For the Good Times Pty Ltd v Coltern Pty Ltd

CATCHWORDS : CONTRACT [129]- Breach of contract- Plaintiff lent $1.1 million to defendant companies in eight tranches- Moneys to be used for property development- Directors of defendant companies agreed to use best endeavours to secure second mortgages for plaintiff- Mortgages never secured- Promise to use best endeavours means obligor must do all that is reasonable in the circumstances to bring about contractual object- Directors did nothing to bring about required result- Held liable. TRADE & COMMERCE [1071]- Consumer protection- Misleading or deceptive conduct- Defendant companies represented to plaintiff that certain development projects were progressing well- Three individual defendants promoters of companies- Two of them left everything to the third to arrange- All knew the third's methods of fund raising- Representations a cause of plaintiff's loss- Claim under ss 52 and 75B of Trade Practices Act made out against all three individuals.

Civil Procedure Act 2005, s 100 LEGISLATION CITED : Fair Trading Act 1987, ss 42, 68, 72 Trade Practices Act 1974 (Cth) ss 51A, 52, 75B, 82, 87

Commonwealth Bank of Australia v Mehta (1991) 23 NSWLR 84 Futuretronics International Pty Ltd v Gadzhis [1992] 2 VR 217 Gould v Vaggelas (1984) 157 CLR 215 Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (1988) 39 FCR 546 Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 CASES CITED : I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109 Kizbeau Pty Ltd v WG & B Pty Ltd (1995) 184 CLR 281 Quinlivan v ACCC [2004] ATPR 42-010 Sutton v AJ Thompson Pty Ltd (1987) 73 ALR 233 Watson v Foxman (1995) 49 NSWLR 315 Yorke v Lucas (1985) 158 CLR 661 Yorke v Ross Lucas Pty Ltd (1983) 68 FLR 268

For the Good Times Pty Limited (P) Coltern Pty Limited (D1) ACN 079 357 243 Pty Limited (D2) Brasic Pty Limited (D3) PARTIES : Sokido Pty Limited (D4) Griffith Land Development Co Pty Limited (D5) Norman Clifford Boyle (D6) Richard Lee Woods (D7) Larry Owen Hanley (D8) Amdoll Holdings Pty Ltd (D9)

R A Parsons (P) COUNSEL : R McKeand SC (D7) D8 in person

Summit Law (P) SOLICITORS : John F Morrissey & Company (D7) D8 in person

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

4835/04 - FOR THE GOOD TIMES PTY LTD v COLTERN PTY LTD

JUDGMENT 1 HIS HONOUR: This case has now become a claim for damages, particularly a claim for damages under the Trade Practices Act 1974 (Cth), in respect of lost investment in subdivisional land in the Riverina area of New South Wales. 2 The plaintiff company is an investment company. It has two equal shareholders who are also its directors. These are Ms Irene Bondarew and Mr M F Junker. They each give the same residential address. The first defendant is a company of which the sixth defendant, Mr Norman Boyle, is the director. Mr Boyle has at all material times been a property developer. The seventh defendant, Mr R L Woods, is an estate agent. The eighth defendant, Mr Larry Hanley, is an accountant. They were involved with Mr Boyle in the activities of the first five defendants in the relevant period. 3 The claims made by the plaintiff, as I have said, are principally for damages under statute. However, there are also claims in contract and against Mr Boyle for monies lent and not repaid. 4 I should note that in addition to the final hearing of the proceedings, there is also before me a notice of motion against the eighth defendant, Mr Hanley, for summary judgment. I will deal with this complication in due course. 5 There were originally eight defendants to the claim. The first five were companies, originally shelf companies, which were used as vehicles for the holding of subdivisional land. These were respectively the first defendant, Coltern Pty Limited, the second defendant, ACN 079 357 243 Pty Ltd, the third defendant, Brasic Pty Limited, the fourth defendant, Sokido Pty Limited and the fifth defendant, Griffith Land Development Co Pty Limited. Of these, the second to fifth defendants have been deregistered and no order is currently sought against them. 6 The first defendant, Coltern Pty Limited, and the sixth defendant, Mr Boyle, though served, did not appear at the hearing, though Mr Boyle had filed a defence and affidavits. It would seem that Coltern has not yet been deregistered, but it is claimed that it has no assets. 7 The hearing commenced before me on 12 February and continued through tol 14 February 2007. Mr R Parsons appeared for the plaintiff; Mr R McKeand SC appeared for Mr Woods, the seventh defendant; Mr Hanley, the eighth defendant, appeared in person. 8 At the hearing affidavits were read from Ms Bondarew, Mr Junker plus two other witnesses for the plaintiff, Messrs Hassan and Phan. Affidavits were also read from Mr Woods and Mr Hanley. Mr Hassan was not required for cross-examination. All other witnesses were cross-examined save for Mr Phan who was not available. I admitted his affidavit, but indicated that I would discount it because he was not cross-examined. 9 I would say that, in general, the basal facts are clear and that there was no material difference in the facts as to the dealings between the plaintiff and the defendants. Where the factual contest lies is as to what extent Mr Woods and Mr Hanley were involved or not involved with the operation of the various companies involved in the case. 10 The plaintiff lent or invested $1.1 million to the first six defendants and unless there is some recovery in these proceedings, all that money has been lost. It would seem that the plaintiff borrowed the $1.1 million and on-lent it to the first six defendants on terms that it would receive security and a considerable rate of interest, possibly a guaranteed 75% per year. The $1.1 million was not lent in one tranche but rather in eight tranches as follows:

No Date Loan To Amount Property Designation 1 29.5.2001 Coltern $200,000 Coltern Land Coltern transaction 2 24.7.2001 ACN $200,000 ACN Land ACN No 1 transaction 3 24.7.2001 Tumut Valley $100,000 Boyle transaction 4 15.8.2001 Brasic $300,000 Brasic Land Brasic transaction 5 15.8.2001 ACN $50,000 ACN No 2 transaction 6 15.8.2001 Sokido $80,000 Griffith Sokido No 1 transaction Land 7 28.8.2001 Sokido $70,000 Do Sokido No 2 transaction 8 20.12.2001 Sokido $100,000 Sokido No 3 transaction

11 There is no doubt at all that all the monies claimed by the plaintiff were actually lent or invested on or about the dates set out in the above table. 12 I need briefly to give some details of each of these transactions. 13 The Coltern transaction involved Lots 2 and61 DP 259723 at Jindabyne East. The proposal was to subdivide this land into 31 lots and sell house and land packages. 14 The plaintiff claims $389,000 (which includes an interest component) from Coltern in respect of this transaction. 15 The ACN transactions involved a similar project with respect to land at Tumut owned by Tumut Valley Property Development. 16 The plaintiff claims $200,000 from Messrs Boyle, Woods and Hanley jointly and severally in respect of the No 1 transaction and $50,000 from the same persons in respect of the No 2 transaction. 17 The Boyle transaction is a simple loan transaction considered below. The plaintiff claims $100,000 plus interest from Mr Boyle. 18 The Brasic transaction involved a similar project at Booral Avenue, Tumut. 19 The plaintiff claims $300,000 from Messrs Boyle, Woods and Hanley, jointly and separately in respect of the Brasic transaction. 20 The Sokido transactions commenced with Sokido agreeing to purchase land in Walla Avenue, Griffith (known as "the Griffith Land") from Mr and Mrs Zirilli. The deposit was paid from loan monies from Mr Junker. Sokido could not raise the finance to complete and, despite several extensions of time and increase of the purchase price, the Zirillis eventually terminated the contract. The Zirillis then sold the Griffith Land to a new company, Griffith Developments Company Pty Ltd, of which Messrs Boyle and Woods were the directors, for $1,600,000. 21 The plaintiff claims $80,000 plus interest from Messrs Boyle and Woods jointly and severally in respect of the Sokido No 1 transaction, $70,000 plus interest from the same persons in respect to the Sokido No 2 transaction and $100,000 plus interest from the same persons in respect of the Sokido No 3 transaction. 22 The further amended statement of claim claims the following relief (omitting relief not pressed at the trial):

1. Judgment against Coltern for $389,000 plus interest;

2. Judgment against Mr Boyle for $150,000 + $130,000 plus interest;

3. Damages against Coltern and each of Messrs Boyle, Woods and Hanley:

(a) for breach of contract, (b) pursuant to s 82 of the Trade Practices Act 1974, for breaches of s 52, (c) pursuant to s 68 of the Fair Trading Act 1987 for breaches of s 42;

4. Orders against each of Coltern and Messrs Boyle, Woods and Hanley under s 87 of the Trade Practices Act (or s 72 of the Fair Trading Act ) such as will compensate the plaintiff for damage suffered by contraventions of those Acts. 23 The Fair Trading Act barely received a mention at the trial. The claim under this legislation was not abandoned, but was put as a back up claim. I will thus focus on the provisions of the Trade Practices Act. 24 In his final submissions and in his written submissions, Mr Parsons noted that the plaintiff's claim could be considered in four categories (I will change the order of the claims as I consider that it is more logical to deal with them in the order I have chosen):

