Hacking v Beckhaus

1 These two proceedings have been heard together. The applicants, Peter Hacking and Elizabeth Hacking, are husband and wife. Proceeding NG 809 of 1995 is brought by Mr Hacking in his capacity as trustee of a unit trust that may be conveniently referred to as the Epilodge Trust, and proceeding NG 386 of 1997 is brought by Mrs Hacking in her capacity as trustee of a discretionary trust that may be conveniently referred to as the Retep Trust. Each proceeding involves claims against Dennis Beckhaus and two companies of which Mr Beckhaus is a director, Beckhaus Pastoral Co. Pty Ltd ("Pastoral") and Beckhaus Civil Pty Ltd ("Civil"). 2 The claim made on behalf of the Epilodge Trust arises out of the disposition of its fixed assets, which Pastoral acquired on 27 May 1994. Mr Hacking alleges that Mr Beckhaus represented, in contravention of s 52(1) of the Trade Practices Act 1974, that a joint venture was to be effected by that transaction. Mrs Hacking's action on behalf of the Retep Trust is a money claim for the hire of earthmoving equipment to Civil in the period from 13 January 1994 up until 27 May 1994. Mr Beckhaus admits that Civil agreed to hire one item of equipment and that he and Mr Hacking had discussed the formation of a joint venture. However, he denies the alleged representation and says that any obligation to pay for the use by Civil of equipment made available to it by the Retep Trust was discharged when Pastoral acquired the fixed assets of the Epilodge Trust. 3 All the units in the Epilodge Trust are held by the Retep Trust. The trustee of the Epilodge Trust used to be Epilodge Pty Ltd ("Epilodge"), and the trustee of the Retep Trust used to be Retep Earthmoving Pty Ltd ("Retep"). Mr and Mrs Hacking were the directors of both those companies. Epilodge and Retep were deregistered by the Australian Securities Commission pursuant to s 574 of the Corporations Law on 6 July 1994. Mrs Hacking was appointed trustee of the Retep Trust on 23 May 1995, and Mr Hacking was appointed trustee of the Epilodge Trust on 19 July 1995. 4 Mr and Mrs Hacking live in Brisbane suburb of Westlake. In 1982 Epilodge was incorporated and commenced to carry on for the unit trust that I have already mentioned a business hiring earthmoving plant under the name "Hacking Plant Hire". It also engaged in contracting for earthmoving works. According to the letterhead of the business, it served "all suburbs and [the] Gold Coast". In Slacks Creek, another Brisbane suburb, Epilodge owned a block of industrial land, which it used as a machinery yard for the business. A small wooden shed on this land was used as an office. Mr Hacking ran the business. 5 Much of the plant and equipment used by Epilodge was leased or subject to hire purchase. The Hackings decided that Hacking Plant Hire should be conducted by a company that did not own the fixed assets used in the business. Accordingly, in mid-1990 Epilodge acquired a shelf company, the name of which was changed to Hacking & Sons Pty Ltd. This company then carried on the business, and Epilodge hired plant and equipment to it. However, on 12 July 1993 Mr and Mrs Hacking instituted the voluntary administration of Hacking & Sons Pty Ltd whose creditors subsequently resolved to wind it up. The Hackings then resolved to change the name of the trustee of their discretionary trust to Retep Earthmoving Pty Ltd. This company took over the business formerly carried on as Hacking Plant Hire and completed its contracts under the name Retep Earthmoving. 6 By the end of 1993 the business interests of Mr and Mrs Hacking were in dire straits. The principal financier of Epilodge was Esanda Finance Corporation Limited ("Esanda"). In 1992 it had refinanced a number of equipment leases as an alternative to repossession. Esanda held fixed and floating charges over the assets and undertaking of Epilodge, in addition to a registered first mortgage over the Slacks Creek land and a registered second mortgage over the Hackings' residence at Westlake. The loans advanced by Esanda in 1992 were also secured by mortgages of specific equipment. 7 In cross-examination, Mr Hacking was reluctant to admit Epilodge's sorry financial condition. He had to be confronted with bank statements before he could recall cheques being dishonoured more than once or twice. Esanda's records tell a very different story. The "scratch pad" comments reported to Esanda's credit control officers on Epilodge's four accounts record telephone calls and actions throughout 1993 that demonstrate Epilodge's parlous state. Repayments were constantly overdue and in arrears. Temporary arrangements were not observed. Repossession warnings were given. Mr Hacking offered a string of excuses for the defaults. (It does not appear whether Esanda was ever informed about the insolvency of Hacking & Sons Pty Ltd whose administrator reported that Epilodge was by far its biggest creditor.) In mid-year Mr Hacking sought payout figures so that he might sell surplus equipment and Esanda arranged inspections and valuations of the equipment securing its loans. In August Mr Hacking inquired "how much [Esanda] would release" if the Slacks Creek land was sold. At the end of August Esanda agreed to the sale of one item of the mortgaged equipment and the proceeds were applied in reduction of Epilodge's debt. Esanda's monthly progress report for November 1993 estimated a large exposure on the value of the mortgaged