McClymont v Critchley

INTRODUCTION 1This is a claim to compensate the plaintiff, Esther McClymont, for the sum of $100,000 (plus interest), which she invested in May 2009 for the purpose of preparing and lodging a development application ( DA ) for land at Granville in which the defendants were involved. The object, with the agreement of the landowners, was to increase the value of the land by obtaining development consent, sell the land, and share the increased value with the landowners. In the end, the DA was not completed or lodged with the local council, in the circumstances recounted below. 2The defendants are Steven Critchley, Parramatta South Pty Ltd ( Parramatta South ), IQ 200 Pty Ltd ( IQ ) and Alistair Brodie. 3The plaintiff's claim is based on alleged oral representations made to her by Brodie in March to May 2009 and then by Critchley at a meeting in May 2009 ( the May meeting ), and non-disclosure of information by Critchley. She pleads that each was acting on his own behalf and on behalf of the other defendants. The plaintiff presses claims against the defendants for: (a)damages for misleading and deceptive conduct in contravention of s 52 of the Trade Practices Act 1974 (Cth) ( TPA ) and s 42 of the Fair Trading Act 1987 ( FTA ); (b)damages for misrepresentation in contravention of s 53 of the TPA; and (c)equitable compensation against Critchley only for breach of fiduciary duty. 4The defendants deny making any misrepresentations and otherwise dispute the claim. 5It was initially pleaded that Critchley and Brodie were liable individually under ss 52 or 53 of the TPA. However, as neither Critchley nor Brodie is a corporation and there is no basis for any extended application of ss 52 or 53 under s 6 of the TPA, the claims against them under ss 52 and 53 of the TPA fail and indeed seem not to have been pressed at trial.

THE PARTIES 6In 2009 the plaintiff was a 53 year old unemployed mother with a background in clerical and community care work. She was inexperienced and unsophisticated in matters of investment. She had limited experience of development applications in relation to her home. She had known Brodie for about 30 years and was friendly with his wife. 7Critchley is a practicing accountant trading under the name "TFS Taxation Service". He has known Brodie for over 30 years. He is the sole director, secretary and shareholder of IQ. He is the sole director and secretary, and, with his company IQ, the majority shareholder and accountant of Parramatta South. 8Brodie was the sole employee of IQ. He is an unlicensed builder and building designer. From about March to October 2009 he was carrying out contract renovation work at the plaintiff's home. He interested the plaintiff in investing her money as she did. 9Parramatta South was incorporated by Critchley in July 2007 as a joint venture vehicle for obtaining the DA. The joint venturers were Critchley, his wholly owned company IQ and Allams Group Ltd ( Allams ). Prior to the plaintiff investing her money, the joint venture agreement with the third party had terminated because the third party could not provide the required funds after the plaintiff invested her money. After the plaintiff invested her money, Parramatta South contracted the necessary work for the DA to IQ, which in turn employed Brodie to do that work and retained expert consultants where required. 10Parramatta South has an issued share capital of 200 shares with a par value of $1 each. In May 2009 the plaintiff purchased 70 of those shares for the sum of $100,000. That is the sum the subject of these proceedings. Currently, the other shareholders in Parramatta South are IQ 115 shares, Critchley 10 shares and Allams 5 shares.

THE ALLEGED REPRESENTATIONS AND NON-DISCLOSURE 11The plaintiff contends that in March to May 2009 Brodie orally made the following oral representations to her on behalf of himself and the other defendants and that they were false, misleading and deceptive: (a)IQ and Parramatta South were undertaking a development in the western suburbs of Sydney that required investment funds; (b)the defendants or all of them would hold monies on trust for the plaintiff and invest those monies for the purpose of investing the funds in a development in the western suburbs of Sydney; (c)those funds would not be used for any other purpose than for investing in the development undertaken by IQ and Parramatta South; (d)the other defendants would account to the plaintiff for those funds; and (e)the investment of $100,000 would be secured by the issue of shares in the IQ and Parramatta South companies and the issue would be secured against property and that investment would have a return payable to the plaintiff. 12Brodie denies making the representations. 13The plaintiff pleads that at the May meeting Critchley orally advised and represented to her that: (a)the plaintiff's investment would be secure; (b)the plaintiff's money would be personally guaranteed by Critchley; (c)the plaintiff would not lose her money; (d)the money would be placed into Critchley's trust account; and (e)the plaintiff should borrow more money to invest in the development. 14Each of these alleged representations is denied. 15The plaintiff submits that Critchley failed to disclose the following matters to her and thereby breached his fiduciary duty to her and also engaged in misleading and deceptive conduct in breach of s 52 of the TPA and s 42 of the FTA: (a)the net asset position of Parramatta South was nil; (b)there had been difficulty in obtaining a DA since 2004; (c)Parramatta South had no funds for any amendments to the DA required by the council or, if the DA was refused, for a merit appeal to the Land and Environment Court; and (d)Critchley was in a position of conflict of interest because he was the sole director and shareholder of IQ which would receive most of the plaintiff's invested funds. 16Critchley denies the existence and breach of fiduciary duty.

THE DISPUTE 17The evidence of the plaintiff, on the one hand, and Critchley and Brodie, on the other, are almost wholly contradictory as to the alleged oral representations and as to their discussions. 18I propose to first set out the uncontroversial facts before turning to the disputed oral representations and the non-disclosure allegations. 19In a case such as this where the plaintiff relies upon oral representations, the observations of McLelland CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315 at 318-319 are apt: Where, in civil proceedings, a party alleges that the conduct of another was misleading or deceptive, or likely to mislead or deceive (which I will compendiously described as "misleading") within the meaning of s 52 of the Trade Practices Act 1974 (Cth) (or s 42 of the Fair Trading Act ), it is ordinarily necessary for that party to prove to the reasonable satisfaction of the court: (1) what the alleged conduct was; and (2) circumstances which rendered the conduct misleading. Where the conduct is the speaking of words in the course of a conversation, it is necessary that the words spoken be proved with a degree of precision sufficient to enable the court to be reasonably satisfied that they were in fact misleading in the proved circumstances. In many cases (but not all) the question whether spoken words were misleading may depend upon what, if examined at the time, may have been seen to be relatively subtle nuances flowing from the use of one word, phrase or grammatical construction rather than another, or the presence or absence of some qualifying word or phrase, or condition. Furthermore, human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience. Each element of the cause of action must be proved to the reasonable satisfaction of the court, which means that the court "must feel an actual persuasion of its occurrence or existence". Such satisfaction is "not attained or established independently of the nature and consequence of the fact or facts to be proved" including the "seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding": Helton v Allen (1940) 63 CLR 691 at 712. Considerations of the above kinds can pose serious difficulties of proof for a party relying upon spoken words as the foundation of a causes of action based on s 52 of the Trade Practices Act 1974 (Cth) (or s 42 of the Fair Trading Act), in the absence of some reliable contemporaneous record or other satisfactory corroboration.

