, paragraph 29 of the defence in paragraph (a) denied that the conduct engaged in by the first and/or second defendants was in relation to financial services as that expression is defined in s 12BAB of the ASIC Act. Section 12BAB is within Division 2 of Part 2 of the ASIC Act. It follows that the definitions are complementary, and what is excluded from the Trade Practices Act is what is covered by the ASIC Act, as one would expect. Accordingly these parts of the defence were not only inconsistent but contradictory.

[176] Section 12BAB defines providing a financial service as among other things providing financial product advice. Subsection (5) provides that "financial product advice means a recommendation or a statement of opinion or a report of either of those things that is intended to influence a person or persons in making a decision in relation to a particular financial product ... or could reasonably be regarded as being intended to have such an influence." The term "financial product" is itself defined in s 12BAA as a facility through which or through the acquisition of which a person inter alia makes a financial investment: subsection (1). Subsection (4) provides that a financial investment arises if a person gives money or moneys worth to another person and (relevantly) the investor intends that the other person will use the contribution to generate a financial return or other benefit for the investor. Obviously the money that was paid by the plaintiff to another person was paid with the intention that this would generate a financial return to the plaintiff, so what the plaintiff was doing was making a financial investment.

[177] Accordingly the promissory note issued by Bayshore Mezzanine was a financial product for the purposes of s 12BAA, and it therefore follows that the representations made by the defendants amounted to providing financial product advice for the purposes of s 12BAB, and therefore amounted to providing a financial service.[177] Accordingly the ASIC Act applies. The defendants ultimately conceded that that was the situation (p 751), and did not in their written submissions submit to the contrary. I find that the allegations in paragraph 26A (1) and (2) are made out, and paragraphs (3), (5) and (7) are made out in respect of the first and second defendants. Paragraphs (4) and (6) are made out only so far as I have found that statements in paragraph 10A were made, since the representations referred to in paragraph 8 have not been made out.

[178] Paragraph 26 alleged that the representations referred to in paragraphs 7 to 11 and the failure to advise of the matters referred to in paragraphs 18, 20, and 21A constituted misleading or deceptive conduct in contravention relevantly of s 12DA of the ASIC Act. That is in the same terms as s 52 of the Trade Practices Act. With regard to the paragraphs relied on, I found that the representations in paragraphs 7 and 10 were made out, but not the representations in paragraphs 8 and 9; some of the representations in paragraph 10A were made out, and some of the representations in paragraph 11. I have dealt in relation to paragraph 17 with the question of which of the representations in paragraphs 7 to 11 were false, misleading or deceptive. For the reasons given earlier, in relation to the express representation in the letters of 18 July 2005 and 27 July 2005 that the investment highlights included "security: guarantee from the Westpoint Group and a charge over the Bayshore Port Melbourne Trust", that statement was misleading and deceptive: paras 7(b)(x), 10(b)(viii). In relation to both letters, the natural reading of the words "Westpoint Corporation and associated entities provide a guarantee for the company's obligation under the loan ..." was that Westpoint Corporation and associated entities were guaranteeing the obligation of Bayshore Mezzanine Pty Ltd to the investors, which was misleading and deceptive: paras 7(b)(vi), 10(b)(v). The corresponding representation in 10A(b)(iv) and 11(g) and (m) concerning the guarantee and the charge were also misleading and deceptive.

[179] The proposition in each of the letters and orally that Westpoint group has substantial net assets in excess of $80 million was misleading and deceptive: paras 7(b)(iv), 10(b)(iii), 10A(b)(iv). I have found that at the time these representations were being made that was not true. This was not a statement as to a future matter, and therefore it is not a question of whether the defendants had reasonable grounds for making the representation; on its face it purported to be a statement of the situation at the time the representation was made, and it was not true at that time. It was therefore misleading and deceptive. These representations were in effect pleaded again as implied representations; to the extent that that adds anything, I find that those implied representations were also misleading and deceptive: para 11(e).

[180] I also find that it was misleading and deceptive to represent that the opportunity to invest was limited (paragraphs 7(b)(i), 10(b)(x)), that Bayshore Mezzanine held a second ranking mortgage and second ranking charge (para7(b)(v), 10(b)(iv), and para 11(f)(ii)) and that the first and second defendants had applied their expertise as financial advisers to the recommendation of investment in promissory notes issued by Bayshore Mezzanine Pty Ltd: para 11(h). It was also misleading and deceptive to represent this as an excellent opportunity to invest (paras 7(b)(ii), 10(b)(ii)) and that the plaintiff had nothing to worry about: 10A(b)(vi). I have given reasons for these findings earlier. Accordingly, the representations in paragraphs 7(b)(i), (ii), (iv), (v), (vi), and (x), 10(b)(ii), (iii), (iv), (v), (viii), and (x), 10A(b)(iv) and (vi), and 11(e), (f)(ii), (g), (h)(i), and (m) were misleading and deceptive, in whole or in part.

[181] With regard to the matters covered in paragraph 18, these matters, so far as they are correct, really just underline or confirm the misleading and deceptive nature of that which was said, to which I have already referred. Thus it was misleading and deceptive to suggest that Bayshore Mezzanine Pty Ltd would have a second ranking mortgage over the development property in circumstances where there was no clear statement to the contrary. Subject to that, however, I am not persuaded that anything alleged in paragraph 18 was a matter the omission of which in itself constituted misleading or deceptive conduct. With regard to paragraph 20, again I do not think that these matters viewed in isolation amounted to misleading or deceptive conduct, although the failure to deal with some of these matters emphasises that what was said in respect of, for example the guarantee or the existence of other security, was misleading and deceptive. But I am not persuaded that any of the omissions identified in paragraph 20 viewed in isolation amounted to misleading or deceptive conduct. The situation in relation to paragraph 21A is essentially the same as in relation to paragraph 18; I am not persuaded that the failure to advise of any of the particular matters referred to there amounted to misleading or deceptive conduct on its own.

[182] The matters referred to in paragraphs 26B, 26C and 26D were concerned with the case under the Corporations Act which has not been pressed. Paragraph 27 alleged that as a consequence of (relevantly) the negligence, negligent misstatements and breaches of the ASIC Act the plaintiff has suffered loss and damage. That depends on whether the plaintiff has suffered the loss and whether the loss was caused by the breaches of duty or breaches of the Act. To some extent I have in relation to paragraph 24 already dealt with the question of causation. I find that the plaintiff was relying on what he was being told by the first and second defendants in relation to this investment, and that he invested in it because of the things that he was told about it by them; specifically, that they were recommending the investment, that it was an excellent opportunity to invest, that he had the benefit of a guarantee of the company's obligations under the loan, and the benefit of a charge to secure his investment. I have also found that he would not have made the investment if he had been told that it was a risky or high risk investment, or if he had been told of the concerns of ASIC as set out in Exhibit 17 or if he had been then told the other matters identified in relation to paragraph 24.

[183] Essentially the plaintiff suffered the loss because he invested in the promissory note; if he had not done that, he would not have suffered the loss. What matters therefore is whether he made that investment relying on things that he had been told, and would not have made the investment if he had been told the things that he ought to have been told but was not. I find that that was the case. Mr Evans did not rely on any other source of information, and the tenor of his evidence was that he was persuaded to make the investment because of what was told to him by the first defendant. I accept his evidence that he did not examine the information memorandum Exhibit 1 closely and did not detect any inconsistency between what it stated and what he had been told by the first defendant. In those circumstances, he was not relying on Exhibit 1; he was relying, as one would expect and as would be natural in the circumstances, on what he was told by the first defendant. That is not a difficult inference to draw. In particular, I find that he was not in fact disabused of the misunderstanding of the position in relation to security, and in particular in relation to the guarantee, by anything he saw in Exhibit 1. That simply confirms that in making the investment he was relying on what he had been told by the defendant about these matters (which was false) rather than what was said in Exhibit 1 (which as far as I can see was true as far as it went).

[184] The allegation in paragraph 23(b) of the defence is not made out; the first and second defendants did give advice, so the plaintiff certainly could not have known to the contrary, and the plaintiff made no inquiries of his own regarding the nature of the investment, the plaintiff had not read carefully and understood the information memorandum, and did not determine to invest in the promissory notes independently of the advice given by the first and second defendants. Indeed, in the context of the evidence in this case, that allegation was nonsense.[178]

[185] For the purposes of the claim under the ASIC Act, it is also necessary to determine whether the plaintiff's response to the representations was reasonable in the circumstances in which he found himself. In this regard, it was submitted on behalf of the defendant that the beliefs of the plaintiff, that he would obtain the benefits of the second ranking mortgage, second ranking charge and guarantee, were so fanciful and so clearly at odds with the information contained in the information memorandum that no reasonable person in his position could have held that belief. I do accept that the document did not represent that he would obtain the benefit of the second ranking mortgage, and that cannot be relied on therefore as a misrepresentation; in these circumstances, plainly his holding of that belief was not reasonable. On the other hand, it appears to me that the two letters plainly say that Westpoint Corporation and associated entities provide a guarantee of the company's obligation under the loan, and plainly refer to the guarantee and a charge as security as one of the "investment highlights". The natural reading of those letters in my view is that what the plaintiff will get is a promissory note with the benefit of a guarantee and a charge. That is not inconsistent with the statement that the promissory notes are unsecured, since the natural reading of "unsecured promissory notes are issued in a special purpose company" would be that the promissory notes do not carry any security over that company; the security referred to elsewhere in the letter was a security in other ways.

[186] The defendant's real point was that the information memorandum was so clearly to the contrary that it was unreasonable to treat the defendant's letters as meaning what they said. The difficulty with this is that it seems to me that the information memorandum was far from clear,[179] and in any case there was no reason why, in circumstances where the plaintiff has obtained clear statements as to these matters from persons who were holding themselves out as expert advisers acting for him, he should have been concerned to scrutinise the information memorandum carefully in order to determine whether there was anything said in it which demonstrated that what he was being told by the defendant about the security was not true. At the time, the plaintiff did not in fact examine the information memorandum carefully enough to detect that that was the situation. In my opinion that was reasonable for him, or indeed for a reasonable person in his position. In my opinion it was reasonable in the circumstances for him to have relied on what was said in the letter and not to have examined the information memorandum carefully with a view to detecting whether he was being told the truth by the defendant.[180]

[187] With regard to paragraph 27 of the defence, there was no evidence and no reason to think that the plaintiff could have obtained any information from public knowledge, or that he in fact did so, and there was no reason to think that he would have ascertained the matters referred to in paragraphs 7 and 11 from any source other than the representations made by the defendants. With regard to such of the matters referred to in paragraphs 15, 16, 17, 18, and 20 as are significant in the light of my earlier findings, I do not accept that the plaintiff in fact was aware of these matters from his own assessment of the information memorandum, nor from any other source, nor was he, nor ought he to have been, aware from the information memorandum of any of the matters set out in paragraph 27(c). Paragraph 27(d) was not made out for the reasons given earlier.

[188] With regard to the quantification of the plaintiff's loss, what was pleaded was that the plaintiff has lost the principal of $50,000 plus interest at 12% per annum from 1 November 2005, and the 2% bonus. That is the measure of damage for breach of contract; it is not applicable in the case of claims for negligence, in circumstances where as I have found had it not been for the negligence the investment would never have been made. In those circumstances, the consequence of the negligence is that the plaintiff invested in this promissory note when he would not have done so otherwise, and it is relevant to compare his position as a result of investing with his position had he not made the investment. The promissory note is of no value: p 437, p 438.

[189] There was no evidence that the plaintiff would have made any other particular investment had he not made this investment, although I suspect that it is likely that he would have done something. Given that he was in my assessment a cautious investor, it is unlikely that had some other form of investment been made it would have produced a return as high as 14%. Mr Johnston's evidence was that market returns at the time were about 6% or 7%: p 998. Accordingly the plaintiff is required to give credit for the extra interest that he did receive, and should be entitled to interest only at the market rate, which can be appropriately accommodated by allowing interest on the $50,000 under the Supreme Court Act 1995 from the time the investment was made, and deducting the payments actually received by the plaintiff before Westpoint collapsed.

[190] The plaintiff's loss is therefore $50,000 plus interest on that amount under the statute from 10 August 2005, less $1,315.07, the payments in fact received from Bayshore Mezzanine Pty Ltd: Exhibit 50. I will allow interest at 8% per annum; this covers the whole of the period up to judgment, and it is the conventional rate being allowed in commercial matters under the statute at the moment. That produces an allowance of interest to the date of judgment of $13,128.88, so the quantification of the plaintiff's loss is $61,813.81. There is no evidence that the plaintiff has already received any distribution from the liquidation of the third defendant in respect of this loss, so the effect of any such distribution is hypothetical, and I say nothing about it. Any entitlement to a possible distribution in the future is irrelevant.[181]

[191] The loss under the ASIC Act is not necessarily confined to the loss on a torts basis,[182] but that is ordinarily the appropriate basis on which to assess damages under that Act,[183] and in my opinion there is no sufficient reason to award damages under the Act other than on a torts basis in the present case. Essentially the result of the misleading and deceptive conduct of the defendants was that the plaintiff made an investment which otherwise he would not have made. This is not a situation where it was the misleading or deceptive conduct which in some way deprived the plaintiff of the full benefit of his investment, nor were there any other circumstances which would make any other measure of damage appropriate. Accordingly I find that the loss suffered for the purpose of the ASIC Act was the same as the loss for the purpose of the claim for negligence.

[192] Although the basis on which the defendant is liable in tort is that the plaintiff reasonably relied upon the defendant in relation to the investment in the Bayshore Mezzanine promissory note, that is not inconsistent with a finding of contributory negligence against him: Astley v Austrust Ltd (1999) 197 CLR 1, where the majority said at [30]:**

"A finding of contributory negligence turns on a factual investigation of whether the plaintiff contributed to his or her own loss by failing to take reasonable care of his or her own person or property. What is reasonable care depends on the circumstances of the case. In many cases, it may be proper for a plaintiff to rely on the defendant to perform its duty. But there is no absolute rule. The duties and responsibilities of the defendant are a variable factor in determining whether contributory negligence exists and, if so, to what degree. In some cases, the nature of the duty owed may exculpate the plaintiff from a claim of contributory negligence; in other cases the nature of that duty may reduce the plaintiff's share of responsibility for the damage suffered; and in yet other cases the nature of the duty may not prevent a finding that the plaintiff failed to take reasonable care for the safety of his or her person or property. Contributory negligence focuses on the conduct of the plaintiff. The duty owed by the defendant, although relevant, is one only of the many factors that must be weighed in determining whether the plaintiff has so conducted itself that it failed to take reasonable care for the safety of its person or property."

**[193] It is also important to bear in mind that the consideration of whether the plaintiff was guilty of contributory negligence, like the consideration of whether the defendant was guilty of negligence,[184] must be looked at prospectively, not retrospectively. Looked at from the point of view of the plaintiff at the time when the decision was made to invest, he had had relatively little experience as an investor, and was not a person whom I would describe as a sophisticated investor.[185] Although he had spent a career in the insurance industry, this would not have provided him with the sort of commercial background which would have assisted him in assessing an investment of this nature. Although he had a law degree, he had never practiced law and I suspect that he would not have retained much from what he was then taught. His behaviour after he obtained funds to invest in 2003 suggests that he did not have any clear idea about how to go about investing in a systematic way.

[194] He was impressed by the fact that the second defendant described itself as advisers to the professions, and by the reference to the research team, and his evidence about the relevant letters from the defendant indicated that he was particularly impressed by them and took them seriously. The whole tenor of his evidence was that he saw the defendant as someone upon whom he could rely, and on whom he did rely. At this time there was nothing which had come to his attention which indicated to him that he could not rely on what they were telling him. A careful reading of the information memorandum Exhibit 1 would have revealed inconsistencies with what the defendant was telling him, although even then the information in Exhibit 1 was information being presented by someone who was trying to sell the product, whereas the defendant was purportedly presenting advice as someone who was acting as an adviser to him, that is to say, someone who was on his side and trying to help him, rather than as someone who was just trying to sell him this financial product. There was nothing, even in the "disclosure" attached to the letters sent, which suggested that this was not the case,[186] and that in fact the defendant was simply acting as a salesman for this product. There was nothing in the disclaimers to suggest that the plaintiff should not rely on what was being said in the letters. In these circumstances, it was reasonable for the plaintiff to treat the letters as a reliable source of advice and the primary source of information about the investment.[187]

[195] The case on contributory negligence really comes down to the proposition that, because Exhibit 1 was provided before the decision to invest was taken, the plaintiff was negligent in failing to give closer attention to the contents of this document. This could be relied on on two bases: close attention to the contents of the document would reveal that this was not in fact a particularly attractive investment, but on the contrary was a risky investment. Further, close attention to the contents of the document would have revealed that some of the things the defendants were saying about the investment were not true, in particular the existence of the securities in the form of a guarantee in his favour, and a charge over the property and the assets of the development company.

[196] These things may be extracted from Exhibit 1 as a result of careful scrutiny, perhaps with an eye to detecting any problems which may be lurking underneath what is plainly intended to be favourable promotional material. The sort of careful and suspicious scrutiny to which I consider a reasonably careful financial adviser ought to subject such a document would certainly reveal such matters. On the other hand, the document is obviously couched in language which is calculated to sell the product;[188] that was its whole point and purpose, and there are many favourable things said in there, all of which would have tended to reinforce the favourable things said about the product by the defendant. Mr Johnston did not initially pick up any inconsistencies between Exhibit 1 and the defendant's letters, when he was not specifically looking for them: p 1005.

[197] On the whole, focusing on the conduct of the plaintiff and without making the mistake of assessing the matter in hindsight, I consider that a reasonable person in the position of the plaintiff, in the light of what had already been said to the plaintiff by the defendants, would not have been concerned to scrutinise Exhibit 1 carefully and suspiciously, and would not necessarily have concluded from it either that the defendants were not to be trusted in what they said about the investment, or that the investment was not one which ought to be made by an investor concerned about the security of the money invested. Accordingly, I am not persuaded that the fact that the plaintiff had a copy of Exhibit 1[189] made available to him before he decided to invest means that there was contributory negligence on his part in deciding to invest, in not examining that document more carefully than he did.[190] In these circumstances, it is not to the point that the plaintiff, when taken carefully through Exhibit 1, conceded that what was said in Exhibit 1 was inconsistent with his understanding of what he had been told by the defendants (p 352), and even that he now wishes that he had read it more carefully: p 353.[191] That was hindsight. The allegation of contributory negligence was not made out.

[198] The issue of contributory negligence also arises in respect of the claim under the ASIC Act: s 12GF(1B). For the same reasons, I reject this allegation in relation to this aspect of the plaintiff's claim, finding that it is not just and equitable to reduce the plaintiff's damages because of any responsibility for the loss, the plaintiff not having suffered the loss as a result in part of his own failure to take reasonable care. There is no reason to think that the legislature was intending to create a system which operated differently from the ordinary rules in relation to contributory negligence applicable in tort.

Proportionate liability - Civil Liability Act

[199] Paragraph 32 of the defence alleged that the loss and damage claimed by the plaintiff was caused by the acts or omissions of the third defendant, Westpoint Corporation Pty Ltd, Bayshore Mezzanine Pty Ltd, and Kebbel (NSW) Pty Ltd or one or more of them, and was the same loss or damage as that claimed by the plaintiff against the first and second defendants. It was further alleged that the claim against the first and second defendants was an apportionable claim for the purpose of s 28 of the Civil Liability Act 2003, and that if the first and second defendants were liable then those others were concurrent wrongdoers for the purposes of s 30 of that Act, and the liability of the first and second defendants ought to be limited to an amount reflecting that proportion of the damage or loss claimed that the court considers just having regard to the extent of the first and second defendants' responsibility for the damage or loss pursuant to s 31 of the Civil Liability Act 2003.

[200] In reply the plaintiff denied these allegations (para 7A, 7B, 7C), and alleged that the plaintiff was exempt from these provisions pursuant to s 28(3)(b) of the Civil Liability Act (para 7E), and that the first and second defendants were in breach of s 32 of the Civil Liability Act, in that they failed to give the plaintiffs any or all information that the defendants had that was likely to help the plaintiff identify and locate any other person who the defendants had reasonable grounds to believe was also a concurrent wrongdoer in relation to the claim, and about circumstances that made the defendants believe the other person is or may be a concurrent wrongdoer in relation to the claim, so that the court was entitled to order the defendants liable for any award of damages made, pursuant to s 32(5) of the Act.

[201] The first issue is whether this was an apportionable claim. The plaintiff's claim is a claim for economic loss arising from a breach of a duty of care, and accordingly satisfies the requirements of s 28(1)(a) of the Act. However, subsection (3) provides that the part does not apply to a claim by a consumer, and accordingly the next issue is whether the plaintiff was a consumer for the purposes of s 28(3). The term "consumer" is defined for the purpose of s 28 and s 29 as relevantly "an individual whose claim was based on rights relating to ... services ... in circumstances where the particular ... services ... relate to advice given by a professional to the individual for the individual's use other than for the business carried on by the individual ...." In the present case the plaintiff was an individual, and the claim was based on rights relating to services, namely advice given by a professional to the plaintiff for the plaintiff's use.

[202] The term "professional" is not defined in the legislation, and there has been much debate in the past in various authorities about the boundaries of the concept, usually for some statutory purpose.[192] A review of some of these, and an attempt to produce a working definition, may be found in Prestia v Aknar (1996) 40 NSWLR 165 at 184-187, and it seems to me that the defendants meet the test laid down there.[193] It is clear enough that the legislation was not intended to be confined to the traditional learned professions, nor even the traditional professions,[194] and I am not concerned in this matter to determine anything other than whether a financial adviser is practising a profession for the purposes of the Act. I note that the learned authors of the annotated Civil Liability Act 2003 suggest in the commentary on s 28 that giving investment advice is a profession for the purposes of the Act.[195] I find that what the defendants were doing in this case was practising a profession, and that the advice they gave was advice given by a professional.

[203] The next issue is whether it was for use other than for a business carried on by the plaintiff. Although it is obviously possible for a person to be carrying on business as an investor, that would require some frequency of investments and regularity of systematic operations characteristic of a business. The mere fact that a person makes an investment, or even a handful of investments, does not mean that that person is carrying on the business of investor.[196] There is a wealth of authority, usually in the context of income tax legislation, as to whether someone is carrying on a business.[197] I think it is clear enough in the present case that the plaintiff was not carrying on a business, and no detailed reasons are required to justify a conclusion to that effect. It follows that all of the relevant elements of the definition of consumer were satisfied, the plaintiff was a consumer and accordingly pursuant to s 28(5) the proportional liability part of the Civil Liability Act does not apply.

[204] That is sufficient to dispose of this part of the defence, although in case a different view may be taken elsewhere I should go on to deal with other issues of fact which arise. The next issue is whether the nominated companies or any of them are concurrent wrongdoers. That term is defined in s 30(1) as a person who is one of two or more persons whose acts or omissions caused, independently of each other, the loss or damage that is the subject of the claim. This has given rise to an issue as to whether all that matters here is the question of causation, or whether it is impliedly confined to persons who, if sued at an appropriate time,[198] would have been liable for that loss or damage. There have been two recent decisions where courts have confined the scope of the definition of "concurrent wrongdoer" in corresponding legislation, where the definition is in essentially the same terms, in this way: Shrimp v Landmark Operations Ltd [2007] FCA 1468 and Atkins v Interprac Financial Planning Pty Ltd [2007] VSC 445.[199] Such an approach is also consistent with the reasoning in Chandra v Perpetual Trustees Victoria Ltd [2007] NSWSC 694. I adopt this construction of s 30, for the reasons given in those decisions, and because it seems to me consistent with the basic purpose of this part of the Act.

[205] The pleading of the first and second defendants did not outline any basis upon which the other asserted concurrent wrongdoers were liable to the plaintiff. Given that this was an issue raised by the defendants, it seems to me that it follows logically that the defendants have the onus of showing the existence and liability of the concurrent wrongdoers. The current pleading does not even satisfy the requirements laid down in Ucak v Avante Developments Pty Ltd [2007] NSWSC 367, where Hammerschlag J held, among other things, that in order to assert that the person was a concurrent wrongdoer the defendant must plead the occurrence of an act or omission by that person: [35]. He went on to hold that it was insufficient to assert a conclusion without pleading the material facts on which that conclusion depended: [36]. The same deficiency occurred in the present case.

[206] There was nothing in the pleading, and little more in the submissions on behalf of the defendant, by which any relevant acts or omissions of the asserted concurrent wrongdoers was identified, let alone any basis upon which any of them were liable to the plaintiff. That is a further obstacle to the success of any claim to reduce the defendant's liability under the apportionment legislation. The practical significance of this is that it leaves me in the position of virtually having to speculate as to what cause of action the plaintiffs might have against the various companies asserted to be concurrent wrongdoers. Whatever the legislative intention was in relation to these provisions, it could hardly have been to encourage judicial speculation about these matters. There needs to be a proper foundation for any conclusion that there was liability on the part of an alleged concurrent wrongdoer. No coherent submission in relation to any such basis of liability was advanced, even in respect of a cause of action not pleaded.