equipment, which could only be covered by recourse to the land at Slacks Creek and Westlake. The report concluded that the current position was: "Customer has had little to no work for some 6 weeks and is now selling off all machinery to payout [sic] accounts and quit operations. Time frame has been set at 2 months at this stage." The report noted that a list of expected sale prices had been provided and sale prospects were to be updated on a regular basis with approval also to be granted individually for the sale of each item. In December Esanda informed Mr Hacking that all unsold equipment would be repossessed at the end of that month. Undaunted, Mr Hacking sent a fax to Esanda on Christmas Eve, stating that he was putting all the equipment into a "new company that will be paying out the Esanda accounts". 8 I have only summarized the general purport and some highlights of Esanda's records relating to Epilodge's accounts during 1993. Pages 62-66 of report no. CC173 (part of exhibit 23) tell the full story in considerable detail. Nor was Esanda the only financier pressing Mr Hacking at the end of 1993. Perpetual Finance Corporation Ltd had also given notice of its intention to sell equipment leased by it to Epilodge. 9 Mr Beckhaus and his wife Colleen Beckhaus reside at Wee Waa in north-eastern New South Wales. Mrs Beckhaus is the company secretary of the two respondent companies. Civil describes its business as civil engineering contracting. Pastoral provides machinery and equipment to Civil. 10 At the end of 1993 Civil had two jobs under way in Queensland. One of those jobs was a contract for the State Department of Transport on the Bruce Highway, south of Gladstone, near Miriam Vale. This was referred to as the Palm Creek job. Mr Beckhaus moved temporarily to live in Bargara, near Bundaberg, in order to supervise this job. 11 Mr Hacking and Mr Beckhaus first met in the 1980s and over the intervening years Civil had occasionally obtained equipment from Hacking Plant Hire. In December 1993 Mr Beckhaus telephone Mr Hacking to inquire about hiring a compactor for the Palm Creek job. Mr Hacking said that he could make available a Caterpillar 815 compactor on a "dry hire" basis at a rate of $56 per hour. Mr Beckhaus made other inquiries about prices and then telephoned Mr Hacking again in early January 1994 to accept the price for the hire of the compactor. Mr Hacking says that during this conversation Mr Beckhaus also arranged to hire three other pieces of equipment at various rates for use on the Palm Creek job. They were two Euclid R-35 dump trucks and a Komatsu PC300-5 excavator. Mr Beckhaus denies any discussion about hiring such equipment. 12 Mr Hacking and Mr Beckhaus had a further telephone conversation at the end of January 1994. Mr Hacking said that his two Euclid dump trucks were for sale at a price of $40,000. They also discussed, very cursorily it would appear, a proposal to pool their enterprises' equipment in a joint venture of some sort. Each man says that the other raised this topic. In any event, as a result of this conversation, Mr Hacking went to see Mr Beckhaus. 13 The two men met at Bargara. Mr Beckhaus offered Mr Hacking the position of project manager on the Palm Creek job. They also discussed a possible joint venture owned in proportion to the value of equipment contributed by each party. Mr Hacking told Mr Beckhaus that he was in arrears with his financiers. Mr Hacking says that he gave Mr Beckhaus a handwritten document, headed "Equipment Listing", showing estimates of auction value, of market value and of repairs for his equipment and, where applicable, the name of the relevant financiers. Mr Beckhaus denies receiving such a document. Mr Hacking also says that Mr Beckhaus offered him a job on the basis that they would "get together in a joint venture". Mr Beckhaus is adamant that the job offer had nothing at all to do with any proposed joint venture. 14 On 3 February 1994 Mr Hacking sent Mr Beckhaus a fax on Retep's letterhead. In that letter he suggested, inter alia, that he would "go to site for next week", "take my Komatsu Pc 300-5 to quarry site", and "think more as to whether it is worth taking Euclids". The tone of this letter is entirely inconsistent with the existence of a firm arrangement for the hire of those pieces of equipment, and I do not accept Mr Hacking's testimony that an oral agreement to that affect was concluded in the telephone conversation of early January. 15 It appears from exhibit 23 that Esanda had been contacted on 2 February by Bryan McMahon, Epilodge's finance broker, and told about a party in Wee Waa who was said to be interested in an "equity partnership". Esanda then arranged revaluations of its securities and informed Mr Hacking on 18 February that it required payment early in March. 16 By mid-February 1994 Mr Hacking was working on Civil's Palm Creek job. The Caterpillar compactor was also on site. Over the next few weeks other items of Epilodge's equipment were also transported to Miriam Vale and used on the job. Civil paid for the cost of transportation and repairs. It also made a number of payments at Mr Hacking's request to cover the cost of his services prior to Mr Hacking being taken on as a wages employee. 