UNCONTROVERSIAL BACKGROUND FACTS 20In 2004 Brodie through his company (which has since ceased operating) was engaged in preparing a DA for the development of a site in Granville. That project was not completed. 21In 2008 Brodie revived a project for a DA and development for three adjacent sites at Granville including the site the subject of the 2004 project. They were at Good Street, Cooper Street and Parramatta Roads. Brodieville Pty Ltd owned the Good Street site. Sitana Pty Ltd owned the other two sites. I shall refer to the three sites collectively as the Property . 22Brodie's interest in the 2004 project and in the 2008 revived project was in carrying out or supervising the carrying out of the necessary work to obtain a DA, for which he was to be remunerated. He was not to share in any profit arising from the increased value of the land with the benefit of a development consent. 23On or about 18 July 2008 a joint venture agreement ( JVA ) was reached between Critchley, Allams and IQ. Critchley was the sole shareholder, director and secretary of IQ. The JVA is briefly recorded in a memorandum of that date prepared by Brodie. It includes provisions to the following effect: (a)The joint venture ( JV ) would prepare, lodge and gain approval of a DA for the Property through a company with shareholdings Critchley 5 %, Allams 47.5 % and IQ 47.5 %. (b)Critchley was to be the JV company's accountant; Allams and IQ would each have a director on the JV company; and IQ would provide the company secretary. (c)The JV would raise funds for construction. (d)IQ would have 12 months, with a further right for six months, to gain the DA. (e)IQ would manage the DA, including design, to final approval stage. It was noted that a normal commercial consideration for a DA including design on the Property would exceed $350,000. (f)In return for its 47.5% shareholding, Allams would pay $350,000 in instalments in August and November 2008 and February 2009. 24On 14 August 2008 Parramatta South was incorporated as the JV vehicle with an issued share capital of 200 shares. Allams and IQ each held 95 shares (47.5% each) and Critchley held 10 shares (5%). Critchley was the sole director and secretary. 25On 19 August 2008 the first meeting of shareholders of Parramatta South was held. Brodie prepared the agenda and was present and made the notes for the minutes, which record the following: (a)Critchley was appointed the company accountant. (b)IQ was appointed its design consultant and project manager. (c)A Ms Lehman was appointed a director and company secretary of Parramatta South. However, it is common ground in the proceedings that she did not take up the position of director. (d)The "Shareholders Agreement enclosed" was adopted. According to Critchley's written evidence, this was an unexecuted formal joint venture agreement between IQ, Allams and Critchley. I think that is probably correct (notwithstanding some inconsistency in the oral evidence). That document recorded that Allams would now pay $400,000 (instead of the $350,000 previously agreed) for its 47.5% of the shares in Parramatta South, payable in instalments in August and November 2008 and January 2009. 26Allams on behalf of Parramatta South paid $20,000 to Sitana and Brodieville as a holding deposit for the purchase of the Property. A written put and call option agreement between Parramatta South and Sitana and Brodieville for the purchase of the Property was prepared. However, it was not executed because later in 2008 Allams, after contributing only $20,000 towards the purchase, informed Critchley and Brodie that they had decided not to go ahead with their investment in Parramatta South as they did not have the funds. 27That spelt the end of the JVA. 28In about January 2009 Brodie reached agreement in principle with the directors of Sitana and Brodieville that rather than Parramatta South buying the Property, it would pay for a DA and it and Sitana and Brodieville would agree on how the sale price was to be divided. 29Critchley made an entry in the amount of $220,000 in the general ledger of Parramatta South for the year ended 30 June 2009. According to Critchley's oral evidence, this was intended to reflect a mental agreement he entered into with himself in 2008 on behalf of both IQ and Parramatta South, after speaking to Brodie, whereby Parramatta South purchased for that sum the intellectual property of IQ in that work as an asset, with a corresponding liability to IQ for the purchase price. According to Brodie's oral evidence, he simply put his intellectual property into IQ and IQ let Parramatta South use it and there was no arrangement or discussion about him being remunerated for the intellectual property. I accept Brodie's evidence on this point. In these circumstances, Critchley's creation of a debt of $220,000 in favour of his own company IQ is dubious in the extreme. Critchley's evidence as to this book entry and the alleged mental agreement supporting it was unsatisfactory. I do not accept that this is a genuine debt owed by Parramatta South to IQ. 30Thus, the net assets of Parramatta South were nil or virtually nil before the plaintiff purchased her shares in that company. 31From about March to November 2009, Brodie was engaged by the plaintiff to carry out renovations at the plaintiff's home. He was there about three days per week. He was not a licensed builder. He said in evidence that an unlicensed builder could not carry out work in excess of $12,000. He said in evidence that he could lawfully carry out that work because each part of it was less than $12,000 - a spurious proposition in my view. 32In about March or April 2009 Brodie told the plaintiff about the Granville DA project and they often discussed it thereafter at her home in the period that he was carrying out renovations. 33The plaintiff told Brodie that she would invest. 34On 13 May 2009 Parramatta South executed a memorandum of understanding ( MOU ) with the owners of the Property which crystallised the distribution of the ultimate sale proceeds after, it seems, the DA was approved. The owners took the first $3.5 million less $100,0000. There was a sliding scale above that price. At $5 million and above Parramatta South took 100 per cent. 35In May 2009 the plaintiff met with Critchley and Brodie at Critchley's office. 36The date of the May meeting was either 19 May (the plaintiff's evidence) or 13 May (Critchley's and Brodie's evidence). There are minutes of that meeting dated 13 May 2009 prepared by Brodie and Critchley. At the May meeting the plaintiff gave Critchley a bank cheque for $35,000 payable to Parramatta South and executed a share transfer dated 13 May 2009 of 70 shares from Allams to her. The latter fact is not entirely uncontroversial but I accept it. 37Allams also transferred 20 shares in Parramatta South to IQ. That left Allams with 5 shares, reflecting its contribution of $20,000. IQ now had a total of 115 shares. The other shareholder was Critchley with 10 shares. 38After the May meeting Critchley attended the Commonwealth Bank at its Balmain branch in company with Brodie, opened an account in the name of Parramatta South and deposited the plaintiff's bank cheque for $35,000 in it. 39Later in May the plaintiff gave a second bank cheque for $65,000 payable to Parramatta South to Brodie to give to Critchley. Brodie deposited it in the said bank account. 40After the May meeting Brodie proceeded to prepare the DA. Parramatta South paid IQ for his services and disbursements. By November 2009 he had about four weeks further work to do on the DA before it could be lodged. 41By about October 2009 the home renovation work that Brodie was doing for the plaintiff terminated acrimoniously. 42The plaintiff became anxious about her investment. 43On about 6 November 2009, in response to the plaintiff's inquiry, Critchley gave her the details of Parramatta South's account at the Commonwealth Bank, Balmain branch. 44On 9 November 2009 the plaintiff asked the Commonwealth Bank, Balmain branch, to stop Parramatta South's account. She provided the bank with her statutory declaration in which she said she was a director of Parramatta South. That was incorrect. The document stated, among other things, that due diligence was not adhered to at the bank "in that all directors or the proper quorum in the company was not in any minute signed by the proper officer to open an account". She alleged "impropriety" by the bank in allowing the account to be opened in the first instance. 45On 10 November 2009 the plaintiff's solicitors wrote to the Commonwealth Bank stating that the plaintiff's two cheques for $35,000 and $65,000 had been deposited into the bank account of Parramatta South; that the plaintiff understood they were to be held in an interest bearing account on trust by Critchley on her behalf; and that monies were withdrawn from the bank account without her authority. The bank was requested to stop the account for 24 hours to enable an application to be brought in the Supreme Court. 46The bank stopped the account. 47On 11 November 2009 the plaintiff commenced these proceedings and immediately obtained an ex parte order freezing the bank account of Parramatta South. The balance in the account was just under $19,000. 48Work on preparation of the DA thereupon stopped. The defendants contend that this was due to Parramatta South's inability to access the funds in the frozen bank account to pay council's DA fee of $14,000. Brodie could have completed work on the DA within four weeks without the need for immediate payment to IQ if Parramatta South had insufficient funds. 49In November 2009 Brodie told a Brodieville/Sitana representative that there would be an indefinite delay in lodging the DA. Brodie (or the representative) was told that if it was not lodged by early March they would consider terminating the MOU. In March 2010 he spoke to the representative again and was told that he would have to lodge the DA by the end of May 2010 otherwise they would pursue other business paths. 50On 1 June 2009 a Brodieville/Sitana representative wrote to Brodie at Parramatta South. The letter records that over the past six months they had been discussing the inability of Parramatta South and Brodie to lodge the DA as per the MOU. The letter says that unless Brodie is able to lodge the DA within 14 days, the MOU would be rescinded. 51The DA has not been lodged. 52However, the MOU was not in fact rescinded. As emerged in the cross-examination of Critchley, a further memorandum of understanding dated 7 June 2010 between Sitana, Brodieville and Parramatta South was executed whereby the 2009 MOU was amended. In my view, the plaintiff as a shareholder of Parramatta South is entitled to share with the other shareholders in any benefits accruing to the company from the 2010 memorandum of understanding, which provides for the following: (a)agreement to Sitana/Brodieville entering into an option to sell the Property to a named corporate third party for $4,500,000, a non-refundable option fee of $200,000 and 5 per cent of the ordinary shares in the third party; (b)the option fee of $200,000 was to be divided equally between Sitana/Brodieville and Parramatta South (ie Parramatta South would receive $100,000); (c)Parramatta South would receive a further $200,000 from the sale price.

Plaintiff's Evidence 53The plaintiff's affidavit evidence was that the following occurred in March 2009: (a)While carrying out renovations at her home Brodie frequently mentioned getting a DA approved for land at Granville and selling it for a profit. (b)In March 2009 he gave her images and drawings. (c)In about March 2009 he said IQ had a development project in Granville; they were going to put a DA into council that will increase the value of the land and it will make a profit; it was going to be very profitable, they needed some investors and she needed to make money. She said it sounded like a good idea, she had some savings and could borrow more. He said $100,000 was needed to get a DA through council. He said the DA was for residential and commercial development. It was for a couple of apartment blocks, one six level and commercial areas underneath, the other ten stories with commercial underneath. He knew the owners of surrounding land who would want to be involved to make it a huge project where a lot more buildings could be built. He said he could get the DA through the council by the end of the year or early 2010 at the latest. He said that her return on $100,000 could be millions; and his building and development associate and accountant knew how to reduce the tax when they sold it. (d)She then spoke to a friend in Melbourne about investing in the DA project. He was a businessman involved with rented apartments. He said that it was not unusual but she should not get involved in the building part of it. (e)She then "decided to invest" as she believed that she would only be involved in the DA stage, but she did not invest straight away as she wanted to find out more from Brodie. (f)Thereafter until May 2009 Brodie often said they would make a huge profit from the project. (g)Between April and May 2009, she told Brodie she could get $35,000 and asked what she needed to do to invest. He told her to get a cheque for $35,000 payable to Parramatta South, which was his associate's (Critchley's) and Brodie's company; he would take her to meet Critchley at his office; and Critchley would organise the rest. She asked whether anyone else would be investing. He said it was just him, her and Critchley, they would look after her investment, no one else is involved. (h)She obtained a bank cheque for $35,000 and told Brodie she had it. He said it would be used to get the DA approved; they would not do anything unless she knew; Critchley would be the only signatory; and Critchley was an accountant so he would make sure the money was only used when she gave her say so. She had lodged a DA before on her own home. She was under the impression the money would be used for professional services. (i)She did a drive by the Property and noticed there was a car yard on it. 54In oral evidence the plaintiff said that: (a)when she invested in May 2009 she understood her money would be used in obtaining the DA by paying for professional services for that purpose and fees council might require; (b)after she made her decision about Brodie's proposition, she asked her bank to draw bank cheques for $35,000 and $65,000; (c)Brodie explained to her that he and his business associate (Critchley) were going to put a DA through the council, the property would then be sold in conjunction with the owners, and the people involved would make a profit from the proceeds of sale; (d)Brodie told her in March/April 2009 that they were looking for money to put a DA through council and were looking for investors. She understood that unless people contributed money the plan could not be put into effect. 55The plaintiff in oral evidence said she understood that: (a)Parramatta South did not have sufficient funds to itself obtain the DA and needed her contribution to obtain it; (b)she would be issued with shares in Parramatta South in return for her $100,000; (c)her funds were needed and would be used to prepare the required documents and works, in order to submit the DA to the council; (d)once the DA was obtained, the Property was to be sold in conjunction with the owners at a profit which would be shared between the plaintiff and Parramatta South; (e)it was only once the Property was sold that she could expect a return on her investment; (f)it was her ownership of 70 shares in Parramatta South that would entitle her to a share of the profit from the transaction; (g)Critchley had an interest in the DA proposal and he was Brodie's building and development associate.