A. claim against Coltern for the debt of $200,000 advanced 29 May 2002 plus agreed interest (the Coltern transaction);

B. claims against Mr Boyle: (1) for debt for $100,000 advanced 24 July 2001 plus agreed interest (the Boyle transaction); and (2) for $100,000 advanced to Sokido guaranteed by Mr Boyle on 20 December 2001 plus agreed interest (the Sokido No 3 transaction);

C. claims against each of: (1) Mr Boyle; (2) Mr Woods; and (3) Mr Hanley as parties to various shareholders' agreements.

D. claims against: (1) Mr Boyle; (2) Mr Woods; and (3) Mr Hanley for ancillary liability in contraventions of s 52 of the Trade Practices Act . 25 I will deal with those claims in the order I have listed and then consider:

E. other claims; F. how the plaintiff's money came to be lost;

H. the strike out motion with respect to Mr Hanley; and

I. the result of the case. 26 I should note here that Mr McKeand protested that the claims are not in strict accordance with the pleadings and reminded me that allegations of misrepresentation and the like should not be taken seriously unless they are clearly pleaded and particularised. I will come back to this point. 27 It is necessary to deal with the cases against the first, sixth, seventh and eighth defendants separately. Although the majority of the time at the hearing was spent in the case against the only appearing defendants, Mr Woods and Mr Hanley, it is necessary first to deal with the case against the first and sixth defendants. 28 A. The claim against Coltern is in respect of what I have designated "the Coltern transaction". It is of little value to spend much time on this matter as it is common ground that Coltern has no assets. The plaintiff's evidence shows that a loan was made pursuant to a document called a Loan and Guarantee Agreement of 29 May 2001. The agreement is a deed. It indicates that there is a loan, principal of $200,000; interest is $189,000. The loan was secured over Lots 2 and 61 Kunama Drive, Jindabyne East (this is of no moment because the first mortgagee took the land). 29 The borrower agreed to repay the principal sum no later than the termination date which appears to be a date 12 months from the date of the agreement. The document is odd in that the guarantor is the same person as the borrower, but this is of no moment. 30 I am satisfied that the money was not repaid and accordingly, the plaintiff is entitled to a verdict for $389,000 plus interest from 29 May 2002. The parties agreed that the specified rate of interest would be 12% and that is the interest which must be paid from 29 May 2002 to the date of signing judgment. On my calculations this is $241,180 to 29 July 2007. Thus, the verdict under this item must be for $630,180. 31 B(1) I have to consider under this head what I have designated the Boyle transaction. 32 It is probably wise to commence with Ms Bondarew's evidence as to her initial contacts with Mr Boyle. 33 She says in her affidavit of 9 June 2005 that she saw an advertisement in The Sydney Morning Herald of 5 May 2001 which read as follows: " REAL ESTATE Joint Venture We have a unique niche market opportunity in strategically located regional areas specifically targeted to the Govt First Home Grant Scheme. Developments are DA approved and ready to start with exceptional returns fully securitised with virtually no risk exposure. Developer requires $100-$300K or part thereof with returns of up to 100 pc within 12 months. Genuine enquiries only. Phone…" 34 In response to that advertisement Ms Bondarew telephoned the number mentioned in the advertisement and left a message. That number belonged to Mr Boyle who returned her call on 7 May 2001. Ms Bondarew says that she queried Mr Boyle about the passage in his advertisement which said that the loans were "fully securitised with no risk exposure". She asked him what form of security he was offering. Mr Boyle said, "If you provide the funds, in addition to being offered an interest in the project, you would also be given a second registered mortgage over the particular property to secure the monies advanced." 35 Ms Bondarew says that she replied, "That's good because we won't invest unless our money is secured." 36 They arranged a meeting. In fact, the parties had several meetings between May and July 2001 during which time the Coltern transaction and the ACN No 1 transaction were considered and consummated. 37 For ease of reference, I will refer to Ms Bondarew, Mr Junker and Mr Boyle as "the principal parties" and to the home shared by the first named two as the "plaintiff's home". 38 At one meeting between the principal parties prior to 29 May, Mr Boyle produced what he called his standard shareholders' agreement. Mr Junker said that the plaintiff would need the mortgage documents as well. Mr Boyle replied that Larry Hanley would draw them up. 39 On 29 May, the principal parties had another meeting. Mr Boyle said, "I brought the documents with me. They have already been signed and dated today. As soon as you sign them we are in business." Ms Bondarew mentioned the term of the loan as 12 months and asked whether that was a realistic expectation to which Mr Boyle replied that "If anything, it will be less - more like around nine or ten months". 40 Mr Junker said, "Where is the mortgage? We need a mortgage before we can advance the money". Mr Boyle replied, "Larry Hanley's company, High Meadows Pty Limited has also lent on this property. He has already invested $200,000. At the moment he is preparing a second mortgage for both his company and yours for the total advanced. That could take a couple of days but I have minutes of a directors meeting of Coltern held today. Don't worry this is as good as a mortgage, I have signed the minutes as the chairman, the company agreed to sign the mortgage. There won't be any problems. I would appreciate the cheque today to keep things moving on the project. The sooner we get on with things, the sooner we will all be paid out and make a profit." The plaintiff's officers then handed Mr Boyle a cheque for $200,000. This is the Coltern transaction. 41 In June, the plaintiff decided to invest another $200,000 with Mr Boyle's companies (this is the first ACN advance). The principal parties met at the plaintiff's home on 11 June 2001. Mr Boyle brought with him signed documents for the loan in respect of the ACN company's Tumut project. Mr Junker asked where the mortgage documents were, and Mr Boyle replied, "Same story as Jindabyne, it is going to be a group mortgage. There is another investor Sam Hassan, who has advanced $100,000 for Tumut. Larry is preparing that mortgage as well as the Jindabyne mortgage. Here again are copies of the minutes of a meeting of Tumut Valley which is more than enough evidence until the mortgage is signed. When do you think I can have a cheque?" 42 In late June, there was a meeting of the principal parties with Mr Woods and Mr Hanley at Mr Woods' office at Neutral Bay. Mr Woods told the gathering that he was to market and sell the house and land packages and Mr Hanley said that he was the company secretary and accountant for the projects and was responsible for all the paperwork and accounting procedures. 43 In early July 2001, the principal parties again had dinner at the plaintiff's home. Ms Bondarew again asked what was happening with the mortgages and was told that Larry Hanley was looking after them but was very busy because of the end of the financial year. 44 She then asked how the projects were going. Mr Boyle said that whilst the Tumut project was going very well, he was getting frustrated waiting for first mortgage funding to develop the property and that meant that he was continually short of funds to keep the work progressing. 45 Mr Boyle then asked, "Is there any chance you could make a short term commercial loan of $100,000 to keep the project moving quickly, so we can all get paid out as soon as possible?" Ms Bondarew replied, "We can think about it. What are you offering in the way of interest?" Mr Boyle replied, "If you can provide us with $100,000, I will return the money with $50,000 interest within 6 months. This can then all be rolled over into another development I have in Tumut. It will be a private development - just you and me." The plaintiff agreed to lend $100,000. This was the Boyle transaction. 46 The monies for the ACN No 1 transaction and the Boyle transaction became available in mid-July 2001. A bank cheque for $100,000 was provided to Mr Boyle and the evidence shows that it was banked in an account styled "Tumut Valley Property Finance". That was a business the registered proprietor of which was Mr Boyle. 47 There was another meeting of the principal parties at the plaintiff's home on or about 21 July 2001. 