17 On 21 February 1994 Civil was notified that it was the successful tenderer for work to be undertaken on behalf of the State Department of Primary Industries in the Burdekin River Irrigation Area near Giru, south of Townsville. This contract was referred to as the Selkirk job. 18 Against that background, on 23 February 1994, Mr Beckhaus went to Brisbane with Mr Hacking and met the latter's accountant, Chris Lowe of Coopers & Lybrand. They discussed the existing corporate structures and the ways in which a joint venture owned in the proportions 40 per cent (Hacking) and 60 per cent (Beckhaus) might be put together. According to Mr Lowe's file note, he advised that any equipment should be owned in a unit trust held in those proportions, but that "Dennis would obviously need to look at his own situation". Mr Beckhaus told Mr Hacking after the meeting that he would speak to his own solicitor and accountant. Earlier that morning the two men had visited, at Mr Hacking's suggestion, the offices of Caterpillar Financial Australia Ltd, where Mr Hacking agrees that he was unable to borrow any money. Mr Beckhaus says that, after the meeting with Mr Lowe, Mr Hacking told him his financiers were "getting jumpy", and he told Mr Hacking to concentrate on managing the Palm Creek job and obtaining finance. Mr Hacking denies this conversation, but I do not accept his denial. The evidence is overwhelming that he was under great financial pressure at the time and that soon after he was asking Mr and Mrs Beckhaus for loans to pay Epilodge's creditors. Such a request was refused when Mr Hacking called soon afterwards upon Mr Beckhaus at his parents' house in Cooroy. Instead, on 2 March, Mr Hacking borrowed $23,000 from a friend, Derek Dewar. This permitted Epilodge to make a vital payment to Esanda. 19 Mr Beckhaus meanwhile was pursuing his own inquiries. On 1 March he telephoned Peter Nest, the manager of the Westpac Bank at Narrabri, where Pastoral and Civil kept their bank accounts and were afforded financial accommodation. Mr Beckhaus said that he was looking to take on a partner who would be offered 40 per cent equity in the business and that this would involve a refinancing. Mr Beckhaus then had a meeting with Todd Wallington, who was the finance manager based at Tamworth for Westpac's subsidiary, Australian Guarantee Corporation Ltd ("AGC"). On Friday, 4 March Mr Wallington sent a fax to Mr Beckhaus at Bargara requesting full details of Epilodge's goods (including "hours/mileage"), valuations of the industrial and residential land and a "history on Peter Hacking & company family tree structure". Mrs Beckhaus replied to Mr Wallington on Monday, 7 March enclosing "information rec'd from Peter Hacking Friday afternoon". The enclosures included a typewritten sheet with the details requested (other than hours and mileage) in respect of fifteen items of equipment and information about the two blocks of land. 20 In March Mr Beckhaus also engaged Mr Dewar to work in an office Civil had established at Beenleigh, south of Brisbane. Esanda continued to press Mr Hacking. On 22 March Mr Hacking telephoned Ted Jacquin at Esanda, told him that AGC had tentatively approved finance, and requested payout figures for 7 April. The same day Mr Jacquin faxed those figures to him. Mr Beckhaus, as he had foreshadowed after the meeting at Coopers & Lybrand, had a meeting with his own accountant, Paul Grew. Mr Lowe and Mr Grew subsequently spoke by telephone on 30 March. Mr Lowe thinks that he explained to Mr Grew the advice that he had given to Mr Hacking and Mr Beckhaus on 23 February. On 31 March, Mr Lowe, prior to his leaving for holiday, arranged at Mr Hacking's request, for one of his partners to look after establishing the "joint venture" structure, if instructed, whilst he was on holiday. Mr Lowe never heard about the proposal again. 21 It is common ground that several items of equipment supplied by Retep were used on the Palm Creek job. As I have said, I am satisfied that, back in January, a rate was only ever agreed for the Caterpillar compactor. Mr Beckhaus says that the subsequent use by Civil of many more machines than originally contemplated was discussed and that he made it clear to Mr Hacking that hiring charges would, in view of the changed circumstances, only now be paid for the use of any of the machines if the joint venture did not proceed or Pastoral did not acquire the machines. Mr Hacking denies such discussions occurred but, somewhat curiously, he says that he did not render an invoice for the hire of that equipment "because of the ongoing discussions regarding the merging of our equipment". 22 After Easter, Mr Nest telephoned Mrs Beckhaus on 6 April. He made the following file note: "Phoned Colleen Beckhaus to get an update on current position re new equity partner/AGC financing. Colleen advised that the matter is currently being finalised by respective accountants and as yet solicitors have not been contacted to prepare transfers from equity partners [sic] name to Beckhaus Pastoral Co Pty Ltd. Colleen advised she would be attending to valuations on both properties and forward same in due course. Please commence preparation of mortgages from Beckhaus Pastoral Co settlement can be arranged in due course via solicitors, David Sweeny [sic] at Wee Waa. AGC should not be drawn until mortgages are executed and satisfactory." Mrs Beckhaus was not cross-examined about this telephone conversation, but Mr Beckhaus was. The questioning suggested that the references to an "equity partner" were inconsistent with Mr Beckhaus's pleaded defence that any proposed partnership had been abandoned in March. 