McCRACKEN v MELBOURNE STORM RUGBY LEAGUE FOOTBALL CLUB AND 2 ORS

• 2 - IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

Jarrod MCCRACKEN v MELBOURNE STORM RUGBY LEAGUE FOOTBALL CLUB LIMITED, Stephen KEARNEY AND Marcus BAI JUDGMENT 1 HULME J: On 22 February 2005 I directed judgment for the Plaintiff against each of the Defendants in this matter with damages to be assessed. I found that on 12 May 2000, the Plaintiff had been injured while playing rugby league football in consequence of a spear tackle effected on him by the Second and Third Defendants who, at the time, were employed by the First Defendant. I found that the actions of the Second and Third Defendants at the time of the tackle were intentional and intended to injure the Plaintiff, albeit not as seriously as in fact occurred. The injury that was effected included injury to the Plaintiff's neck and he has not played football since. These reasons are concerned with an assessment of the Plaintiff's damages. 2 At the time of his injury the Plaintiff was a successful professional footballer. He had also indulged successfully in a significant degree of land dealing and/or development and, directly or indirectly and with a deal of success, has continued activities in that area. This fact complicates the assessment of his damages but, at least so far as detail is concerned, the topic may be deferred for the moment. 3 The place where the injury to the Plaintiff occurred was Victoria. The Statement of Claim was filed on 7 May 2002, originally in the District Court. In written submissions, counsel for the Plaintiff submitted that the relevant law was that of Victoria and because of the time of events and my finding that the Defendants' acts were intentional and with intent to cause injury, damages fell to be assessed in accordance with the general law and the applicable discount rate was 3%. Counsel for the Defendant accepted that this was the situation and I shall proceed accordingly.

The Plaintiff's History and the Injury 4 The Plaintiff was born on 27 March 1970. He left school aged about 14 or 15. He completed an apprenticeship as a motor mechanic and also spent some time in building construction. 5 He had been a professional Rugby League football player from 1991, playing in Australia at First Grade level. After the end of the Australian season towards the end of 1992, he played for the St Helen's Club in the United Kingdom in that country's premiership competition. He enjoyed living in England. 6 In Australia he played for a number of clubs and then signed a contract with Wests Tigers Club for the 2000 and 2001 seasons. He was captain during the 2000 season until his injury at which time the club was then first or second in the competition. The Plaintiff's intention was to continue playing with Wests until 31 October 2001, the end of the 2001 season. 7 The Plaintiff's contract with Wests provided him with an income of $300,000 per annum. He had previously played for Parramatta for 4 years for about $500,000 per year plus a wage of a couple of thousand dollars a month - T73. There was evidence that suggested that payments at that time were higher due to the ructions which occurred some years ago in the sport. It was not contended, and I do not draw the inference, that the reduction in the Plaintiff's income was any reflection on his ability. 8 During his career the Plaintiff had played about 163 First Grade games for the ARL or NRL and 22 test matches for New Zealand. For at least one of these test matches he was captain. On another occasion he was selected as captain but could not play. On 2 of these occasions he was selected as man of the Match. At one stage he played for the Rest of the World against Australia. 9 Asked what his plans were for the period following the 2001 season, he said, "I'd probably, like most other footballers do, go to England after I finished in the ARL". He might have stayed in the ARL but was keen to go to England to finish his career. I might add that there was evidence I accept that playing in England is less physically demanding than playing in Australia at the level at which the Plaintiff played. 10 At the time of the accident the Plaintiff was fit though he had had minor arthroscopies to his right knee and shoulder in earlier years. He had never had any problems with headaches or neck pain or the like. 11 As an incident of the spear tackle that led to these proceedings, the Plaintiff landed on his head, he heard a loud crack, his neck went into spasm and became numb and he had pins and needles and numbness down his right arm. He was taken from the field to the dressing room. There he was placed on a spinal board and had a neck brace applied and taken to hospital. His neck and arms were painful and he was pretty worried. After radiological examination he was discharged from hospital next day wearing a rigid cervical collar. This treatment, with some change of collar, continued for some months during which the Plaintiff experienced pain. He described at least some of this as unbearable. 12 The Plaintiff was bedridden for a time and suffered nausea for about 3 months. He was given physiotherapy and manipulation but the effect of this was to cause the injury to flare up. The Plaintiff did not return to training that season. 13 In November 2000 the Plaintiff returned to his club with a view to participating in pre-season training for the 2001 season. He was judged unfit, the club wished to terminate his contract and there were negotiations in that regard. On 28 February the Plaintiff and the club entered into a deed of release and pursuant to it the Plaintiff received some $120,000 in March 2001. 14 It is appropriate to record that one of the recitals in the deed was to the effect that the plaintiff believed that, notwithstanding his injury, he was capable of playing further games without any greater than usual chance of injury. Whether the Plaintiff thought that at the time, I do not find it necessary to decide. I am satisfied he was not so fit. 15 At or prior to this time the Plaintiff had financial commitments and was concerned about his ability to meet these in the event his contract was terminated. For a time after he realised he would not return to football he was depressed. He had loved the game and still misses training and being a player. I should perhaps add that the passage of time would very probably have imposed those burdens upon him before the present in any event. 16 Since the injury the Plaintiff has suffered from constant neck pain. For 12 months or so he had fairly constant tingling or pain down his right arm, sometimes involving his right hand. The Plaintiff has learnt to moderate his activities so as to minimise these problems flaring up. Headaches and neck pain are normally cured with Panadeine Forte or Mersyndol and from time to time by massage and acupuncture. The medication is taken about once a month and the physical treatment about 3 or 4 times a month. In that connection the Plaintiff visited a chiropractor at a cost of about $50 a visit. 17 The Plaintiff does not play any sort of competitive sport, but swims, rides a bike and does light weight-lifting to keep fit. Long runs or waterskiing jars his neck and he does not pursue those activities. He plays tennis but is limited in what he can do in that regard if he is not to stir up his problems. He can drive a car for some hours without difficulty but after a period his neck becomes too tense and he has to swap with another driver. He also enjoys fishing. 18 Other options for treatment of ongoing problems in the Plaintiff's neck have been considered but he has elected to this time to adopt the conservative approach of exercise and strengthening his neck. There is nothing to indicate that any less conservative treatment is at all likely. 19 He does not do any of the physical building work associated with his properties. He gave evidence that because of his neck problems he could not return to work as a motor mechanic or in building construction. 20 At the instigation of the Plaintiff's counsel, a number of medical reports came into evidence. Some had not been served but there was no objection to these provided the Plaintiff was confined to his particulars and this was the basis of their admission. The reports tend to confirm the Plaintiff's complaints as to the impact of the injury upon him - which I accept - and persuade me that he suffered a significant strain of the upper cervical spine with probable ligamentous and intervertebral joint involvement and traumatic cervical spondylosis and that the symptoms he has suffered are all attributable to the actions of the Defendants. The reports also lead to the conclusion that the Plaintiff's symptoms are likely to continue and, combined with the Plaintiff's evidence as to his visits to the doctors, also indicate that he suffered some restriction of movement in his neck and should not engage in any activity involving repetitive heavy bending, stooping or lifting. The doctors' opinions confirm the Plaintiff's own evidence to the effect that he was compelled by his injury to give up competitive football. 21 As I have said, the Plaintiff said that he would probably go to England after he finished in the ARL. Evidence was called from a Mr Beavis, a professional sports manager, as to the Plaintiff's prospects in this regard and as to the remuneration he could expect. Mr Beavis expressed the view that the Plaintiff could have expected a contract or contracts covering 3 seasons commencing November 2001 with reasonable expectations of receiving remuneration of $400,000 per annum playing fee, other benefits worth some $55,000, (thought there would be costs associated with some of those other benefits) and bonuses. Mr Beavis also gave evidence of contracts and remuneration obtained by other players with whom he was involved and commented on the relative ability or standing of many of them and the Plaintiff and of other payments that are sometimes made. 22 Mr Beavis also gave evidence that persons such as the Plaintiff may also receive money as "image rights". I accept this evidence but I am not persuaded that in the Plaintiff's case this would have resulted in income (including capital receipts) in excess of the sum of $400,000 per annum. 23 Mr Beavis was cross-examined but no contrary evidence was called. I was satisfied that Mr Beavis was qualified to express the opinions he did and I am satisfied that I should accept what he said. That statement is subject to 2 reservations. Firstly, I do not accept that a past history of injury would be of as little significance as Mr Beavis seemed to suggest although I am satisfied that the Plaintiff's past history in this regard would not have been regarded as significant. Secondly, I do not accept that if the Plaintiff had been injured in England to the extent of being unable to play thereafter he would probably have been paid out his full contract sum. Mr Beavis' later evidence of payment for the season seems to me both more likely and to more accurately reflect his opinion. 24 I turn then to the various heads of damage under which the Plaintiff makes his claim. In doing so, I should add that, apart from qualifications specifically made, I accept the evidence to which I have referred.

