Lukey v Corporate Investment Australia Funds Management Pty Ltd

4 Ms Lukey contended that, by distributing the Prospectus and a supplementary prospectus dated 18 June 1998 ('the Supplementary Prospectus'), CIAFM engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of s 995(2) of the Corporations Law of New South Wales and other States and Territories ('the Law') and s 52 of the Trade Practices Act 1974 (Cth) ('the Trade Practices Act'). 5 Ms Lukey also contended that, in contravention of s 995(2) of the Law, Cardinal engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in relation to the Prospectus. In addition, there were further claims by Ms Lukey against CIAFM and Cardinal alleging breaches of the Project Deed and against Cardinal alleging breaches of trust. Ms Lukey's claims against the Directors were based on the Law and the Fair Trading Act 1987 (NSW) and its equivalents in other States and Territories ('the Fair Trading Acts'). 6 Various respondents, including Cardinal, filed cross-claims. Most of the cross-claims were for contribution or indemnity from other respondents, although some, including Cardinal's, were against third parties. All of the cross-claims, other than the cross-claim by Cardinal, were subsequently disposed of by consent. 7 On 8 December 2003 Ms Lukey's claims against Professor Valentine were dismissed by consent and approval was given for settlement of the proceeding as against him pursuant to s 33V(1) of the Federal Court Act (see [2003] FCA 1602). 8 During 2003, finishing on 18 December 2003, I heard all of the evidence and argument on the questions of whether the impugned conduct of CIAFM, the Directors or Cardinal contravened the relevant legislation, whether the Directors were involved in any contravention by CIAFM and whether there were breaches of the Project Deed or breaches of trust by CIAFM or Cardinal. On 11 March 2004, with the consent of the parties then remaining in the proceedings, I published my provisional conclusions concerning those questions. At that time, I invited further written submissions on certain questions and further submissions were subsequently made by several of the parties. However, before I finally decided those questions, all of Ms Lukey's claims on her own behalf and on behalf of the Group Members were settled. On 4 June 2004, Ms Lukey's claims against Mr Kerin were dismissed by consent and approval was given for settlement of the proceeding as against him pursuant to s 33V(1) of the Federal Court Act. 9 Judgment for damages to be assessed was entered against TrackNet at an early stage in the proceeding. On 30 June 2004, I made declarations that CIAFM had contravened provisions of the Law, but ordered that the proceeding be otherwise dismissed as against CIAFM and TrackNet, on the basis that there was no utility in prosecuting the proceeding further against those respondents, since it appeared highly unlikely that any judgment could be met by them and further costs would be incurred (see [2004] FCA 1555). 10 On 28 June 2004, orders were made by consent as a result of a settlement between Cardinal and Ms Lukey, both on her own behalf and on behalf of the Group Members. The proceeding was settled on the basis that Cardinal would pay sums totalling $1,700,000 to Ms Lukey and the other Group Members, and would pay the sum of $2,600,000 in respect of Ms Lukey's costs of the proceeding to date. On 28 June 2004 I gave approval for the settlement pursuant to s 33V(1) of the Federal Court Act (see [2004] FCA 1579). 11 Ms Lukey's claim against Cardinal had been for the sum of $3,572.80, being the sum of $500 paid by her to Cardinal and $650 paid by her to CIAFM in December 1998, and the sum of $2,422.80 paid by her to Barkley Finance Corporation Pty Limited ('Barkley') in January 2000. I shall describe the circumstances of those payments in some detail in due course. The amount payable to Ms Lukey under the settlement was $2,337.28, which included interest under s 51A of the Federal Court of Australia Act. 12 In the result, Cardinal's cross-claim is the only matter remaining for determination. In its amended cross-claim ('the Cross-Claim'), Cardinal claims contribution or indemnity in respect of its liability to Ms Lukey. The cross-respondents to the Cross-Claim are:

• Finance and Planning Insurance and Superannuation Consultants Pty Limited ('Finance and Planning');
• Ms Ibrahim;
• The Hartford Group Pty Limited ('Hartford');
• Anthony Arthur Cunningham and Glen-John Lacelles Smith ('Tony Cunningham and Associates'). Cardinal has made no submissions in respect of its claims against Finance and Planning and Tony Cunningham and Associates. The Cross-Claim should therefore be dismissed as against those cross-respondents, neither of whom has participated in the proceeding. Neither has made any application for costs. 13 Cardinal makes similar allegations against each of Ms Ibrahim and Hartford, although the allegations against Ms Ibrahim are wider than those against Hartford in some respects. For the purposes of the Cross-Claim, it has been agreed between Cardinal, on the one hand, and Ms Ibrahim and Hartford, on the other, that the reasonable costs and disbursements, as assessed on a party/party basis, of Ms Lukey's claim against Cardinal, were $2,150,000. Cardinal's claim against Ms Ibrahim and Hartford is for contribution towards or indemnity in respect of the sum of $2,152,337.28. That sum consists of the amount of the judgment entered in favour of Ms Lukey of $2,337.28, together with the sum of $2,150,000 for costs. 14 Cardinal makes no claim against Hartford in respect of the sums totalling $1,150 paid by Ms Lukey in December 1998. Its claim against Hartford is limited to the sum of $2,422.80 paid by Ms Lukey in January 2000. The claim against Ms Ibrahim, however, is with respect to both of those sums, totalling $3,572.80. Cardinal claims contribution in respect of the whole of the sum of $2,337.28 from Ms Ibrahim. However, Cardinal claims contribution from Hartford in respect of only 68% of that sum: that is the proportion that $2,422.80 bears to the sum of $3,572.80. 15 In relation to the costs of $2,150,000, Cardinal claims contribution from Harford and Ms Ibrahim in the same proportions. That is to say, Cardinal claims contribution or indemnity from Ms Ibrahim in respect of the whole of the sum of $2,150,000 and claims contribution or indemnity from Hartford in respect of 68% of that sum. 16 Cardinal's claim for contribution or indemnity is based on:
• s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) ('the Tortfeasors Contribution Act'); or alternatively
• general equitable principles relating to equivalent coordinate liability. 17 Before dealing with the Cross-Claim, it is necessary to say something more about the Project and the Prospectus and about Ms Lukey's claims against CIAFM and Cardinal. Those claims may have a bearing on the liability of Ms Ibrahim and Hartford to Ms Lukey, since Ms Lukey claimed that she was induced to apply for an Interest in the Project by reason of misleading statements in the Prospectus. 18 I shall also say something about Ms Lukey's claims against Cardinal based on breach of the Project Deed and breach of trust. While Ms Lukey originally made a claim against Cardinal alleging breach of a duty of care alleged to be owed to her by Cardinal, that claim was abandoned in the course of the hearing. The provisional conclusions that I reached in relation to the remaining claims formed the basis of the settlement between Cardinal and Ms Lukey. For the purpose of the Cross-Claim, Cardinal, Hartford and Ms Ibrahim accept those conclusions as binding.

THE PROJECT 19 By participating in the Project, each 'Participant' was to purchase an individual 'Market Entitlement Area', consisting of the area covered by a single Australian postcode. Each Participant was to become the proprietor of a business involving the marketing, sale and distribution, in that area, of a vehicle communications and tracking system 'employing the latest in satellite and digital mobile telecommunications technologies using the TrackNet trademark'. The Prospectus described the 'TrackNet technology' in the following terms: 'a multi-purpose satellite based tracking and digital telephone based messaging system providing, initially, a means of tracking vehicles in the event of theft, or pinpointing the location of the transponder unit in the event of a range of crises, including personal duress, mechanical breakdown, activation of the vehicle's air bag, or a myriad of other applications.' 20 The TrackNet system involved monitoring signals from transponder units to be inserted in motor vehicles. Each business was intended to generate income in the form of proceeds from sales of such transponder units and in the form of monitoring fees. Each Participant was to enter into a management agreement with CIAFM ('the Management Agreement'), under which CIAFM was to manage the business of that Participant and to undertake the commercialisation of the products and services to be delivered by that Participant's business. The income from all of the businesses was to be pooled and the pooled proceeds were to be divided equally among the Group Members according to the number of Market Entitlement Areas held by them. 21 The Project Deed was approved by the Australian Securities Commission (as it then was) ('the Commission') pursuant to s 1067(4) of the Law. It recited that:

• CIAFM and Cardinal had agreed to establish a venture to be known as 'The First TrackNet Project';
• to enable the Project to commence, each Participant and CIAFM would enter into a Management Agreement under which CIAFM would agree to manage the business of each of the Participants, together with the business of all other Participants in a collective manner and CIAFM would agree to sell the rights to a specified Market Entitlement Area for the Project to each Participant. 22 By Clause 3.2 of the Project Deed, the Project was to commence upon the date of issue of the first 'Interest' (as defined) after 'the Expenditure Qualifying Conditions' were satisfied. An 'Interest' was to consist of the Participant's rights and obligations under the Management Agreement, an interest in the 'Participant's Undistributed Income' (as defined) at any time and all other rights and obligations conferred or imposed upon the Participant under the Project Deed. 23 The Expenditure Qualifying Conditions were defined as: (a) the achievement of minimum subscriptions under the Prospectus (which was 350); (b) the grant or assignment of the rights to the technology necessary for the delivery of the 'Vehicle Tracking and Communications Services' (as defined); and (c) the execution of a contract for the manufacture of at least 1,000 'Vehicle Transponders' (as defined). The term 'Vehicle Tracking and Communication Services' was defined as the marketing and sale of vehicle tracking units and the ongoing monitoring of those units for customers of the proposed businesses of Participants. 'Vehicle Transponder' is defined in clause 1.1 of the Project Deed as: 'the physical communication and satellite signal receiver unit designed for installation in a motor vehicle.' 24 Under clause 3.2 of the Project Deed, the Project was to terminate at the time specified in clause 12.1. Under clause 12.1(b), the Project was to be terminated, inter alia, 'where the Project is to be terminated under Clause … 41.1' (sic; scilicet 40.1). Clause 40.1 provided that, if, by 30 June 1998, the Expenditure Qualifying Conditions had not been satisfied then, subject to clause 40.2, the Project would terminate. Clause 40.2 provided that the date of 30 June 1998 referred to in clause 40.1 'may be amended … by supplemental deed … executed and approved by the Commission before 30 June 1998' (emphasis added). No such supplemental deed was ever executed. 25 It was common ground that the first Expenditure Qualifying Condition was satisfied. Further, CIAFM and Cardinal also treated the second and third Expenditure Qualifying Conditions as having been satisfied in circumstances to which reference will be made below. One of the principal issues in the proceeding was whether they were, in truth, satisfied. In my provisional conclusions I found that they had not been satisfied. 26 Under clause 17.1 of the Project Deed, CIAFM was given the absolute discretion as to whether to accept or reject any application for an Interest, provided that it was not to accept any application for an Interest until the Expenditure Qualifying Conditions had been met. Under clause 17.2, CIAFM was required to execute a Management Agreement in favour of the prospective Participant within five days of resolving to accept an application. The form of the Management Agreement was a schedule to the Project Deed. The Management Agreement was also set out in full in the Prospectus. 27 The parties to a Management Agreement were to be the Participant, CIAFM and TrackNet. Clause 4 of the form of Management Agreement provided that the 'Business' (as defined in clause 1) was to commence 'on the date of the satisfaction of [the] Expenditure Qualifying Conditions and due execution of the Management Agreement'. The term 'Business' was defined as: '… the commercial marketing, sale and distribution for a Market Entitlement Area of Vehicle Tracking and Communication Services and includes such actions undertaken to enable the Participant to derive income or an interest in income as part of the business activities…'. 28 Clause 5 of the form of Management Agreement dealt with fees. Under clause 5.1, on the issue of the Interest, the Participant was required to pay to CIAFM 'as Agent and Manager' a 'Market Area Entitlement Fee' of $500. Under clause 5.2, the Participant was required, on the issue of the Interest, to pay to CIAFM 'as the Agent and as Manager of the Business' a management fee for the 'Initial Period' of $25,000. The Initial Period is defined as the period of 12 months from the issue of a Participant's Interest. Clause 5.3 provided that, on receipt of the amount referred to in clause 5.2, CIAFM 'as the Agent and as Manager of the Business' was to pay, direct or disburse those amounts as follows:
• to CIAFM the sum of $17,500 representing prepaid marketing fees; · to CIAFM the amount of $7,500 representing prepaid business management fees.

The distinction between marketing fees and business management fees is not relevant for present purposes. 29 Clause 6 of the Project Deed dealt with the payments to be made under the Management Agreement. Under clause 6.2, Management Fees paid under a Management Agreement were to be dealt with, relevantly, as follows: '(a) the Management Fee for the Initial Period will be paid by the Participant directly to [Cardinal] and, on the issue of an Interest [Cardinal] shall be obliged to pay the Management Fee received by it to [CIAFM] by way of payment of the Management Fee under the Management Agreement for the Initial Period for the Participant….' By clause 6.5, CIAFM and the Participants agreed that the 'Total Project Sales' (as defined) from time to time would be paid to Cardinal as received by CIAFM, to be allocated to each Participant and disbursed in accordance with the Project Deed. Payment of those amounts in that way was to satisfy CIAFM's obligations under the Management Agreements. 30 On 22 December 1997, an agreement was made between CIAFM and TrackNet ('the Responsibility Agreement'). By clause 3 of the Responsibility Agreement, TrackNet agreed to make available to CIAFM and all the Participants all 'Intellectual Property' (as defined) required by CIAFM and all the Group Members for the conduct of the Project. Under clause 4.1, TrackNet agreed that it would, at its own cost, perform all of the responsibilities of CIAFM under each Management Agreement and the Project Deed. 31 Clause 5.1 of the Responsibility Agreement provided that, subject to clauses 5.3 and 5.4, CIAFM would pay to TrackNet, as remuneration for performing its responsibilities, a fee equivalent to the aggregate of the management fees in respect of the Initial Period received from Participants under the Management Agreements. Under clause 5.2, CIAFM was to pay to TrackNet, in subsequent periods, by way of remuneration for performing its responsibilities, a fee equivalent to the aggregate of the management fees received from Participants under the Management Agreements. Clause 5.3 provided for TrackNet to subscribe for shares in CIAFM and to pay all CIAFM's costs incurred in relation to the establishment of the Project and the issue of the Prospectus. 32 An instrument described as Technology and Intellectual Property Licence Agreement, which bears the date 1 September 1997 ('the Licence Agreement'), made between Global Positioning Systems Development Corporation ('GPSD'), as licensor and TrackNet, as licensee, was of some significance in the proceeding. Ms Lukey placed considerable emphasis on its terms in the context of statements made in the Prospectus that were said to be misleading or deceptive. It is also significant in relation to the question of whether the second Expenditure Qualifying Condition was met. 33 Part A of the Licence Agreement consists of recitals to the following effect: · GPSD is the owner/licensee of 'Intellectual Property' (as defined) and copyright subsisting in the 'TrackNet Vehicle Tracking System' (as defined); · GPSD has agreed to grant to TrackNet, who has agreed to accept, a licence to use the 'Intellectual Property' and the 'TrackNet Software' (as defined) upon the terms of the Licence Agreement; · GPSD has agreed to supply the 'TrackNet Vehicle Tracking System' and to provide 'Support Services' (as defined) upon the terms of the Licence Agreement. 34 The Licence Agreement contains the following definition: '"TrackNet Vehicle Tracking System" means the TrackNet Vehicle Tracking System as described in Schedule 5 and as further detailed in Schedule 20 as varied from time to time by [GPSD].' 35 Schedule 5, in turn, refers the reader to Schedule 4, which describes the 'TrackNet Software' as comprising: '… the system of integration between the Global Positioning System (GPS) hardware and the Global System for Mobiles (GSM) hardware, and any software required to operate the two pieces of hardware to be integrated. The TrackNet Software also extends to the integration of local digital mapping software to be incorporated into the operational Control Room.' 36 'TrackNet Software' is defined as the software designated in Schedule 4, consisting of a set of instructions or statements in executable code medium, together with any associated materials and documentation. The term 'Support Services' is defined as support services relating to the TrackNet Software to be performed by GPSD pursuant to Part C of the Licence Agreement. 37 Clause B4 is the pivotal provision so far as the grant under the Licence Agreement is concerned. By clause B4.1.1, GPSD: '… grants to [TrackNet], who accepts, an exclusive licence to use the Intellectual Property and TrackNet Software for the purpose of operating and maintaining TrackNet Vehicle Tracking Systems within the Territory during the term (sic) and to sell the Products and Services within the Territory during the Term'. 'Territory' is defined as Australia and New Zealand. The term 'Products' is defined as products made in accordance with, or using, or comprising Intellectual Property. The term 'Services' is defined as services provided in accordance with, or using, or comprising the Intellectual Property and which are in support of the Products. 38 While the Licence Agreement is, on its face, of some complexity, it contains little of actual substance and particularity as to the subject of the grant purportedly made by it. In fact, GPSD had nothing of substance to make the subject of any grant. The Licence Agreement contains no operating specifications or performance criteria. Rather, it might fairly be described as a broad specification for a vehicle tracking system, rather than a detailed description of the technology for operating such a system. 39 GPSD did not have any relevant rights that were capable of grant or assignment under the Licence Agreement, other than rights under an instrument described as 'Heads of Agreement for the Licensing of SiRF GPS Application Software' ('the SiRF Heads of Agreement'). The SiRF Heads of Agreement bear the date 1 September 1997, although it is clear that they were not actually signed until November 1997. 40 The SiRF Heads of Agreement purport to be made between SiRF Technology Inc ('SiRF') and GPSD and contain recitals to the effect that:

• SiRF is a technology company that provides innovative, cost-effective, silicon and software solutions for a broad range of GPS applications, and is the manufacturer of the SiRFstar I/LX GPS chipset;
• the parties wished to negotiate an agreement under which SiRF would agree to supply its SiRFstar products and considerable GPS expertise and services to GPSD or GPSD's customers; · the parties acknowledged that the SiRF chipsets may be supplied only as part of a complete unit, through an approved manufacturer;

· GPSD would acquire SiRF products initially through NAViS Technology Inc, subsequently Navtel Technology Inc ('Navtel'), or such other SiRF approved manufacturer as both parties may agree upon.

41 The SiRF Heads of Agreement contain a statement that they were intended 'to become legally binding on the Effective Date of a GPS/GSM license agreement to be entered into on or about 1 September 1997 between [GPSD] and [Navtel] (the "[Navtel] Agreement" which is deemed to be annexed to this Agreement'. Under clause 2, the SiRF Heads of Agreement were to commence on the 'Effective Date' of the Navtel Agreement and were to terminate on the termination of that agreement. 42 Clauses 3 and 4 of the SiRF Heads of Agreement dealt with the respective obligations of SiRF and GPSD in the following terms: '3. OBLIGATIONS OF SiRF 3.1 Facilities SiRF will agree to ensure that it has and maintains the SiRF Facilities and that such SiRF Facilities are adequate for the prompt and efficient provision of its services to [GPSD], and for the ongoing supply of SiRF Products to [Navtel], or such other manufacturer as may be agreed between the parties. 3.2 Services SiRF, in conjunction with [Navtel], and at [GPSD's] cost, will provide: (a) the engineering staff support necessary to configure, install and test all of the electronic components of the Australian Response Centre;

(b) the technical staff to assist in the Australian Response Centre installation…;

(c) instructors who will provide the necessary training of Australian Response Centre personnel. …;

(d) the necessary technical support to localise the SiRF system to accommodate Australian telecommunications technology. 4. OBLIGATIONS OF [GPSD] 4.1 Market SiRF Products and Services [GPSD] will agree to actively market the SiRF Products and Services to its Customers, as part of the TrackNet Vehicle Tracking System.

[GPSD] will pay to SiRF an initial payment of $AUD 2,000,000 for use of the SiRF name, introduction to a manufacturer and ongoing access to SiRF for the purposes of future developmental work and assistance. …'. The term 'SiRF Facilities' was defined in the SiRF Heads of Agreement as the SiRFstar suite of products described in Schedule 1, which contains a description of components and software. 43 Thus, the SiRF Heads of Agreement did not purport to grant or assign to GPSD any rights to technology. Under the SiRF Heads of Agreement, SiRF's obligations (clause 3) were limited to maintaining certain facilities and providing services in relation to an 'Australian Response Centre'. In any event, clause 2 provided that the SiRF Heads of Agreement would only commence on the Effective Date of the Navtel Agreement between GPSD and Navtel. No such agreement was ever made.

THE PROSPECTUS 44 The Prospectus consisted of a booklet comprising 76 printed pages. The front cover of the Prospectus contained the following: 'PROSPECTUS FOR PARTICIPATION IN THE FIRST TRACKNET PROJECT'. The TrackNet trade mark also appeared on the front cover. The inside of the front cover contained further printed material to which reference will be made later. 45 The back cover contained the following: 'CORPORATE INVESTMENT AUSTRALIA FUNDS MANAGEMENT LTD (ACN 059 438 514). For the issue of up to 3068 Interests in the First TrackNet Project. This Prospectus is dated 22nd December 1997. A copy of this Prospectus has been lodged with the Australian Securities Commission on 22nd December 1997. The ASC does not take any responsibility as to the contents of this Prospectus.' 46 The contents of the Prospectus were divided into seventeen sections under the following heads: 1 DIRECTORY 2 CONTENTS 3 IMPORTANT NOTICE TO APPLICANTS 4 DETAILS OF THE INDUSTRY 5 SUMMARY OF PARTICIPATION 6 THE MANAGER 7 THE TRUSTEE 8 THE OPERATIONAL MANAGER 9 INDICATIVE FINANCIAL FIGURES 10 REPORT ON FINANCIAL FIGURES 11 TAXATION ADVISER'S REPORT 12 ADDITIONAL INFORMATION 13 DIRECTORS 14 MANAGEMENT AGREEMENT 15 INSTRUCTIONS TO APPLICANTS 16 APPLICATION FORM AND POWER OF ATTORNEY 17 DEFINITION AND GLOSSARY OF TERMS 47 Section 4 of the Prospectus contained two reports by Valutech Pty Limited ('Valutech') dated 17 December 1997. The first is entitled 'Automatic vehicle location systems market assessment' ('the Valutech Market Assessment'). The second is entitled 'Independent technical expert's report' ('the Valutech Technical Report'). 48 Section 5 of the Prospectus began by stating that, to participate at the minimum level in the Project, each Prospective Participant would be required to pay management fees for the first year of the Participant's business, totalling $25,000 ('Management Fees'). It stated that, in addition, there is a 'once only' market entitlement area fee of $500 ('Market Entitlement Area Fee'). Thus, the total payment required for participation was $25,500. Section 5 also stated that Participants would be allocated an individual market entitlement area per Interest, in which they were to have 'marketing rights' for the TrackNet System. Section 5 also stated that the minimum subscription under the Prospectus was to be 350 Interests and that the offer was for a maximum of 3,068 Interests. 3,068 is the number of separate postcodes in Australia. 49 Section 5 also contains the following warnings: 'Risks of Participation Marketing risk There is no guarantee that it will be possible to either penetrate existing markets, or widen them, in order to achieve the revenue projections set out in the section titled Indicative Financial Figures. Alternative and competitive products may appear on the market. Anticipated returns may not occur. Market development may be slower than anticipated, or markets for the products produced may not eventuate. Projected prices for products may not be achieved. … Technical risk There is no guarantee that the research and development work of the Developer will be successful in maintaining the marketability of TrackNetTM. New technology and techniques need to be continually developed to meet evolving consumer, market and regulatory standards. Tax risk Taxation consequences of the Project are detailed in the Taxation Adviser's Report, pages 39-49 of this Prospectus. The Manager refers Participants to the risks identified by Deloitte Touche Tohmatsu and advises that Participants should seek their own independent tax advice.'

50 Section 6 described each of the three Directors but otherwise said nothing about CIAFM. Section 7 described Cardinal and Section 8 described TrackNet and its directors, Messrs Pawsey and Flanagan, and Mr White. 51 Section 9 set out projected returns and cash flow per Interest on the basis of assumptions that were set out in that section ('the Projections'). It projected a profit per Interest for the year ending 30 June 1999 of $2,423. The Projections were as follows: '1. PROJECT RETURNS 1998 1999 2000 2001 2002 Transponder Unit Sales (no.) - 6,500 13,000 13,650 14,333 Income ($,000) Transponder Unit Sales - 5,038 10,377 11,223 12,137 Monitoring (units sold in current year) - 1,560 3,214 3,476 3,759 Monitoring (units sold in previous years) - - 1,366 4,009 6,553 Stand Alone Systems - - 1,000 1,030 1,061 Total Income ($,000) - 6,598 15,957 19,738 23,510 Total Expenditure ($,000) 25,000 4,175 9,637 12,061 14,477 Profit ($,000) (25,000) 2,423 6,320 7,677 9,033 Per Interest ($) (25,000) 2,423 6,320 7,677 9,033

2. Cash flow Per Interest Inflow 1998 1999 2000 2001 2002 Net Income - 2,423 6,320 7,677 9,033 Total Inflow - 2,423 6,320 7,677 9,033 Outflow Management Fee 25,000 Market Entitlement Area Fee 500 Tax on gross revenue @ 48.5% - 1,175 3,065 3,723 4,381 Total Outflow 25,500 1,175 3,065 3,723 4,381 Net Cash Flow (25,500) 1,248 3,255 3,954 4,652 Cumulative Cash Flow per Interest (25,500) (24,252) (20,997) (17,043) (12,391)'.