23 Mr Wallington travelled after Easter to Miriam Vale via Slacks Creek. He inspected the industrial land and the equipment for which finance was sought. Mr Wallington also attended to the paperwork required by AGC. To this end, the Beckhauses signed delivery receipts dated 7 April, and on 8 April Mr Hacking signed offers to sell Epilodge's interest in the equipment. There is also in evidence a master lease agreement dated 8 April 1994. The parties to that agreement are AGC as lessor, Pastoral as lessee, and Mr and Mrs Beckhaus and Civil as guarantors. Mr Wallington agreed to finance only twelve of the fifteen items of equipment offered by Epilodge. He declined to finance a Ford Maverick four-wheel drive and the two Euclid dump trucks. Mr Wallington recalls estimating the auction value of the equipment at between $250,000 and $300,000. 24 Mr Hacking says that, at the end of March or beginning of April whilst he was working on the Palm Creek job, Mr Beckhaus telephoned him and said: "I have spoken to my solicitor and accountants about our new set up. I have been advised that to form the new joint venture it will be easier and better to pay out the debt on your equipment and the land and put them into one of my companies until the new company is set up in November, 1994." Mr Beckhaus denies making such a statement. Indeed, in cross-examination, it was not put to him that he made a statement in those precise terms. What was put to Mr Beckhaus was the suggestion that he told Mr Hacking that he was going to pay out Epilodge's debt and put the equipment and the land into Pastoral "while a new company was set up". The alleged November time frame was not put to Mr Beckhaus at all. In any event, Mr Beckhaus does not agree that he said any such thing. 25 Mr Beckhaus must have found some of his cross-examination confusing. For example, it was put to him that Mr Wallington visited Miriam Vale "within days" of his fax of 4 March. In fact, it was just over one month later. Mr Beckhaus was cross-examined about his pleaded defence that the joint venture proposal had been abandoned in March. He explains that during March it became apparent that Mr Hacking was unable to arrange a re-financing of Epilodge's commitments so as to contribute any equipment to a joint venture. Mr Beckhaus says that he pointed out to Mr Hacking that the latter's re-financing efforts was "going nowhere" and that he raised the prospect of the Beckhaus interests paying out Epilodge's financiers and purchasing its equipment. Mr Beckhaus says that, by the time Mr Wallington visited Miriam Vale, discussions had moved on to the difference between the payout figures and the combined value of Epilodge's equipment and Slacks Creek land. Mr Beckhaus does allow that he continued to hold out the prospect of equity participation being possible for both Mr Hacking and Mr Dewar in some kind of enterprise with Mr Beckhaus in the future, provided that there were profits from cost savings achieved as a result of their management of contracts whilst they worked for Civil. 26 In about the middle of April Mr Hacking went north to manage the Selkirk job. He and Mr Beckhaus travelled together by road from Bundaberg to Ayr, where Mr Hacking was to live whilst managing Selkirk. The journey took about twelve hours. They discussed Mr Wallington's visit to Miriam Vale, but they disagree about what was said. Mr Beckhaus says that he told Mr Hacking that Mr Wallington "wasn't overly impressed" with Epilodge's plant, but that "with the Slacks Creek land we should still be able to get enough to purchase the gear". He told Mr Hacking that: "There will be little or no return to you after we pay out your debts on the plant. Even with Slacks Creek thrown in". Mr Hacking denies that conversation. 27 Mr Hacking says that, whilst he was in Ayr, he had a telephone conversation with Mr Beckhaus about a document that Mr Beckhaus faxed to him. The document is dated 29 April 1994 and marked "for discussion purposes only". Mr Beckhaus says that it was prepared by him "in consultation with others" (by which I think he meant, in context, persons other than his wife) for discussion with his solicitor and accountant. Mr Beckhaus denies faxing that document to, or discussing it with, Mr Hacking. Indeed, he says that the document (which bears no fax transmission line) was taken from his office without permission. Mr Hacking claims to have made some contemporaneous notes on the back of this document during his alleged telephone conversation. 28 The document is headed "P. HACKING AGREEMENT - BECKHAUS CIVIL PTY LTD". The following terms are significant: "1. All plant (both free & encumbered) including land at Rowland Street, Shed Frame, Buckets, Phones, Utes, Containers, Tools etc., to be sold to Beckhaus Pastoral which will be used as security against AGC Loan (approx. $365,000) raised by this company. 