General Damages 25 The injuries inflicted on the Plaintiff and their sequelae, while falling a long way short of many which this Court has to consider, are permanent and do and will prevent, or impose limitations on, a number of activities in which the Plaintiff would otherwise engage. They occurred to someone who obviously rejoiced in, and had put a great deal of effort into, his health and fitness. They also prevented him from continuing in a career for which he had a passion and which must have involved substantial satisfaction and reward in addition to that of a monetary nature. It must be recognised that the career was one that probably would have ended within a few years anyway but in one sense, given the position the Plaintiff had reached, that may have tended to exacerbate the loss. 26 I do not ignore the fact that to some degree there must have been satisfaction in the money or wealth-producing activities the Plaintiff has subsequently indulged in but, I suspect, this has primarily been advanced in time rather than arisen in consequence of his injury. 27 Counsel for the Plaintiff submitted that an appropriate award under this heading was in the range of $120,000 to $150,000. 28 Counsel for the Defendant submitted that by New South Wales standards $50,000 was a more appropriate figure. He also submitted that it was notorious that courts in states other than New South Wales tended to make lower awards than made in this State and I accept that that is so. However, I have no idea how much lower interstate awards, more particularly those in Victoria, tend to be and no figures were put before me to provide any guidance as to the extent of the difference. 29 I do not regard an amount of $50,000 as close to an appropriate figure. On the other hand, the range suggested by the Plaintiff's counsel is high, perhaps one third or one quarter or what might be thought appropriate in New South Wales for a quadriplegic or someone with severe brain damage. The injury to the Plaintiff was serious but I would not regard it as as high on the scale as those suffered by the persons just mentioned. The amount to be awarded under this heading should be $90,000.

Interest on Past General Damages 30 The claim under this heading was for interest at 2% per annum for 5 years on, say, $80,000, i.e. $8,000. No submissions were made in opposition, although it is obvious the principal sum to be included in the calculations is liable to variation in consequence of any change in the figure for general damages from that sought on behalf of the Plaintiff. Given the passage of time since the case was heard, the 5 years period should also increase. Except insofar as the Plaintiff's loss of his football career happened at or very soon after the time of the accident, there is little or nothing to indicate that the major part of the losses for which general damages are awarded happened prior to this, or indeed are not substantially proportional to time. 31 In these circumstances, I propose to allow this claim calculated at 2% for 6½ years on $50,000.

Past Out of Pocket Expenses 32 In light of the terms of the contractual provisions under which the Plaintiff played football, these were all met by his club and none are claimed.

Future Out of Pocket Expenses 33 A token or nominal amount only is claimed under this heading. There is no specific evidence indicating what expenses will be incurred although the injuries to the Plaintiff's neck certainly raise the likelihood that there will be some, e.g. physiotherapy, and the possibility that there will be others of a more significant nature. There was no opposition to the claim which in principle I regard as proper. I allow this component of the claim in the very modest sum proposed - $1,000.

Loss of Earning Capacity - General Approach 34 On behalf of the Plaintiff this claim is advanced upon the basis that the Plaintiff's capacity to earn income as a footballer was destroyed and damages should be assessed on the basis of what, prior to November 2004, he could have earned from this activity but for the injury. The end of November 2004 accords with the end of the 3 year period Mr Beavis opined that the Plaintiff could earn in England. No other claim is made for loss of earning capacity except for a cushion on the basis that the injury done to the Plaintiff by the Defendants has precluded some avenues of employment being open to him. 35 On behalf of the Defendants it is submitted that at the time of his injury the Plaintiff had 2 income earning capacities - one as a footballer and the second as a property dealer and developer. Although the injury may have destroyed the former, that fact afforded the Plaintiff increased opportunity to pursue the latter, the Plaintiff had done so and what he earned by so doing more than offset any damages flowing from his loss of earning capacity in the football arena. It was submitted that the Plaintiff had not shown a loss of overall earning capacity, certainly not a loss productive of damage. It is convenient to consider the 2 topics separately.

Loss of Football Earning Capacity 36 Accountants, Mr Brendan Halligan on behalf of the Plaintiff and Mr Watt on behalf of the Defendant, have prepared detailed reports containing calculations of various types designed to measure the financial impact of the injury on the Plaintiff and various aspects which, together, go to make up that impact. In a number of respects the reports are by no means easy to follow. 37 Apart from immaterial differences both accountants agree however on what the Plaintiff would have earned uninjured if he had continued to play football under his contract with Wests until its conclusion and, subject to a couple of assumptions, had then played for a club in England upon the terms given in evidence by Mr Beavis. Reflecting adjustments for income the Plaintiff's tax returns show he did earn during the years ended 30 June 2000 and 30 June 2001 from Wests Tigers Football Club, and certain work related expense figures also derived from the tax returns, the figures - set out on page 15 of Mr Halligan's report and page 17 of the schedules thereto and page 179 of Mr Watt's report - are:- Halligan Watt 1999/00 $96,016 $96,016 2000/01 $150,640 $150,640 2001/02 $213,744 $213,743 2002/03 $245,295 $245,295 2003/04 $245,868 $245,868 2004/05 $91,846 $91,846

38 The assumptions are that work related expenses would have been, while the Plaintiff was playing in Australia, similar to those recorded in his tax return for the year ending 30 June 2000, viz. $32,000 and, when playing in England, $55,000, an amount based on Mr Beavis' estimate of allowances for various expenses. These assumptions, and the base income figures of $300,000 in Australia and $400,000 in England I regard as reasonable subject to some allowance for vicissitudes. I should add that there was no suggestion during the hearing that the Plaintiff might have continued to play football after November 2004. 39 In the calculation of damages "vicissitudes" are normally confined to economic loss arising after trial and commonly allowed at a figure of 15% taking into account a working life to age 60 or 65. However, the nature of the Plaintiff's occupation was fraught with risks of injury. If injured in Australia, he might never have played in England at all or, injured in either country, had his playing career much attenuated. Although I am satisfied that the probabilities are that he would have gone to England, he might not have. I do not accept the submission that the demands and interests of the Plaintiff's own and extended family made it unlikely that he would go, leaving, as it was put, "the pleasant lifestyle he and his family enjoy(ed) on the Gold Coast to go and live in a miserable climate" but it does seem to me that there should be a discount from the result of the use of the figures referred to in the immediately preceding paragraphs and, notwithstanding the brevity of the period of earnings taken into account, this discount should be 10%. 40 Mr Halligan adjusted the figures I have tabulated above to take account of an amount of $55,000 per annum gross that he assumed the Plaintiff could have earned during the years following 30 October 2001. The $55,000 was arrived at as an approximation of the average earnings for Australian males at the time. Mr Watt carried out similar calculations, albeit starting from 16 March 2001 and using in addition to the $55,000, higher figures ranging up to $155,000. 41 In principle of course, the cessation of obligations to play and train for football freed up the Plaintiff to engage in other remunerative employment and therefore something should be allowed in reduction of any amount calculated simply from the matters previously referred to in this section of these Reasons. There is no reason to believe that any substitute income would have been at the rate of average weekly earnings but there is no evidence to provide any indication of what sum could or would have been earned had the Plaintiff not pursued the course he did and which is referred to below. He has demonstrated that he has and had quite considerable skills in the property and land development areas but the evidence is quite insufficient to demonstrate what those skills might be worth in any employment situation. 42 Were it necessary to come to a conclusion on this topic, I would take the view that the Plaintiff's capacity in an employment situation was worth double average weekly earnings. After all, it is notorious that those who are successful in the field of real estate are well rewarded financially and I am not persuaded the Plaintiff's remaining capacity in the circumstances contemplated was less than I have indicated. 43 Were it not for the conclusions reached below, I would calculate the value of the Plaintiff's lost football earning capacity by taking the average of the figures arrived at by the accountants, and making the allowances referred to in the immediately preceding paragraph and for vicissitudes.

