Trade Practices - sale of business - representations as to trading position of newsagency business by business broker - whether bank providing loan to purchase made representation when approving loan - whether accountant advising purchaser made representation as to viability of business - scope of accountant's retainer

Trade Practices Act 1974 (Cth) s52

Fair Trading Act 1987 (NSW) s42

Arnotts Ltd and Ors v Trade Practices Commission (1990) 24 FCR 313

Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247

Mr S.L. Walmsley (instructed by E. Berman and Co) appeared for the appellants.

Ms Elaine Hurst (instructed by Daniel Smyth) appeared for the first and second respondents.

Mr M.T. McCulloch (instructed by Murray Stewart and Fogarty) appeared for the third and fourth respondents.

Mr M. Walton and Ms J. Deamer (instructed by Dibbs Crowther and Osborne) appeared for the fifth respondent.

Mr R. Sheldon (instructed by Ebsworth and Ebsworth) appeared for the sixth respondent.

1. The appeal is dismissed.

2. The appellants pay the respondents' costs.

NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

OLNEY, MOORE AND TAMBERLIN JJ The appellants (who are husband and wife) were the second and third applicants in proceedings in which they sought damages against the respondents to this appeal. The first applicant in the proceedings was Fodure Pty Ltd (Fodure) a company formerly owned and controlled by the appellants but now in liquidation. Fodure was given leave to discontinue on the first day of the trial of the proceedings.

2. At material times the second respondent (Johnson) was a director of the first respondent (Abalpark) and the fourth respondent (Lipscombe) was a director of the third respondent (Dunkley). The sixth respondent (Woodward) is a chartered accountant in private practice.

3. The trial at first instance occupied 12 hearing days. The appellants failed to establish a case against any of the respondents and the application was dismissed with costs.

4. In order to establish the context in which the proceeding at first instance arose it will be helpful to provide by way of background a summary of the facts as found by the trial judge. In what follows the first appellant will be referred to as Sheedy and the second appellant as Mrs Sheedy.

5. Abalpark carried on a newsagency business at two shops in suburban Newcastle; one traded under the name of The Junction Newsagency (shop 1) and the other traded as Junction Fair Newsagency (shop 2). The business serviced a territory approved by the Newsagency Council of NSW and ACT (the Council).

6. In February 1988 Dunkley was appointed exclusive agent for the purpose of selling Abalpark's business. A sale did not take place and the agency expired in September 1988.

7. In December 1988 Abalpark applied to the Council to cut off a portion of its territory and in March 1989 the Council approved of shop 2 becoming a newsagency in the cut-off territory.

8. In June 1989 Dunkley was again commissioned to sell both shops on behalf of Abalpark. On 14 June 1989 Abalpark's accountant provided Johnson with a balance sheet as at 30 April 1989 and a profit and loss account for the period ended 30 April 1989 for each shop. The accountant also provided to Johnson for each shop a form prescribed by the Council, namely Form B (Vendor's Notification to Dispose of Newsagency), referred to as disposal sheets, which contained trading figures for the 6 months from 1 November 1988 to 30 April 1989. Johnson forwarded this material to Lipscombe who examined it and requested Johnson to furnish him with Abalpark's cheque butts for the 12 months to 30 June 1989. Johnson also supplied Lipscombe with details of gambling purchases for that period. Lipscombe then prepared a one page computer printout for each shop analysing the figures for the year ending 30 June 1989. The printouts purported to show a return of 49.13% on a purchase price of "$250,000 + SAV" for shop 1 and of 43.12% at a purchase price of $170,000 + SAV" for shop 2. Each printout contained the message -

NOTE: ... The above figures have been compiled by Dunkley

Real Estate and Business Brokers Pty Ltd from information

supplied by the vendors and their accountants. Dunkley

Real Estate and Business Brokers Pty Ltd do not warrant the

accuracy of the above information which should be confirmed

by the purchasers through proper investigation of the

vendors records.

9. Dunkley placed an advertisement in The Sydney Morning Herald of 15 July 1989 in the following terms:

NEWSAGENCY

Rarely does a business of this quality and position come on the

market. Park like surrounds, excellent presentation, finance

available 16.8 p.c. for 5 years, showing 43 p.c. net on purchase

price of $420,000 T.O. $15,826.