Brodie's evidence 56Brodie agreed that he had conversations to the effect of that summarised at [53(c)] above, but otherwise generally disputed the plaintiff's account of conversations with him. 57Brodie's evidence concerning discussions prior to the May meeting included the following. 58At his initial meeting with the plaintiff at her home in about April 2009 to discuss her proposed renovations, he told her he was involved in a development in Granville. She asked if it was a development project as she was "looking for projects to invest in", and she asked him to tell her about it. He said it was "a project that had got into difficulties with the global financial crisis and needed to be re-negotiated". They were "now establishing a pathway of just preparing a DA for a project and selling it with that in place". 59After the initial meeting, he was at her home about three times per week renovating. He showed her copies of the JVA, his JV budget with Allams and the option agreement. 60In April or May he told her he was negotiating a memorandum of understanding with the owners to re-jig the deal such that rather than Parramatta South buying the Property and doing the development, it would fund and obtain a DA to maximise the potential, and then the equity gained as a result would be shared between the owners and Parramatta South. He told her the sharing was being negotiated, but at the moment the idea would be that the first $3.5 million would be paid to the owners less $100,000. Parramatta South would get everything above a certain amount; and there would be a sliding scale in between. She accepted his invitation to provide more information and to take her to the site. 61He told her that Allams had been issued 47.5% of the shares in Parramatta South but it did not have the money to pay for them. They needed new investors to take over those shares and provide funding but the new investor's commitment did not need to be anywhere near the $400,000. 62In early May 2009 an in principle agreement was reached with Sitana and Brodieville on the terms of the MOU. Brodie showed the plaintiff his latest project budget from May to December 2009 which took into account the MOU. It showed total amounts payable in that period of $109, 700, including $35,000 to IQ ($5,000 per month). The latter sum represented Brodie's remuneration. He told her Parramatta South would be prepared to arrange for a transfer of 35 per cent of its shares for a subscription price of $100,000, the shares to come from Allams. He said, "This will entitle you to 35 per cent of the eventual profit of Parramatta South after the land is sold with the DA and before any construction of the DA taking place". 63He told her that her money would be used to meet the company's predicted cash flow shortfall of approximately $100,000 to finish the DA. Her money "would be deposited into the company's trading account and used to cover expenses and liabilities to achieve the business plan of the company, that is to produce a DA for the site". 64He told her that IQ was the nominated company to project manage, design, liaise and lodge the DA for Parramatta South. 65She said she would look over the material he had given her again and would ask some people she knew about it and take them to the site for an opinion. 66He said that it was wise for her to undertake her own due diligence. Parramatta South had other people interested in investing but he would ensure nothing happened for ten days. She said she did not need more than seven days. 67On or about 8 May 2009 she told him she had thought it over and wanted to purchase the shares. He thereupon gave her copies of the formal draft MOU with the owners, the then budget for the DA submission and a cash flow budget, as well as proposed DA concept plans. He told her to get advice and if she still wanted to proceed he would ask Parramatta South's director and shareholder to accept her offer to purchase the shares. 68He kept Critchley updated on each of his discussions with the plaintiff. 69On or about 11 May 2009 she told him she had visited the site with friends and wanted to proceed to invest in Parramatta South. 70He informed Critchley who told him to get the MOU with the owners signed, get Allams to sign over the shares, and then Parramatta South will consent to the transfer. 71On 12 May 2009 he told Critchley that Allams had agreed to trade its shares to the plaintiff except for five shares, which Allams would retain as they had already paid $20,000. He asked Critchley to prepare the share transfers and send them to a solicitor to enable the transfer of 35% of the shares, and he would leave the maths to Critchley. Later that day he collected the draft transfer from the solicitor. 72On 13 May he met with Sitana and Brodieville representatives and they signed counterparts of the MOU, which had already been pre-signed by Critchley and Ms Lehman on behalf of Parramatta South. He then obtained two signed transfer forms from Allams. One was for the transfer of 70 shares to the plaintiff. The other was for the transfer of 20 shares to IQ. The question of whether IQ agreed to pay any consideration for its shares was not explored in evidence. 73Later that morning Brodie met with the plaintiff and said here is the signed MOU and share transfer. She read them and said she understood them. He showed her the updated budget plans for Parramatta South to produce the DA and his concept drawings of the proposal. He said that if she still wanted to proceed they could go to the company director's (Critchley's) office for a shareholder meeting. Her funds would be deposited in the company's account and used to meet the $100,000 budgeted shortfall for the expenses of obtaining the DA. He went over the concept drawings and budget with her. He explained the MOU. He said that when the site was auctioned, Parramatta South might use the equity generated to help purchase the site. But that was for later. 74She said she was happy to proceed, but she only had a $35,000 bank cheque ready; however she would be able to get the rest of the funds by the end of the week. He said Critchley was expecting them so he suggested they bring that issue up with Critchley. But he needed to know she was aware the subscription was for $100,000 for 35% of the shares as he would have to activate another investor. She said no problems, she would have all of the $100,000 by the end of the week. 75They then drove to Critchley's office at Penrith.

Critchley's evidence 76Critchley did not dispute Brodie's evidence that he kept Critchley "updated" on his discussions with the plaintiff. I accept Brodie's evidence in that regard. The precise content of the updating was not explored in evidence. 77Critchley's evidence concerning the plaintiff prior to the May 2009 meeting included the following: (a)On or about 10 May 2009 Brodie informed him that he had an investor, Esther McClymont (the plaintiff), who wanted to invest $100,000 in Parramatta South. Critchley replied that she should take a transfer of some of Allam's shares; that in that way she would assume Allam's obligations to pay the subscription price; and she could then pay the money directly to Parramatta South. (b)On or about 12 May 2009, Brodie told him he had sorted it out. Parramatta South would repay Allams most of the $20,000 and Allams would transfer 90 of its 95 shares as directed. The plaintiff was to get 35% of Parramatta South for her $100,000. He asked Critchley to work out how many shares needed to go to her, and said the balance could go to IQ. He asked Critchley to send him the transfer forms after Critchley had prepared them. (c)Critchley prepared two share transfer forms, transferring 70 of Allams shares to the plaintiff and 20 to IQ. On or about 12 May he spoke to Brodie who said that he would get Allams to sign the transfer then bring the plaintiff to his office with $100,000 for the shares the next day.

Plaintiff's evidence 78The plaintiff's written evidence concerning the May meeting is found in more than one affidavit and in aggregate included the following. 79In May 2009 the plaintiff was driven by Brodie to Critchley's office at Penrith. Her recollection is that this occurred on 19 May 2009. Brodie and Critchley say it was on 13 May 2009. I accept their evidence as to the date, which is supported by the date of 13 May 2009 on the minutes of the meeting and on the share transfer she signed. It is also consistent with Critchley's postal records. 80After the plaintiff was introduced to Critchley by Brodie, she handed Critchley the bank cheque for $35,000 payable to Parramatta South. 81She was impressed with Critchley as he was very polite and his offices appeared to be quite professional and busy with several people working in it. This made her feel that handing the cheque to him would be safe and that any "financial advice" would be good advice. 82The following conversation then occurred: CRITCHLEY: "Parramatta South is Alistair's and my company. I used to work for the taxation department for many years and I have been a CPA for a long time and I am respected. I am 64 years old and I give you this advice, this is a secure investment. Don't worry your money will be secure, I give you my personal guarantee that you won't lose your money, its as safe as houses, it's going into a trust account." PLAINTIFF: "Thank you, I trust you because you are a CPA." CRITCHLEY: "I am the director of Parramatta South and I am the only signatory. I just need to you sign this. I will send copies of all the paperwork to you. Can I please have your address and contact details." PLAINTIFF: "It gives me a great deal of security and comfort, and I am happy to hand to you my $35,000". 83Critchley leaned across the table with a manila folder and asked her to sign a piece of paper. It was not completely visible as it was sticking out of the manila folder. She signed the bottom of the paper. In her affidavit she said the part she signed was the only part of the document that was visible to her and that she was under the impression that she was signing the document to acknowledge that she had given him the cheque. Because Critchley was a CPA, she did not feel that she had reason to be suspicious with respect to her investment. Therefore she did not ask to look at the whole document. She trusted his advice that it was a secure investment as he was a CPA and he presented himself very well. However, in cross-examination she indicated that approximately eight inches of the paper that she signed was sticking out. That equates to about two thirds of an A4 sized piece of paper. 84He told her they could offer her shares in the company but they might need at least another $35,000, maybe more. She said she did not want to hand over more funds as it was 100% of her savings and she would have to re-draw on her mortgage. He said he had already told her it is a secure investment. 85In oral evidence she said her "understanding" of how her money was to be used to pay for professional services was that they would be held "securely" by Critchley' and that by "securely" she meant it would be secure until they told her first what they were going to do with it. She then said that was what Critchley had told her. When asked why that was not in any of the affidavits, she said that Critchley said her money would be "secure". I do not accept that she was told that she would first be told what the defendants were planning to do with her money. 86In cross-examination the plaintiff said that: (a)from the beginning of the discussions with Critchley she was aware that in return for the money she was contributing to Parramatta South she would be issued with shares; (b)she was told that shares would be transferred to her from Allams; (a)she gave Critchley her name and address and he wrote them on a foolscap page; (b)her apparent signature on the share transfer dated 13 May 2009 of 70 shares from Allams to her is similar to her signature. 87She said in cross-examination that she did not recall being asked whether she would become a director of Parramatta South or whether she had declined. This is contrary to the evidence of Critchley and Brodie and the minutes of the meeting referred to below at [98].