The Plaintiff's land dealing and/or development 44 This topic took by far the major portion of the time spent by the parties on the topic of damages. While, as I have said, the Defendant contended that what the Plaintiff had derived from this activity more than offset any diminution in football related earning capacity, the contention advanced on behalf of the Plaintiff was that, for a number of reasons, whatever the Plaintiff had derived in this area was irrelevant and could not be attributed to the use of any earning capacity but rather to matters such as inflation, the use of capital and luck. However, before turning to these issues, it is desirable to canvass the evidence upon which the Defendant places reliance. Ultimately the vast bulk of it was not the subject of dispute. 45 There is no doubt that the Plaintiff has been very successful in dealing in and/or developing parcels of land. A number of statements of assets and liabilities signed by the Plaintiff were tendered and show his assets to be worth of the order of $30M (gross) and $15M (net) and though these raw figures of themselves support the argument of neither the Plaintiff nor the Defendant in this area, they do perhaps give some indication of the magnitude of the Plaintiff's activities. A statement of assets and liabilities as at 24 January 2001 supplied by the Plaintiff's accountant to the St George Bank asserted the former to be worth $9.4M and his liabilities $6.7M at that time. 46 In so stating the matter, I have ignored the distinction between the Plaintiff, his wife, and corporate and trust entities. The Plaintiff agreed that whether a project or property was purchased in his name, that of his wife or that of a company, he regarded all as being done on his behalf. He agreed that although a property on Chevron Island was in his wife's name he regarded it as his and accepted the suggestion that it was his money that was used in acquiring property in the name of another. It is clear that he was the moving force in the various purchases, sales and activities. It would seem that on occasions the party within the Plaintiff's camp who actually acquired a property was not the party who first contracted to purchase it. To ignore the distinction also accords with the decision of the High Court in Husher v Husher (1999) 197 CLR 138 where the Court looked at a plaintiff's ability to control and dispose of income, and not merely what he would have received. 47 The Plaintiff bought his first property at age 18, i.e. in or about 1988. He carried on activity in this area during his football career. He said that while it took some time he could fit it in with playing football. He gave as an example that when sitting on a team bus going to Canberra he would not read the form guides as 90% of the people did but read the real estate section of the Sydney Morning Herald. He would also look at records of comparable sales. He described also looking at the rental rates per square metre, selling prices and capitalisation rates for commercial property and negotiating. He might have obtained building inspection reports. He said that he had invested almost all of his football earnings in real estate. 48 As an indication of the Plaintiff's capacity to do other things while still pursuing a football career, it might be noted that for a period from about July 1998 to January 1999 he had a helicopter charter business. Although others operated the business, the Plaintiff played some role. He also was in control of, and overseeing, the refurbishment and building works effected at the "Wentworth Hotel" at Cessnock during the period October 1996 to February 2000. He oversaw the running f the hotel, visiting it in the order of twice a week. 49 However, at least in relation to many properties, the Plaintiff's activities have concentrated around buying and selling. He described building as hard work and agreed it contained an element of risk. He said he continually reviewed in his mind the value of assets held and said there were advantages in being able to turn property and money over rather than have funds tied up in one property for longer periods. 50 A convenient starting point in a consideration of whether, in the period during which the Defendants' actions deprived the Plaintiff of the ability to earn income from football, he benefited from the exercise of some other earning capacity is a schedule of transactions in which the Plaintiff was involved from 1996 to early 2005 and which I have annexed to these reasons. As stated in a note to the schedule, it is intended to provide merely a reasonable indication of the extent of the land purchases, sales and development with which the Plaintiffs was engaged. Furthermore, I have not thought it necessary in each case to indicate the profit derived. Sometimes the calculation is subject to too many possibilities to make the exercise worthwhile. 51 There were other "business" activities. A helicopter hire business has been mentioned. He also had a boat charter business employing at least a skipper of the relevant vessel who, according to the Plaintiff, organised everything. He took steps with a view to the acquisition of property other than that mentioned in the schedule, including one at Ogden St, Townsville. Properties "owned" at the time of injury 52 From a mere consideration of the summary, a number of features stand out. One is that at the time of his injury in May 2000 the Plaintiff owned, or had agreed to buy, 5 properties. They, their eventual sale prices and the profits made were:-

5/360 Vardeys Rd, Marayong $1.15M $265,000 81 The Esplanade, Cronulla $3.1M $800,000 41 Albatross Ave, Mermaid Beach $2.5M $1.3M 2-6 Evans St, Yorkeys Knob $320,000 Loss 1010/1 The Kingsway, Cronulla $640,000 $55,000

53 The property at Vardeys Road, Maryong (near Blacktown) was an industrial warehouse, purchased by the Plaintiff in 1996 or 1998 for $880,000 and sold in April 2003 for $1.15M. It yielded a rental income that varied but in was of the order of $100,000 to $127,000 per annum. 54 81 The Esplanade, Cronulla was bought by the Plaintiff and his wife in December 1998 for about $1.285. The property was leased for some time and then in about 2000, with a loan of some $900,000 obtained or negotiated in February 2000, the Plaintiff constructed 2 villas on the property. On 13 December 2000 contracts were entered into for the sale of the units for some $3.1M and these were completed in May 2001. 55 By contract dated 22 December 1998, the Plaintiff and his wife agreed to buy 41 Albatross Avenue, Mermaid Beach for a sum of $1.2M. The sale was settled in June 1999. The property is on the beach front at the Gold Coast. Council approval for the construction of 2 double storey villas was obtained in about September 2000 although there was then an appeal lodged by an objector. In that state of affairs and without being developed, the property was sold for $2.5M pursuant to a contract dated 11 January 2001. 56 A significant reason for the sale of 41 Albatross Avenue was concern in the mind of the Plaintiff and his accountant that, due to the loss of his football income, the Plaintiff could not meet the cash flow needs associated with all of the properties in which he had an interest. In so concluding, I do not ignore cross-examination on this topic particularly in connection with the availability of funds from the St George Bank. However, I am satisfied by the evidence of the Plaintiff and his accountant as I have indicated. 57 The property at 2-6 Evans St, Yorkey's Knob (near Cairns) was at all times a vacant block of land, bought by the Plaintiff in February 2000 for $320,000 and sold in late 2001 for the same price, resulting in a loss of the holding and other incidental costs. 58 The property at 1010 The Kingsway, Cronulla was a unit. In April 2000 it was agreed to be bought "off the plan"; it was paid for in January 2001 and resold in July 2002. The purchase price was $550,000 and the sale price approximately $631,000. It is not apparent whether it was the Plaintiff or his wife who owned it, or who had originally contracted to buy it. 59 In the ownership of these properties the Plaintiff thus had, at the time he lost his football earning capacity, an appreciable measure of capital. Furthermore, I see no basis upon which it can be suggested that the profits derived from the realisation of these properties was in any sense utilisation of an earning capacity in replacement for that lost due to the Defendants' actions. It may be that the Plaintiff's injury meant he had some more time available to be involved in the re-development of 81 The Esplanade, but the work in that regard was principally done by contractors and there is no evidence to indicate that any extra time was so used, or resulted in financial reward or that it contributed to the profit. 60 The profits derived from the development and sale of the Cronulla property and the sale of those at 41 Albatross Avenue and The Kingsway also provide a further indication that even when playing football, the Plaintiff had a capacity to earn significant income from land dealing or development. 61 A second feature that is apparent from a consideration of the annexed summary is the increase in the number of transactions that occurred in the 18 or so months after the Plaintiff's injury. In 1996 there had been 2 or 3 purchases. In the 4½ year period from 1996 to 2000 there had been a total of 8. In the approximately 19 months from the time the Plaintiff was injured to the end of 2001, there were 5. Although it may be inferred that the sale, pre June 2001, of 81 The Esplanade and 41 Albatross Avenue and in 2002 of the property at The Kingsway released to the Plaintiff funds to use, it is difficult not to think that the extra time his injury had made available to him, and probably the extra incentive arising from the fact that he no longer had a football income to rely on, were not contributing factors to this increase in activity. The different locations of some of the properties purchased do nothing to dispel this impression. 62 Although the number of hours in a day or a week spent in connection with playing football was not, I think, the subject of direct evidence, the Plaintiff indicated that, with the possible exception of breaks between the end of the season and the beginning of November and over Christmas/New Year, he trained every day. I accept the substance of this evidence although I also infer that training did not occupy all of most days. 63 Also relevant to whether freedom from football obligations led to the Plaintiff exercising to a greater extent an earning capacity in the land or development field are remarks made during the course of evidence and in some of the documents tendered. I shall refer to more of these below but it may be opportune now to refer to evidence the Plaintiff gave that after his accident "it" - I infer he meant some aspect of his life - was very tough. No one wanted to lend him money and he was struggling to obtain finance. His purchase of the Triangle Arcade occurred when he was "pretty desperate" and "trying to look for ways to better, you know, to start rebuilding, to go forward …". Later it was put to him that in late 2001 he was very busy investigating a number of investments and purchases. He responded, "I was trying very hard in 2001, yes". 64 Again however it is necessary to have regard to circumstances of the particular properties and of the Plaintiff's activities relating thereto.