52 Section 10 consisted of a report dated 17 December 1997 ('the PKF Report') from PKF Corporate Advisers Pty Limited ('PKF'). The report was described as a review of the Project and the Projections contained in Section 9. 53 Section 11 consisted of an opinion dated 19 December 1997 ('the Tax Opinion') from Deloitte Touche Tohmatsu ('Deloittes'). The Tax Opinion was generally directed to whether:

• income from a Participant's business will be assessable income; · whether losses or outgoings would be allowable deductions for tax purposes.

Specifically, the Tax Opinion addressed the deductibility of the Market Entitlement Area Fee, the Management Fees and interest paid in respect of borrowings to acquire an Interest. 54 Section 12 described the effect of the Project Deed and other relevant documents in a number of respects. In particular, relevantly for present purposes, it had information under the following heads:

• Duties and Obligations of the Trustee;
• Application Money; · Material Contracts.

Under the head of Material Contracts, the following were described:

• the Licence Agreement;
• the GTW Heads of Agreement;
• the Responsibility Agreement;
• the Project Deed. 55 Section 13 contained the signatures of each of the Directors. The entire form of the Management Agreement to be entered into between each Participant and CIAFM was set out in Section 14. Section 15 contained instructions for the completion of application forms and two application forms were contained in Section 16. Section 17 contained a dictionary of terms used in the Prospectus. 56 On 18 June 1998, CIAFM issued a Supplementary Prospectus. The Supplementary Prospectus was prompted entirely by taxation considerations. It refers to a request by the Commission to bring to the attention of prospective Participants an announcement made by the Commissioner of Taxation ('the Taxation Commissioner') on 12 June 1998 of the intention of the Australian Taxation Office ('the ATO') to 'target tax driven schemes'. It also refers to the Taxation Commissioner's warning that 'schemes driven by the intention to minimise tax may be struck down by the [ATO] with expenditures claimed, disallowed'. The Supplementary Prospectus contains CIAFM's response to seven factors listed by the Commissioner that might be taken into account by the ATO when looking at expenditure claims by individuals related to intended investments. 57 A letter dated 23 September 1998 ('the 23 September 1998 Letter') was circulated in conjunction with the Prospectus. The letter was in the following terms: 'Current Operational Status Since the end of the financial year there have been several matters of significance that have taken place at TrackNet which have positive implications for the future of The First TrackNet Project.

· Subsequent to the end of the financial year, we have completed the acquisition of Mobiletrack Pty Limited from Spectrum Networks Limited (now PowerTel Limited). …

…there is an existing revenue stream in Mobiletrack of approximately $2 million pa. TrackNet Pty Limited has agreed to make all of this Australian revenue available to participants in The First TrackNet Project pursuant to its obligations under the Tracknet Project Deed. With all of their management and marketing fees paid for this first year, participants are assured of receiving substantial revenue for the year ended 30 June, 1999.

· Tracknet has appointed Mr Tom Scollon, former Managing Director of QuikTrack Limited, as CEO, with specific responsibility for Mobiletrack and the marketing of TrackNet. …

· TrackNet has entered into a marketing contract with Autoforce Pty Limited, a company associated with the Wynn's Group, and who holds the extended warranty insurance programme for the Hyundai, Audi and Chrysler groups. …

· TrackNet has appointed Kennedy Rea Advertising and a PR firm to handle all aspects of the launch and ongoing advertising of TrackNet at both a corporate and retail level in a multi million dollar campaign, due for launch in November.

· TrackNet is currently designing a sales package for all participants, (both new and old) by means of which all participants will receive a TrackNet "BlackBox" (value $1200 - $1500) to be installed in their cars for demonstration purposes, as well as a sales kit. …

The above mentioned income stream and other very positive developments as well as the manner in which TrackNet Pty Ltd has managed The First TrackNet Project on behalf of the Participants sets this project apart from any other.'

FACTUAL FINDINGS 58 I shall set out in narrative form my findings and conclusions, which are derived from the contemporaneous documentary evidence, together with the oral evidence given by Ms Lukey, Ms Ibrahim and, in some respects, Professor Valentine. Their evidence is relevantly consistent and I consider that it is generally reliable. The oral evidence extended not only to objective circumstances but also, in the case of Ms Lukey, to her subjective state of mind. That latter matter is of significance in relation to any question of a causal connection between the conduct of Ms Ibrahim, on the one hand, and the loss and damage claimed by Ms Lukey against Cardinal, on the other. In that regard, it is not without significance that Ms Lukey made no claim in the proceeding against either Hartford or Ms Ibrahim. 59 While evidence as to oral communications given some years after the event will never be entirely accurate, I am satisfied that Ms Lukey, Ms Ibrahim and Professor Valentine were honest witnesses and were endeavouring, as best they were able, to give an accurate recollection of the matters in question. I should add that, while the evidence in question was given some considerable time ago, my assessment of their evidence is based on the notes that I made at the time when the evidence was given.

THE POSITION OF MS IBRAHIM AND HARTFORD 60 Prior to April 1998, Ms Ibrahim was appointed as a representative of CIAFM within the meaning of s 88 of the Law. By letter of 15 April 1998, CIAFM informed Ms Ibrahim that on 29 April 1998 there was to be a workshop for representatives CIAFM. The letter said that the one day workshop had been arranged to provide representatives with a sound basis for advising clients on the range of products provided by CIAFM. 61 Ms Ibrahim attended the workshop held at CIAFM's office in Bligh Street, Sydney. At the workshop, representatives were addressed by various people, including Mr Kean Flanagan and Mr Neil Green of TrackNet, Mr Keith Watson of Barkley, Mr White of CIAFM and Mr Edward Russell of Cardinal. Ms Ibrahim was given brief details of all of the speakers. 62 On 15 June 1998, CIAFM wrote to Ms Ibrahim in connection with a speech given by the Commissioner for Taxation on 12 June 1998. The speech was entitled 'Taxing Times or Beware the Magic Pudding'. The letter enclosed a copy of the speech, which was said to be 'for your essential reading', and relevantly said: 'The speech issues a warning to investors that schemes driven by the intention to minimise tax may be struck down by the Australian Tax Office with expenditures claimed disallowed. You should be aware of what the Commissioner has said and taken to account his statements. Your clients may enquire as to whether [the Taxation Commissioner's] remarks relate particularly to the products of [CIAFM]. As you know our products [include] the First TrackNet Project. … [The Taxation Commissioner] lists the seven factors shown in italics that may be taken into account when looking at expenditure claims by individuals related to their project investments. We have reviewed the Commissioner's seven factors and include a synopsis of our responses: … 6. The taxpayer's participation in the scheme is financed wholly, or substantially, by a non-recourse loan. Further doubt would arise if the loan is effected by a round-robin of cheques and the transactions are not underpinned by genuine commercial considerations… Comment: No CIAFM products include any loan arrangements as an integral component. We believe that our products stand on their own merits without the need for leverage. However, we are aware that loans are available to participants and in so far as we are aware, none of the financing options are non-recourse in nature. … [The Taxation Commissioner] announced that promoters will be able to obtain a public ruling by approaching his office with full details of arrangements. As CIAFM views that its products are not of the kind characterised by the seven factors set out in his speech we see no need to apply for a product ruling. Your clients should therefore, be advised that no product ruling has been applied for in respect of our products. As you know all of CIAFM's products are supported by a prospectus that has been registered with the Australian Securities Commission. Representatives are reminded that they should be fully appraised of CIAFM's products and always ensure that their clients refer to the relevant prospectus and the enclosed tax opinion. In each instance, the tax opinion has been prepared by a reputable tax expert who is independent of the promoter. Representatives should also advise their clients that if they are uncertain as to their tax position, or are a company, it is advisable that they obtain independent professional advice as to their particular circumstances. …' 63 The enclosed speech by the Commissioner of Taxation included the following: 'Our objective is simply to understand the reality of the arrangements and apply the law accordingly. In this context our attention is at least aroused where the effect of the arrangements are such that the "investor" is not subject to significant, or indeed any, risks when the tax benefit is taken into account whether because of the use of limited or no-recourse financing, put-options or whatever combination of ingenious financing arrangements. Limited or no-recourse funding, broadly under which repayment is limited wholly or in large part to profits from the underlying activity, are often used to leverage up by many multiples the amount of any direct contribution by the "investor". The result is that the sought after tax benefit on the leveraged up amount "guarantees" the "investor". The result is that the sought after tax benefit on the leveraged up amount "guarantees" the "investor" a profit because it exceeds his or her personal contributions. Of particular concern to us at the moment are arrangements whereby their practical effect is that the loaned funds are simply not capable of ever being invested in the underlying activity. For example the arrangements might involve a round-robin of payments under which the investment, to the extent of the loan, is effectively used to repay the loan to the original financier. In these cases, while there is an underlying activity with the potential for profit, the actual amount going to that activity is a small fraction only of the claimed investment. In some cases you only have to aggregate the claimed investment to realise the underlying activity simply could not sustain the total level of investments claimed. It will come as no surprise to you that we have concluded that deductions claimed in these particular types of arrangements are not available under the law. We do not accept that the "investors" in these types of arrangements are carrying on a business and as such do not accept that deductions claimed for the fees funded under the arrangements are available under the general provisions of the law. Even if they could technically pass that hurdle - and as I said we do not accept that - we believe the tax benefit sought would be precluded by the operation of the general anti-avoidance provision - Part IVA.' 64 On 27 August 1998, CIAFM wrote again to Ms Ibrahim inviting her to a further training seminar for representatives, to be held on 23 September 1998. Ms Ibrahim attended that seminar, which also included presentations by Mr Flanagan, Mr Russell, Mr Green and Mr White. After the seminar, Mr Flanagan gave a presentation about the TrackNet Project and said that the Expenditure Qualifying Conditions had been met. 65 In October 1998, the First TrackNet Project was being marketed by telephone to clients of Tony Cunningham & Associates. At that time, Ms Ibrahim shared office accommodation with Tony Cunningham & Associates. Ms Ibrahim observed Ms Heather Kennedy, who was an accountant employed by Tony Cunningham & Associates, discussing which clients they were going to telephone. Ms Kennedy told Ms Ibrahim that she would refer clients to her who had indicated that they wanted further information about the First TrackNet Project. From October 1998, Ms Ibrahim began forwarding copies of the Prospectus to potential Participants, in her capacity as a representative holder of CIAFM. 66 On 18 November 1998, Tony Cunningham & Associates conducted a seminar at the Novotel Hotel, North Beach, Wollongong. The speakers included Mr Flanagan, who described the First TrackNet Project as an investment opportunity. Ms Ibrahim also attended that seminar. 67 From about November 1998, Ms Ibrahim distributed approximately 100 packages comprising copies of the Prospectus, the Supplementary Prospectus and the 23 September 1998 Letter. Of the 100 packages, approximately 80 were distributed after the seminar of 18 November 1998 just described. The packages were distributed during the course of interviews with potential Participants, many of whom had attended the seminar. 68 Sixty Interests in the Project were purportedly sold by Ms Ibrahim. Fifty were sold as a consequence of referrals from Tony Cunningham & Associates. Ms Lukey was one of the referrals to Ms Ibrahim from Tony Cunningham & Associates. 69 Ms Ibrahim had an arrangement with CIAFM to receive a commission of $1,250, less an administration fee, for each Interest in the Project sold by her. The commission was to be paid by two instalments. The first instalment was to be $650 and was to be forwarded prior to Christmas 1998. The second instalment was to be $600, to be forwarded during January 1999. Ms Ibrahim was to share that amount 50/50 with Tony Cunningham & Associates for those Interests that had been sold by reason of referral. On 23 December 1998, CIAFM paid to Ms Ibrahim the sum of $20,475, described as the 'first instalment' of commissions payable on the 60 Interests that she had sold at that stage, including the Interest sold to Ms Lukey. 70 On 17 December 1998, CIAFM wrote to Ms Ibrahim informing her of CIAFM's decision to withdraw her proper authority as a representative, effective from 31 January 1999. The letter said that the decision arose from a recent decision by the board of CIAFM to consolidate CIAFM's efforts in funds management. The letter went on to say: 'However, in view of your valued contribution as a CIAFM representative I would like to commend you to, The Hartford Group. They have been appointed as CIAFM product distributors in 1999. Moreover, they are more than happy to consider appointing ex CIAFM proper authority holders for a limited number of places as proper authority holders.' The letter then described Hartford and explained the ways in which Ms Ibrahim could take up the invitation to be appointed as a representative of Hartford. 71 Hartford was incorporated in September 1998 and was granted a dealers license by the Commission in November 1998. Hartford was formed to provide:

• an effective advisory distribution network for the products of CIAFM and other approved products;
• financial planning services to clients; · access to financial planning services for other financial planning and accounting firms, and to levy a fee for the provision of those services.

72 Professor Valentine was a director of Hartford at all relevant times. As at February 1999, the directors of Hartford were Professor Valentine, who was the responsible officer under Hartford's license, Messrs Kean Flanagan and Garry White, as non-executive directors and Messrs Wayne Pratt and David Kerr as executive directors. 73 In February 1999, Hartford published a training manual for its representatives, who were the holders of proper authorities from Hartford. The training manual summarised the position of representatives, relevant provisions of the Law and the functions of the Commission in relation to representatives. The training manual also set out conditions attached to Hartford's dealer's licence and contained advice on relevant matters for representatives. 74 In addition, the training manual contained a section entitled 'Financial Products in the Market Place'. That section included the following: 'Advisors are required to aim for an investment strategy that best suits the financial needs and objectives of the client. As reiterated throughout the Manual investment recommendations should be soundly based. This advice should be reduced to writing and the advisor should keep a copy of that advice along with other details on the client. … Licensees and its (sic) representatives as a matter of law, are required to disclose to investors the fundamental terms and obligations attaching to a financial product as well as the risks involved with the product and all fees, commissions and changes.

It is imperative that the investor is provided with clear and easy to understand information. Information provided to the client is required to be in a form which will enable the client to make an informed decision based on a rational assessment of the relative merits of the product compared with other alternative investments. Information provided to clients must set out the basic features of an investment product including risks, fees and charges. On occasions, this will mean providing the investor with information that is not especially favourable to a particular product. It may also require advising the client to seek additional specialist advice (e.g. from their Accountant/Lawyer or Tax agent). … … advisors are required to have sound product knowledge. It is imperative therefore, that before advising a client, that (sic) the advisor has a grasp of what products are generally available. The advisor is required to have the skills to research these products further and to arrive at an assessment that is useful, relevant and meaningful to the client's particular circumstances. … As a general "rule of thumb" investors should be cautioned against placing all their investment eggs in the one basket. However, the decision to invest ultimately rests with the client. Nevertheless, it is incumbent on the adviser to ensure that in making the decision that the client is provided with up to date, accurate and reliable information and that the client is fully cognisant of any risks associated with that decision. Accordingly, advisors and proper authority holders should ensure that they conduct themselves openly and honestly with clients. The penalties for doing otherwise are severe. Tax Based Schemes People are often attracted to some products for tax reasons. Many products currently on the market offer a substantial tax deduction in the first year and smaller deductions during the project's life. These products are usually marketed before the end of the financial year. However, investors should be warned of the risks of investing in products that appear to be principally tax driven and in particular, they should be alerted to Tax Rulings involving anti avoidance… .

In addition, investors should be advised that the published taxation benefits of certain products can be highly variable and vary with the individual circumstances of the tax payer. Therefore, advisors should advise clients to consult their own tax advisors for an assessment on how these schemes apply to their own specific circumstances. … Aggressive marketing of a products [sic], risks breaching the Law, especially if accompanied by inattention to the client's particular financial circumstances. It is imperative that advisors adhere to the Law in respect of providing advice and avoid making exaggerated claims or quarantining important information from the client. Omitting important details about a product may amount to misleading and deceptive conduct.' 75 On 11 January 1999, Hartford wrote to Ms Ibrahim with respect to her interest in becoming a representative of Hartford. A copy of Hartford's commission structure was attached to the letter, which set out the facilities that would be available for financial planners who were to become representatives of Hartford. A copy of Hartford's Approved Product List was also attached. The Project was not included in that list. 76 Whether Ms Ibrahim received a copy of the training manual has no bearing on the question of what duties, if any, she owed to Ms Lukey in December 1998. Ms Ibrahim had no relationship with Hartford until some time during 1999. While, as will appear below, Ms Ibrahim subsequently sent to Ms Lukey information received from Hartford concerning possible further investments, the training manual has no bearing on Ms Ibrahim's obligations to Ms Lukey in relation to the financing of Ms Lukey's investment in the Project in the circumstances described below. 77 On 3 March 1999, Ms Ibrahim sent a facsimile to Hartford attaching her completed application for a proper authority. That application included particulars of her qualifications, including particulars of registration of the business name 'Enhance Consultancy'. On 3 March 1999, Hartford wrote to Ms Ibrahim telling her that the directors of Hartford had approved her application as a representative and that the Commission had been advised accordingly. An authorised copy of her proper authority as a representative was enclosed with the letter. 78 Some time after 3 March 1999, Ms Lukey received a document on Hartford letterhead entitled 'Advisory Services Guide'. That document included statements to the following effect: 'Your advisor will be Sherin Ibrahim. … Sherin will be acting on behalf of [Hartford], who are responsible to you for any advisory services she provides. … We only recommend an investment to you after considering its suitability for your individual investment objectives, financial situation and needs. Our advisory service can include ongoing monitoring of your portfolio. … We will explain to you any significant risks of investments and strategies which we recommend to you. …' 79 On 7 April 1999, Hartford wrote to Ms Ibrahim again saying that Hartford was formalising its arrangements with its representatives. An authorised representative agreement was attached for Ms Ibrahim's consideration, execution and return. Clause 7.9 of the agreement provided as follows: '7.9 The Authorised Representative undertakes to take all reasonable steps to ensure that: … (g) he or she will only recommend or provide advice on those products which are on the Approved Products List and for which the Authorised Representative is accredited or approved by [Hartford].' 80 On 20 April 1999, Ms Ibrahim wrote to Ms Lukey on letterhead that contained references to 'Enhance Consultancy' and Hartford. The letter relevantly said: 'I write to inform you of changes to my Proper Authority. I have ceased holding a Proper Authority with [CIAFM] on 24 February 1999 and have commenced a Property Authority with [Hartford] on 3 March 1999. … As a financial planner and a Proper Authority Holder, I see this transition from CIAFM to Hartford being greatly beneficial to you, my client, as I will be able to extend the range of financial planning services provided, supported by in depth research. As well as offering a broad range of investments, managed funds, insurance and superannuation products, Hartford is willing to incorporate some of CIAFM's investment products on their Approved Product List, where taxation product rulings have been issued.' The letter went on to enclose copies of prospectuses for other investments unconnected with the Project. It is more likely than not that the Advisory Services Guide was sent to Ms Lukey at about the same time as the letter of 20 April 1999. 81 On 19 May 1999, an agreement for the appointment of Ms Ibrahim as authorised representative of Hartford was executed on behalf of each of them. The agreement included clause 7.9(g) to the effect that Ms Ibrahim would only recommend or provide advice on those products that are on the Approved Products List and for which Ms Ibrahim was accredited or approved by Hartford. As I have said, the Project was not on the Approved Products List.

MS LUKEY'S INVOLVEMENT IN THE PROJECT 82 In 1998, Ms Lukey was a part-time teacher at the Illawarra TAFE and was a PAYE taxpayer. She was a co-ordinator of community aged care packages with the Benevolent Society and also a voluntary co-ordinator of Advocates for Survivors of Child Abuse. She had responsibility as a sole parent for three children aged 18, 14 and 4. At that time, Ms Lukey's earnings were between $45,000 and $50,000 per annum and she had not undertaken any investment activities of any size. She was renting her home but wished to increase a current deposit that she had in order to purchase her first home. 83 Ms Lukey first heard about the Project in the second half of 1998 when her tax return was being prepared by Ms Heather Kennedy, who was a friend of Ms Lukey's. Ms Kennedy mentioned the Project to her and said that Cunningham & Associates were involved in it. She also told Ms Lukey that Ms Ibrahim, who was sharing the Figtree office of Cunningham & Associates, was also involved with the Project. Ms Kennedy told Ms Lukey that Ms Ibrahim was a financial adviser. Ms Kennedy gave Ms Ibrahim's telephone number to Ms Lukey. On 23 November 1998, Ms Lukey telephoned Ms Ibrahim and told her that she was a friend of Heather Kennedy. An appointment was made for 8.30 am on the following day. Ms Lukey told Ms Ibrahim that she had had her tax return prepared by Ms Kennedy, who had said that she should make an appointment to talk to Ms Ibrahim about the Project. 84 On 24 November 1998 Ms Lukey and her boyfriend attended Ms Ibrahim's office. Ms Lukey said that she would like to increase her current deposit to purchase her first home. Ms Ibrahim told Ms Lukey that she was a financial planner and a representative of CIAFM employed to work on the Project. Ms Ibrahim showed Ms Lukey a package consisting of a copy of the Prospectus, the Supplementary Prospectus and the 23 September 1998 Letter. 85 At this meeting, Ms Lukey told Ms Ibrahim that Ms Kennedy had told her a little bit about the Project and that she could find out more from Ms Ibrahim. Ms Ibrahim told Ms Lukey that the Project was the subject of a prospectus lodged with the Commission and that, before they spoke about the Project, they should look at her financial situation to see if it was suitable. 86 Ms Ibrahim had a financial plan to show Ms Lukey. She explained what the plan would consist of and that it was to evaluate an individual's financial circumstances. Ms Ibrahim explained to Ms Lukey that the cost of a financial plan would be approximately $600 to $800. Ms Lukey said that she did not want a financial plan but wanted to find out about TrackNet. Ms Ibrahim then opened the Prospectus and began to talk to Ms Lukey about the TrackNet Project. At some stage towards the beginning of the meeting, Ms Lukey spoke briefly to Ms Ibrahim about a deposit to buy a house and said that she and Grant were interested in buying a property together. 87 Ms Ibrahim spoke about the Prospectus and went to a number of pages to explain details contained in it. Ms Ibrahim and Ms Lukey sat on the same side of Ms Ibrahim's desk and together they went through the Prospectus in considerable detail. Ms Ibrahim first took Ms Lukey to the pages of the Prospectus that described the 'TrackNet technology'. They spent some time talking about the technology. Ms Ibrahim made a note that she gave the 'full TrackNet presentation' and explained the 'cash flow effect'. Ms Ibrahim also made a note that: '[Ms Lukey] may be entitled to DSS payments when taxable income is reduced, will apply for review.' Ms Ibrahim's note records that the Prospectus, finance documents and cash flow were given to Ms Lukey, who was to contact Ms Ibrahim for a future appointment. 88 Ms Ibrahim told Ms Lukey that the Project represented a really good opportunity, that it was a very good project and that the technology was new, innovative and advanced. Ms Ibrahim also told her that there were some tax advantages involved in becoming involved in the Project. Ms Ibrahim then led her into the cash flow analysis in the Prospectus and went through the cash flow analysis on a computer. 89 Ms Ibrahim told Ms Lukey about the risks associated with being involved in the Project, told her that it was speculative and told her that there were no guarantees that it was going to work. Ms Ibrahim also told her that, because of the nature of the Project, TrackNet had bought another company providing technology that had the same principles behind it and that it was a really good opportunity. Ms Ibrahim spent some time talking to Ms Lukey about the risks. 90 Ms Ibrahim explained that, with the borrowing of the money to purchase the Interest in the Project, Ms Lukey would be responsible for paying the interest component on the loan and that, if the Project did not continue, Ms Lukey would be responsible for paying the interest component for the life of the loan. She said that that was a risk because that meant Ms Lukey would be responsible for paying $12,000 or $13,000. 91 Ms Ibrahim told Ms Lukey that, as she did not know Ms Lukey's financial position, she could only talk about the TrackNet Project. Ms Lukey said that she was 'OK' with that. Ms Ibrahim said that the Prospectus needed to be read in its entirety, that Ms Lukey should go away and think about everything and that if Ms Lukey had any questions, she should not hesitate to contact her. Ms Lukey said that she would read the Prospectus. 92 At the end of the meeting, Ms Ibrahim handed Ms Lukey the package comprising the Prospectus, the Supplementary Prospectus and the 23 September 1998 Letter and said to her: 'You need to take this home and read it thoroughly to understand the Project and what you are thinking about getting involved in.' 93 After Ms Lukey's meeting with Ms Ibrahim on 24 November 1998, Ms Lukey contacted Ms Kennedy and they got together and talked about the benefits of the Project, including what was good and what was not so good about it. Ms Kennedy told her a lot about the technology and talked mostly about the technology. Ms Kennedy was really excited because she has a particular interest in that kind of thing. She did not discuss non-recourse loans or tax to any great extent. Ms Lukey had confidence in Ms Kennedy's judgment as her accountant and that was a factor in her decision to enter into the Project. 94 After the meeting of 24 November 1998, Ms Lukey read through the Prospectus. She did not sit down and read the whole thing at once, but spent about 5 or 6 hours doing so, over a period of time. On 2 December 1998, she rang Ms Ibrahim and made an appointment for 4 pm on 4 December 1998. 95 Ms Lukey and Ms Ibrahim met on 4 December 1998. Ms Ibrahim asked Ms Lukey whether she had had an opportunity to read through the Prospectus and whether she understood it. Ms Lukey replied that she had read through the Prospectus and understood it to the best of her ability. Ms Ibrahim showed Ms Lukey some paperwork and they talked about the cost of the Project. Ms Ibrahim asked Ms Lukey whether she was interested in being involved in the Project and signing up to purchase an Interest. 96 They had further discussion about the TrackNet technology. Ms Lukey asked Ms Ibrahim some questions about how the technology would actually work. In that context, they went back to the pages of the Prospectus that described the TrackNet technology (pages 6 and 7). Ms Ibrahim said that it was new and innovative technology. Ms Lukey also asked about the management and how the Project would run. Ms Ibrahim then took Ms Lukey back to the pages of the Prospectus that dealt with the management structure, in particular Chapter 6 (at page 27) of the Prospectus. She referred again to Mr Kerin, Mr White and Professor Valentine. As a result of looking at those parts of the Prospectus, Ms Lukey felt 'comfortable' enough to have a look at the paperwork. She was satisfied that the questions that she had asked had been answered. 97 At the meeting of 4 December 1998, Ms Lukey signed a number of documents, including several cheques. First, she signed a document entitled 'LIMITED ADVICE AGREEMENT'. The Limited Advice agreement was in the following terms: ' LIMITED ADVICE AGREEMENT Name Of Authorised Representative: Sherin Ibrahim Licensed Dealer In Securities: Corporate Investment Australia Funds Management Limited ("CIAFM") (Dealer No. 66769) Client's Full Name: Ms Samantha MacDonald Address: … Phone: … Sherin Ibrahim has informed me of the range of financial planning and advisory services available through Corporate Investment Australia Funds Management Limited ("CIAFM") (Licensed dealer in Securities - Dealer No. 66769) and Finance & Planning Insurance & Superannuation Consultants. She has advised me of the importance of providing sufficient personal information and the limitations of her recommendation to me. However, I have informed Sherin Ibrahim that I do not wish to take up the financial planning services or investment portfolio advice other than that relating to The First TrackNet Project. I understand the limitations of her recommendation as it relates to my financial situation, needs and investment objectives and agree that Sherin Ibrahim, CIAFM's Authorised Representative, is to be limited in the recommendations made to me. I am of the opinion and/or have received advice from my accountant and/or solicitor that The First TrackNet Project is appropriate to my particular investment needs and financial circumstances. Name: Samantha Macdonald Signed: [Signature]4th day of Dec 1998 Witness: …………….' 98 Ms Ibrahim asked Ms Lukey to sign the Limited Advice Agreement. Ms Lukey read it and said she understood it. Before Ms Lukey signed it, Ms Ibrahim told her that she could put together a whole financial plan for her, looking at a range of different investment options. However, Ms Lukey made a decision not to accept that offer. Ms Lukey could not recall whether she or Ms Ibrahim struck out the words 'or solicitor'. She understood the reference to 'my accountant' to be a reference to Heather Kennedy. 99 Ms Lukey signed the Limited Advice Agreement. When she did so, she understood that Ms Ibrahim was asking her to sign it because Ms Ibrahim was not giving her financial planning services. When Ms Lukey signed the Limited Advice Agreement, Ms Ibrahim did not question the truth of the statement that Ms Lukey was 'of the opinion and/or have received advice from my accountant… that the First TrackNet Project is appropriate to my particular investment needs and financial circumstances'. 100 Secondly, Ms Lukey signed the 'Application Form and Power of Attorney' attached to her copy of the Prospectus. By that document, she applied to CIAFM for one Interest in the Project. Ms Lukey also signed a document addressed to Tony Cunningham & Associates entitled 'Documentation Release Authority'. 101 Thirdly, Ms Lukey signed a document entitled 'Offer to Borrow' addressed to Australian Technology Finance Pty Limited ('ATF'). By the Offer to Borrow, Ms Lukey undertook to borrow from ATF the sum of $25,000 ('the Advance'). The Offer to Borrow provided for an establishment fee of $500 and a monthly account service fee equal to 0.075 per cent of the amount of the Advance. The Advance was repayable 84 months from the date that it was to be made. Provision was made for the payment of interest at an average rate of 9.95 per cent per annum from the drawing of the Advance. The Advance was to be drawn in one instalment and paid, on the date of drawing, to CIAFM as manager of the Project. 102 Clause 6 of the Offer to Borrow provided for repayment of the Advance in the following terms: 'I will repay the Advance to you as follows: (a) The Advance is repayable by me in full at the end of the Term.