Contact Tony Lipscombe Dunkley Real Estate (065) 84 9499.

10. In the first half of 1988 the appellants commenced making enquiries about the purchase of a newsagency business. Sheedy attended a seminar on newsagencies conducted by Capital Business Brokers. He became familiar with the contents of disposal sheets and with the prices asked for newsagencies. He looked at about 20 newsagencies by driving past premises and visited both Orange and Armidale to speak to proprietors.

11. Sheedy saw the SMH advertisement and arranged to visit Newcastle on 17 July 1989 where he spoke to Johnson and inspected the shop premises. Johnson gave him the disposal sheets prepared by Abalpark's accountants and a disposal sheet prepared by Lipscombe showing the combined trading figures for the 2 shops for the year ending 30 June 1989. On 21 July 1989 both appellants inspected the shops. On this occasion Sheedy telephoned Lipscombe from shop 1 and indicated that the appellants wished to purchase the business. They discussed finance and Sheedy said that he and his wife would have to sell their house in Sydney. In this discussion Lipscombe indicated that Sheedy should be able to obtain finance through the fifth respondent's (the NAB) branch at Port Macquarie. Dunkley had already on 21 July 1989 sent to Sheedy and several other enquirers information concerning the business including the two computer printouts Lipscombe had prepared. Sheedy had not received this information before he spoke to Lipscombe on 21 July 1989. Following his discussion with Sheedy, Lipscombe prepared a 3 page document dated 21 July 1989 containing particulars for a sale to the appellants. Dunkley sent this document under cover of letters dated 24 July 1989 to Abalpark, to the appellants and to their respective solicitors.

12. On 26 July 1989 Sheedy spoke to Mr Bob Wilmot (Wilmot), the NAB's commercial business manager at Port Macquarie. Sheedy gave Wilmot details of the appellants' assets and liabilities. Their principal asset was their home at Bonnet Bay, a Sydney suburb, which they valued at $369,000 but which was mortgaged to secure about $27,000. On the same day Wilmot had confirmation from a local estate agent that the market value of the property was $340,000. At about the same time, Sheedy went to see an accountant Mr Keith Spaul, but he was unable to assist due to ill health.

13. The appellants visited Port Macquarie on 31 July 1989. On their way there they collected invoices for the business from Johnson. At Port Macquarie they met Lipscombe for the first time (Dunkley's office was at Port Macquarie). Lipscombe introduced them to Wilmot to whom he had provided some material concerning the business including the financial statements for each shop as at 30 April 1989 prepared by Abalpark's accountant, the one page computer printouts for each shop and a one page financing proposal which he had also prepared. The appellants discussed the financing of the purchase of the business with Wilmot.

14. On 2 August 1989 Wilmot wrote to the appellants offering a fully drawn advance of $390,000 and an overdraft facility with a limit of $10,000. As security the NAB required a registered second mortgage over the Bonnet Bay property, or if that property had been sold, a letter of amalgamation over a term deposit, together with registered traders' bills of sale over both newsagencies and all chattels.

15. The appellants saw their solicitor Mr Chris McRobert (McRobert) on 3 August 1989 when they discussed an agreement for the sale of the business prepared by Abalpark's solicitors. The purchase price was $420,000 with a deposit of 5% payable on execution of the agreement and the balance payable upon completion. The price was apportioned as to $346,000 for goodwill and as to $74,000 for plant, fittings and chattels. Stock-in-trade was estimated at $100,000. The sale was to be subject to the Council approving the appellants as accredited newsagents for the territories. The agreement provided for the transfer of existing leases to the appellants. McRobert's record of the interview indicates that the appellants took the contract home for further perusal of the leases.