Properties bought post-injury 65 In about July 2000 the Plaintiff and his wife entered into a contract to purchase a property at 57 Albatross Avenue, Mermaid Beach for the sum of $1.775M. The purchase was completed in January 2001. Like number 41 Albatross Avenue, this property is also on the beachfront and the 2 parcels of land are virtually identical. Having previously obtained approval to develop number 41, at the time of purchase the Plaintiff believed he could obtain carry out a similar development on number 57. 66 Conditional development approval was obtained on 21 December 2000. Construction of a 3 storey building containing 3 units commenced in the second half of 2001 and took something of the order of 12 months. During this time the Plaintiff acted as project manager and for at least some of the period was on site once or twice a month, travelling down from Port Douglas, or it may be Townsville, in this connection. 67 Completion of the sale of one of the units seems to have occurred at the end of 2002. Some of the documents indicate that the sale proceeds were $6.5M although Mrs McCracken's tax return and others indicate that one of the units may have been retained for at least a time as a residence, possibly with an eye to capital gains tax. On the basis of the sale of 2 units, for $4.2M, a profit of about $1.4M was declared. 68 On or about 19 January 2001, the Plaintiff's wife acquired property being Lot 144 Ferrero Rd, Port Douglas for the sum of $545,000. It was resold on or about 9 July 2001 for $590,000. The reasons for purchase are unclear. A memorandum of 23 May 2001 from Roxanne Gorman, an employee of the St George Bank says that the Plaintiff intended to reside there but a "Corporate Banking Unregulated Fixed Rate Loan" annexure to a letter of offer from the St George Bank dated 15 June 2001 describes the property as "an investment property". 69 On or about 15 May 2001 the Plaintiff's wife agreed to purchase the Triangle Shopping Centre on Chevron Island on the Gold Coast for $2.87M. It was sold about 12 months later for $3.6M for a profit of about $500,000. The Plaintiff gave as his reason for purchasing this property that he thought it a good strategy and it was income producing and had a good cash flow. The Plaintiff accepted that he signed the contract to purchase, albeit with a delayed settlement, without any offer of finance and it was suggested that he was taking a risk on being able to complete. He replied, "Yeah, I was pretty desperate at the time". 70 The documents do not make it clear how this purchase was financed. The deposit was paid by a cheque drawn on a St George account which was met but exceeded the Plaintiffs' arrangements with that bank. In the ensuing months the Plaintiff moved to the NAB. Correspondence of 9 November 2001, shortly before the purchase was due to be completed, to that bank suggests it may have been involved in providing finance and it was paid approximately $3.2M out of the proceeds of sale. 71 By contract dated 26 October 2001, the Plaintiff's wife bought a property at 36 Stanton Terrace, Townsville for $1.7M. It was sold for $2.5 in about August 2004 at the time of purchase of another property, viz. that at 89A Albatross Avenue, Mermaid Beach. While owned, it was a, if not the principal place of residence of the Plaintiff and his family. 72 Also in October 2001 the Plaintiff's wife acquired a property at 72-74 The Strand, North Ward, Townsville at a price of $3.2M. The purchase was settled on or about 30 April 2002. 73 By contract dated 31 May 2002, Crackers Corporation Pty Ltd as Trustee for the Crackers Family Discretionary Trust agreed to purchase for a sum of $5.4M a commercial building containing a mix of retail and office space known as "Northtown on the Mall" in Flinders Mall, Townsville. I shall say more below about this and the property mentioned in the immediately preceding paragraph. 74 At some stage during 2002 the Plaintiff acquired an option to purchase a beachfront property at 159 Hedges Avenue Broadbeach. He sold the option shortly afterwards without having to effect the purchase. Although at one stage he said that he had made a profit of about $100,000 on the transaction, when further cross-examined on 22 August 2005, he seemed to agree that he had made a profit of $500,000. (The figure of $4.5M, suggesting a profit of $1.5M, at page 38 of the transcript seems erroneous.) 75 In about August 2003, Seashore Projects (Aust) Pty Ltd as trustee for the Crackers Childrens' Trust purchased The Seaview Hotel, The Strand, Townsville for the sum of $6.9M. At about the end of October of the same year, the hotel was re-sold for the sum of $7.5M in conjunction with the sale by an associated company Jade Holdings (Aust) Pty Ltd for a further $2.5M of what was referred to as "Confidential Information" including council applications, at least some preparation of development plans, and surveys etc. in relation to a proposed development of 120 units on the property and adjoining premises and "in-principle" agreements from adjoining landholders. The Plaintiff agreed a lot of work was done on the project. Settlement seems to have occurred in December 2003. The Plaintiff's accountant agreed that apart from some consultants' fees (and tax) the $2.5M was profit. The Plaintiff gave evidence to the effect that it had been his intention to develop the site. A letter from his accountants dated 28 August 2003 said that they had assisted in undertaking due diligence (on purchase) and prepared budgets and concluded that the hotel was overstaffed, other expenses had not been addressed properly and steps were (now) being taken to improve turnover. Documents summarised below indicate that this property was largely acquired and held with the use of borrowed funds. 76 In May 2004, the Plaintiff was looking to increase, by $1.3M, a loan facility to assist with the purchase of a property in Ogden St, Townsville. By July of that year he seems to have abandoned that plan and wished to use the money for something else. 77 On 21 July 2004, Mrs McCracken acquired an option to acquire land at 89A Albatross Avenue, Mermaid Beach for the sum of $7.5M. The purchase was effected in October and she re-sold the property for $9M, completion occurring on 7 March 2005. 78 In July 2005, for a price of $4.5M a car park in Townsville was acquired with a view to redevelopment. The evidence does not disclose what has occurred in relation to this property since. Of course July 2005 is about 7 months after the Plaintiff's career in England would, on the basis of my findings, have concluded.

The Watermark 79 As I have said, in October 2001 the Plaintiff's wife acquired a property at 72-74 The Strand, North Ward, Townsville at a price of $3.2M, settling that purchase on or about 30 April 2002. The property, sometimes referred to in evidence as "The Hideaway", was a motel and restaurant and this use continued for about 2 years, albeit these activities were conducted by lessees. A letter from the Plaintiff's accountants of 29 July 2003 asserts that the rental income was then $208,000 per annum. The Plaintiff said that at the time of purchase he knew the property had a "good development side but he does not really like to build much". In July 2003 there seem to have been negotiations under way for the sale of the property at a price of $4M but at the time of the liability hearing in February 2005 it was still owned by Mrs McCracken and was described by the Plaintiff as a hole in the ground as an incident of the development of blocks of units known as "The Watermark". The Plaintiff estimated construction costs to be about $20M and in March 2005 believed that the property would yield in excess of $10M in development profits in the ensuing 9 months. 80 In a statement of assets and liabilities dated 8 April 2005, the Plaintiff valued the Watermark at that time at $10M, subject to a mortgage of $4M. 81 The evidence is sketchy as to details of the progress of the early stages of the development. In January and March 2004, solicitors and accountants were discussing the legal structure to be used in the development. In June 2004 there was an invoice from the Plaintiff for consulting services to which I refer in more detail below. In July 2004, Mr Vazey of Balmain NB Commercial Mortgages Limited mortgage brokers used frequently by the Plaintiff, recorded that one unit had been sold "from the sales board on the site with actual formal launch set down for this week". A credit submission of Mr Vazey of 18 August 2004 directed to obtaining funds for the development asserted that demolition of the existing structures was imminent, it was proposed that a commercial component of the development consisting of 4 units containing café restaurant facilities would be refinanced, contracts for 20 of the 46 residential units proposed for the site had issued, that all necessary approvals were held and development was ready to commence and that by 15 September approximately $750,000 would have been spent from the Plaintiff's own cash reserves on professional fees, site demolition and other preliminaries. A further letter from Mr Vazey, dated 24 August 2004, asserted that 10 contracts had been returned and deposits received. In principle credit approval from a lender issued on 26 August 2004. 82 In the case of this property also the evidence is not clear as to all the details of how it has been financed. A copy letter of 30 July 2002 from the NAB ("Leichhardt BBC") tends to indicate that 2 bill facilities totalling about $2.7M were then in place to assist with the purchase of the property, although one was to be discharged from the proceeds of the sale of Mermaid Beach units. The re-development of the property seems also to have been funded by loan funds, these being provided by Permanent Trustee Australia Ltd or LM Investment Management Ltd.

North Town on the Mall 83 The second property about which more must be said is the commercial building known as "North Town on the Mall" in Flinders Mall, Townsville, and which was acquired for $5.4M. It contained a mix of retail and office space although at the time of purchase, which seems to have been completed on 31 July 2002, many of the shops in the property were vacant and, according to a memorandum of 26 June 2002 from the Plaintiff's accountant, the net rental return was $750,000. The first reference to the property in the documents in evidence seems to be part of a contract of purchase dated 31 May 2002. An internal NAB memo of 12 July 2002 indicates that the Bank provided funding to the extent of $5.7M. Documents in Exhibit 2 dealing with the provision of finance, many of which are referred to below indicate that other expenditure in connection with this property was also wholly or substantially effected with the use of borrowed funds. 84 Again the evidence is somewhat scant as to detail, the timing of events and the Plaintiff's participation in them. However, it is apparent that the value of the property has increased significantly and that the Plaintiff was involved substantially in the activities that led to that increase in value. 85 In December 2002 the local Council wrote to the Plaintiff advising him that "your tender" for the new City Library and Office Accommodation had been successful. In a valuation report of 18 August, referred to below, the Library was referred to as an anchor tenant, then paying some $450,000 per annum. 86 A letter of 15 October 2003 from Taylor Byrne, a firm of valuers recorded that renovation works to the first floor had been completed and on the ground floor works to the internal mall and upgrading of the escalators was nearly complete, the bulk of the new retail shopfronts were in place and the new air-conditioning system was operational. In the letter Taylor Byrne updated, but did not increase, a valuation made in May 2003 of $13.5M on completion of the renovation works.