(b) During the Term all income or entitlements from the Project will be paid by the Manager to You to be held by You on deposit to meet my obligation to repay the Advance at the end of the Term. However you will have or procure a performance bond or other undertaking … to repay such part of the Advance which may not have been repaid by the distribution of income from the Project. …

(c) The moneys on deposit will earn interest at a rate nominated by you, and such interest will be paid to You to offset in part or in whole my interest payment obligations hereunder. …' 103 The reference to 'the performance bond or other undertaking' was apparently regarded as having the effect that the borrower would have no liability to repay the Advance beyond the bond or undertaking. That is to say, it was regarded as a limited recourse loan. Ms Lukey also said that the limited recourse nature of the loan that was being offered to her was a positive factor but she would still have gone into the Project if limited recourse financing had not been available. That seems surprising, but I would be disposed to conclude that Ms Lukey genuinely believed that was her state of mind at the time. 104 It is not clear why the Offer to Borrow referred to the sum of $25,000, in circumstances where Ms Lukey also drew a cheque for $650 for part payment of the Management Fee. The total amount payable by way of Management Fee was $25,000. Accordingly, the amount that she needed to borrow was only $24,350. It appears that the sum of $25,000 was inserted in the Offer to Borrow by mistake. 105 Finally, Ms Lukey signed four cheques drawn on her account with Illawarra Credit Union Limited ('the Credit Union'). The cheques were as follows:

• $106.65 payable to ATF for stamp duty;
• $393.35 payable to ATF for finance fee;
• $500 payable to Cardinal for market establishment fee;
• $650 payable to CIAFM for part payment of management fee. 106 On 18 December 1998, a Management Agreement, in the form contained in the Prospectus and the Project Deed, was signed by Mr White on behalf of CIAFM and TrackNet and by Mr David Kerr, the secretary of CIAFM, on behalf of Ms Lukey. CIAFM purported to issue an Interest in the Project to Ms Lukey. The Register kept on the premises of CIAFM disclosed Ms Lukey's name as one of the persons to whom an Interest had purportedly been issued.

MS LUKEY'S REASONS FOR INVESTING IN THE PROJECT 107 Ms Lukey said that the principal aspects of the Prospectus that interested her in investing in the Project were the technology and the explanation of the technology in the Prospectus. Another aspect was that she understood that $12 million had been spent on the Project and it seemed to her a great opportunity. She understood that the management structure and accountability mechanisms in place would ensure that the Project worked well. She clearly understood that there were going to be some risks around borrowing nearly $25,000 and that she would be responsible for the interest component on that money for the life of the contract. At the same time, because of what Ms Lukey understood to be available in terms of the technology, she understood there would be a good future income projection, which would mean that she would be able to manage the repayment of the loan or at least the interest component. Ms Lukey also said that if what she understood about the technology was not true she would not have signed any of the documents in December 1998. 108 When she signed the documents, Ms Lukey understood that Ms Ibrahim was a financial planner with financial expertise. She trusted Ms Ibrahim. Based on what Ms Ibrahim told her, Ms Lukey believed that Ms Ibrahim thought the Project was a good one. Ms Lukey's belief that Ms Ibrahim thought the Project was a good one was an aspect of her decision, but not the only aspect. However, Ms Lukey did not understand Ms Ibrahim to be recommending the Project to her. 109 Further, Ms Lukey said that she did not consider the tax advantages, as she perceived them, were important to her in deciding to enter into the Project, although they were an aspect of the decision. She said that, if she had not been able to get a tax deduction, she would still have invested in the Project. 110 Ms Lukey was cross-examined concerning a document that was brought into existence by her, after the Project started to go wrong, as a note of her thoughts about the reasons why she had entered into the investment. She was asked whether, when she prepared the document, her recollection was that Ms Ibrahim had been instrumental in persuading her to enter into the investment. She replied 'No'. While she had written the phrase 'Financial Planner' on the document, she could not categorically recall why she had done so. She also wrote on the document: 'Latest Technology Non Resource Loans Accountability Structure Future Financial Projections' She agreed that they were all factors that, when she prepared the document, she considered had been important in causing her to make the investment in the Project. 111 Ms Lukey agreed that, when she prepared the document, it was in her mind that one of the reasons why she had made the investment was that the structure gave her a tax break and that she had only a small amount of money and wanted to maximise it. However, she said that the availability of the tax break was not an important factor in her decision to enter into the Project. Ms Lukey refused to accept that in late 1998, the TrackNet Project was the only investment that she was aware of that would put her in a position to get the money to put down on a house. She said that she was looking at the Project as a long term investment and that she was not simply looking at TrackNet as a means of getting a deposit on a house. 112 It is clear that Ms Lukey gave considered attention to the Prospectus. She went through it with Ms Ibrahim and subsequently spent some hours examining it herself. It is clear that Ms Lukey exercised independent judgment in deciding to proceed with investment in the Project. She denied that Ms Ibrahim was recommending such an investment to her although, based on what Ms Ibrahim told her, she thought that the Project was a good one. 113 However, Ms Lukey also considered that the role of Cardinal, as trustee, in ensuring that the correct processes occurred prior to expenditure, was of importance in making her decision to invest in the Project. That evidence is credible. She was influenced by the following statement on the inside of the front cover of the Prospectus: 'All Application Monies will be held in a separate bank account in trust for the Applicants until the issue of the Interests which will not occur until the Expenditure Qualifying Conditions are satisfied. [Cardinal] has been appointed the Participants' Trustee pursuant to the Project Deed dated 12 December 1997 and lodged with the [Commission].' She also had regard to section 7 of the Prospectus, which described Cardinal as a trustee company, specifically established to provide a range of trustee, custodial and other financial services to institutions, companies, individuals, including several similar prescribed interest based investments. 114 It is also clear that Ms Lukey placed reliance upon the statements contained in the Prospectus, that CIAFM had access to all hardware, software and infrastructure necessary for the Project and had access to all necessary technology to enable the Project to generate a positive cash flow in the first year of participation. Ms Lukey's reliance upon those statements had nothing to do with Ms Ibrahim, who took pains to ensure that Ms Lukey read and understood the Prospectus herself.

BARKLEY'S INVOLVEMENT IN DECEMBER 1998 115 For some reason, ATF did not provide finance to Ms Lukey pursuant to the Offer to Borrow. On 19 December 1998, without the knowledge of Ms Lukey or Ms Ibrahim, Messrs Flanagan and White approached Mr Keith W Watson, the managing director of Barkley, and asked, in substance, whether Barkley would provide 'temporary finance' to a group of individuals who were waiting finance approval from ATF. In addition, a letter dated 18 December 1998 was signed by Mr Ian Yates, who acted as a supervisor of the holders of proper authorities of CIAFM. In the letter, Mr Yates asked Mr Watson to arrange 'temporary finance' for Mr Yates' clients and clients introduced by, inter alia, Ms Ibrahim. The period of the temporary finance was to be 60 days. 116 The proposal put to Barkley was that, after the 60 days, a company called 'Capital Corp' would provide loan facilities to those who had signed Offers to Borrow to ATF and that, if Capital Corp was unable to proceed in that way, Barkley would offer an alternative facility. Mr Watson informed Messrs Flanagan and White that Barkley would be willing to provide the temporary finance for 60 days, for a small fee, which would be paid out of the 'finance fees' paid to ATF by the relevant borrowers. In fact, no such fee was ever deducted, because the total of $500 paid by Ms Lukey to ATF was subsequently refunded to her. 117 On 21 December 1998, a cheque in the sum of $43,426,500 was drawn by Barkley on an account with National Australia Bank Limited ('NAB'). The account was in the name of 'Barkley as trustee for the BFC TrackNet Trust' ('the BFC Account'). The cheque was payable to Cardinal and was forwarded to Cardinal under cover of a letter from Barkley dated 21 December 1998 saying: 'Please find attached a cheque for a total of 1,703 Interest (sic) as follows: 1,703 Interests at $25,500 = $43,426,500…'. Mr Watson signed the letter, as managing director of Barkley. On 21 December 1998, the cheque was deposited in Cardinal's Applications Account with NAB ('the Cardinal Applications Account'). It was debited to the BFC Account on 22 December 1998 and was credited to the Cardinal Applications Account on that day. 118 Cardinal received a letter dated 21 December 1998 from CIAFM saying relevantly: 'We have one thousand seven hundred and three (1,703) valid applications for one thousand seven hundred and three (1,703) interests in The First TrackNet Project, for which $43,426,500 has been deposited into [Cardinal's Application Account]. Could you please arrange for release of:

· The Management Fee representing $42,575,000.00 … made payable by cheque to [CIAFM];

· Marketing Fee representing $851,500.00 … made payable by cheque to [CIAFM] Trust Account;

The Interest (sic) have been issued and the post codes allocated.' Cardinal responded to that request by drawing two cheques on the Cardinal Applications Account for $42,575,000 and $851,500 respectively, which were debited to the Cardinal Applications Account on 22 December 1998. The cheque for $851,500 was deposited into CIAFM's trust account with NAB ('the CIAFM Trust Account') and credited to that account on 22 December 1998. The cheque for $42,575,000 was deposited into and credited to CIAFM's business cheque account with NAB ('the CIAFM Business Account') on 22 December 1998. 119 On 22 December 1998, CIAFM drew a cheque on the CIAFM Trust Account for $851,500 payable to TrackNet. That cheque was debited to the CIAFM Trust Account on 22 December 1998 and was paid into and credited to TrackNet's account with NAB ('TrackNet's Account'). 120 At the same time, CIAFM drew a cheque in the sum of $42,575,000 on the CIAFM Business Account payable to TrackNet. That cheque was deposited into TrackNet's account on the same day. The combined amounts of $851,500 and $42,575,000, totalling $43,426,500, were credited to TrackNet's Account on 22 December 1998. 121 On 22 December 1998, TrackNet drew a cheque on TrackNet's Account in the sum of $43,426,500. That cheque was payable to Barkley and was deposited into the BFC Account on that day and was credited to the BFC Account on 22 December 1998. The effect of the payment to Barkley was to extinguish the overdraft in the BFC Account that was created by the initial payment by Barkley to Cardinal. The payment to Barkley had the effect of creating a debt owing by Barkley to TrackNet. 122 Each component of the transactions just briefly described was documented by each party involved and gave rise to debits and credits in various accounts maintained with NAB as well as in Cardinal's internal Statement of Receipts and Payments for the period 1 July 1998 to 31 December 1998. Each of the parties to the various transactions intended that the respective payments described would create the legal rights and obligations which they gave the appearance of creating. 123 It was Cardinal's understanding that the payment of $43,426,500, which it received from Barkley, comprised loan funds from Barkley in the sum of $25,500 per Interest in respect of 1,703 Interests. Cardinal understood that that sum comprised Subscription Moneys in respect of those 1,703 Interests and that, when it paid the sum of $43,426,500 to CIAFM on 22 December 1998, it was paying that sum as Management Fees and Market Entitlement Area Fees. It accounted for those moneys accordingly. It is clear enough that the Interest that was purportedly issued to Ms Lukey on 18 December 1998 was one of the 1,703 Interests that were referred to in the correspondence relating to the series of payments just described. 124 Ms Lukey understood that she was expected to pay the sum of $25,500 to make up her total Subscription Moneys. She paid $1,150 herself. She expected that the balance of $24,350 was to come from ATF. She did not know of the existence of Barkley as at December 1998 and Barkley had no knowledge of her existence as an individual in December 1998. 125 On the other hand, it appears that Barkley intended to make a loan to Ms Lukey as a person who was one of Ms Ibrahim's clients. In effect, CIAFM intended that Barkley would stand in the shoes of ATF in making an advance to Ms Lukey. Barkley ultimately accounted for an advance to Ms Lukey. In its general ledger for the calendar year 1998, Barkley recorded a loan to Ms Lukey, as at 18 December 1998, in the sum of $24,350. The intention, at that time, was that the advance would be refinanced in 60 days. It is not entirely clear what was intended if the advance was not refinanced in 60 days. Of course, Ms Lukey knew nothing of any such possibility. She knew only of her request to ATF. 126 The cheque for $500 drawn by Ms Lukey on 4 December 1998 in favour of Cardinal for the Market Entitlement Area Fee was debited to her account on 22 December 1998. It was credited to the Cardinal Applications Account on the same day. That sum, together with other sums credited to the Cardinal Applications Account on 22 December 1998 totalling $48,350, was treated as having been part of the $851,500 paid by Cardinal to CIAFM on 22 December 1998. 127 The cheque drawn by Ms Lukey, in the sum of $650 in favour of CIAFM, was deposited into the CIAFM Trust Account on 21 December 1998 as part of a larger sum of $7,150. The amounts so deposited were credited to that account on 22 December 1998. The sum of $650 was debited to Ms Lukey's account with the Credit Union on 22 December 1998. 128 By letter of 22 December 1998, CIAFM requested that Cardinal deliver to CIAFM two cheques totalling $229,500. In accordance with that request, Cardinal drew a cheque in the sum of $269,800, which included the sum of $229,500. That cheque was payable to CIAFM and was deposited into the CIAFM Business Account on 23 December 1998 and credited on that date. That sum represented the sum of $229,500 and the amount of $40,300 referred to above. On 23 December 1998, CIAFM drew two cheques on the CIAFM Business Account, one for $40,300 and one for $229,500. Both cheques were payable to TrackNet and were deposited into TrackNet's Account and credited to that account on 23 December 1998. 129 On 22 December 1998, CIAFM drew a cheque in favour of Cardinal for $40,300. That sum was made up of $650 in respect of sixty Interests for Ms Ibrahim's clients and two Interests for clients of another financial planner. The cheque for $40,300 was delivered to Cardinal under cover of a letter dated 22 December 1998, in which CIAFM stated that the amount was 'incorrectly paid to CIAFM' and requested that Cardinal make out a cheque for the same amount to CIAFM for release of those funds. The cheque for $40,300 was deposited into the Cardinal Applications Account and credited to that account on 23 December 1998. 130 Thus, it is clear that Cardinal received $500 of Ms Lukey's money, which it paid away to CIAFM. Cardinal also received the sum of $650 belonging to Ms Lukey, which it paid away to CIAFM. As will appear below, those payments were made in breach of trust, because the Expenditure Qualifying Conditions had not all been satisfied.

MS LUKEY AND THE AUSTRALIAN TAXATION OFFICE 131 On 15 October 1999, Ms Lukey submitted an income tax return to the ATO for the year ended 30 June 1999. The tax return was submitted on her behalf by Tony Cunningham & Associates. The contact name given in the return was Heather Kennedy. By the tax return, Ms Lukey claimed a deduction for a loss in the sum of $25,051. On 29 October 1999, the ATO issued a notice of assessment showing a credit of $15,061.27. The assessment was made after allowing the deduction claimed in the tax return. 132 On 10 January 2001, the ATO wrote to Ms Lukey relevantly saying: 'We are writing to inform you that amended assessments were issued to you in the near future to give effect to the disallowance of management fees and interest expenses associated with your participation in the arrangements "The First TrackNet Project" for the year ended 30 June 1999. The reasons for our decision to amend the assessments was conveyed to you in our letter of 23 August 2000.' Determinations Under Part IVA of the Income Tax Assessment Act 1936 (Cth) have been made. The determinations are enclosed.' 133 A determination, dated 21 December 2000, provided that the Deputy Commissioner had determined, under s 177F(1)(b) of the Income Tax Assessment Act 1936 that the amount of $25,051, 'being a tax benefit that is referable to a deduction being allowable to [Ms Lukey] for the year of income ended 30 June 1999 shall not be allowable to [Ms Lukey] in relation to the year of income'. Section 177F(1)(b) is concerned with schemes to reduce income tax. The letter of 23 August 2000 referred to in the ATO's letter of 10 January 2001 is not in evidence. 134 On 8 February 2001, the ATO issued a notice of amended assessment showing the sum of $16,782.70 payable by Ms Lukey by 13 March 2001. The notice of amended assessment included in the sum of $2,336.72 for 'Understatement, Penalty and Interest'. The balance of the assessment was shown as a debit of $1,721.43. The amount payable of $16,782.70 was the difference between that sum and the credit of $15,061.27 shown in the original assessment for the year ended 30 June 1999. On 15 March 2001, Ms Lukey paid the sum of $16,782.70. 135 On 27 March 2001, Ms Lukey lodged a notice of objection in respect of the amended assessment. On 11 April 2001, the ATO wrote to her relevantly saying: 'We have received your notice of objection dated 27 March 2001 in respect of amended assessment for the year ended June 1999 which relates to adjustments made to your taxable income in respect of deductions claimed for your investment in the "First TrackNet" project. In accordance with the Taxpayer's Charter a decision would normally be made and issued to you within 56 days of receipt of the objection. However, further enquiries are being pursued by the ATO and until such time as they have been completed we are not in a position to give proper consideration to your objection.' 136 On 28 March 2001, the ATO wrote to Ms Lukey again. The letter was headed 'First TrackNet Project' and referred to 'Settlement opportunity including a remission of penalties and interest'. The letter relevantly said: 'I would now like to outline the options that are available to you in relation to our decision to disallow the deductions you claimed in respect of your participation in First TrackNet Project. The settlement opportunity applies to 1998-1999 and earlier years. These options are available to your even if you have already settled or paid your debt. The special circumstances that have led to the concessions being offered are that investors typically lacked full knowledge of scheme arrangements and the operation of the tax system, including self assessment and private ruling system. Investors were often subject to aggressive and sophisticated marketing techniques, had a generally good tax record and typically took advice from people expected to have the necessary knowledge to foresee the pitfalls. Importantly, investors contributed real money to the schemes and, in the end, many have suffered a real financial loss. … You can now settle amounts in dispute. This will provide you with the opportunity to claim a deduction for the cash outlayed on your investment. … The settlement would also provide eligible taxpayers with an opportunity to receive a remission of penalties and interest in full, and a two year interest free payment period if they enter into an acceptable arrangement to pay off the tax debt relating to this investment.' 137 Ms Lukey accepted the settlement opportunity offered by the ATO, which wrote to her on 3 May 2002 saying that her response to the settlement proposal would be processed as soon as practicable. On 26 September 2002, the ATO issued a further notice of amended assessment in respect of the year ended 30 June 1999. In that assessment, the sum of $3,573 was allowed as a deduction. The notice of amended assessment showed that the balance of the assessment was a credit of $2,518.22. Since the balance of the previous amended assessment was $1,721.43, the further notice of amended assessment showed an amount refundable of $4,239.65.