Critchley's evidence 88Critchley's evidence as to the May 2009 meeting was as follows. 89At about 9 am on 13 May, he received a facsimile from Brodie enclosing the share transfer form signed on behalf of Allams. 90At about 11 am the plaintiff and Brodie arrived at his office. The meeting commenced with a review of the plans and cash flow forecasts for the development. That review primarily took place between Brodie and the plaintiff. I note that these cash flow forecasts from May to December 2009 included a budget and showed a funding shortfall of $102,000, payments of $5,000 per month to IQ, and other payments such as for town planning and structural engineering. 91The discussion moved to the MOU dated 13 May 2009 between Parramatta South and Sitana and Brodieville: see [34] above. Brodie read out the terms of the MOU and said words to the effect: Parramatta South would have had an option to acquire the site but Allam's Group weren't able to comply with their funding obligations. This new MOU with the land owners means that Parramatta South only has to fund the development application. The intention will be to sell the site with the DA in place. The first $3.5 million will go to the owners. Parramatta South receives everything above $5 million. There is a sliding scale between those two amounts. Your $100,000 will go to meeting the forecast funding shortfall for the development application. I recommend the MOU is the best way forward. 92The plaintiff said words to the effect: "I want to proceed to invest in Parramatta South. I have a bank cheque for $35,000. I will get the balance of $100,000 to you shortly." 93She gave Critchley the bank cheque for $35,000. He produced and completed the share transfer form by adding her name as transferee. There was a discussion to the following effect: CRITCHLEY: "Here is a share transfer form for 70 shares. That's 35% of the shares in Parramatta South. Allam's Group have agreed to transfer its shares at our direction given a decline to fund its investment at Parramatta South. Please sign here." PLAINTIFF: "OK" 94Critchley then witnessed the plaintiff sign the transfer form dated 13 May 2009 and the discussion continued as follows: CRITCHLEY: "You will need to get the balance of $100,000 in as soon as possible to complete your investment". PLAINTIFF: "OK, I will get the balance to you shortly". BRODIE: "I move that Esther's 35% shareholding in Parramatta South for $100,000 be approved. CRITCHLEY: "I second that". BRODIE: "Welcome on board Esther". PLAINTIFF: "Thanks". CRITCHLEY: "Esther, I think it's appropriate that you become a director of Parramatta South". PLAINTIFF: "No I don't want to become a director". CRITCHLEY: "OK". 95The meeting continued. The topics covered included the opening of a BankWest account and its use. There was also a discussion about the terms of agreement between the shareholders in relation to the issue of further shares and the sale of shares by existing shareholders. 96Critchley made a copy of the share transfer form and gave it to the plaintiff. 97Critchley denied the plaintiff's allegations that he said at the meeting that her investment was secure, that he personally guaranteed that she would not lose the money, that he said it was safe as houses, and that he said it was going into a trust account. He said that the transfer form which she signed at the meeting was not inside a manila folder and he saw her looking at it before she signed it. 98Brodie prepared minutes of the meeting on 13 May 2009 which he gave to Critchley. They record the following: Matters Arising

1. That the meeting receive the MOU between Parramatta South and Sitana Pty/Brodieville Pty and resolve to approve the agreement. Alastair Brodie read the MOU to the meeting and recommended its approval as it contained the agreed conditions as discussed with all the existing and incoming shareholders. Moved S Critchley. Seconded A Brodie. Adopted
2. That the meeting resolve to approve the 30% shareholding for E McClymont for a $100k subscription. Moved A Brodie, Seconded S Critchley, Adopted
3. That the meeting resolve to receive documents of Allams Earthworks share transfer and approve the new allocation of shares Moved S Critchley Seconded A Brodie, Adopted
4. IQ 200 Pty Ltd representative to report on DA progress and planning. Alastair Brodie presented the cash Flow forecast and budget along with the Project Plan to obtain the Development approval
5. That the meeting resolve approve establishment of Bankwest company account. Proposed that P Lehman, as the company secretary establish the company account with BankWest. Moved Esther McClymont Seconded S Critchley
6. That the meeting resolve the parameters and conditions of use of the company bank account. S Critchley moved that the directors and company shareholders can operate the account. A maximum of $5,000 in any one transaction for one signature any amount above this will require authority from two signatories. Moved A Brodie seconded Esther McClymont. Adopted
7. That the meeting discuss and resolve the shareholders agreement with respect to: a) Dilution of Share Holding:- If a majority of the shareholders (75% min) vote to mutually agree to issue more shares to a share holder the existing share holders will equally dilute. E.g. if the company decide to sell shares to raise capital these shares will come for the existing shareholders equally. Adopted Moved A Brodie, Seconded Esther McClymont b) Sale of shares & Rights of First Refusal:- The share holders have the right to sell or trade their shares at any time subject to Rights of first Refusal by existing share holders. This means that any offer of purchase of shares can be matched by existing shareholders they have a right to buy them if they do so within 10 working days. Moved Esther McClymont. Seconded S Critchley. Adopted .
8. Any other matters Esther McClymont was invited to become a director of the company by S Critchley but she declined the offer. Enclosure (1)
9. MOU document
10. Share Transfer documents from Allams earthworks
11. Share transfer documents for E McClymont
12. Bankwest application form
13. Cash Flow and DA budget
14. Project Plan 99When Critchley saw the minutes he realised that they recorded approval for the "30% shareholding for E McClymont". This appeared to him to be an error based on a miscalculation of the relative shareholdings of the parties. The plaintiff had received a transfer of 70 shares which represented 35% of the ordinary shares in Parramatta South. He therefore prepared supplementary minutes dated 13 May 2009. They record the meeting commencing at 11am and closing at 12.15 and state: E M signed Share transfer and officially became a shareholder of 35% in the Company. AB delivered a verbal report to the meeting where it was hoped the shareholder's meeting in 2 weeks would be able to assess the design brief. SC proposed a meeting in 2 weeks. 100In oral evidence the plaintiff recalled only a couple of the matters in the minutes of the 13 May 2009 meeting: a decision that shares in Parramatta South be issued to her and mention of Allams. 101Critchley prepared a share certificate certifying that the plaintiff was a registered holder of 70 ordinary fully paid shares in Parramatta South. He signed the share certificate which bears the date 14 May 2009. Critchley's outgoing mail register records "Esther McClymont, 15 May 2009 share certificate Parramatta South", indicating that the plaintiff's share certificate was mailed on that date. 102In oral evidence Critchley said that in his professional practice he never gave financial planning advice and that if the plaintiff had asked for financial advice at the May meeting he would have called in his associate who was a financial planner and got him to answer.

Brodie's Evidence 103Brodie's evidence as to the discussions at the May 2009 meeting is generally similar to and consistent with Critchley's evidence. In addition, however, Brodie gave evidence that Critchley told the plaintiff that her money would be deposited in the "company account". In the absence of corroborative evidence from Critchley, I do not accept that was said.