48 At this meeting Mr Boyle said, "We have got another investment opportunity in relation to a property at Booral Avenue, Tumut. We have a DA approved for 28 house and land package lots in respect of this land. It is a lovely development. All of the lots have views over Tumut Valley and to the mountains beyond and will be fully serviced and secured. This would be another great investment for you too." The plaintiff agreed to lend $300,000. This is the Brasic transaction. 49 On 25 July 2001, Mr Boyle delivered the shareholders' agreement in relation to this project, the Brasic project, together with a loan and guarantee agreement. Mr Boyle said, "You will get the mortgage document at the same time as you get the others. Larry is working on them at the moment and it should not be too much longer." 50 In early August 2001, the principal parties met at the plaintiff's home and Mr Boyle told the plaintiff's officers that Mr Hassan was unable to lend the $100,000 he had intended to lend on the ACN project and could only come up with $50,000. The plaintiff agreed to advance the other $50,000 (this is the second ACN advance). At about this time Mr Junker asked, "Where are the second mortgage documents for Tumut and Jindabyne?" to which Mr Boyle replied, "I am still waiting on Larry. We will get your copies to you as soon as they have been registered." 51 During August, the plaintiff's officers continued to meet with Mr Boyle approximately once a week and had telephone conversations with him every few days. They say that Mr Boyle would often say, "Tumut and Jindabyne are going well. They are both great projects." 52 I will deal with subsequent facts when dealing with the claims under the Trade Practices Act. What I have already set out is sufficient for present purposes. 53 Exhibit 39 is a piece of paper bearing date 12 July 2001 which suggests that the $100,000, the Boyle transaction, was in respect of something at Griffith (as will appear later in these reasons, Sokido had agreed to purchase some land at Griffith). However, the only real evidence before me is that which I have set out. 54 Mr Boyle did not give evidence, and, apart from the meeting at Neutral Bay, Messrs Woods and Hanley did not take part in making the arrangements for loans. 55 There is no reason to discount the evidence of Ms Bondarew and Mr Junker and I accept it. From this, it would seem inevitable that there must be a verdict on the Boyle transaction for the plaintiff for $150,000 plus interest against Mr Boyle. 56 The term of the loan is unclear, but it would appear to be "short term". Although it probably will not make much difference in the long run, I will order interest from 24 July 2002 at the court rate, which on my calculation is $68,375, making a verdict for $238,375. 57 B(2) The second part of claim B is the Sokido No 3 transaction. The $100,000 was advanced to Sokido as per Exhibit 24. The contract was that the loan was $100,000, the interest $30,000, the loan was to be repaid on 14 February 2002 and Exhibit 35 shows it was guaranteed by Mr Boyle. The loan has not been repaid, Sokido has been deregistered and there is no answer to the plaintiff's claim that it should have judgment against Mr Boyle for $130,000 plus interest at the court rate from 14 February 2002, which on my calculations is $64,133 making a verdict for $194,133. 58 C. Claim C has three parts. I will first deal with facts and circumstances which affect all three parts and then consider the claim against each of the relevant defendants separately. 59 At one of the early meetings, Mr Boyle provided the plaintiff's officers with a sample shareholders' agreement. He indicated that this was the standard way in which he proceeded to obtain investors' funds. The shareholders' agreement used in the Coltern transaction, which is exhibit PX03, is standard to the agreements used generally between the plaintiff and the various defendants. 60 There were four shareholders' agreements. Each was in an identical form. However, not all were signed by all of the individual defendants. It is thus necessary to deal first with the common text and then with the individuals who were parties to those agreements. 61 The Coltern shareholders' agreement bears date 29 May 2001. It notes that its parties are (1) Norman C Boyle; (2) Larry Hanley; (3) Richard L Woods; (4) For the Good Times Pty Limited; and (5) Dhatt Enterprises Pty Limited. 62 I will not set out all the provisions of the agreement. Basically it provided that there would be 1,000 shares; that Mr Boyle would have 320 shares, Mr Hanley 320 shares, Mr Woods 60 shares, Mr Junker and Ms Bondarew 150 shares between them, and another investor, Mr Dhatt, 150 shares; that Mr Junker and Ms Bondarew would loan $200,000; that Mr Dhatt would loan $200,000 and that there was an existing loan by Mr Hanley of $200,000. 63 The term of the loans was 12 months from the date the funds were received and the company guaranteed a minimum return on shareholders' loans of 75% of the expected return, that is, $142,425 with interest at 12% if the loans and expected returns were not repaid within 12 months. The shareholders' loans were to be secured by second mortgage. 64 The key parts of the agreement are that the day to day management of the company was committed to Messrs Boyle, Hanley and Woods who were designated managers. Mr Boyle was to be paid a weekly management fee of $1,100 and expenses and the other managers were to be paid on a contractual basis. The directors of Coltern were Messrs Boyle and Hanley. The directors were to be paid $20,000 per annum with Mr Boyle, as secretary, receiving an additional $10,000 per annum. 65 The agreement provided that the directors and shareholders would meet at least every calendar month and that minutes of such meetings would be promptly circulated. 66 The shareholders' loans (which included the loan from the plaintiff) were to be secured by a second mortgage and there was a cross reference to the "Loan and Guarantee Agreement". 67 The following appeared under the heading "Operation": "The parties agree that they shall use their best endeavours to ensure that the company conducts business in accordance with the applicable laws and its Memorandum and Articles, this Agreement and any deed or agreement entered into pursuant to this Agreement." 68 Although the document purported to be a deed, it was not properly attested because Mr Boyle's signature was witnessed by Mr Hanley, and Mr Hanley's signature by Mr Boyle. It was initially thought that Mr Woods never signed the document, but at the very end of the evidence a copy of the document signed by Mr Woods was tendered. 69 With respect to the Coltern shareholders' agreement (similar allegations are made in respect of the first ACN shareholders' agreement, the Brasic shareholders' agreement, the second ACN shareholders' agreement and the Sokido agreement), it is alleged by the plaintiff that: "(i) Messrs Boyle, Woods and Hanley failed to hold directors and shareholders meetings of Coltern at least once every calendar month after the Plaintiff advanced the Coltern Principal to Coltern; (ii) Messrs Boyle, Woods and Hanley failed to ensure the management of Coltern was undertaken at all times (after the Plaintiff advanced the Coltern Principal to Coltern) by the Coltern Management; (iii) Messrs Boyle, Woods and Hanley failed to provide quarterly accounts for Coltern to the Plaintiff in each quarter after the Plaintiff advanced the Coltern Principal to Coltern which included; (a) a report for financial performance of the business of Coltern against budget; (b) a description of material activities undertaken by Coltern; (c) summary of unaudited profit and loss and cash flow statement for Coltern; (d) a balance sheet for Coltern; and (e) a report of aged debtors and creditors balances. (iv) Messrs Boyle, Woods and Hanley failed to ensure the Coltern Management provided the Plaintiff with copies of half yearly accounts for Coltern within a few months of the end of each half year after the Plaintiff advanced the Coltern Principal to Coltern; (v) Messrs Boyle, Woods and Hanley failed to provide the Plaintiff with annual accounts for Coltern within 3 months of the end of each financial year and after the Plaintiff advanced the Coltern Principal to Coltern; (vi) Messrs Boyle, Woods and Hanley failed to ensure that Coltern granted the Coltern Mortgage to the Plaintiff over any of the Original Coltern Land, the Specified Coltern Land or the Coltern Land; (vii) Messrs Boyle, Woods and Hanley failed to ensure that Coltern repaid the Coltern Principal to the Plaintiff together with an expected return of $189,900.00 (or guaranteed return of $142,425.00) within 12 months of the date of receipt of the Coltern Principal; and (viii) Messrs Boyle, Woods and Hanley failed to ensure that Coltern paid the Plaintiff interest on the Coltern Advance calculated at the applicable Additional Interest Rate from the date which was 12 months after the date on which the Plaintiff advanced the Coltern Principal to Coltern." 