MS LUKEY'S DEALINGS WITH BARKLEY 138 On 29 January 1999, Ms Ibrahim sent an email to Mr Flanagan saying: 'I've had a number of enquiries about the current status of TrackNet. Could you please advise me of the following:

1. Number of units/interests prescribed.
2. When and where will the promotional campaign commence.
3. How does an investor go about installing a unit in their car? 3.(sic) How does an investor go about marketing/selling units for the purpose of commission? Any information about the current status of TrackNet would be appreciated. If any of this information has already been forwarded to investors, could you supply me with copies?' 139 Mr Flanagan responded to Ms Ibrahim's email on 1 February 1999, saying: '1. 2136 units in the Project.
4. On the 15th March. 3. Shortly after the 15th March all will be contacted with details about installation and their marketing. I hope these are the answers you were looking for…We are busy trying to sort out with the Bank a method of financing the units you sold, when we have it in place you will need to go back to your clients to complete documentation to get it all done asap.' 140 On 22 February 1999, the balance of the commissions payable by CIAFM to Ms Ibrahim in respect of Interests in the Project sold by her was still outstanding. She therefore began agitating for payment. That agitation resulted in an assertion from Messrs White and Flanagan to the effect that, because ATF had not in fact provided finance for many of the prospective investors to whom Ms Lukey had sold Interests, she would have to obtain finance for those investors. It was suggested that, if the investors to whom Ms Ibrahim had sold Interests did not obtain alternative finance, they would lose their Interests and she would have to repay the commissions already paid in respect of those Interests. In its submission, Cardinal characterised those statements as threats. 141 On 22 February 1999, Ms Ibrahim sent a further email to Mr Flanagan saying: 'Further to our previous discussions:
5. What is the current status on the financing position?
6. Have you gained the funding you were seeking?
7. Who is the financier? 4. Has a final financing document be agreed to?(sic) How does this differ from the "Offer to Borrow" from ATF. 5. When & how will participants be notified of these changes to the financing agreement? 6. When will the balance of the outstanding brokerage be paid? As you can appreciate quite some time has passed and the outstanding amount needs to be finalised.' 142 Mr Flanagan responded on the same day relevantly saying: 'As you know [TrackNet] was initially not going to become involved in arranging any finance, the reason why we stepped in was due to the fact that other parties who had made representations that finance was available failed to deliver. The biggest problem we are experiencing at the moment with our funders are the terms and conditions that were offered under ATF's package. TrackNet at this stage has yet to receive a cent from your 70 participants and quite obviously would like to. To answer all your questions:
8. Answered above.
9. Yes, but are trying to solve all the terms and conditions to reflect ATF.
10. They would prefer to remain unknown at this stage.
11. Answered above.
12. When we have a facility agreement agreed ... 6. At this stage you have sold these investments to your clients and have received part of the com due, I can appreciate that you are waiting for the balance, however, the underlying investment (ie TrackNet the reason for the investment) has yet to receive 1 cent. I sure you can appreciate that we are trying everything possible to come up with a solution.' 143 On 3 March 1999, Ms Ibrahim sent to Mr Flanagan a list of her clients who were involved in the Project. She asked that 'the finance applications' be mailed directly to the clients. Ms Lukey's name was included in the list. 144 On 19 March 1999, Ms Ibrahim sent an email to Mr Flanagan relevantly saying: 'I am wondering how you are going with organising other financing arrangements. I met with Ben Brown from Westpac and David Marjanovic yesterday afternoon. They proposed Westpac financing, but I have not seen the financing documents proposed. I also spoke to Ian Yeates a couple of days ago & he had suggested that TrackNet had been granted financing with the State Bank - once again no documents have been forwarded to me. I will no proceed with any financing until I am further advised by you as to the arrangements made and the financing available. Could you please clarify which financing will become available to clients and provide me with a copy of the financing documentation. I really need to be aware what documents will be proposed or forwarded to clients, so that I may answer any queries and compare it to ATF's financing arrangements first agreed to by clients.' Mr Flanagan responded on 22 March 1999 saying that Mr White would discuss with her, that afternoon, 'the full package and what needs to be done etc'. 145 On 7 April 1999, Ms Ibrahim sent a facsimile to Mr White setting out 'a list of questions and issues that have been brought forward by clients' as well as a few questions of her own. The questions were under several headings, including one relating to Colonial State Bank and one relating to TrackNet. 146 Sometime in about April 1999, probably about 7 April 1999, Tony Cunningham & Associates wrote to Ms Lukey relevantly saying: 'Your application for TrackNet has been delayed because of problems with the initial financier. Essentially they did not deliver as promised and we have had to arrange with another financier to complete the deal. That financier is the Colonial State Bank and unfortunately you will need to complete a new application… The end result is essentially the same as you originally signed for and if anything, the deal is a little better than the original offer. In the meantime would you please ring… the Colonial State Bank Wollongong… make an appointment to complete the paperwork mentioning that Tony Cunningham advised you to contact them about TrackNet. … The TrackNet Project is ready to get under way and the lack of the funds from our part of the Project is not hindering the process but it is definitely not helping at this time. … I cant stress enough though that the new arrangements are as good as, if not better than the original offer. …' 147 At about the same time, Tony Cunningham & Associates sent a flyer, dated 7 April 1999, headed 'TrackNet Meeting' to Participants in the Project. The flyer relevantly said: 'In order to bring you up to date on your Tracknet investment and the different financing options available to you we have scheduled some information meetings for this week. We will be holding the meetings in our Wollongong office and they will be run by Sherin Ibrahim and/or myself. … You will be given full details about the financing and the progress of the Tracknet Project. We have enclosed copies of a recent brochure about Tracknet and will attempt to have projections, cash flow details with current information and where everybody stands with the ongoing details and the monitoring of the Project. Please ring Sherin… to indicate which meeting you will be attending.' The 'recent brochure' referred to was not identified in the evidence. 148 On 12 April 1999, Ms Ibrahim sent to Mr Wayne Pratt of Hartford, a memorandum of fees for commissions due to her in respect of the Project. Also attached was a list of Participants indicating progress with financing at Colonial State Bank. 149 On the same day, Ms Ibrahim sent to Mr Pratt the material that was presented to clients at the information session announced by Tony Cunningham & Associates' flyer of 7 April 1999. The agenda referred to ATF and alternate financing options incorporating Barkley and a comparison between ATF and the proposed financing option. A corporate profile of Barkley was attached. 150 On the same day, Ms Ibrahim sent to Mr Flanagan a list of Participants, including Ms Lukey. Ms Ibrahim asked Mr Flanagan to 'forward ATF documents to me asap, so that I can follow it through with… the State Bank'. 151 On 14 April 1999, Ms Ibrahim sent a further email message to Mr Flanagan concerning queries from clients about:

• when they would receive the offer from TrackNet to purchase a tracking unit;
• when they would receive a sales kit and be notified of the commissions that would be received from the sales of the tracking units to others. Mr Flanagan responded by saying that an offer would be going out to all clients in June with both the kit and commission structure. He said that, within the next two weeks, an update that had been given to Ms Ibrahim would be sent out to clients, which would include that information. 152 On 22 April 1999, Colonial State Bank wrote to Ms Lukey thanking her for her recent application for a personal loan but indicating that the application had been unsuccessful. The letter said that the decision was based partly on information supplied in a credit bureau report. 153 On 27 April 1999, Ms Ibrahim sent a letter to Ms Lukey headed 'Financing of the First TrackNet Project'. The letter relevantly said: '…I have enclosed a Tracknet marketing pack for your information. I have great pleasure to inform you that Tracknet is performing very well. This will become more evident as you read the 'Project Update' enclosed. Regarding the financing of your participation in Tracknet, the facility ('Offer to Borrow') that you sought with [ATF] unfortunately did not eventuate. Through our telephone conversation today, I have advised you that I have been in contact with the Colonial State Bank to follow up your application for financing of the Tracknet Project and that this application was declined due to credit rating issues. To this extent, I would also like to inform you that I am currently reviewing other financing options with [Barkley] to arrange alternative financing of your Tracknet investment… The facility sought by [Barkley] is intended to be essentially the same as the ATF 'Offer to Borrow'. In this way you can be assured of the repayment of the loan principal amount ($24,350) through income distributions from your prescribed interest (1 unit), but remain liable for the interest due on the loan for the term of the loan. I do not currently have a new financing offer by [Barkley], although I am expecting to negotiate a package in the near future. I will inform you of what action to take when the financing is confirmed. In the meantime, rest assured that I am making this a priority matter and would be attempting to make this as easy for you as possible. …' 154 On 12 May 1999, Mr Green of TrackNet wrote to Ms Ibrahim attaching individual application packages 'for those TrackNet investors originally rejected by Colonial State'. The letter requested that Ms Ibrahim have the documents signed by the individuals and returned as soon as possible. 155 On the same day, Ms Ibrahim told Mr Flanagan and Mr Green that 21 of her clients, who had applied for a total of 27 Interests in the Project, had received finance approval from Colonial State Bank and that another 21 who had also applied for a total of 27 Interests in the Project, including Ms Lukey, had not been offered finance by Colonial State Bank. 156 On 14 May 1999, Ms Ibrahim issued a memorandum of fees claiming the balance of commissions payable in respect of the applicants for the 27 Interests who had received finance approval from Colonial State Bank. On 20 May 1999, she was paid $8,370 in accordance with her memorandum of fees. 157 On 25 May 1999, Ms Ibrahim sent to Professor Valentine several documents, which she described as 'the Barkley documentation offered to participants in TrackNet'. The documents included the agenda for the information sessions in early April 1999, together with a copy of a letter dated 9 April 1999 from Barkley to Participants in the Project. By that letter, Barkley offered Participants a facility to replace the ATF facility that had not eventuated. 158 On 3 June 1999, Ms Lukey completed a loan application to Westpac Banking Corporation, Wollongong ('Westpac'). The loan was said to be for 'investment purposes' and was to be for $20,000. At the same time she signed an authority to Westpac for Westpac to remit proceeds of the proposed loan facility to Barkley. That was apparently a reference to the notional advance that had been made by Barkley to Ms Lukey in December 1998 without her knowledge. Ms Ibrahim forwarded the finance application to Westpac on that day. 159 On 24 June 1999, Ms Ibrahim sent an email to David Kerr of Hartford, in which she said that Westpac was dissatisfied with the fact that the clients who applied for financing with Westpac had all been previously declined finance by Colonial State Bank. Ms Ibrahim said that she had told Westpac that she had been instructed to complete the applications by Mr White and Mr Flanagan. 160 On 27 June 1999, Ms Ibrahim wrote to Ms Lukey again, relevantly saying: 'Following our meetings and discussions, I confirm your participation in the [Project] will be fully financed by [Barkley]. In the [Barkley] Loan Agreement the repayment of the Principal amount ($24,350 per unit) will be made from 100% of the income distribution derived from your participation in the Project. Interest on the loan is calculated at a fixed rate of 9.95% for the term of the loan (5 years). The Interest will be calculated on the Amount Outstanding as of the first day of January each year for the term of the Loan. I have enclosed [Barkley's] Terms and Conditions, as well as a completed application form for your review. Please sign the marked areas and return to me as soon as possible. … Upon receiving your application I will forward it to [Barkley] and notify you in writing of the date forwarded. You will receive notification from [Barkley] upon finalisation of your application.' 161 On 28 June 1999, Professor Valentine wrote to Mr White, referring to the response received by Ms Ibrahim to the comments made by Westpac and expressing concern with material provided to clients by Barkley. He said that, according to Ms Ibrahim, she came under great pressure from Messrs White, Flanagan and Watson to find alternative finance for clients. He said that he understood that the urgency arose from the parlous financial position of TrackNet. 162 On 2 July 1999, Ms Ibrahim wrote to Professor Valentine, in his capacity as a director of Hartford, saying:

She also referred to the 'round-robin event' that had occurred in December 1998 and made the following observation: 'I believe that I have shown complete due diligence in regard to these matters and have complied with all of the requirements in respect of advising on the various finance alternatives that were available to clients. Indeed, I have cooperated fully with CIAFM as a proper authority holder and subsequently with [Hartford]. In my view I have acted in good faith and have been let down and misinformed by TrackNet and Mr White who I held to be honest and trustworthy. However, it would appear that this assessment was misplaced.'[Emphasis added] Cardinal attaches considerable significance to the words emphasised, as indicating that at that stage, Ms Ibrahim believed that Mr White was not honest or trustworthy. 163 On 3 July 1999, Professor Valentine tendered his resignation from the board of CIAFM, stating as one of his reasons that 'in the last week I was given information which suggests to me that CIAFM is insolvent'. On 3 July 1999, Professor Valentine also wrote to the Commission saying that it was his belief that CIAFM should be removed as Responsible Entity from the Project. 164 On 6 July 1999 Ms Ibrahim met again with Messrs Flanagan, Green and White. On 13 July 1999, she wrote to Professor Valentine about that meeting. In the letter she said, inter alia, as follows: 'In my view I have acted in good faith but have been misinformed by parties whom I held to be reliable, honest and trustworthy.' 165 Ms Ibrahim subsequently received a letter from Mr Watson dated 6 July 1999 putting Barkley's version of the financing of Ms Ibrahim's clients into the Project. The letter relevantly said: 'On 19 December 1998 I was approached by Kean Flanagan, of TrackNet …, and Mr Garry White, [CIAFM], and asked if [Barkley] as Trustee for the BFC Trust would provide temporary finance to a group of individuals who were waiting for finance approval from an alternative financier known to me only as ATF. I advised both Mr Flanagan and Mr White that I would be willing to provide the aforementioned temporary finance for sixty days for a small fee which would be paid out of the finance fees paid by the individuals to ATF. … At the end of the sixty day period I was told by Mr Garry White that he had been informed by a financial planner of some of the individuals concerned that finance would not be forthcoming from ATF. Again …[Barkley] agreed to continue to provide the temporary finance facility for an extended period under the same conditions. … …[Barkley] put in place suitable finance arrangements for all the individuals affected by the ATF dilemma,…' 166 On 13 July 1999, Ms Ibrahim sent to Ms Lukey a cheque from ATF for $500, being a refund of the finance application fee and stamp duty that had been paid to ATF in early December 1998. The cheque had been received by Ms Ibrahim from ATF following representations that she had made on behalf of various clients, including Ms Lukey, for refund of finance application fees and stamp duty paid to ATF. 167 On 8 August 1999, Ms Ibrahim wrote to Ms Lukey again, referred to her letter of 27 June 1999 and saying that the loan offered by Barkley had been amended and referring to three clauses that had been amended. Ms Ibrahim's letter said: 'I followed up the above named clauses for amendment to ensure that your best interest in this loan facility was kept. I have enclosed the previously signed documents for your disposal and have also enclosed the amended document for your completion. Please sign the marked areas and return to me as soon as possible. … Upon receiving your application I will forward it to [Barkley] and notify you in writing of the date forwarded. You will receive notification from [Barkley] upon finalisation of your application.' 168 On 26 August 1999, Ms Ibrahim forwarded the Barkley loan agreement, signed by Ms Lukey, to Barkley. At the same time, she sent Barkley loan agreements signed by eight other clients. 169 On 18 August 1999, Hartford sent to CIAFM copies of invoices from Ms Ibrahim and Tony Cunningham & Associates for outstanding commissions in relation to the Project. On 23 August 1999, Ms Ibrahim also wrote to CIAFM demanding payment of the commissions. The total amount claimed was $28,200. 170 On 27 August 1999, Mr Robert Fenwick, a director of CIAFM, wrote to Hartford referring to the invoices in question. Mr Fenwick's letter relevantly said as follows: 'GENERAL In respect of each invoice we require proof of the commission agreement with each representative or dealer group (as appropriate) before payment can be authorised. Please forward promptly to avoid delay in settlement… TRACKNET PROJECT … …Sherin Ibrahim has not been able to satisfactorily complete the financing of her clients and a number have had to provided [sic] with round-robin financing which clearly does not provide immediate cash into the Project. A partial settlement with Ms Ibrahim would appear to be an equitable solution and we shall respond in a few days…' 171 A copy of Mr Fenwick's letter was apparently sent to Ms Ibrahim who, on 1 September 1999 wrote to Mr Kerin, in his capacity as a director of CIAFM. After referring to Mr Fenwick's letter, Ms Ibrahim said: 'Mr Fenwick's reason for the letter appears to reflect a serious misunderstanding of the obligations of CIAFM to promptly pay commissions to Proper Authority Holders for the application, lodgement and acceptance by the Management for the First TrackNet Project. Mr Fenwick… has failed to recognise acceptance by Management constituted at the point of participation allocations and whereby commissions are earned by Proper Authority Holders. Mr Fenwick further confuses the nature of 'round-robin' financing entered into by CIAFM, TrackNet, and [Barkley] and whomever else, to be in some way impacting upon commissions. The applications were properly completed, lodged and accepted by the Management of the Project… At best I could view Mr Fenwick's letter as a misunderstanding or at worst an attempt to present the transactions as a sham or spurious. Either way CIAFM is liable and unless I receive a satisfactory response to my claims within 48 hours, I will have no choice than to take debt recovery action and consider advising [the Commission] that the information contained in the prospectus, which the directors of CIAFM signed, is false and misleading. Over many months, through discussions and correspondence, I have attempted to solve with CIAFM staff and yourself this ongoing situation and at no time was commission owing to me denied as being due and payable, nor that any of the participants were incorrectly accepted by Management.' …' Cardinal attaches significance to the words emphasised in the quotation as indicating that at the time that she wrote the letter to Mr Kerin, Ms Ibrahim knew, or at least suspected, that there were false and misleading statements in the Prospectus. 172 On 3 September 1999, Ms Ibrahim met with Mr Russell of Cardinal, Professor Valentine and others. Subsequently, on 6 September 1999, she wrote to Mr Russell of Cardinal alleging default by CIAFM and default by TrackNet. 173 Towards the end of 1999, there were proposals for a scheme of arrangement involving CIAFM and participants in the Project. The scheme involved the issue of shares in CIAFM to Participants in satisfaction of their Interests. However, the scheme was not approved. 174 On 5 January 2000, Ms Ibrahim sent a circular letter to her clients, including Ms Lukey. The circular, in so far as it affected Ms Lukey, said: 'For those of you… who have received full finance from [Barkley], I suggest you give [Barkley] a call and find out about interest payments due. I don't think you should be making any interest payments to [Barkley] because the resolutions were passed at the meeting BUT YOU MUST CONFIRM THIS WITH [Barkley] AND HAVE THEM PUT IT IN WRITING!!! (You do not want to be in default of your loan due to non payment). Make sure that Keith Watson is the person you speak to. … The resolutions proposed in the Notice of Meeting were passed at the Meeting on 22/12/99. (Although, it should be noted that the Resolutions have not to date been accepted by the [Commission]). Most of you have an account balance of $24,350 (per unit) with [Barkley]. In this case, I would be inclined to think that no interest payments need be made to [Barkley]… ****Please ensure that you contact Keith Watson regarding these payments. And ask for written confirmation from [Barkley].' 175 On 10 January 2000, Barkley wrote to Ms Lukey saying: 'Under the terms of your loan with [Barkley] you are required to pay [the TrackNet Trust] interest yearly in advance and at the rate of 9.95% per annum on the loan amount outstanding as at 1 January each for five consecutive years beginning 1 January 2000. At 1 January 2000 the amount outstanding on your loan with [Barkley] was $24,350.00. Therefore the interest due and payable on your [Barkley] loan at 1 January 2000 was $2,422.83. … Please draw a cheque for the amount of $2,422.83… and forward it to [Barkley].' 176 On 29 January 2000, Ms Lukey sent a cheque in the sum of $2,422.83 to Barkley. On 11 February 2000, Barkley wrote to Ms Lukey confirming receipt of that sum on 2 February 2000.

MS LUKEY'S CLAIMS AGAINST CIAFM AND CARDINAL 177 By her Fifth Further Amended Statement of Claim ('the Statement of Claim'), Ms Lukey alleged that, by publishing the Prospectus containing certain statements identified in the Statement of Claim and by publishing the Supplementary Prospectus, CIAFM made a number of false representations. The alleged false representations pleaded can be restated under several heads as follows:

• CIAFM has access to all hardware, software and infrastructure necessary for the Project.
• CIAFM has paid the sum of $12 million for the grant of a licence for all necessary technology.
• Participants in the Project can expect a profit and positive cash flow in the first year of participation. · Loan arrangements in relation to the Project do not involve round-robins. · Subscription moneys will not be paid out until the Expenditure Qualifying Conditions are satisfied. 178 In substance, the first group of representations alleged that CIAFM has access to all hardware, software and infrastructure, amount to representations that the second and third Expenditure Qualifying Conditions had been met. The thrust of the complaint in relation to those alleged representations was that the second and third Expenditure Qualifying Conditions had never been met, although Cardinal, TrackNet and CIAFM proceeded after 30 June 1998 as though they had been met. The facts relied on as to the alleged falsity of that group of representations were the same as those relied on to support the assertion that the second and third Expenditure Qualifying Conditions had not been met. 179 The Statement of Claim then alleges that Ms Lukey relied on the representations, or one or more of them, in:
  1. entering into loan arrangements in relation to the Project;
  2. paying Subscription Moneys for an Interest in the Project;
  3. contributing moneys out of her own funds towards the Subscription Moneys;
  4. executing documents committing herself as a Participant in the Project;
  5. refraining from pursuing other investment opportunities; and
  6. claiming tax deductions in respect of the Subscription Moneys. 180 Ms Lukey also alleged in the Statement of Claim that Cardinal impliedly represented to prospective Participants that it would not release any of their Subscription Moneys held by it, unless it were first reasonably satisfied that all of the conditions expressed in the Prospectus in relation to the commencement of the Project had been fulfilled. The Statement of Claim then alleged that Ms Lukey relied on that implied representation in doing each of the 6 things set out in the previous paragraph. 181 Publication of the Prospectus containing the statements referred to above was misleading or deceptive or likely to mislead or deceive because:
• the Licence Agreement had not become effective such that TrackNet was presently entitled to whatever rights were purportedly granted by it;
• TrackNet did not have available to it the hardware, software and infrastructure necessary to enable it to commence the operation of the TrackNet system, as described in the Prospectus, even with further development work to achieve the integration of the hardware, software and infrastructure that might have been available to it;
• TrackNet did not have financial resources available to it that would enable it to pay whatever licence fees and costs were necessary for the acquisition of any technology required for the operation of the Project to which it did not already have access, because the only funds to which it had access were those that it would acquire as a consequence of the payment of fees to it by CIAFM pursuant to the Responsibility Agreement. 182 More specifically, it was misleading and deceptive, or likely to mislead or deceive, to say that TrackNet had paid, or otherwise agreed to pay, all costs associated with the establishment of the Project and that no funds raised under the Prospectus would be expended on such costs. 183 However, the Prospectus does say that a licence had been granted to TrackNet. The language of the relevant part of the Prospectus is slightly confused. The preamble refers to a 'technology and intellectual property licence agreement'. There then follows what are expressed to be 'the principal terms' of that licence agreement. In the succeeding numbered paragraphs, reference was made to 'the licence' in terms that suggest an intention to draw a distinction between the instrument of 1 September 1997 and the rights granted by that instrument. That is a meaningful, if somewhat subtle, distinction. However, there is some inconsistency in so far as paragraph (ii) refers to 'the software (as defined in the licence)'. That usage suggests that 'the licence' is there intended to refer to the instrument rather than the rights granted by the instrument. 184 I do not consider that the Prospectus represents that the sum of $12 million has already been paid. It represents that the Licence Agreement has had some effect and that the consideration payable for that effect is $12 million. That, however, does not necessarily mean that the sum of $12 million has been paid. It suggests that TrackNet had the capacity to pay $12 million. That is a different matter. 185 It follows that the publication of the Prospectus containing the Projections was a contravention of s 995 of the Law, in so far as it constituted an implied representation that the sales and income distributions projected were reasonable and achievable. The other representations alleged under this head are particulars of the representations concerning the Projections. They add nothing to those representations. If the representations in 14(f) are made out, it would be unnecessary to show the others. If they are not, the representations in 14(f) are not made out, none of the others will lead anywhere. 186 The Prospectus makes no reference to loans to Participants or prospective Participants. How Participants were to fund their Subscription Moneys for the purpose of acquiring Interests was a matter outside the Prospectus. The Supplementary Prospectus states expressly that there are no loan arrangements in relation to the Project. No representations are made about any loan arrangements at all. Prospective Participants were to make whatever arrangements they wished. There was no representation implied from the statements in the Prospectus concerning loans to be provided to prospective Participants. The representations alleged under this head simply do not arise. 187 The Prospectus does not represent that the Expenditure Qualifying Conditions will be satisfied by 1 July 1998. The effect of the Project Deed was that, if the Expenditure Qualifying Conditions were not satisfied, then the Project would come to an end. Thus, the scheme contemplated by the Prospectus in relation to the Project was that, if the Project were ever to commence, it would commence by 1 July 1998. That is all that the references in the Prospectus say. The representations alleged under this head do not arise. The consequences, under the Project Deed, of the Expenditure Qualifying Conditions not being satisfied is a different question, which will be addressed below.

CARDINAL'S LIABILITY TO MS LUKEY 188 My provisional conclusions were that, in publishing the Prospectus, CIAFM had engaged in conduct that was misleading and deceptive and had contravened the Law. I also concluded that Cardinal had committed breaches of trust and breaches of the Project Deed. Because Cardinal acted in breach of the Project Deed, it contravened s 1073(1A) of the Law. I shall recount below the reasoning that led to those conclusions. 189 However, in my provisional conclusions, I was not concerned to consider whether there was any causal connection between such breach or contravention, on the one hand, and any loss suffered by Ms Lukey, on the other hand. In particular, I did not give any consideration to the question of whether Cardinal was liable to Ms Lukey for the sums of $1,150 paid in December 1998 or the sum of $2,422.80 paid in January 2000. A fortiori, I gave no consideration at that stage tothe question of Cardinal's liability to Ms Lukey for the costs of the proceeding.