87 The letter also observed that since a prior valuation in May 2003 there had been the provision of an additional 80 sq. metre tenancy to Level 1 as a result of re-development and that management expenses would decrease as a result of building and management system upgrades. 88 The upgrading of the premises included a $1.2M air-conditioning unit and an $80,000 fit-out for the library. 89 A letter from Ingenuity Mortgage Solutions of 19 May 2004 refers to the "hard work of Jarrod renovating and obtaining quality tenants" and showing some poor tenants the door, thereby enabling him to develop the downstairs into an eatery area, and effect a reduction in electricity and air-conditioning expenses and an increase in car-park and air conditioning revenue. Ingenuity Mortgage Solutions would seem to have been a firm of mortgage brokers engaged by the Plaintiff. 90 A letter of 26 July 2004 from Mr Vazey contained the observation that the Plaintiff was "controlling the management of the centre from his office located on the first floor and (has) a very pro active hands-on approach for the continuing success of the centre". In evidence the Plaintiff acknowledged that he could have given this information to Mr Vazey, saying that he liked to have involvement in anything he had. 91 In a valuation dated 18 August 2004, a firm of professional valuers FPD Savills remarked that upon completion of the work the property would include 26 retail shops, a basement largely devoted to parking, a mezzanine floor and 5 floors of offices. Works completed to date included major refurbishment of the first mezzanine floor, including new carpets, good quality internal fit out to new tenancy areas including floor to ceiling glass shop front, new ceiling panels, re-location of two escalators for access from the ground floor to the first floor, refurbishment to the majority of office accommodation and upgrading of the air-conditioning ducting and plant. By the time of completion of the upgrade, which is said to be due by the end of 2004, some $3.5M would have been spent on it. The value placed on the building was $15M. 92 In the valuation FPD Savills said that they had been "advised the owner is being selective upon proposed tenant mix as he wishes to maximise pedestrian flow …". They recorded that there were then 10 retail tenants in occupation, 9 under current lease arrangements. FPD Savills also listed outgoings "as supplied by the property manager" - I infer the Plaintiff. Totalling some $449,000 these included an amount of $60,000 for management costs. On 6 November 2004, the Plaintiff wrote to ING Australia Limited - 2 associated companies were referred to in the valuation as persons who could rely on the report - saying that the $60,000 management costs were "not a present day expense, as all management of the property is undertaken by myself". 93 By September 2004 the rental income seems to have increased to approximately $1.6M gross and $1.25M net. An annexure to a credit submission of 3 September indicates that about 20 parts of the premises were then let. 94 In a statement of assets and liabilities dated 8 April 2005, the Plaintiff valued the property at $15M although noting it was then subject to a loan of $10,295,000. In evidence he agreed that, when fully tenanted, he expected the property would yield $2.1M net of outgoings. 95 Over-simplifying, on the basis of the figures mentioned, for an expenditure of $8.9M ($5.4M + $3.5M) the Plaintiff has acquired an asset worth $15M. Of course, other costs such as stamp duty, running costs and interest (offset in part by rent) have to be taken into account in any attempt to deduce whether there has been any profit made from the venture. However, what strikes me as likely to be the largest of these, interest, seems not to have exceeded the income by any significant extent. 96 I should add that the parties did not attempt this exercise, but in light of the way in which it seems to me the Plaintiff's property dealings should be approached, I have felt it necessary to make some attempt to derive some idea at the profitability of this venture and, as an incident thereof to consider this interest issue. The Plaintiff tended not to keep separate the funds used in, or borrowed against, one particular property and in the case of the Northtown on the Mall property there is no simple piece of evidence that provides any persuasive indication. Relevant information contained within the evidence includes the following:- Description Amount Document Ex 2 Net rental income $750,000 F, M & K letter 26/2/02 373 Gross passing $1,139,452 NAB internal memo 12/7/02 376 rental income Annual outgoings $602,069 NAB internal memo 12/7/02 376 NAB Interest rate Below 8.15% Copy NAB letter 30/7/02 380 Gemi Interest rate 12.5% Gemi letters 24/12/02, 6/3/03 401 407 NAB & other Interest rates Approx 6.4% on $3.75M and 10% on $1.6M Statement of Assets & Liabilities 409 Sundry, including a statement that $2M fit-out is required and accounts which tend to show no substantial capital expenditure pre 3/3/03 F, M & K letter 16/5/03 408-416 Gemi Interest rate 14% Gemi letters 11/8/03, 19/8/03 427 429 NAB Loan $5.3M NAB letter 11/9/03 448 ING Loan principal sought $10.125M ING Loan Interest 2% above bank bill rate - 6.95% Credit submission 454- Borrowing costs Plus $100,000 Gross rental income - much renovation work completed $1.306M Taylor Byrne letter 15/10/03 473 Estimated operating costs $500,000 Taylor Byrne letter 15/10/03 477 ING Loan made $9.75M Plaintiff's letter 7/11/03 480E NAB Repaid NAB Letter 26/11/03 490 ING Loan Principal $8.75M ING Loan Interest 7.25% NAB Loan Principal $1M Credit Submission for the Watermark 570 NAB Loan Interest 7% Total Interest $704,000 Net (rental) Income $950,000 Credit Submission for the Watermark 570 Net passing income $930,000 578 FPD Savills Valuation. 18/8/04 Outgoings $449,000 607 Annual Rental Income $1.248M 695 F, M & K fax 6/9/04 Estimate outgoings YE 30/6/05 $337,000 696 $1.125M 736 Net Income ING Credit Submission 4/11/04 $930,000 740 Interest Rate 2.15% above bank bill rate - 7.6% ING Credit Submission 4/11/04 736

97 Although most of the above information relates to the Northtown on the Mall, not all does. However, all provides some indication, or confirmation, of figures which may be used in an attempt to make some assessment of the profitability, or otherwise, of the Northtown on the Mall venture. Accepting that some assumptions have to be made and that the result is not precise, the following gives some indication of the order of interest paid in connection with the property:- Principal $5.6M ($5.4M + $200,000 costs) from 31/7/02 to 30/7/03, of which sum $3.75M is borrowed at 6.4% and the balance at 10% - Simple Interest = $425,000 Principal $6.8M ($5.6M + $1.2M (1/3 of $3.5M)) from 31/7/03 to 30/11/03, (4 months) of which sum $3.75M is borrowed at 6.4% and the balance at 14% - Simple interest = $222,333 Principal $9.75M (ING) from 30/11/03 to 30/11/04, borrowed at 7.25% - Simple interest = $706,875 98 (Lest it be thought I have overlooked them, I should probably expressly recognise that the principal costs of $5.4M and $3.5M obviously fall appreciably short of the $9.75m borrowed from ING and the $3.5M was undoubtedly paid progressively through the period until the renovations were completed, apparently at about the end of 2004. Indeed some of the $9.75M would seem to have been invested on deposit with the NAB for some period.) 99 As I have said, there were undoubtedly other costs, including additional fees charged by lenders and possibly brokers, some in the range of tens of thousands of dollars - see e.g. Ex 2 pages 437, 447, 451, 470, 471. However general experience, and the lack of evidence suggesting these were, relative to the figures to which reference has been made, substantial, lead me to the conclusion that the profit from the Northtown on the Mall acquisition and development will be of the order of $5M or more. When combined with the capitalisation rates of about 10% used by FPD Savills, the Plaintiffs' evidence that, when fully tenanted, the property should yield $2.1M net of outgoings, suggests the profit will indeed be much more than $5M.

Personal Activity by the Plaintiff 100 One issue that was raised both in argument and evidence was the extent to which any activity or personal involvement by the Plaintiff had contributed to the increase in wealth indicated by the above figures. I have referred to some of the evidence bearing on this topic but more should be mentioned. 101 The Plaintiff said or agreed that he expended some effort in but the tenor of his evidence was that this effort did not involve a large amount of time. 102 He accepted that sometime he spent a lot of time working on the Seaview project but, asked for more specificity, he said that he had organised an architecture firm to consider the site and what could be done with it and retained the surveyors. He also oversaw the day to day running of the hotel business. 103 At one stage the Plaintiff said that he thought the Sea View Hotel and North Town on the Mall were his principal business interests in 2003 but added that the time he was spending on the North Town development was (only) a few hours per week. He claimed that a deal of what was required could be effected by emails and phone calls. He agreed that he had researched the Watermark project very carefully before he went into it. 104 Mr Crofts agreed that the Plaintiff himself carried out most of the "due diligence" carried out in the investigation of properties. - T99 on 23/8 105 One further item of evidence to take into account is the fact that the Plaintiff has been paid or credited with a salary. An invoice dated 29 June 2004 was raised in the Plaintiff's favour. Directed to Coastline Constructions (Australia) Pty Limited, the company engaged in the re-development of the Watermark, the invoice claimed an amount of $170,000 plus GST for:- "Professional consulting services rendered for the period 1 September 2003 to date in regards to co-ordination of all necessary pre-construction tasks in relation to development project "the Watermark", 72-74 The Strand, Townsville." 106 The invoice was raised on the suggestion of Mr Crofts, the Plaintiff's accountant, for the Plaintiff's time, effort, skill and knowledge in putting The Watermark project together, although it was not Mr Crofts but the Plaintiff or his secretary who determined the amount. The Plaintiff acknowledged that this was not the first such invoice. 107 In an endeavour to gain some further indication of the extent of the Plaintiff's own activity, and due to the paucity of direct evidence in this area, it seemed worthwhile to reflect on the extent and frequency with which finance was sought in apparently busy parts of the period with which I am concerned. The following summary is to be gleaned from the documents included in Exhibit 2.

Borrowing activity 10/1/02 Letter from Gemi P/L advising of the effecting of a loan of $350,000 15/1/02 Further letter from Gemi P/L discussing existing and proposed loans.

5/3/02 Letter Fleming Moynihan & Kay to NAB advising of the Plaintiff's intentions concerning use of proceeds of Mermaid Beach units.

30/7/02 Letter from Gary Mangan of NAB to the Plaintiff advising of approval or existence of 8 different finance facilities in various amounts and with various expiry dates.