70 I should add that some subsidiary allegations were made with respect to breaches of the other shareholders' agreements, but essentially the main claims were as I have set out in respect of Coltern. 71 There is no doubt that Messrs Boyle, Woods and Hanley each signed the Coltern and Brasic agreements. 72 There is no copy of the shareholders' agreement in the ACN company signed by Mr Woods in evidence. Mr Parsons asked me to draw the inference that this was in fact signed by Mr Woods. I do not consider that there is sufficient material to enable me to draw such an inference. The ACN agreement was signed by Mr Hanley. 73 The Sokido agreement was only signed by Mr Boyle, and, although it purports to show a signature of Mr Woods, it is clear that that signature was in fact affixed by Mr Boyle. 74 The Loan and Guarantee Agreements were in standard form. They provided, inter alia, that the loans made to the various companies would be secured because (cl 7) "the Borrower will give to the Lender security in the form of a second ranking Mortgage over the Property (in a form acceptable to the Lender) as security for the payment to the Lender of the Total Owing and also as security for the due performance of the Borrower's other obligations thereunder." 75 It is useful to note here who were the directors, managers and secretaries of the various companies and for what period they held office. 76 Exhibit DX1376, a search of ASIC records, shows that Coltern was incorporated on 4 April 1995. Mr Boyle was appointed a director on 18 December 1998, Mr Hanley was a director from 18 December 1998 to 7 May 2003 and Mr Woods was a director from 29 April 2003. Mr Hanley was the secretary from 18 December 1998 to 10 September 2003 and Mr Boyle was the secretary from 10 September 2003. 77 Exhibit DX1377, another search of ASIC records, shows that ACN was incorporated on 16 July 1997. Mr Boyle was a director from 18 May 2001, Mr Woods was a director from 20 November 2002 and Mr Hanley was a director between 16 December 1998 and 20 November 2002. Mr Hanley was the secretary from 16 December 1998 until 18 May 2001 and thereafter Mr Boyle was the secretary. The inference from the search is that this company was originally one where Mr Hanley's company High Meadows Pty Ltd owned all the issued shares, but that the company was acquired by the Boyle interests in 2001. 78 Exhibit DX1378, another search of ASIC records, shows that Brasic was incorporated on 26 August 1999 and was acquired by the Boyle interests in 2000. Mr Boyle was a director from 29 June 2000, Mr Woods from 20 November 2002 and Mr Hanley between 25 July 2001 and 20 November 2002. Mr Boyle was its secretary from 29 June 2000. 79 Another search of ASIC records annexed to Mr Junker's affidavit, shows that Sokido was incorporated on 17 May 2001. Mr Boyle was a director from incorporation, Mr Woods was a director from 1 June 2001 until 28 November 2002. Mr Boyle has always been the secretary. There are 200 issued shares, 90 held by each of Messrs Boyle and Woods and 20 by Mr Hanley. 80 Exhibit DX1375, another search of ASIC records, shows that Griffith Development Co Pty Ltd was incorporated on 23 April 2003. For the whole of its existence, Messrs Boyle and Woods were its directors and Mr Woods its secretary. 81 Exhibit PX503, another search of ASIC records, shows that Leeton Land Company Pty Ltd was incorporated on 4 September 2001. Messrs Boyle, Woods and Hanley all became directors on that date, Mr Hanley ceased to be a director on 20 November 2002. Mr Boyle has been its secretary at all times. 82 Essentially, then, the position is as pleaded in the statement of claim; that at all material times Mr Boyle was a director of Coltern, ACN, Brasic, Sokido, Griffith Development and Leeton Land Company Pty Ltd. Mr Hanley was a director at all material times until 20 November 2002 of Coltern, ACN, Brasic and Leeton Land Company, and indeed was a director of Coltern through to 7 May 2003. He was also a director of a corporation known as High Meadows Pty Ltd. Mr Woods was a director of ACN and Brasic after 20 November 2002, a director of Coltern after 29 April 2003, a director of Sokido up until 28 November 2002, and of Griffith Development from 23 April 2003. He was also at all material times a director of the Leeton Land Company. 83 The plaintiff claims $200,000 plus interest in respect of the Coltern transaction, $250,000 plus interest in respect of the two ACN transactions and $300,000 plus interest in respect of the Brasic transaction from all three of Messrs Boyle, Woods and Hanley, and additionally from Mr Boyle and Mr Woods in respect of the Sokido transactions, a total of $250,000 plus interest, though this includes the loan of $100,000 in the Sokido No 3 transaction. 84 Mr Parsons says it is quite evident that no-one connected with Coltern (or any of the other companies which signed identical agreements) used best endeavours to ensure that there was a second mortgage provided to the investors. Not one mortgage was actually effected. Not only that, but mortgages were granted to third parties to secure collateral obligations, and indeed, those mortgages resulted in the Coltern and Brasic lands being sold by the mortgagees. 85 As Mr McKeand correctly submitted, a promise to use best endeavours must be construed in the context in which it was made, it includes an obligation not to hinder or prevent the fulfilment of the relevant purpose and the obligor is bound to do all that he or she reasonably can do in the circumstances to achieve the contractual object, but no more. Those propositions stem from the judgment of Gibbs CJ in Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41, 64. 86 It is, of course, necessary for the plaintiff to prove that Mr Woods and the other gentlemen did not use their best endeavours rather than Mr Woods and others to prove that they did use their best endeavours to carry out their contract. 87 Mr McKeand puts that the plaintiff's case really is that the result did not come about. The plaintiff says that this is a gross oversimplification. 88 The key factor in this head of claim is that there were no regular meetings of directors, managers or shareholders, that there was no regular reporting and that there were no accounts produced. There was no attempt to see that investors' money was directed for the purpose for which it was lent. 89 C(1) With this background, I will now turn to the case against Mr Boyle. 90 As mentioned earlier, Mr Boyle did not appear at the hearing. 91 There seems little doubt that Mr Boyle was the person with the most influence over the companies. He was a professional property developer and appears to have been the person who found the sites, arranged for advertisements to be placed to attract investors, interviewed investors and provided documentation. 92 The whole of the evidence shows clearly that Mr Boyle was solely or jointly in charge of each of the companies where a shareholders' agreement was in force. It does not appear that in any of those companies there was any attempt to comply with the terms of the shareholders agreement. The document seems to have been considered by Mr Boyle merely as something that "the girls" would type up when an investor needed assurance. 93 It is quite clear that no regular directors' meetings were held and that no real attempt was made to provide the plaintiff with a second mortgage over any of the relevant lands. 94 Draft mortgages were produced in September 2002: I will deal with the facts surrounding this event when considering the Trade Practices Act claim. 95 Mr Boyle did virtually nothing to fulfil the other obligations to the plaintiff under the shareholders' agreements. Indeed, he seems to have treated them as mere bits of paper to be churned out when needed to assist his fund raising. 96 It is true that the plaintiff could have been more active in protesting and taking some action of its own to force the issue. However, the reality is that it trusted Mr Boyle and left things to him, in hindsight, for too long. 97 The breach by Mr Boyle of each of the shareholders agreements is plainly established. 98 What follows from this will be considered under heads F and G. 99 C(2) Mr Woods is a real estate agent by profession and he carries on business in Neutral Bay, far removed from the lands in the Riverina which Mr Boyle was developing. Mr Woods describes his participation in the schemes as being "on the marketing side". He was to use his skills as a real estate agent in selling the lots that would be created by the subdivisional activities of the various companies. 100 Mr Woods' counsel made, inter alia, the following submissions:

(a) When working out whether a person has breached a promise to use best endeavours, one must consider the position of the relevant contracting party and his or her capacity to bring about the results of which the plaintiff complains. It has not been shown that Mr Woods omitted or failed to do anything within his capacity to bring about the result sought by the plaintiff;

(b) The evidence does not allow a finding of fact that Mr Woods was a party to the ACN shareholders' agreement;

(c) There is no sufficient material to show that the damages suffered by the plaintiff are equal to the amount of investment lost. 101 I will deal with proposition (c) under head G. I have already noted my agreement with proposition (b) at [72]: I will now consider (a). 102 The eight loans took place between 25 May 2001 and 20 December 2001. Mr Woods was not a director of Coltern, Brasic or ACN for any part of this period but was a director of Sokido when loans were made to it from 15 August 2001. 103 Mr Woods did, however, sign the shareholders' agreements for Coltern and Brasic. 104 Those two shareholders' agreements stated that Mr Woods was one of the persons who was a manager of the relevant project. Mr Woods knew that the agreements were in a standard form and contained this provision. 105 Mr McKeand submits that, in the whole of the circumstances, being a manager was insufficient of itself to show that Mr Woods breached the shareholders' agreements. He refers to the fact that Ms Bondarew's primary affidavit shows that, apart from one meeting at Mr Woods' office at Neutral Bay, all the plaintiff's dealings were with Mr Boyle. Further, in those dealings and at the Neutral Bay meeting, Mr Woods' role was said to be marketing and sales. 106 However, Mr Woods knew that the investors had been told he was one of the managers. He signed agreements that he would use his best endeavours to ensure that, inter alia, the company carried out the shareholders' agreements. There is no material to show that Mr Woods did anything to bring about the required result. 107 Indeed, both Messrs Woods and Hanley gave evidence and from what they said and did not say, the evidence clearly makes me conclude that not only did they do nothing to bring about the fulfilment of the shareholders, agreements, they left everything to Mr Boyle even when it was clear that Mr Boyle was not doing what one would have expected a managing partner to do. 108 There was a promotional launch of some of the development projects at Edgecliff in mid September 2001. Ms Bondarew and Mr Junker were present, as was Mr Woods. Ms Bondarew said in her affidavit that "[she] had become aware [that Mr Woods] was taking a more active role in the various projects", but I disallowed that evidence and there was no primary material put forward to establish that contention, except, perhaps, in the case of Sokido to which I will refer subsequently. 109 However, as Mr Woods did not sign the Sokido shareholders' agreements, what happened with that company is irrelevant except to the extent it might show that Mr Woods was more intimately connected with all the projects than merely in sales and marketing. However, any inference that might be drawn from Mr Woods' conduct with Sokido must be discounted because he was a director of Sokido. 110 Mr McKeand places considerable reliance on the fact that Mr Woods was not a director or the secretary of any of the companies with which he signed a shareholders' agreement, and thus he put, Mr Woods was not in any position to call meetings of directors or shareholders. 111 Mr Woods also points to the fact that he only had 60 of the 1,000 shares, his role was marketing and he says it is quite unreasonable to think that he was in a position to be able to influence what Coltern and Brasic did. 112 In general, I accept Mr Woods' evidence that his prime role in the schemes was sales and marketing. I do consider, however, that in some respects he was more involved than merely marketing. 113 Cross-examination of Mr Woods showed that he was fully aware of Mr Boyle's methods of raising mezzanine finance for the developments. He was aware of the standard shareholders' agreements (of course, he actually signed two of them himself). 114 Mr Woods kept saying that he was the marketing man and that he left everything to Mr Boyle. However, he says that he did realize that proper statements were not being prepared and, (T114) when he realized that, he expressed concern to Mr Boyle on several occasions that the accounts were not available and demanded that the books and records be handed to Mr Hanley to prepare the accounts. This would have been in about September 2002. Mr Boyle did not comply with these demands initially, but did ultimately. 115 Mr Woods knew that he was being held out as a manager and that the flavour of the shareholders' agreements was that the team of Boyle, Woods and Hanley were promoters in place and were the team that was to bring the projects to fruition. 116 Mr Woods signed the Coltern and Brasic Agreements. He was to use his best endeavours to make the projects succeed. He did nothing (except the marketing) even though he could clearly see Mr Boyle was on a frolic of his own. It seems to me, in those circumstances, that Mr Woods breached this covenant. 117 Mr McKeand also made submissions to the effect that, even if I did find a breach of the best endeavours clause, the plaintiff could not establish that the damages claimed by the plaintiff flowed from the breach. It is unnecessary to deal with the majority of those submissions in view of my finding on liability. However, insofar as I need to consider damages, I do so in Section G. 118 C(3) Mr Hanley merely says in his submissions that he denies liability over the various shareholders agreements. 119 Mr Hanley is an accountant practising in Bowral. He had been associated with Mr Boyle in other schemes. He claimed merely to have been the accountant for the company. He certainly was that, but the evidence goes further as I will show shortly. 120 A lot of what I have said about Mr Woods' case is directly applicable to Mr Hanley. However, Mr Hanley's position is not as strong as Mr Woods'. First, he was a director of all the companies other than Sokido when the transactions took place in 2001. He gave evidence that he knew that he was personally under an obligation to bring about the situation whereby the companies created second mortgages in favour of the plaintiff, but that he did nothing about it other than to prepare forms of mortgage (T188). 121 Mr Hanley signed the shareholders' agreements in respect of Coltern, ACN and Brasic. 122 Mr Hanley says in his affidavit that he prepared mortgages in respect of the three companies mentioned in the previous paragraph, but, at Mr Boyle's request, retained them until about 15 September 2002. He then handed the mortgages to Mr Boyle. He understands that the plaintiff signed them and Mr Boyle retained them, but the mortgages were never returned to him. I have already dealt with other aspects of this when considering the case against Mr Boyle. 123 The clear scenario was that Mr Boyle was the governing force in this development. As far as the mortgages were concerned, Mr Hanley did what he had to do. The mortgages were prepared and handed to Mr Boyle to be executed by the plaintiff. 124 However, the same reasoning as would make Mr Woods liable on the covenant to use best endeavours would apply to Mr Hanley, indeed, a fortiori, as he was a director. 125 It follows that Mr Boyle is liable in contract in respect of all transactions and Mr Woods in respect of the Coltern transaction and the Brasic transaction and Mr Hanley in respect of the Coltern, Brasic and ACN transactions. How this must be reflected in damages or other relief is considered in section G. 126 D. Section 52 of the Trade Practices Act provides that a corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive. 127 Section 82 of the Trade Practices Act, when read in conjunction with section 75B(1) empowers a court to make an award of damages against any person directly or indirectly knowingly concerned in a contravention of the Act by a corporation. 128 Section 87 of the Act sets out a series of other orders that a court may make if it determines that there has been a contravention of the Act. 129 The further amended statement of claim alleges that each of the representations described in that document as the "Coltern Representations", the "ACN Representations", the "Brasic Representations", the "Sokido Representations", the "Second Representations", the "December Representations", the "Sokido Progress and Profit Representations" and the "Griffith Development Representations" were misleading or deceptive or likely to mislead or deceive. 130 As far as the Coltern Representations are concerned, the allegation is that the following representations were made and were misleading or deceptive:

(i) That the joint venture opportunities to develop the Jindabyne Land were ready to commence;

(ii) That such opportunities provided exceptional returns;

(iii) That investors would be provided with security and that there would be no risk exposure;

(v) That the plaintiff would receive 7.5% interest in the project for each $100,000 invested;

(vi) That the plaintiff would be given a second registered mortgage over the Coltern Land. 131 The complaints about the ACN representations are similar, but include additional allegations that the company did not own the relevant land when the representations were made, the plan of subdivision was not registered within the six weeks as represented, construction of houses on the land did not commence within six weeks as represented, and nothing was done to see that budgetary goals were achieved. 132 The Brasic complaints are similar to Coltern. 133 The Sokido representations are similar to the Coltern representations with the additional claim that Sokido never owned the relevant land. 134 The "Second Representations", the "December Representations", the "Sokido Progress and Profit Representations" and the "Griffith Development Representations" also concern the Griffith Land being purchased by Sokido. 135 The Second Representations and the Sokido Progress and Profit Representations are said to be misleading as it was represented that the Griffith Land development was progressing well, whereas in fact, no progress at all was being made as the purchase of the land had not even been completed. 136 The December Representations were that, if the plaintiff advanced a further $100,000 to keep the Griffith Development progressing it would only be needed over the Christmas period. This was false. 137 I have already noted the initial advertisement and the conversations between the principal parties up to mid July 2001. I now need to continue to set out the relevant facts on which the plaintiff relies, and the reaction of Messrs Woods and Hanley to what the plaintiff's witnesses say. These additional facts principally relate to the Sokido advances. 138 In late July or early August 2001, the principal parties were at the plaintiff's home when Mr Boyle said that "Richard [meaning Mr Woods] and I are very excited about a house and land development a company we have called Sokido owns in Griffith. It is such a progressive and prosperous town. The project is an 83 lot subdivision. I will leave you a brochure. Have a think about it. This one is going to be a gold mine." 139 On or about 10 August 2001, on the telephone, Mr Junker told Mr Boyle that the plaintiff had agreed to lend $150,000 for the Griffith project; $80,000 from the plaintiff company itself and a further $70,000 from a superannuation fund. Mr Boyle replied, "Terrific, you won't regret it. It is a great project and going very well. It may well be the jewel in the crown." 140 On 15 August, Mr Boyle called at the plaintiff's home and collected a cheque for $80,000 drawn in favour of Sokido. He said he did not bring the Griffith documents, but reiterated that he and Mr Woods were excited about the project and also the need to keep the head works moving forward. 141 On 28 August 2001, the principal parties again met at the plaintiff's home. Mr Boyle presented the plaintiff's officers with the shareholders' agreement and loan and guarantee agreement in relation to Sokido which were in the same form as for the earlier transactions. Mr Boyle said that he brought the Griffith documents but Ms Bondarew said that they were wrong because they were for $150,000 instead of splitting the loan between the company and the superannuation fund. Mr Boyle said he would get them done again and added "You should have the mortgage on this one pretty soon." Ms Bondarew reminded Mr Boyle that she was still waiting on the other mortgages and would like to get them sooner rather than later to which Mr Boyle replied, "Things are settling down, Larry should get them done pretty soon." 142 Again, there were regular visits and telephone calls between the principal parties, and again the second mortgages were requested with the usual reply that "Larry is looking after them. I will chase him up for you." 143 I have already mentioned the promotional launch in September 2001. Mr Woods was present at the time and there was general conversation indicating just how marvellous the projects appeared to be. 144 On 7 October 2001, Mr Boyle said during an on-site sales promotion, "Things are going fantastically well. I can't believe the reception we are receiving to the house and land packages. It is possible that we will sell every one of the 83 properties this weekend. The response is so good. Richard and I are very optimistic about the possibility of paying you out sooner than originally anticipated." 145 Of course, at this time Sokido did not even own the Griffith Land, let alone have carried out any development on it. 146 On 12 December 2001, the principal parties again met at the plaintiff's home and arrangements were made for an additional $50,000 to be loaned to Sokido. Ms Bondarew again asked about the mortgage documents to which Mr Boyle replied, "That bloody Hanley! I'm forever on his back. I'll chase him up straight away. You'll have them by Christmas at the latest." 147 Hindsight, of course, informs us that there was no way that Sokido could have granted a mortgage because it had not even completed the purchase of the Griffith Land. 148 In addition to the meetings I have already discussed, there were a series of meetings in September 2002. Ms Bondarew says that on or about 13 September 2002, there was a telephone conversation with Mr Boyle in which, again, the plaintiff asked for the mortgage documents. At this stage Mr Boyle said, "Hanley's got them. I don't know what he's doing with them but I'm sure they're ready." They then had a conversation with Mr Hanley on the phone who said that he indeed had the mortgage papers and that he would be passing them on to Mr Boyle. Ms Bondarew said that that was quite unsatisfactory and if it happened she would lodge a caveat. Mr Hanley replied that that would stop first mortgage funding and everyone would lose their money. Ms Bondarew's riposte was, "Well, all of that can be avoided if we those mortgages" and Mr Hanley replied "It's just a matter of finding them and getting them to you." 149 On 24 September, Mr Boyle suggested a meeting the following day at St Leonards at which he would give the plaintiff's officers the registered second mortgage documents and update them with the various projects. 150 On 25 September, the principal parties and Mr Woods met at St Leonards. Mr Boyle said, "We have the mortgages for all of the various companies. All we need is for you to sign them." Ms Bondarew said, "I thought we were getting registered mortgages today". Mr Boyle replied, "No, we have just got the documents here and they need to be signed … on behalf of your company before they get registered." 151 Thus, on 25 September 2002, mortgages were signed by Mr Boyle, Ms Bondarew and Mr Junker in respect of the Coltern, Brasic and ACN advances, but these were taken by Mr Boyle on the pretext that he needed the signature of other investors and that he would then arrange for Mr Hanley to register them. Despite enquiries over the next year or so, the mortgages were never produced for registration. 152 I should note that Mr Hanley has submitted that it was the plaintiff's own fault that the mortgages were never registered as it should not have permitted Mr Boyle to take them away with him. There are difficulties with this submission as one does not know whether or not the mortgages were in registrable form or who had possession of the Certificates of Title. In any event, it is irrelevant to the question as to whether people fulfilled their obligation to use their best endeavours to have the mortgages perfected. 153 Mr Hanley swore that, as far as he was concerned, the forms of mortgages he drafted were in registrable form. However, there is doubt about that at least as far as the ACN transaction was concerned as there were already two mortgages over Lot 4 of this company's land. 154 Some evidence was given by Ms Bondarew that admissions were made at a meeting on 25 September 2002. However, Mr Woods swore that he had not heard any such admissions being made, and the plaintiff subsequently abandoned reliance on these. 155 On 28 November 2002, Mr Junker asked Mr Boyle where were the mortgages that had been signed in September as his information was that other investors had not even been asked to sign them. Mr Boyle replied that he had not had time to get them signed. 156 The plaintiff and other investors demanded that Mr Boyle produce accounts. He said that the accounts were not yet ready. The investors pressed for them. 157 Also on 28 November, Ms Bondarew said, "You told all the shareholders here that Sokido owned the land at Griffith. That was not true. Why did you lie to us? 158 Mr Woods replied, "We didn't lie to you. You were all aware when you lent us the money that Sokido only had a deposit on the land." Mr Junker said, "That is rubbish! That's not what we were told. Your own shareholders' agreement says 'Sokido was the owner of the land known as Lot 21 in DP 882734'." Mr Woods, "Oh, that shouldn't have been there. That was a mistake." Ms Bondarew, "A mistake! How could you possibly make a mistake like that in a legal document, it's not as if it's a 'typo'. It clearly states that 'Sokido is the owner …'. Anyway how would you know what we were told, Richard. You weren't there when Norm was telling us about Sokido. You don't know what Norm said." Mr Woods said, "You all knew very well that we only had a deposit on it since you [there was a gesture to the plaintiff's officers] provided the deposit monies yourselves." Ms Bondarew said, "What deposit monies?" Mr Woods replied, "It was $75,000 of the $100,000 you gave Norm in July 2001. It came out of what you've termed the 'emergency money' ". Ms Bondarew said, "But Norm said that money was to help keep Tumut moving along. He didn't say anything about land at Griffith. There's no way we would ever provide money for land that you didn't own." 159 The investors continued to be concerned that nothing concrete was coming from Mr Boyle and his companions. Furthermore, a meeting that was supposed to be held on 19 December with the investors was cancelled by Mr Boyle. 160 In June 2003 or thereabouts, Mr Woods told Mr Junker that they were unable to save the Griffith land for Sokido. Mr Junker said, "We loaned you a total of $250,000 for Griffith … Where did it all go to? What are you going to do about all this?" Mr Woods replied that something might be able to be salvaged from a project management fee from the new buyer (he did not tell anyone that he and Mr Boyle were the new buyer). 161 Ms Bondarew then again requested the second mortgage documents and Mr Woods said, "Hanley's still got them, as far as I know. I'll ask Norm to get them for you." Mr Junker said that they had heard that before and that unless the mortgages were produced they would put on caveats. Mr Woods said, "If you do that, we'll just walk away from the whole thing. The first mortgagee will stop funding, all the projects will fall over and you wont get your money back. Don't listen to lawyers: they'll only give you legal advice, not commercial advice. Before careful what you do. If you put caveats on, you'll lose everything." 162 On 18 June 2003, there was a meeting of the principal parties together with Mr Woods at the Four Seasons Hotel in Artarmon. Mr Woods said, "As you know, we have had some problems. We had to get some more investors so the projects could proceed. They invested $1.2 million. We had to give those investors second mortgages and now the first mortgagee will not agree to any more mortgages." 163 Mr Junker then said, "We lent you $1.1 million in good faith, about 2 years before these people came on board. According to the agreements, we were supposed to get the second mortgages. Now you are telling us you have been giving mortgages to new investors. And the company we were told owned Griffith didn't." Mr Boyle said, "We can give the mortgage documents to you but they won't be registered and you won't be able to register them." 164 There were further discussions between the principal parties and with Mr Woods. The plaintiff did receive back about $15,000, but otherwise nothing of any moment occurred during these conversations. 