[207] The plaintiff had seen some Westpoint documents; the information memorandum was one, and a copy of Westpoint On Point which was presumably published by Westpoint Corporation Pty Ltd, which was I suspect (though I think the evidence is tenuous) also responsible for publishing Exhibit 1. The difficulty here of course is that it has not been shown that anything said in the information memorandum or Westpoint On Point was said negligently, or for that matter was misleading or deceptive. It did emerge in the course of the trial that there was some inconsistency between them as to the extent to which the building was completed at dates quoted in them, but merely demonstrating that inconsistency does not demonstrate that a particular document was prepared negligently, or was misleading or deceptive. Apart from that, there was simply no evidence that that part was relied on in any way by the plaintiff. He did not read the information memorandum in any great depth, being more interested in a picture on the front: p 350. He did not concede that he relied on it: p 342. With regard to the Westpoint On Point magazine Exhibit 47, Mr Evans initially said he did not rely on it (p 358) but subsequently conceded (p 359) that he did rely on a part under a headline "A significant reduction in capital risk". However, it was not shown that there was anything negligent, misleading, or deceptive or false about anything in that part of the document.

[208] There was not even any evidence before me that there was any negligence on the part of Westpoint Corporation Pty Ltd, or Bayshore Mezzanine Pty Ltd, in relation to the collapse of the project or the inability of Bayshore Mezzanine Pty Ltd to repay the money owed. I suspect that there was no wrongdoing on the part of Bayshore Mezzanine Pty Ltd, but I really do not know.[200] The point is that I should not be left to speculate about these things, and I cannot find that an entity such as this was a concurrent wrongdoer in the absence of a proper formulation on the pleadings of a basis for such a finding, supported by evidence. Nothing of that nature appeared here. There was, if possible, even less in relation to a case against Kebbel (NSW) Pty Ltd; as far as the evidence shows, the plaintiff knew nothing about this company. There is no reason to think he was relying on it in any sense.

[209] The position of the third defendant is somewhat different. It was certainly liable to the plaintiff, because apart from anything else the first and second defendants were acting as agents for the third defendant in what they did, as was common ground on the pleadings. Accordingly the third defendant is vicariously liable for the negligence of the first and second defendants. Nevertheless, I do not think that is sufficient to make the third defendant a concurrent wrongdoer. It seems unlikely that the legislature would have intended that proportional liability would apply in circumstances of vicarious liability, and s 30(1) speaks of persons whose acts or omissions cause the loss or damage "independently of each other". Where one person is liable to the plaintiff for negligence, and another person is vicariously liable for the negligence of the first, the liability of the first and the second persons do not arise or exist independently of each other.[201]

[210] Apart from this, I am confronted again with the difficulty that the defendants have not identified any particular cause of action of the plaintiff against the third defendant on the basis of which it was said the third defendant was liable to the plaintiff. Presumably, the liability was said to arise in relation to the approval of the Bayshore Mezzanine promissory notes for sale, or perhaps the approval of the forms of letters used by the defendant in dealing with the plaintiff. As to the former, I do not know what information the third defendant had when it approved the promissory notes for investment. It may have been told things by Westpoint or Kebbel which (if taken at face value) answered the issues I have identified earlier. The latter argument is that the letters the sending of which amounted to negligent misrepresentation had been approved, either generally or specifically, by the third defendant, so the third defendant must also be liable to the plaintiff in respect of the sending of the letters. That may well be the case, but it is difficult to see how, if that were the case, it would not amount to joint liability rather than liability independent of the liability of the first and second defendants.

[211] The Queensland Act does not use the additional words "or jointly" found in for example the Trade Practices Act, which suggests that the legislative intention in Queensland was not to include joint liability. One example of joint liability is concerted action, where the parties to the commission of a tort are acting together in the furtherance of a common design.[202] That appears to have been the situation here so far as the second and third defendants were concerned. In those circumstances, it is difficult to see why any liability of the third defendant would not be excluded on the basis that it was joint liability with the second defendant.

[212] I suppose a situation could arise where there was concurrent liability, if the plaintiff was also relying on the third defendant in some way in deciding to enter into the transaction. But although the third defendant's logo appeared on the letters, the letters were in form and substance communications from the first and second defendants, they were plainly interpreted that way by the plaintiff, and there was no evidence the plaintiff relied on the third defendant in any way. That gives rise to two difficulties; it makes it difficult to see how there is any liability of the third defendant independent of the liability of the first and second defendants, and it also makes it difficult to see how there can have been any causation in relation to any separate breach of duty of the third defendant.

[213] Indeed, it seems to me that there are difficult issues of causation anyway in seeking to make the plaintiff's loss attributable to, for example, the decision of the third defendant to approve this investment for sale by its agents. In the first place, there is no suggestion that the approval meant that the third defendant was required or even expected to sell or try to sell it to everybody. It was still a matter for the first and second defendants to decide in a particular case to which individuals particular products on the approved list would be offered. There was evidence that some of the Westpoint products, approved by the third defendant, were not offered to potential investors by the second defendant at all, as a result of a choice exercised by the second defendant.[203] The selection of this approved Westpoint investment was for reasons which, as I have said earlier, were demonstrably unsound, indeed negligent. The approval of the product by the third defendant only resulted in the loss to the plaintiff because the second defendant chose to offer this particular product to potential investors, and because the first defendant chose to offer it to this plaintiff. I would have thought that was sufficient to break the chain of causation in relation to any negligence on the part of the third defendant.

[214] The third defendant is in liquidation and the plaintiff's claim is not proceeding against the third defendant. Accordingly, it is not appropriate for me to decide, and I am not deciding, whether the plaintiff has a good cause of action against the third defendant, either at all or on the evidence led in the present case. All I have to decide is whether the first and second defendants have shown that the third defendant is a concurrent wrongdoer for the purposes of s 30 of the Civil Liability Act 2003. I am not so persuaded.

[215] In those circumstances, the claim for apportionment under the Civil Liability Act fails. I do not think that there is any meaningful basis upon which I could make a precautionary apportionment; it would be quite unrealistic for me to attempt such an exercise, in circumstances where there has not been identified any particular wrongdoing on the part of the third defendant which I can compare with the wrongdoing of the first and second defendants for the purposes of determining the proportion of the loss or damage claimed I consider it just and equitable that each should bear having regard to the extent of that defendant's responsibility for the loss or damage: s 31(1)(a).

Civil Liability Act s 32

[216] In these circumstances it is unnecessary for me to go on to consider whether there was a breach of s 32 of the Civil Liability Act by the defendant, and whether in those circumstances I should make an order under subsection (5), but the point was argued and I will say something. It was submitted on behalf of the first and second defendants that s 32 applied only where the concurrent wrongdoer was not known to the plaintiff; that that necessarily followed from the terms of subsection 32(2), particularly the part in brackets in para (a). Subsection (2) provides:**

"A concurrent wrongdoer, in relation to a claim involving an apportionable claim, must give the claimant any information that the concurrent wrongdoer has -

(a) that is likely to help the claimant to identify and locate any other person (not being a concurrent wrongdoer known to the claimant) who the concurrent wrongdoer has reasonable grounds to believe is also a concurrent wrongdoer in relation to the claim; and

(b) about the circumstances that make the concurrent wrongdoer believe the other person is or may be a concurrent wrongdoer in relation to the claim."

**[217] This provision amply illustrates the practical difficulties of any system of proportionate liability. The legislative intention plainly was that the concurrent wrongdoer who knew of other concurrent wrongdoers would pass on the necessary information to the claimant so that the claimant could make a claim against all of the applicable concurrent wrongdoers. That, however, is a utopian idea which gives rise to far more practical questions than are answered by the legislation. For a start, how is a concurrent wrongdoer to know whether any other person who the concurrent believes on reasonable grounds is a concurrent wrongdoer is one known to the claimant? Even if the concurrent wrongdoer knows that, how is the concurrent wrongdoer going to know what information is likely to help the claimant to identify and locate that other person? The provision plainly does not apply to a concurrent wrongdoer known to the claimant which, however, the claimant cannot locate, even if the concurrent wrongdoer can.

[218] It is all very well to say that if the concurrent wrongdoer knows that a particular person is at a particular place, that information will help the claimant locate that person, but how is the concurrent wrongdoer to know, for example, whether information that it has about where the other person used to live would help the claimant to locate that person now? The same would apply to any other information the concurrent wrongdoer had about that other person; the test is whether it would help the claimant, presumably when taken in conjunction with whatever information the claimant already has, to locate that person, not whether it would help the concurrent wrongdoer to locate that person (if the concurrent wrongdoer wanted to) or even whether the concurrent wrongdoer believes on reasonable grounds it would help to locate that person.

[219] Paragraph (b) is also unsatisfactory. What the claimant would need is the evidence available to the concurrent wrongdoer which would show that the other person is or may be a concurrent wrongdoer in relation to the claim, not simply the circumstances which give rise to such a belief, which may be circumstances of no evidentiary value. There is the further difficulty that paragraph (b) is plainly dependent on paragraph (a). That arises because the reference to the circumstances that make the concurrent wrongdoer believe in paragraph (b) is clearly a reference to the belief referred to in paragraph (a), and the reference is to "the other person", which refers back to "any other person" in paragraph (a), rather than to "an other person". But the "other person" in paragraph (a) is a concurrent wrongdoer not known to the claimant; it follows that paragraph (b) only applies in relation to a person in respect of whom there is an obligation which arises under paragraph (a), so there is no obligation to provide information, or even the circumstances giving rise to a belief, supporting the existence of concurrent liability in respect of a concurrent wrongdoer who is already known to the claimant.

[220] Of course, if the authorities which have concluded that a concurrent wrongdoer is limited to someone against whom the plaintiff would have been entitled to recover (at any time) are correct, and it is a matter for the defendant wishing to rely on these provisions to show that there is such a concurrent wrongdoer, and therefore to plead the basis of liability against that concurrent wrongdoer in the defence, once a defence is available then (subject I suppose to limitation questions) the plaintiff will be able to join that concurrent wrongdoer, if the concurrent wrongdoer is still available to be sued. In that way, therefore, the deficiencies in s 32 may well be overcome in time (although possibly not soon enough to assist the plaintiff) by the defendant's pleading. Nevertheless, the provision seems to me thoroughly unsatisfactory, and is an illustration of the extent to which there has been a failure properly to think through the practical application of this radical change from the common law. However, it is in my opinion not the function of courts to fill in gaps in legislation or to rectify deficiencies of legislative drafting. In my opinion the point made by the defendants about the scope of s 32(2) is good, and there is no relief under s 32(5) available in the present case.

[221] There was also a pleading that the plaintiff's claim was an apportionable claim for the purposes of Part 6A of the Trade Practices Act 1974, but that only applies to liability under that Act, which is not pursued. There was a similar plea in paragraph 29(e) in relation to the claim under the ASIC Act. The provisions of the ASIC Act are similar to, but not identical with, the provisions of the Civil Liability Act. Significantly for present purposes, there is no exclusion in respect of a claim by a consumer, and the definition of concurrent wrongdoer in s 12GP(3) of the Act extends to persons whose acts or omissions caused "independently of each other or jointly" the relevant loss or damage. This does not extent to vicarious liability, as is made clear by s 12GW(a), but it would apply in respect of any other liability of the third defendant even if that liability is properly characterised as joint.

[222] Nevertheless, there is no reason to doubt that the approach in the authorities referred to earlier, that the section is concerned with concurrent wrongdoers who are legally liable for the plaintiff's loss, would also apply to these provisions. They are similar to the provisions of the Trade Practices Act considered in Shrimp v Landmark (supra). That gives rise, therefore, to the same difficulty that there was not either pleaded or even articulated in submissions any particular basis upon which it was said that any of the supposed concurrent wrongdoers were (or would have been if sued at the appropriate time) legally liable to the plaintiff.

[223] I have already touched on the difficulties in establishing liability on the part of the named alleged concurred wrongdoers, apart from the third defendant. It seems to me that those difficulties, particularly the difficulties in relation to causation, remain an obstacle to any reduction in the damages payable in respect of the ASIC Act on the basis of the proportionate liability provisions. This defence is also not made out.

[224] So far as the third defendant is concerned, the representations made by the second defendant, in the letters authorised by the third defendant, were also made by the third defendant (acting through its agent) and therefore a breach of the ASIC Act itself, so far as those representations were misleading or deceptive, as I have found: Downey v Carlson Hotels Asia Pacific Pty Ltd [2005] QCA 199 at [33]- [53]. What matters here is whether the plaintiff was relying on the misrepresentations, not whether he was relying on the third defendant, so causation is established. In those circumstances there is also liability on the part of the third defendant under the ASIC Act, so the third defendant is a concurrent wrongdoer for the purposes of the proportionate liability provisions of that Act.

[225] In terms of apportionment, in my opinion the first and second defendants were principally responsible for causing the plaintiff's loss as between them and the third defendant.[204] On the evidence they selected this approved Westpoint project to market, they chose to offer it to this plaintiff, they were the ones who dealt directly with the plaintiff, and they were the ones whose sloppy modification of earlier standard letters, which were more appropriate to earlier Westpoint projects, led to some of the misleading and deceptive statements. In my opinion this apportionment should be carried out from the point of view of the plaintiff, without regard to any independent claim, in tort or contract, between the concurrent wrongdoers. I apportion 25% of the loss to the third defendant, and 75% of the loss to the first and second defendants.

[226] I should add that I am not disposed to examine more carefully the question of whether I could tease out some other liability on the part of the third defendant, in circumstances where it is clear that, if the Civil Liability Act provisions do not apply so that the plaintiff is entitled to an unreduced award in negligence, the plaintiff is entitled to judgment for that unreduced amount regardless of whether the liability under the ASIC Act is properly reduced on the basis of these provisions: s 12GR(2).

[227] Accordingly I find that the defendant did owe a duty of care to the plaintiff, that duty was breached by advising that this was an excellent opportunity to invest, that there was a guarantee of the obligation of Bayshore Mezzanine Pty Ltd under the loan, and that there was a charge in favour of the investor over the development company, and in failing to advise that this was a risky or high risk investment, that a promissory note was just an IOU and unsecured, that there was no guarantee in his favour in respect of the loan, and that ASIC had been concerned about whether these promissory notes were required to be regulated by them, in failing to ensure that the risks associated with the investment were clearly explained and understood by the plaintiff, and in the other specific ways found earlier. As a result of those breaches of duty, the plaintiff invested in Bayshore Mezzanine Pty Ltd promissory notes and as a result suffered a loss of $61,813.81. Accordingly the first and second defendants are liable to the plaintiff in negligence for $61, 813.81.

[228] I also find that the representations that it was an excellent opportunity to invest, that the investment was secured by a guarantee, that the investment was secured by a charge over the development company, that the Westpoint group had net assets of over $80 million, and the other matters found earlier were misleading and deceptive, and that as a result of that misleading and deceptive conduct the plaintiff suffered loss. The misleading and deceptive conduct occurred in circumstances governed by the ASIC Act, and the first and second defendants are liable to the plaintiff under the ASIC Act in the sum of $46,360.36. Accordingly there will be judgment that the first and second defendants pay the plaintiff $61,813.81, which is inclusive of interest to the date of judgment.

[229] I cannot conclude this part of the judgment without saying something about the way in which the plaintiff's case has been pleaded. It was in my opinion unsatisfactory, not only because of the extent to which the pleading in this case did not correspond with the plaintiff's evidence. The plaintiff's pleading was unduly repetitious and complicated, a matter which has, along with the necessity for me, because of the way in which the defendants conducted the defence, to focus on the plaintiff's pleading in preparing these reasons for judgment, produced a set of reasons which will be undoubtedly incomprehensible without immediate access to a copy of the pleadings, and more than usually unreadable. At times the pleading was too wide, and at other times curiously narrow. Overall, it was far too complex, and much of the pleading has not been made out, although sufficient facts were admitted or proved to entitle the plaintiff to judgment. The same applied to all the actions.

[230] This is a little surprising, because in principle the plaintiff's case ought to have been susceptible of a very clear and straightforward pleading, alleging:

1. The facts showing that the defendants owed a duty of care to the plaintiff.

2. It was a breach of that duty for the defendants to recommend an investment in Bayshore Mezzanine Pty Ltd promissory notes at all.

3. It was particularly a breach for them to do so without drawing attention to and explaining the risks associated with such an investment.

4. It was even more if a breach, and misleading and deceptive, to do so in terms which attributed to such an investment virtues which it did not possess.

5. As a result of the defendants' breach, and misleading and deceptive conduct, the plaintiff invested $50,000 in a Bayshore Mezzanine promissory note, and as a result suffered loss.

6. (An appropriate pleading of the material facts necessary to engage the entitlement to relief under the ASIC Act should have been included.)

The rest was essentially just a matter of particulars. I have long been of the view that if a plaintiff has a good cause of action it can be pleaded simply and concisely. This plaintiff had one, and it could and should have been so pleaded. That would have greatly simplified my task, and produced a shorter and more readable judgment.

[231] It is now necessary to go through each of the remaining actions. I propose to do so wherever possible simply by reference to the various paragraphs in the pleadings, and adopting the reasons given in relation to the Evans matter, where the issue is the same, or where the evidence is similar enough to make the reasoning applicable, at least by analogy.

[232] A further amended statement of claim was filed on 19 October 2006. A notice of intention to defend and defence were filed on behalf of the first and second defendants on 2 October 2006, and an amended defence of the first and second defendants on 9 October 2007. A reply to that amended defence on behalf of the plaintiff was filed on 10 December 2007. On 13 December 2007 there was a further amendment allowed in terms of paragraph 60 in Exhibit H: p 1023.

[233] The position with the allegations in paragraph 1 is the same as in Evans, except that the defendants denied para 1(d). A copy of the document is part of Exhibit 45, but there was no evidence that it was ever provided to the plaintiff. Otherwise, the outcome of those respective allegations is the same. Paragraphs 2, 3, and 4 are not found, and indeed were not pressed. In paragraph 6(d) of the amended defence, as part of the defendant's response to paragraph 3 of the further amended statement of claim, it was alleged that during a meeting between the plaintiff and the first defendant on or about 27 April 2004 the plaintiff represented to the first defendant words to the effect that he required a range of investments involving a moderate to high risk and that he was willing to take risks to ensure good returns. The plaintiff denied this (p 113), and it is not consistent with the documents signed by the plaintiff: Exhibit 9, Exhibit 19. I do not think there was any evidence from Mr Brannelly in support of this proposition. I find this allegation not proved.

[234] In relation to paragraph 5 there is a difference from Evans; in the original defence the first and second defendants admitted the facts alleged in paragraphs 5(a), (b), and (d). In the amended defence, however, the first and second defendants purported to withdraw those admissions. On the first day of the trial I pointed out that it did not appear that leave had ever been obtained to withdraw those admissions. The matter was referred to again at the beginning of the second day, when senior counsel for the defendants conceded that if that were not the case he would have to obtain leave to withdraw those admissions, and said that if necessary he would get back to the issue later: p 89. He never did, and leave has never been given to withdraw those admissions. The purported withdrawal in the amended defence was irregular and is ineffectual.[205] Paragraphs 5(a), (b), and (d) are therefore admitted.

[235] What the defendant sought to do in the amended pleading was introduce a qualification to the admission of paragraph 5(a) and (b); in my opinion that qualification required leave because, to the extent of the qualification, it involved a withdrawal of what had previously been an unqualified admission, so that the qualification was ineffectual. As to paragraph 5(d), in paragraph 8 of the amended defence that was simply denied, which involved a withdrawal of the admission which was previously made, and which was therefore ineffectual.

[236] As to (c) and (e), I find those paragraphs proved, essentially for the same reasons as in Evans; there was a telephone conversation with the first defendant following Exhibit 12 which ought to have made it clear to him that the plaintiff would be likely to rely on what he was told about the quality of the promissory notes as an investment, their value as an investment and the price, safety and reliability in comparison to other investments. In any case, in both the defence and the amended defence the allegation in paragraph 6 of the existence of a duty of care to the plaintiff was admitted.

[237] I accept that there was a telephone conversation on about 8 August 2005 in which the plaintiff informed the first defendant that he was interested in the investment in Bayshore Mezzanine and wanted the first defendant's opinion about it. Paragraph 7(b) was not proved. The making by the first defendant of the statements alleged in paragraph 7(c), was admitted on the pleadings: para 10(a). In those circumstances, I will proceed upon the basis that those statements were made.[206]

[238] I might add the evidence of Mr Courtney did not support the matters alleged in paragraphs (i) or (vii). He said the first defendant had said that the Westpoint group had been established for over 20 years, so paragraph (ii) was not otherwise made out, and that Westpoint guaranteed the loan by Bayshore Mezzanine, rather than the loan to Bayshore Mezzanine, so paragraph (vi) was not made out. His evidence supported and I would have found that paragraph (iii) was made out, and (iv) in substance; his evidence referred to net assets of the order of $80 million. As to paragraph (v), I accept that he was told that Bayshore Mezzanine had a mortgage over the development property and a charge, but could not have found more than that. Paragraph (viii) was supported by Mr Courtney's evidence in effect, and as to the progress of construction, Mr Courtney's evidence was that the construction was scheduled for completion at the end of 2005.[207] Paragraph (d) which was in issue was not proved by Mr Courtney's evidence; as to paragraph (e), what was said by the first defendant was that he would recommend the investment, so this allegation was not made out.

[239] Paragraph 8 alleged somewhat curiously that certain representations were made as a result of making the statements referred to in paragraph 7 above. These appear to be pleaded as representations implied on the basis of what was actually said so far as that was alleged in paragraph 7. The crucial allegation in paragraph 7 for that purpose was that in paragraph 7(e), which has not been found, and therefore I am not prepared to find that the representations alleged in paragraph 8 were made.

[240] The letter dated 18 August 2005 was Exhibit 13; it was admitted that it contained statements alleged in paragraph 9: defence 13(a). The whole tenor of the letter was that it amounted to the provision of advice. It was on letterhead describing the second defendant as "advisers to the professions", the letter followed a telephone conversation in which the plaintiff had sought his advice about the investment, and was told among other things that the first defendant would recommend the investment, and that was the general tone of the body of the letter. In addition, there was no express pleading to paragraph 9(a), which is therefore taken to be admitted.

[241] As to paragraph 9(b) I am faced with a somewhat surreal situation where, notwithstanding that the making of the statements alleged in that paragraph was admitted in paragraph 13(a) of the amended defence, that was not what the letter Exhibit 13 actually said. For example, as to paragraph (i), what it actually said after the heading "Bayshore Port Melbourne" was: "This is a limited opportunity to participate in the final stage financing of this Melbourne development." There was no statement like paragraph (b)(ii), nor (iii), although the statement in paragraph (iv) was included, and that in (v), except that the first words were "For each project" instead of "For specific projects". The words in paragraph (vi) were there, but not those in (vii). There was something very like (viii), but with slightly different introductory words. What was said about the project was "the completion of this project is scheduled for the end of 2005"[208] instead of what was alleged in (ix), and there was no paragraph headed "Investment highlights". Despite the defence, only paragraph 9(b)(iv), (v), (vi), and (viii) were proved. What was in issue was whether these statements were representations, but for the reasons given in respect of analogous statements in Evans they plainly were and I so find.

[242] Paragraph 10 of the amended statement of claim referred to the letter dated 29 August 2005: Exhibit 15. In relation to this, the defendant in paragraph 14 admitted making the statements alleged in the letter, but denied that they were representations, on the basis that they were a mere conduit of information which had been published by Westpoint group and Bayshore Mezzanine Pty Ltd. Such an allegation was also made in relation to paragraph 9, in paragraph 13(b) of the defence. In such a situation there are not representations on the part of the person communicating the information, but for the reasons given in relation to Evans that was not the situation here either; what was presented in these letters was presented as information or advice coming from the defendant, not something which would take the matter outside the concept of a representation on this basis.

[243] A more important point in relation to the letter referred to in paragraph 10 was that made somewhat obliquely in paragraph 7 of the amended defence, that anything in the letter was irrelevant to any cause of action because it was not sent until after the plaintiff had decided to make the investment. The plaintiff sent in his application form and his cheque under cover of a letter dated 23 August 2005: Exhibit 14. Nothing that the defendant did after that could be relied upon as operative negligence, or a relevant representation, though it is relevant as part of a consistent pattern of behaviour on the part of the defendant.

[244] Paragraph 11 of the statement of claim then alleged that there were implied representations made by the express representations referred to in paragraphs 7, 8, and 10. These implied representations were in issue on the amended defence. The representations in paragraph 8 were not found and those in paragraph 10 were irrelevant so they cannot be the basis of any implied representation which would be of any relevance. Somewhat curiously, the written representations alleged in paragraph 9 were not relied on here. The statement in paragraph 7(c)(i) supports the implied representation in paragraph 11(c)(iv). The statement in paragraph 7(c)(iv) supports the implied representation in paragraph 11(e). The statements in paragraph 7(c)(v) and (vi) support the implied representation in paragraph 11(f)(i) and (ii). The statement in paragraph 7(c)(vi) supports the implied representation in paragraph 11(g). The statement in paragraph 7(c)(viii) supports the implied representation in paragraph 11(i)(i). Otherwise the implied representations alleged were not made out.

[245] Paragraph 12 alleged that the plaintiff invested $200,000 in a Bayshore Mezzanine promissory note in reliance on the advice and representations referred to in paragraphs 5-11 above, on or about 28 August 2005. The plaintiff sent an application form and cheque for that amount to the defendant on 23 August 2005: Exhibit 14. That was forwarded, apparently initially to Kebbel, and ultimately reached Westpoint, because Bayshore Mezzanine issued a promissory note in his favour dated 29 August 2005: Exhibit 16. Accordingly the plaintiff did what was required of him to make the investment on 23 August, and the promissory note was issued on 29 August 2005 as a result.