AFTER THE MAY MEETING 104On 19 May 2009 Critchley, Brodie and Ms Lehman met at the Commonwealth Bank branch at Darling Street, Balmain and opened an account in the name of Parramatta South with Critchley and Ms Lehman as the authorised signatories. Critchley deposited the plaintiff's cheque for $35,000 in the account. Although the minutes of the May meeting record a resolution that the account be opened with BankWest, Critchley considered it prudent not to do so because he understood BankWest was owned by the Bank of Scotland which was in financial difficulty. 105On or about 25 May 2009 Brodie met the plaintiff and she handed him a bank cheque in favour of Parramatta South for $65,000. By arrangement with Critchley, Brodie deposited the cheque in Parramatta South's account with the Commonwealth Bank at Balmain. 106Brodie worked during the period between 13 May 2009 and about 8 November 2009 on the preparation of the DA for the Property. He showed the plaintiff drawings. He worked on three design concepts. Where required, he arranged for IQ to engage the services of a consultant draftsman to assist with the preparation of plans and drawing. He had various reports prepared as well as a draft environmental impact statement. He liaised with the experts for whom the draft reports were being prepared as well as with officers of Parramatta Council and the Department of Planning to negotiate a development path. He arranged for IQ to invoice Parramatta South periodically for his services and costs in managing and preparing the DA; and Parramatta South paid IQ approximately $81,000. 107According to Brodie, at regular weekly meetings with the plaintiff between 30 May 2009 and early November 2009, when he was still carrying out renovations at her home, he regularly met with her and provided her with copies of designs and reports that had been prepared for the purpose of the DA. 108Prior to this, in about September 2009, the plaintiff and Brodie had had a falling out over the renovation work and her requesting him to provide receipts for the materials he had been charging her. He said "Are you getting all forensic on me?" and that the receipts were with his accountant. 109That was when she started to worry about her investment with Parramatta South. 110In around October Brodie removed his tools from her house and indicated he would be building his office in Bowral. He did not come back. 111On 22 October 2009 the plaintiff attended Critchley's office. According to the plaintiff, she asked Critchley where her money was. He said he didn't know, Brodie took the cheques. She said "What? I thought they were in your trust account for safekeeping". He said "I will have to speak to Alistair and speak to him about it and get back to you". He said Critchley was his accountant. She said she had asked Brodie for receipts for her home renovation and he said he couldn't give them to her as they were with his accountant. 112On 23 October 2009 she searched the ASIC website. She saw that she was registered as a shareholder. She was concerned that it also showed Allams as a shareholder and telephoned Critchley's office to inquire who Allams was but was told he was unavailable. 113As a result of the search the plaintiff went to Critchley's office unannounced. She asked him what Brodie's position was in IQ. He replied that Brodie had an arrangement and that it was a private matter. She said she wanted the paperwork and asked where her cheques were. He said he would sort it all out and get back to her. She also asked who Allams were and he gave her an explanation. 114Critchley agreed that he met with the plaintiff on 22 and 26 October 2009. He could not specifically recall what was said at the first meeting except that she made derogatory remarks about Brodie. As for the 26 October meeting, his evidence was that she asked what Brodie's position was at IQ. He said Brodie was an employee. She asked for the paperwork and he said Brodie's relationship with IQ was private and he could not give that information. She asked where her money was. He said that it had been deposited in Parramatta South's bank account and he would send the details. 115The plaintiff's evidence was that she was confused and kept trying to work out what the relationship was between the companies and Critchley and Brodie. Up to about 5 November she asked Brodie what was going on and he said that they were working on the DA. On or about 6 November she rang Brodie and asked where her cheques were. He said that they were in BankWest, St George, Penrith. She asked for the account details and he hung up. She started to panic, called St George head office and was informed there was no St George branch in Penrith. 116She rang Critchley and asked him where her cheques were. He said there was no bank account at St George and he didn't know where the cheques were. She said that she really trusted him as CPA to keep the cheques in safekeeping. He said that he was busy and had a client waiting and would get back to her. 117On 5 or 6 November 2009 Critchley and the plaintiff spoke on the telephone and he gave her Parramatta South's bank account details. 118The plaintiff attended the Commonwealth Bank and asked it to trace her two cheques. 119According to Brodie, on 8 November 2009 he met with the plaintiff when they reviewed the drawings and plans which had been progressively amended as a result of meetings he had had with Parramatta Council, consultants, marketing advisers and shareholders of Parramatta South. She agreed that they should submit that design version and he told her that he expected to lodge the DA by the end of December or at the very latest by the end of January. He said that she did not raise any issues that troubled her or raise any concerns about Parramatta South's bank account. I accept that such a meeting and discussion occurred but I think it was probably much earlier than 8 November given the steps the plaintiff was taking at around that time. 120On 9 November 2009 the plaintiff went to the Commonwealth Bank, Balmain branch and asked it to stop the account. Although she did not disclose it in her evidence, she provided the bank with her statutory declaration dated 6 November 2011 in which she declared that she was a director of Parramatta South: see [44] above. In fact she was not a director. In cross-examination she first said that at the time she did not know the difference between a director and a shareholder. Subsequent cross-examination demonstrated that she had an understanding of the difference. I conclude that she knew she was not a director but declared she was because of anxiety or panic about her investment. 121The bank placed a stop on the account until 10 November in order to provide her with an opportunity to obtain legal advice and to apply for an injunction if so advised. 122The plaintiff engaged solicitors. She commenced these proceedings on 11 November 2009 and immediately obtained a freezing order over the money in the bank account of Parramatta South, which was just under $19,000. On 20 November 2009 the Court ordered that the money in the account be transferred to the trust account of the defendants' solicitors. 123Brodie denied in evidence that he indicated to the plaintiff that the cheques had been deposited into BankWest St George at Penrith. He said that during the period between 26 October and 6 November the plaintiff asked him where Parramatta South's bank account was. He said he didn't remember, he was not a signatory, he would call Critchley and call her back. I do not accept that Brodie did not remember. Critchley's evidence, which I accept in this regard, was that Brodie was with Critchley when Critchley earlier opened an account for Parramatta South at the Commonwealth Bank at Balmain. Brodie's own evidence was that he banked the plaintiff's cheque for $65,000 at the Commonwealth Bank, Balmain branch.

CONCLUSION RE BRODIE'S ALLEGED REPRESENTATIONS BEFORE MAY MEETING 124It is convenient to repeat the representations allegedly made by Brodie before the May meeting: (a)IQ and Parramatta South were undertaking a development in the western suburbs of Sydney that required investment funds; (b)the defendants or all of them would hold monies on trust for the plaintiff and invest those monies for the purpose of investing the funds in a development in the western suburbs of Sydney; (c)those funds would not be used for any other purpose than for investing in the development undertaken by IQ and Parramatta South; (d)the other defendants would account to the plaintiff for those funds; (e)the investment of $100,000 would be secured by the issue of shares in the IQ and Parramatta South companies and the issue would be secured against property and that investment would have a return payable to the plaintiff. 125Nowhere in the plaintiff's evidence does she depose that Brodie made any of the alleged representations to her. Brodie told her, on even her evidence, that he was involved in a project to prepare and submit a DA to the local council that would increase the value of the Property with a view to then selling it by arrangement with the owners and sharing the expected profit. The plaintiff understood that there was no actual development of the Property intended to be undertaken by any of the defendants. 126However, if one were to read "development" as "development application" in alleged representations (a) and (c) then Brodie did in effect make those representations - and they were true or came to pass. The same goes for the second part of alleged representation (b ). The money paid by the plaintiff for shares in Parramatta South were intended to be, and were in fact used for the purposes of preparing a DA for the Property. 127The plaintiff submits that she has established Brodie made alleged representation (e) ("secured " by the issue of shares or against property) because in cross-examination Brodie agreed he told her that on his interpretation of the MOU it somehow "underwrote" her investment. I reject the submission. The plaintiff gave no evidence that he made that representation, let alone that she relied on it. Presumably the cross-examiner put the leading question in that form to Brodie because earlier in his cross-examination he had answered a question concerning the MOU and the answer concluded with the words "That's why [Sitana and Brodieville] signed the MOU and underwrote the company". The word "underwrote" in this context does not necessarily connote security. The MOU was explained to the plaintiff at Critchley's office. It contained a provision that of the first $3.5 million of the sale price Parramatta South would have $100,000 and above that amount it would retain a share on a sliding scale until its share was 100 per cent. That is capable, in a conversational context, of being described as underwriting her investment. Furthermore, in the absence of any evidence from the plaintiff that Brodie told her the MOU underwrote her investment, I am not satisfied that he in fact used that word to her or, if he did, that she understood it to mean that her investment would be "secured". 128The plaintiff's pleaded allegation that Brodie told her the moneys would be held in trust or would be secured against property are contrary to her own understanding of the transactions both before and after she invested funds: see [135] below. That included an understanding that she would be issued with shares in Parramatta South in return for her investment of $100,000. 129As the representations the plaintiff pleads Brodie made were, on her own evidence, either not made or were not false, misleading or deceptive, her claim against Brodie must be dismissed. 130Based largely on my impression of the plaintiff and Brodie, I generally prefer her evidence in relation to the pre-May meeting period where it conflicts with his evidence. My conclusions in relation to the pre-May meeting period include the following: (a)Brodie painted a rosy picture of large profits which could be made if she invested in Parramatta South. (b)I do not accept that Brodie informed the plaintiff as fulsomely as he claimed. The only documents I am satisfied Brodie showed her prior to the May meeting were plans for the DA. As she conceded in cross-examination, she understood from them that IQ was working on the documents for the purpose of preparing the DA, and that IQ had been engaged by Parramatta South to prepare documents like those concept plans for the DA. (c)she trusted Brodie. (d)she decided to invest before the May meeting and indicated this to Brodie. She probably indicated to him before the May meeting that she intended to invest $100,000. (e)she had the impression her investment would be low risk. (f)she was financially unsophisticated, and this would have been reasonably apparent to Brodie - and later to Critchley.