2. A Service Agreement to be drawn up with P.H. as follows: (4 Year Term) i) Salary of $1200 p.w. paid to Retep Pty. Ltd. plus vehicle & 10% of Beckhaus Civil profit in all Queensland jobs. ii) A clause prohibiting P.H. from trading in existing or other companies to the detriment or in competition with Beckhaus Civil, Pastoral or its subsidiaries. iii) $40,000 (paid @ $10,000 p.a.) over 4 years to make up difference between assessed value of plant, equipment, land, Beckhaus risk in obtaining loan, finance & profit to Beckhaus Pastoral in purchasing P.H. assets at payout value (dependant [sic] on group profit & paid at Directors [sic] discretion) iv) A termination clause if either partly [sic] acts contrary to the others [sic] interests in obtaining or distributing profits or the joint interests of all group projects and plant are not given priority over others. . . . N.B. Transfer of Rowland Street ownership is to be affected [sic] prior to settlement of P.H. borrowings - we have initiated this transfer with our Solicitor. Will be necessary for P.H. to cover for insurance until ownership title transferred (should be three weeks)" Mr Hacking has drawn on the back of this document a rough diagram in order to depict what he says is a "joint venture set up" with the relative value of his contribution and that of Mr Beckhaus to a new entity expressed as "x" and "x +". 29 When 7 April passed without Epilodge's debt being paid, Esanda continued to press Mr Hacking. On 20 April Esanda informed Mr Hacking that a further payout of $12,000 was required if settlement did not occur by 30 April. On 3 May Mr Hacking told Mr Jacquin that settlement was now expected about 20 May. 30 AGC attended to further paperwork in anticipation of settlement. On 11 May Pastoral executed twelve separate lease agreements with AGC in respect of that number of items to be acquired from Epilodge. The cost of the goods stated in the leases totalled $412,000. The leases were for a period of 48 months from 25 May 1994 and provided for rentals totalling $8,623.61 per month. The sum of the goods' residual values was $123,600. 31 On 12 May Esanda agreed to Epilodge selling the two Euclid dump trucks that AGC refused to finance. The sale price was applied in reduction of Epilodge's debt to Esanda. 32 Pastoral retained a Wee Waa solicitor, David Sweeney, to act on the acquisition from Epilodge. Mr Sweeney, in turn, engaged a Brisbane firm of solicitors as his agents. Those solicitors prepared a contract of sale and transfer in respect of the Slacks Creek land and forwarded it to Mr Hacking on 18 May. The contract stated the purchase price of the land as $127,500. 33 Settlement was originally fixed for 25 May, but that was changed to 27 May. On 25 May AGC advanced the sum of $412,000 to Pastoral's account at the Westpac branch in Narrabri. Mr Hacking and Mr Beckhaus attended, together with Mr Dewar, a meeting in Beenleigh on 27 May. Mr Hacking signed on behalf of Epilodge a document dated 25 May 1994 described as a purchase agreement. It recited in three paragraphs what it described as items "included in the sale of assets" to Pastoral from Epilodge. Paragraph (1) referred to the equipment to be leased from AGC, paragraph (2) to an "attached list" of items at Slacks Creek and paragraph (3) to the Slacks Creek land. The list attached to the document was prepared by Helen Clarke, Mr Hacking's former secretary at Hacking Plant Hire. In Brisbane Mr Sweeney's agents handed over cheques to Esanda for $293,589.49, to Perpetual Finance for $30,666.63 and to the Commonwealth Development Bank for $25,427.63, making a total of $349,683.75. Those solicitors received releases of Esanda's mortgages, and Mr Hacking authorised them by fax to sign any necessary documents on behalf of Epilodge. 34 Mr Beckhaus agrees that he determined the purchase price stated in the contact of sale for the Slacks Creek land. Mr Hacking says that he said at the Beenleigh meeting that he did not know his financiers were to be paid out on that date. Mr Beckhaus denies that conversation but, even if Mr Hacking did say such a thing, the Esanda files compel the conclusion that Mr Hacking knew that Esanda had to be paid out by the end of May. 35 In June Mrs Hacking called at the Beenleigh office where Mr Dewar made certain records from the Palm Creek job available for her inspection. Mrs Hacking subsequently prepared an estimate of the hours during which equipment from Hacking Plant Hire was used on that job up until 27 May 1994. 36 Mr Hacking has prepared a handwritten document dated 3 July 1994 addressed to "D.B." which he has initialled. He has set out a list of what he describes as "plant" (which includes some land) showing auction and market values for each item. On a final page he has claimed an amount of $150,000 as "owing" representing the difference between an auction value of $500,000 and an actual payout of $350,000. He has also claimed an amount of $23,000 as "owing to Derek Dewar". Finally, he has claimed an amount of $112,000 for plant hire "prior to purchase of plant" being dry hire rental charge less the costs of parts and labour paid for by Civil. Mr Hacking says that he gave a copy of this document to Mr Beckhaus at the Selkirk job site on 3 July 1994. Mr Beckhaus says that he was in Wee Waa that day and was never given such a document. (Mr Beckhaus used to visit the job sites at least once a month.) 37 By September or October in 1994 Mr Beckhaus had formed a decidedly unfavourable view of Mr Hacking's skills as a project manager. He realized that there would be no profits achieved as a result of Mr Hacking's efforts and that he had no wish to have him as any sort of partner. When the Selkirk job was completed in mid-November, Mr Hacking visited the Beenleigh office, where he was given a letter dated 18 November 1994, notifying him that his services with Civil were terminated. Mr Hacking says that he then suggested to Mr Beckhaus that they should "sort out valuations and plant hire". Mr Beckhaus denies such a conversation. In any event, Mr Hacking then gave Mrs Beckhaus a copy of the notes dated 3 July 1994 that I have described. 