[246] In relation to the question of reliance, the plaintiff said that he relied on a number of statements in the letter of 18 August 2005, Exhibit 13. He referred to the interest and the bonus at the end of the project, that the investment was secured by way of a second mortgage, that the Westpoint group had net assets in excess of $80 million (9(b)(iv)), that the special purpose company, which he took to be Bayshore Mezzanine, had a second ranking mortgage over the development property and a second ranking charge (9(b)(v)): p 53. He understood these were securities that Bayshore Mezzanine was obtaining: p 54. He understood that Bayshore Mezzanine was getting the guarantee from Westpoint, so that there was no question of his having relied on anything he was told to the effect that he was getting the guarantee himself: p 76. There were various other matters referred to, but none of them which appear to be of particular relevance to the matters in issue. Apart from this, the oral representations in paragraph 7(c)(iv) and (v) which were closely related to things said in the letter, and the implied representations in paragraph 11(e) and (f)(ii), which were also closely related to such representations, were also relied on.

[247] These were not the only matters relied on by the plaintiff in making the decision to invest, but I find that they were matters of some significance in that decision. My impression is that the plaintiff was particularly relying on what he was being told by the defendant, for a variety of reasons. The plaintiff had previously consulted the defendant in a more formal way in relation to investment advice the previous year (Exhibits 9 and 10), and accordingly was used to treating the defendant as an investment adviser.[209] The plaintiff had specifically sought advice about this investment from the defendant, after a seminar at which Westpoint investments were discussed, and at which he received a document, Exhibit 11, which said among other things that potential investors were advised to seek independent financial advice before making an investment decision.[210] The plaintiff also said that he was relying on the fact that the defendant said in the telephone conversation that he recommended the investment, but that particular part of the conversation was not relied on in the pleading. That was also consistent with a statement to that effect in Exhibit 15, and indeed the general tenor of the conversation and Exhibit 13. This supports the inference, which is natural enough in these circumstances, that the plaintiff was relying on those things he was told which were relied on in the pleading and supported by the evidence. To that extent[211] paragraph 12 is made out.

[248] Paragraph 13 dealing with the terms of the promissory note was not admitted but is proved by the note which is part of Exhibit 16. As to paragraph 14, I accept that the plaintiff received only two monthly payments, and that there was no payment of the principal or any other payments of interest or the premium. Paragraphs 15(a)-(g) are the same as the corresponding paragraphs in Evans; paragraph 15(a) was admitted in the amended defence (para 2), but otherwise the facts alleged in paragraph 15 were not admitted: para 17. For the reasons given in Evans, I find paragraph (b), (c), and (g) proved, as was paragraph 15(i) which was the same as 15(h) in Evans. For the reasons given in Evans, paragraph (e) and (f) are not found.

[249] Paragraph (h) was an enlarged version of the assertion in Evans that Bayshore Mezzanine Pty Ltd was insolvent, and continued with the allegation that it was financially unsound or was unlikely to be able to meet its financial commitments as and when they fell due, for various reasons set out. Many of the facts set out in the particulars were established by the evidence, but at the relevant time Bayshore Mezzanine Pty Ltd was not insolvent, for reasons given in relation to Evans, based on the evidence of Mr Vickers. It was unable to repay the promissory notes because of the failure of the Bayshore development, and because of the wider failure of the Westpoint group. The problem was that the Bayshore development was in serious financial trouble, and it was that which imperilled the position of Bayshore Mezzanine Pty Ltd, but that was not something referred to in the particulars. Overall I am not satisfied that paragraph 15(h) has been proved.

[250] Paragraph 16 was in the same terms as paragraph 16 in Evans; for the reasons given in Evans, I find that paragraph (a) was partly correct, and find paragraphs (b), (e), (f), and (i) proved; I do not find that the allegations in paragraph (d), (g), (j), and (k) are proved. Paragraph 17 was in the same terms as paragraph 17 in Evans. As to the facts alleged in paragraph 17, for the reasons given in Evans, I find the facts in paragraphs (a), (b), (c), (d), (f), (g), (h), (i), (j)(i) re the first and second defendants, (k)(ii), and (l) proved; the facts alleged in paragraph (e), and (k)(i), (iii), (iv), (v), and (vi) were not proved.

[251] As to whether the representations were false, misleading or deceptive, it is necessary to go through those which have been admitted or found. In paragraph 7 that means the representations in 7(c). It follows from those findings of fact that the representations in paragraph 7(c)(ii), (iv), (v), and (vi) were false, misleading and deceptive. The representations in paragraph 8 were not found. With regard to paragraph 9 the representations in paragraph 9(b)(iv), (v), (vi) were false, misleading and deceptive. The representations in paragraph 10 were irrelevant because they came too late. With regard to paragraph 11, the implied representation in paragraphs (e), (f)(ii), and (g) were false, misleading and deceptive.

[252] Paragraph 18 was effectively in the same terms as paragraph 18 in Evans.[212] For the reasons given there I find that a financial adviser exercising reasonable care and skill would have advised clients of the facts alleged in paragraphs (g) and (h). Paragraph 19 was in the same terms as paragraph 19 in Evans. There was no breach of contract here; as to whether there was a breach of the duty of care, I find that there was a breach in failing to advise the plaintiff of the matters in paragraph 15(c), and (g) insofar as it related to the commission paid to the first and second defendants,[213] in paragraph 16(i), in paragraph 17(a), (c)(ii), (g), (h)(i), (i), (j)(i) (so far as it related to the first and second defendants), and (l), and in paragraph 18(a), (b), (g), and (h).

[253] Paragraph 20 was in the same terms as paragraph 20 in Evans. For the reasons given there I find paragraphs (a), (d), (e)(iii), (h), (j), and (l) proved. Paragraph 20A was in the same terms as paragraph 20A in Evans. I find that a financial adviser exercising reasonable care and skill in providing advice to a client would have known of the matters referred to in paragraph 15(a), (b), (c), (g)(i), and (i), in paragraph 16(i), and in paragraph 17(a), (b), (c), (d), (g), (h), (i), (j)(i) re the first and second defendants, and (l). The allegation in paragraph 20A(b) was probably correct but was irrelevant, because the plaintiff was not a client of the first and second defendants; the plaintiff had been their client at one time, but that relationship was at an end, and I am assessing the duty not by reference to the duty on a financial adviser giving advice to a client. Paragraph 20B essentially repeated the allegations in paragraph 20A(a) and I make the same findings.

[254] With regard to paragraph 21(a) I find that the first and second defendants knew the facts alleged in paragraphs 18(a), (b), and (c) and 20(e), (h), (j), and (l); this was either admitted by Mr Brannelly in evidence, or so obvious from the information that he had that I am prepared to infer that he had actual knowledge of these matters. Paragraph 21(b) touched also on paragraph 21A so I should say something about it. It alleged various things about Bayshore Mezzanine Pty Ltd, and this time it was not admitted, in paragraph 17 of the amended defence. The things alleged were effectively the same as those mentioned in paragraph 18. I find the facts in paragraph 21A(a), (b), (c), (h), and (i) proved.[214] To go back to paragraph 21(b), I find that the first and second defendants ought to have been award of the matters referred to in paragraph 15(a), (b), (c), (g)(i), and (i), paragraph 16(i), paragraph 17(a), (b), (c), (d), (g), (h), (i), (j)(i) re first and second defendants, and (l), paragraph 18(a), (b), (c), (g), and (h), paragraph 20(a), (d), (e), (h), (j), and (l), and paragraph 21A(a), (b), (c), (h), and (i). With regard to paragraph 21(c) the first and second defendants had a duty to advise the plaintiff of the matters referred to in paragraph 18(a), (b), (g), and (h), in paragraph 20(a), (d), (e)(iii), (h), (j), and (l), and in paragraph 21A(a), (b), (h), and (i)

[255] With regard to paragraph 22, there was no breach of contract. I find that there was a breach of duty of care to the plaintiff in the failure of the first and second defendants to advise the plaintiff of the matters referred to in paragraphs 18(a), (b), (g), and (h), 20(a), (d),[215] (e)(iii), and (h),[216] and 21A(a), (b), (h), and (i). Paragraph 23 in relation to the breach of duty of care repeated the allegation of failure to advise of the matters referred to in paragraphs 18, 20, and 21A, coupled with making the representations referred to in paragraphs 8 and 11. The representations in paragraph 8 have not been found; I find there was a breach of the duty of care in making the implied representations referred to in paragraph 11(e), (f)(ii), and (g).

[256] Paragraph 24 then alleged that the plaintiff would not have invested if he had been aware of various matters. The plaintiff said that if he had been aware of the ASIC warning contained in Exhibit 17 he would not have invested (p 63), and that if he had been told that the investment in the promissory note was a high risk investment he would not have made the investment (p 61), or if he had been told that Bayshore Mezzanine Pty Ltd did not have a second ranking mortgage or a second ranking charge he would not have made the investment: p 62. Although he said he would not have invested if he had been told of all the commission that was paid, there was no direct evidence that he would not have invested had he been told of the amount of the commission paid to the second defendant, and I am not persuaded that if he had been told that he would not have invested.

[257] I find that if he had been told the promissory notes did not provide a security greater than a mere agreement to pay money at a later date he would not have made the investment. The plaintiff did not know what a promissory note was (p 46) and he was not told what it was by the first defendant (p 48) nor was that explained in the letter from the first defendant, or (adequately) in the other information provided to the plaintiff.[217] The plaintiff said and I accept that he was concerned that his investment should be safe and secure (p 62) and I find on the balance of probabilities that in these circumstances if he had been given this advice he would not have made the investment. Related to this is that I find he would not have invested if he had been told the matters in paragraph 18(g) and (h), which were repeated in paragraph 21A(h) and (i). It follows from the plaintiff's evidence that he relied on the statement that the Westpoint group had net assets in excess of $80 million that he would not have made the investment if he had been told that that was not the case (para 17(g)).

[258] He also said that he would not have made the investment if it had not been recommended to him by Mr Brannelly (p 62). I accept this evidence, which was consistent with his evidence that he specifically spoke to Mr Brannelly after he had received and had looked at Exhibit 1 in order to ascertain whether he recommended the investment. In these circumstances, I find that if he had been told that the first and second defendants did not apply their expertise as financial advisers in relation to his project, he would not have made the investment, because in those circumstances there would have been no effective endorsement of it by the defendant in his capacity as a financial adviser, which was specifically what was sought (paragraph 17(j)(i)). I also find that the plaintiff would not have made the investment if the risks associated with it had been clearly explained to the plaintiff (para 20(a)) or if it had been explained to him that the investment proposed was an unregulated high risk investment which was not capital guaranteed: para 20(d).[218]

[259] Paragraph 25 then alleged that the representations referred to in paragraphs 8 to 11 constituted negligent misstatements. I find that the representations in paragraphs 9(b)(iv), (v) and (vi), and 11(e), (f)(ii), and (g) amounted to negligent misstatements. For the reasons given in Evans, paragraph 60 was proved.

[260] The pleading then went on to raise the applicability of the ASIC Act. For the reasons given in Evans, this Act was applicable, and I find the allegations in paragraph 26A(1), (2), (3), (5), and (7) proved. As to paragraph 26, the matters that were relied on as misleading and deceptive conduct were the representations in paragraphs 8 to 11 and the failure to attend to or advise of the matters referred to in paragraphs 18, 20 and 21A. I find that, for reasons analogous to those in Evans, making the representations in paragraph 9(b)(iv), (v), and (vi), and 11(e), (f)(ii), and (g) was misleading and deceptive conduct. However, I do not think that there was any separate misleading and deceptive conduct in relation to any of the omissions; the circumstance that the various things which ought to have been disclosed or advised were not disclosed or advised served to provide a context relevant to whether some of the things that were said were misleading and deceptive.

[261] Paragraph 26B, 26C, and 26D were concerned with a case under the Corporations Act which has not been pressed. Paragraph 27 alleged that as a consequence of (relevantly) the negligence, negligent misstatements and breaches of the ASIC Act the plaintiff has suffered particular loss and damage. That depends on whether the plaintiff has suffered the loss and whether the loss was caused by the breaches of duty or breaches of the Act. The approach to quantum is the same as in Evans; I will allows $200,000 plus interest at 8% from 29 August 2005, less the interest payments already made, which came to $4,142.47: p 64. This produces a total amount of $247,540.09.[219]

[262] In relation to the question of causation, it is clear that these are by no means the only matters on which the plaintiff relied, but what matters for the purposes of a claim in negligence is whether the negligence or negligent misstatements were a cause of the plaintiff's making the investment. Mr Courtney did not rely on all of them, but on his evidence he relied on those in paragraphs 9(b)(iv) and (v) and 11(e) and (f)(ii). I find that those negligent misrepresentations or misstatements were a cause. To the extent that the omissions to advise were negligent and the plaintiff would not have invested if such advice had been given, that negligence was also a cause.[220] For the purposes of the ASIC Act, the position is essentially the same, subject to other matters which I will deal with shortly; I find that they were a cause of the plaintiff's investing in the promissory note. Essentially the plaintiff suffered the loss because he invested in the promissory note; if he had not done that he would not have suffered the loss. Had it not been for the negligence, negligent misstatements and breach of the ASIC Act, the plaintiff would not have made that investment.

[263] In the case of Mr Courtney, the information from the first and second defendants was by no means all that he was relying on. He had originally heard of this investment as a result of attending a seminar given by a representative of Kebbel (NSW) Pty Ltd (p 42), and to some extent relied on things he was told there,[221] and he had been provided with a copy of Exhibit 1, the information memorandum from Westpoint, before he had had any communication from the first defendant,[222] and admitted under cross-examination that to some extent he relied on things set out in Exhibit 1.[223] But in terms of causation what matters is whether he was also relying on the first and second defendants, and I think it is clear in the light of the whole of Mr Courtney's evidence[224] that that was the case and I so find.

[264] For the purposes of the ASIC Act it is also relevant to consider whether the plaintiff's response to the representations was reasonable in the circumstances in which he found himself. I find that it was. His approach to Mr Brannelly was with a view to getting advice from somebody whom he identified as an adviser, somebody who would be on his side, somebody on whom he could rely to provide independent objective advice, and who might be expected to be more reliable therefore than the representative of Kebbel and the marketing brochure from Westpoint. He had no reason not to trust what he was told by the defendants. In these circumstances in my opinion it was quite reasonable for him to have relied on what he was being told by the defendant. Mr Brannelly never told him that he was just acting as a salesman of this financial product.

[265] It was alleged in paragraph 12(c) of the amended defence that the plaintiff was aware and ought to have been aware that any investment in the promissory notes of Bayshore Mezzanine Pty Ltd was high risk. I do not accept the plaintiff was aware of that; on the contrary, I accept that the plaintiff would not have made the investment if he had been aware of that. As to whether he ought to have been aware that it was high risk, it is correct that a careful consideration of the information contained in the information memorandum ought to have cast doubt on whether this was a good investment, but I am not persuaded that someone in the position of the plaintiff, who had relatively little investment experience, ought to have been able to deduce just from the information memorandum the serious problems which ought to have been appreciated by the defendant from the information available to it. It was not shown that the plaintiff had seen a copy of the Westpoint On Point brochure, or anything else which provided information inconsistent with what was said in the information memorandum. Otherwise I have largely dealt with these arguments in relation to the matter of Evans.

[266] I also find that the allegation in paragraph 25(c) of the amended defence, that the plaintiff chose to invest irrespective of any representation or advice given by the first and second defendants was not made out. As to paragraph 29, I find that the plaintiff was not aware and ought not to have been aware from his own assessment of the information memorandum and public knowledge of such of the facts pleaded in paragraphs 7, 9, 10, 11, 15, and 16 as I have found that a failure to disclose them amounted to negligence on the part of the defendant; no doubt there were plenty of facts referred to in those paragraphs of which he would or ought to have been aware from Exhibit 1, but not the material ones. I find that he received the information memorandum (a copy of Exhibit 1) under cover of the letter of 8 August, Exhibit 12, not the letter of 18 August, Exhibit 13. The allegations in paragraph 29(c) and (d) were not made out.

[267] The first and second defendants also raised issues of proportionate liability in relation to the claims in negligence under the Civil Liability Act 2003, and in relation to the claim under the ASIC Act under the proportionate liability provisions of that Act. There was also an unparticularised plea of contributory negligence, but only in relation to liability under the ASIC Act: amended defence para 36(d). As to the question of contributory negligence, although the position is not entirely the same as in Evans, for reasons similar to those applying in the case of Evans, contributory negligence has not been made out.

[268] There is the difference that Mr Courtney had some additional information in the form of the seminar, and he had seen a copy of the information memorandum before he received any advice, oral or in writing, from the defendant, so he had some additional sources of information and as a result was not, for example, mislead by the inaccurate statements about the benefit of the guarantee contained in Exhibit 13, and he understood that the mortgage and the charge referred to in that letter went to Bayshore Mezzanine, not to himself: p 54. It was not clear that he really appreciated that there was anything inconsistent being told him by Mr Brannelly, but it would have been natural in any event for him to act on what he was told by Mr Brannelly, and not to be concerned to scrutinise closely what he was being told by him in order to see whether it really was consistent with the information memorandum. I do not think I need to say more about contributory negligence.

[269] With regard to the question of proportionate liability under the Civil Liability Act, I find that the plaintiff was a consumer and therefore exempt under s 28(3) of that Act, for the reasons given in relation to Evans, which apply here equally. I should add that the other difficulties that arise in relation to a claim under the Civil Liability Act apply here as well, although at least here there was some evidence of reliance on the part of the plaintiff on things said by Westpoint in the information memorandum, and things said by Kebbel (NSW) Pty Ltd; however, it was not shown that there was any breach of duty on the part of either of those in relation to those things that were relied on.

[270] In relation to the claim under the ASIC Act, again the position is similar to that of Mr Evans, the only claim which is made out is in relation to the third defendant, which is also shown to have been a concurrent wrongdoer on the basis that the relevant representations amounted also to misleading and deceptive conduct by it. In relation to the question of apportionment, there is this difference, that the first and second defendants were not the ones who introduced the plaintiff to this investment; the plaintiff already knew about the investment, and sought advice about it from the defendant: p 44. Nevertheless, they chose to market this product, they were the ones who dealt directly with the plaintiff and recommended it, and they were the ones whose sloppy modification of earlier standard letters which were appropriate to other Westpoint products led to the relevant misleading and deceptive statements. Again there was no suggestion that there was any particular significance attached by the plaintiff to any association with the third defendant. In all the circumstances I apportion 20% of the loss to the third defendant and 80% of the loss to the first and second defendants. However, this does not affect the amount of the judgment for reasons given earlier.

[271] In summary, the defendant was negligent in advising that the Westpoint group had net assets in excess of $80 million and that Bayshore Mezzanine had a second mortgage and a second ranking charge, which also amounted to misleading and deceptive conduct in breach of the ASIC Act, and negligent in failing to give proper advice about the risks of the investment, and failing to inform the plaintiff of various other things as I have found. The plaintiff made the investment because of this negligence and breach of the Act, and as a result suffered loss for which the first and second defendants are liable. Accordingly there will be judgment that the first and second defendants pay the plaintiff $247,540.09, which is inclusive of interest to the date of judgment.

[272] A second further amended statement of claim was filed on 13 November 2007, which incorporated amendments allowed on 16 October 2007. A notice of intention to defend and defence by the first and second defendants were originally filed on 2 October 2006 but a further amended defence, which responded to the amendments in the second further amended statement of claim, was filed on 26 November 2007. The amended reply to that defence on behalf of the plaintiffs was filed on 30 November 2007. On 13 December 2007 there was a further amendment allowed in terms of paragraph 60 in Exhibit H: p 1023.

[273] The allegations in paragraph 1 were the same as in Evans, and the defence was the same except that paragraph 1(d) was denied: para 3. There was evidence that the third defendant issued such a document, which was part of Exhibit 45, and a copy was sent to the plaintiffs with Exhibit 66, so 1(d) was proved. Otherwise, the outcome of those allegations is the same as in Evans. Paragraphs 2, 3, and 4 are not found, and indeed were not pressed, being related to the case in contract. Paragraph 5 was denied by the defendants: paragraph 12. I accept the evidence of the plaintiffs in relation to their conversations with the first defendant and on the basis of those conversations, find the facts alleged in paragraph 5(a) proved. At least from the conversation, which I find occurred, after receipt of the letter of 18 July 2005 Exhibit 68, the first and second defendants were aware that the plaintiffs were giving consideration to investing in the Bayshore Port Melbourne development. I find that the first and second defendants should have known that the plaintiffs believed that they had expertise in property investments and were experienced and knowledgeable about property investment.

[274] I find that the first and second defendants ought to have known that the plaintiffs would rely or were likely to rely on any representations made by them as to the quality of the promissory notes as an investment, the value of the promissory notes in comparison to other investments and securities, and the price, safety, and reliability of the promissory notes in comparison to the other investments. I also find that the first and second defendants should have known that the plaintiffs would rely on the advice and the representations and would thereby be induced to make the investment in Bayshore Mezzanine Pty Ltd. I make these findings on the basis of acceptance of the plaintiffs' evidence, and essentially for the same reasons as the same findings were made in Evans. Paragraph 6 alleged that the first and second defendants owed a duty to the plaintiffs to exercise reasonable care and skill in the provision of advice and the making of representations. That paragraph was denied: paragraph 11. For the reasons given in Evans, I find paragraph 6 proved.

[275] Paragraph 6A, which was denied, alleged that Mr Summergreene had a telephone conversation with the first defendant in January 2005 in which various things were said. I accept the evidence of the plaintiffs as to this conversation. As to paragraph (a), the plaintiffs' evidence did not support (i), the evidence of Mrs Summergreene was that he said that her husband was semi-retired and had his own superannuation fund: p 474. Her evidence also supported (iii), and both she and Mr Summergreene (p 503) supported (iv). There was no evidence from either of them to support (v). Mrs Summergreene said that the money to invest would be coming from an investment house they intended to sell, and Mr Summergreene said they had an investment rental property they were considering selling and the funds would be drawn from the sale of that property: p 503. To that extent paragraph (vi) was proved.[225] Paragraph 6A(b) was proved by the evidence of Mr Summergreene: p 503.

[276] Paragraph 6B referred to the letter of 14 January 2005 sent to Mr Summergreene: Exhibit 66. This included the express statement alleged in that paragraph; it also enclosed a copy of the product disclosure statement for the Prime Retirement and Aged Care Property Trust, a supplementary product disclosure statement for that trust, a copy of the Deakin Financial Services Guide published by the third defendant with a statement that the first defendant was the plaintiff's authorised representative, and copies of the documents "Brannelly the professional perspective" and "Your rights to privacy".

[277] As to paragraph 6C, the defendant sent Mr Summergreene a circular letter dated 28 February 2005: Exhibit 67. The letter said: "Recently, you expressed interest in one (or more) of the high yielding funds we recommend by requesting a prospectus or information memorandum." That was an admission that the defendant was recommending particular investments, relevantly to the plaintiffs. The letter went on that they had "for more than 40 years ... provided financial services to a select clientele of executives and self-employed business people. ... Over the past seven years we have been asked to investigate and source funds yielding between 10% per annum and 15% pa with risk factors minimised as much as possible. All investments carry a degree of risk. In many cases, a higher expected yield means that the product carries a greater risk. However, we endeavour to recommend only those funds in which risk factors to your investment are minimised as much as possible." The letter went on to refer again to the Prime Trust, and then to the Westpoint group, and to other investments. In relation to the Westpoint group, it was said that it "has substantial net assets flowing from the successful completion of its present developments (in excess of $80 million). ... Westpoint has a number of projects still available. Whilst all projects are not the same, features common to most projects are as follows: ... Security: is usually held by a registered second ranking mortgage over the property and a second ranking charge over the developer. This is supported by a guarantee from Westpoint itself." The letter went on at p 4 to advise that "we are a fully qualified financial planning organisation. ... If you would like any assistance in this area, please telephone me personally ... ."[226]

[278] Paragraph 6D alleged a telephone call in relation to the Prime fund between February and July; I accept that the first defendant rang on a number of occasions during that period to inquire whether they were ready to invest money, but were told that the property had not yet been sold: p 504. Otherwise that paragraph was not proved. Paragraph 7 related to the letter dated 18 July 2005 sent to Mr Summergreene by the defendant: Exhibit 68. The sending of the letter was not in dispute. The plaintiffs alleged that the letter provided advice with respect to investment in the promissory notes; that was disputed, and the defendant relied on the third page of the letter headed "Disclosure". The letter contained the express statements alleged in paragraph 7(b) which in context amounted to representations by the defendant, so paragraph 7(b) was proved. It also concluded with the statement: "Douglas, I trust you will find the attached material of interest. As indicated, it is expected that this capital raising on the Bayshore development will remain open only for a limited period. If you would like to receive the relevant information memorandum or require any further information please call me ... ."

[279] The third page headed "Disclosure" stated "Please note that the attached information is not financial advice and is for information purposes only. As you did not describe your current situation to me, have not sought advice nor were given advice by any authorised representative of Deakin Financial Services Pty Ltd ... it is possible that the chosen product is not approved for use by representatives of the licensee. It is also possible that there may be products available from other financial product providers that are more suitable to your needs." It then went on to refer to commissions, and contained a reference to the cooling off period provided under the Corporations Act 2001. This was the passage referred to in paragraph 9(d) of the further amended defence, and 13(b) of that defence. Notwithstanding that passage, which was in fairly limited terms, in view of the statements in the letter relied on in paragraph 7(b), and the passage I quoted from the second page, I find that overall the letter did amount to advice by the defendant to invest in Bayshore Mezzanine Pty Ltd promissory notes. The statement on p 3 was similar to the statement in one of the letters sent to Mr Evans, and my reasons in relation to its absence of significance in Evans apply here also. Paragraph 7(a) was proved.