13/9/02 Letter from Fleming Moynihan & Kay detailing balance and at least 7 loans made at and since 1/7/01 to 30/7/02 and enquiring as to Plaintiff's future requirements.

2/12/02 Letter from NAB advising as to disposition of $3.8M received on sale of units 1 and 2, 57 Albatross Avenue to 6 different accounts or facilities with the bank. 29/7/03 Fleming, Moynihan & Kay P/L prepared a submission "To whom it may concern" seeking additional facilities of $11M,

• $2M for the refurbishment of Northtown on the Mall, - $2M to pay off a debt to Gemi P/L and assist in the purchase of Northtown on the Mall and a deposit on Seaview, and - $7M to purchase the Seaview Hotel

18/8/03 The Plaintiff wrote to Gemi P/L agreeing that his current facility would increase by $1M and that all moneys owed by himself would be repaid by 30 September 2003.

28/8/03 Fleming, Moynihan & Kay P/L wrote to Balmain NB saying that the Plaintiff would withdraw $1M from residential property, $1.35M from Northtown on the Mall and provide $650,00 in cash to acquire the Seaview Hotel.

4/9/03 Minutes of a resolution of Equititrust Ltd's credit committee resolving to approve a loan of $4.5M to purchase the Seaview Hotel.

11/9/03 The Plaintiff spoke to NAB enquiring as to the extent of facilities used.

15/9/03 Minutes of a resolution of Equititrust Ltd's credit committee resolving to approve a loan increase of $1M to provide working capital in connection with the Seaview Hotel.

24/9/03 A credit submission prepared by George Vazey and Noel Pennell of Balmain NB Commercial Mortgages Ltd addressed to ING Funds sought a loan of $10.125M for 3 years to assist with refinancing of Northtown on the Mall, consolidate debt by, inter alia, paying off the NAB and Gemi P/L and providing $0.825M surplus.

2,3/10/03 Correspondence from Gemi P/L canvassing the topic of repayments and fees in a number of eventualities. It seems clear that the plans in the 18 September letter had not come to fruition.

15/10/03 Taylor Byrne wrote to ING Funds Management P/L updating, but not increasing, their valuation of 28 May 2003, including details of the tenancies and rents, and a breakdown of estimated operating expenditure.

29/10/03 Letter from Noel Pennell to ING pursuing the loan of $10.125M and dealing with concerns that had been raised.

6,7/11/03 Plaintiff signs a number of documents in connection with the ING loan

18/11/03 Minutes of a resolution of Equititrust Ltd's credit committee resolving to approve a loan increase of $4.1M to $9.6M to re-finance the NAB and provide working capital.

24/11/03 Letters from Gemi P/L to the Plaintiff canvassing a number of aspects of the financial arrangements between them.

19/5/04 Letter from Ingenuity Mortgage Solutions P/L re increasing a $10,075M facility by $1.3M to assist with purchase of a property called Ogden St, Townsville.

22/7/04 Further letter from Ingenuity Mortgage Solutions P/L re use of the further $1.3M for a purpose other than the purchase of Ogden St.

26/7/04 Letter from George Vazey to ING advising that the Plaintiff has given Balmain NB a mandate to put together the funding for the Watermark development.

5/8/04 Statement from Equititrust for the period 1/7/03 to 30/6/04 showing, inter alia, the following capital advances and repayments:-

05.09.03 $4.358,000 Solicitors 15.09.03 $943,000 Crackers Corp 12.11.03 $900,000 Crackers Corp 19.11.03 $2,100,000 NAB 19.11.03 $882,000 Crackers Corp 15.12.03 ($5,400,000) From Seaview

18/8/04 A credit submission prepared by George Vazey and Noel Pennell of Balmain NB Commercial Mortgages Ltd addressed to LM Investment Management Limited sought a loan of $24.8M for 18 months to assist with the development of the Watermark, including paying $2M to NAB, and covering construction and costs of $18.6M and providing $1.8M surplus.

18/8/04 FPD Savills' Valuation of Northtown on the Mall, including tenancy and rent details and anticipated capital expenditure and operating expenses.

24/8/04 Letter from George Vazey to Allan Kerr, a recipient of a funding proposal for the Watermark, and envisaging discussions with the Plaintiff.

26/8/04 Letter from George Vazey to the Plaintiff advising approval in principle for the construction facility from Permanent Trustee Australia Ltd (which seems to be associated with LM Investment Management Ltd

31/8/04 A credit submission prepared by George Vazey and Noel Pennell of Balmain NB Commercial Mortgages Ltd addressed to Challenger Managed Investments Pty Ltd sought a loan of $4.875M for 5 years to assist with the purchase of 89A Albatross Avenue.

9/9/04 Letter from Gemi P/L agreeing to a $2M line of credit to the Plaintiff for 18 months

16,17/9/04 The dates of some documents incidental to the loan for the Watermark, signed by the Plaintiff

6/11/04 The date of some documents incidental to the loan from Challenger Investment Management, signed by the Plaintiff.

4/11/04 A credit submission on the letterhead of ING mortgage Funds seeking an increase of $1.5M in a loan of $8,775,000 in order to repay Equititrust loan.

23/11/04 Letter dealing with minor complications to purchase of 89A Albatross Avenue, indicating discussions with Plaintiff. 108 General experience leads inevitably to the conclusion that the nature of the Plaintiff's activities was such that the obtaining of finance and the ability to regularly service it were vital. No doubt at times he relied on the assistance of others, including his accountant, but the importance of the topic and the Plaintiff's own evidence as to liking to be involved lead me to have no doubt that the obtaining of finance was something with which the Plaintiff regularly concerned himself and which occupied some appreciable amount of time. 109 Furthermore, it is a reasonable inference, which I draw, that in connection with the pursuit of finance on all or almost all of the above occasions, the Plaintiff would have had contact with one or more of mortgage brokers or solicitors acting on his behalf and often would have been involved in the supply of information necessary to make any application attractive and given some consideration of the terms likely to be available. It is a reasonable inference also that there would have been over the years not inconsiderable contact with his accountant.