38 On 22 February 1995 Retep sent Civil an invoice for equipment hire. On 26 July 1995, acting on the advice of her solicitor, Mrs Hacking rendered Civil an invoice for the same charges in her capacity as trustee of the Retep Trust. 39 In chronicling above the course of dealings between Mr Hacking and Beckhaus, I have summarized in a fairly compressed way the effect of the two men's evidence about their discussions from time to time. The versions of those discussions differ starkly, and I have not set out their various accounts in detailed, narrative form. However, Mr Hacking does insist that right up to their final meting in November 1994 he continued to inquire of Mr Beckhaus whether he had yet received valuations of Pastoral's assets. Mr Beckhaus denies this, but Mr Hacking says that it was not until their November meeting that he discovered "there was not going to be a joint venture". 40 Mr Hacking's misleading or deceptive conduct case is pressed on two bases. First, it relies on Mr Beckhaus's alleged statement to the effect that the transfer of assets to Pastoral was only temporary until a new company was set up. Secondly, it is contended that, if the transfer was not in furtherance of a joint venture, Mr Beckhaus was in the circumstances obliged to say so. 41 Counsel for the applicants submits that, in resolving the conflict of evidence between Mr Hacking and Mr Beckhaus, I should have regard to the inherent implausibility of Mr Hacking having agreed to a transaction of the kind that Mr Beckhaus says he did. In support of this argument, counsel draws attention to evidence adduced in Mr Hacking's case as to the value of the assets acquired by Pastoral and compares those figures (which range, in total, between $410,000 and $638,000) with the lesser amount of $349,683.63 required to pay out Epilodge's financiers. Counsel submits that such a disposition would have been improvident, had Mr Hacking not been led to believe that the transfer was in furtherance of a joint venture. It would, he says, have made no sense for Mr Hacking to have simply sold the assets outright to Pastoral, as Mr Hacking would thereby have obtained no advantage. 42 I do not find that this analysis at all convincing. I have already described the situation facing Epilodge at the end of 1993. That position did not improve in 1994. Esanda revalued its securities in February and, on its calculations, the Slacks Creek land (which was given a quick sale value of only $70,000) was still required to cover Epilodge's outstanding commitments. Esanda also held by way of security a second mortgage over the Hackings' residence, as well as guarantees from Mr and Mrs Hacking and Retep. In November 1993 Perpetual Fiance had also had the equipment it leased to Epilodge professionally valued at a figure below that subsequently used by Mr Hacking as the auction values in the "Equipment Listing" document he says he gave to Mr Beckhaus. The Esanda records do not suggest that its valuations were given to Mr Hacking, but it is a reasonable assumption that those dealing with Mr Hacking on Esanda's behalf presented him with the general picture when they were pressing for payment. The fact is that, from the Hackings' point of view, their home at Westlake was at risk together with any assets they may have owned personally or in the Retep Trust. 43 On the other side of the deal, the Beckhaus interests were able to borrow $412,000 by way of lease finance provided to Pastoral. That borrowing required guarantees from Civil and Mr and Mrs Beckhaus. Mr Wallington recalls estimating the value of the equipment to be leased by Pastoral from AGC at between $250,000 and $300,000. That equipment included three items that were unencumbered, and yet nearly $350,000 was required to pay out Epilodge's financiers. It is hardly surprising that Mr Beckhaus also needed the Slacks Creek land to support his group's borrowings. There is no actuarial evidence of the May 1994 value of the future liability taken on by Pastoral in committing to make the lease payments over the four-year term of the leases and to pay the residual sum of $120,000 at the end of their term. Depending upon the assumptions made, the present value of such a liability in May 1994 may well have exceeded $412,000. The requirements of AGC were not, of course, known to Mr Hacking, but I see nothing inherently implausible in the consummation of a transaction on the basis that Mr Beckhaus says was agreed. 44 I do not think it matters whether, at their first meeting in Bargara, Mr Hacking gave Mr Beckhaus the "Equipment Listing" document, save perhaps for the convenient symmetry with the list of equipment set out in Mr Hacking's notes dated 3 July 1994. (Only two items are omitted from the second list). However, I am not prepared to find that he did so. In particular, I reject Mr Hacking's evidence that Mr Beckhaus's job offer was linked to the joint venture. Mr Beckhaus explains why he needed a project manager straightaway. Any joint venture was obviously a matter for future negotiations. 