[280] Paragraph 7A alleged that after receipt of that letter there was a telephone conversation between Mrs Summergreene and the first defendant. I accept Mrs Summergreene's evidence that she did have such a conversation, and that in the course of it she said various things (p 486) but they did not correspond to any of the things alleged in paragraph 7A, which is therefore not found. Paragraph 7B alleged a further telephone conversation between Mrs Summergreene and the first defendant on or about 20 September 2005. I accept that there was a telephone conversation on that day which is to some extent not in issue: defence para 13B. Mrs Summergreene gave evidence of this conversation at pages 488-9; on the basis of her evidence I find 7B(a)(i) proved, and that the first defendant said he would send them some information. See also p 588. Under cross-examination she conceded that she could have asked whether the Bayshore investment was still open, but did not say positively that she did do so: p 588. So far as I can see the further matters alleged in paragraph 13B of the further amended defence were not even put to Mrs Summergreene in cross-examination, and I find that they were not said during that conversation. This is notwithstanding the terms of Exhibit 117, in view of my reservations about the reliability of Mr P Brannelly.[227]

[281] Paragraph 10 alleged the letter from the defendant of 20 September 2005: Exhibit 69. That that letter was sent was admitted (paragraph 16(a)) as was the proposition that it contained the statements alleged in paragraph 10(b), although the proposition also in that paragraph that those statements amounted to representations was not the subject of any express response in the pleading, and is therefore taken to have been admitted. Again there is the difficulty that this part of the pleading appears to have been drawn without close attention to the terms of the letter; the statement (representation) in paragraph 10(b)(i) does not actually appear in Exhibit 69, and what the letter said in relation to "project term" under the heading "investment highlights" was that "construction is underway and due for completion at the end of 2005." Subject to that, however, paragraph 10(b) was proved. As to whether the letter provided advice, in view of the terms of the letter as a whole I accept that it did provide advice notwithstanding the terms of the page headed "disclosure" which was similar to that attached to Exhibit 68.

[282] Paragraph 11 alleged that certain representations were made by implication by making the express representations referred to in paragraph 6C, 7, 7A, and 10. These were similar to the allegations in paragraph 11 in Evans, but of course must be determined by reference to the express representations relied on in this matter. On that basis, I find the implied representations in paragraph 11(b)(iv), (c)(i) and (ii), (d), (e)(i) and (ii), (f), (g)(i) and (iii), (i), (k), (l)A and (m) as to the guarantee and the charge to have been made.

[283] Paragraph 11A alleged a conversation between the first defendant and Mrs Summergreene on or about 21 September 2005. This allegation is in issue: paragraph 17A. This alleged telephone conversation was not supported by the evidence of either plaintiff and it was not made out. Paragraph 11B alleged a further telephone conversation on about the same day, which was also in substance denied: paragraph 17B. Again there was no evidence from the plaintiffs to prove this allegation.

[284] Paragraph 11C alleged that there was a conversation during a meeting between the plaintiffs and the first defendant on or about 23 September 2005. That paragraph was denied: paragraph 17C, although the first defendant's notes did record a meeting on 23 September 2005: Exhibit 117, p 1114. I find there was such a conversation. I accept the plaintiffs' evidence in relation to this conversation. On the basis of that, I find that the first defendant was told that the plaintiffs wanted to know that their money was going to be safe (p 492) and that he was asked what a second ranking mortgage was: p 493. I find that the first defendant made the oral representations alleged in paragraph 11C(c)(i), (ii) so far as it related to the guarantee, and (iii) except for the reference to a "registered" mortgage. Although Mrs Summergreene said that the first defendant made her feel that there was nothing to worry about, she did not say he actually said that, and (iv) is not found. There does not seem to be any dispute that it was on this occasion that the application for the promissory note and the cheque for $100,000 were handed over, and paragraph 11C(d) was made out.

[285] Paragraph 12 alleged that the plaintiffs invested $100,000 in a Bayshore Mezzanine promissory note in reliance on the advice and representations referred to in paragraphs 5 to 11C above, on or about 23 September 2005. The plaintiffs handed over the application form and cheque on 23 September 2005. That was apparently forwarded by the defendant, and Bayshore Mezzanine issued a promissory note dated 28 September 2005 in favour of the plaintiffs: Exhibit 71. In relation of the question of reliance, there was no advice or representation referred to in paragraphs 5, 6, and 6A, and paragraphs 6D and 7A have not been found.

[286] The effect of Mrs Summergreene's evidence was that she relied[228] on the advice and representations in paragraph 7(a) and (b)(ii), (iv), (vi), (vii), (viii), and (x) insofar as it concerned the question of security. Mrs Summergreene also said and I accept that she relied on the things in the letter of 20 September 2005 which corresponded with the things in the earlier letter, so I find that she relied on paragraph 10(a), (b)(ii), (iii), (v), (vi), (vii), and (viii) insofar as it concerns security. The various matters mentioned by Mr and Mrs Summergreene as matters of some significance to them justify a finding that they relied on the implied representations in paragraph 11, so far as they have been found, except for that in paragraph 11(e)(ii), which was not relied on because they believed that they and not the company issuing the promissory notes would have the benefit of the mortgage over the development property: p 482. I also find on the basis of their evidence that they relied on the oral representations made by the first defendant on or about 23 September 2005, and hence those found in paragraph 11C(c).

[287] Paragraph 13 was admitted. Paragraph 14 was not admitted but I find it proved on the basis of the plaintiffs' evidence and Exhibit 72. Paragraph 15 alleged various things about Bayshore Mezzanine Pty Ltd which largely but not entirely corresponded to paragraph 15 in Evans; for the reasons given in Evans, I find the facts in paragraph 15(a), (b), (c), (f), and (h) proved; paragraph (g) alleged in rather more detail the allegation of insolvency of Bayshore Mezzanine Pty Ltd slipped into paragraph 15 in Evans; for the reasons given in Evans, that allegation, and the other allegations in paragraph 15, were not made out. The facts alleged in paragraph 16 correspond to the facts alleged in paragraph 16 in Evans; for the reasons given in Evans, I find the facts in paragraph 16(a) in part, (b), (d), (e), and (g) proved.

[288] It was then alleged that the representations in paragraphs 6C and 7 to 11C were false, misleading, and deceptive on the basis of the various facts alleged in that paragraph. Those facts correspond to the facts alleged in paragraph 17 in Evans. For the reasons given in Evans I find the facts in paragraphs (a), (b), (c), (d), (f), (g), (h), (i), (j) so far as it related to the first and second defendants,[229] (k)(ii), and (l) proved.

[289] As to which of the representations nominated (and found) were false, misleading, and deceptive, I have found the representations in paragraph 6C to have been made, but am not persuaded that the representation in paragraph (a) was false, misleading or deceptive because it was a general statement which may have been true as a general statement. The representation in (b) was, however, false, misleading and deceptive. This was not a correct statement of the security available to the lender, but rather a statement of the security usually available to the special purpose company; however, the letter clearly reads as though the former is the meaning, so that representation was false, misleading and deceptive. As to the representations in paragraph 7(b), those in paragraphs (i) as to its being a limited opportunity to invest, (ii) as to its being an excellent opportunity to invest, (iv) as to the Westpoint group having net assets in excess of $80 million, (v) as to the securities held by the company in each project, (vi) as to the existence of the guarantee, and (x) as to the existence of the guarantee and charge were false, misleading and deceptive.

[290] The representations in paragraph 7A were not found, and there were no representations in 7B. As to the representations in paragraph 10(b), those in paragraphs (ii) as to its being an excellent opportunity to invest, (iii) as to the Westpoint group having net assets in excess of $80 million, (iv) as to the securities held by the special purpose company, (v) as to the guarantee, and (viii) as to the security for the investment by way of guarantee and charge were false, misleading and deceptive. As to the implied representations in paragraph 11, those in paragraphs (c)(i), (d), (e)(ii), (f), (g)(i), and (m) were false, misleading and deceptive. The representations alleged in paragraph 11A were not found. As to the representations in paragraph 11C(c), that in (ii) insofar as it referred to Westpoint fully guaranteeing the investment was false, misleading and deceptive.

[291] The facts alleged in paragraph 18, which is in issue (defence paragraph 20(f)) were essentially the same as those alleged in paragraph 18 in Courtney. For the reasons given there I find that a financial adviser excising reasonable care and skill would have advised clients of the facts alleged in paragraph (g) and (h). Paragraph 19 was in the same terms as paragraph 19 in Evans; for the reasons given there, I find there was a breach of the duty of care in failing to advise the plaintiffs of the facts alleged in paragraphs 15(c), 16(g), 17(a), (c)(ii), (g), (h)(i), (i), (j)(i) (so far as it related to the first and second defendants), and (l), and 18(a), (b), (g), and (h).

[292] Paragraph 20 was in the same terms as paragraph 20 in Evans. For reasons given there I find that paragraphs (a), (d), (e)(iii), (h), (j), and (l) proved. Paragraph 20A was in the same terms as paragraph 20A in Evans, except that it referred to the matters referred to in paragraphs 14 to 16 instead of 15 to 17, which would have been more relevant as paragraph 14 simply alleged the failure of Bayshore Mezzanine to honour the promissory note. As to the facts alleged in paragraphs 15 and 16, I find that a financial adviser exercising reasonable care and skill in providing advice to a client would have known of the matters referred to in paragraphs 15(a), (b), (c), (f)(i), and (h) and in paragraph 16(g). The allegation in paragraph 20A(b) was irrelevant because the plaintiffs were not clients of the first and second defendants. Paragraph 20B seems to repeat the allegations in paragraph 20A(a) and I make the same findings.

[293] With regard to paragraph 21(a), insofar as this related to paragraphs 15 and 16, it was in substance the same as paragraph 20A(a), and the findings I have made earlier apply as well. Had the first and second defendants exercised the level of care and skill of a reasonably competent financial adviser, I find they would have been aware of the matters in paragraph 17(a), (b), (c), (d), (g), (h), (i), (j) insofar as it related to the first and second defendants, and (l), and the facts alleged in paragraphs 18(a), (b), (c), (g), and (h) for the reasons given in Evans. As to paragraph 20, it follows from earlier findings that the defendants ought to have been aware of the facts in paragraphs (a), (d), (e), (h), (j), and (l). With regard to paragraph 21A, this largely parallels paragraph 18, and for the reasons given earlier the defendant ought to have known the facts alleged in paragraph 21A(a), (b), (c), (h), and (i).[230] As to paragraph 21(b), I find that the first and second defendants had a duty to advise the plaintiffs of the matters referred to in paragraphs 18(a), (b), (g), and (h), 20(a), (d), (e)(iii), (h), (j) and (l), and 21A(a), (b), (h), and (i).

[294] As to paragraph 22, I find that there was breach of the duty of care of the first and second defendants in failing to attend to or otherwise advise the plaintiffs of the matters referred to in paragraphs 18(a), (b), (g), and (h), 20(a), (d), (e)(iii), (h), (j), and (l), and 21A(a), (b), (h) and (i), for the reasons given in Evans. Paragraph 23 was a repeat of the allegation in paragraph 22 in relation to paragraphs 18, 20, and 21A, but included an allegation that it was a breach of the duty of care to make the representations in paragraph 6A and 11C.[231] Paragraph 6A did not allege representations by the first and second defendants, but in relation to paragraph 11C I find that it was a breach of the duty of care for the first and second defendants to represent that Westpoint fully guaranteed the investment.

[295] Paragraph 24 then alleged that the plaintiffs would not have invested if they had known of the various matters. Mrs Summergreene said she would not have invested if she had known that it was a risky investment or a high risk investment, or if she had been told that a promissory note was nothing more than an IOU: p 498. She also said that she would not have invested if she had been told that the Westpoint guarantee came not to the investor but to Bayshore Mezzanine Pty Ltd, or if she had been told about the ASIC warning in Exhibit 17: p 499-500. Mr Summergreene also said that he would not have made the investment if it was risky or high risk, or if he had been told that a promissory note was nothing more than an IOU, or if there was no security for the investment, or if he had been told there was no guarantee to the investors from Westpoint: p 513. He would also not have invested if he had known of the ASIC warning in Exhibit 17: p 514.

[296] Apart from this, my general impression of Mr and Mrs Summergreene was that they were very cautious investors, who would have been readily scared off by any bad news or warning in relation to any proposed investment.[232] I do not think that the matters in paragraphs 15(a) and (b) would have mattered, and as to 15(c) there is the complication that they thought that they received the benefit of the mortgage and the charge, not the company, so telling them this information probably would not have had much effect on them. There was no reason to think that Bayshore Mezzanine Pty Ltd was an independent company so that telling them of (h) would have been of no significance. As to the facts in paragraph 16, I think it likely that they would not have invested if they had been told the facts in paragraph 16(b), and there is direct evidence which I accept supporting (g).

[297] I do not think they would have invested if they had known that the investment was unsecured, since they were clearly concerned about the safety and security of their investment, or if they had been told (in effect) that the statement about the Westpoint group's net assets was wrong, or if they had been told that they did not get the benefit of any charge, or the benefit of any guarantee, or if they were told that the first and second defendants were not applying their expertise as financial advisers in relation to this proposed investment.[233] Accordingly I find they would not have invested if told the facts in paragraph 17(a), (c), (g), (h)(ii), (i), (j) re the first and second defendants, or (l). As to 18, they thought they had the benefit of the mortgage rather than Bayshore Mezzanine, but they did think they obtained the benefit of the charge and indeed a mortgagee over the development property, so I find they would not have invested if told the facts in paragraph 18(c), (g), or (h). In the light of their understanding of the position I find they would not have invested if they had been told of the matters covered by paragraph 20(a), (d), (e)(iii), or (l), or the facts in paragraph 21A(c), (h), or (i).

[298] As to paragraph 23 of the further amended defence, I accept that the plaintiff obtained a copy of the information memorandum (Exhibit 1) as part of Exhibit 69, the letter of 20 September 2005; there was no such memorandum with the letter of 18 July 2005, or the letter of 23 September 2005 which was irrelevant because it was after the investment occurred. However, I accept the plaintiffs' evidence that they paid little attention to this, essentially because they did not understand it. They made no inquiries of anyone other than the first defendant about the proposed investment, and did not invest independently of the advice and information provided by the defendant. I find that the plaintiffs were not aware of the matters referred to in paragraph 27(a) of the defence as a result of any assessment of the information memorandum; there was no evidence that they would have discovered any of these matters from public knowledge. The facts in paragraph 27(c) and (d) were not made out; indeed in the light of the evidence these allegations were silly. Paragraph 28 of the defence appears to be a plea of contributory negligence based on the facts in paragraph 27, which falls with it.

[299] As to paragraph 25 of the statement of claim, it is sufficient to say that I find that the statement in paragraph 11C(c)(ii) as to Westpoint guaranteeing the investment constituted a negligent misstatement. For the reasons given in Evans, paragraph 60 was also proved.

[300] For the reasons given in Evans, the ASIC Act was applicable and the allegations in paragraph 26A(1), (2), (3), (5), and (7) were proved. As to paragraph 26, the matters relied on as misleading and deceptive conduct were only the representations referred to in paragraph 6A and 11C. Paragraph 6A did not contain any allegation of representations, and the only relevant misleading and deceptive representation in paragraph 11C was the representation as to the existence of a guarantee in favour of the investors, the making of which was certainly misleading and deceptive conduct. Paragraphs 26B, 26C, and 26D were concerned with a case under the Corporations Act which has not been pressed.

[301] Paragraph 27 alleged that as a consequence of (relevantly) the negligence, negligent misstatements and breaches of the ASIC Act the plaintiff has suffered particular loss and damage. That depends on whether the plaintiffs have suffered the loss and whether the loss was caused by the negligence or breaches of the Act. The approach to quantum is the same as in Evans; I will allow $100,000 plus interest at 8% from 23 September 2005, less the interest already paid, which was $1,084.93.[234] This produces a total of $124,208.22.[235]

[302] In relation to the question of causation, it is clear from the whole of the evidence of the plaintiffs that they were relying very strongly on what they had been told by the first defendant,[236] and accordingly insofar as it amounted to negligent statements, or a negligent omission to advise, or a breach of the ASIC Act, those things were a cause of the investment. For the purposes of the ASIC Act it is also relevant to consider whether the plaintiffs' response to the representation was reasonable in the circumstances in which they found themselves. In the light of the material they had been sent by the first defendant, I find it was reasonable.

[303] In relation to causation, however, the defendant submitted that the plaintiffs suffered the loss because of their investment in the Westpoint Income Fund and the subsequent failure of that investment, which was not causally connected to the conduct of the first and second defendants:[237] further amended defence para 28A. What happened here was that the defendant wrote to Mr Summergreene on 12 October 2005 (Exhibit 77) referring to the investment in the Bayshore project which was stated (inaccurately) to mature in May 2006,[238] a date described, curiously, as "in the near future". The letter foreshadowed the provision of "our advice" in early December as to an alternative investment opportunity.

[304] Subsequently the defendant sent a letter to the plaintiffs dated 18 November 2005, at a time when they were holidaying in Victoria: Exhibit 78.[239] That advised investment in the Westpoint Income Fund "as a replacement for your maturing investment with Westpoint." Westpoint was said to be offering a special interest rate of 12% per annum for a two year period if investors transferred out of a current project, such as Bayshore, provided that they accepted by 24 November 2005. They subsequently signed on 22 November 2005[240] and sent back to the defendant an application to invest $100,000 in the Westpoint Income Fund, and a direction to Bayshore Mezzanine Pty Ltd to "reinvest and pay the face value of the promissory note $100,000 to the Westpoint Income Fund as application monies ... ." There was no express request to redeem the promissory note at once, but Bayshore Mezzanine had the right to pay out the note early.[241]

[305] It appears from the stamp on the original document, a copy of which is Exhibit 79, that the document found its way as far as Kebbel NSW.[242] There was, however, no evidence that it went any further, or that anybody acted on it. In particular, there was no evidence that Bayshore Mezzanine Pty Ltd in fact paid the $100,000 into the Westpoint Income Fund. In my opinion the allegation in paragraph 28A is not made out unless the promissory note was actually redeemed and the amount of the investment was transferred to the Westpoint Income Fund prior to the collapse of the Westpoint group, that is, unless the documents signed by the plaintiffs were acted upon. There was no evidence of that, and it follows that this allegation fails.

[306] In any case, even if the money had been transferred to the Westpoint Income Fund, that would not break the chain of causation. The correspondence from the defendant made it perfectly clear that the plaintiffs were invited to invest in the Westpoint Income Fund only because they had already an investment in a Bayshore Mezzanine Pty Ltd promissory note. There was no evidence that the plaintiffs would have invested or sought to invest or been invited to invest in the Westpoint Income Fund had they not previously invested in the Bayshore Mezzanine Pty Ltd promissory note. If (which I am not persuaded occurred) their investment had at the relevant time become an investment in the Westpoint Income Fund, that would have occurred only because of the earlier investment in the Bayshore Mezzanine Pty Ltd promissory note, and the loss would still have been caused by whatever caused the earlier investment. There was therefore necessarily no substance to the defence in paragraph 28A.

[307] The first and second defendants also raised issues of proportionate liability in relation to the claims in negligence under the Civil Liability Act 2003, and in relation to the claim under the ASIC Act under the provisions of that Act. There was also a plea of contributory negligence in relation to liability under the ASIC Act, which fails for the same reason as in relation to paragraph 28, and for reasons analogous to those in the case of Evans. With regard to proportionate liability under the Civil Liability Act I find that the plaintiffs were consumers and therefore exempt under s 28(3) of that Act, for reasons given in Evans, which apply here equally. The other difficulties that arise in relation to the claim under the Civil Liability Act apply here as well. In relation to the claim under the ASIC Act, because the plaintiffs have (probably inadvertently) confined their case under the ASIC Act to the one oral representation by the first defendant, I am not prepared to find that that representation was also a representation made by the third defendant, so that the only liability pleaded and proved would have been vicarious liability on the part of the third defendant, which is not sufficient to make it a concurrent wrongdoer for the purposes of the ASIC Act. Accordingly the proportionate liability provisions of the ASIC Act do not apply either.[243]

[308] In summary, the defendant was negligent in advising that this was an excellent opportunity to invest, and in saying that Westpoint guaranteed the investment, and in other respects that I have found, and the statement about the guarantee was misleading and deceptive conduct. It was also negligent in failing to give proper advice about the risks of the investment, and in failing to inform the plaintiffs of the other things I have found. The plaintiffs invested in the promissory note because of this negligence and breach of the Act and as a result suffered loss for which the first and second defendants are liable. In all the circumstances therefore there will be judgment that the first and second defendants pay the plaintiffs $124,208.22 which is inclusive of interest to the date of judgment.

[309] A further amended statement of claim was filed on 19 October 2006. An amended defence of the first and second defendants was filed on 3 October 2007, and a reply to that amended defence was filed in court on 18 October 2007. A further amended defence to the first and second defendants was filed on 26 November 2007. A reply to that further amended defence was filed on 4 December 2007. On 13 December 2007 there was a further amendment allowed in terms of paragraph 60 in Exhibit H: p 1823.

[310] The position with the allegations in paragraph 1 was the same as in Evans, except that the defendants denied paragraph 1(d). A copy of the document was part of Exhibit 45, but there was no evidence that it was ever provided to this plaintiff. Save for that, paragraph 1(d) was proved. Paragraphs 2, 3, and 4 were not pressed, and are not found. As to paragraph 5, I find, on the basis of the plaintiff's evidence, that at the relevant time the plaintiff was seeking advice on a serious financial matter and giving consideration to investing, and the first and second defendants ought to have been aware of that and the matters alleged in paragraph (c) and (d) in relation to the plaintiff. The existence of a duty of care was disputed; essentially for the reasons given in Evans, I find that the first and second defendants did owe the plaintiff a duty to exercise reasonable care and skill in the provision of advice and the making of representations.

[311] It was not disputed that the defendant sent the plaintiff a letter dated 27 July 2005: Exhibit 22. There is an issue as to whether it provided advice to the plaintiff with respect to the investment referred to in the letter; in view of the terms of the letter as a whole, it plainly did. The defendant's allegation in paragraphs 13(b) and 14 (c) of the further amended defence, that the letter Exhibit 22 contained a particular statement, was not made out. The letter did not contain the statement alleged in paragraph 13(b) of the further amended defence. The letter had with it another copy of the information memorandum Exhibit 1, and a copy of an interview with Norm Carey which was undated, though the letter referred to "a recent interview". The letter contained the express statements alleged in paragraph 7(b)(ii), (iv), (v), (vi), (vii), (viii), and (x), and the statements in (iii) except that the reference was to $10 million having already been raised, and (ix) except that the project was said to be due for completion at the end of 2005. To the extent that it contained those statements they amounted to representations.

[312] Paragraph 8 alleged a telephone conversation between 27 July and 8 August, in which various things were said; according to the plaintiff's evidence, there was a telephone conversation prior to his receipt of the letter of 27 July in which he said that he wanted an investment which was secure and short term, and had about $200,000 to invest.[244] I accept this evidence, but the plaintiff did not say that there was a specific response in relation to Bayshore Mezzanine. This conversation was relevant to the findings in respect of paragraph 5, but paragraph 8 was not made out on the evidence. There was a conversation after 27 July, but that just involved the plaintiff telling the first defendant that he probably would be investing in Bayshore Mezzanine: p 132. Paragraph 8 not having been found it follows that paragraph 9 was also not made out. As to paragraph 10, I find that the express representations in paragraph 7(b), to the extent found, gave rise to the implied representations alleged in paragraph 10(c)(iv), (d)(i), (e), (f)(i), and (ii), (g), (h)(i) so far as it concerned the first and second defendants and (iii), (i), (k)A and (l).

[313] Paragraph 11 alleged that the plaintiff invested $97,000 in a Bayshore Mezzanine promissory note in reliance on the advice and representations referred to in paragraph 5 to 11 above. The only relevant advice was in paragraph 7(a), and the representations found were those in paragraphs 7(b) and 10, to the extent found. I find that Mr Andrew did decide to invest and sent off an application form accompanied by his cheque for $97,000, on 5 August 2005: Exhibit 23. It was acknowledged by the defendant in a letter of 8 August 2005 (Exhibit 24) which said that they would be forwarded to Kebbel and that he would in due course receive the promissory note. The promissory note in this matter was not in evidence.

[314] As to the question of reliance, Mr Andrew said that he relied on the defendants' description of this as an excellent opportunity to invest, the interest rate, the experience of the Westpoint construction business, and that Westpoint was guaranteeing the money if anything occurred: p 128. He also relied on the fact that this was a short term investment due in 2006: p 129. He relied on the fact that the Westpoint group had net assets in excess of $80 million, and the extent of the pre-sales: p 130. He did not know what a charge was (p 131) so I suspect he did not particularly rely on the statement that a charge over Bayshore Port Melbourne Trust was part of the security. He thought he obtained as an investor the benefit of the guarantee (p 131) and I accept that it was a matter of some importance to him. He received a copy of the information memorandum Exhibit 1, and read it, but did not identify anything in it inconsistent with what he had seen in the letter Exhibit 22: p 132. I accept his evidence in relation to these matters. On the basis of this evidence I find that he did rely on the advice, and on the representations in paragraph 7(b)(ii) that it was an excellent opportunity to invest, (iv) relevantly that Westpoint group had net assets in excess of $80 million, (vi) and (x) insofar as they relate to the guarantee of the company's obligations from the Westpoint corporation and associated entities, and the related implied representations in paragraph 10(e), (g), and (l).

[315] The terms of the promissory note alleged in paragraph 12 of the statement of claim was admitted: defence paragraph 2. I find that Bayshore Mezzanine made interest payments in August, September, and October 2005 totalling $2,615.01, but otherwise has paid nothing in respect of the promissory note: Exhibit 26.