16. Whilst in Port Macquarie on 31 July 1989 Lipscombe showed Sheedy how to verify the figures in the disposal sheets and computer printouts with invoices and cheque butts. Sheedy told Lipscombe that he had been unable to secure the services of Mr Spaul and Lipscombe gave him the name of his accountant, Woodward, who he said was experienced in newsagency work. Sheedy telephoned Woodward on 1 August 1989 and arranged an appointment for 4 August 1989. On the evening of 3 August 1989 Lipscombe faxed to Woodward the financing proposal, the computer printouts for each shop and the particulars of sale. The appellants met Woodward at his office on 4 August 1989. They discussed a number of matters associated with the purchase and financing of the business. Woodward recommended that the business be purchased in the name of a shelf company. The appellants said they would arrange with their solicitor to acquire a company.

17. In the following week the appellants signed the agreement for sale. On 7 August 1989 they accepted the NAB's offer of finance. On 11 August 1989 McRobert sent the executed agreement for sale to Abalpark's solicitor with a cheque for $1,000 as part payment of the deposit. He wrote that the balance of the deposit would be paid "immediately funds have been released by the purchasers' bank" and continued:

This Agreement is forwarded in escrow only pending completion of

formal exchange. In this respect, I confirm my advice that the

Purchasers intend, on their Accountants (sic) advice, to

incorporate a company to purchase the businesses.

18. Contracts were exchanged on 14 August 1989. The appellants were still shown as the purchasers. Lipscombe prepared the forms required by the Council. A Form B for each shop was signed on behalf of Abalpark on 14 August 1989. The appellants also signed prescribed Form C (Application for Accreditation), an annexed submission relating to their proposed conduct of the newsagencies and prescribed Form D (Notification of Exchange of Contracts).

19. On 23 August 1989 Wilmot wrote to the appellants as follows:

Further to our Letters of Offer 2nd August 1989 wherein we agreed

to finance $400,000 towards the purchase of the two (2)

newsagencies, we now further advise that should your house

property not settle prior to completion date of the said

newsagencies, the Bank will finance the total purchase price of

the newsagencies up to a maximum of $557,000.

The above maximum includes an amount of $27,000 required to payout

your present Bankers.

Security will be as stated in our Letter of Offer, however, as our

Bank will be paying out your present State Bank loan, our mortgage

over your house property will be a Registered First Mortgage.

20. McRobert advised Abalpark's solicitors on 25 August 1989 that the purchaser would be Fodure. A new contract was prepared in the name of Fodure. On 31 August 1989 Sheedy delivered the company documents to Woodward and on the same day McRobert sent copies of the same documents to the NAB and asked to be informed of the bank's requirements due to the intention to purchase in the name of a company. The appellants saw Woodward on 4 September 1989 when they informed him that they had bought the business. They discussed the opening of a bank account in Fodure's name and other matters relating to the keeping of the company's records.

21. At about this time the appellants attended a seminar on the running of a newsagency conducted by the Newsagents Association.

22. On 12 September 1989 the NAB offered Fodure a fully drawn advance of $390,000 repayable on 31 August 1991 and an overdraft limit of $10,000 on the same securities as were referred to in the letter of 2 August 1989.

23. On or about 14 September 1989 the NAB paid out the appellants' existing mortgage on the Bonnet Bay property and advanced the balance of the deposit on the business. On 3 October 1989 the NAB offered Fodure a bridging loan of $167,000 repayable on 30 April 1990 or upon the earlier sale of the Bonnet Bay property. The security required was a guarantee and indemnity for $272,000 from the appellants "fully supported" by the certificate of title to the Bonnet Bay property.

24. From the beginning of October 1989 the appellants attended at the shops to observe the manner in which they were conducted and to receive tuition in relation to the conduct of the business.

25. On 13 October 1989 they executed on behalf of Fodure duplicates of the NAB's letters of 12 September 1989 and 3 October 1989 and a mortgage debenture. They also executed a guarantee and indemnity in respect of Fodure's basic liability of $567,000.

26. The appellants commenced to run the business on 16 October 1989 a few days before completion took place on 20 October 1989.

27. On 28 December 1989 many buildings in Newcastle were affected by an earthquake. One consequence of the earthquake was that 2 of the Fodure's 4 sub-agents ceased to trade (a fifth sub-agent had ceased to trade in November 1989). In January 1990 both shops were affected by flooding and shop 2 was affected by flooding a second time in February 1990. During January 1990 Fodure had leased 2 new motor vehicles.