45 Mr Beckhaus says that, in their discussions, Mr Hacking talked most of the time and he just listened. Although he did not say so, I got the impression that Mr Beckhaus thought Mr Hacking a bit of a blusterer. That would accord with my impression of him in the witness box. On the other hand, Mr Beckhaus demonstrated a rather passive manner. He betrayed, I thought, some resentment at being the subject of the present claim. This led Mr Beckhaus sometimes not to consider his answers as carefully as he might have, but he did strike me as entirely truthful. By contrast, Mr Hacking seemed to think that he could will facts into existence by constantly repeating the phrase "joint venture" as some kind of mantra. 46 The visit to Caterpillar Financial was obviously a complete waste of time. I have no doubt that Mr Beckhaus was soon alert to Mr Hacking's financial difficulties and advised him as he said he did after that meeting. During March Mr Hacking's predicament worsened. Plainly he had no way of contributing any assets to a pooled enterprise. Mr Beckhaus admits that he saw an opportunity. He says that Mr Hacking told him he was "desperate" and that he wanted to see how badly off Mr Hacking was. By the end of the month all prospect of a joint venture had been abandoned, and Mr Hacking simply wanted to sell his equipment. I accept Mr Beckhaus's evidence. I attach no importance to the Westpac file note of 6 April. Its language is explicable having regard to what Mr Nest had been told on 1 March. But the financing was being arranged by AGC and Mr Wallington was not at all interested by the end of the month in the Hacking's "family tree structure" or anything that vaguely suggested a continuing involvement of the Hackings. It seems to be common ground that Mr Beckhaus had no desire to acquire the Westlake residence, details of which had been included in the information furnished earlier in the month. I do not accept that Mr Beckhaus ever said that the land and equipment were to be "put into" one of his companies until a new company was formed. I think that Mr Hacking's evidence that Mr Beckhaus went on to say that the new company would be set up "in November 1994" reflects Mr Hacking's wishful thinking after the event to conform with the termination of his employment at that time. No logical reason is suggested why it should have been proposed that the formation of a new company should wait until then if what was proposed was a pooling of existing assets. Mr Hacking would not be expected to defer to the views of Mr Beckhaus's professional advisers. 47 This brings me to the draft discussion document of 29 April 1994. Mr Beckhaus does not deny its authenticity, and it may be accepted that it represented his thoughts as they had developed during April. Plainly any thought of pooling equipment had disappeared, but the transfer of the Slacks Creek property was critical to Pastoral's paying out Epilodge's financiers. Mr Beckhaus allows that he had thought at one stage that there may have been a "slight surplus" in the value of the assets to be purchased by Pastoral. That thinking appears to be reflected in paragraph 2(iii) of the discussion draft, although it must be said that the tone is at once tentative and hedged in terms of discretion. The one thing that is clear is that the document nowhere contemplates a pooling of assets or any kind of joint venture. It is absurd for Mr Hacking to suggest that it could have prompted a discussion of a joint venture on such a basis. On the contrary, if such a document had been sent to Mr Hacking at around that date (which I do not accept), then, if he genuinely believed that such a proposal was on foot, the natural and instinctive reaction would have been to protest about the entirely inconsistent arrangement contemplated in the discussion draft. This is not what Mr Hacking says he did. Instead, he says that, during a telephone conversation at about that time, he made the notes on the reverse side of the document. I do not accept that there was any such conversation. 48 Mr Beckhaus says that during April it became apparent to him that there would be no surplus value in the assets acquired from Epilodge. I accept Mr Beckhaus's evidence of what he says about discussions during the journey to Ayr with Mr Hacking. Certainly, by the time settlement occurred on 27 May 1994, Mr Hacking can have been in no doubt about the nature of the transaction. The comprehensiveness of the disposition by Epilodge was underscored by the list prepared by Ms Clarke, who was a long-time employee of Hacking Plant Hire (she was shown as a creditor for wages in the administrator's report on the affairs of Hacking & Sons Pty Ltd) and a confidante of the Hackings. Nor were the Hackings unsophisticated in business. They had engaged Coopers & Lybrand in 1990 to create a business structure where the assets employed in their business were not available to meet the debts owing to their trade creditors. I have already mentioned that Mr Hacking had told Esanda earlier in May that settlement was scheduled for the end of the month. Yet Mr Hacking never went back to see Mr Lowe after the end of March. He had no involvement in the negotiations with AGC. It is ludicrous for Mr Hacking effectively to suggest that what was represented to him was that he was going to get a free ride until November, completely freed of his erstwhile obligations to financiers, whilst the Beckhauses assumed burdens he knew nothing about. 