[316] Paragraph 14 essentially parallels paragraph 15 in Evans, and for the reasons stated there I find the facts in paragraphs (a), (b), (c), (g), and (i) proved. Paragraph 15 parallels paragraph 16 in Evans; for the reasons there I find that the project had been the subject of earlier fundraisings, and the facts as alleged in paragraph (b), (e), (f), and (i) are found. Paragraph 16 alleged the representations referred to in paragraph 7 to 11 above were false, misleading or deceptive because of various matters. Those matters were the same as the matters alleged in Evans in paragraph 17;[245] for the reasons given there, I find the matters in paragraph (a), (b), second (a), second (b), (d), (e), (f), (i), (j)(i) as far as it concerned the first and second defendants, (k)(ii), and (l) proved. The representations in paragraph 7(b)(ii) so far as it was represented that it was an excellent opportunity to invest, (iv) concerning the net assets of the Westpoint group being in excess of $80 million, (v) concerning the security held by the special purpose company, (vi) concerning the guarantee, and (x) concerning the guarantee and charge securing the investment were false, misleading and deceptive. The representations made in 8 and 9 were not found. As to the implied representations found in paragraph 10, those in paragraph 10(d)(i), (e), (f)(ii), (g), and (h)(i) so far as it related to the first and second defendants and (l) were false, misleading and deceptive.

[317] Paragraph 17 was effectively the same as paragraph 18 in Evans; for the reasons there, I find the allegations in paragraph 17(g) and (h) proved. Paragraph 18 alleged relevantly that it was a breach of the duty of care for the defendant to fail to advise the plaintiff of the matters referred to in paragraphs 15, 16, and 17. This was similar to the allegation in paragraph 19 in Evans, except that the numbering has not been properly adjusted. For the reasons given in Evans, I find that the first and second defendants did breach their duty of care in failing to advise the plaintiff of the matters referred to in paragraphs 15(i), 16 first (a), second (a)(ii), (e), (f)(i), (i), (j) concerning the first and second defendants, and (l) and 17(a), (b), (g), and (h).

[318] Paragraph 19 was in the same terms as paragraph 20 in Evans. For the reasons given there I find that paragraphs (a), (d), (e)(iii), (h), (j), and (l) are made out. There was no paragraph 20. Paragraph 20A was in the same terms as paragraph 20A in Evans. I find that a financial adviser exercising reasonable care and skill and providing advice to a client would have known that the matters referred to in paragraphs 14(a), (b), (c), (g)(i), and (i), 15(i), 16 first (a), first (b), second (a), second (b), (e), (f), (i), (j)(i) concerning the first and second defendants, and (l). The allegation in paragraph 20A(b) was probably correct but irrelevant because the plaintiff was not a client of the first and second defendants. Paragraph 20B was in substance the same as paragraph 20A(a) and I make the same findings.

[319] Paragraph 21A was in the same terms as paragraph 21A in Courtney; for the reasons given there, I find the facts in paragraphs 21A(a), (b), (c), (h), and (i) proved. Paragraph 21 then alleged that the first and second defendants would have been aware of the matters referred to in paragraphs 15 to 20 and 21A had they exercised the level of care and skill of a reasonably competent financial adviser. I have already made in relation to paragraph 20A(a) findings as to whether they would have been aware of the matters in paragraphs 15 and 16. There were no relevant matters in paragraphs 18. I find for the reasons given earlier that a financial adviser exercising the level of care and skill of a reasonably competent financial adviser would have known of the matters alleged in paragraph 17(a), (b), (c), (g), and (h), paragraph 19(a), (d), (e), (h), (j), and (l), and paragraph 21A(a), (b), (c), (h), and (i). Paragraph 21(c) alleged that the first and second defendants had a duty to advise the plaintiff some or all of the matters referred to in paragraphs 18, 20, and 21A. This allegation was inappropriate in relation to paragraphs 18 and 20; I suppose the reference to paragraph 18 could be interpreted as a reference to the matters referred to in paragraphs 15, 16, and 17, which are in turn referred to in those terms in paragraph 18. I find there was a duty to advise the plaintiff of the matters alleged in paragraphs 15(i), 16 first (a), second (a)(ii), (e), (f)(i), (i), (j) concerning the first and second defendants, and (l), 17(a), (b), (g), and (h), and 21A(a), (b), (h), and (i).

[320] Paragraph 22 alleged relevantly that in breach of the first and second defendants' duty of care they failed to attend to or advise the plaintiff of the matters referred to in paragraphs 18, 20, and 21A. This allegation was also inapt, since paragraph 18 did not allege any matters, and there was no paragraph 20. Treating the reference to paragraph 18 as again picking up paragraphs 15, 16, and 17, the paragraph essentially repeated the allegation of breach of duty in paragraph 18, and I make the same findings in relation to paragraphs 15, 16, and 17 as were made for paragraph 18. I also find that there was a breach of the duty of care in failing to advise of the matters in paragraph 21A(a), (b), (h), and (i).

[321] As to paragraph 23, I find that it was a breach of the duty of care to the first and second defendants to make the representations referred to in paragraph 7(b)(ii), (iv), (v), (vi), and (x) concerning the security offered. Paragraph 11 did not plead representations, though it did refer to those in paragraphs 5 to 11 (sic); the only other representations made that were referred to in those paragraphs were such of the implied representations alleged in paragraph 10 as have been found. I find it was a breach of the duty of care to make the implied representations alleged in paragraph 10(e), (f)(ii), (g), (h)(i) concerning the first and second defendants, and (l).

[322] It was then alleged that the plaintiff would not have proceeded with the investment had he been aware of the matters referred to in paragraphs 15, 16, 17, 18, 20, or 21A. Mr Andrew said that he would not have made the investment if he had been told that the investment was a high risk investment, or if he had been told that the investment was with a company which did not have 20 years experience, or if the investment had not been described by the defendant as an excellent opportunity, or if he had been told that a promissory note was really nothing more than an IOU, or if he had been told that he was not getting a guarantee from the Westpoint guarantor group: p 135. He also said that he would not have made the investment if he had been made aware of the ASIC warning in Exhibit 17, or if he had been told that the information memorandum should have complied with the requirements of the Corporations Act and did not do so: p 136. I accept his evidence. Bearing in mind this evidence, and also his evidence as to the matters on which he relied in making the investment, and my general assessment of Mr Andrew, I find he would not have made the investment if told of the matters in paragraphs 15(b), (i), 16 first (a), second (a), second (b)(i), (e), (i), (j) concerning the first and second defendants, (l), 17 (g), (h), 21A(h) or (i).

[323] Further in relation to paragraph 24 of the statement of claim, I reject the allegation of paragraph 22(b)(ii) of the defence; there was no evidence that the plaintiff made any inquiries about the investment other than from the defendant. Paragraph 22(b)(iii) is found; the plaintiff admitted that he had read the information memorandum sent with the letter which is Exhibit 22, although he did not detect any inconsistency with what he had been told by the defendant. I accept that evidence. The allegation in paragraph 26(c) of the defence was not made out, nor the allegation in (d). On that basis the allegation of contributory negligence in paragraph 27 also fails.

[324] Paragraph 25 alleged that the representations in paragraphs 7 to 11 constituted negligent misstatements. For the same reasons as the findings in relation to the representations in paragraph 23, I find that the representations the making of which was a breach of the duty of care as set out in relation to that paragraph constituted negligent misstatements. For the reasons given in Evans, paragraph 60 was also proved.

[325] As to the claim under the ASIC Act, the act was applicable here and for the same reasons as in Evans I find the facts alleged in paragraph 26A(1), (2), (3), (5), and (7) made out. I have already found in relation to paragraph 16 that some of the representations in the letter Exhibit 22, and some of the implied representations alleged in paragraph 10 were false, misleading and deceptive. To that extent making those representations also amounted to misleading and deceptive conduct on the part of the first and second defendants in contravention of the relevant provision of the ASIC Act.

[326] Paragraph 27 then alleged that as a consequence of (relevantly) the negligence, negligent misstatements and breaches of the ASIC Act the plaintiff has suffered particular loss and damage. The approach to quantum is the same as in Evans; I will allow $97,000 plus interest at 8% from 6 August 2005, less the interest payments already made, which come to $2,615.01: Exhibit 26. This produces a total amount of $119,939.83.[246]

[327] In relation to the question of causation, it is clear from the whole of Mr Andrew's evidence that he was relying significantly on what he had been advised by the defendant in the letter of 27 July 2005 in deciding to make this investment. This was not all he relied on[247] but that does not matter for the purposes of causation. Accordingly I find that, to the extent misstatements were made in that letter which were negligent misstatements or the making of which was negligent or a breach of the Act, they were a cause of his loss. Insofar as the defendant had a duty to advise of additional matters, and had not done so, and I have found that had he been advised of those matters he would not have made the investment, the failure to advise of those matters was also a cause of this loss. For the purposes of the ASIC Act it is also relevant to consider whether the plaintiff's response to the representation was reasonable in the circumstances in which he found himself. I find that it was. His approach to the first defendant was with a view to giving advice from someone whom he identified as an adviser, someone on whom he could rely to provide independent objective advice. In the circumstances I find that it was quite reasonable for him to have relied on what he was told by the defendant.

[328] Paragraph 27A of the further amended defence contained allegations similar to those in Summergreene, that the plaintiff's loss was actually caused by the failure of the Westpoint Income Fund. The position is similar to that in Summergreene; Mr Andrew said that he decided to go into the Westpoint Investment Fund, filled the form out and send back his promissory note but it never occurred, Bayshore went into liquidation: p 134. The form was sent on to Kebbel: Exhibit 119. There was no evidence that anything was done by Bayshore or Westpoint to effect the change. The position was therefore the same as in Summergreene, and for the reasons given there, this defence fails.

[329] The defendants also seek to raise the proportionate liability provisions of the Civil Liability Act, and the ASIC Act. For the reasons given in Evans, which apply here as well, the provisions of the Civil Liability Act do not apply. In relation to the claim under the ASIC Act, the third defendant was a concurrent wrongdoer, for the reasons given in Evans, and I would make the same apportionment as in that matter, the position in this matter being essentially the same. For the reasons given there, this does not affect the outcome. There was also an allegation of contributory negligence under the ASIC Act; for reasons analogous to those given in Evans, this allegation also fails.

[330] In summary, the defendant was negligent in advising that this was an excellent opportunity to invest, and in saying that Westpoint guaranteed the investment, and in other respects that I have found, and these statements were also misleading and deceptive conduct. He was also negligent in failing to give proper advice about the risks of the investment, and in failing to inform the plaintiffs of the other things I have found. The plaintiff invested in the promissory note because of this negligence and breach of the Act and as a result suffered loss for which the first and second defendants are liable. In all the circumstances therefore there will be judgment that the first and second defendants pay the plaintiff $119,939.83 which is inclusive of interest to the date of judgment.

[331] A further amended statement of claim was filed on 19 October 2006. A notice of intention to defend and defence were filed on behalf of the first and second defendants on 2 October 2006. An amended defence on behalf of the first and second defendants was filed on 3 October 2007, leave was given on 16 October 2007 to make a number of amendments to the statement of claim in this matter, and a second further amended statement of claim which gave effect to that leave was filed on 30 November 2007. A further amended defence of the first and second defendants was filed on 26 November 2007; it was responsive to the statement of claim in its state as amended on 30 November 2007. A reply to the further amended defence was filed on 4 December 2007. On 13 December 2007 the statement of claim was further amended by adding paragraph 60 in Exhibit H.

[332] The allegations in paragraph 1 were the same as in Evans, and the defence was the same except for that of paragraph 1(d) was denied: para 3. There was evidence that the third defendant issued such a document, which is part of Exhibit 45, and a copy was sent to the plaintiffs with Exhibit 51, so 1(d) was proved. Otherwise, the outcome of those allegations is the same as in Evans. Paragraphs 2, 3, and 4 are not found, and were not pressed, being related to the case in contract. Paragraph 5 was denied by the defendants: paragraph 12. I accept the evidence of the plaintiff[248] as to his conversations with the first defendant, and on the basis of those conversations I find the facts in paragraph 5(a) proved, at least from the time of the conversation of 27 June when the first defendant referred to the Bayshore Investment, after which the defendant was aware that the plaintiffs were giving consideration to that investment. I find that the first and second defendants should have known that the plaintiffs believed that they had expertise in property investment and were experienced and knowledgeable about property investment; to that extent 5(b) is proved. I also find paragraph 5(c) and (d) proved on the basis of the evidence of the plaintiff.

[333] Paragraph 6 alleged a duty of care to the plaintiffs; this allegation was denied in paragraph 11 of the defence. For the reasons given in Evans, I find paragraph 6 proved. Paragraph 6A alleged a telephone conversation between the plaintiff and the first defendant on or about 20 October 2004. I find that such a conversation occurred on 21 October 2004 and accept the evidence of the plaintiff that he told the first defendant that he was looking for secure investments that paid monthly or quarterly returns: p 422. In substance this was the allegation in paragraph 6A(a). The plaintiff said that the first defendant told him that the Prime Trust was a strong performing trust, and quoted the return it was getting, and said that he had a research team and recommended this particular investment: p 423. In substance paragraph 6A(b) was proved.

[334] Paragraph 6B alleged a further telephone conversation on or about 16 March 2005. I accept that the plaintiff rang again on that day, and I accept the plaintiff's evidence that he said he was looking for secure investments that provided him with regular distributions and asked some questions about the Prime Trust: p 424. The plaintiff gave some more details about this conversation at p 425, but they did not include the matters alleged in paragraph 6B(a) which was not proved. He also did not give evidence to support the allegation in paragraph 6B(b). Paragraph 6C, which alleged an investment in the Prime Trust, was supported in effect by the evidence of the plaintiff at p 425, and it was proved, for what it is worth.

[335] Paragraph 6D referred to a letter dated 26 April 2005 sent by the defendant to the plaintiffs: Exhibit 54. That the letter contained the statement in paragraph (a) was admitted. Paragraph 6D(b) was disputed; the letter contained the quoted passage beginning "security", and the introduction to that section was in substance what was said in the introductory words, so that 6D(b) was proved. It was disputed that these were representations, and the defendant relied on the entire contents of the letter. That included a statement at the beginning that "this report will provide you with information on several outstanding performers we have brought to our clients in the past 12 months." The letter also contained a statement toward the end that "it is becoming increasingly difficult for the average person to make fully informed investment decisions. If you would like any assistance in this area, please telephone me personally ... ." Having considered the letter as a whole, I find that the statements relied on in paragraph 6D were representations.

[336] Paragraph 7 alleged a letter dated 28 June 2005, the sending of which was admitted: Exhibit 55. It was submitted that this did not contain advice because of a statement on the third page headed "disclosure" which included the matters set out in paragraph 13(b) of the defence. That includes a statement that "you ... have not sought advice nor were given advice ... ." Nevertheless, the body of the letter plainly conveyed advice, and advice does not cease to be advice simply because it has tacked onto it a false statement that it is not advice. In any case, the "disclosure" statement does not suggest that the content of the letter should be ignored, or that it is inaccurate, or that it should not be relied upon, and generally does nothing to counter the relevant deficiencies in the body of the letter. I find that paragraph 7(a) was proved.[249]

[337] This time all of the express representations set out in paragraph 7(b) were contained in the letter Exhibit 55. In context they were plainly representations, and paragraph 7(b) was proved. Paragraph 7A alleged a telephone conversation on or about 4 July 2005. This conversation was not admitted (defence para 13A) but Exhibit 116 does include a note of a conversation on that day which is broadly consistent with Mr Radcliffe's evidence at p 431, which was to the effect that he was told that it was still possible to invest in Bayshore although it would probably be closing by the end of August. To that extent paragraph 7A(a) was made out. There was no evidence to support paragraph 7A(b).

[338] Paragraph 10 then alleged various implied representations, which are in issue. These were based only on the express representations referred to in paragraph 6D, 7, and 7A. On that basis the representations in paragraphs (b)(iv), (c), (d), (e)(i) and (ii), (f), (g)(i) and (iii), (i), (j), and (k) so far as it concerned the guarantee and the charge were made out.

[339] Paragraph 11 alleged that on or about 14 July 2005 the plaintiffs invested $100,000 in a Bayshore Mezzanine Pty Ltd promissory note in reliance on the advice and representations referred to in paragraphs 5 to 10. The plaintiffs sent in an application form and a cheque for $100,000 on 5 July 2005 (Exhibit 57) but it was only signed by Mr Radcliffe, and it was sent back on 8 July 2005 to be signed by his wife. She did sign the form and it was sent back, and on 14 July 2005 a promissory note for that sum was issued by Bayshore Mezzanine Pty Ltd : Exhibit 58.

[340] In respect of the letter of 28 June Exhibit 55, Mr Radcliffe said that he relied on the fact that it was a limited opportunity, that the percentage return was 14%, that the Westpoint group had a track record of success in the property development field over 20 years, that Westpoint was guaranteeing the investment, that the defendant regarded this as the most appealing Westpoint project, and that the presales were substantial: pp 427-430. Mr Radcliffe conceded that he did not pay much attention to the references to a mortgage and a charge, because he did not know what a charge was, and he was focusing on the guarantee. It was clear from this and indeed from the general content of his evidence that he was relying on the fact that the defendant endorsed this investment and spoke highly of it when making the decision to invest.[250] Accordingly I find that the plaintiff did rely on the advice in the letter Exhibit 55, and on the representations in paragraph 7(b)(i), (ii), (vi), (vii), and (x) insofar as it related to the security by way of guarantee, and on the implied representations in paragraph 10(b)(iv), (f), (g)(i) and (iii) re the first and second defendants, and (k) insofar as it relates to the guarantee.

[341] Paragraph 12 was admitted. Paragraph 13 was not admitted, but on the basis of the plaintiffs' evidence I find that Bayshore Mezzanine Pty Ltd failed to pay to the plaintiffs the principal of $100,000 plus the interest outstanding after the first four payments as set out in Exhibit 65. Paragraph 14 was effectively in the same terms as paragraph 15 in Evans; for the reasons given there I find the facts alleged in paragraph 14(a), (b), (c), (f), and (h) proved. Paragraph 15 was similar to paragraph 16 in Evans, in that most of the allegations were the same. For the reasons given in Evans, I find the facts alleged in paragraph 15(a) to the extent that there had been at least one earlier fundraising for the project, (b), (d) and (e) proved.

[342] Paragraph 16 alleged that the representations in paragraphs 6D and 7 to 10 were false, misleading and deceptive because of various facts there alleged. As to the facts alleged in paragraph 16, these parallel the facts alleged in paragraph 17 in Evans, and for the reasons there stated I find the facts in paragraph 16(a), (b), (c), (d), (f), (g), (h), (i), (j) concerning the first and second defendants, (k)(ii), and (l) proved. As to whether the representations were false, misleading or deceptive, those in paragraph 6D were the same as those alleged in paragraph 6C in Summergreene, and for the reasons given there the representation in paragraph 6D(b) was false, misleading and deceptive. For the reasons given elsewhere, the representations alleged in paragraph 7(b)(i) that it was a limited opportunity to invest, (ii) that it was an excellent opportunity to invest, (iv) that the group had net assets in excess of $80 million, (v) that in each project the special purpose company had a second ranking mortgage over the development property and a second ranking charge, (vi) as to the guarantee and (x) as to the security by way of guarantee and charge were false, misleading and deceptive. The corresponding representations in paragraph 10(d), (e)(ii), (f), (g)(i) re the first and second defendants, and (k) re the guarantee and the charge were also false, misleading and deceptive.

[343] Paragraph 16A alleged a conversation in a meeting between the first defendant and Mr Radcliffe on or about 25 July 2005. That there was a meeting on 25 July 2005 was admitted, as was the fact that on that day Mr Radcliffe gave the first defendant a limited statement of his financial position, Exhibit 75: defence paragraph 18A(a), (b). Mr Radcliffe said that he was looking to put more money into his super fund, and was looking for secure investments providing a quarterly or monthly distribution which could be reinvested: p 434. Mr Radcliffe said that the first defendant referred again to the Prime Trust, but also said that Bayshore was looking for some extra funds, but it would probably be closed at the end of August: p 463. He mentioned some other options but Mr Radcliffe concentrated on those two because both had received flying reports. There was some discussion about whether Mr Radcliffe was a sophisticated investor, and what was involved in that concept,[251] but that was about all Mr Radcliffe could recall of the meeting. I accept the plaintiff's evidence and find the facts alleged in paragraph 16A proved.

[344] Paragraph 17 referred to a letter dated 11 August 2005 sent by the defendant to the plaintiffs: Exhibit 59. The defence admitted the letter was sent by the second defendant, although the proposition that it was sent by the first defendant was denied; it looks like his signature to me. It was alleged that the letter provided advice in respect of investment in the Bayshore Port Melbourne development; it plainly did, in paragraph 2. This was in part of a letter said to contain the funds "we recommend". It follows that paragraph (ab) was also proved. In these circumstances, it was absurd to pretend, as it did on the third page, that "you ... have not sought advice nor were given advice by any authorised representative of Deakin Financial Services Pty Ltd ... . Naturally you are free to invest where you choose but as I gave you no advice neither the licensee nor I can take responsibility for the outcomes resulting from your decision." The letter in substance was plainly advice and a recommendation, and did not cease to be simply because of a false statement tacked on to it that advice had not been given.

[345] The letter contained the express statement alleged in paragraph (b) of the pleading, except that the words at the beginning of the second sentence were "presales are high", and the later words "now only just over 10 months away" were reproduced as "now only just one-10 months away", and the full stop which should follow away has been omitted. These errors, which unfortunately are characteristic of the general lack of care shown in preparing these pleadings, are of no practical consequence. It was then alleged in paragraph 18 that the representations in paragraph 17 were false, misleading and deceptive. The only representation that has been clearly shown to have been false, misleading and deceptive was the assertion contained in paragraph 17(b) that "Westpoint guarantee the return of funds in June 2006". That, however, was certainly false, misleading and deceptive.

[346] Paragraph 19 then alleged that the plaintiffs made a further investment of $100,000 in a Bayshore Mezzanine promissory note on or about 29 August 2005 in reliance on the advice and representations referred to in paragraph 6D, 7 to 10, and 17. The plaintiffs signed a further promissory note application form, a copy of which is Exhibit 60, and sent it in, presumably together with a cheque. The stamps visible on the copy show that it was forwarded to the third defendant and to Kebbel NSW, and presumably in due course found its way to Westpoint, because in response a promissory note for $100,000 dated 29 August 2005 was issued by Bayshore Mezzanine Pty Ltd: Exhibit 61. As to what was relied on, the position is similar to that in relation to paragraph 11, with since then the additional representation and recommendation in the letter Exhibit 59. Accordingly I find that the plaintiffs relied on the advice in paragraphs 7(a) and 17(a) and the representations in paragraphs 7(b)(i), (ii), (vi), (vii), and (x) in relation to the guarantee, 10(b)(iv), (f), (g)(i) re the first and second defendants and (iii), (k) in relation to the guarantee, and 17(b) in relation to the guarantee.

[347] Paragraph 20 was proved by Exhibit 61. Paragraph 21 was proved by the evidence of the plaintiff and Exhibit 65. Paragraph 22 was effectively the same as paragraph 20A in Evans. As to paragraph 22(a), for the reasons given in Evans, I find that a financial adviser exercising reasonable care and skill in providing advice to a client would have known of the matters referred to in paragraphs 14(a), (b), (c), (f)(i) and (h), and 16(a), (b), (c), (d), (g), (h), (i), (j) concerning the first and second defendants, and (l). Paragraph 22(b) was probably true, but irrelevant because the plaintiffs were not clients of the defendant in the relevant sense.

[348] Paragraph 22A was effectively the same as paragraph 22(a), and I make the same findings. Paragraph 23(a) then alleged that, had the defendants exercised the level of care and skill of a reasonably competent financial adviser, they would have been aware of some or all of the matters referred to in paragraphs 14 to 16 above. This again effectively alleged the same thing as in paragraph 22(a), and I make the same findings insofar as the first and second defendants are concerned. Paragraph 23(c) alleged that the defendants had a duty to advise the plaintiffs of the matters referred to in paragraphs 14 to 16 above. For the reasons given elsewhere I find the first and second defendants did have a duty of care to the plaintiffs. That duty relevantly required them to advise of the facts alleged in paragraph 14(b), (c), and (f)(i), and 16(a), (c), (g), (h)(i), (i), (j) concerning the first and second defendants, and (l).

[349] The facts alleged in paragraph 23A were the same as the facts alleged in paragraph 21A in Courtney; for the reasons given in relation to that paragraph, I find the facts alleged in paragraph 23A(a), (b), (c), (h), and (i) proved. Paragraph 24 was the same as paragraph 18 in Evans, except for the allegations about Bayshore Mezzanine Pty Ltd being insolvent prior to particular dates, which do not matter because I am not persuaded that it has been shown that Bayshore Mezzanine Pty Ltd was insolvent prior to any of the specific dates alleged in any of the pleadings. A financial adviser exercising reasonable care and skill probably would have advised clients of the facts alleged in paragraphs (h) and (i) but since the plaintiffs were not clients of the defendant in the relevant sense, this allegation was also irrelevant.

[350] Paragraph 25 then alleged that the defendants failed to advise the plaintiffs of the matters referred to in paragraphs 14, 15, 16, 23A, and 24 above, and that this was a breach of contract or breach of duty of care to the plaintiffs. There was no question of breach of contract, but I have found that the first and second defendants did owe a duty of care to the plaintiffs. There could be a duty to advise only in relation to such facts as I have found, facts which were in existence at the time the advice was given and facts which were known to the defendant or ought to have been known to the defendant and which a reasonably careful financial adviser in the position of the defendant would have advised someone in the position of the plaintiffs, with whom there had been such dealings as had occurred with the plaintiffs.