CONCLUSION RE CRITCHLEY'S ALLEGED REPRESENTATIONS AT MAY MEETING 131It is convenient to repeat the pleaded representations allegedly made by Critchley at the May meeting: (a)the plaintiff's investment would be secure; (b)the plaintiff's money would be personally guaranteed by Critchley; (c)the plaintiff would not lose her money; (d)the money would be placed into Critchley's trust account; and (e)the plaintiff should borrow more money to invest in the development. 132In oral evidence the plaintiff also alleged that Critchley told her that the money would not be used without prior consultation with her. That not having been pleaded or referred to in any of her three affidavits, I do not propose to allow it to form part of her cause of action. However, I think the allegation is damaging to her credit because she did not make it until her oral evidence. 133Having regard to the contemporaneous documents, difficulties with the plaintiff's evidence and my impression of the witnesses, I accept as reliable Critchley's account of the May meeting and its date. To a significant extent, his evidence of the meeting is consistent with, and the plaintiff's evidence is inconsistent with the contemporaneous documentary evidence the authenticity of which I accept: the share transfer dated 13 May 2009 signed by the plaintiff, the minutes of the meeting dated 13 May 2009, and Critchley's mail records. His evidence is substantially corroborated by Brodie. That could not be unless they colluded in their evidence, which I do not accept. Nor do I understand that to have been suggested. 134I have referred to difficulties with the plaintiff's evidence. The first difficulty concerns her pleaded allegation that Critchley was holding himself out as an accountant or as providing independent financial advice or investment advice. It is difficult to accept that that is what she understood because: (a)she knew that Critchley was the business associate of Brodie; (b)she understood that Critchley and Brodie were the directors and shareholders in Parramatta South and, accordingly, were involved in and had an interest in the DA proposal; (c)she understood that IQ had been engaged by Parramatta South to have the carriage of the DA and carry out work for that purpose; and (d)she knew that the Critchley would be dealing with the financial side of things. 135Secondly, the alleged representations that the plaintiff's investment would be "secure" and would be placed in Critchley's trust account are contradictory to her own understanding of the transaction both before and after she invested the funds. The plaintiff's oral evidence was that she understood the following: (a)Parramatta South did not have sufficient funds to itself obtain the development approval required and needed her contribution of funds to obtain the DA; (b)she would be issued with shares in Parramatta South in return for the $100,000 in funds she provided; (c)the funds she provided were needed for and would be used for the purpose of preparing the various documents required and other work, in order to submit the DA to the council; (d)once the DA was approved, the Property was to be sold in conjunction with the owners at a profit and the profit from the proceeds of sale shared between the owners and Parramatta South; (e)it was only once the Property was sold that she could expect a return on her funding of Parramatta South; and (f)it was her ownership of 70 shares in Parramatta South which would entitle her to a share of the profit from the transaction. 136Thirdly, nowhere in the plaintiff's evidence does she depose to a conversation in which Critchley advised her to "borrow more money" (representation (e)). On her own evidence: (a)the plaintiff volunteered to Brodie before the May meeting that she had monies and could borrow monies on her mortgage before she met Critchley; (b)the plaintiff decided herself to draw a further cheque for $65,000 on her mortgage later in May 2009; 137Fourthly, it is difficult to see why Critchley would have told the plaintiff that her cheques would be deposited in his trust account (representation (a)). On the plaintiff's own evidence, by the time he is alleged to have said it she had given him a cheque for $35,000 payable, as Brodie had requested, to Parramatta South. She understood, as she conceded in evidence, that normally a cheque is drawn to the entity into whose bank account it is going to be deposited. 138Fifthly, the allegation that Critchley represented that her funds would be placed into Critchley's trust account (representation (d)) is difficult to reconcile with her own evidence that: (a)Brodie asked her to draw a bank cheque in favour of Parramatta South (as opposed to a trust account). The second bank cheque for $65,000 was after she was allegedly told that it would be paid into a trust account; and (b)she arranged for both bank cheques to be made payable to "Parramatta South Pty Ltd" (as opposed to a "trust account"). 139Sixthly, on the plaintiff's own evidence, there is difficulty in accepting that the alleged representations by Critchley induced her to invest at least in relation to the first cheque for $35,000. Her evidence was that before the May meeting; (a)in about March, after consulting with her friend in Melbourne, she "decided to invest" but did not do so straight away as she "wanted to find out more" from Brodie; (b)after finding out more from Brodie, she arranged for a bank cheque for $35,000 payable to Parramatta South and told Brodie she had it, whereupon he said they would go to Critchley's office; (c)at Critchley's office, after being introduced, she handed him that cheque before he made any of the alleged representations. 140I make no finding that the plaintiff's evidence was deliberately untruthful. A possible explanation is that after she became anxious about her investment she subconsciously came to believe that the alleged representations were made. It may be that her belief grew out of an understanding on her part at and before the May meeting that her proposed investment would be low risk. It is unnecessary, and perhaps unwise, to explore this further. 141Part of the evidence of Critchley that I have accepted was that before the plaintiff handed over her cheque for $35,000, the plans and cash flow forecasts for the development were reviewed with her and the MOU was read and explained to her. The MOU, cash flow and DA budget are referred to in the minutes as enclosures. She was told at the May meeting that her $100,000 would go to meeting the forecast funding shortfall for the DA. I have referred to other matters which she knew or understood: see [55],[135], [136] above. 142Overall, she was reasonably well informed before she parted with her money. 143I have no doubt that at the time of the May meeting the plaintiff was impressed with Critchley and his apparent professionalism; she trusted him; and she thought that her investment was low risk.

THE CLAIMS UNDER THE TPA AND FTA 144Section 52 of the TPA provided that, "A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or likely to mislead or deceive". Section 42 of the FTA provides that, "A person shall not in trade or commerce engage in conduct that is misleading or deceptive or is likely to mislead or deceive". Section 53 of the TPA prohibited a corporation from making certain false representations in trade or commerce. It is alleged that IQ and Parramatta South engaged in such conduct through their director, Mr Critchley. 145As I have held that none of the alleged positive representations were made or that if they were made they came to pass, the plaintiff's case based on positive representations must fail. 146I turn to the plaintiff's submission that the matters not disclosed by Critchley to the plaintiff listed at [15] above constituted misleading or deceptive conduct by silence in breach of s 52 of the TPA and s 42 of the FTA. The plaintiff submits that Critchley was under an obligation to disclose these matters because she was a very unsophisticated investor. 147Silence is to be assessed as one of the factors in a party's conduct having regard to what the party did and said, and what they did not do or say, in order to determine whether its conduct as a whole was misleading or deceptive. If the circumstances are such as to give rise to a reasonable expectation that if some relevant fact exists it will be disclosed, silence may support the inference that the fact does not exist: Dawson v LNG Holdings Pty Ltd [2008] NSWSC 137 per White J. 148I reject the silence submission in this context for several reasons. First, there is no pleaded allegation of misleading or deceptive conduct by non-disclosure or silence. As it has not been pleaded, I do not propose to entertain it. 149Secondly, had it been pleaded, it would have been necessary to consider the definition of "engaging in conduct" in s 4(2) of the TPA and s 4(4) (now repealed) of the FTA. The definition required that where the conduct consists of not disclosing something, s 52 of the TPA and s 42 of the FTA would only be contravened if such non-disclosure were otherwise then inadvertent. "In other words, there must have been a conscious or advertent non-disclosure": Dawson v LNG Holdings Pty Ltd at [87]. The plaintiff submits that Critchley's silence as to these matters was not inadvertent and that he did it for the purpose of dressing up this investment as being low risk and high return and inducing the plaintiff to so invest by purchasing the shares. I reject the submission. In my view, that has not been proved. 150Thirdly, non-disclosure of information constitutes misleading or deceptive conduct where the defendant had actual knowledge of a matter which he advertently did not disclose in circumstances where there was a duty to disclose or where the other party had a reasonable expectation that such information would be disclosed to him. Reasonable expectation is to be judged objectively by what a reasonable person would expect in the circumstances: Dwyer v Craft Printing Pty Ltd [2009] NSWCA 405 at [55] - [60]. In the present case no such duty or reasonable expectation is alleged. 151Fourthly, there is no allegation that the alleged failure to disclose gave rise to a positive representation, such as where concealment of a fact may cause the true representation of another fact to be misleading. If that had been alleged, then s 4(2) of the TPA and s 4(4) of the FTA would have been inapplicable: Dwyer at [5]. 152Fifthly, some of the pleaded representations refer to future matters. In the context of the TPA and the FTA, this pleading is embarrassing because it merely alleges that they were false, misleading and deceptive and in breach of s 52 of the TPA and s 42 of the FTA. A representation that future matters would come to pass is not misleading or deceptive, when made, merely because the contrary of the representation came to pass: Entirity Business Services Pty Ltd v Garsoft Pty Ltd [2011] FCA 76 at [69]. There is no pleading of any reliance on s 51A of the TPA and s 41 of the FTA. They provided that if a person does not have reasonable grounds for making a representation with respect to a future matter, the representation shall be taken to be misleading. Section 51A of the TPA Act then deemed a defendant not to have had reasonable grounds unless it adduces evidence to the contrary. And s 42 of the FTA Act imposed an onus on the person to establish that they had reasonable grounds. A party invoking those provisions must make clear that it is doing so: Aussie Home Security Pty Ltd v Sales Systems Australia Pty Ltd [1999] FCA 1458 at [20]. The plaintiff in the present case has not done so. 153Finally, apart from those provisions, a representation as to a future event can ripen into misleading or deceptive conduct in a number of circumstances referred to in Aussie at [19] (quoting earlier authority): "...if there is an implied statement in the representation as to a present or past fact; if the representation represents impliedly that the representor has a present intention to make good the promise or has the means or ability to do so; if the representation involves a representation that the representor has a present state of mind; or if a representation is made, which having regard to relevant circumstances at the time, requires a qualification because of the possibility of its non-fulfilment". No such circumstances are pleaded in the present case. 154For these reasons, the claim under the TPA and the FTA must fail.

THE CONTRACT CLAIMS 155As I have not accepted that the alleged representations were made, the claims in contract must be rejected.