PLEADING OF CARDINAL'S LIABILITY TO MS LUKEY 190 Cardinal says in the Cross-Claim (par [30]) that Ms Lukey had made the following claims against it: (1) Cardinal breached the implied terms and trusts and express terms of the Project Deed and contravened s 1073(1A) of the Law in acting as trustee of the Project and Ms Lukey thereby suffered loss and damage. (2) Cardinal knew, or ought to have known, that Ms Lukey was dependent and reliant upon it to take reasonable steps to investigate the accuracy of any representations in the Prospectus and, if appropriate, to contradict, correct or qualify such representations and to ensure that the Expenditure Qualifying Conditions were properly satisfied before any subscription moneys paid by Ms Lukey were released or applied in respect of the Project. (3) Cardinal knew, or ought to have known, that if it was careless in its investigations in relation to any representation made in the Prospectus or in the steps it took to ensure that the Expenditure Qualifying Conditions were properly satisfied before any subscription moneys paid by Ms Lukey in respect of the Project were released or applied in respect of the Project, Ms Lukey would or would be likely to suffer loss and damage. (4) Cardinal knew, or ought to have known, that Ms Lukey was in no position to establish the accuracy of any representations in the Prospectus or the extent to which the Expenditure Qualifying Conditions had been properly satisfied and, accordingly, was vulnerable to any carelessness by Cardinal in relation to those matters. (5) Cardinal owed Ms Lukey a duty to take reasonable care in relation to its investigations concerning any representations made in the Prospectus, and in relation to the steps taken by it in order to satisfy itself that the Expenditure Qualifying Conditions had been properly satisfied before any subscription moneys paid by Ms Lukey in respect of the Project were released or applied in respect to the Project. (6) Cardinal breached its duty of care owed to Ms Lukey by its conduct in breaching implied terms and trusts and express terms of the Project Deed, and in contravening s 1073(1A), and its failure to take any, or any reasonable, or adequate steps to satisfy itself that the Expenditure Qualifying Conditions had been properly satisfied. 191 The Cross-Claim then alleges that Cardinal has denied the above allegations (par 31) but that, if it is determined that Cardinal is liable for the loss and damage allegedly suffered by Ms Lukey, then Cardinal claims contribution or indemnity from each of Ms Ibrahim and Hartford (par 32). 192 Ms Lukey did not press any claim that Cardinal had breached a duty of care owed to her by it. Indeed, an allegation originally by Ms Lukey, that Cardinal was liable in negligence for failure to exercise all due diligence and vigilance in protecting her interests, was abandoned in January 2004. 193 It may be significant that neither Hartford nor Ms Ibrahim put in issue the allegations made by Ms Lukey against Cardinal. That may have a bearing on the extent, if at all, to which Cardinal will be entitled to contribution or indemnity in respect of costs that it has agreed to pay to Ms Lukey and other Group Members. Specifically, Hartford said, in answer to Cardinal's allegations just summarised, that it admitted that Ms Lukey had made the allegations against Cardinal but did not plead to pars (31) and (32). Ms Ibrahim, on the other hand, said, in relation to pars (30) and (31), that she did not plead to those paragraphs 'as the same contains no allegation of material fact' against her. Ms Ibrahim denied par (32).

BREACH OF TRUST 194 Clause 16.3 of the Project Deed provided that all 'Application Money' paid by a prospective Participant was to be held on trust by Cardinal for the prospective Participant, pending the issue of Interests to the prospective Participants. Accordingly, so it is alleged, there was a breach of the terms of the Project Deed by Cardinal in so far as Application Money paid by any prospective Participant was paid by Cardinal to CIAFM. Clause 6.2(a) of the Project Deed provides that the Management Fee for the Initial Period was to be paid by the Participant directly to the Trustee and, on the issue of an Interest, Cardinal was to pay the monies received to CIAFM. 195 Several questions are raised by the contention as follows:

• Was any part of the Application Money held by Cardinal on trust?
• Were the Expenditure Qualifying Conditions met?
• Were Interests ever issued?
• Was there a payment by Cardinal to CIAFM of any Application Money?
• Was any such payment a breach of trust by Cardinal? 196 The Project Deed was an essential element in the structure of the Project. It is, in effect, the constitution of the Project and is designed to set out the rights and obligations of those who would be involved in the Project. CIAFM, as the entrepreneur promoting the Project, was to have rights as well as obligations as manager. The Prospectus and the Project Deed contemplated that Participants and prospective Participants would have rights and obligations as specified in the Project Deed. The task of Cardinal, as trustee, was to look after the interests of Participants and prospective Participants and to provide a focus in their dealings with CIAFM as manager. 197 Thus, the Project Deed must be construed in a fashion that will permit CIAFM to reap the benefits of the scheme promoted by it. However, it must also be construed in a manner that will protect Participants and prospective Participants who, because of the nature of their Interest, will not individually have the strength that the manager will have. The function of Cardinal, as trustee, is not simply to derive fees for holding and managing property, but to represent Participants, as the holders of Interests, in their dealings with CIAFM as manager of the Project. 198 The Expenditure Qualifying Conditions were perceived by the promoters and by the drafters of the documentation as being prerequisites that had to be satisfied before the Project could be regarded as operational. Clearly enough, the Project was in a developmental stage. The Expenditure Qualifying Conditions were perceived to be prerequisites without which the Project could not succeed and without which it should not be permitted to proceed. Thus, they must be treated as prerequisites of real commercial importance, such that they had to be satisfied before the Project could be regarded as sufficiently commercially viable to permit Application Moneys subscribed by prospective Participants to be made available to CIAFM, as manager of the Project, for use in the Project. 199 Clauses 3.2 and 40 of the Project Deed emphasised how fundamental the Expenditure Qualifying Conditions were to the commercial viability of the Project. Thus, clause 3.2 provided that the Project was to commence on the date of issue of the first Interest after satisfaction of the Expenditure Qualifying Conditions. Under clauses 12.1(b) and 40.1, the Project was to terminate if the Expenditure Qualifying Conditions had not been satisfied by 30 June 1998, or such later date as might be provided by supplemental deed executed before 30 June 1998. Clause 17.1 provided that CIAFM, as manager, must not accept any application for an Interest until the Expenditure Qualifying Conditions had been met and, under clause 16.3, all Application Money paid by Prospective Participants was to be held on trust by Cardinal, as trustee, pending the issue of Interests to the Prospective Participants. 200 It follows that the Expenditure Qualifying Conditions were intended to represent hurdles of real commercial significance and importance. Accordingly, the language used in defining the Expenditure Qualifying Conditions should be construed as giving rise to requirements of real and substantial commercial importance and significance, and not requirements that could be satisfied by mere formalities without real commercial consequences for the Project. 201 Similarly, the terms of the Project Deed generally should be construed so as to permit both CIAFM, as manager, and Participants to benefit from the commercial success of the Project, but also so as to ensure that the rights of Participants and prospective Participants will be protected by Cardinal, in its capacity as trustee, to the extent that it would be impracticable for prospective Participants or Participants individually to look after and pursue such rights. 202 Cardinal accepts that it had an obligation to hold any Subscription Moneys paid by a prospective Participant in accordance with clause 16.3 of the Project Deed. It accepts that that obligation was a trust obligation arising from an express trust in favour of a prospective Participant, to the extent that the prospective Participant paid such Subscription Moneys. To the extent that there was an express trust that governed the relationship between Ms Lukey, on the one hand, and Cardinal, on the other, in relation to any Subscription Moneys, there can be no implied trust that would impose any obligation upon Cardinal that was inconsistent with the terms of the express trust evidenced by the terms of the Project Deed. 203 The language of the Prospectus would not support the implication of a trust in terms different from that derived from the Project Deed. Cardinal was not a party to the Prospectus and Cardinal expressly disassociated itself from the provisions of the Prospectus, except to the extent that it described Cardinal's functions and obligations in relation to the Project. It might be conceivable that the Prospectus misstated Cardinal's functions and obligations. However, those functions and obligations, whatever they are, were derived from, and limited to, those arising under the Project Deed. 204 Clearly, one of the functions of Cardinal, as trustee under the Project Deed, was to afford some protection to prospective Participants, pending the commencement of the Project. Clause 16.3 of the Project Deed is the pivotal provision in that regard. However, clause 16.3 must be construed in the light of the other provisions of the Project Deed. Those provisions include the pro forma Management Agreement, which is an attachment to, and forms part of, the Project Deed. That is to say, to the extent that the provisions of the Management Agreement throw light on the position of Cardinal, as trustee, in receiving application monies, regard must be had to those provisions in construing the express trust derived from clause 16.3. 205 Clause 16.3 relevantly provided: 'All Application Money … shall be held on trust … pending the issue of Interests to the prospective Participants.' The term 'Application Money' is defined in clause 1.1 as: '… that amount payable by a Participant upon application for an Interest …, and in the case of the Initial Issue of Interests, shall comprise the Market Entitlement Area Fee and the Management Fees for the Initial Period …'. The word 'Participant' in that definition must be read as a reference to 'Prospective Participant', a term that appears elsewhere in the Project Deed. An applicant for an Interest will not be a Participant. A 'Participant' is a person 'who from time to time holds an Interest'. The term 'Prospective Participant' appears in clause 16.3, as well as clause 17.5(v). Clause 17.5(v) imposes an obligation on CIAFM, as manager, to provide to Cardinal, as trustee, a statement, inter alia, as to 'the amount of Application Money (if any) returned to prospective Participants'. 206 On the other hand, under clause 5 of the Management Agreement, a Participant's obligation to pay the Market Entitlement Area Fee and the Management Fee arises 'on the issue of the Interest'. Thus, in so far as Application Money is to comprise the Market Entitlement Area Fee and the Management Fee for the Initial Period, it is clearly an amount payable by a Participant. In so far as clause 16.3 refers to Application Money being paid by prospective Participants, clause 16.3 appears to involve a misconception. That is to say, the moneys paid by a prospective Participant do not constitute Application Money. The amount subscribed will, of course, be equal to the amount of the Application Money that becomes payable by a Participant, pursuant to the Management Agreement upon the issue of the Interest to that Participant. That occurs upon the execution of the Management Agreement on behalf of the Participant. 207 Nevertheless, it is clear that the obligation that Cardinal undertook pursuant to clause 16.3, upon payment to it by a prospective Participant of money intended to be the Market Entitlement Area Fee and Management Fees, was to hold that money on trust for the prospective Participant, 'pending the issue' of an Interest to that prospective Participant. The question is what constitutes 'the issue' of an Interest to a prospective Participant for the purposes of clause 16.3. 208 Clause 6.2(a) of the Project Deed provided: 'The Management Fee for the Initial Period will be paid by the Participant directly to the Trustee and, on the issue of an Interest the Trustee shall be obliged to pay the Management Fee received by it to the Manager by way of payment of the Management Fee under the Management Agreement for the Initial Period for the Participant;…' Once again, there is an apparent inconsistency in the use of the term 'Management Fee'. In clause 6.2(a), the term must be taken to refer to a sum of money equal to the Management Fee since, for the reason indicated above, Management Fee was the amount payable under the Management Agreement. Nevertheless, clause 6.2(a) is consistent with clause 16.3 in predicating the obligation of the Trustee to pay the Management Fee to the manager on 'the issue of an Interest'. 209 That is to say, clause 16.3 requires the Trustee, pending the issue of an Interest to a prospective Participant, to hold on trust the money paid by that prospective Participant as Application Money and clause 6.2(a) then obliges the Trustee to pay that amount to the manager 'on the issue' of an Interest to the prospective Participant. The critical question is when an Interest is to be taken to be issued to a prospective Participant. 210 Clause 6.7 of the Project Deed throws some light on the way in which the amount paid as Management Fee or Application Money is to be dealt with. Under that provision, the Management Fee in respect of the Initial Period was payable by Cardinal to CIAFM in advance, subject to fulfilment of the Expenditure Qualifying Conditions. Thus, there was no obligation of Cardinal to make any payment to CIAFM until the Expenditure Qualifying Conditions had been fulfilled, just as, under clause 6.2(a), the Management Fee for the Initial Period was to be paid by Cardinal to CIAFM on the issue of an Interest. Pending the issue of Interests, which was not to occur until after the Expenditure Qualifying Conditions were satisfied, the Application Money was, under clause 6.3, to be held on trust by Cardinal for prospective Participants. 211 Section 5.2 of the Project Deed provided that an Interest was to consist of: 'the Participant's rights and obligations under the Management Agreement, an interest in the Participant's Undistributed Income at any time and all other rights and obligations conferred or imposed upon a Participant under this Deed.' Under clause 5.1, an Interest was to be deemed to have been issued on the satisfaction of the Expenditure Qualifying Conditions and the execution of a Management Agreement by CIAFM and the Group Members. It was also to cease to exist where, inter alia, the Project is terminated as set out as in clause 12. 212 Clause 5.1 is expressed to be a deeming provision, in the sense that an Interest is to be taken to have been issued when the Expenditure Qualifying Conditions are satisfied and a Management Agreement is executed by CIAFM and the relevant Participant. Nevertheless, the scheme of the Project Deed, including clauses 6.2(a), 16.3 and 17.1, indicates that no Interest could be issued until the Expenditure Qualifying Conditions had been satisfied and there would be no Interest within the meaning of the Project Deed until they had been satisfied. 213 Thus, under clause 17.1, CIAFM must not accept an application for an Interest until the Expenditure Qualifying Conditions have been met. Under clause 17.2, CIAFM, as manager, was obligated to execute a Management Agreement in favour of a prospective Participant within five days of resolving to accept an application. Under clause 17.3, where an application is received and a Management Agreement is entered into in favour of the prospective Participant, CIAFM, as manager, was then required to enter in the Register the name of the person described in the Management Agreement as the Participant. The Management Agreement is to be taken as evidence of the issue of the Interest to the Participant. 214 The definition of Interest for the purposes of the Project Deed is to be found, in essence, in clause 5.2 of the Project Deed, which makes clear that there are three elements:
• the rights and obligations of the Participant under the Management Agreement;
• the Participant's Undistributed Income at any time;
• the rights and obligations conferred or imposed upon a Participant under the Project Deed. 215 The rights and obligations of a Participant under the Management Agreement would be minimal if the Expenditure Qualifying Conditions were unsatisfied. By clause 2, the Participant appointed CIAFM as manager of the Business and as agent, and by clause 3.1, the Participant agreed to undertake the Business and participate in the Business. Under clause 4, the Business was to commence on the date of satisfaction of the Expenditure Qualifying Conditions and the execution of the Management Agreement and was to terminate on the termination of the Project. 216 Under the Project Deed, the Project was to terminate if the Expenditure Qualifying Conditions were not satisfied, nor was it to commence until the Expenditure Qualifying Conditions were satisfied. Thus, no Business could have commenced. Under clause 9.1, if the Project terminated, the Business was thereby terminated. Under clause 4.2, termination of the Project or the Business was not to prejudice the accrued rights and obligations of the Parties. However, if the Business had never commenced, there could be no accrued rights to be prejudiced. 217 Further, 'Business' is defined in the Management Agreement by reference to a Market Entitlement Area. Under clause 13.1 of the Project Deed, where an Interest is terminated, the right of management granted to CIAFM under the Management Agreement does not survive and the right granted to the Participant to conduct the Business in the Market Entitlement Area does not remain with the Participant. Clauses 14.4(a) and 14.4(b) provide that, on the Project being terminated, the ownership of a Market Entitlement Area vests in CIAFM, and the Participant is still assigned all rights, title and interests in the Intellectual Property of the Market Entitlement Area to CIAFM. 218 The second element of an Interest is the right to Undistributed Income. Under clause 13.1(b), where an Interest is terminated, the only amount which the outgoing Participant is entitled to receive is the Participant's Undistributed Income. However, Undistributed Income is a function of the 'Participant's Gross Business Income'. That is defined in the Project Deed as the Participant's proportion of total Project sales and the Participant's proportion of the insurance proceeds. Total Project sales are the total proceeds of the sale of 'Vehicle Tracking and Communication Services'. That term is defined as the marketing and sale of vehicle tracking units and the ongoing monitoring of those units for customers of the Business. Thus, there can be no Undistributed Income unless there is a Business. If the Business has not commenced, there is no Undistributed Income that could possibly constitute any part of the second element of Interest. 219 Clause 13.1 of the Project Deed provides that, where an Interest is terminated, the right of management granted to the manager does not survive, and the right granted to the Participant to conduct the Business does not remain. An Interest terminates upon termination of the Project. A Participant is a person who, from time to time, holds an Interest. Since an Interest is the right under the Management Agreement and the right to Undistributed Income, there are no rights or obligations under the Project Deed that would survive the termination of the Project so far as a Participant is concerned. 220 Thus, even if an Interest could be issued by reason of the execution of a Management Agreement, notwithstanding non-satisfaction of the Expenditure Qualifying Conditions, that would not constitute the issue of an Interest to a Participant for the purposes of clause 16.3 of the Project Deed. It is therefore necessary to consider whether the Expenditure Qualifying Conditions were satisfied. 221 While there was originally an allegation that none of the Expenditure Qualifying Conditions had been satisfied by 30 June 1998, Ms Lukey subsequently accepted that the first Expenditure Qualifying Condition had been satisfied by that date. The question is whether the second and third Expenditure Qualifying Conditions were satisfied. 222 The second Expenditure Qualifying Condition, in referring to 'the rights to the technology' in the context of 'grant or assignment', signified an expectation that TrackNet would obtain intellectual property, know-how or confidential information that could not be used in the absence of a grant or assignment. That is to say, the clear implication is that, before the Project could commence, TrackNet would acquire rights that would enable it to operate the proposed vehicle tracking and communications system. That must mean substantial rights relevant to a commercialised vehicle tracking and communications system, the marketing of vehicle tracking units, the sale of communications from such units and the ongoing monitoring of such units for customers. The Project contemplated something more than an in-vehicle navigation system that merely enabled the occupants of a vehicle to determine their whereabouts. The essence of the system was the external monitoring, so that the location of the vehicle could be determined by a person other than occupants. That required an automatic vehicle location system monitoring centre. The system would involve the integration of the technology of in-vehicle navigation system with the monitoring service. 223 The second Expenditure Qualifying Condition would be satisfied upon the grant or assignment, presumably to TrackNet, of the rights to the technology necessary for the delivery of the Vehicle Tracking and Communications Services. While the technology necessary for the provision of vehicle tracking and communication services was available in the market place, and could have been acquired by TrackNet by payment of appropriate consideration, the fact is that TrackNet did not have rights to any specific technology. It had the rights conferred by the Licence Agreement, but was bound to pay the sum of $12 million for any rights to be acquired pursuant to the Licence Agreement. It did not have $12 million to pay to GPSD. 224 In any event, GPSD itself did not have any specific technology the rights to which could be subject of grant or assignment pursuant to the Licence Agreement. As at 30 June 1998, TrackNet was simply not in a position to provide vehicle tracking and communication services. As at 30 June 1998, there had been no grant or assignment to TrackNet, or to CIAFM, of the rights to the technology necessary for the delivery of the vehicle tracking and communications services described in the Project Deed. The second Expenditure Qualifying Condition was therefore not satisfied. 225 On 30 June 1998 GPSD wrote to TrackNet a letter in the following terms: 'Confirmation of Order I hereby confirm receipt of and acceptance of your order for the first 1,000 GPS/GSM transponders for your TrackNet Vehicle Tracking System. Please provide a schedule and required delivery dates for the delivery of the units. The transponders will be supplied in accordance with the terms of our Technology and Intellectual Property Licence Agreement dated 1 September 1997, which agreement is now considered effective by virtue of acceptance of the above order. We look forward to a long and mutually rewarding association.' That is the only step that could have satisfied the third Expenditure Qualifying Condition. 226 It is quite clear that the letter of 30 June 1998 was brought into existence in order to satisfy the third Expenditure Qualifying Condition. However, it is also clear that GPSD was simply not in a position to deliver 1,000 GPS/GSM vehicle transponders, nor was TrackNet in a position to pay for 1,000 GPS/GSM vehicle transponders. 227 It is clear that, as at 30 June 1998, GPSD was simply not in a position to perform any obligation to supply transponders to TrackNet. In truth, the letter of 30 June 1998, was nothing more than window dressing. The third Expenditure Qualifying Condition was not satisfied as at 30 June 1998. 228 When the Prospectus was published, the date for satisfaction of the Expenditure Qualifying Conditions had not yet arrived. However, by December 1998, when Ms Lukey subscribed for an Interest, the time had long since passed. Even if she did not understand that the Expenditure Qualifying Conditions had to be satisfied by 30 June 1998, because she did not read the Project Deed, her case in a sense depended upon a representation, by the continuing offering of Interests after 30 June 1998, that the Expenditure Qualifying Conditions were capable of being satisfied and that the Project was capable of commencing. That is not how her case was framed. 229 It would have been an exercise in complete futility for Ms Lukey, on receipt of the Prospectus in December 1998, to pay over Subscription Moneys simply for Cardinal to hold it on trust to repay it immediately. The explanation, of course, is that, rightly or wrongly, the Expenditure Qualifying Conditions were treated by both Cardinal and CIAFM as having been satisfied by 30 June 1998. 230 In December 1998, CIAFM was holding out that the Project had commenced. For example, when the Prospectus was given to Ms Lukey, the 23 September 1998 Letter was attached to it. That letter began: 'Since the end of the financial year there have been several matters of significance that have taken place at TrackNet which have positive implications for the future of The First TrackNet Project.' The letter went on to refer to the acquisition of Mobiletrack and the ability to introduce the TrackNet product to an existing corporate market via established Mobiletrack customers. Reference was also made to the appointment of Mr Scollon as chief executive officer and to the entry by TrackNet into a marketing contract and the appointment of Kennedy Rea Advertising and a public relations firm to handle all aspects of the launch and ongoing advertising of TrackNet. 231 To the extent that Cardinal received Subscription Moneys from Ms Lukey, it was obliged to hold that money, in the designated bank account, pending the satisfaction of the Expenditure Qualifying Conditions. To the extent that it paid such money to CIAFM, it did so in breach of trust because, the Expenditure Qualifying conditions not having been satisfied, no Interests were validly issued under the Project Deed and were not issued within the meaning of clause 16.3. There was a breach of trust in respect of the sum of $1,150 belonging to Ms Lukey (being the sums paid by Ms Lukey to Cardinal and CIAFM). Cardinal was therefore liable to Ms Lukey in respect of that sum, which she lost as a direct consequence of the breach of trust.

BREACH OF THE PROJECT DEED BY CARDINAL 232 Ms Lukey's relevant claims based on breach of the Project Deed by Cardinal, as pleaded in the Statement of Claim, may be summarised as follows:

• By clause 35.5(a) of the Project Deed, Cardinal covenanted that it would exercise all due diligence and vigilance in carrying out its functions and duties, and in protecting the rights and interests of the Group Members.
• In breach of clause 35.5(a) of the Project Deed, after the various times of execution of the respective Management Agreements with Ms Lukey and each of the Group Members, Cardinal: (a) released to CIAFM Subscription Moneys paid to Cardinal by, or on behalf of, or in respect of Ms Lukey and such Group Members; (b) failed to hold all Subscription Moneys paid to it by, or on behalf of, or in respect of Ms Lukey and such Group Members in a separate bank account; (c) failed to take steps to prevent the issue of Interests, to prevent the expenditure of and procure the recovery of, all monies referable to Subscription Moneys and to repay all Subscription Moneys to the original payer; (d) treated the Expenditure Qualifying Conditions as having been satisfied when they were not all fulfilled; (e) failed to take, at any time, any or any adequate steps to satisfy itself that the Expenditure Qualifying Conditions had been fulfilled. 233 Section 1073(1A)(a) of the Law relevantly provides that a person must not contravene a covenant contained, or taken to be contained, in a deed that is, or has at any time been, an approved deed. It is common ground that the Project Deed is an approved deed within the meaning of s 1073(1A)(a). Section 1325(1) of the Law provides, relevantly, that where, in a proceeding instituted under, or for a contravention of, Pt 7.12 (in which s 1073 is contained), the Court finds that a person who is a party to the proceeding has suffered, or is likely to suffer, loss or damage because of conduct of another person, who was engaged in a contravention of Pt 7.12, the Court may make various orders if the Court considers that the order or orders concerned will compensate the first mentioned person for the loss or damage. The orders that the Court may make include orders for the refund of money, and orders directing the person who engaged in contravening conduct to pay the amount of the loss or damage suffered by any person. 234 One of the pivotal obligations of Cardinal, as trustee under the Project Deed, was to hold the Subscription Moneys, pending the satisfaction of the Expenditure Qualifying Conditions. It was therefore incumbent upon Cardinal to satisfy itself, before releasing any moneys held by it on trust, that the Expenditure Qualifying Conditions had been satisfied. That satisfaction should be based on reasonable independent material. Cardinal was obliged to require the production of reasonable and independent evidence of satisfaction of the Expenditure Qualifying Conditions. To fail to do so would be a failure to exercise due diligence and vigilance in protecting the rights and interests of the Group Members. 235 Cardinal never intended to take steps to be reasonably satisfied as to the fulfilment of the Expenditure Qualifying Conditions and it took no such steps. Rather, its approach to the question of whether the Expenditure Qualifying Conditions had been satisfied was that a mere statement to Cardinal by Mr White would be treated, without more, as sufficient. Documents central to the question of whether the Expenditure Qualifying Conditions had been satisfied, which were sent to Cardinal 'by way of confirmation' that they had been satisfied, were given no more than cursory attention by Cardinal. 236 Cardinal gave no consideration after 30 June 1998 to the question of whether or not the Expenditure Qualifying Conditions had been met. Without any further enquiry, it treated them as being satisfied and treated the Project as being on foot. It did so notwithstanding that the only information provided to it in relation to the second Expenditure Qualifying Condition was the Licence Agreement and that all it saw in relation to the third Expenditure Qualifying Condition was the letter of 30 June 1998 from GPSD to TrackNet. Cardinal took no steps to enquire as to the capacity of GPSD to perform any obligations under either of those arrangements. Reasonable inquiry would have disclosed that GPSD was no more than a 'shelf company' that had not even being 'activated'. 237 Specifically, Cardinal made no enquiries as to whether:
• any payment had been made by TrackNet to GPSD;
• GPSD had any rights to technology;
• the GTW Heads of Agreement had been replaced by a binding agreement in relation to monitoring; · GPSD had the capacity to procure manufacture of 1,000 transponders or otherwise procure the supply of 1,000 transponders.