[351] On this basis, I find that it was a breach of duty for the defendant to fail to advise the plaintiffs of the matters referred to in paragraphs 14(c) because of representation in the letter of 28 June 2005 in paragraph 7(b)(v), 16(a) because of the references to security in the letters, (c)(ii) for the same reason, (g) because of the earlier statements that the group had net assets of $80 million or more, (h)(i) because of the incorrect statement in the letter that the special purpose company held such a security, (i) because of the several incorrect statements that the investment was guaranteed by Westpoint, (j) in relation to the first and second defendants because of the clear implication from the circumstances in which advice and recommendations in relation to this investment being given that the first and second defendants were applying their expertise as financial advisers to this project, and (l) because the letter of 28 June attributed such security to the investment when it was in fact not available. As well it was a breach of the duty of care to fail to advise of the facts alleged in paragraph 23A(a), (b), (h), and (i), which were repeated in 24(a), (b), (h), and (i), for substantially the same reason as applied to the similar omission referred to earlier.

[352] Paragraph 26 was in the same terms as paragraph 20 in Evans, and for the reasons given there I find the facts alleged in paragraph 26(a), (d), (e)(iii), (h), (j), and (l) proved. Paragraph 27(a) then alleged that the defendants knew of the facts in paragraphs 24 and 26. For reasons given in Evans, I find the defendants knew of the facts alleged in 24(a), (b), (c), (h), and (i). Not all of the matters in paragraph 26 were matters of which it could be said that the first and second defendants were aware, but it is clear in the light of the whole of their evidence that they were adequately aware of the risks involved and otherwise of the matters referred to in paragraph 26(a), (d), (e), (h), (j), (k), and (l). Paragraph 27(b) alleged that had the defendants exercised the level of care and skill of a reasonably competent financial adviser they would have been aware of some or all of those matters. I find that allegation proved in respect of the same parts of paragraphs 24 and 26 as the allegation in paragraph 27(a).

[353] Paragraph 27(c) then alleged that the defendants had a duty to advise the plaintiffs of some or all of the matters referred to in paragraphs 24 and 26. This was not framed on the basis of any incorrect allegation of the existence of a client relationship, and was related to, indeed overlaps with, the allegation in paragraph 25. For reasons given in relation to paragraph 25, there was a duty to advise the plaintiffs of the matters referred to in paragraph 24(a), (b), (h), and (i) on the part of the first and second defendants. With regard to the matters referred to in paragraph 26, this overlaps the allegation in paragraph 26 itself, and for the reasons given there I find that the first and second defendants had a duty to advise the plaintiffs of the matters referred to in paragraph 26(a), (d), (e)(iii), (h), (j), and (l).

[354] Paragraph 28 then alleged that it was a breach of contract or a duty of care for the defendants to fail to attend to or otherwise advise the plaintiffs that the matters referred to in paragraphs 24, 26, and 23A. So far as this related to paragraphs 24 and 23A, it overlapped the allegations in paragraph 25 and I make the same findings. With regard to paragraph 26, I find that there was a breach in failing to attend to the matters in paragraph 26(a), (d), (e)(iii), (h), (j), and (l). Paragraph 29 then repeated the allegation of breach of the duty of care in relation to the failure to advise of the matters referred to in paragraphs 23A, 24, and 26, but added the allegation that there was also a breach of the duty of care in making the representations referred to in paragraphs 6D, 7 to 10 and 17. It may be that the pleading in substance alleged negligence in the combination of what was said and what was omitted, and there is some force in that, although generally I have addressed this by reference to the findings that there was a duty to say particular things which arose in the light of particular other things which had been said.

[355] In any event, I find that there was a breach of duty in making the representations in paragraph 6D(b), because this was presented as the security held by the investor rather than by the special purpose company, the representations in paragraph 7(b)(ii) in describing this as an excellent opportunity to invest, (iv) in attributing to the Westpoint group net assets in excess of $80 million, (v) in asserting that the special purpose company had a second ranking mortgage and a second ranking charge in each project and therefore in this project, (vi) in asserting that the company's obligations under the loan were secured by a guarantee from Westpoint corporation and associated entities, when in fact no guarantee was provided to the investor, and (x) in relation to security, when neither a guarantee from the Westpoint group nor a charge over Bayshore Port Melbourne Trust was provided to the investor. It was also negligent to make the related implied representations alleged in paragraph 10(d), (e)(ii), (f), (g)(i) re the first and second defendant, and (k) re the guarantee and the charge. It was also negligent to represent as alleged in paragraph 17(b) that Westpoint guaranteed the return of the funds in June 2006, when that was not true.

[356] It was then alleged in paragraph 30 that, had the plaintiffs been aware of the matters in paragraphs 14, 15, 16, 23A, 24, and 26, they would not have proceeded with the investment. Mr Radcliffe said that if he had been told that it was a risky investment or a high risk investment he would not have made the investment, or if he had been told a promissory note was no more than a simple IOU he would not have made it: p 468. He did not pay much attention to the mortgage or the charge (p 429), but put particular emphasis on the presence of the guarantee, which he said "was the clincher for me".[252] He believed that he obtained the benefit of the guarantee,[253] and said that he would not have made the investment if he had understood that the guarantee was not given to him, but rather given to Bayshore Mezzanine Pty Ltd. He said he would not have invested had it not been recommended by Mr Brannelly. He said that he went to Mr Brannelly because they were financial advisers to business people etc, he was seeking financial advice and he just would not have invested without the recommendation: p 468-9. He treated him as a financial adviser of integrity: p 543-4. He said he was not told about the ASIC warning in Exhibit 17, and would not have made the investment if he had, but for some reason that was not a matter relied on in the pleading. He also said that he would not have made the investment if he had been told that it was required to be registered under the Corporations Act but was not: p 469. That I think is plausible, and really emphasises that Mr Radcliffe would have been readily put off anything adverse which had been disclosed about this proposed investment. I accept Mr Radcliffe's evidence about these matters.

[357] In these circumstances, I think it unlikely that Mr Radcliffe would have made the investment if he had been told the matters in paragraphs 14(f) and 15(a), (b), (d), (e), and (g), 16(a), (c)(ii), (g), (i), (j) concerning the first and second defendants, and (l), or if the matters referred to in paragraph 26A(a), (d), (e)(iii), and (l) had been disclosed to him.

[358] The defendant denied the allegations in paragraph 30 and alleged in paragraph 23 of the defence that the plaintiffs determined to invest in Bayshore Mezzanine Pty Ltd knowing no advice had been given by the first and second defendants, having made their own inquiries regarding the nature of the investment and having read the information memorandum. I find that Mr Radcliffe had read the information memorandum, but, in circumstances where advice plainly had been given by the first and second defendants, the plaintiffs could not have known to the contrary, and there was no evidence that the plaintiff made any inquiries in relation to the nature of the investment or its quality, from anybody other than the first defendant. Paragraph 23(b) was not made out.

[359] Paragraph 31 alleged that the representations in paragraph 6(d), 7 to 10, and 17 constituted negligent misstatements. To the extent that I have found in relation to paragraph 29 that it was a breach of the duty of care for the first and second defendants to make those representations, they constituted negligent misstatements by the first and second defendants. For the reasons given in Evans, paragraph 60 was also proved. It was then alleged in paragraph 32 that the representations in those paragraphs, and the failure to attend to or advise of the matters referred to in paragraphs 23A, 24, and 26 constituted misleading and deceptive conduct contrary to the Trade Practices Act, the Fair Trading Act, and the ASIC Act. In relation to the applicability of the ASIC Act, the reasoning in Evans applies here as well, and I find the facts alleged in paragraphs 32A(1), (2), (3), (5), and (7) proved. The position here is similar to that in the other matters, and I find that making the representations referred to in paragraph 6D(b), 7(b)(i), (ii), (iv), (v), (vi), and (x) to the extent set out in my findings in relation to paragraph 16, and the related implied representations in paragraph 10(d), (e)(ii), (f), (g) re the first and second defendants, and (k) re the guarantee and the charge, and the representation in paragraph 17(c) as to the guarantee by Westpoint of the return of the funds, amounted to misleading and deceptive conduct for the purposes of the ASIC Act.

[360] Paragraphs 32B, 32C, and 32D relate to a claim under the Corporations Act which was not pressed. Paragraph 33 alleged that as a consequence of the negligence, negligent misstatement or breach of the ASIC Act by the defendants, the plaintiff suffered a particular loss or damage. The approach to the assessment of the damages here should be the same as in the other matters, and I will allow $200,000 plus interest at 8% on $100,000 from 14 July 2005, and $200,000 from 29 August 2005, less the interest actually paid, an amount of $5,954.78 (Exhibit 65), which to the date of judgment comes to $246,735.62.[254]

[361] As to whether this loss was caused by the negligence, negligent misstatements and breaches of the ASIC Act, I find that the plaintiffs made the investments because Mr Radcliffe relied on what he was being told by the defendant and because he was not deterred from doing so by the things he ought to have been told but was not. I also find that it was reasonable for him to have done so. They suffered the loss because they made the investments. The situation here is similar to the situation in the other matters, I have already made reference to relevant parts of the evidence of Mr Radcliffe, and my reasoning is analogous. I do not think I need to enlarge on it further here.

[362] In relation to the question of causation, it was alleged that the plaintiffs had suffered any loss as a result of the loss of an investment in the Westpoint Income Fund and the subsequent failure of that investment, which was said to be not causally connected to the conduct of the first and second defendants: defence paragraph 28A. The position here is similar to the other matters; on 1 November 2005 Bayshore Mezzanine Pty Ltd wrote to the plaintiffs inviting them to reinvest in the Westpoint Income Fund: Exhibit 63. On 9 November 2005 the defendant also wrote drawing attention to the option of reinvesting the money lent to Bayshore in the Westpoint Income Fund: Exhibit 64. The plaintiffs signed a request for Bayshore Mezzanine Pty Ltd to reinvest the proceeds in the Westpoint Income Fund for a two year period (p 548), and an application form for that fund for the amount of the loan, which was passed on to the third defendant and Kebbel NSW: Exhibit 76, Exhibit 119. Again, however, there was no evidence that anything was actually done in response to that form, that it was acted upon in any way, or that Bayshore Mezzanine Pty Ltd did in fact repay the promissory note early so that the money in fact came to be in the Westpoint Investment Fund prior to the collapse of the Westpoint group. Accordingly this defence was not made out. In addition, for reasons given elsewhere, it is clear that the approach in relation to the Westpoint Income Fund was made only because of the plaintiffs' status as existing investors in Bayshore Mezzanine Pty Ltd, there was no reason to think that they would have invested in the Westpoint Income Fund if they had not already invested in Bayshore Mezzanine Pty Ltd promissory notes, and in those circumstances the chain of causation has not been broken. This defence was not made out.

[363] It was alleged in the defence that the plaintiffs contributed to any loss they suffered by their own negligence, apparently in reliance on the allegations in paragraph 27. I find that Mr Radcliffe was sent a copy of the information memorandum Exhibit 1, and that, although he read it, he did not see it other than as supporting what he had been told by the defendant. I find that he was not aware as a result of his own assessment of the information memorandum of any of the matters pleaded in paragraphs 7 to 10, 14, 15, 16, 24, and 26, of which he ought to have been made aware by the defendant. In relation to whether he ought to have been aware of these matters from the information memorandum, the position is similar to that in Evans, and for reasons analogous to that in Evans I am not persuaded that he ought to have been aware of these matters from his own assessment of the information memorandum, bearing in mind what he had been told in the letters by the first defendant. There was no evidence that the plaintiff could have been aware of any of them as a result of public knowledge. Paragraph 27(a) was not made out.

[364] I find the letter of 28 June 2005 Exhibit 55 contained the statements set out in paragraph 9(d) and 9(e) of the defence; for reasons given elsewhere, these were of no consequence. I find the letter of 11 August 2005 Exhibit 59 contained the same statements. There was no letter of 12 July 2005 in evidence. Paragraph 27(c) has not been proved; although a careful examination of the information memorandum would have revealed the matters referred to in paragraph (c)(i) and (iv), the former was apparent only as a result of careful scrutiny of an unclear and confusing diagram, and the latter was essentially meaningless. Paragraph 27(d) was not made out, nor was paragraph 9(c); there was no evidence that the plaintiff made any analysis or assessment, or did anything himself in relation to the choice of this investment other than accepting and acting on the advice of the defendant. The plea of contributory negligence therefore fails. There was a similar plea in relation to the claim under the ASIC Act, which fails for the same reasons, and for reasons analogous to those in Evans.

[365] The first and second defendants also alleged that the plaintiff's claims were apportionable claims for the purposes of the Civil Liability Act, and the ASIC Act. For the reasons given in Evans, this defence in relation to the Civil Liability Act fails. In relation to the ASIC Act, the position is similar to Evans, I make the same apportionment in relation to the third defendant, but the matter is irrelevant. The fact that the plaintiffs are trustees of a superannuation fund is irrelevant to the application of the exemption under the Civil Liability Act; the plaintiffs were individuals and did not cease to be individuals because they were trustees, and the mere fact that they were acting as trustees does not mean that they were carrying on a business. Ordinarily trustees do not carry on a business when acting as trustees; indeed, traditionally trustees were assumed to act gratuitously, consistently with the rule that prima facie trustees must not profit from their trust.[255] It is of course possible for a person or a company to carry on business as a trustee, but the mere fact that individuals are acting as trustees does not mean that they are carrying on a business, and the mere fact that they are operating a private superannuation fund would also not mean that they were carrying on a business. There was no evidence that the plaintiffs in this case were carrying on a business, so s 28(3) of the Civil Liability Act applies and the apportionment provisions do not apply.

[366] In summary, the first and second defendants owed the plaintiffs a duty of care, and they breached that duty of care in various ways as I have found, particularly by asserting that Westpoint corporation and associated entities guaranteed the proposed investment, and that it had other advantages, which it did not, and in failing to provide appropriate warnings as to the risks associated with the investment, of which they were or ought to have been aware, and to inform them of the various other matters referred to earlier. As a result of those matters, the plaintiffs made the investment, and as a result suffered a loss, which was therefore caused by the negligence of the first and second defendants. The incorrect statements about the proposed investment also amounted to misleading and deceptive conduct on the part of the first and second defendants, on which the plaintiffs reasonably relied, and therefore suffered the same loss. Sufficient of the facts alleged in the statement of claim have been admitted or proved to entitle the plaintiffs to judgment against the first and second defendants. In all the circumstances therefore there will be judgment that the first and second defendants pay the plaintiffs $246,735.62 which is inclusive of interest to the date of judgment.

[367] An amended statement of claim was filed on 5 September 2006. On 12 October 2007 leave was given to amend the statement of claim in accordance with Exhibit D and a second further amended statement of claim incorporating those amendments was filed on 3 December 2007. A notice of intention to defend and defence by the first and second defendants were filed on 2 October 2006, and an amended defence on 3 October 2007. A further amended defence was filed on 26 November 2007, which was responsive to the second further amended statement of claim, and a reply to that defence was filed on 4 December 2007. Then on 13 December 2007 there was a further amendment allowed in terms of paragraph 60 in Exhibit H: p 1023.

[368] The allegations in paragraph 1 were the same as in Evans, and the defence was the same except that paragraph 1(d) was denied: para 3. There was evidence that the third defendant issued such a document, which is part of Exhibit 45. A copy of it was sent to Mr Pegg on behalf of the plaintiff on 24 March 2005 with a letter of that date as part of Exhibit 27, so paragraph 1(d) was proved. Otherwise the outcome of those allegations is the same as in Evans. Paragraphs 2, 3, and 4 alleged an agreement to provide financial investment advice for reward, which was not proved, indeed ultimately was not pressed. Paragraph 5 alleged that the defendants were aware or should have been aware of various things at the time the advice was given and the representations made as alleged in paragraphs 7 to 11. Paragraph 7 referred to a letter of 18 July 2005 which was sent after there had been a request for information about the Prime Aged Care Trust, which had been sent some time earlier. It was the first reference to Bayshore, and was unsolicited, so paragraph (a) was not made out in relation to that letter.

[369] Paragraph 8 referred to a conversation held subsequently, and after Mr Pegg had spoken to a receptionist and left a message that he wanted a PDS, and for Mr Brannelly to call him back, so by the time that telephone conversation occurred, and subsequently, the first defendant must have known that the plaintiff was seeking advice on serious financial matters and was giving consideration to investing in the Bayshore Port Melbourne development. That would also have been true when the letter of 22 July 2005 referred to in paragraph 10 was sent. At the time when the various letters were sent, bearing in mind the information that had been provided on 24 March 2005, I find that the defendant knew or ought to have known that Mr Pegg on behalf of the plaintiff believed that the first and second defendants had expertise in property investment, and were experienced and knowledgeable about property investment. To that extent paragraph 5(b) is found.

[370] At least from the time of the telephone conversation on 22 July 2005, the defendant knew or ought to have known that Mr Pegg would rely or was likely to rely on any representations made by him as to the quality of the promissory notes as an investment, the value of the promissory notes in comparison to other investments and securities, and the price, safety, and reliability of the promissory notes in comparison to other investments, so paragraph 5(c) was proved. He also knew or ought to have known that the plaintiff would rely on the advice and representations and would thereby be induced to invest in Bayshore Mezzanine Pty Ltd, or would be likely to do so, so that paragraph 5(d) was in substance proved. It follows from these findings, and from the general circumstances of the case and the evidence of Mr Pegg, which I accept, that the first and second defendants owed a duty to the plaintiff to exercise reasonable care and skill in the provision of advice and the making of representations concerning proposed investment in Bayshore Mezzanine Pty Ltd, so paragraph 6 was proved. My reasoning in this respect is essentially the same as in Evans.

[371] Paragraph 7 referred to a letter sent by the defendant to the plaintiff dated 18 July 2005, Exhibit 28. It was admitted that the letter was sent, though not admitted that it provided advice or made representations. The letter contained the statements alleged in paragraph 13(b) of the amended defence, including the statement that the "attached information is not financial advice" and that Mr Pegg "had not sought advice nor was given advice ... ." For the reasons given in Evans, in my view this was of no significance. Looking at the contents of the letter as a whole, it plainly gave advice. I find that the letter of 18 July 2005 did provide advice with respect to investing in Bayshore Mezzanine Pty Ltd promissory notes.

[372] The letter contained the express statements alleged in paragraph (b), which I find were representations. There was nothing in the letter to indicate that they purported merely to amount to repetition of what was said in the information memorandum, and in most cases they did not accurately reflect what was said in the information memorandum. Paragraph 8 alleged the telephone conversation on 22 July 2005 referred to earlier. I find that that conversation occurred as recorded by Mr Pegg in Exhibit 29. Consistently with that, I find paragraph 8(ab) proved. Mr Pegg did not give evidence which provided any support for the allegations in paragraph 8(a) or (aa). He did, however, say that when his other questions had been answered he informed Mr Brannelly that if he was sure it, that it is the investment, was secure then to send him the information memorandum and any information he had on the interview with Mr Carey referred to in the letter, and Mr Brannelly responded that he would do so today. Accordingly, paragraph 8(b) was proved.

[373] Mr Brannelly did in fact send to Mr Pegg a letter dated 22 July 2005 which enclosed a copy of the information memorandum Exhibit 1, and a copy of an interview between someone identified only as Kebbel and Norm Carey: Exhibit 30. That was the letter referred to in paragraph 10, but before coming to that I should deal with the allegation in paragraph 8(c) that there was an express statement by the first defendant that he was satisfied the investment in Westpoint was very secure. To some extent this is covered by a finding I have already made in relation to paragraph 8(ab)(i), and of course by saying "will do today" he impliedly represented that the investment was secure. Nevertheless in terms the evidence of Mr Pegg did not support the allegation in 8(c) as a separate allegation, so that allegation was not made out.

[374] Paragraph 9 alleged that as a result of making the statements referred to in paragraph 8 the defendants made certain representations. The representation referred to in 8(ab)(i) was effectively a representation also by the defendant that the investment was a very secure investment, and hence a secure investment, so paragraph 9 was proved in relation to the first and second defendants.

[375] Paragraph 10 referred to the letter of 22 July 2005: Exhibit 30. The sending of that letter was admitted, but it was denied that any advice was given and reliance was placed on the statement on the third page headed "Disclosure" which was in the same terms as the statement with the same heading on page 3 of Exhibit 28. Notwithstanding that statement, for the reasons given earlier in the light of the content of the letter as a whole, I find that it did amount to advice by the defendant with respect to investing in Bayshore Mezzanine promissory notes. The letter contained the express statements referred to in paragraph 10(b) except that the third paragraph did not contain the words "in excess of" alleged in the second line of paragraph 10(b)(i), the first paragraph used the word "have" instead of the word "has" in paragraph (b)(ii), the letter referred to capital "now being raised on Bayshore" rather than the "now being raised at Bayshore" in paragraph (b)(vii) and under Investment Highlights the letter referred to as security "guarantee from the Westpoint group ..." whereas paragraph (b)(viii) alleged "guarantee from Westpoint group ... ." These inaccuracies are of no consequence. I find that these amounted to representations by the defendant.

[376] Paragraph 11 alleged that the defendants made certain implied representations in making the express representations referred to in paragraphs 7, 8, and 10. Paragraph 8 referred to statements rather than representations, but I will take this as a reference to the statements in paragraph 8(ab) which have been found. The allegations are similar to the allegations in paragraph 11 in Evans, though of course have to be decided by reference to the express representations in paragraphs 7, 8, and 10 that were made to Mr Pegg. On that basis, I find that the implied representations in paragraph 11(c)(iv), (d) (in effect), (e), (f)(i) and (ii), (g), (h)(i) and (iii), (i), (k), (l), and (m) were made.

[377] Paragraph 12 alleged that the plaintiff invested $50,000 in a Bayshore Mezzanine Pty Ltd promissory note on or about 1 August 2005 in reliance on the advice and representations referred to in paragraphs 5 to 11. Paragraphs 5 and 6 did not refer to advice or representations. Mr Pegg said that he signed an application form for Bayshore (Exhibit 32) and indeed one for Prime (Exhibit 31, dated 26 July 2005) and sent these with his cheques to the defendant; the investment in Bayshore was acknowledged by a letter from the defendant dated 27 July 2005: Exhibit 33. He subsequently received from Bayshore Mezzanine Pty Ltd a promissory note dated 1 August 2005 for $50,000: Exhibit 34. Accordingly I find that he signed the application form and sent in his cheque on 26 July 2005, as a result of which the promissory note was issued on 1 August 2005.

[378] Mr Pegg said that in relation to the letter of 18 July he relied on the reference to its being a limited opportunity, and being an excellent opportunity to invest (p 163), the return at 14% which he regarded as very attractive, the fact that the company had been in business for over 20 years (p 164), that about one-third of the money to be raised had already been raised, that it was a short-term investment, that Westpoint group had net assets in excess of $80 million, that the company that his money would be going into had a second ranking mortgage over the development property (p 165), that there was a second ranking charge as well, and that there was a guarantee from the Westpoint corporation, a guarantee of the company's obligations under the loan, that is to return his investment: p 166, p 217.

[379] Mr Pegg's evidence about the guarantee was not always very clear. At p 166 line 30 he seemed to say that the company was getting the guarantee, but his next answer showed that he understood it as a guarantee of Bayshore Mezzanine's obligation to him. Under cross-examination he mentioned the guarantee at p 218 but in terms which were ambiguous. At pp 223-4 he seemed to accept that the Information Memorandum Exhibit 1 referred to a guarantee "given to Bayshore Mezzanine" and that that corresponded with his understanding of the position at the time. At p 248 I asked him again about his understanding of the guarantee, and he again said that he took it from the letters that Westpoint proved a guarantee of the obligations of Bayshore Mezzanine to him.

[380] No doubt Mr Pegg had only a layman's understanding of a guarantee, and may not have appreciated the true import of what he was being asked at times. Overall, I find that he did at the time believe that he, rather than Bayshore Mezzanine, would get the benefit of Westpoint's guarantee in the immediate sense, which was the natural interpretation of what was said in the letters, and relied on that, notwithstanding what was said about the guarantee in Exhibit 1. He also relied on the recommendation of Bayshore Port Melbourne as the most appealing project at present, and the fact that the money was needed to construct additional floors, and the fact that the accounts had been audited by KPMG: p 167. He also referred to the matters under the investment highlights, including the large number of pre-sales, when the project was due for completion, and the security, so that it was "all in all a very, very attractive proposal.": p 167.

[381] In relation to the letter of 22 July, he said that that was very similar to the earlier letter and that he relied generally on the same things, though he noted that the amount that had already been raised had gone up to $10 million: p 177. It is not difficult to conclude that Mr Pegg also relied on the things he had been told orally by the first defendant on 22 July 2005. Overall, I find that in making the investment the plaintiff through Mr Pegg relied on the advice in paragraph 7(a) and 10(a), and the representations in paragraph 7(b), 8(ab), 9, 10(b), and 11 (to the extent found). Paragraph 13 was admitted; paragraph 14 was proved by the evidence of Mr Pegg and Exhibit 35.