28. Shop 2 was placed on the market for sale and contracts were exchanged in April 1990. The sale was settled on 15 June 1990. The net proceeds amounted to $218,947.95 of which $166,309.60 was applied to clear the bridging loan from the NAB.

29. On 8 June 1990 the appellants contracted to purchase a house at Merewether, a Newcastle suburb, for $193,000. The deposit from the sale of shop 2 was used as a deposit on this property. The purchase was financed by a home loan of $150,000 from the NAB secured by first mortgage. Settlement took place on 7 August 1990. In the meantime the appellants contracted to sell the Bonnet Bay property for $280,000 but that sale fell through. The property was eventually sold in November 1990 for $275,000 with settlement taking place on 18 December 1990. On 13 December 1990 the appellants had executed a fresh guarantee and indemnity in respect of Fodure's basic liability of $425,000 and the NAB had agreed to release its security over the Bonnet Bay property. The sale proceeds from the Bonnet Bay property were applied as to $75,000 in reduction of the appellant's home loan, $10,000 in reduction of Fodure's overdraft and a little over $160,000 on term deposit as security. Funds were later released from the term deposit to clear the home loan.

30. In April 1991 Fodure accepted a deposit for the sale of shop 1 for a sale price of $227,500 plus stock. Settlement took place on 12 June 1991. The net proceeds of the sale were applied in reduction of Fodure's fully drawn advance leaving a balance due to the NAB of $144,696.60. The applicants sold the Merewether property in October 1991 for $240,000. Part of the proceeds were applied to clear Fodure's borrowings.

31. The foregoing is an abbreviated statement of the trial judge's findings. These facts were said by his Honour to be relatively uncontroversial except as to one matter. Lipscombe's evidence was that the occasion when he showed the appellants how to verify the trading figures from Abalpark's business records was on 11 August 1989 rather than 31 July 1989. The trial judge thought that nothing turned on this issue. It was common ground that Lipscombe told the appellants that they should satisfy themselves about the figures. His Honour observed that it was not said that Abalpark's trading figures were wrong.

32. There was however one question of fact involving a serious controversy which related to two financing proposals prepared by Lipscombe. (These documents are referred to in the reasons as annexure C). One proposal assumed a cash investment of $311,000 and a financing requirement of $218,113. The other assumed no investment by the purchasers and a financing requirement of $557,000. Although Sheedy insisted that these documents were in Wilmot's possession on 31 July 1989, Wilmot denied having seen them at all. The trial judge found that they were not created until after 31 July 1989, that they were not furnished to anyone other than Sheedy and were not discussed in the meeting at the NAB Port Macquarie on 31 July 1989. His Honour also made the following specific findings as to what was discussed at the meeting on 31 July 1989:

What was discussed at the meeting on 31 July 1989 was Abalpark's

profit and loss account for Shop 1 for the period ended 30 April

1989. This document bore Mr Wilmot's markings of the "addbacks"

for bank charges, depreciation, fringe benefits tax, bank

interest, subscriptions and managers' wages. Mr Sheedy and Mr

Wilmot agree about that. It is also agreed that at this stage it

was assumed that the Bonnet Bay property would be sold, that the

Sheedys would invest $142,000 of the proceeds in the purchase and

that $170,000 of the proceeds would (at Mr Wilmot's suggestion) be

placed on term deposit to be used as security. This last sum

might be later used for the purchase of a house in Newcastle which

could be substituted as security.

Mr Wilmot constructed a notional net profit for 10 months after

operating expenses using Abalpark's accounts. He says that he

explained that would represent an annualized profit of

approximately $120,000 from which interest costs on the borrowing

of $400,000 would have to be deducted. Mr Sheedy denies that the

last step was explained. I cannot accept that denial. I am

quite satisfied that Mr Wilmot did explain the deduction of

interest expenses. There would simply be no sense in otherwise

seeking to explain the figures from Abalpark's accounts. Mr

Wilmot did have Mr Lipscombe's financing proposal which assumed a

$330,000 investment by the purchaser, but this had been forwarded

to Mr Sheedy at least 10 days beforehand and assumed borrowings of

less than $200,000.