Cardinal failed to take any steps to satisfy itself that the prerequisites for the commencement of the Project had been satisfied. It follows, of course, that it treated Interests as validly issued, notwithstanding the fact the Expenditure Qualifying Conditions had not been satisfied. 238 Clause 17.1 of the Project Deed provided that CIAFM was to have an absolute discretion as to whether to accept or reject any application for an Interest, subject to the proviso that it must not accept an application for an Interest until the Expenditure Qualifying Conditions had been met. This was a matter of importance and significance. Cardinal, as a party to the Project Deed, in exercising diligence and vigilance in protecting the rights and interests of the Group Members, had an obligation to ensure that no Interests were issued until the Expenditure Qualifying Conditions had been met. That entailed an obligation to take reasonable steps to satisfy itself, on the basis of reasonable and independent material, that the Expenditure Qualifying Conditions had been met. 239 Cardinal was in breach of its obligation under clauses 16.3 and 35.5(a) in parting with the Subscription Moneys held by it without satisfying itself on that basis. By accepting, without further investigation or enquiry, a statement by Mr White that the Expenditure Qualifying Conditions had been met, Cardinal failed to act with appropriate caution, failed to act prudently and failed to act in a way that provided appropriate security to prospective Participants. That was a failure to exercise due diligence and vigilance. It was a breach of clause 35.5(a) as well as of clause 16.3. 240 Ms Lukey alleged that the breaches of clauses 35.5(a) and 16.3 of the Project Deed were contraventions of s 1073(1A) of the Law. Section 1073(1A) relevantly provided that a person must not contravene a covenant contained in a deed that is or has at any time been an 'approved deed' within the Law. Section 1005(1) relevantly provided that a person who suffers loss or damage by conduct of another person that was engaged in a contravention of s 1073(1A) may recover the amount of the loss or damage by action against that other person.

CONCLUSION AS TO CARDINAL'S LIABILITY 241 As a consequence of the breach of trust, Ms Lukey lost the sum of $1,150 that she had paid in respect of Subscription Moneys. Further, but for the breach of the Project Deed, she would not have paid that sum in the first place. Cardinal says, therefore, that Ms Lukey lost the sum of $1,150 as a consequence of the breach by Cardinal of the Project Deed. Ms Lukey was, in those circumstances, entitled to recover that sum from Cardinal pursuant to s 1005(1) of the Law. 242 Cardinal says that, as a consequence of the breach of its obligations under the Project Deed, Ms Lukey was placed in a position where she was induced to believe that an Interest had been issued to her and that she had a liability to pay to CIAFM the balance of the Subscription Moneys for that Interest. She therefore borrowed the sum of $24,350 from Barkley in August 1999 and on 29 January 2000 paid the sum of $2,422.80 as interest on that loan. But for the breach of the Project Deed, she would not have had a liability to CIAFM and would not have borrowed from Barkley. Thus, Cardinal says that Ms Lukey lost the sum of $2,422.80 as a consequence of the breach by Cardinal of the Project Deed. Ms Lukey was, in those circumstances, entitled to recover that sum from Cardinal pursuant to s 1005(1) of the Law. 243 Hartford and Ms Ibrahim do not dispute that Cardinal was liable to Ms Lukey in respect of both sums of money, namely, $1,150 and $2,422.80. However, there is a question as to whether, in respect of those sums, Cardinal incurred a liability to Ms Lukey in tort for breach of a common law duty to take care, within the meaning of the Tortfeasors Contribution Act.

CARDINAL'S CROSS-CLAIM 244 Cardinal makes parallel claims for contribution against each of Hartford and Ms Ibrahim. However, its claims against them are not identical. Ms Lukey suffered loss in two respects. First, her initial payments totalling $1,150, when she agreed to invest in the Project in December 1998, were lost. Secondly, the interest payment of $2,422.80 that she made to Barkley in January 2000, was also lost. Cardinal has submitted to judgment in respect of Ms Lukey's claims under both heads of loss, although there was no differentiation between the two heads of loss in the consent judgment in favour of Ms Lukey. Cardinal also consented to an order for costs in favour of Ms Lukey. 245 As I have said, Cardinal makes no claim against Hartford in respect of the sums totalling $1,150 paid by Ms Lukey in December 1998. Its claim against Hartford is limited to the sum of $2,422.80 paid by Ms Lukey to Barkley in January 2000. The claim against Ms Ibrahim, however, is with respect to both of those sums, totalling $3,572.80. Cardinal paid $2337.28 to Ms Lukey in respect of that loss. Cardinal claims contribution in respect of the whole of that sum of $2,337.28 from Ms Ibrahim. However, Cardinal claims contribution from Hartford in respect of only 68% of that sum. That is the proportion that $2,422.80 bears to the sum of $3,572.80. In relation to the costs of $2,150,000, Cardinal claims contribution from Hartford and Ms Ibrahim in the same proportions. That is to say, Cardinal claims contribution or indemnity from Ms Ibrahim in respect of the whole of the sum of $2,150,000 and claims contribution or indemnity from Hartford in respect of 68% of that sum.

CARDINAL'S PLEADING 246 Cardinal's allegations in the Cross-Claim, that Ms Ibrahim had a liability to Ms Lukey, may be summarised as follows: (1) In or about November 1998, Ms Lukey entered into an agreement or arrangement ('the Ibrahim Retainer') with Ms Ibrahim, pursuant to which Ms Ibrahim agreed to act as Ms Lukey's financial planner and adviser and investment adviser and, without limitation, agreed to provide advice in respect of Ms Lukey's proposed investment in the Project. (2) The terms of the Ibrahim Retainer included the following: (i) Ms Ibrahim would use all due care, skill and diligence in the performance of her obligations pursuant to the Ibrahim Retainer. (ii) Ms Ibrahim would exercise all due care, skill and diligence in the provision of financial planning advice and tax effective investment advice to Ms Lukey pursuant to the Ibrahim Retainer. (3) Between about November 1998 and January 2000, Ms Ibrahim acted as Ms Lukey's financial planner and adviser and investment adviser and, without limitation, provided advice in respect of Ms Lukey's proposed investment, and investment, in the Project ('the Ibrahim Services'). (4) Ms Ibrahim owed a duty of care to Ms Lukey in the provision of the Ibrahim Services. The duty of care owed by Ms Ibrahim included: (i) a duty to exercise all due care, skill and diligence in the provision of the Ibrahim Services; (ii) a duty to exercise all due care, skill and diligence in the provision of advice, including financial planning and tax effective investment advice, to Ms Lukey; (iii) a duty to ensure that she had a reasonable basis for making all financial planning and investment recommendations which she made to Ms Lukey; (iv) a duty to ensure that any investment recommendation she made to Ms Lukey was appropriate, having regard to Ms Lukey's investment objectives, financial situation and needs; and (v) a duty to give such consideration to, and to conduct such investigations of, the subject matter of any investment recommendation made by Ms Lukey as was reasonable in all the circumstances. (5) Ms Ibrahim acted in breach of her obligation to use all due care, skill and diligence and acted in breach of her duty of care. (6) The conduct constituting breach of duty was conduct in trade or commerce that was misleading or deceptive, in contravention of the Fair Trading Acts. (7) By reason of Ms Ibrahim's breaches and contraventions, Ms Lukey suffered loss of the moneys paid in December 1998 and the money paid in January 2000. 247 The allegations of Hartford's liability are made in identical terms except as to the time at which Ms Lukey is alleged to have entered into an agreement or arrangement with Hartford ('the Hartford Retainer') and the period during which Hartford is alleged is to have acted as Ms Lukey's adviser and to have provided services to Ms Lukey ('the Hartford Services'). The Hartford Retainer is alleged to have been entered into on or about 20 April 1999 and the Hartford Services are alleged to have been provided between about April 1999 and about January 2000. 248 The Cross-Claim makes allegations of 'breach of the duty of care' that Ms Ibrahim is alleged to have owed to Ms Lukey 'in the provision of the Ibrahim Services'. The Cross-Claim also alleges breach, by Hartford, of the duty of care that Hartford was alleged to owe to Ms Lukey. The particulars of breach as against Ms Ibrahim and Hartford have considerable overlap but, because of the timing differences, involve additional allegations of breach of duty by Ms Ibrahim. The Cross-Claim also asserts that the breaches of duty, as alleged, also constituted failure to exercise all due care, skill and diligence in the performance of the obligations owed to Ms Lukey, pursuant to the Ibrahim Retainer or the Hartford Retainer, as the case may be. 249 The allegations of breach of duty, in so far as Ms Ibrahim is concerned, are as follows: (1) Between November 1998 and 26 August 1999 Ms Ibrahim recommended and continued to recommend investment in the Project to Ms Lukey, which was inappropriate for Ms Lukey, having regard to Ms Lukey's investment objectives, financial situation and needs. (2) Ms Ibrahim advised Ms Lukey, in or about November 1998, that if she were to invest in the Project this would speed up the time it takes to save for a deposit for a home, and the future income stream would help Ms Lukey to pay off her mortgage faster than otherwise, in circumstances where Ms Ibrahim had no reasonable basis for so advising Ms Lukey, and in circumstances where Ms Ibrahim knew, or ought to have known, that the Project was commercially speculative and could fail and was an inappropriate investment, having regard to Ms Lukey's investment objectives, financial situation and needs. (3) Ms Ibrahim advised Ms Lukey in or about November 1998 that TrackNet had bought the latest technology for vehicle tracking systems, in circumstances where no such representation was made in the Prospectus, or elsewhere, and Ms Ibrahim had no reasonable basis for making that representation. (4) In or about November 1998, Ms Ibrahim advised Ms Lukey that Cardinal would watch over Participants' money and oversee the whole Project, in circumstances where no such representation was made in the Prospectus and Ms Ibrahim had no reasonable basis for making the representation. (5) In or about November 1998, Ms Ibrahim advised Ms Lukey that she would receive a free unit and from that day an income would start almost immediately, in circumstances where Ms Ibrahim had no reasonable basis for making such a representation and had undertaken no investigations or enquiries to ascertain if the representation was reasonable and would be fulfilled. (6) Ms Ibrahim advised Ms Lukey to apply for a loan from Barkley in circumstances where an investment in the Project was inappropriate, having regard to Ms Lukey's investment objectives, financial situation and needs. (7) Ms Ibrahim failed to advise Ms Lukey that the Project was highly speculative and that the return of her capital was not guaranteed. (8) Ms Ibrahim failed to advise Ms Lukey that, if the Project was unsuccessful, all of the money that she invested in the Project could be lost, and, in addition to losing all of the money she invested in the Project, Ms Lukey could incur additional loss, including interest payments required to be made on any loan she obtained in order to invest in the Project, professional fees, penalty and interest payable to the Australian Taxation Office, in respect of any tax deductions which she claimed but which might subsequently be disallowed, and damage arising from a loss of opportunity to invest her funds in an alternative and safer investment.

Cardinal also alleges that by reason of those matters, Ms Ibrahim: (a) failed to exercise all due care, skill and diligence in the performance of her obligations pursuant to the Ibrahim Retainer; (b) failed to exercise all due care, skill and diligence in the provision of advice pursuant to the Ibrahim Retainer; (c) failed to ensure that she had a reasonable basis for making the investment recommendation she made to Ms Lukey in respect of the Project; (d) failed to give such consideration to, and to conduct such investigations of, the Project as was reasonable in all the circumstances, or any investigations of the Project, before recommending that Ms Lukey invest in the Project and before causing Ms Lukey to subscribe to the Project. 250 Cardinal then alleges that, by reason of Ms Ibrahim's breach of the duty of care owed by her to Ms Lukey, Ms Lukey's reliance on Ms Ibrahim's advice, Ms Lukey's consequent investment in the Project and the subsequent failure of the Project and disallowance of Ms Lukey's claim for a tax deduction, Ms Lukey suffered loss and damage. 251 The Cross-Claim also alleges that, in breach of the duty of care that Hartford owed to Ms Lukey, Hartford, by its proper authority holder and agent, Ms Ibrahim, between 1 March 1999 and 26 August 1999, recommended and continued to recommend that Ms Lukey investment in the Project, which was inappropriate for Ms Lukey, having regard to Ms Lukey's investment objectives, financial situation and needs. Further allegations are made, which mirror precisely the allegations in items (1) to (6) of par 249 above. The Cross-Claim then asserts that, by reason of those alleged breaches by Hartford, Hartford, by its proper authority holder and agent, Ms Ibrahim: (a) failed to exercise all due care, skill and diligence in the performance of its obligations owed to Ms Lukey pursuant to the Hartford retainer; (b) failed to exercise all due care, skill and diligence in the provision of advice to Ms Lukey pursuant to the Hartford Retainer; (c) failed to ensure that it had a reasonable basis for making any investment recommendation it made to Ms Lukey in respect of the Project; (d) failed to give such consideration to, and conduct such investigations of, the Project as was reasonable in all the circumstances, or any investigations of the Project, before recommending that Ms Lukey execute the Barkley loan documentation and submitting that documentation to Barkley. 252 In addition to allegations of loss and damage suffered by Ms Lukey by reason of the breach of duty and by conduct alleged to have contravened s 52 of the Trade Practices Act, Cardinal also alleges that Hartford is liable for Ms Ibrahim's acts and omissions alleged in the Cross-Claim, pursuant to s 817 of the Law. Section 817 relevantly provided that, where a person engages in conduct as a representative of another person ('the principal') then, as between the principal and a third person, the principal is liable in respect of that conduct in the same manner, and to the same extent, as if the principal had engaged in it. 253 Under s 9 of the Law, the term representative in s 817 was defined as a securities representative. Section 94(2)(a) relevantly provided that a person who holds a proper authority from a securities licensee is a securities representative of the licensee. Hartford was at relevant times a securities licensee and Ms Ibrahim held a proper authority from Hartford. 254 Section 94(3) relevantly provided that a person does an act, or engages in conduct, as a securities representative of another person if, and only if, the first mentioned person does the act, or engages in the conduct:

• in connection with a business carried on by the other person;
• while the first mentioned person is a securities representative of the other person; and
• as employee or agent of, or otherwise on behalf of, on account of, or for the benefit of, the other person. Hartford says that Ms Ibrahim did not, at any time, satisfy that third requirement because it was a term of her appointment as securities representative of Hartford that she would only act and advise in relation to 'Approved Products'. Interests in the Project, and borrowing money, it says, were never Approved Products for that purpose. 255 Thus, before considering the nature of the liability of Cardinal to Ms Lukey, in respect of which contribution is claimed, and the basis upon which such contribution is claimed, it is first necessary to determine whether Hartford or Ms Ibrahim had any liability to Ms Lukey in relation to the amounts in respect of which Cardinal claims contribution or indemnity. For that purpose, it is necessary to determine the basis upon which such liability, if any, rests. In that regard, Cardinal's claims have exhibited a degree of fluidity.

Alleged Breaches 256 A question arises as to whether the Cross-Claim should be construed as making separate or alternative allegations of:

• an agreement or arrangement pursuant to which Ms Ibrahim (or Hartford as the case may be) agreed to act as Ms Lukey's financial planner and adviser and investment adviser, and
• an agreement or arrangement pursuant to which Ms Ibrahim (or Hartford as the case may be) agreed to provide advice in respect of Ms Lukey's proposed investment in the Project. The same question arises in relation to the allegation that Ms Ibrahim (or Hartford as the case may be) acted as Ms Lukey's financial planner and adviser and investment adviser and provided advice in respect of Ms Lukey's proposed investment, and investment, in the Project. 257 The alternative is that the references to Ms Ibrahim's (or Hartford's as the case may be) agreeing to provide advice in respect of Ms Lukey's proposed investment in the Project and to Ms Ibrahim's providing advice in respect of Ms Lukey's proposed investment, and actual investment, in the Project are not to be construed as independent or alternative allegations, but simply as particulars of the one agreement, or arrangement, to act as a financial planner and adviser and investment adviser, or a particular incident of acting as a financial planner and investment adviser. Some significance may attach to the distinction because of the Limited Advice Agreement, signed by Ms Lukey, at the behest of Ms Ibrahim, on 4 December 1998. 258 Cardinal says that Ms Ibrahim was under a duty to furnish Ms Lukey with all the relevant knowledge that she possessed, concealing nothing that might reasonably have been regarded as relevant to the making of a decision to invest in the Project. It says that Ms Ibrahim was under a duty to obtain for Ms Lukey the best terms that Ms Lukey would obtain from a third party, if Ms Ibrahim were to exercise due diligence on Ms Lukey's behalf in such a transaction. In any event, Cardinal says, Ms Ibrahim was under a duty to exercise proper or reasonable care and skill in discharging her obligations to Ms Lukey in acting on her behalf and to inform Ms Lukey of all relevant matters. 259 Cardinal says, in particular, that Ms Ibrahim promoted the Project to Ms Lukey as a tax effective investment, failed to advise Ms Lukey that the Project was not a suitable investment for her, having regard to her investment objectives, financial situation and needs, and advised her that there was no problem with the Project, despite the expressed negative view of the ATO as to the deductibility of investments in tax effective schemes. Cardinal says that, having read the Commissioner's speech and the covering letter from CIAFM enclosing a copy of the speech, Ms Ibrahim should have been aware that investment in the Project would never be acceptable to the ATO. Nevertheless, Cardinal says, Ms Ibrahim recommended investment in the Project with a limited recourse loan, notwithstanding the Commissioner's speech about non-recourse and limited recourse loans. 260 Cardinal also says that the same conduct constituted contravention of s 42 of the Fair Trading Acts. Thus, Cardinal says that Ms Ibrahim's conduct can be analysed in terms of representations that it says Ms Ibrahim made to Ms Lukey. Specifically, Cardinal says that Ms Ibrahim represented to Ms Lukey that there was no tax problem with the Project. That was misleading because of the ATO's expressed negative view of the deductibility of investments in tax effective schemes. Cardinal says that Ms Ibrahim should not have said that there was no tax issue in response to Ms Lukey's questions and that Ms Ibrahim's statement that the Supplementary Prospectus had satisfactorily dealt with what the Commissioner had said in his speech was likely to mislead Ms Lukey. Rather than making such statements, Ms Ibrahim should have told Ms Lukey that what was proposed involved a limited recourse loan and that the Commissioner had intimated that payments made in connection with such arrangements would not be deductible. 261 Cardinal also asserts that Ms Ibrahim was also in breach of her duties in recommending Ms Lukey's entry into the arrangements with Barkley in August 1999, given Ms Ibrahim's knowledge of the Project at that stage. Cardinal says that Ms Ibrahim was aware of information that suggested that:
• TrackNet had no rights to relevant technology and no marketable product,
• Professor Valentine had significant concerns about TrackNet's viability, and · statements in the Prospectus were probably untrue,

and had ceased to believe that Mr White was honest and trustworthy. Cardinal says that, in those circumstances, Ms Ibrahim should have advised Ms Lukey that, rather than to proceed with any proposed refinancing, it was in Ms Lukey's interest to avoid any further participation in the Project. 262 Cardinal says that, in advising Ms Lukey concerning the need to make alternative financing arrangements, Ms Ibrahim came under a duty to consider whether the proposed arrangements with Barkley were appropriate for Ms Lukey at that stage. Cardinal says that Ms Ibrahim should have advised Ms Lukey not to enter into any arrangements with Barkley but to withdraw from participation in the Project altogether. 263 Cardinal contends that the conduct of Ms Ibrahim was a breach of her obligations as a financial adviser to Ms Lukey to exercise reasonable care and skill in advising and acting on behalf of Ms Lukey and of her obligations not to make negligent misstatements and her obligations not to give negligent advice concerning entry into arrangements with Barkley when it was not in Ms Lukey's interest to do so. In all of those circumstances, Cardinal says, Ms Ibrahim was in breach of her duty to take care in relation to the advice she gave to Ms Lukey and that that breach was a breach of contract and was breach of a common law duty. 264 Further, Cardinal says, the impression created by Ms Ibrahim's letter of 27 April 1999, that the Project was 'going well', was never corrected or withdrawn, and should be regarded as being repeated up to the time when the Barkley arrangements were finalised in August 1999. That impression was false in circumstances where Ms Ibrahim knew, as at 13 July 1999, that there was no technology in TrackNet and that statements in the Prospectus were questionable, if not outright untrue. Cardinal says that as late as 8 August 1999, Ms Ibrahim represented to Ms Lukey that the Project was still going well and that it was in Ms Lukey's best interests to enter into the arrangements with Barkley. 265 Cardinal says that the statements and representations so made by Ms Ibrahim to Ms Lukey were misleading and deceptive because:

• the Taxation Commissioner's speech was directed at schemes with characteristics similar to those of the Project, including limited or non-recourse funding and round-robin cash flow;
• the Project was not going well, to Ms Ibrahim's knowledge, as at 8 August 1999;
• it was not in Ms Lukey's best interests to enter into the arrangements with Barkley. 266 Cardinal relies on the following matters:
• the degree to which Ms Ibrahim was a salesperson for the Project;
• the extent to which tax advantages were a selling point for the Project;
• the Taxation Commissioner's statements about tax effective schemes applied to Ms Lukey's investment in the Project;
• the precise structure of Ms Ibrahim's commission arrangement;
• the impact of the 'threat' made by Mr White and Mr Flanagan concerning repayment of commission;
• the knowledge of Ms Ibrahim and Hartford of the deficiencies in the Project prior to execution by Ms Lukey of the Barkley loan agreement;
• the extent of reliance by Ms Lukey on Ms Ibrahim's expertise and opinion;
• Ms Ibrahim's response of 1 September 1999 to the reference to 'round-robin' financing (Exhibit C260).