Conclusions - The Plaintiff's land dealing and/or development 110 On the basis of the evidence to which I have referred, a number of conclusions seem to me to flow. 111 Firstly, the Plaintiff does have an income earning capacity in the field of land dealing and development. The skill, flair and results the Plaintiff has demonstrated in that field reflect an income earning capacity just as much as did his skill and results on the football field. 112 Secondly, he has had, and has employed, that capacity throughout the period since 1996. 113 Thirdly, I have no doubt that, uninjured, the Plaintiff would have continued to pursue an activity of land purchase and development. 114 Fourthly, since his injury he has employed that capacity far more than he did beforehand. Probably that fact is at least in part due to the fact he has had more time available and no football demands but the increased employment of the capacity certainly was contributed to by the consequences of his injury, and the need to replace his football income. Included in the factors that lead me to this conclusion are the Plaintiff's evidence to the effect that, post injury, he was trying harder to make money in the land dealing and development area. The increase in frequency and extent of activity is probably in part a reflection of this. 115 Fifthly, the use since his injury of that capacity has been very profitable. The profits flowing from, or contributed to by, it have or will include amounts in the order of:- (i) The Triangle Arcade - $500,000 (i) The Watermark - on the Plaintiff's estimate, something in the order of $10M in development profits. (ii) Northtown on the Mall - in the order of $5M or more (iii) The Seaview Hotel and activities associated with it - of, or in excess of, $2.5M. 116 Even if these figures do not reflect accurately all of the costs that have been incurred in relation to those properties, the figures are sufficiently large that it is impossible to conclude other than as stated in the first sentence of the immediately preceding paragraph. 117 Sixthly, some of the profits derived since the Plaintiffs' injury, particularly some of those derived from properties other than those just mentioned, cannot be said to be the result of his injury. I include in these the profits derived from the realisation of properties acquired prior to his injury in May 2000. As I have said, I see no basis upon which it can be suggested that these profits were in any sense utilisation of an earning capacity in replacement for that lost due to the Defendants' actions. 118 If they are considered individually, it is also impossible to conclude that the acquisition or development of a number of the after acquired properties was, in whole or in part, a consequence of the Plaintiff's football injuries. The property at 57 Albatross Avenue falls into this category. The Plaintiff's experience with 41 Albatross Avenue, liking for beachfront property, and familiarity with Surfers Paradise is quite sufficient to account for the Plaintiff's dealings with 57 Albatross Avenue, particularly having regard to the time it was acquired. 119 The factors mentioned in the immediately preceding paragraph also bear on the Plaintiff's involvement with 159 Hedges Avenue and 89A Albatross Avenue although one should recognise that if, as I think probable, the plaintiff had been playing football in England in 2002 and July 2004, the prospects of him hearing of the availability of these properties would probably have been less and perhaps non-existent. 120 The evidence does not permit of any conclusion whether the dealings with the Ferrero Rd property were, in whole or part, a product of the Plaintiff's injury. Probably the same remarks can be made in relation to 36 Stanton Terrace, Townsville. 121 The purchase of the Triangle Arcade was the Plaintiff's first venture into that sort of property and his remarks about his situation and motivation at the time of purchase certainly raise a question whether, had he not been injured, he would have acquired it. It is impossible to conclude that its acquisition was not, at least in part, a consequence of his injury. 122 A similar question arises prominently in relation to the purchase of the 3 properties, 72-74 The Strand which has become the Watermark, North Town on the Mall and the Seaview Hotel and the re-development of the first two of these. A subsidiary question is whether, even if all of these purchases and re-developments had occurred, the re-developments would have occurred at about the time they did. 123 The time of purchase of the Watermark, October 2001, means that the Plaintiff may well have heard about and acquired it when he did. Its rental income means the Plaintiff could probably have bought and held onto the property until his football career ended. 124 However, the time of purchase of Northtown on the Mall and the Seaview Hotel, July 2002 and September 2003, when the Plaintiff would on my findings have probably been in England argues against the likelihood of the Plaintiff then acquiring them. Indeed, I think the probabilities are that he would not have. For there is not only the issue of him hearing about them. There are also issues such as the investigation of what they were and had to offer and, in the case of the Seaview, a preference which the Plaintiff acknowledged he had for being able to keep an eye on cash businesses. I doubt if the Plaintiff while in England could have done whatever it was that enabled the latter to be sold with the "Confidential Information" that yielded or helped to yield the $2.5M profit. It is improbable that the Plaintiff could have put in train the redevelopment of Northtown on the Mall while resident in England and great doubts exist whether his lenders would have advanced the funds to an absentee developer. Whether the property would have justified purchase with a view to being held for a year or so until the Plaintiff returned from England I find it unnecessary to decide. 125 In the case of these last mentioned properties, the conclusions at which I have arrived are that, if the Plaintiffs' football career had continued as his claim involves, probably neither would have been acquired and, even if either was, redevelopment of the one would not have commenced and the profit on the other not derived, until at the earliest the Plaintiffs' return from England at about the end of 2004. 126 In any event, the Plaintiff bears the onus of proof of showing that he has suffered loss through impairment of his earning capacity. In the circumstances of this case that involves persuading me that the probabilities are the opposite of those stated in the immediately preceding paragraph. Even if the conclusions there expressed are not positively justified, the Plaintiff has failed to persuade me of the opposite. He has also failed to persuade me that the Triangle Arcade would have been purchased and its profit derived had his injury not occurred. 127 The profit derived from the Seaview Hotel and the transaction associated with it is itself substantially in excess of what the Plaintiff lost through inability to continue playing football. So is the profit to be derived from the development of Northtown on the Mall. Of course, if one concluded that the Plaintiff would have acquired Northtown on the Mall and merely deferred re-development of it, it may be only a case of profit being delayed not lost. However, the figures are such that even a delay in the receipt of profit would have a significant operation in off-setting the Plaintiffs' football income. And there is also the profit on the Triangle to be taken into account. 128 I do not forget that in GIO v Johnson (1981) 2 NSWLR 617 at 627, Hutley J said "Where a person has capital employed in a business, it is necessary to split his earning capacity from his income" - a passage quoted with approval by Finlay J in Pennington v Inverell Municipal Council (Unreported, Finlay J, 24 September 1992) - that my enquiry must be directed to the Plaintiffs' earning capacity and not simply to his income, and that so far I have not made that distinction. See also O'Loughlin v Cape Distribution Ltd [2001] EWCA 178. 129 However it is clear that the profits, realised and unrealised, arising from the Triangle Arcade, Northtown on the Mall and the Seaview Hotel have in large part flowed not from the employment of capital possessed by the Plaintiff or under his control but from funds he has borrowed for the purposes. The same remark may be made in respect of the Watermark, although in making it I do not forget the distinction I drew a short time ago as to the probabilities of purchase of this property. To the extent to which this has occurred, it seems to me appropriate to regard the profits from the 4 properties as flowing principally from his earning capacity rather than from the employment of capital and this even if - and I am not sure this is the case except to a minor extent - without some injection of capital by him, the borrowings could not have been made. 130 Were there a greater degree of equality between on the one hand the employment of capital possessed by the Plaintiff or under his control and on the other the totality of monies he borrowed and his entrepreneurial activity and skill - and this whether one looked at the 4 properties referred to in the immediately preceding paragraph individually or in aggregate - it would be necessary to attempt more analysis than I have done. However, in light of the relativity in those matters that exists and the extent of the profits made on the Triangle Arcade, Northtown on the Mall and the Seaview Hotel, I do not fell it necessary to carry out this analysis. 131 Indeed on one view it could be said that all of the profit is attributable to, and should be regarded as reflective of, the Plaintiff's earning capacity. All is the result of his decisions to purchase and then do various things with the properties and just as an interference with earning capacity may have an impact on the usability of capital or a capital asset, particularly in the short term, as is recognised in Luntz, Assessment of Damages for Personal Injury and Death (4th Ed, 2002) at 5.5.4, and damages recovered for the loss of use, so it may be argued may the productivity of capital be said to be attributable to the exercise of an earning capacity. However, I need not so decide. Even if some of the profits should be regarded as attributable to the employment of capital or the engagement of others such as architects, I would nevertheless conclude that the major causative factor in the derivation of the profit was the Plaintiff. Looked at from another perspective he, and not capital, was the cause of the vast bulk of the profit. In the exercise of labour and skill that was an incident of the Plaintiff's earning capacity in land dealing and development, he made the decisions that led to the profits, including the decision to purchase, borrow, engage others, obtain plans and sell or redevelop. 132 In this connection, I accept the Plaintiff's evidence to the effect that in his land dealing or development activities, he does not work what one would regard as full time and that much can be achieved over the telephone. However, I am not persuaded that the time involved is as low as the Plaintiff's own evidence would suggest. The size of the developments the Plaintiff has undertaken must have involved considerable consultation with many, many people. It is impossible to believe that, playing in England, the Plaintiff could not have put into the Northtown on the Mall project the time other evidence indicates he did. 133 I should perhaps add, particularly for the benefit of any other court that has to consider the matter that, although my impression of the Plaintiff was that he was a generally truthful witness, I do wonder whether he tended to downplay certain matters. An example is his evidence given on 15 February 2005 as to his wealth. That evidence is impossible to reconcile with documents he had signed or with what he said when cross-examined on such documents on 23 August 2005. The Plaintiff's explanation for the discrepancy is also not easy to accept. 134 Mr Gross QC, counsel for the Plaintiff, submitted that I could draw no inference from the fact or the amount of the invoice and it should be treated as simply a means for the Plaintiff to obtain back money from a corporation he controlled. It was submitted alternatively that the fee encompassed the Plaintiff's whole role, including the risk element. I see no basis for concluding that the amount charged reflects more than the reasons advanced in the invoice. 135 However, before leaving the topic, there are some other matters to which I should refer. It was the primary submission of Mr Gross that the court "can't look at capital gains", "market movements" or "the labour of others" and that the profits made by the Plaintiff fell into one or more of these categories. He submitted that at least part of the reason why capital gains could not be looked at was that neither juries nor courts could competently make a distinction between the various elements - including time, energy, resources, decision making, labour of others, and general or particular inflation that contributed to any gain. It was, so the submission went, inherently impossible to look at a capital profit, subtract other factors, and thus establish what was left as being the value of a person's "entrepreneurial skill or luck". 136 Although later Mr Gross seemed to retreat to some degree from this, at one stage he also submitted that there was no extra earning capacity released by reason of the Plaintiff's injury; the extra time freed up was of no use to the Plaintiff in his investment or development activities and even remaining in Australia rather than going to play football in England was of no advantage in this connection; although the Plaintiff may have had more time available through not playing football and that might have allowed him to indulge in more transactions, these could be good or bad and that was a matter of luck, and the end result if successful would be a capital gain. 137 Mr Gross also submitted that if the professional architect, builders and others engaged by the Plaintiff exercised due care and skill in doing their jobs, the Plaintiff's presence might give him more peace of mind but would not add value; and even if one took the view that the Plaintiff's absence from Australia playing football would have made some developments harder, and that they would have been deferred, the only consequence was that such gain as he had or was likely to derive was advanced. 138 I have summarised at a little length these submissions but most suffer from the fundamental fallacy that they ignore the elementary principle that in assessing damages a court is required to do the best that available evidence allows and not simply adopt the view that because precision is impossible, give up the task. If events, including profits or losses, are the product of a number of factors including an earning capacity or loss of it, and earning capacity or a loss of it is something a court is required to assess, difficulty - inherent, not one attributable to a party's failure to advance relevant evidence - is not a reason for not coming to a conclusion. 139 In support of his claim that the court "cannot buy into the capital profit at all", Mr Gross cited an American textbook "Handbook on the Law of Damages" by Charles McCormick, where it is suggested that where loss has been the product of both labour and capital, one looks to see which is predominate. Thus at paragraph 87 it is said:- "If he (the injured plaintiff) is the owner of a business, however, it is only where the profits of a business are chiefly dependent upon the plaintiff's own efforts and not upon capital invested or the labour of employees that the courts will permit evidence of the past profits and their diminution during plaintiff's absence from business to be used to show the value of time lost."