There is no evidence about when annexure C was supplied to Mr

Sheedy. It must have come from Mr Lipscombe at a time when it was

realized that the Bonnet Bay property might not be sold. It is

possible that this may have been prior to Mr Wilmot's letter of 23

August 1989 or it may not have been until late September 1989 when

Mr Sheedy specifically applied to Mr Schneider for bridging

finance on behalf of Fodure. In any event, there is no evidence

to suggest that it was ever produced to the NAB, except for Mr

Sheedy's evidence of what he saw on 31 July 1989, which I do not

accept.

33. The appellants allege that Dunkley, Lipscombe, the NAB and Woodward contravened s 52 of the Trade Practices Act 1974 (Cth) and/or s 42 of the Fair Trading Act 1987 (NSW) by making representations that were misleading and deceptive or likely to mislead or deceive. It is said further that at the times they were made Dunkley, Lipscombe, the NAB and Woodward did not have reasonable grounds for making the representations.

34. The representations pleaded in the statement of claim can be summarised as follows:

1. In the SMH advertisement Dunkley represented that the business was

one of rare quality and position; that finance was available for

its purchase at 16.8% for 5 years, that it was showing 43% net on

the asking price of $420,000; and that its turnover was $15,826

per week.

2. On 17-18 July 1989, both orally and in documents made available to

the appellants, Lipscombe represented in respect of the business

that for the period 1 July 1989 to 30 June 1989 the gross trading

profit was $306,002.69; the approximate total of the operating

expenses was $141,597.24; the approximate net profit was

$164,405.45 and that these figures had been compiled from

information supplied by Abalpark and/or its accountants.

3. In conversations between Lipscombe and the appellants in 2

documents prepared by Lipscombe, Dunkley by its servant and agent

Lipscombe on or about 31 July 1989 represented in respect of the

business that the finance charges which would be incurred in

borrowing the sum of $557,000 would be approximately $95,804;

that the net income of the business would be more than sufficient

to meet such financial charges; and that the net income available

after meeting the finance charges would be $68,601.45.

4. On or about 15 July 1989 Dunkley by its servant and agent

Lipscombe represented orally to the appellants that Abalpark was

selling the business as a consequence of Johnson's wife having

sustained injury in a motor vehicle accident.

5. On or about 21 July 1989 Dunkley by its servant and agent

Lipscombe represented orally to Sheedy that the NAB had approved

finance to enable the purchase of the business.

6. On or about 31 July 1989 Dunkley by its servant and agent

Lipscombe represented orally to the appellants in respect of the

business that it was a great buy and a real bargain; that he had

verified any cheques drawn on the business of which he was

suspicious and had found nothing wrong; that he would have liked

to buy the business himself had he not been otherwise committed;

and that Johnson was selling the business because of rumours that

his family and their friends were stealing money from the

business.

7. On or about 31 July 1989 the NAB by its servant and agent Wilmot

orally represented to the appellants that Lipscombe carefully and

properly prepared the figures he used in respect of the sale of

the business; that Lipscombe's figures always appeared to be

right; and that it (NAB) had put through a lot of loans for

Lipscombe and the persons concerned appeared to be happy. (In

paragraphs 19 and 19A of the Statement of Claim extensive further

representations are pleaded against the NAB including

representations that Wilmot was impressed with the business, that

he had considered buying it himself, that Lipscombe had

recommended it to him; and that Johnson was selling the business

for other than financial reasons).

8. On or about 4 August 1989 Woodward represented to the appellants

in respect of the business that he had examined the figures

presented to him by Lipscombe; that the figures were adequate to

operate the business; and that the appellants should purchase a

shelf company to operate the business.

35. The appellants pleaded that, relying on the representations, they acquired the shares in and became directors of Fodure and caused it to purchase the business which they ran on its behalf, lent it money and guaranteed contractual obligations on its behalf; and Fodure purchased the business and entered into possession on or about 16 October 1989.

36. The appellants further pleaded that Abalpark and/or Johnson authorised and/or were liable for the representations made by Dunkley and/or Lipscombe; that the NAB was liable for the representations made by Wilmot; that Dunkley was liable for the representations made by Lipscombe; that Johnson and Lipscombe aided, abetted, counselled and procured and were knowingly concerned in and a party to the alleged contraventions; and that as a result of the contraventions they sustained loss and damage.