Ms Ibrahim's Obligations to Ms Lukey 267 I do not consider that the evidence supports a finding that Ms Lukey entered into an agreement or an arrangement with Ms Ibrahim in or about November 1998, or at any other time, pursuant to which Ms Ibrahim agreed to act as Ms Lukey's financial planner and adviser and investment adviser. Rather, the evidence is quite to the contrary. While Ms Ibrahim intimated that she was prepared to enter into such an arrangement, Ms Lukey expressly rejected any such proposal. It is equally clear that at no time did Ms Ibrahim act as Ms Lukey's financial planner and adviser and investment adviser. 268 As I have said, it is by no means clear whether Cardinal intended by the Cross-Claim to allege, in the alternative, that Ms Lukey entered into an agreement or arrangement with Ms Ibrahim, pursuant to which Ms Ibrahim agreed to provide advice in respect of Ms Lukey's proposed investment in the Project. By the same token, it is by no means clear that Cardinal intended by the Cross-Claim to allege that Ms Ibrahim provided advice in respect of Ms Lukey's proposed investment, and investment, in the Project, independently of acting as Ms Lukey's financial planner and adviser and investment adviser. 269 The evidence does not support a conclusion that Ms Lukey entered into an agreement or arrangement with Ms Ibrahim pursuant to which Ms Ibrahim agreed to provide advice in respect of Ms Lukey's proposed investment in the Project. The evidence does not support a finding that Ms Ibrahim furnished information or advice to Ms Lukey beyond explaining the contents and effect of the Prospectus and the effect of deductibility of the payments for tax purposes. 270 The most that could be said, on the basis of the evidence that I have set out above, is that Ms Ibrahim provided some advice in relation to Ms Lukey's proposed investment in the Project. That advice was limited to explaining to Ms Lukey the effect of the Prospectus and the effect of deductibility of the subscription moneys for tax purposes. While Ms Ibrahim may have had an obligation to ensure that Ms Lukey understood fully the risks involved in investing in the Project, I consider that she discharged that duty in all the circumstances. 271 The Limited Advice Agreement, and the discussions that took place concerning it, make it abundantly clear that Ms Lukey was not relying upon Ms Ibrahim for advice as to whether the Project was appropriate for Ms Lukey having regard to her investment objectives, financial situation and needs. It is abundantly clear that Ms Lukey did not rely upon Ms Ibrahim for advice as to the appropriateness of an investment in the Project having regard to Ms Lukey's investment objectives, financial situation and needs. Ms Ibrahim did not have the information necessary to give advice in relation to such matters, as Ms Lukey clearly acknowledged by signing the Limited Advice Agreement. 272 The evidence leads to the conclusion that, at the time of Ms Lukey's investment in the Project, Ms Ibrahim was not acting as Ms Lukey's financial adviser. More specifically, the evidence does not support a finding that, up to December 1998, when Ms Lukey originally signed the documents relating to her investment in the Project, Ms Ibrahim had recommended the Project as an investment. Rather, Ms Ibrahim's involvement was limited to explaining the Prospectus and the Supplementary Prospectus, including taxation aspects. Such explanations did not go beyond the contents of the Prospectus. Ms Ibrahim did not make any recommendation to Ms Lukey concerning the suitability of the investment for her. Ms Lukey came to the decision to make the investment on the basis of the information contained in the Prospectus and discussion with Ms Ibrahim and Ms Kennedy concerning the contents of the Prospectus. 273 Ms Ibrahim was to receive a commission from CIAFM in respect of Ms Lukey's investment in the Project. However, no part of the commission was to come from Ms Lukey. It would be quite artificial to analyse the arrangements between Ms Lukey and Ms Ibrahim in terms of a contract under which Ms Ibrahim agreed to provide advice of some sort to Ms Lukey in exchange for some consideration passing from Ms Lukey. Ms Lukey made a decision to invest in the Project. She did not do that for Ms Ibrahim as consideration for a promise by Ms Ibrahim to provide advice. 274 Ms Ibrahim was a salesperson in respect of the Project, acting as a representative of CIAFM. Ms Lukey understood that Ms Ibrahim was a salesperson, although she believed that Ms Ibrahim had skill as a financial consultant. Ms Ibrahim understood that Ms Lukey might rely on her to make fair and accurate statements concerning the contents of the Prospectus and the Supplementary Prospectus as well as to disclose any information that Ms Ibrahim had available to her that would be material to Ms Lukey's decision whether or not to invest in the Project. 275 It is clear enough that Ms Lukey was interested in the possible tax deduction. The question is whether Ms Ibrahim was in breach of any duty to Ms Lukey to warn her of the possibility that a deduction was likely to be disallowed. Ms Lukey read the Supplementary Prospectus and the 23 September 1998 Letter. I consider, on the basis of her evidence, that it is more likely than not that the risk of the deduction being disallowed is one that Ms Lukey would have been prepared to take. In any event, from Ms Ibrahim's point of view, the Supplementary Prospectus adequately drew attention to the matters raised by the Commissioner. Ms Ibrahim was entitled to rely on the completeness of Supplementary Prospectus as constituting adequate disclosure to prospective Participants of the risks of investment in the Project in a manner promoted by CIAFM. That manner included the proposed arrangements with ATF involving some limited recourse in relation to the proposed borrowing. 276 To the extent that Ms Ibrahim told Ms Lukey that the tax deductions that might be available would speed up the time that it would take to save for a deposit for a home, Ms Ibrahim had a reasonable basis for saying so, having regard to the statements contained in the Prospectus. The Supplementary Prospectus responded specifically to factors raised by the ATO that might have prejudiced the deductibility of payments to be made by Ms Lukey under the Project. Ms Ibrahim informed Ms Lukey that the Project was commercially speculative. Ms Lukey was aware of the possibility of failure and was aware that, in that event, she would have a liability for the payment of interest in respect of her borrowing to make the investment. 277 Ms Ibrahim was not a tax consultant. She was not a lawyer. She was not an accountant. The Supplementary Prospectus addressed in express terms the concerns raised by the Taxation Commissioner. Ms Ibrahim drew Ms Lukey's attention to the relevant provisions of the Prospectus and the Supplementary Prospectus. There has been no suggestion that the intended arrangements for ATF would involve a round-robin of cheques, as in fact occurred with Barkley. There is no evidence that Ms Ibrahim knew in 1998 that there was a round-robin of cheques involving no real advance to Ms Lukey. Ms Ibrahim told Ms Lukey to take the documents away and study them and to telephone if she wished to proceed. Ms Lukey took them away with her and examined them. She discussed the documents with her accountant, Ms Kennedy, who had prepared Ms Lukey's tax return, as Ms Ibrahim understood. 278 Ms Lukey in fact claimed a substantial deduction in her tax return. In the events that happened, a substantial part was disallowed. However, she appears to have obtained some benefit. I do not consider that Ms Ibrahim was in breach of any duty to advise further as to the availability of a tax deduction in circumstances where she knew that Ms Lukey was in communication with her accountant, Ms Kennedy. 279 There is no evidence to support a conclusion that Ms Ibrahim advised Ms Lukey in November 1998 that TrackNet had bought the latest technology for vehicle tracking systems. Nor is there any evidence to support a conclusion that, in November 1998, Ms Ibrahim advised Ms Lukey that Cardinal would watch over Participants' money and oversee the whole Project. Ms Ibrahim did not advise Ms Lukey in November 1998 that she would receive a free unit and that income would start almost immediately. Nor did she represent to Ms Lukey in November 1998 that the expected income that she would receive from investing in the Project over a ten year period would be very high. Nor were any of those statements made in December, or at any time. There is no evidence that Ms Ibrahim made any statements about the Project that were not totally justified by the contents of the Prospectus. 280 Ms Lukey's evidence as to her reliance of the statements contained in the Prospectus was convincing. She examined the Prospectus carefully and was convinced that the Project was a promising one. The Projections promised an early return of profit from an investment in the Project. The Projections showed a positive return in 1999 and following years. The PKF Report supported the Projections. The Tax Opinion from Deloittes addressed the deductibility of the proposed payments. Ms Lukey had regard to those matters. 281 It is significant that Ms Lukey made no complaint about Ms Ibrahim's conduct, despite her extremely thorough and comprehensive pleading of claims against the original respondents. Those claims extended to Professor Valentine, in circumstances that caused me some disquiet (see [2003] FCA 1602). It can be assumed that those advising Ms Lukey gave careful attention to every possible avenue of recovery. I do not consider that Ms Lukey placed relevant reliance on Ms Ibrahim or Hartford in making any decision in question. 282 The technology proposed for the Project was available in the marketplace. The difficulty was that TrackNet had not acquired it. There was some evidence to suggest that, had TrackNet access to all of the relevant technology, infrastructure and the like, the Project could well have been a success. For example, on 2 September 1998, TrackNet entered into a 'Share Sale Agreement' and a 'Deed of Assignment of Debt' in relation to Mobiletrack Pty Limited ('Mobiletrack'). Mobiletrack's business involved the operation of a vehicle tracking technology system, similar to that proposed by the Project. 283 Under the Share Sale Agreement, TrackNet agreed to buy all the issued share capital of Mobiletrack for $10 and to lend to Mobiletrack the sum of $250,000 to be used by Mobiletrack as working capital for the conduct of its day-to-day business. That sum of $250,000 was payable on completion of the Share Sale Agreement. Under the Deed of Assignment of Debt, TrackNet agreed to take an assignment of debts owing by Mobiletrack totalling $4,750,000. The consideration for the assignment was to be $4,750,000, of which $250,000 was payable on execution of the Deed of Assignment. Completion of both agreements was to take place on 28 October 1998. 284 The two payments of $250,000, totalling $500,000, made by TrackNet were forfeited when, on 9 November 1998, both the Deed of Assignment of Debt and the Share Sale Agreement were terminated. The moneys so forfeited had been paid out of the only source of funds of the Project, namely, fees derived from Subscription Moneys paid by or on behalf of prospective Participants in respect of the Project. Thus, an inference can be drawn that TrackNet did not have funds available to it (other than those derived from Subscription Moneys) from which it could pay the costs of acquiring hardware, software and infrastructure. However, whether the Project could have succeeded or not, there was no reason for Ms Lukey to have any suspicion as to those matters in December 1998. 285 When AFT did not come up to expectation and provide the advance that had been expected in December 1998, there was no greater reason to doubt that a tax deduction would be available to Ms Lukey. So far as Ms Ibrahim was concerned, it was necessary to arrange alternative finance in order to ensure the availability of the deduction, if it were going to be available at all. With the benefit of hindsight, it might have been possible for Ms Ibrahim to deduce that there were real problems for the Project. However, I do not consider that, in making the arrangements for Ms Lukey that she made during 1999, in order to protect her Interest in the Project, Ms Ibrahim was in breach of any duty owed by her in relation to Ms Lukey's investment in the Project. 286 The exchanges that Ms Ibrahim engaged in with CIAFM in the middle of 1999 do not lead to the conclusion that she knew of the deficiencies in the Project. Her complaints about the honesty of Mr White and being let down by TrackNet were directed at the failure to pay the commissions to which she believed she was entitled and which were overdue for payment. When asked in cross-examination what information in the Prospectus she was referring to in her letter of 1 September 1999 as 'false and misleading', Ms Ibrahim said she meant the references in the Prospectus to the payment of commissions by CIAFM to authorised representatives. 287 Ms Ibrahim's statement in her letter to Ms Lukey of 27 April 1999, that TrackNet was 'performing very well', was based on the Project Update that was enclosed with the letter. Ms Ibrahim had no reason at that stage to doubt the reliability of that information. I do not consider that she was furnished with any information subsequently that would have imposed upon her a duty to correct any impression that the letter may have created for Ms Lukey. 288 There is no basis in the evidence for concluding that the relationship between Ms Ibrahim and Ms Lukey changed as a consequence of the involvement of Ms Ibrahim with Hartford. Ms Ibrahim was not Ms Lukey's financial advisor or financial planner. It is unrealistic to suggest that Ms Ibrahim had a duty to advise Ms Lukey in 1999 that she should abandon her proposed investment in the Project and expose herself to possible claims by CIAFM for payment of the sum of $24, 350 that ATF had failed to advance. 289 I do not consider that Ms Ibrahim acted in breach of any duty owed to Ms Lukey by her either, in December 1998 or at any time during 1999. Nor did Ms Ibrahim act in breach of any contract between her and Ms Lukey. Accordingly, Ms Ibrahim is not a person who, if sued by Ms Lukey, would have a liability for any loss suffered by Ms Lukey by reason of her payments in 1998 or 2000.

LIABILITY OF HARTFORD 290 Cardinal contends that Ms Ibrahim was acting on behalf of Hartford from 3 March 1999 through to 26 August 1999 by reason of the following: (a) Ms Ibrahim's appointment as representative of Hartford; (b) Ms Ibrahim's letter to Ms Lukey of 20 April 1999; (c) Hartford's advisory services guide; (d) Ms Ibrahim's letter to Ms Lukey of 27 April 1999; (e) Ms Ibrahim's letter to Ms Lukey of 3 June 1999; (f) Ms Ibrahim's letter to Ms Lukey of 27 June 1999; (g) Ms Ibrahim's letter to Ms Lukey of 13 July 1999; (h) Ms Ibrahim's letter to Ms Lukey of 8 August 1999; (i) Ms Ibrahim's letter to Ms Lukey of 26 August 1999. 291 Ms Lukey assumed, following receipt of the letter of 20 April 1999, that Ms Ibrahim would be working together with Hartford. She agreed that the fact that Professor Valentine was the chairman of directors of Hartford gave her some comfort, particularly having regard to his knowledge about TrackNet. Further, Professor Valentine confirmed that, if Ms Lukey was a client of a representative of Hartford, she was a client of Hartford. Professor Valentine acknowledged that clients would see advice given by a representative of Hartford as having the imprimatur of Hartford within the areas covered by the proper authority. 292 Under s 820 of the Law, where it is proved that a person engaged in particular conduct while that person was a representative of another person (the indemnifying principal), then unless the contrary is proved, it is to be presumed that the representative engaged in the conduct as a representative of the indemnifying principal. Thus, it is necessary for Hartford to show that Ms Ibrahim was not acting as a representative of Hartford in relation to her conduct concerning Ms Lukey during 1999. 293 In addition, Cardinal says that Ms Lukey was an agent of Hartford, acting within the scope of her actual or apparent authority and that, under s 84(2) of the Trade Practices Act, any conduct of Ms Ibrahim engaged in on behalf of Hartford is to be deemed, for the purposes of the Trade Practices Act, to have been engaged in by Hartford. 294 Cardinal says that, having regard to the communications described above, Hartford owed the same duties to Ms Lukey as Ms Ibrahim, either as a financial adviser to her or as her agent in procuring the financing arrangements with Barkley. Cardinal asserts that Hartford was in breech of its direct obligations to Ms Lukey in permitting Ms Ibrahim to make representations on its behalf and in failing to disclose to Ms Lukey the information that Hartford possessed concerning the Project, which was highly relevant to the question of whether Ms Lukey should enter into the arrangements with Barkley. 295 I would be disposed to conclude that, in the circumstances, Ms Ibrahim was authorised by Hartford to act as its representative, with authority to deal with clients on its behalf in relation to investments made by those clients after Ms Ibrahim's appointment. However, the Project was not an investment in respect of which Hartford conferred authority on Ms Ibrahim. The Prospectus was spent in the sense that no more Interests were available for investment. Any continuing relationship between Ms Lukey and Ms Ibrahim related to the need to replace ATF as financier. While Hartford attempted to assist Ms Ibrahim in the recovery of her commissions, I do not consider that in dealing with Ms Lukey in relation to the Project, Ms Ibrahim was acting as agent for Hartford. Those dealings were not part of Hartford's business. 296 Cardinal also says that Professor Valentine's knowledge of the parlous state of the Project and falsities in the Prospectus should have led Hartford to appreciate that Ms Lukey should be informed of the inaccuracies in the Prospectus but, in breach of its duty as her adviser, Hartford failed to do so. Even if Ms Ibrahim was acting on behalf of Hartford in her dealings with Ms Lukey during 1999, Hartford had no duty beyond that which arose from the relationship that existed between Ms Ibrahim and Ms Lukey. 297 That is to say, whatever reservations and concerns Professor Valentine may have had concerning the affairs of CIAFM in general, and the Project in particular, those reservations had nothing to do with the relationship between Ms Lukey and Ms Ibrahim. Ms Ibrahim had agreed to pay a proportion of her commissions to Hartford as consideration for her appointment. However, that goes only to the question of whether or not she was acting on behalf of Hartford in her dealings with Ms Lukey. Accordingly, Professor Valentine's knowledge of the difficulties of CIAFM in June and July 1999 can have no bearing on the question of whether or not a client introduced by one of its representatives should be warned about difficulties with the TrackNet Project. 298 I do not consider that Hartford was in breach of any duty to Ms Lukey by reason of its failure to warn her of the concerns and reservations that Professor Valentine had by July 1999.

CONTRIBUTION 299 In the light of the conclusions that I have reached that neither Ms Ibrahim nor Hartford is a person, who if sued by Ms Lukey, would be liable for any loss or damage, it is strictly unnecessary to consider the question of contribution by them to Cardinal's liability. However, the questions were fully argued and it is appropriate, therefore, that I express my views concerning those questions. 300 The argument on the Cross-Claim has proceeded on the basis that my provisional findings are binding on all parties. However, while the question of contribution to Cardinal's liability in respect of the sums totalling $1,150 and $2,422.80 actually paid out by Ms Lukey is one thing, contribution to any liability incurred by Cardinal for costs in resisting Ms Lukey's claims may be another. Contribution, whether under the Tortfeasors Contribution Act or on the basis of general equitable principles, involves questions of justice, equity and fairness, having regard to all the circumstances of the case. It will be necessary, therefore, to say something about the relative culpabilities of the parties, both in relation to the sums totalling $1,150 and $2,422.80 and the costs of $2,150,000.

Claim Under The Tortfeasors Contribution Act 301 Section 5(1)(c) of the Tortfeasors Contribution Act relevantly provides that, where damage is suffered by any person as a result of a tort, any tortfeasor liable in respect of that damage may recover contribution from any other tortfeasor who is, or would, if sued, have been, liable in respect of the same damage. Under s 5(2), the amount of the contribution recoverable from any person is to be such as may be found by the court to be just and equitable, having regard to the extent of that person's responsibility for the damage. Further, under s 5(2), the court has power to exempt any person from liability to make contribution and also has power to direct that the contribution to be recovered from any person is to amount to a complete indemnity. 302 Cardinal contends that, although neither Ms Ibrahim nor Hartford was joined as a respondent by Ms Lukey, each of them is a person who would, if sued by Ms Lukey, be liable as a tortfeasor for the same damage for which judgment in favour of Ms Lukey has now been entered by consent against Cardinal. The first question, however, is whether the damage suffered by Ms Lukey, in respect to which the judgment against Cardinal in her favour has been entered, was damage suffered as a result of a tort and whether Cardinal was a tortfeasor liable in respect of that damage. 303 In relation to its claim for contribution or indemnity under the Tortfeasors Contribution Act, Cardinal asserts that it was liable to Ms Lukey for breach of a common law duty to exercise all due diligence and vigilance in protecting her interests as a Participant in the Project. In support of that allegation, Cardinal says: (a) Clause 35.5 of the Project Deed imposed an obligation on Cardinal to exercise all due diligence in carrying out its functions and duties and in protecting the rights and interests of the Participants. (b) The purpose of that provision was to protect individual investors who would, as a matter of practicality, be unable themselves to scrutinise the progress of the Project and to call CIAFM to account. (c) The provisions of clause 35.5 were set out in the Prospectus with the approval of Cardinal. (d) Cardinal knew or ought to have known that investors would rely upon Cardinal fulfilling its obligations under clause 35.5. (e) The Participants were not parties to the Project Deed and, as a matter of contract, the obligations of Cardinal were enforceable only by CIAFM. 304 Cardinal says that, in those circumstances, it owed a duty of care at common law to prospective investors by reason of:

• known reliance on Cardinal by investors who became Participants; · relevant control by Cardinal in a situation of vulnerability on the part of Participants.

305 Cardinal says that, while it may have been under a fiduciary duty to Participants, as beneficiaries under a trust, that duty was not inconsistent with the existence of a concurrent duty under the common law to take care. Cardinal says that, had it made appropriate enquiries, the non-satisfaction of the Expenditure Qualifying Conditions would have been apparent and the Project could not have been proposed to Ms Lukey. She would therefore not have invested in the Project and would not have suffered any loss or damage. 306 Alternatively, Cardinal contends that a contravention referred to in s 1073(1A) is a tort for the purposes of the Tortfeasors Contribution Act. That is to say, contravention gives rise to a liability at common law for breach of a statutory duty, which is a liability in tort. While s 1073(1A) creates a statutory obligation and s 1005 provides for statutory civil remedies, s 1005(3) preserves any other rights that may exist. 307 Cardinal must establish first that Ms Lukey suffered damage as a result of a tort and that Cardinal is liable in respect of that damage, as a tortfeasor. Ms Lukey did not allege in the Statement of Claim that Cardinal committed a tort. However, Cardinal asserts that its liability to Ms Lukey as a consequence of its contraventions of the Law is to be regarded, for the purposes of s 5(1)(c), as liability as a result of a tort committed by Cardinal. 308 Cardinal must also establish that Hartford and Ms Ibrahim, if sued by Ms Lukey, would have been liable, as tortfeasors, in respect of the same damage for which Cardinal claims it is liable as a result of its breaches of the Law. That entails characterising any breach of duty of care owed by Hartford or Ms Ibrahim to Ms Lukey as a tort rather than a breach of contract. 309 Finally, Cardinal must establish that it is just and equitable that it recover contribution or indemnity from Hartford and Ms Ibrahim in respect of the damage suffered by Ms Lukey. That requires an assessment of the respective responsibilities of Ms Ibrahim and Cardinal in relation to the loss suffered by Ms Lukey. 310 There are good reasons for concluding that Cardinal was liable to compensate Ms Lukey in respect of the loss or damage suffered by her by reason of the breaches of the Project Deed committed by Cardinal. If Cardinal had taken vigilant or diligent steps to satisfy itself that the Expenditure Qualifying Conditions had been satisfied, it would have discovered that the second and third Expenditure Qualifying Conditions had not been satisfied. Once that occurred, Ms Lukey's subscription moneys would simply have been returned to her. There would have been no question of incurring a liability for interest to Barkley in respect of a notional borrowing in August of the following year. Applying a common sense approach to causation, which is appropriate for a claim for relief under s 1005 in respect of a contravention of s 1073(1A), Cardinal's contravention relevantly caused Ms Lukey's loss of the amounts of $1,150 in December 1998 and $2,422.80 in January 2000. 311 The first two questions that arise in relation to the claim under the Tortfeasors Contribution Act are:

• whether a common law duty of care is owed to investors by a trustee in performing the obligations imposed on the trustee by covenants in a deed given for the benefit of proposed investors.
• whether the prohibition in s 1073(1A) gives rise to a duty, the breach of which can properly be characterised as a tort and whether a person who breaches such a duty can properly be characterised as a tortfeasor in respect of the damage suffered as a result of that breach.

Duty of a Trustee 312 In the 19th Century, eminent English judges commonly spoke of directors as trustees. Generally, the duties of a director of a company were derived from, although not identical to, the duties of a trustee to a cestui-que-trust and the duties of an agent to his principal. When, in relation to those duties, reference was made to negligence, the reference was not to negligence in the common law sense but to imprudence of such a nature as to constitute a breach of trust. Nevertheless, it is now clear that the duty and function of a director do not correspond with those of a trustee. For example, while the duty of a trustee is to exercise a degree of restraint and conservatism in investment judgments, the duty of a director may be to display entrepreneurial flair and to accept commercial risks to produce a sufficient return on the capital invested by shareholders. Nevertheless, directors owe fiduciary obligations and a power conferred upon them cannot be exercised in order to obtain some private advantage or for any purpose foreign to the power (see Daniels v Anderson (1995) 37 NSWLR 438 at 493-4). 313 A person who accepts the office of director of a company undertakes the responsibility of ensuring that he or she understands the nature of the duty a director is called upon to perform. That duty will vary according to the size and business of the particular company and the experience or skills that the director holds himself or herself out to have in support of appointment to the office. The duty is a common law duty to take reasonable care owed severally by persons who are bound not to exercise the powers conferred upon them for private purpose or for any person foreign to the power. The duty includes that of acting collectively to manage the company and breach of the duty will found an action for negligence at the suit of the company (Daniels v Anderson at 505). 314 Cardinal relies upon those principles for the proposition that it owed a common law duty of care to prospective Participants in the Project and that its breach of that duty resulted in loss and damage to Ms Lukey of all of the moneys that she paid out both in December 1998 and in January 2000. However, while there is nothing exceptionable in the principles that I have stated, they do not necessarily lead to the conclusion contended for by Cardinal. 315 The claim against Cardinal in respect of the sums totalling $1,150 paid by Ms Lukey in December 1998 is for breach of trust. That is to say, Ms Lukey's claims against Cardinal in respect of that money was for breach of trust. Cardinal dealt with Ms Lukey's money in breach of trust. The loss was not a result of a breach of a duty to take care in relation to the management of Ms Lukey's money. It was an unauthorised dealing by Cardinal with Ms Lukey's money. On the other hand, Cardinal was not a trustee in respect of any part of the sum of $2,337.28 paid by Ms Lukey to Barkley in January 2000. 316 Nevertheless, the Law conferred a remedy on Participants for breach of the Project Deed by Cardinal. The parties to the Project Deed were expressed to be CIAFM, Cardinal and 'the persons who may from time to time enter into Management Agreements with CIAFM, as Manager'. Nevertheless, Ms Lukey was not a party to the Project Deed and had no cause of action against Cardinal for breach of covenant under the Project Deed. However, Cardinal says that it owed a duty to Ms Lukey by reason of the fact that it knew that investors who became participants, as did Ms Lukey, would rely on Cardinal to exercise all due diligence and vigilance in protecting their interests and because Cardinal exercised relevant control in a situation of vulnerability on the part of investors who became Participants. 317 The question must be considered in the context of the Law. That is to say, in circumstances where Cardinal was under a statutory duty not to contravene the provisions of the Project Deed and the Law provided a remedy for any person who suffered loss or damage by such a contravention, there is no reason why the common law would impose a duty of care. Cardinal points to the attempt by the parties, unsuccessful though it was, to make Participants parties to the Project Deed. However, that was an attempt to confer a contractual right upon Participants. The consequences of a breach of a contractual obligation may well have been quite different from the consequences of a breach of a common law duty to take care in the performance of the covenants given by Cardinal in the Project Deed in CIAFM. I do no consider that Cardinal owed to Ms Lukey a common law duty of care, the breach of which gives rise to cause of action in tort. 318 Once Ms Lukey's money had been paid to Cardinal, Cardinal became a legal owner of the money. A legal owner as such owes no common law duty of care to others in his management or administration of his own property. A legal owner is free to give his property away, sell it at an undervalue, neglect it, damage it or destroy it. However, such acts would be breaches of trust if the owner were a trustee. Since the common law does not recognise equitable ownership, a legal owner cannot owe a common law duty of care to an equitable owner as such. Nevertheless, equitable owners are not without remedy against agents who participate, with knowledge, in breaches of trust or fiduciary duty. However, liability in equity is based on active conduct with knowledge and not on a mere failure to meet an objective standard of care. Compensation is determined on different principles. Thus, there is no room for a common law duty of care. If the common law had imposed a wider or different liability, there would be a conflict with the rules of equity, which would prevail. The Court of Chancery exercised an exclusive jurisdiction over trustees and their agents in cases of breach of trust - see Wickstead v Brown (1992) 30 NSLWR 1 at 17-18. 319 Where another body of law can effectively deal with economic loss, a court should be slow to use negligence law to impose a duty of care on a defendant or respondent. That is particularly important where to do so would interfere with a coherent body of law in another field - Perre v Apand Pty Ltd (1999) 198 CLR 180 at [120]. Recovery in negligence for economic loss should not be allowed, where to do so would cut across a well developed body of doctrine which already applies, with its own checks and balances, with the situation in question (see Perre v Apand Pty Ltd at [197]). 320 The most important duty of a trustee is to obey the terms of the trust. Equity provides remedies for breach of express trust. The nature of that remedy may vary to reflect the terms of the trust and the breach of which complaint is made. Equitable compensation for breach of the duty of skill and care owed by a trustee resembles common law damages in that it is awarded by way of compensation for the loss suffered by the claimant. There is no reason why the common law rules of causation, remoteness of damage and measure of damages should not be applied, by analogy, in such a case. It should not be confused with equitable compensation for breach of fiduciary duty - see Youyang Pty Ltd v Minter Ellison (2003) 212 CLR 484 at [36] and [38]. 321 The law, in the guise of Equity, imposed a duty on Cardinal to deal with Ms Lukey's money in accordance with the terms of the Project Deed. It was a trustee in respect of the money and paid the money away in breach of trust. It was not under a duty of care not to pay the money away in breach of trust. For that additional reason, its liability to Ms Lukey in respect of the sums totalling $1,100 received by it in December 1998 was not a liability in tort as a tortfeasor.