49 Mr Hacking's notes dated 3 July 1994 are also curious. I am quite satisfied that Mr Hacking never gave that document to Mr Beckhaus as he says he did, and that it was first seen by the Beckhauses when it was handed over in November. In July its terms might be expected to have promoted the kind of dispute which has resulted in this litigation. It would never have produced the sanguine, business as usual reaction that Mr Hacking describes. I can only guess that the date was fixed upon so as to antedate the deregistration of Epilodge and Retep (although Mr Hacking says he did not learn of that fact until 1995). In any event, it does not matter. Again what is far more striking about this document is the kind of claim made. It contains a claim for surplus value based on the "purchase" of the assets detailed. It does not suggest a pooling of resources to be effected upon the receipt of valuations of the Beckhaus assets, although this is what Mr Hacking says that he was inquiring about right up to November. I reject Mr Hacking's evidence that he ever made such requests. 50 The key representation relied on by Mr Hacking is not made out. I find that Mr Hacking knew that what was effected on 27 May 1994 was an outright sale of Epilodge's assets and that it was not part of any joint venture proposal. There is nothing equivocal about the "purchase agreement" dated 25 May 1994 that he signed. Mr Beckhaus could not have made the position clearer. Indeed, he acknowledges (and I accept) that Mr Beckhaus expressed his regret that there was no surplus value. It was always open to both sides not to proceed with the sale. Mr Beckhaus was not buying a pig in a poke. When he knew what the payout figures were, he could have declined to proceed with the purchase. 51 It is true, as Mr Beckhaus says, that he continued for some time to offer an "incentive" to Mr Hacking (and for that matter to Mr Dewar) to participate, after the Selkirk job and dependent on its management, in some future enterprise with him. But that had nothing to do with pooling the equipment being used by each of their businesses at the beginning of 1994. That is the case put against the respondents by Mr Hacking, and it entirely fails. 52 Mrs Hacking's claim on behalf of the Retep Trust has occupied much of the hearing time. The items of equipment, which were made available by Retep and used by Civil in the period prior to 27 May 1994, have been identified. There was a good deal of conflicting evidence, however, about their actual hours of usage and the condition of the machines. Mrs Hacking allowed in her invoice of 26 July 1995 a credit for the cost of parts and labour supplied by Civil, which corresponds with that given by Mr Hacking in his rates dated 3 July 1994. Civil and the other respondents denied any liability to pay hire charges for the use of that equipment. However, Civil claimed that, in the event that it was liable to pay such charges, the equipment must be regarded as having been made available on the same "dry hire" basis as was initially agreed for the Caterpillar compactor. This meant, it was alleged, that the hirer had to meet transport costs to and from site and all the costs of keeping the equipment in working order. So great were the claimed costs of this type, which Civil had itself met, that it claimed not merely a set-off against any liability for hiring charges, but also by way of cross-claim for a balance owing to it by the Retep Trust for such costs and other amounts paid to Retep on account. 53 There plainly was an agreement initially in respect of the Caterpillar compactor. However, after the other items of equipment were brought to the Palm Creek job site, I do not accept that any hiring rates were agreed. Both Mr Hacking and Mr Beckhaus seem to agree that the question of any charge for the use of the extra machines was to await the outcome of their discussions. Mr Beckhaus says that this arrangement also covered the Caterpillar compactor that he had agreed to hire before such discussion commenced. The postponement by Mr Hacking of any invoicing for charges only makes sense if no charges were to be raised in the event that a deal was concluded. Mr Hacking was coy about saying that explicitly, but I apprehend that his case was that only a concluded joint venture involving the pooling of equipment would lead to a result where no hiring charges were raised. Mr Beckhaus, of course, says that during March the negotiations shifted and that by April the only proposal for negotiation was the out-right purchase by Pastoral. I have already said that I accept Mr Beckhaus's evidence to this effect. Mr Hacking failed to demand any payment for the use of the machines until November. Whatever Mrs Hacking's motives were in inspecting Civil's records in June, that does not affect the situation that obtained on 27 May 1994. The settlement at that date was plainly intended as a clean break. Mr Beckhaus knew in broad terms of the cost of transport and repairs that Civil had incurred in respect of the machines made available by Retep. That was a commercial consideration he was able to take into account in deciding whether to proceed with the AGC loan and to pay out Epilodge's financiers, along with the fact that some of that expenditure had been incurred on the two Euclid dump trucks that Pastoral was not acquiring. Accordingly, I find that the only agreement, that relating to the Caterpillar compactor, was also discharged by the subsequent agreement involving the purchase by Pastoral of the equipment used by Civil. There never were any agreed rates of hire for the other machines.