37. Other causes of action were pleaded against the NAB and Woodward.

38. As to the NAB, it was said that at material times Abalpark and Johnson were indebted to it and were unable to service the debt otherwise than by selling the business. The appellants pleaded that the NAB owed the appellants a duty to take reasonable care and a duty as a fiduciary by reason of having a direct financial interest in the sale of the business and that the NAB breached its duty to take reasonable care and its duty to act as their fiduciary whereby they have suffered loss and damage.

39. Woodward was said to have contracted and/or owed a duty to the appellants to exercise the due care and skill of a chartered accountant in or about the purchase of the business and that he breached his contract, or was negligent in that he failed to properly advise the appellants as to the risk involved in purchasing the business; failed to advise them that inadequate financial information was available to properly assess the worth of the business; and failed to advise them that the business would not support the borrowings proposed to be made in respect of the purchase of the business.

40. In their defences the respondents took issue with the appellants in respect of the facts relevant to the respective causes of action pleaded against them.

41. The allegations concerning representations as to the health of Johnson's wife, the existence of other potential purchasers, unauthorised withdrawals from the business's takings and the alleged interest of Wilmot or Lipscombe in purchasing the business were described by the trial judge as "distractions" which were not seriously pressed by counsel for the appellants. His Honour observed however, that to the extent that any of those considerations may have had any slight relevance it was never established that they were untrue although both Johnson and his wife denied any knowledge of cash being taken from the business.

42. In his reasons the trial Judge observed that it was not submitted that the turnover or trading figures of Abalpark were misleading or deceptive but rather that it was the return or net profit of the business that had been misrepresented. His Honour said he was unable to characterize any of the information in the financing proposals prepared by Lipscombe as misleading or deceptive or that any oral statement by Lipscombe confused their plain meaning.

43. Further, his Honour found that nothing in the evidence suggested that the NAB assumed responsibility for giving advice to the appellants on the merits of the business.

44. In relation to the allegation of misrepresentation made against Woodward his Honour found that there was no evidence that Woodward ever said he had examined the figures made available by Lipscombe and pronounced them adequate to operate the business. Nor was there any evidence that he was asked to do so.

45. Having found that none of the statements made, or documents made available, to the appellants by Dunkley or the NAB on or before 31 July 1989 nor any statement made by Woodward on or about 30 August 1989 involved a representation that was misleading or deceptive, his Honour went on to say that had any representation been capable of being so characterised, it would not have made any difference to the appellants as Sheedy made up his own mind about whether Fodure should buy the business.

46. In their amended notice of appeal the appellants assert that the trial Judge erred in the following respects, namely:

(a) in failing to make any findings about what in fact Woodward

told the appellants on 1 August 1989 and 4 August 1989 in

relation to the viability of the business;

(b) in finding that Wilmot explained the deduction of interest

expenses from an annualised profit of $120,000 using the

notional net profit of ten months to 30 April 1989, failed

to find that was of itself misleading;

(c) (not pressed)

(d) in failing to find that Dunkley's conduct in placing the

advertisement was one factor in the appellants' decision to

buy the business;

(e) in failing to find that an advertisement suggesting a net

profit of $180,000 when the actual return was $73,890.00 was

not misleading or deceptive;

(f) in finding there was no evidence to suggest the NAB had

assumed responsibility for giving advice to the appellants

on the merits of the business;

(g) in failing to find, even on the assumption that where his

evidence differed from that of the Sheedys, he should be

believed, Wilmot's conduct was not in the circumstances

misleading or deceptive given his version that he explained

there would be annualised profit of $121,757 in

circumstances where the actual performance for the 1988 to

1989 year was $73,890.00;

(h) in failing to have any or any proper regard for the actual

trading results of the business for the year ended 30 June

1989, 1990 and 1991 against the "litany of the

contemporaneous complaints that the Sheedys directed at the

NAB during their conduct of the business".