Contravention of s 1073(1A) 322 The question in the present context is whether the prohibition in s 1073(1A) gives rise to a duty, the breach of which can properly be characterised as a tort. In one sense, questions of contribution under the Tortfeasors Contribution Act depend upon similar principles to those that arise in relation to contribution in Equity. That is to say, where two persons contribute to the same damage, justice and equity requires that they bear the damage in proportion to their responsibility for the damage. However, the legislature, in enacting the Tortfeasors Contribution Act, clearly intended to limit the circumstances in which the statutory right to contribution would arise. That is to say, it expressly provided only for contribution as between persons who can be properly characterised as tortfeasors in relation to damage suffered as a result of their torts. 323 In Jonstan Pty Ltd v Nicholson (2003) 58 NSWLR 233 ('Jonstan's Case'), a judge of the Supreme Court of New South Wales concluded that a contravention of s 52 of the Trade Practices Act constitutes a tort within the meaning of the Tortfeasors Contribution Act. In that case, the Court considered that the statutory obligation imposed by s 52 not to engage in conduct that is misleading or deceptive, or likely to mislead or deceive, is an obligation the breach of which would give rise to a cause of action and would amount to a tort, quite independently of the cause of action conferred bys 82 of the Trade Practices Act. The Court then went on to consider whether the presence of s 82 and other provisions of the Trade Practices Act, such as s 87, providing for remedies, altered the position. 324 Cardinal expressly eschewed any claim that it was liable to Ms Lukey in respect of its contravention of s 1073(1A) otherwise than under s 1005 of the Corporations Law. That is to say, Cardinal did not contend that there was an independent liability, which could be characterised as a liability in tort, by reason of its contravention of s 1073(1A). Cardinal accepted that its liability to Ms Lukey arose only under s 1005. However, Cardinal contended that a liability under s 1005 was a liability in tort for the purposes of the Tortfeasors Contribution Act 325 To that extent, Cardinal did not necessarily embrace completely the approach adopted by the Court in Jonstan's Case. It is important to understand the issue that arose in Jonstan's Case, which was concerned with contribution in relation to a liability under s 82 of the Trade Practices Act in respect of a contravention of s 52 of the Trade Practices Act. 326 Section 52 of the Trade Practices Act and s 42 of the Fair Trading Acts are designed to afford a remedy for conduct that might or might not constitute a tort. Clearly, some conduct that would constitute a contravention of s 52 or s 42 would also constitute a tort. For example, conduct that amounted to the tort of deceit could fall within those provisions. Further, conduct consisting of providing information negligently, in circumstances where there was a duty to take care, which would constitute the tort of negligence, could involve a contravention of those provisions (see Jonstan's Case at [75]). 327 Section 1073(1A) is directed at a different problem. A party to an approved deed could sue for breach of covenant contained in the approved deed. On the other hand, persons in the position of Participants under the Project Deed would have no privity of contract so as to be able to sue for breach of a covenant contained in the Project Deed. Section 1073(1A) is designed to remedy a perceived deficiency in the law in that regard. Thus, s 1073(1A) prohibits a person from contravening a covenant contained in an approved deed and s 1005 affords a remedy for contravention of that prohibition in s 1073(1A). 328 However, even a party to an approved deed would not ordinarily have a cause of action in tort against a person who contravened a covenant in the approved deed. Rather, such a party would have an action for breach of covenant. The measure of damages for breach of covenant could be significantly different from the measure of damages for breach of a duty to take care that gives rise to a cause of action in tort. 329 The Project Deed was an approved deed. Cardinal has contravened covenants in the Project Deed and has therefore contravened the prohibition in s 1073(1A). Thus, one might expect that the measure of damage would be the measure appropriate for breach of covenant, rather than the measure of damage appropriate for liability in tort. 330 In any event, it is difficult to characterise a cause of action that arises solely as a consequence of statute as a cause of action in tort. In the absence of anything further, a contravention of s 1073(1A) of itself would not give rise to a cause of action. Absent a provision such as s 1005, there would be no cause of action arising by reason of the contravention. Section 1073(1B) provides that a person who contravenes s 1073(1A) is not guilty of an offence. However, s 1005(1) provides that a person who suffers loss or damage by conduct of another person that was engaged in in contravention of s 1073(1A) may recover the amount of the loss or damage by action against that other person. While s 1005(3) provides that s 1005(1) does not affect any liability that a person has under any other law, that reservation cannot alter the character of a claim under s 1005. 331 Ms Lukey's claim against Cardinal in respect of the payments made by her (other than the claim for breach of trust in respect of the sum totalling $1,150) are entirely statutory. The right to bring it is conferred by s 1005. In a case based on breach of statutory duty, the cause of action is tortious. The statute does not in terms confer the cause of action. Rather, the Court determines that, on the proper construction of the statute, the legislature intends a person within its purview, who is injured as a result of its breach, to have a right of action - see Australia and New Zealand Banking Group Limited v Turnbull & Partners (1991) 33 FCR 265 at 277. 332 I do not consider that Cardinal's liability to Ms Lukey by reason of its contravention of s 1073(1A), by breaching the covenants in the Project Deed, constituted a tort by Cardinal within the meaning of the Tortfeasors Contribution Act.

Apportionment of the Costs 333 The right conferred by the Tortfeasors Contribution Act on a tortfeasor to recover contribution from a concurrent tortfeasor, extends to, and includes any, costs recoverable by the claimant (see James Hardie & Co Pty Ltd v Wyong Shire Council (2000) 48 NSWLR 679) ("James Hardie"). However, the rationale for that principle must be understood in order to determine the extent to which a tortfeasor is entitled to contribution from a concurrent tortfeasor. I have concluded that the Tortfeasors Contribution Act does not apply. If I had concluded to the contrary, it would have been necessary to determine the appropriate proportion of the costs that Cardinal agreed to pay to Ms Lukey that would be appropriate for contribution pursuant to the Tortfeasors Contribution Act. 334 The underlying concept is that costs properly incurred in establishing the damage suffered as a consequence of the conduct of two joint tortfeasors are properly the subject of contribution. However, costs incurred in establishing the negligence of one tortfeasor are not properly the subject of contribution, except to the extent that those costs also establish the liability of the second joint tortfeasor. That is to say, it must be possible to show that the costs visited on the first tortfeasor could properly have been visited on the second tortfeasor. 335 The principle is one of natural justice, operating both at law and in equity, directed to achieving an equality of benefit and burden. It can be brought within the concept of unjust enrichment (James Hardie at [36]). The assumption is that the tortfeasor found liable and the concurrent tortfeasor are under coordinate liabilities to make good the one loss as to damage. The Tortfeasors Contribution Act reinstated the principle of natural justice, but went further by specifically providing for unequal contribution between the tortfeasors. The tortfeasor found liable and the concurrent tortfeasor are, in one sense, not under coordinate liabilities to make good the one loss as to costs. That is because the order in favour of the claimant is made only against the tortfeasor found liable. For there to be complete recognition of the principle of natural justice and equity of benefit and burden, costs should be treated in the same way as damages. If the claimant had sued the concurrent tortfeasor, and the concurrent tortfeasor would have been ordered to pay the costs, natural justice and equality of benefit and burden would require the concurrent tortfeasor to contribute to the costs incurred by the tortfeasor found liable. 336 However, natural justice and equity of benefit and burden would not require a concurrent tortfeasor to contribute to costs incurred by the tortfeasor found liable that had nothing to do with the liability of the concurrent tortfeasor (see James Hardie at [40]). In the present case, a substantial part of the costs that Cardinal has agreed to pay to Ms Lukey were incurred by Ms Lukey in establishing the liability of Cardinal. Much of that had nothing to do with the possible liability of either Ms Ibrahim or Hartford. For example, a considerable part of the hearing was directed to establishing whether or not the Expenditure Qualifying Conditions had been satisfied and whether there was misleading or deceptive conduct on the part of Cardinal in relation to the Prospectus. If any contribution were appropriate under the Tortfeasors Contribution Act, the contribution should only be in respect of a relatively small proportion of the total costs in question of $2,100,000. Hartford and Ms Ibrahim contend that no more than 30 to 40 per cent of the costs were referable to establishing matters that were irrelevant to the liability of Hartford or Ms Ibrahim. 337 The question of Ms Ibrahim's liability to Ms Lukey required an examination of the circumstances that led to Ms Lukey making the proposed investment in the Project. Those matters were also necessarily examined in order to determine Ms Lukey's entitlement to recover damages from CIAFM and Cardinal, based on her reliance upon statements in the Prospectus. However, Cardinal was not liable to Ms Lukey in respect of alleged contravention of the Law by reason of the statements contained in the Prospectus. Cardinal's liability in respect of the sums of $1,150 paid by Ms Lukey in December 1998 was for breach of trust. 338 On the other hand, it was necessary to examine in detail the circumstances in which Ms Lukey paid the sum of interest to Barkley in January 2000, in order to establish Cardinal's liability to her for that sum. There was a degree of overlap, therefore, in relation to establishing Ms Lukey's entitlement, if there were any, to recover damages from Ms Ibrahim and Hartford in respect of that loss. If it were necessary for me to determine the matter, I would conclude that no more than 30 per cent of the sum of $2,150,000 is referable to matters that natural justice and equity of benefit and burden would require should be the subject of contribution by Ms Ibrahim. 339 Cardinal says that the effect of the agreement between Hartford and Ms Ibrahim, on the one hand, and Cardinal, on the other, concerning the quantum of costs is to preclude Hartford and Ms Ibrahim from advancing the contentions just outlined. As I have said, the parties to the Cross-Claim agreed that the reasonable costs and disbursements of Ms Lukey's claim against Cardinal, as assessed on a party/party basis, was $2,150,000. The parties further agreed that Cardinal's claim against Hartford and Ms Ibrahim was for contribution towards the sum of $2,152,337.28, being the amount of the judgment entered in favour of Ms Lukey against Cardinal together with the sum of $2,150,000 for party/party costs. Cardinal contends that under this agreement, if it is entitled to an amount in respect of contribution or indemnity, it is entitled to the full amount. Cardinal says that it is not open to Ms Ibrahim and Hartford to contend that contribution or indemnity should be considered only in respect of a lesser sum. 340 I raised with the parties at a relatively early stage in the argument on the Cross-Claim whether any issue was to be taken by Hartford and Ms Ibrahim concerning the quantification of the claim for contribution in respect of costs. Initially, an unequivocal intimation was given that Hartford and Ms Ibrahim accepted that, if there was any right to contribution or indemnity on the part of Cardinal, the right of indemnity or contribution would extend to the whole of the costs. It was not until after the agreement to which I have just referred that arguments were advanced on behalf of Ms Ibrahim and Hartford to the effect that contribution should be limited to only a proportion of the sum of $2,150,000 for costs. 341 In the light of the conclusion that I have reached concerning liability on the part of Hartford and Ms Ibrahim to Ms Lukey, it is unnecessary to resolve any question as to the effect of the agreement. However, if I were required to do so, I would conclude that the effect of the agreement is that Ms Ibrahim and Hartford accept that the amount in respect of which contribution or indemnity should be determined is the sum of $2,152,337.28.

Appropriate Contribution 342 It is important to observe at the outset that, if Cardinal had not breached its obligations under the Project Deed and under the Law, Ms Lukey would have suffered no loss at all. Further, questions arise, in determining the respective responsibility of Cardinal and Ms Ibrahim for the damage suffered by Ms Lukey, as to whether the statutory duty owed by Cardinal under the Law was owed not only to prospective Participants, but also to their advisers, such as a person in the position of Ms Ibrahim. 343 That is to say, whether or not the Project was an appropriate investment for Ms Lukey, the loss and damage that she suffered would have been avoided if Cardinal had ascertained that the Expenditure Qualifying Conditions had not been satisfied. Had it done so, Ms Ibrahim would never have been in a position to speak to Ms Lukey about investment in the Project and there could be no question of breach of duty in Ms Ibrahim. 344 Had the Expenditure Qualifying Conditions been satisfied, the Project may well have been successful. In those circumstances there would be a real question as to whether, irrespective of any breach of duty by Ms Ibrahim, Ms Lukey would have suffered no loss. Putting it in another way, it would be just and equitable for Ms Lukey to be exempted from liability to make contribution, having regard to the overreaching responsibility of Cardinal to ensure that Subscription Moneys are kept safe and the Project not be permitted to commence until the Expenditure Qualifying Conditions had been satisfied. 345 It has not been suggested that Ms Lukey was any worse off under the arrangement entered into with Barkley in August 1999 than she would have been, had ATF provided finance pursuant to the offer that she signed on 4 December 1998. Cardinal seeks, in effect, to take advantage of the purely fortuitous fact that, before Ms Lukey had actually entered into the arrangement with Barkley, there was ground for significant disquiet concerning the health of CIAFM and the Project itself. 346 Cardinal's breach of the covenants of the Project Deed, giving rise to a contravention of s 1073(1A), clearly resulted in Ms Lukey's loss in paying interest to Barkley in January 2000. Cardinal's breach was a continuing one. Cardinal was under an obligation to inform Participants at all times after 30 June 1998 that it had failed to act diligently in protecting their interests. Cardinal's claims that Ms Lukey and Hartford should be held liable for failing to ascertain the egregious breaches which Cardinal itself had committed. It says, in effect, that Hartford and Ms Ibrahim ought to have known that the Project was failing, because it had no technology, and should therefore have advised Ms Lukey of the risk of breaching her obligations under the contract made when she signed the application form. Cardinal makes that assertion in circumstances where it had all of the machinery and procedures available to it under the Project Deed to know precisely what the position was. Cardinal chose to exercise none of the rights that it held for the benefit of Participants. Yet, it says that Ms Ibrahim and Hartford should contribute to the loss that it received fees to avoid. 347 If the question arose, I consider that it would be just and equitable to exempt Ms Ibrahim and Hartford from liability to make contribution.

Contribution In Equity For Co-Ordinate Liability 348 In the Cross-Claim Cardinal says that, if Cardinal is liable to Ms Lukey for damages or compensation on any of the bases alleged in the Statement of Claim, then each of Ms Ibrahim and Hartford is a person who would, if sued by Ms Lukey, have an equivalent co-ordinate liability to her. Cardinal then claims from Ms Ibrahim and Hartford contribution or indemnity in Equity for any liability that Cardinal is held to have to Ms Lukey. 349 Cardinal says that it was liable to Ms Lukey under s 1005 of the Law by reason of its contravention of s 1073(1A), which is a statutory liability. It says that Ms Ibrahim and Hartford are liable to Ms Lukey, by reason of their contravention of s 42 of the Fair Trading Acts and s 52 of the Trade Practices Act respectively. Thus, Cardinal says, the respective liabilities of Cardinal, on the one hand, and Ms Ibrahim and Hartford, on the other hand, are co-ordinate because:

• each is a statutory liability;
• each involves liability without any subjective element;
• each is directed to consumer protection, and
• each gives rise to a liability for the same loss or damage. 350 In the course of address, Cardinal stated that that is the only basis of its claim to contribution or indemnity in equity. 351 Having regard to the conclusion that I have reached concerning liability of Ms Ibrahim and Hartford, it is necessary to deal with the question of equitable contribution only on a hypothetical basis. A distinction must be drawn between liability for the loss of $1,150, liability for the loss of $2,452.80 and liability for the costs of $2,150,000. 352 The principle of equitable contribution requires that those who are jointly or severally liable in respect of the same loss or damage should contribute to the compensation payable in respect of that loss or damage. The doctrine applies both at common law and in equity and is usually expressed in terms requiring contribution between parties who share co-ordinate liabilities or a common obligation to make good the one loss. The doctrine of coordinate liability depends on common interest and common burden. The right to contribution depends upon whether the liability was of the same nature and to the same extent. That requirement includes notions of equal or comparable culpability and equal or comparable causal significance - see Burke v LFOT Pty Limited (2002) 209 CLR 282 at [14] to [16]. 353 The doctrine of equitable contribution is founded on concepts of fairness and natural justice. In this context, natural justice requires that, if one of several persons has paid more than his proper share towards discharging a common obligation, he is entitled to be compensated by those who have not - Albion Insurance Co Ltd v Government Insurance Office of New South Wales (1969) 121 CLR 342 at 351. 354 The circumstances in which a court will order contribution are not closed and a difference in the causes of action pursuant to which two parties are liable will not necessarily preclude an order for contribution, provided liability of each is of the same nature and to the same extent. Nevertheless, the doctrine will not apply if the obligations in question are merely owed to the same party or are otherwise connected in time or circumstance. Nor will it apply merely because the claimant's payment has benefited or relieved the other party financially. It is only where there is a community of interest, such as where the parties are involved in a common design to achieve a common end, that it would be inequitable for the party against whom the contribution is sought to keep the benefit it derives from the claimant discharging its obligations - Burke v LFOT Pty Ltd at [44], [48] and [49]. 355 So far as concerns the liability in relation to the loss of $1,150 in December 1998, there could be no basis for concluding that any liability of Ms Ibrahim is co-ordinate with that of Cardinal. Cardinal is liable for paying away, in breach of trust, money that it held on trust. Ms Ibrahim's liability, if she had any in respect of that sum, would be for failing to advise Ms Lukey as to the risks that the subscription moneys that she was to pay partly from her own funds and partly from a loan from ATF, may not be allowed as deductions. However, if the Project had been a success, whether or not she was allowed a deduction for the payments, she would have suffered no loss. 356 From another point of view, however, if Cardinal had performed its obligations as trustee and had discharged its obligations under the covenants contained in the Project Deed, the loss could never have occurred, because the Project would never have commenced. The Expenditure Qualifying Conditions were to be satisfied by 30 June 1998, or such later date as might have been fixed before then. Ms Ibrahim was just as much a victim of Cardinal's default as was Ms Lukey. It is completely without substance to suggest that Ms Ibrahim's liability, if she had any, to Ms Lukey was coordinate with that of Cardinal in relation to the loss of the sum of $1,150. 357 Cardinal says, however, that its liability for breach of trust should be ignored and that the only liability that should be taken into account is its liability under s 1005 of the Law by reason of its contravention of s 1073(1A). Cardinal contends that, while it may have been liable for breach of trust in paying away money that it held on trust, that should be ignored in favour of its liability under s 1005 by reason of its contravention of s 1073(1A). There has been some fluidity in Cardinal's position in that regard. It was only at the end of oral submissions in reply that it became apparent that Cardinal's position was founded upon liability under s 1005 of the Law. 358 However, even if one ignores Cardinal's breach of trust in paying away $1,150, its liability under s 1005 in respect of that amount is not in any way commensurate with any liability that Ms Ibrahim might have under s 42 of the Fair Trading Act. For the reasons advanced above, Ms Ibrahim would never have been in a position to offer Interests in the Project if Cardinal had discharged its duty and ascertained that the Expenditure Qualifying Conditions had not been satisfied. 359 It is by no means clear that Ms Lukey suffered a loss in respect of the sums totalling $1,150 by reason of Cardinal's contravention of s 1073(1A) of the Law. If Cardinal had not acted in breach of trust, Ms Lukey would not have suffered any loss in that regard. I am not persuaded that Cardinal was liable to Ms Lukey for the sum of $1,150 under s 1005 of the Law. On the other hand, it was clearly liable to Ms Lukey for its breach of trust in paying away the money that it held on trust for Ms Lukey. 360 The loss in relation to the payment of interest to Barkley may be in a different category. The thrust of Cardinal's complaint is that Ms Lukey should have been advised not to enter into the arrangements with Barkley, or with anyone else, to borrow money to pay for Subscription Moneys to CIAFM. 361 However, the underlying cause of the loss in that regard is referable to Cardinal's default as at July 1998 and its continuing default thereafter, in acting on the basis that the Expenditure Qualifying Conditions had been satisfied as at that date. Had Cardinal discharged its obligations, by exercising due diligence in its position under the Project Deed, the occasion for consideration of whether Ms Lukey should enter into alternative financing arrangements concerning her investment in the Project would never have arisen. The dilemma in which Ms Lukey found herself in 1999 would never have arisen but for Cardinal's default. 362 Ms Ibrahim and Hartford, on the one hand, and Cardinal, on the other, were involved with Ms Lukey in totally disparate and unconnected capacities. On the hypothesis upon which the question of contribution arises, Ms Ibrahim and Hartford were in breach of a duty to advise Ms Lukey not to make any payment to CIAFM pursuant to her application for an Interest in the Project. The hypothesis is that Hartford and Ms Ibrahim knew, or ought to have known, enough about the deficiencies of the Project that they were under a duty to advise Ms Lukey not to obtain fresh finance for her obligation to pay application monies, or alternatively were in breach of some duty to her in advising her that she should make arrangements to finance the obligation that had arisen pursuant to her application for an Interest in the Project. 363 On the hypothesis upon which the claimed contribution in equity by reason of co-ordinate liabilities arises, Ms Lukey was advised to enter into the arrangements with Barkley in order to discharge her obligation to CIAFM to pay the balance of the sum of $25,000 for her Interest in the Project. However, there was no community of interest on the part of Hartford and Ms Ibrahim, on the one hand, and Cardinal, on the other, in having Ms Lukey make that payment, through her borrowing from Barkley. There was no common design on the part of Hartford and Ms Ibrahim, on the one hand, and Cardinal, on the other, in causing Ms Lukey to enter into the arrangements with Barkley. Cardinal had no interest whatsoever in having Ms Lukey discharge her obligations to CIAFM. Even if, on the hypothesis in question, Hartford and Ms Ibrahim have a liability to Ms Lukey by reason of their advice in relation to the arrangements with Barkley, it would not be inequitable for Cardinal to bear the whole of the loss suffered by Ms Lukey, which would never have been suffered had Cardinal acted diligently in looking after the rights and interests of Ms Lukey as it was obliged to do. 364 I do not consider that the liability of Ms Ibrahim or Hartford in relation to Ms Lukey's commitment in August 1999 to Barkley is, in any relevant sense, co-ordinate with the liability of Cardinal for failing to act diligently in ascertaining whether or not the Expenditure Qualifying Conditions had been satisfied as at 30 June 1998. In those circumstances, no question of contribution towards the costs for which Cardinal became liable in resisting Ms Lukey's claims would arise.

CONCLUSION AS TO THE CROSS-CLAIM 365 The Cross-Claim should be dismissed. Cardinal should pay Ms Ibrahim's costs of the Cross-Claim and Hartford's costs of the Cross-Claim.

I certify that the preceding three hundred and sixty-five (365) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.

Counsel for the Cross-Claimant: T G R Parker with R E Steele

Solicitors for the Cross-Claimant: Allens Arthur Robinson

Second Cross-Respondent: Ms Ibrahim appeared in person

Counsel for the Third Cross-Respondent: G Lucarelli

Solicitor for the Third Cross-Respondent: Sparke Helmore

Date of Hearing: 8, 9, 10, 11, 12, 15, 16, 17, 18, 22, 23, 24, 25, 26, 29, 30 September, 1, 20, 21, 22, 23, 24, 28, 29, 30 October, 8, 9, 11, 12, 16, 17, 18 December 2003, 28, 29, 30 June, 2 July, 29, 30 November, 1, 2, 3, 15 December 2004

Date of Judgment: 23 March 2005