THE FIDUCIARY DUTY CLAIM AGAINST CRITCHLEY 156The plaintiff submits that Critchley breached his fiduciary duty to her by failing to disclose the following matters to her before she made her investment: (a)that the net asset position of Parramatta South was nil; (b)that there had been difficulties in obtaining a DA since 2004; (c)that Parramatta South had no funds for any amendments to the DA required by the council or, if the DA was refused, for a merit appeal to the Land and Environment Court; and (d)that Critchley was in a position of conflict of interest because he was a director of IQ which was the entity billing Parramatta South for the work for the DA and thereby receiving the plaintiff's money. 157The defendants object that matters (b), (c) and (d) were not pleaded or particularised, and that they are thereby prejudiced because they might have called evidence in relation to those matters. The general rule is that apart from cases where the parties choose to disregard the pleadings and to fight the case on some different basis, the relief which may be granted must be founded on the pleadings. This secures procedural fairness. See Dare v Pulham [1982] HCA 70, 148 CLR 658 at 664; Banque Commerciale SA in Liquidation v Akhil Holdings Ltd [1990] HCA 11, 169 CLR 279 at 286-287; Betfair v Racing New South Wales [2010] FCAFC 133, 273 ALR 664 at [51]; Entirity v Garsoft [2011] FCA 76 at [67]; Benton v Scott's Refrigerated Freightways Pty Ltd [2008] NSWCA 143 at [44]. 158I uphold the objection in relation to matters (b) and (c). They were not pleaded or particularised nor mentioned in the plaintiff's opening written submissions. They appear to have emerged during cross-examination of Critchley and Brodie. I reject the objection in relation to matter (d): one of the particulars in the statement of claim is that Critchley failed to properly disclose "that the monies would be used by a further related company of which [Critchley] was a director". In the result, the plaintiff is entitled to argue that, if Critchley owed a fiduciary duty to her, it was breached because of non-disclosure of matters (a) and (d) above. In relation to that argument, I accept that the plaintiff did not know that Critchley was a director of IQ, although she knew that IQ was being paid by Parramatta South for work on the DA: see [90] above. She was not told expressly that Parramatta South's net assets were nil although she knew or should have known that the company was entirely reliant on her $100,000 to pay for the work on the DA. 159However, it is unnecessary to consider that argument further because in my opinion Critchley did not owe a fiduciary duty to the plaintiff. 160The plaintiff's case is not put on the basis that this was a prospective joint venture giving rise to a fiduciary relationship: cf United Dominions Corporation Ltd v Brian Pty Ltd (1985) 157 CLR 1; Friend v Brooker [2009] HCA 21, 239 CLR 129. 161The first basis on which the plaintiff submits that Critchley owed her a fiduciary duty was because he held himself out as providing financial advice or as an accountant. I reject the submission. He did not hold himself out in that way and I have concluded that he did not give her any financial advice. The plaintiff had no prior relationship with Critchley nor did she retain him to provide advice: cf Pavan v Ratnam (1996) 23 ACSR 214 at 225. She understood that Critchley was the business associate of Brodie, involved in the development and would be dealing with the financial side of things. 162The other basis on which the plaintiff submits that a fiduciary duty arose is that Critchley was the sole director of Parramatta South and the circumstances in which he dealt with her at the May meeting for the purpose of her purchasing shares in Parramatta South. The plaintiff relies on Brunninghausen v Glavanics [1999] NSWCA 199, 46 NSWLR 538. 163The general rule is that a director of a company owes a fiduciary duty to the company as a whole and not to individual shareholders. The bare relationship between a director and shareholder cannot without more give rise to a fiduciary relationship. However, in some circumstances a director of a proprietary company may owe a fiduciary duty to a shareholder so long as it does not compete with the director's duty to the company as a whole: Brunninghausen at [58]. This principle is sensitive to, and requires close examination of the circumstances of the particular case. Circumstances which may point to the existence of a fiduciary obligation include the shareholder's dependence upon information known to the director, the existence of a relationship of confidence, reliance or trust; the vulnerability of the shareholder, the significance of any positive action taken by or on behalf of the director to promote the transaction; the structure of the shareholdings; and the significance of the particular transaction to the parties: Pavan v Ratnam (1996) 23 ACSR 214 (NSWCA); Coleman v Myers [1977] 2 NZLR 225 at 234; Glavanics v Brunninghausen [1996] 19 ACSR 204 at 218; R Austin and I Ramsey, Ford's Principles of Corporations Law 14th ed (2010) LexisNexis Butterworths [9.050] p 484, and the cases there cited. This is consistent with the seminal principle that "Rules of equity have to be applied to such a great diversity of circumstances that they can be stated in only the most general terms and applied with particular attention to the exact circumstances of each case": Boardman v Phipps [1967] 2 AC 46 at 123 per Lord Upjohn; approved in New Zealand Netherlands Society "Oranje" Inc v Kuys [1973] 2 NZLR 163 at 166 per Lord Wilberforce delivering the judgment of the Judicial Committee of the Privy Council. 164In Coleman v Myers the other family shareholders had trust and confidence in the directors, an attitude which the directors invited and encouraged and then exploited: at 325, 331, 371. It was held that the directors owed a fiduciary duty to the shareholders. Woodhouse J said at 324: As I have indicated it is my opinion that the standard of conduct required from a director in relation to dealings with a shareholder will differ depending upon all the surrounding circumstances and the nature of the responsibility which in a real and practical sense the director has assumed towards the shareholder. In the one case there may be a need to provide an explicit warning and a great deal of information concerning the proposed transaction. In another there may be no need to speak at all. There will be intermediate situations. It is, however, an area of the law where the courts can and should find some practical means of giving effect to sensible and fair principles of commercial morality in the cases that come before them; and while it may not be possible to lay down any general test as to when the fiduciary duty will arise for a company director or to prescribe the exact conduct which will always discharge it when it does, there are nevertheless some factors that will usually have an influence upon a decision one way or the other. They include, I think, dependence upon information and advice, the existence of a relationship of confidence, the significance of some particular transaction for the parties and, of course, the extent of any positive action taken by or on behalf of the director or directors to promote it. In the present case each one of those matters had more than ordinary significance and when they are taken together they leave me in no doubt that each of the two directors did owe a fiduciary duty to the individual shareholders. 165The passage was quoted with approval and applied in Glavanics v Brunninghausen (1996) 19 ACSR 204 at 218 by Bryson J who held that, in the circumstances of the case, a director owed a fiduciary obligation to a shareholder of a small proprietary company. An appeal from the decision in Glavanics was dismissed: Brunninghausen v Glavanics [1999] NSWCA 199, 46 NSWLR 538. 166Brunninghausen concerned a sale of shares by the plaintiff, the minority shareholder and director, to the defendant, the majority shareholder and director. Events had brought to an end the personal trust and confidential relationship between them. The defendant became the sole effective director, and the plaintiff took no active part in the business of the company. The defendant did not disclose to the plaintiff that he was negotiating on the company's behalf for the sale of its business for a price substantially greater than that reflected in the price attributed to the share sale agreement between the plaintiff and the defendant. The primary judge (Bryson J) and the Court of Appeal held that the defendant had acted in breach of a particular fiduciary duty of disclosure owed by him to the plaintiff as shareholder. The fiduciary duty was limited to disclosure necessary to negate the effect of taking advantage of his superior position to the detriment of the plaintiff who was "at the mercy" of the defendant and "vulnerable to abuse" by the defendant of his position: at [99]. More particularly, the duty was to disclose material matters affecting the value of the shares of which the defendant knew the plaintiff was ignorant. The plaintiff was awarded equitable compensation: at [52], [113], [117]. 167In the course of a comprehensive analysis of the law, Handley JA (with whom Priestley and Stein JJA agreed) held that "the office of director in a proprietary company is, at least for some purposes, a fiduciary one in relation to the shareholders": at [100]. His Honour referred with approval to the special facts doctrine found in United States decisions under which the special facts of the case may take it outside the general rule that directors do not owe a fiduciary duty to shareholders when purchasing their shares: at [109] - [112]. One such decision was Van Schaack Holdings Ltd v Van Schaack 867 P 2nd 892 (1994) where Rovira CJ, delivering the opinion of the Supreme Court of Colorado En Banc, said at 898: Holding corporate "insiders" to a duty to fully disclose all material facts and circumstances surrounding or affecting the value of shares is warranted ...because much of the information bearing on the value of a closed corporation's stock is not publicly available and because no market exists in which the shares of such a corporation can be valued through the interplay of market forces. As a result of this unique aspect of closed corporations, there arises the "necessity of preventing a corporate insider from utilising his position to take unfair advantage of the uninformed minority shareholders" and the imposition of a duty of disclosure is warranted as "an attempt to provide some degree of equalization of bargaining position in order that the minority may exercise an informed judgment in any such transaction. 168In Brunninghausen Handley JA at [50] noted that the primary judge had adopted the reasoning of Rugg CJ in the Supreme Judicial Court of Massachusetts in Goodwin v Agassiz (1933) 186 NE 659 at 661: ...circumstances may exist requiring that transactions between a director and a stockholder as to stock in the corporation be set aside. The knowledge naturally in the possession of a director as to the condition of the corporation places upon him a peculiar obligation to observe every requirement of fair dealing when directly buying or selling its stock. ...directors cannot rightly be allowed to indulge with impunity in practices which do violence to prevailing standards of upright businessmen. Therefore where a director personally seeks a stockholder for the purpose of buying his shares without making disclosure of material facts within his peculiar knowledge and not within reach of the stockholder, the transaction will be closely scrutinised and relief may be granted in appropriate instances. 169In Brunninghausen the fiduciary duty arose from the bare facts of the relationship and was held to have been breached at [54] - 58]: 54 If a fiduciary duty exists here it must arise from the bare facts of the relationship. These include the position of the defendant as the sole effective director, the existence of only one other shareholder, their close family association, the intervention of the mother-in-law to secure a family reconciliation , and the exclusive advantage or opportunity which the defendant's position conferred on him to receive any offers to purchase the company's business from third parties. 55 Any fiduciary duty arising from these facts must be one imposed by law. The defendant did nothing which could be construed as a voluntary assumption of such a duty. The judge held that the relationship between the parties did not create a comprehensive fiduciary duty but one which was limited to the disclosure of the unexpected offer by third parties to purchase the entire business. The existence of such a duty was denied in Percival v Wright and that case cannot be distinguished from the present. We can only hold that the defendant owed the fiduciary duty found by the judge if we decline to follow Percival v Wright . 