[382] It will surprise no-one who has persevered this far to learn that paragraph 15 was in essentially the same terms as paragraph 15 in Evans, and for the reasons given there I find paragraphs (a), (b), (c), (g), and (i) proved. Paragraph 16 was in the same terms as paragraph 16 in Evans, and for the reasons given there I find the facts in paragraph (a) (to some extent), (b), (e), (f), and (i) proved. Paragraph 17 alleged that the representations in paragraph 7 to 11 were false, misleading, and deceptive because of various matters there alleged; the matters there alleged were the same as the matters alleged in paragraph 17 in Evans, and for the reasons given there I find the facts in paragraphs (a), (b), (c), (d), (f), (g), (h), (i), (j)(i) concerning the first and second defendants, the second (i)(ii), and (k) proved.

[383] As to whether the representations were false, misleading or deceptive, I find that the representation in paragraph 7(b)(i) that the opportunity was limited, (ii) that it was an excellent opportunity to invest, (iv) that the Westpoint group had net assets in excess of $80 million, (v) that for each project the special purpose company has a second ranking mortgage over the development property and a second ranking charge, (vi) that Westpoint corporation and associated entities provided guarantees for the company's obligations under the loan, and (x) as to the security available, were false, misleading and deceptive. The representations in paragraph 8(ab) that the investment was very secure, that Westpoint group had guaranteed the investment, that Westpoint had assets of $80 million and that Bayshore Mezzanine had a second mortgage over the property were all false, misleading and deceptive, and the corresponding representations in paragraph 10(b)(ii), (iii), (iv), (v), (viii) as to security, and (x), and the corresponding implied representations in paragraph 11(d)(i), (e), (f)(ii), (g), (h)(i) and (iii) concerning the first and second defendants, and (m) except as to the mortgage were false, misleading and deceptive, for the reasons already given elsewhere.

[384] Paragraph 18 alleged that a financial adviser exercising reasonable care and skill would have advised clients of a number of matters. I find that a financial adviser would have advised clients of the matters in paragraphs (g) and (h), for reasons given elsewhere, but the allegation is irrelevant because the plaintiff was not a client in the relevant sense. Paragraph 19 then alleged that there was a breach of contract or duty of care to the plaintiff for the first and second defendants to fail to advise the plaintiff of the matters in paragraphs 15, 16, 17, and 18. There was no question of contract, but I find for reasons given elsewhere that it was a breach of the first and second defendant's duty of care to fail to advise the plaintiff of the matters referred to in paragraphs 15(c), 16(i), 17(a), (c)(ii), (g), (h)(i), (i), (j)(i) concerning the first and second defendants, and (k), and 18(a), (b), (g), and (h).

[385] Paragraph 20 alleged that a financial adviser exercising reasonable care and skill in relation to the relevant investments would have done various things. The allegation parallels that in paragraph 20 in Evans, and for the reasons given there I find that a financial adviser in such circumstances would have done the things in paragraphs (a), (d), (e)(iii), (h), and (l). One difference from Evans is that it would not have been necessary to give the advice referred to in paragraph (j), because it is clear from Mr Pegg's evidence that he did appreciate that he was not lending the money directly to the development company but rather lending money to a company which did not own the real estate or was not actually doing the development.

[386] Paragraph 20A alleged that a financial adviser exercising reasonable care and skill would have known of the matters referred to in paragraphs 14 to 16 above. For reasons given elsewhere I find that such a financial adviser would have known of the matters in paragraphs 15(a), (b), (c), (g)(i), and (i), and 16(i); there were no relevant matters in paragraph 14. As to paragraph 20A(b) such an adviser probably would have advised clients of those matters but that is irrelevant because the plaintiff was not a client in the relevant sense. Paragraph 20B seems to me to be the same as paragraph 20A(a) and I make the same findings.

[387] Paragraph 21(b) alleged that had the defendants exercised the level of care and skill of a reasonably competent financial adviser they would have been aware of the matters in paragraphs 15 to 20 and 21A. I have already made findings in paragraph 20A(a) about the awareness of such a financial adviser of the matters in paragraphs 15 and 16. I find for the reasons given in Evans that such a financial adviser would have been aware in addition of the matters referred to in paragraphs 17(a), (b), (c), (d), (g), (h), (i), (j)(i) concerning the first and second defendants, and (k), 18(a), (b), (c), (g), (h), 20(a), (d), (e), (h), (j), and (l), and 21A(a), (b), (c), (h), and (i). As to paragraph 21(c), I find for the reasons given in Evans that the first and second defendants had a duty to advise the plaintiff of the matters referred to in paragraphs 18(a), (b), (g), and (h), 20(a), (d), (e)(iii), (h), and (l), and 21A(a), (b), (h), and (i). Paragraph 21A alleged various things about Bayshore Mezzanine Pty Ltd which were much the same as in paragraph 18; I find the facts in paragraph 21A(a), (b), (c), (h), and (i) proved.

[388] Paragraph 22 alleged that it was a breach of the duty of care of the first and second defendants not to attend to or otherwise advise the plaintiff of the matters referred to in paragraphs 18, 20, and 21A. For the reasons given in Evans, I find it was a breach of the duty of care to fail to attend to or advise the plaintiff of the matters referred to in paragraphs 18(a), (b), (g), and (h), 20(a), (d), (e)(iii), (h), and (l), and 21A(a), (b), (h), and (i). Paragraph 23 alleged that there was a breach of duty of care of the defendant in failing to advise the plaintiff of those matters and by making the representations referred to in paragraphs 7 and 11. I find there was a breach in making the representations referred to in paragraph 7(b)(ii) that it was an excellent opportunity to invest, (iv) that the Westpoint group had net assets in excess of $80 million, (v) that for each project the special purpose company has a second ranking mortgage and a second ranking charge, (vi) that the Westpoint corporation and associated entities guaranteed the company's obligations under the loan, and (x) in relation to the security of the investment. I also find there was a breach of duty of care in making the related implied representations in paragraph 11(e), (f)(ii), (g), (h)(i) concerning the first and second defendants, and (m).

[389] Paragraph 24 alleged that the plaintiff would not have proceeded with the investment had it been aware of the matters referred to in paragraphs 15, 16, 17, 18, 20, or 21A. Mr Pegg said that if he had been told that a promissory note was nothing more than an IOU he would not have made the investment, nor if he had been told there was no second ranking mortgage in place, nor a second ranking charge, nor if he had been told this was a high risk investment: p 182.[256] He would not have invested if he had been aware of the contents of Exhibit 17, the ASIC warning, or if he had been told that the court had determined that promissory notes ought to be registered under the Corporations Act and comply with the requirements under the Act and these did not: p 104. I accept his evidence, and in the light of this evidence, and the evidence of Mr Pegg generally, and my general assessment of him as an individual, I find that the plaintiff would not have proceeded with the investment had the plaintiff been aware of the matters referred to in paragraphs 15(c), 16(i), 17(c)(ii), (g), (h)(i), (i), (j) concerning the first and second defendants and (k), 18(a), (b), (g), and (h), 20(a), (d), (e)(iii), (h), (l), and 21A(a), (b), (h), and (i).

[390] As to paragraph 25, I find that the representations in paragraph 7(b)(ii), (iv), (v), (vi), and (x) as identified earlier in relation to paragraph 23, the representations in paragraph 8(ab), the representations in paragraph 10(b)(ii), (iii), (iv), (v), and (viii) concerning the security, which essentially parallel the corresponding representations in paragraph 7(b), and the implied representations in paragraph 11(e), (f)(ii), (g), (h)(i) concerning the first and second defendants, and (m) constituted negligent misstatements. For the reasons given in Evans, paragraph 60 was also proved.

[391] Paragraph 26 then alleged that the representations referred to in paragraphs 7 to 11 and the failure to advise or attend to matters referred to in paragraphs 18, 20, and 21A constituted misleading or deceptive conduct by the defendants in contravention relevantly of s 12DA of the ASIC Act. For the reasons given in Evans, I find that the ASIC Act applied and find the facts alleged in paragraph 26A proved. For the reasons given elsewhere, I find that making the representations referred to in paragraphs 7, 8, 10, and 11 that I identified as false, misleading and deceptive in relation to paragraph 17 earlier constituted misleading and deceptive conduct for the purposes of the ASIC Act. I need not deal with paragraphs 26B to 26D.

[392] Paragraph 27 alleged that as a consequence of the negligent misstatements and breaches of the ASIC Act the plaintiff suffered certain loss and damage. I find that as a result of making the investment the plaintiff suffered the loss of his principal of $50,000, together with interest at 8% from 1 August 2005, less the interest actually paid which amounted to $1,495.89: Exhibit 35. This produces a total loss to the date of judgment of $61,731.50.[257] As to whether this was caused by the negligence and negligent misstatements and breaches of the ASIC Act, I accept that the plaintiff made the investment because Mr Pegg was relying on what he had been told by the defendant, as identified earlier, and that if he had not been told those things, or if he had been told the various other matters referred to earlier, which he ought to have been told, he would not have made the investment. Accordingly I find that he did suffer this loss as a result of the negligence, negligent misstatements and breach of the ASIC Act of the first and second defendants.

[393] It is also relevant to consider whether it was reasonable for the plaintiff to have relied on the representations which amounted to misleading and deceptive conduct on the part of the first and second defendants. In all the circumstances, I find that it was reasonable. The defendants held themselves out to him as financial advisers, persons who were experts and experienced and persons who could be trusted by him. In the financial services guide which was attached to Exhibit 27, which Mr Pegg read (p 161) it was said that "your adviser will be acting for you and not for any financial institution." Mr Pegg had no reason to know that Mr Brannelly was not even attempting to live up to that proposition. The various statements in the document "Brannelly the professional prospective" would also have engendered confidence in the proposition that things said by the defendant could safely be relied upon. In all the circumstances, bearing in mind this and all of the circumstances disclosed in Mr Pegg's evidence, I find that it was reasonable for him and therefore the plaintiff to have relied on the representations which amounted to misleading and deceptive conduct.

[394] It was alleged in the defence at paragraph 27 that the plaintiff was aware or ought to have been aware of the matters in paragraphs 7, 11, 14, 15, 16, 17, 18, and 20 of the statement of claim from his own assessment of the informant memorandum and public knowledge. Mr Pegg received a copy of the information memorandum, and read it, but the only discrepancy that he detected was that it made no reference to the additional floors, and he assumed, reasonably enough, that this was because the information available to the defendant was more up to date. Otherwise he did not detect any discrepancy, which was reasonable. There was no evidence that he could have been aware of any of those matters from public knowledge. Paragraph 27(a) was not made out.

[395] I find that the letters of 18 July and 27 July 2005 did contain the statements set out in paragraph 9(d) of the defence; I have already commented elsewhere on the lack of significance of those statements. I find that Mr Pegg was not in fact aware of the matters in paragraph 27(c) of the defence, nor ought he to have been aware of them from reading the information memorandum. Paragraph 27(d) was not made out; Mr Pegg received advice from the defendant, and decided to invest because of that advice and acted on it. There was no evidence that he received any information about the proposed investment, or any advice in relation to it, from any other source. Paragraph 27 accordingly was not made out, and it follows that paragraph 28 which was an allegation of contributory negligence was not made out either. There was also an allegation of contributory negligence pleaded in relation to the claim under the ASIC Act. For these reasons, and for reasons analogous to those set out in more detail in Evans, I find that that claim of contributory negligence also fails. Although Mr Pegg had some investment experience, he was by no means a sophisticated investor and it was reasonable for him not to have analysed the Information Memorandum in sufficient detail to realise either that this was in fact not a good investment, or that he should not accept at face value what was said about it by someone who was supposed to be acting for him.

[396] The defendant also pleaded in paragraph 28A that any loss suffered by the plaintiff had been suffered as a result of his subsequent investment in the Westpoint Income Fund and the failure of that investment. Mr Pegg received from Bayshore Mezzanine Pty Ltd a letter of 1 November 2005 inviting him to transfer his investment to the Westpoint Income Fund, and signed and sent in the application forms and other documents associated with that proposal which were attached, on 23 November 2005: Exhibit 40. The forms were sent on to Kebbel: Exhibit 119. There was, however, no evidence that this was acted on by Bayshore Mezzanine Pty Ltd, or for that matter anyone else, and accordingly it has not been shown that the plaintiff's investment at the relevant time had become one in the Westpoint Income Fund. In any case, it is clear that the plaintiff received this offer to invest in the Westpoint Income Fund, and did what was done with a view to attempting to achieve that, only because he had already invested in a Bayshore Mezzanine Pty Ltd promissory note, so that the chain of causation was not broken. This defence also fails.

[397] The defendant also relied on the proportionate liability provisions of the Civil Liability Act and the ASIC Act. There is a distinction here in relation to the application of the Civil Liability Act from the position in Evans, because this plaintiff does not satisfy the requirements of the definition of a "consumer" for the purposes of s 28(3). The plaintiff is a company, and therefore not an individual. However, the various other matters discussed in Evans in relation to an apportionable claim under the Civil Liability Act apply equally in this matter. So far as the plaintiff pleaded and proved any cause of action against the third defendant, it was not in respect of any act or omission which caused the plaintiff's loss or damage independently of the first and second defendants; it is a liability which arises by way of vicarious liability, or because the third defendant was a joint tortfeasor with the first and second defendants in respect of the relevant acts and omissions of the first and second defendants. Accordingly, the third defendant was not a concurrent wrongdoer for the purposes of s 30 of the Act, or at least the first and second defendants have not shown that that was the case.

[398] In relation to the various other potential concurrent wrongdoers identified in the defence, it is sufficient to say that the defendant has failed to plead and prove any basis on which any of them are liable to the plaintiff so as to make them concurrent wrongdoers. It follows therefore that, for the reasons given in Evans except in relation to the question of whether the plaintiff was a consumer, the attempt to reduce the damages payable on the basis that the plaintiff's claim is an apportionable claim for the purposes of the Civil Liability Act fails.

[399] So far as the claim under the ASIC Act is concerned, this is an apportionable claim so far as the third defendant is concerned, and the position is relevantly similar to that in Evans. Again in my opinion the first and second defendants were principally responsible for the plaintiff's loss as between them and the third defendant. For the reasons given in Evans, I would apportion 25% of the loss to the third defendant and 75% of the loss to the first and second defendants. However, because of s 12GR(2) of the ASIC Act, I give judgment for an unreduced sum against the first and second defendants.

[400] The situation with this plaintiff is therefore relevantly the same as with the other plaintiffs. In the circumstances the first and second defendants owed the plaintiff a duty of care, and they breached that duty of care in various ways, particularly by asserting that the proposed investment had the benefit of a security in the form of a guarantee from Westpoint corporation and associated entities, and other advantages, which it did not have, and in failing to provide appropriate warnings as to the hazards associated with the investment, of which they ought to have been aware, and the various other matters referred to earlier. As a result of those matters, the plaintiff made the investment, and as a result suffered a loss, which was therefore caused by the negligence of the first and second defendants. The incorrect statements about the proposed investment also amounted to misleading and deceptive conduct on the part of the first and second defendants, on which the plaintiff reasonably relied, and therefore suffered the same loss. Sufficient of the facts alleged in the statement of claim have been admitted or proved to entitle the plaintiff to judgment against the first and second defendants. In all the circumstances therefore there will be judgment that the first and second defendants pay the plaintiff $61,731.50 which is inclusive of interest to the date of judgment.**

[1] Affidavit of Cliff sworn 3 April 2008 and filed by leave in CEP Enterprises Pty Ltd, Exhibit DFC1.

[2] I shall use the term "defendant" to refer to the second defendant, acting by the relevant first defendant.

[3] To some extent this was mitigated by various amendments to the statements of claim. On rare occasions, the degree of similarity actually proved to be inadequate, in respect of matters where identical wording would have been appropriate.

[4] This involves working closely through the pleadings; where something is in issue on the pleadings, anything relevant to the determination of that tissue is therefore admissible. It is not necessary to plead evidence tending to prove material facts: Delmenico v Brannelly [2008] QCA 74 at [54].

[5] See pp 343-5; see also pp 335-6, where full details were not sought.

[6] His responses under cross-examination, for example at p 347, suggested to me that he was not very quick on the uptake.

[7] He said that, despite the terms of the letters and Exhibit 1, he thought he was lending the money to the Westpoint group: p 339.

[8] He does not seem to have made the connection that presumably the group would not be doing this out of a sense of altruism towards investors.

[9] See also p 355. He thought the mortgage was granted by the company in which he was investing the funds (p 355) which he thought was the Westpoint group: p 339. The company "had" the mortgage in the sense that a mortgagor has a mortgage.

[10] Mr Brannelly's notes record a telephone call on 26 July, but nothing relevant about its content: p 1122, Exhibit 116.

[11] The information memorandum was another copy of the document which was Exhibit 1.

[12] The first defendant noted a meeting with him on 9 August 2005: Exhibit 115, p 1120. I accept that that was when the meeting occurred. Mr Brannelly either did not recall, or denied, what was put to him about this meeting: pp 1122-2.

[13] Mr P Brannelly gave no version of this meeting. All that he had noted in Exhibit 115 was that the plaintiff came in, handed over the application form and a cheque. These notes do not purport to be comprehensive diary notes, but just an outline of what Brannelly regarded as of significance to his business: p 905, p 956, p 1090. For reasons given elsewhere, I prefer the evidence of the plaintiff.

[14] It follows that only at this point did he finally decide to go ahead.

[15] The document referred to the second defendant's expertise (p 1-1) and to Mr Courtney having ranked himself as a medium risk profile: p 4.2. Mr Courtney never said anything to Mr Brannelly to the contrary: p 34.

[16] This included an investment of $50,000 in Westpoint: pp 94-5, Exhibit 18.

[17] The document in evidence is undated, but it was uncontroversial that it was executed on about 25 May 2004: p 40. Mr Courtney agreed that nothing was done under this: p 117.

[18] In cross-examination he was taken through what he noted in it, how he interpreted it, and what he relied on in it when deciding to invest: pp 71-84.

[19] Mr Brannelly denied that any such conversation occurred: p 779. I prefer the evidence of Mr Courtney and find that it did occur. Exhibit 13, sent on 18 August 2005, referred to "our recent telephone conversation". Exhibit 12, sent on 8 August 2005, foreshadowed such a call. The defence para 9(a) admitted a discussion by telephone, and para 10(a) admitted making the statements in para 7(c)!

[20] Mr Courtney was particularly concerned about security of the investment: p 49.

[21] He took this to mean that the investors as individuals would be able to access that guarantee: p 77, p 78.

[22] See also Mrs Summergreene at p 474; she was listening to his side of the conversation, and added that he said that they wanted a reasonable rate of interest, that they were semi-retired and that they had their own superannuation fund: p 474. Mr Brannelly said this would not have been said, although he had no recollection of this conversation: pp 1109-10. He said, consistently with his notes Exhibit 117, that he spoke to Mrs Summergreene on 31 January 2005: p 1112.

[23] Mr Brannelly had no record or recollection of this conversation and said he would not have said there was no problem: p 1113. In substance he denied the conversation: pp 1113-4.

[24] The transcript at line 31 is inaccurate.

[25] Mr Brannelly noted a phone call from her on 20 September 2005: p 1112, Exhibit 117.

[26] He said under cross-examination that he read it (p 650) and seemed to accept that the diagram did show that the guarantee went to the company, and that he understood that at the time: p 651. That was quite inconsistent with his other evidence about the guarantee. He said he did not analyse it in detail at the time (p 653) and I find he did not understand at the relevant time what Exhibit 1 said about the guarantee.

[27] Under cross-examination Mrs Summegreene added that he said there was a registered mortgage over Bayshore: p 596. They believed that they were investing in bricks and mortar: p 631. See also Mr Summergreene p 652, lines 31-35.

[29] Mr Brannelly had no recollection of this conversation, but denied that it had occurred as they alleged, although he accepted that he would have mentioned the Westpoint guarantee: pp 1114-6.

[30] Who actually gave him a document, a copy of which is Exhibit 20.

[31] Mr Brannelly noted a call on 26 July 2005 consistent with this conversation, but without reference to the investment being secure and short term: Exhibit 113, p 1127.

[32] That is another copy of the document which is Exhibit 1. There was also a copy of an "interview" with Mr Carey.

[33] That was consistent with what he said at pp 148-9, and his evidence at p 135 that he would not have invested without it. In this context his answer at p 150 line 31 under cross-examination was curious, and should not be taken at face value. It may be that he did not appreciate that he was being asked about his understanding when he applied for the promissory note, or that he thought that these were two guarantees, one to Bayshore Mezzanine referred to in Exhibit 1, and the one referred to in the letter Exhibit 22, which he reasonably interpreted as a guarantee to him. The point was not explored.

[34] He told the defendant he had read and understood the documents: p 138. The defendant recorded a call on 1 August 2005: Exhibit 113, p 1126. The plaintiff also invested in Prime: p 145.

[35] Mr Brannelly agreed there was a conversation in October 2004 (Exhibit 116), but in substance denied this content: p 1116.

[36] The exhibit is only the letter, but it said it included various things, including the Prime PDS and a copy of the Financial Services Guide, which I assume were the same as those attached to the letter in Exhibit 66.

[37] He later said he relied on the existence of the research team and an inference that it had also approved the Bayshore investment when deciding to invest in Bayshore: p 534.

[38] He relied on this and on the statement that this was a top performer, and the reference to a fully qualified financial planning organisation: p 535.

[39] He also relied on this, the guarantee, and on the assertion the defendants were experts: p 536. See also p 543 for a list of things relied on.

[40] He understood that the guarantee was provided to the investors, and was not disabused of this interpretation by anything he saw in Exhibit 1: p 530.

[41] Mr Brannelly had a note of a conversation on 27 June (Exhibit 116), and accepted most of this conversation: pp 1117-8.

[42] He did not understand the diagram in Exhibit 1: p 527.

[43] Mr Brannelly's notes record conversations to this effect on 29 June and 4 July: Exhibit 116, p 1118.

[44] The application form became Exhibit 56. Originally Mrs Radcliffe had not signed it as required, and the defendant sent it back for this to be attended to: Exhibit 57. The form was signed and sent back: p 433.

[45] Mr Brannelly agreed there was a meeting on that day, as recorded in his notes (Exhibit 116) and that Exhibit 75 was handed over but otherwise had no relevant recollection of the meeting: pp 1119-1120 (an issue relevant to his credibility is dealt with elsewhere).

[46] He agreed that Mr Brannelly explained he was giving general advice, not personal advice: p 544.

[47] The application form for Bayshore became Exhibit 60, and the promissory note he received in response Exhibit 61. He phoned the defendant on 24 August to tell him of the decision to do this: p 546.

[48] The return, although high, did not ring alarm bells: p 540.

[49] This was important, although not the only thing relied on: p 525-6.

[50] See Exhibit 44, an agreement with the stockbroker, signed in about 2000: p 243

[52] This can be a perfectly satisfactory method of investing in the stock market, provided one has the right broker, but it does not require any sophistication on the part of the investor.

[53] Mr Brannelly noted a call on 24 March 2005: Exhibit 114.

[54] The exhibit includes copies of the Deakin Financial Services Guide (which he read: p 161), and the documents "Brannelly The Professional Perspective" and "Your rights to Privacy". It appears from the letter that there were various other things sent with it not included in the exhibit, including the Prime PDS and a desk calendar for 2005.

[55] This was sent without prior discussion about it. The highlighting on the document was put on by Mr Pegg when he read the letter in detail: p 162.

[56] He denied he told the receptionist he was going ahead with the investment: p 220. This is contrary to the note from Ms Ahern which is part of Exhibit 114. I accept his denial.

[57] Mr Brannelly denied that he called back that day, having no note of a call in Exhibit 114: pp 1124-5. No call to 0427 652 559 appears in the Telstra records for the second defendant that day, Exhibit 109, but that is not conclusive. A call could have been made on another line, or a mobile.

[58] The highlighting on the letter is highlighting he put on at the time: p 177.

[59] He found the diagram in Exhibit 1 confusing: p 223.

[60] There was a brief conversation about completing the forms, on 26 July, of no significance: p 238.

[61] At times the cross-examination bordered on the improper. For example, at p 652 line 9 there was a question which presumed a proposition, that the witness had understood "the document" (Exhibit 1) which the witness had not previously accepted, although he had earlier said that he understood a couple of parts of it that he was asked about. I do not regard his answer to that question as evidence that he did understand the document.

[62] Other examples were the idea that loan to value ratios are based on gross sale values (p 863), and that he told Mr Courtney in the letters to him that he was just selling a product (p 878), something that does not appear in the letters, expressly or by implication.

[64] Mr Courtney was in a different position: he did not deal with Mr P Brannelly, although he was not told this either: p 61.

[65] As it happens, Mr Radcliff accepted that this had been said: p 544. This does not account for the presence of this statement in the typewritten notes, on the defendant's explanation.

[66] That was consistent with the evidence of Martinovic p 932.

[67] The defendant's expert. His report Exhibit 87 spells his name both with and without a "t" in different parts. The transcript credits him with the "t", as does Exhibit 120, so I have tried to follow suit.

[68] Statement of claim para 1(a)(ii); defence para 1(d).

[70] Statement of claim para 1(a)(iv); this allegation was not put in issue in the defence, though it was independently alleged that the first defendant was competent and qualified to give financial advice but did not do so in respect of the plaintiff. There is therefore a deemed admission of the holding out.

[71] The first three propositions were admitted; defence para 2. There was a purported denial of the fourth and fifth propositions in para 3 of the defence, but that denial did not comply with r 166(4) so the facts are deemed to be admitted: r 166(5).

[72] Statement of claim para 1(c), admitted in defence para 4.

[73] Statement of claim para 1(d). This was initially not admitted, but the reference to this paragraph having been deleted from para 5 of the current defence, it is taken to be admitted as there is no pleading to it. The document is part of Exhibit 45, a letter sent by the defendant to the plaintiff on 6 April 2005. Significantly, it also says: "Your adviser will be acting for you."