165 It can be seen from the above that there is little contest to challenge as to what was said to the plaintiff about the various projects. Indeed, there is little dispute about the conversations related by Ms Bondarew and some of the statements made in the documents. The vital questions are what consequences flow from them and how far each of Messrs Boyle, Woods and Hanley are liable in respect of them. 166 Although Mr McKeand notes that the evidence as to reliance is rather general, the allegation and supporting evidence that the plaintiff relied on the various representations is not gainsaid. 167 It is clear that silence may constitute misleading or deceptive conduct where there is a duty to reveal relevant facts; see eg Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (1988) 39 FCR 546, 557. One must take what is not said in connection with what is said and the surrounding circumstances; see eg Commonwealth Bank of Australia v Mehta (1991) 23 NSWLR 84, 88. 168 Mr McKeand seeks to pare down the case into discreet sections and say that the plaintiff has not established to my satisfaction each part. Mr Parsons, on the other hand, submits that one must look collectively at the whole case and then ask whether, on the whole of the material, there has been misleading or deceptive conduct. There is some force in each approach, but that of Mr Parsons is to be preferred as the way to approach the matter. 169 Of course, the plaintiff's case is not limited to representations with respect to the Griffith Land. The whole thrust of the plaintiff's case is that there was a newspaper advertisement and oral representations made by one of the three promoters (of which the others must have been aware), representing that there was a no risk investment where the investors would have both equity and creditor status, protected by three knowledgeable developers managing the project and secured by a second mortgage. All of this was a complete façade to allow Mr Boyle to use the investors' money for what he liked without supervision. 170 I have already detailed the representations made in the Coltern and similar transactions. Some of these are clear statements of existing fact as to whether the subdivision was ready to proceed and as to whether or not the relevant company owned or had substantial equity in the relevant parcel of land. However, some look to the future. With respect to the latter, the conduct of Mr Boyle who told the plaintiff that its money was being used for certain purposes, whilst using it as the deposit on the purchase of the land the relevant company was supposed to be well into developing, show that the representation was false when made. 171 In a deceit case, Gould v Vaggelas (1984) 157 CLR 215, 236, Wilson J noted that the relevant representation need not be the sole inducement of the loss so long as it plays some part, even if only a minor part, in contributing to the formation of the contract. 172 In Sutton v AJ Thompson Pty Ltd (1987) 73 ALR 233, 240, the Full Federal Court applied that principle to representations that fell foul of s 52 of the Trade Practices Act. If at least the false and misleading conduct is a cause of the loss, the defendants are liable. 173 Furthermore, as Brennan J said in Gould at 252, it matters not that the plaintiff was greedy or gullible or a fool, as "A knave does not escape liability because he is dealing with a fool." 174 There is no doubt that Coltern is liable in respect of the Coltern Representations. 175 I have reached the position that the majority of the representations sued on by the plaintiff were false and were relied upon to have the plaintiff part with over a million dollars. I say "majority", only because, as in most cases of this type, the misrepresentations were interwoven with a few grains of truth. I will now turn to the liability of the individual defendants in respect of these representations. 176 D(1) Mr Boyle actually made most of the representations either by the advertisement he published, or in conversations with Ms Bondarew and Mr Junker. He was clearly a person knowingly concerned with the making of the representations and I cannot see any material which would tend against making an order under s 82 of the Trade Practices Act against him. I will deal with the consequences of this determination under Section G. 177 D(2) Mr Parsons put that the evidence showed that Mr Woods was knowingly involved with contraventions of s 52 of the Act by Sokido. 178 He put that Mr Woods knew that Mr Boyle was seeking investment from private investors and that he knew that Mr Boyle was using his standard form of shareholders' agreements. Indeed, as I have said, Mr Woods was a party to some of those agreements. 179 Mr Woods knew that he was being held out as a manager and that the flavour of the shareholders' agreements was that the team of Boyle, Woods and Hanley were in place, as people who knew what they were doing, to bring the projects to fruition. 180 Whilst it may be that, as between themselves, Messrs Boyle, Woods and Hanley had distinct roles, each was a promoter and each knew and intended that investors be promised a security for their investment. 181 Mr McKeand, in his helpful submissions, put that Mr Woods was not a person concerned so as to be personally liable in respect of any of the representations. 182 Mr McKeand reminded me that in order to establish liability under s 75B of the Trade Practices Act, it is necessary to establish actual knowledge of the essential facts constituting a contravention of s 52 and that s 51A of the Act does not apply to claims for assessorial liability: Quinlivan v ACCC [2004] ATPR 42-010. 183 When a claim is made under s 75B of the Act, the plaintiff must prove that the persons sought to be charged with damages were aware or should have been aware of the facts which gave rise to the relevant contravention; proof of intent is not required; see Yorke v Ross Lucas Pty Ltd (1983) 68 FLR 268, 272 affirmed by the High Court as Yorke v Lucas (1985) 158 CLR 661, 666-9. 184 Mr McKeand also reminded me that in Watson v Foxman (1995) 49 NSWLR 315, 31-8, McLelland J clearly warned judges of the need for care when determining cases of alleged false and misleading conduct based on people's recollection of parts of conversations not evidenced in writing. 185 Furthermore, McLelland J pointed out in Watson v Foxman, that a court must be careful in this sort of case to look closely to what is pleaded and what is established by the evidence, and pay particular attention: (i) as to what the alleged conduct was; and (ii) the circumstances which rendered it misleading. 186 I take this salutary warning on board, however, in the instant case, with some exception, there is no real dispute as to the substance of the relevant conversations. 187 Mr McKeand says that it is important to consider the way the case under the Trade Practices Act is pleaded against Mr Woods. He says that, as pleaded, the allegation against his client can be summarised as follows. The Sydney Morning Herald advertisement of 5 May 2001 was apparently made by Mr Boyle. Ms Bondarew saw the advertisement and had conversations with Mr Boyle in none of which was Mr Woods involved. However, it is said that the representations at these meetings were "amplified and supported" by the Coltern shareholders' agreement which Mr Woods knew were common to other transactions including Sokido. 188 The only inference that I can draw from the evidence is that Messrs Boyle, Woods and Hanley were promoters. They all knew the way in which it was intended to raise funds and the form of the shareholders' agreements. Indeed, Mr Woods' office physically handled the placement of the advertisement in The Sydney Morning Herald. 189 I must infer that the various companies and Mr Boyle never intended to effect the represented mortgages or would only effect them if they saw fit to do so and that Messrs Woods and Hanley knew that Mr Boyle was prevaricating over the grant of mortgages. Mr Woods was involved in the whole project, though he left matters such as the mortgages to Mr Boyle. Mr Woods stood to gain and fully appreciated that the raising of money was necessary for the development. 190 In para 132A of the further amended statement of claim, Mr Woods is alleged to have been knowingly concerned by reason that he was a director of Sokido and a party to the Sokido agreement. The evidence is now clear that Mr Woods did not sign the Sokido agreement (but he must have known what it contained because of his involvement in previous agreements and he knew of the standard form used by Mr Boyle). Mr McKeand puts that the mere fact that Mr Woods was a director of Sokido and nothing more would not make out the case of being knowingly concerned. 191 As to the representation that Mr Woods said that Sokido was progressing well and the profit would be good, Mr McKeand puts that those comments were made by Mr Woods on the basis that the house and land packages in Griffith were selling very well. Indeed, this was the case. Mr Woods gave evidence that between September and October 2001, approximately 134 house and land packages were sold in the various estates and 78 of the 83 allotments at Griffith had contracts put out for them. 192 Cases such as Watson v Foxman show that one must be very wary of holding a representation to be false and misleading if there is a credible alternative meaning to the statement. Mr McKeand puts that Mr Woods never represented that Sokido owned the Griffith Land. 193 Mr McKeand puts that the evidence "clearly establishes that Sokido was proceeding with the development of the Griffith Land and that the making of any profit was highly likely." With respect, I do not agree. 194 However, one must look at the impression that the words used would have on the mind of the hearer, such as the officers of the plaintiff. In my view, an assertion that the development of land is proceeding well and that sales have been made at the very least conveys the impression that the developer and seller owns the land and has done some work on the land to make it vendible. 195 As to the alleged representation that Sokido owned the land, it seems to me that is more a case of misrepresentation by silence rather than actual misrepresentation by words. I am not persuaded that there was an actual spoken representation that the Griffith Land was owned by Sokido. It was left to the plaintiff to make the assumption, a reasonable assumption, that Sokido actually owned the land from the general flavour of what was and was not said. 196 Although, as one would expect, most of what Mr McKeand puts is soundly based, it seems to me that it would be rather naïve for me as a tribunal of fact to think that Mr Woods was a mere offsider for marketing purposes to Mr Boyle. 197 Mr Woods was a substantial shareholder in most of the developments, he knew Mr Boyle's method of operation, he was a signatory to some of the agreements, he was the person who assisted Mr Boyle in placing the advertisements in The Sydney Morning Herald (and presumably knew of their content), he knew from the promotional meetings that Ms Bondarew and Mr Junker had been attracted by those advertisements, he knew that the land at Griffith had not been conveyed into the name of the Sokido company and he knew that there was difficulty in completion. 198 Despite all of this, Mr Woods did absolutely nothing, it would seem, to alert the investors to any of these problems. He knew that the investors had been promised second mortgages, but did absolutely nothing to see that they got them, leaving everything to Mr Boyle when he knew from Mr Boyle's default in other matters that he was not producing accounts or holding regular meetings. He knew that Mr Boyle was in fact treating the shareholders' agreements as pieces of paper to hand to investors but which had no binding effect on him. In these circumstances, the Court should hold that Mr Woods was concerned in the breaches by Sokido. 199 On the whole of the evidence, my view is that Mr Woods was knowingly concerned in false and misleading conduct both with respect to the ownership of land by Sokido and generally. 200 I need to consider one more matter before turning to the case against Mr Hanley. 201 Mr McKeand points out that para 120A of the further amended statement of claim pleads that during the period 28 November 2002 to 20 October 2003 the following representations were made to the plaintiff:

(i) it was not possible for Sokido to complete the purchase of the Griffith Land;

(ii) that it may be possible for an independent entity unrelated to Sokido ("Newco") to purchase the Griffith Land;

(iii) that an opportunity may be available to Sokido … to project manage the Griffith Project on behalf of Newco;

(iv) in the circumstances that Newco acquires the Griffith Land and appointed Sokido … to project manage the development of the Griffith Land and Sokido … may be able to recover sufficient profit to repay the First and Second Sokido Advances to the Plaintiff together with 9% pa interest;

(v) that by 30 October 2003 it had been neither possible for Sokido to complete the purchase of the Griffith Land nor for Newco to acquire the Griffith Land and engage the services of Sokido. 202 Mr McKeand puts that at best these representations amount to no more than that Messrs Woods and Boyle "may be able" to do something and that they are too vague to amount to representations. 203 The alleged representations in para 120A are all representations as to a future matter. 204 Section 51A of the Trade Practices Act says that: " … where a corporation makes a representation with respect to any future matter … and the corporation does not have reasonable grounds for making the representation, the representation shall be taken to be misleading." 205 As Mr McKeand points out, Ormiston J in Futuretronics International Pty Ltd v Gadzhis [1992] 2 VR 217 at 240-241 makes it clear that one should not treat every contractual promise as giving rise to an implied representation of the kind referred to in s 51A. 206 Mr McKeand says that in the present case, the alleged representations are too vague to amount to contractual promises that in turn amount to representations as to future matters, and there is no other basis for them being representations as to future matters. I tend to agree. 207 D(3) I now turn to the case against Mr Hanley. 208 The case here is much weaker than the case against Mr Woods. Mr Hanley was not involved in the Sokido deal at all. 209 I am not persuaded that Mr Hanley has assessorial liability in respect of the plaintiff's loss in respect of Sokido. However, most of what I said with respect to Mr Woods over the general representations applies to Mr Hanley. 210 I reject the view that Mr Hanley was a mere accountant confined to accounting for the money and drafting documents. The evidence shows that he and Mr Boyle had been associated in land development transactions and he must have known Mr Boyle's modus operandi. This is reinforced by the fact that Mr Hanley signed three of the shareholders' agreements. 211 Accordingly, Mr Hanley is also personally liable for the Trade Practices Act claims. 212 E. There is little left over from that which I have already considered. Further, the evidence on the claim that Messrs Boyle and Woods misrepresented to the plaintiff that the Griffith Land was owned by Sokido has already been considered with respect to the corresponding claim under the Trade Practices Act. 213 F. The basic reason why the development lands were lost (though they have subsequently been purchased by companies owned by Mr Boyle and Mr Woods from the mortgagees) was that the Leeton Land Company required finance and obtained finance from a company known as RMBL, which required collateral security over the Coltern and Brasic properties. The monies raised from RMBL paid out some, but not all, of the then existing first mortgages. 214 Investor monies then had to be obtained to support the RMBL advance over the Leeton, Brasic and Coltern properties. This must have been a matter which would concern any company director or manager who knew that investors were being brought into projects on the basis that they would get second mortgages, and that this would inhibit them getting those second mortgages. 215 The plaintiff says that, particularly in the case of Sokido, had it been given a second mortgage as promised, it would have had security and, moreover, it would have been in a position to prevent the promoters from disregarding its interests by giving charges in priority to other lenders. 216 The riposte was that as the promoters were unable to discharge the first mortgages, the first mortgagees would, in any event, have sold and probably taken the whole of the proceeds as happened with Coltern, ACN and Brasic. 217 Whilst it is true that in the fullness of time, the Griffith Land became owned by another company controlled by Messrs Boyle and Woods, Messrs Woods and Hanley say that the plaintiff was given the opportunity to become involved in the new company that acquired the Griffith Land, but declined. (The reason for this decision was twofold, first, the plaintiff had run out of money, and secondly, it had run out of trust in the promoters). 218 It should be noted that the Brasic land also later found its way, through a mortgagee's sale, into the hands of Mr Woods. 219 G. The question now is what damages or compensation should be ordered and against whom? 220 The plaintiff merely says that the compensation should be the loss of its investment plus interest. Mr McKeand rightly says that that is too simplistic an approach to the matter. 221 So far as the breach of contract claim is concerned, Mr McKeand says that the plaintiff's submissions seek damages in the amounts of the advances made by the plaintiff, respectively for each company, but the plaintiff has made no attempt to establish causation of such losses in relation to each of the numerous breaches of contract alleged. He then says that indeed there is evidence to negate the damages claimed. Mr Woods' evidence as to the inability of the borrowing companies to obtain funds from prospective lenders establishes the true cause of the plaintiff's losses. 222 The key matter involved in the breach of best endeavours clause was the failure to use the best endeavours to secure the second mortgage. One can understand that the other matters might go to substantial damage because, had Mr Boyle been properly advised by colleagues that he was heading for financial disaster for the investors, he might have been dissuaded from the course he took and the investors' money might have been saved. However, this is just speculation. On the evidence, the other matters only sound in nominal damages. 223 The plaintiff says that had the defendants' best endeavours been used to gain second mortgages, then it would have received something out of the wreck. 224 Unfortunately, there is not much evidence of this. I just do not have sufficient material to show what was the state of the first mortgage at the relevant times. 225 One would have thought that if the evidence had shown that at the time the promise to use best endeavours was breached the land was worth $100,000 and the first mortgage was for $80,000 that it would be a simple matter to say that the plaintiff had lost $20,000. However, that sort of evidence does not exist. Furthermore, the evidence tends to suggest there was no surplus when the first mortgagee eventually sold. 226 Accordingly, it seems to me that I can only find nominal damages on the contract counts. 227 It is, of course, a disturbing matter that the Griffith Land and another parcel of land did find their way back into the hands of the promoters. However, this is offset to a degree by the fact that the promoters did offer to the plaintiff to give it a further share of the action if it were to advance a little more money, but the plaintiff had run out of money and did not trust the promoters so it did not take advantage of this proposal. 228 As to the Trade Practices Act claims for damages or compensation, a similar problem arises for the plaintiff. However, when one stands back and looks at the whole picture, the plaintiff's case that it would not have invested were it not for the representations, looks a lot stronger. 229 It must be remembered that, before the advertisement and the initial meetings with Mr Boyle, the parties were strangers to each other. The plaintiff parted with over a million dollars to these strangers which sane people do not normally do without some special motivation. What was that motivation? Clearly, to my mind, it was the representations that the investments were no risk, that they would be secured and other representations . 230 The further amended statement of claim sets out a series of representations. As to the Coltern, ACN and Brasic transactions, the plaintiff complained that it was led to believe: (i) that the joint venture opportunities to develop the relevant land were ready to commence; (ii) that such opportunities provided exceptional returns; (iii) that investors would be provided with security and that there would be no risk exposure; (iv) that the relevant companies owned or had equity in the relevant land; (v) that the plaintiff would receive high interest; and (vi) that the plaintiff would be given a second registered mortgage. 231 I have said already that these representations were made and that, at least the majority of them, were false. 232 The plaintiff says that had it not been for those representations, it would not have invested. Whilst courts regard statements like that made with hindsight with great care, in this case it fits neatly into the scenario that no sane person would have acted without accepting the truth of such representations. 233 It seems to me that as the whole of the investments have been lost, even though the proximate cause of the loss may have been the subsequent conduct of Mr Boyle, the consequence is that a cause of the loss was the false representations. 234 It follows that with respect to the Coltern, Brasic and ACN transactions, the damages are the loss of the investment. 235 As to the Sokido transactions, the principal complaint is over the facts:

(b) that the promised mortgages never eventuated and that in fact the companies with the knowledge of Messrs Boyle and Woods went out of their way to make sure the second mortgages could not be granted by giving second mortgages to somebody else. 236 So far as the second of these is concerned, the same problems exist as with the contract claim. 237 However, the first matter is a little more complex. Had Sokido owned the Griffith Land, then it could not have been forfeited by the Zirillis. However, it is true that the company still would not have had the funds to be able to develop the land. 238 Furthermore, there is the problem that the plaintiff's monies were used for purposes other than those for which the plaintiff was advised. 239 The plaintiff invested $80,000 in the first Sokido transaction, $70,000 in the second, and $100,000 in the third. Had there not been false and misleading conduct it seems to me that none of these monies would have been advanced and that they have been lost because of the false and misleading conduct. 240 Accordingly, it seems to me that the defendants, Messrs Boyle and Woods, are each liable to pay the plaintiff $250,000 in respect of the Sokido transactions plus relevant interest. Of course, that includes the $100,000 owing by Mr Woods as guarantor of the Sokido (No 3) transaction dealt with earlier in these reasons. 241 It may be true that the real reason for the loss is that the whole project was under-capitalised. However, as noted above, the representation need not be the sole inducement of the contract so long as it played some part in it. To put it another way, even if the loss is attributable to a number of factors, if the false and misleading conduct is a cause of the loss, then the defendants are liable. 242 Had the representations been honoured, the plaintiff would have received back the sums advanced plus interest. I am doubtful as to whether interest should be allowed as part of the primary damages. However, the damages accrued as at the time for repayment when the money was not repaid. As the parties have specified the rate in their agreement, the court applies that rate to calculating interest for the purpose of s 100 of the Civil Procedure Act 2005, so that the same result appertains. 243 Mr Parsons put emphasis on his submissions that he was seeking compensation under s 87 of the Trade Practices Act as an alternative to damages. I am not too sure whether, in the present case, there is very much difference between the two. However, one must remember that s 87(1AA) provides that an order for compensation is not to be made where the order would be based on the conduct contravening a provision of Division 1 of Part V and that, of course, includes s 52. However, compensation under s 87 may, in the appropriate case, be different to damages so that in cases such as Kizbeau Pty Ltd v WG & B Pty Ltd (1995) 184 CLR 281, damages were supplemented by compensation because the measure of damages did not fairly compensate the plaintiff for its loss; see also I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109, 143. However, it does not seem to me that the present is such a case. 244 H. The strike out application was made with respect to Mr Hanley by motion filed 15 December 2006. It was returnable on 31 January 2007. 245 The case had been set down for hearing by the Registrar in September 2006 for hearing before me in February 2007 and a pre-trial was held in November. 246 At the pre-trial it appeared that Mr Hanley might not appear at the hearing. There was thus some reason for the motion. However, once a case has been set down for trial, it is really a waste of time issuing motions for summary judgment. 247 I expected that, when the trial began, the motion would be abandoned. It was not, but nothing further happened in respect of it. 248 It is of no utility to deal with a motion for summary judgment when one has heard the whole trial, including cross examination of the person against whom summary judgment is sought. 249 The motion for summary judgment must be dismissed. No costs are to be allowed in respect of it. 250 I. For the above reasons, the result is that in respect to the Coltern transaction, the loss is $630,000 for which Coltern, and Messrs Boyle, Woods and Hanley are responsible. 251 In respect of the ACN transactions, there was a loan of $200,000 made on 24 July 2001 and a second loan of $50,000 made on 21 August 2001 on the basis that the loans would be for twelve months and would carry interest at 12% if not then paid. Five years' interest amounts to $150,000, so that those responsible under the Trade Practices Act count are liable for $400,000. 252 In respect of the Boyle transaction, there must be a verdict against Mr Boyle for $238,375. 253 In respect of the Brasic transaction, the loan was $300,000 made on 15 August 2001 on terms that if not repaid in 12 months would carry interest at 12%. I calculate the interest for 59 months at $177,000 so that those responsible for this transaction must pay $477,000. 254 In respect to the Sokido transactions, loans in the Nos 1 and 2 transactions made in August 2001 totalled $150,000. Again 12% was specified. The interest component is $88,500. I have already calculated the amount due under the Sokido No 3 transaction as $194,133. 255 The nett result is that there should be verdicts as follows:

Against Mr Hanley for $1,939,633. 256 In all except the Boyle transaction, the verdicts against the individual defendants are joint and several. 257 The defendants must also pay the plaintiff's costs of the proceedings. 258 The exhibits are to be returned at the end of 28 days from delivery of judgment, unless an appeal is lodged, in which case they are to be retained pending the hearing of the appeal. 259 This should be the end of the litigation, at least at first instance. However, if there is any debate as to the form of the order, so long as my Associate is contacted before 13 August 2007, a time can be fixed to deal with any loose ends. ******************************

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