and later, "In most states the courts … have said that, if the business is one where the predominant element in producing the income is the plaintiff's own efforts, then the earnings of the business may be shown, but if the greater income-producing elements are the capital invested or the labour of others, then the evidence of profits must be excluded." 140 The logic of looking at, and presumably making some measurement or assessment of, the relative importance of a plaintiff's efforts on the one hand and capital and employed labour on the other for the purposes of determining which is predominant but then adopting different methods of valuation of those efforts is not apparent. But whatever be the situation in the United States, I am satisfied that the approach I have adverted to above is the correct one. 141 It is supported also by the decision of the English Court of Appeal in O'Loughlin v Cape Distribution Ltd [2001] EWCA Civ 178. There the trial court had been required to assess, pursuant to the Fatal Accidents Act, the loss suffered by the family of an entrepreneur in property dealing, whose success the Court regarded as due both to his efforts and flair and his use of capital. It was held that the loss was capable of being valued in money terms and, in that case could be done by accepting evidence as to how much it would cost to replace the deceased's skills with those of another person. The Court also regarded it as proper to look at the totality of the deceased's accumulation of wealth and not merely the moderate salary he had paid himself. 142 The Plaintiff in this case had an income earning capacity in land dealing and development. Such a field of activity uses capital, albeit often borrowed but it also uses skills inter alia in judging what to buy, in deciding what do to with what is bought, in obtaining the funds with which to buy and at times re-develop, and in deciding who to employ to assist in these activities. Not all those who follow the road the Plaintiff has are successful and to suggest that the Plaintiffs' success is simply due to capital gains, market movements, the labour of others and inflation is simply wrong and ignores the fact that it was the Plaintiff who largely put these other elements or people together and more particularly made the decisions to purchase and otherwise deal with the properties. And even the contribution of capital may be considered of little weight if it is all borrowed. 143 Although for obvious reasons he was unwilling to state it so baldly, it seemed to me that the substance of many of Mr Gross' submissions was that the Plaintiffs' success has been due to everything else but the Plaintiffs' skill and earning capacity. The proposition has only to be stated to be rejected. 144 Mr Gross also submitted that if, nevertheless, the conclusion was reached that the cessation of football had freed up some time for the Plaintiff to earn income in some other capacity one still would not make any deduction because the Plaintiff had not chosen to exercise that capacity and, given the Plaintiff's record of property dealings, one could not reasonably have expected him to go into some other conventional type of employment. If some allowance had to be made, an appropriate allowance was of the order of $1,000 per week, a sum which approximated average weekly earnings in the community. In light of conclusions reached above, it is unnecessary for me to pursue these topics. 145 I should acknowledge that in much of what I have said I have tended to single out the Triangle, the Seaview Hotel and Northtown on the Mall. I have done so because they seem to me the properties productive of profits most likely to be a result of the Plaintiffs' football injury and/or not to have been derived had he gone to England. I have put aside as not bearing on the issue the Plaintiffs' land dealing and development activities carried out or in train at the time of his injury and I accept that, whether or not he was injured, similar and fresh dealings would almost certainly have continued and been productive of profits. However, in circumstances where precision as to what would have occurred had the Plaintiff not been injured is impossible, this consideration seems to me adequately taken account of by my ignoring, or more precisely, putting to one side, the profits derived on other properties acquired post-injury. 146 The question, so far as the period for which the Plaintiff claims damages for loss due to the reduction in his football earning capacity is concerned, is whether his earning capacity in the field of land dealing and development has been productive of more financial gain than it would have been had his injury not occurred, and if so, either by how much or whether in an amount that exceeds the loss of football earnings. (In so stating the matter, I put to one side the onus of proof.) 147 The conclusion at which I have arrived is that the Plaintiff's earning capacity in the field of land dealing and development has been productive of more financial gain than the loss due to the diminution in his football earning capacity. Certainly, I am not satisfied both that it has not and that, looking at the totality of the Plaintiff's income earning capacity, there has been, or will be, any financial loss. Thus the Plaintiff, who carries the onus of proof, has not discharged it in respect of his claim for damages for a reduction in earning capacity. 148 I should expressly acknowledge that a number of the figures and evidence which I have used encompass events extending beyond the period of the Plaintiff's expected football career and to that extent do not reflect the use of an earning capacity in substitution for that lost due to his injury. I am conscious also that had he not undertaken the projects on hand towards the end of 2004, he would have been likely to pursue other projects in the post (expected) football period. Any judgment of whether the financial return from use of an income earning capacity in substitution for his lost football earning capacity has outweighed the latter has to take account of considerations such as these. Precision is not possible but I am satisfied that even when account is taken of these factors the conclusions I have expressed above are appropriate. 149 I recognise also that insofar as I have been influenced by the thought that the Plaintiff's absence in England might have reduced the likelihood of him buying some of the properties referred to, one must recognise that he may have purchased or dealt with properties there. I regard this consideration as having some weight but I would incline to the view that the chances of involving himself in a market new to him and one where he did not intend to remain for many years were much less than the chances of the activity that occurred. 150 Finally, I should make some further reference to the expert reports of Messrs Halligan and Watt. In most areas, I have found both singularly unhelpful and put them aside. In large part, and despite their size and no doubt enormous cost, they do not appropriately address many of the issues that arise.

Summary 151 It follows from the above that the amounts to be included in a verdict for the Plaintiff are:- General Damages $90,000

Interest on General Damages $6,500 (2% x $50,000 x 6.5 years)

Future Out of pocket Expenses $1,000 $97,500 152 Thus there should be a verdict for the Plaintiff in the sum of $97,500. However, against the possibility that there is some ingredient of the claim that I have overlooked, I propose to defer entering judgment for a short period. If either party wishes to re-list the matter that may be effected by arrangement with my Associate. If no such application is made within 7 days, judgment will be entered as I have foreshadowed without the necessity of further appearance. ********** Jarrod MCCRACKEN v MELBOURNE STORM RUGBY LEAGUE FOOTBALL CLUB LIMITED, Stephen KEARNEY AND Marcus BAI Address Owner Purchase Use & Other Sales Profit/ Costs Loss Date Amount DateAmount Plomer Rd 1990 Port Macquarie Thomas Laycock Dr 1993 Home & Bringelly Developed 7/1-3 Bay Rd 1996 $304,000 11/97$340,000$36,000 Drummoyne 7 Cumberland St Plaintiff & Jarrod Refurbished Cessnock McCracken 10/96 $810,000 until 2/00 at cost of $532,000 2/00$1.085$260,000 loss Wentworth Hotel Promotions P/L 5 Vardeys Rd Plaintiff 96 or 98 $880T Industrial warehouse 4/03$1.15$265,000 Maryong 81 The Esplanade Plaintiff & wife 12/98 $1.285 Leased & later re-developed 5/01$3M approx$700,000 Cronulla 41 Albatross Av Plaintiff & wife 12/98 $1.2M Plans & concepts prepared, home for a time 2/01$2.5M Mermaid Beach 2-6 Evans St Plaintiff 11/99 $320,000 Sold as vacant block - holding costs of $40,000 12/01$320,000$40,000 loss Yorkey's Knob (north of Cairns) Yorkey's Knob Caravan Park Wife 12/99 Price $750,000 but contract rescinded 1010 The Kingsway, Cronulla (Northies) Plaintiff or wife 99 or 00 $550T Unit bought off plan; 7/2/01 memo says deposit paid 2 yrs prior 7/01$631T$46,000 57 Albatross Avenue P and/or wife 7/00 $1.775M Re-developed at cost of $1.65M + 10 -12/02$6.5M Mermaid Beach Ferrero Rd Wife 1/01 $545,000 7/01$590,000$7,000 Port Douglas Triangle Arcade, Wife 5/01 $2.87 4/02$3.6$511,000 Chevron Island, Surfers Paradise Hideaway, The Strand, Wife 10/01 $3.2 Motel & restaurant for a while, then RSH Townsville - became the Watermark 36 Stanton Tce, Townsville Wife 10/01 $1.7M Home 11/04$2.5M 159 Hedges Av, Broadbeach 02 Took and sold option 03$1 - 500,000 North Town on the Mall, Flinders Mall Crackers Corporation P/L as Trustee 5/02 $5.4M RSH MORE Townsville Seaview Hotel, Townsville Seashore Projects Australia P/L 9/03 $6.9M 12/03$7.5M + $2.5M (for "confidential information") 89A Albatross Ave, Mermaid Beach Wife 7/04 option $7.5M 3/05$9M 11/04 purchase 89 Albatross Av, Mermaid Beach wife Home in 2/05

NOTE: The above schedule is intended to provide a reasonable indication of the extent of the land purchases, sales and development with which the Plaintiffs was engaged but no more. Some dates may be of a contract and some of completion of a contract but, while all of the properties, or in one case an option, were acquired, and held for the approximate times indicated, the evidence on a number of the details, including purchaser and dates was at times conflicting. On occasions, the "owner" is not the person who at first contracted to purchase a property. In many cases, incidental costs such as stamp duty, agents' commission and interest on money borrowed have not been reflected in the figures. In at least one case, 57 Albatross Avenue, the tax return figures differ significantly from the settlement statements.

No attempt was made by the legal advisers of the parties to resolve many of these conflicts and, while the schedule seeks to reflect evidence that appears likely to be the most reliable on these matters of detail, no attempt has been made to achieve comprehensive accuracy where there is conflicting evidence. Figures have, from time to time, been rounded.

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