56 The decision is not binding on this Court and the comments in Winthrop Investments Ltd v Winns Ltd [1975] 2 NSWLR 666 at 680 and the decision in Glandon Pty Ltd v Strata Consolidated Pty Ltd (1993) 11 ACSR 543, which is distinguishable, do not prevent us from re-examining the decision. It has not been followed in Australia in circumstances comparable with the present. 57 The general principle that a director's fiduciary duties are owed to the company and not to shareholders is undoubtedly correct, and its validity is undiminished. The question is whether the principle applies in a case, such as the present, where the transaction did not concern the company, but only another shareholder. 58 Any statement that the defendant owed a duty to the company in relation to his dealings with the plaintiff over his shares is meaningless. Such a duty would lack all practical content. The company could not suffer any loss from the breach of such a duty, and had no interest in its loyal and disinterested performance. Where a director's fiduciary duties are owed to the company this prevents the recognition of concurrent and identical duties to its shareholders covering the same subject matter. However this should not preclude the recognition of a fiduciary duty to shareholders in relation to dealings in their shares where this would not compete with any duty owed to the company. 170Handley JA at [91] - [92] found "compelling" the following reasoning of Mahon J in Coleman v Myers [1977] 2 NZLR 225 at 277-8 concerning the fiduciary relationship imposed by law on promoters in relation to their company: "...in any transaction involving sale of shares between director and shareholder, the director is the repository of confidence and trust necessarily vested in him by the shareholder, or by his legal status, in relation to the existence of information affecting the true value of those shares...when [a] director has, by reason of his office, knowledge of an impending advantage to the company which would appreciate the value of the shares...he is in possession of information which the shareholder is legally precluded from acquiring in the absence of the consent of the board. ...where the director ...makes an offer founded upon corporate information as to the value of shares which, by law, is placed outside the knowledge of the owner ...there is ...by reason of the statutory disability of the shareholder to compel disclosure of the relevant facts, a necessary confidence reposed in the director, by virtue of his status, in relation to his advantageous possession of material information ...it seems an untenable argument to suggest that the shareholders on an offer to buy their shares are not perforce constrained to repose a special confidence in the directors that they will not be persuaded into a disadvantageous contract by non-disclosure of material facts. In my opinion therefore there is inherent in the process of negotiation for sale a fiduciary duty owing by the director to disclose to the purchaser any fact, of which he knows the shareholder to be ignorant, which might reasonably and objectively control or influence the judgment of the shareholder in forming his decision in relation to the offer. 171Handley JA held at [98] - [103] explained why the defendant owed a fiduciary duty to the plaintiff in the circumstances of that case: [98] The plaintiff therefore was almost totally powerless. He had no legal right as a shareholder to inspect the company's books of account or financial records. He was entitled to copies of the annual accounts but realistically chose not to exercise it. Those alone would not provide any real guide to the value of his shares. He had no effective right to be informed of the negotiations for the sale of the company's business. [99] The defendant, as the sole effective director, occupied a position of advantage in relation to the plaintiff. He could, if he saw fit, disclose information about the pending negotiations for the sale of the business but could not be compelled to do so. This gave him the capacity to affect the interests of the plaintiff "in a practical sense", and in the context of the negotiations with him "a special opportunity" to exercise that capacity to the detriment of the plaintiff who was "at the mercy" of the defendant and "vulnerable to abuse" by the defendant "of his position". Hospital Products ibid per Mason J at 96-7. [100] After 1983 the defendant did not undertake in any factual sense to act in the interests of the plaintiff, or in the joint interests of the plaintiff and himself. However he continued to occupy an office with the advantages referred to. In my judgment it is open to this Court to hold that the office of director in a proprietary company is, at least for some pur-poses, a fiduciary one in relation to the shareholders. See generally Finn "Fiduciary Obligations" 1977 Chs 2, 4. Fiduciary duties are imposed on the holders of such offices by operation of law. As Professor Finn said in "Equity, Fiduciaries and Trusts" Youdan 1989 p34-p35: "But whether or not a real trust and confidence is there ... the law simply prescribes that, in general, one party is entitled to expect that the other will act in his or their joint interests in those matters falling within the ambit of the [fiduciary] relationship ... against the background of the relationship, its nature and its purpose [the law] asks for what purpose one party has acquired rights, powers and duties in the relationship: to promote his own interests, the joint interest, or the interest of the other party alone. Insofar as it is either of the latter two, the relationship will be fiduciary to that extent". (emphasis supplied) [101] Thus the question is not whether there is an expectation in fact, but whether the vulnerable party is "entitled to expect" a particular standard of conduct. Professor Finn continued at 47: "... the expectation may be a judicially prescribed one because the law itself ordains it to be that other's entitlement. This may be so ... because that party should, given the actual circumstances of the relationship, be accorded that entitlement irrespective of whether he has adverted to the matter ...". [102] In the present case there was a factual basis for some expectation on the part of the plaintiff... [103] The plaintiff had no idea of the real value of his shares to the defendant while the latter continued to operate the company, and made no attempt to find out. 172In my opinion, as the defendants submit, Brunninghausen is distinguishable. It was concerned with the fiduciary duty of a director to an existing shareholder to disclose information affecting the value of the shareholder's shares in a small proprietary company which the director was purchasing. The director derived a personal, direct benefit from the transaction. The present case is concerned with a director's duty not to an existing shareholder but to someone purchasing shares in a small proprietary company. The consideration was paid to the company, Parramatta South, not to Critchley. Critchley's potential benefit, like that of the other shareholders, was tied to the fate of the company. In the latter situation, no case, so far as I am aware, has applied the law of the fiduciary rather than the law of the marketplace. 173A conclusion that there was no fiduciary duty in the present case is also consistent with the decision that there was no fiduciary duty in the comparable case of Pavan . In that case R proposed to engage in a strata building development of a property and incorporated a company as the development vehicle. R was a director and the controller of the company and he and his wife were the shareholders. R was a tax accountant and proposed to P, his client, that P reduce his tax liability by investing in the development. P agreed and invested by buying one of the units in the development from the company. P lost his investment money. P unsuccessfully sued R for breach of fiduciary duty, breach of contract and negligence. P accepted that R did not act in the capacity of financial advisor as such, but submitted that in the circumstances R had a duty of a fiduciary character to take steps to secure the funds: at 222-223. Beazley JA (Meagher JA agreeing) noted at 224-235: ...there are difficulties in attempting to find an all embracing statement of principle to categorise a relationship which, as Mason J pointed out in Hospital Products is "infinitely varied". It is preferable to approach the matter by looking at all the circumstances of the case and determining whether there are factors which solely, or in combination, establish the nature of the relationship as a fiduciary one. This is the approach to be found in Hospital Products and also finds expression in Lloyds Bank Ltd v Bundy [1975] QB 326 per Sachs LJ at 341: Such cases tend to arise where someone relies on the guidance or advice of another, where the other is aware of that reliance and where the person upon whom reliance is placed obtains, or may well obtain, a benefit from the transaction or has some other interest in it being concluded. In addition, there must, of course, be shown to exist a vital element which in this judgment will for convenience be referred to as confidentiality. It is this element which is so impossible to define and which is a matter for the judgment of the court on the facts of any particular case. The cases establish that a number of factors may characterise a relationship as being of a fiduciary nature. They include: vulnerability, reliance and the presence of loyalty, trust and confidence. The notion of vulnerability, as used in this context, is not to be understood in the sense of any "weaker party" concept. Rather, it refers to the circumstance where another party agrees (not necessarily contractually) "to act on behalf of or in the interests of another and, as such, is in a position to affect the interests of that other person in a legal or practical sense. As such, fiduciary relationships are marked by vulnerability in that the fiduciary can abuse the power or discretion given him or her to the detriment of the beneficiary": see Hodgkinson per La Forest at 168. Reference is also usefully made to Professor Finn's (now Justice Finn of the Federal Court of Australia) description in The Fiduciary Principle at 50-1: ... fiduciary responsibities [sic] will be exacted where the function the advisor represents himself as performing, and for which he is consulted, is that of counselling an advised party as to how his interests will or might best be served in a matter considered to be of importance to his personal or financial well-being, and in which the adviser would be expected both to be disinterested, save for his remuneration, and to be free of adverse responsibilities unless the contrary is disclosed at the outset. In determining whether the circumstances in this case gave rise to a fiduciary relationship, the following characteristics of the relationship are relevant: (i) the respondent and the appellant were in a tax accountant/client relationship; (ii) in the course of and as part of that relationship, the respondent, from time to time, advised the appellant on appropriate financial structures and investment directions; (iii) in 1983, the appellant was concerned to minimise his tax liability; (iv) at that time, separate from his accountancy practice, the respondent had himself decided to pursue a particular investment opportunity, namely the development of land at Penrith upon which he proposed to build industrial units; (v) the respondent acquired Nupace Pty Ltd as the investment vehicle; (vi) there was no contractual relationship between the appellant and the respondent in respect of the project, although the respondent "introduced" the appellant to the project; and (vii) there was no evidence of any representation by the respondent to the appellant that any monies he committed to the project were to be held "on trust", or were to be kept separate from Nupace Pty Ltd's monies; or were not to be utilised by Nupace Pty Ltd during the course of the development. None of these circumstances point to the existence of a fiduciary relationship. Although the appellant undoubtedly had confidence that the project would be successful and it may well have been that that confidence was engendered by the fact the respondent was involved with it, there are none of the indicia of vulnerability, reliance or confidence in the sense which those matters bear in the context of a fiduciary relationship. 174Pavan is comparable to the present case notwithstanding that (a) P in that case invested by purchasing property from R's company whereas the plaintiff in the present case invested by purchasing shares in Critchley's company; and (b) R was P's tax accountant whereas in the present case there was no pre-existing relationship between the plaintiff and Critchley.

ORDERS 175The proceedings are dismissed with costs. The exhibits may be returned. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 15 June 2011