[74] Statement of claim para 1(e), deemed to be admitted under r 166(5).

[75] Statement of claim para 1(e), defence para 6(a).

[76] Statement of claim para 1(h), deemed admission under r 166(5).

[77] The sending of the letter was admitted in defence para 10(d); the letter was Exhibit 46.

[78] This was in issue on the pleadings; I accept the plaintiff's evidence, which is consistent with Exhibit 48, and find that this occurred. The date was confirmed by Exhibit 115.

[79] It follows from Exhibit 49 that the application form got to Bayshore Mezzanine Pty Ltd somehow.

[80] That occurred between 18 July 2005 and 27 July 2005, the date Exhibit 47 was sent. Exhibit 116 says 26 July.

[81] P Brannelly agreed under cross-examination that the plaintiff was quite a tentative or hesitant investor: p 1121.

[82] It was not even suggested in cross-examination that the plaintiff relied on anything other than the other documents sent by the defendant on 27 July 2005: Exhibit 45. They were of no real significance to his decision to invest.

[83] In any case, as the authorities quoted below make clear, a duty of care can arise in relation to the provision of information as well as advice, so there is nothing in this point. But the whole tenor of the letter was that the plaintiff was being advised to invest in these promissory notes, by someone purporting to act as an adviser.

[84] Even that was not correct, as there is an alternative, general advice, which relates to products but is not specific to individuals, which is still advice: M Brannelly p 756, 798. P Brannelly p 1128.

[85] See also Delmenico v Brannelly [2008] QCA 74, where however there was no discussion of principle.

[87] These were representations by the defendant; the letter was not in terms providing information as a mere conduit: Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 592 at [40]; Gardam v George Wills & Co Ltd [1988] FCA 194; (1988) 82 ALR 415 at 427. This was not effective as a disclaimer: Downey v Carlson Hotels Asia Pacific Pty Ltd [2005] QCA 199 at [83]. This follows from the content of the letters and oral advice, and applies to all the representations.

[88] The closest the plaintiff came was at p 317 he said he told the defendant a short term investment was good for him.

[89] I accept the plaintiff's evidence to this effect; the current defence in paragraph 16A effectively admitted that there was such a meeting.

[90] The ones found are those in paras 7, 10, and 10A(b)(i), (ii), (iii), (iv), part of (v) and part of (vi). It strikes me that this is a very narrow basis relied on for the implied representations; for example, they were not alleged to arise from the whole of what was said in the letters referred to in paragraphs 7 and 10.

[91] Here and elsewhere I am applying the test of what a reasonable person in the position of the plaintiff, taking into account what he knows, would make of the express representations relied on: Downey v Carlson Hotels Asia Pacific Pty Ltd [2005] QCA 199 at [69].

[92] What was intended was that Bayshore Mezzanine had a second ranking charge over the company doing this development: p 1076. That was also not consistent with Exhibit 1, which shows a charge which ranked third.

[93] No such charge was given of course; the defendant was telling a lie, but not the particular lie relied on in this part of the plaintiff's pleading.

[94] P Brannelly conceded this meaning of the passage in Exhibit 46: p 1079.

[95] Paragraph 12 referred to paragraphs 5 to 11, but paragraphs 5 and 6 did not refer to representations.

[96] That is those in paragraphs 7, 10, 10A(b)(i), (ii), (iii), (iv), part of (v) and part of (vi); and 11(c)(iv), most of (d), (e), (f)(i) and (ii), (g), (h)(i) and (ii), (i), (k)(A), (l)(A), and part of (m).

[98] Statement of claim para 13, defence para 2.

[99] Exhibit 8; it went into administration on 6 December 2005 and liquidation on 27 January 2006.

[100] It was incorporated on 7 August 2001: Exhibit 8.

[101] Exhibit 8; the second ranking mortgage and second ranking charge were held by Bridgecorp Finance Ltd from about July 2004. Bayshore Mezzanine Pty Ltd had such securities prior to September 2004 but they were then discharged. At the relevant time, it held only an unregistered charge and the guarantees to secure any monies it lent. As to the guarantees, see Vickers p 453.

[105] M Brannelly p 862; the allegation in paragraph 15(g) was that they went to the third defendant, but that was not the evidence.

[108] See also Exhibit 8, which so far as I can see does not refer to four fund raisings, although there were four earlier Information Memoranda: Report p 21.

[109] Exhibit 8, Report to creditors, p 25.

[110] Vickers said a total of $36 million was raised, but did not say how much was raised by mid 2005. The report to creditors which is part of Exhibit 8 shows that most was raised after 30 June 2005: p 21.

[111] The report to creditors which is part of Exhibit 8 said that audited accounts were not provided for the 2005 financial year.

[112] Proceedings began in 2004 and the third defendant was told about them in July 2004: Exhibit 111. The second defendant received a copy of this in July 2004: M Brannelly p 899. The proceeded as far as the determination of preliminary questions in 2004 (Exhibit 88, a copy of which went to the first defendant in December 2004), from which an appeal was brought in the related proceedings involving Emu Brewery Mezzanine Ltd: [2006] WASCA 105; (2006) 32 WAR 204.

[113] That allegation by ASIC was apparently only against Emu Brewery Mezzanine Ltd in the related proceeding: Exhibit111 letter p 2, Exhibit 88, [2004] WASC 241 at [15]. In any case, there was no evidence to the contrary.

[114] This was not the subject of direct evidence, but as at 30 June 2004 the Westpoint Group had net assets of only $46 million (Exhibit 4), the group collapsed at the end of 2005 (Exhibit 8), and if it had had money of its own it would not have been trying to complete this project with expensive borrowed funds (see Exhibit 8).

[115] If investing for less than a year, 12% per annum plus 2% of the principal is more than 14% per annum. It does not affect the rate of return if payment of the last 2% is delayed.

[116] The tenor of their evidence was that they essentially acted on the approval of the third defendant, without giving much thought themselves to the intrinsic merit (or otherwise) of this investment.

[118] The liquidator did not know: Vickers p 447.

[119] Exhibit 100: see clause 2, Item 9 of Schedule 1, and the definition of project.

[120] Mr P Brannelly was not able to say where the $80 million figure came from: p 1073. It may have come from Exhibit 103, a document provided by Kebbel, but that was a reference to "NTA", not net assets, which figure appeared in Exhibit 4, which they also had, at $46 million. The "Interview with Norm Carey" sent by the defendant to various plaintiffs (eg in Exhibit 69) also referred to NTA of $80 million for 2004, which was directly inconsistent with Exhibit 4.

[121] The evidence, particularly Exhibit 8, suggests Bayshore Mezzanine took all the money it could get.

[122] For reasons given later, this was actually a very risky investment.

[123] There are later allegations in the pleading which pick up these alleged omissions.

[124] M Brannelly p 779, p 836; P Brannelly p 1083.

[125] In any case, Exhibit 8 shows that these allegations were not true.

[126] I am assuming that the hypothetical financial adviser, being reasonably careful and skilful, had not told the client to the contrary.

[127] See statement of claim para 7(b)(v), 10(b)(iv). P Brannelly knew there was no second mortgage: p 1083.

[128] As to this point see Johnston p 1008-1009. M Brannelly thought Kebbel was being paid 5%: p 862. He could have seen that figure in Exhibit 93.

[129] I accept the evidence of Mr Child in this respect, see Exhibit 81 p 2; the evidence of Mr Johnston that such commissions are not uncommon in other areas really does not answer this, but merely tends to confirm that a high commission to a financial planner is an indication of relatively high risk of one kind or another, and suggestive of a need for caution. I think that the duty of care required that the investor be warned that this was a relatively high commission for an income paying investment. I do not accept the evidence of Mr M Brannelly that, whether viewed globally or for mezzanine investment, this was a moderate or relatively low commission: pp 786-788. Johnston said Westpoint commissions were at the top end of the market: p 1004.

[130] Mr P Brannelly denied he was aware of the earlier fundraising: p 1086.

[131] There was evidence they were aware of the proceedings in Western Australia: Exhibit 111, Exhibit 88 sent to the defendant in December 2004, M Brannelly p 899; but this did not reveal that ASIC was alleging that the investors were being misled.

[132] Child p 663, p 669. I am entirely unconvinced by the theory propounded by Johnston that in some way this gave comfort about this investment: p 1040.

[134] It was mentioned as an NTA in a Kebbel marketing sheet Exhibit 103, but that was not consistent with the accounts Exhibit 4, which the defendant had: p 1088. It was also mentioned as an NTA figure in the "Interview with Norm Carey".

[135] See above, re paragraph 11(f)(ii) of the statement of claim. P Brannelly knew there was no second mortgage: p 1083.

[136] The defendant's expert, Mr Johnston, agreed with this proportion: p 998, p 1059.

[137] All this is obvious, and was supported by the evidence of Johnston at p 999, p 1059.

[138] It was covered by the Bills of Exchange Act, but not "regulated" in any meaningful sense, eg by ASIC: Johnston p 1060.

[139] Again, all this is obvious, but see eg. Johnston p 999, p 1063. The defendants conceded the investment was high risk: P Brannelly p 1089, M Brannelly p 871.

[140] I accept Child in this: Exhibit 81; Johnston effectively conceded that it was unusual as an investment offered to the public: p 1050.

[141] As accepted by Johnston p 1062. This was particularly so in a situation where things had been said suggesting to the contrary.

[142] This was also conceded by Mr Johnston: p 1062.

[143] Delmenico v Brannelly [2008] QCA 74 at [17]; with which I respectfully agree.

[144] Holdway v Arcuri Lawyers [2008] QCA 218 at [5] per McMurdo P, citing Damberg v Damberg [2001] NSWCA 87; (2001) 52 NSWLR 492.

[145] This applies to paragraphs 15(a), (b), (c), (g) (i), (h), 16(i) and 17(a), (b), (c), (d), (g), (h), (i), (j)(i) re first and second defendants, and (l). The exceptions, for reasons given earlier, are paragraphs 15(g)(ii) and (iii); 16(a), (b), (e), (f), (j); 17(f), (k).

[146] It was not proved that the defendants had access at the relevant time to all the documents tendered that they produced at the trial, but there was no evidence that the defendants did not have access to them at the relevant time. Given that the defendants gave evidence, it would have been easy enough for them to say this if it had been true. In those circumstances I am prepared to apply a presumption of continuance and infer that they did have either possession of or at least access to those documents at the relevant times: Exhibits 2, 3, and 6.

[147] P Brannelly p 1083, M Brannelly p 779, p 836.

[149] As with the representation in paragraph 7(b)(iv).

[150] This is covered by paragraph 20(d).

[151] P Brannelly admitted he was a tentative or hesitant investor: p 1121. I am not deterred from making that finding by the fact that soon after this, another financial adviser sold him a superannuation product which involved a deposit into an "aggressive growth" fund, which was (for a superannuation fund) high risk and high return: see pp 334, 360. Such a fund has nowhere near the level of risk these promissory notes carried.

[152] This is covered by paragraph 17(c) and 20(e).

[153] This is covered by paragraphs 17(l) and 20(l) concerning the guarantee.

[154] As it happens, the guarantee was worthless: Vickers p 454. That does not excuse the defendant's false statements about it.

[155] This is covered by paragraph 16(i).

[156] That would be entirely natural behaviour for an unsophisticated investor such as Mr Evans.

[157] P 332; the transcript has introduced incorrectly the prefix "un".

[158] Because of the importance he attached to the guarantee.

[159] Because he considered that the defendant was endorsing this investment (p 313) and he took the defendant seriously: p 309, p 324.

[160] That really follows from his evidence about the importance to him of the guarantee, and the investment being secure.

[161] This is an obvious finding; no-one in his right mind would have invested in these promissory notes if all the risks had been properly disclosed and explained.

[162] Some might think that the degree of scrutiny to which I have subjected Exhibit 1 might be more accurately described as cynical and suspicious rather than merely careful; if so, that in my opinion ought to be the approach of a reasonably careful investment adviser. P Brannelly claimed to have read it with a critical eye: p 1084. See also Johnston p 1006.

[163] P Brannelly p 1094. One of the copies in evidence is Exhibit 96.

[164] If he had realised this, he should have been asking questions and not have sold this product until the matter was clarified: Johnston pp 977-978.

[165] The report to creditors which is part of Exhibit 8 said that one of the reasons for the failure of the project was that it was almost entirely funded by debt: p 25.

[166] It was even worse, because the cost of funding was covered by Westpoint, so this presumably had to be recovered from this $11.4 million also: p 864. P Brannelly conceded that the figures suggested the project would not have returned a profit: p 1108.

[167] Johnston p 1046, p 1048 - the loan to value ratio was "very high". A usual profit margin for something like this was about 25%: p 1048. M Brannelly conceded one would normally expect an 80% LVR for this sort of project: p 838. I do not accept his evidence that this is based on gross sale value (p 863), which is obviously nonsense.

[168] The comparison between the figures in Exhibit 1, as at February 2005, and in Exhibit 3, as at September 2003, is also revealing, and another danger sign, but the defendants were not cross-examined about Exhibit 3, so I will say no more about it.

[170] By me, at p 868. The defendant's expert, Mr Johnston, also conceded that the statements were on the face of them inconsistent. P 977. See also P Brannelly: p 1096.

[171] Mr M Brannelly was certainly aware of the details in the On Point brochure, because he incorporated them into his letter of 18 August 2005 to Mr Courtney: Exhibit 13.

[172] On 7 July 2005 someone from Kebbel told him construction was approximately 80%, suggesting no significant advance since February: Exhibit 6. But he was not cross-examined on this.

[173] If this were correct, clearly the notes were not going to be redeemed at the end of June 2006 from the proceeds of sale of the units, another danger sign. Exhibit 114 includes a handwritten note that on 26 July 2005 Mr Pegg was told that the completion date was the end of 2005, not the end of 2006. By the second half of 2005, such a completion date for a project no further advanced than as described in the "Westpoint On Point" brochure Exhibit 96 as at May 2005 should have been seen as implausible.

[174] At least until the matter had been investigated and clarified. Mr Johnston agreed that that approach was appropriate: p 978. See also p Brannelly p 1098, p 1109.

[175] Child p 714 line 50, which I accept.

[176] As conceded by P Brannelly p 903, p 961.

[177] In any case, they amounted to conduct in relation to financial services for the purposes of the ASIC Act: Delmenico v Brannelly [2008] QCA 74 at [39].

[178] There was a lot in this pleading, and indeed in the conduct of the defence generally, which had about it a touch of the Last Stand at the Alamo.

[179] Tellingly, Mr Johnston said that the general understanding in the industry was that the investors had the benefit of the guarantee: p 1037 line 50. It is expecting a lot of the plaintiff that he should have spotted something that went past the industry generally. See also p 1039 and p 1057. The question in re-examination at p 1067, which attempted to get him to change his evidence, was so convoluted and ambiguous that I do not place any significance on his answer.

[180] See also Delmenico v Brannelly [2008] QCA 74 at [40].

[181] Tang Man Sit v Capacious Investments Ltd [1995] UKPC 54; [1996] AC 514 at 522, cited with approval in Baxter v Obacelo Pty Ltd [2001] HCA 66; (2001) 205 CLR 635 at [39]. No question of satisfaction arises before me.

[182] cf. Murphy v Overton Investments Pty Ltd [2004] HCA 3; (2004) 78 ALJR 324, concerning damages under the Trade Practices Act.

[183] cf. Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1 at 14, also concerning damages under the Trade Practices Act.

[184] State of New South Wales v Fahy [2007] HCA 20; (2007) 81 ALJR 1021 at [57]; Roads and Traffic Authority of New South Wales v Dederer (2007) 81 ALJR 1773 at [18].

[185] The same applied to all the plaintiffs, although there were differences in detail.

[186] The assertion of Mr P Brannelly at p 878 to the contrary was wrong, and reflects on the reliability of his evidence.

[188] See Johnston p 1000, p 1040 line 55.

[189] And the Westpoint On Point brochure: Exhibit 47.

[190] Mr Evans said and I accept that his reading of Exhibit 1 was less than cursory (p 352) and that he did not detect anything in it which was inconsistent with what he had been told by the defendants: p 319.

[191] See also p 350: he did not read it with care.

[192] See Currie v Inland Revenue Commissioners [1921] 2 KB 332 at 340-1; Bradfield v Federal Taxation Commissioner [1924] ArgusLawRp 7; (1924) 34 CLR 1 at 7; Carr v Inland Revenue Commissioners [1944] 2 All ER 163 at 166.

[193] See also Inland Revenue Commissioners v Maxse [1919] 1 KB 647 at 657, which test was also met here.

[194] Law, medicine and WS Gilbert's other professions: the army, the navy, the church and the stage.

[195] Douglas, Mullins and Grant "The Annotated Civil Liability Act 2003 (Qld)" (2nd edition, 2008) para 28.16.

[196] Eg Smith v Anderson (1880) 15 Ch D 247 at 261; National Bank of Australasia Ltd v Commissioner of Taxation [1969] HCA 11; (1968) 118 CLR 529; Federal Commissioner of Taxation v Radnor Pty Ltd (1991) 102 ALR 187.

[197] There is a helpful collection of references in the judgment of Sheppard J in State Superannuation Board (NSW) v Federal Commissioner of Taxation (1988) 82 ALR 63 at 73. For the similar issues of whether a person is carrying on the business of moneylending or punting, see respectively Hungrier v Grace (1972) 46 ALJR 492 at 494, and Martin v Federal Commissioner of Taxation [1953] HCA 100; (1953) 90 CLR 470 at 473, but see 479.

[198] Bearing in mind the provision of s 30(2).

[199] This case also arose out of the collapse of the Westpoint group, but was a decision on an application for joinder by the defendants.

[200] The company had really no separate existence except in law: Vickers p 452.

[201] Douglas, Mullins, and Grant, op cit p 233.

[202] Fleming "The Law of Torts" (9th edition, 1998) p 288; Thompson v Australian Capital Television Pty Ltd [1996] HCA 38; (1996) 186 CLR 574 at 581.

[203] P Brannelly p 1080; M Brannelly p 770, p 835.

[204] It was not suggested that any distinction should be made between the first and second defendants for this or any purpose.

[205] Under UCPR r 371(1), (2)(c). The problem was not corrected in later versions.

[206] The submissions for the defendant said that the admission ought to be disregarded (para 69) but the mere fact that the plaintiff went into evidence on this is no reason to ignore the admission. Para 7(c) said things which were quite similar to what was said in Exhibits 13 and 15, and I have no reason to doubt that the admission was appropriate. No application was ever made to withdraw it.

[207] That was consistent with what was said in the letter Exhibit 13. See also Exhibit 114, handwritten entry for 26 July 2005.

[208] An extraordinary proposition given that the letter also said, lower down the same page, in effect that construction of towers C and D had not yet commenced, and it was already 18 August.

[209] That formal relationship was no longer current in August 2005: p 117.

[210] He wanted the defendant's opinion as to the security of the investment (p 85) which was natural under the circumstances. See also p 105. He asked for his opinion: p 110 line 24. He gave Brannelly the opportunity to raise any concerns about the investment (p 119) that is, to draw to his attention the relevant risks. Instead, he received a sales pitch.

[211] That is, in relation to the matters in paragraphs 7(c)(iv) and (v), 9(b)(iv) and (v), and 11(e) and (f)(ii).

[212] As to the matters listed, (a), (b), and (c) were obviously true in view of the evidence about Bayshore Mezzanine, and (g) and (h) follow from the structure set up.

[213] Unlike the position in Evans, there was here no advice, in Exhibit 13 or elsewhere, of the level of commissions paid to the defendants, so there was a breach of the duty in this respect.

[214] This follows from the evidence about the Bayshore Mezzanine structure, and was not in fact in dispute at the trial, although not admitted on the pleading.

[215] Bearing in mind that the information the defendant had about the plaintiff was that he had only a moderate risk profile: p 762 line 37, and see Exhibit 19, Exhibit 9.

[216] There was no breach in failing to advise of the matters in paragraph 20(j) and (l) because Mr Courtney was aware of these matters already.

[217] He was relying on the defendant to advise of any problems with the structure of the investment: p 79. He did not understand that promissory notes were not securities in any real sense: p 75.

[218] Hence paragraph 24 is made out in respect of the matters referred to in paragraphs 15(c), 16(i), 17(c)(ii), (g), (h)(i), and (j)(i) re first and second defendants, 18(a), (b), (g), (h), 20(a), (d), (e)(iii), and (h), and 21A(a), (b), (h), and (i).

[219] $200,000 + $51,682.56 - $4,142.47..

[220] This applies to the matters in paragraphs 15(c), 16(i), 17(c)(ii), (g), (h)(i), (j)(i) re first and second defendants, 18(a), (b), (g), and (h), 20(a), (d), (e)(iii), and (h), and 21A(a), (b), (h), and (i).

[221] Courtney pp 66-7, although significantly he did not arrive at the belief, suggested by Exhibit 11 from Kebbel, that he would have the benefit of a guarantee and a charge: p 76, p 54.

[222] I expect this is why he did not share the view of the other plaintiffs that they had the benefit of the guarantee.

[223] Courtney pp 71-84. He proceeded on the basis that the information from the defendant was more recent than that in Exhibit 1: p 107. This was reasonable, and shows he was relying on the defendant.

[225] So overall I find paragraph 6A(a)(ii) in part, (iii),(iv), and (vi) in part proved.

[226] The statement of claim in paragraph 6C referred only to two specific quotes from this letter. That paragraph was proved by Exhibit 67, but paragraph 11C of the further amended defence alleged that the representations had to be read in the context of the entire letter, and repeated and relied on the entire contents of the letter, which justifies my looking at the letter more broadly.

[227] I note that the typed version for 20 September 2005 does not correspond with the handwritten version, in particular omitting what looks like a reference to the need to pay tax next year, which is no doubt the matter referred to in paragraph 7A(a)(iii), which that pleading attributed to an earlier conversation.

[228] The effect of Mr Summergreene's evidence was that he followed the lead of his wife in a matter such as this, so what matters is what she relied on. I have noted earlier their evidence about what they noted and relied on in the letters, which I accept.

[229] This paragraph is actually marked (i)(i) in this pleading, but as it corresponds to paragraph (j) in Evans I will refer to it as (j).

[230] As to paragraph 21A, I find the facts in paragraphs (a), (b), (c), (h), and (i) proved.

[231] This was a mistake, since leave was given to substitute "6A to 11C" in this paragraph, and paragraphs 25 and 26. But this was the amendment which was actually made, which is all I can act on.

[233] See for example Mr Summergreene: p 514 line 6.

[234] See Exhibits 71, 72; the plaintiff said they received only the first payment of interest: p 512.

[235] $100,000 + $25,293.15 - $1,084.93.

[236] Eg. Mrs Summergreene p 582, line 26, p 589 line 5.

[237] More relevantly, not causally connected to conduct shown to have been negligent or in breach of the Act.

[238] See Exhibit 71, which stated an expiry date of 30 June 2006.

[239] While there they went to the Bayshore site and looked at it: p 594.

[240] The decided to accept the defendant's advice to do this: p 637.

[241] The Summergreenes' application form is not in evidence, but see Exhibit 56. All but 1c could have been repaid at any time.

[243] I am not suggesting that the operation of the proportionate liability provisions can be avoided simply by restricting the plaintiff's pleading; the position rather is that the deficiency in the defendant's pleading, which I am treating as otherwise fatal to a claim for proportionate liability, is not avoided in this case by the relevant deficiency being overcome by the scope of the plaintiffs' pleading against the third defendant. I do not think it is necessary for the defence, in order to activate the proportionate liability provisions, to replicate a pleading which already appears in the statement of claim alleging liability of a concurrent wrongdoer.

[244] Although paragraph 8 followed paragraph 7, it did not allege that the conversation followed receipt of the letter referred to in paragraph 7 and it is obvious from paragraph (b) and the plaintiff's evidence that in fact it preceded it, as could easily have occurred if it took place on 27 July 2005. The defendant usually sent out documents quite promptly after conversations.

[245] Except for the eccentric paragraph numbering; the corresponding paragraphs in Evans were 17(a), (b), (c), (d), (f), (g), (h), (i), (j)(i) in part, (k)(ii), and (l).

[246] $97,000 + $25,554.84 - $2,615.01.

[247] He relied also on the "interview" with Carey which the defendant sent with the letter of 27 July 2005: Exhibit 22.

[248] Mr Radcliffe gave evidence on behalf of the plaintiffs, and it is convenient in relation to this action to refer to him as the plaintiff.

[249] On 25 July 2005 at the meeting P Brannelly said he was giving general advice not personal advice: p 544. This was an admission that he was then, and (in effect) generally, giving advice.

[250] See also Radcliffe p 543 line 49 to p 544 line 3.

[251] On the basis of Mr Radcliffe's evidence the first defendant's idea of a sophisticated investor is not one which I would endorse.

[252] Radcliffe p 425 line 6; see also p 430 line 14.

[253] Radcliffe p 530 line 26; he assumed that the guarantee referred to in the Information Memorandum was that guarantee, which is the real significance of his answer at p 528 line 56. It does not mean he knew the only guarantee was to the company.

[254] $200,000 + $1,008.21 + $51,682.19 - $5,954.78.

[255] Bray v Ford [1896] AC 44 at 51; and see generally Jacobs' "Law of Trusts in Australia" (5th ed 1986) para 1733.

[256] I do not treat his answer at p 237 line 54 as an admission that he knew this was a high risk investment, just that that was suggested by the interest rate in isolation. That was countered by what he was told in the letters.

[257] $50,000 + $13,227.39 - $1,495.89.