(i) in finding there was no evidence that Woodward ever said he

had examined the figures made available by Lipscombe and

pronounced them adequate to operate the business;

(j) in finding that none of the statements made or documents

made available to the appellants by Dunkley or the NAB on or

before 31 July 1989 involved a representation that was

misleading or deceptive;

(k) in finding that even had any representation been capable of

being characterised as misleading or deceptive it would not

have made the slightest difference to the appellants;

(l) in finding as a relevant matter that Lipscombe was never

consulted to give finance advice;

(m) in failing to make any finding of fact about whether and if

so when Mrs Sheedy made up her mind about whether Fodure

should buy the business;

(n) in paying undue regard to the effect on the business and its

viability of:

(i) the failure of the appellants to sell their

Bonnet Bay property for over a year and for

$100,000 less than anticipated;

(ii) the Newcastle earthquake;

(iii) the lease of new vehicles;

(iv) the taking on of extra staff;

(v) the sale of shop 2.

47. In his reasons the trial Judge said that the case finally put against Abalpark and Johnson depended upon a finding against Dunkley so that s 84(2) of the Trade Practices Act might be relied upon. The appellants do not take issue with this conclusion.

48. The appeal was argued on the same basis and accordingly nothing more need be said on this aspect of the case at this stage.

49. The appellants allege against Dunkley and Lipscombe, that representations were made on 15 July, 17-18 July and 31 July 1989 which constituted conduct contravening s 52 of the Trade Practices Act and/or s 42 of the Fair Trading Act. They say that in reliance on those representations they acquired the shares in Fodure, became its directors and caused it to purchase the business. As a result, it is said they and Fodure sustained loss and damage. Dunkley and Lipscombe deny the claim and allege that in any event clause 18 of the agreement for the sale of the business gives rise to an estoppel and that representations made in certain documents were the subject of a disclaimer.

50. Grounds of appeal (d), (e), (j), (k), (l), (m) and (n) have relevance in relation to the appeal insofar as it relates to Dunkley and Lipscombe.

51. The trial Judge's conclusions concerning whether Dunkley and Lipscombe had engaged in misleading or deceptive conduct are found in the following extract from the judgment:

As I have said, it is not submitted that the turnover or

trading figures of Abalpark were misleading or deceptive.

What is said to have been misrepresented is the return or

net profit from the operation of the business. No doubt,

the advertisement placed by Dunkley is capable of a variety

of interpretations, but it should be borne in mind that it

is only part of the conduct of Dunkley. After the

advertisement the Sheedys received the computer printouts

and the financing proposal. It is submitted by their

counsel that this showed a net profit of $180,000. That is

true. But what is also clearly showed were the variable

items for operating expenses and, most importantly, finance

charges. Mr Sheedy said at one point in his evidence that

he did not understand interest charges had to be deducted

before a net profit could be ascertained. I simply do not

believe this. His whole evidence reeked of reconstruction

after the event in order to convey the impression that his

state of mind in 1989 accorded with a possible view of the

documentary materials brought into evidence at that time.

I am unable to characterize any of the information in the

financing proposals as misleading or deceptive. Nor did

any oral statement by Mr Lipscombe confuse their plain

meaning.

... None of the statements made, or documents made

available, to the Sheedys by Dunkley or the NAB on or before

31 July 1989 involved a representation that was misleading

or deceptive....

52. His Honour later dealt with the question of reliance in these terms:

However, even had any representation been capable of being

so characterized, I do not consider that it would have made

the slightest difference to the Sheedys. Both of them had

worked in banks in their youth and were perfectly capable of

understanding the various financing propositions put to them

by the NAB. Mr Sheedy made up his own mind about whether

Fodure should buy this business. His only difficulty was

to convince his wife to sell their home at Bonnet Bay. Mr

Lipscombe was never consulted to give financial advice.

53. His Honour did not refer to evidence led by the appellants from Mr W.M. Jansen (Jansen) who is an accountant and a senior partner of Ernst and Young, Chartered Accountants. Jansen prepared two statements, dated respectively 12 October 1992, and 18 February 1993. He gave evidence on 21 July 1993. Nor was reference made by his Honour to evidence called by the NAB from Mr J.V. Hutchinson (Hutchinson), an accountant employed by Walker Wayland, Chartered Accountants. Hutchinson also prepared two statements dated respectively 11 September 1992 and 23 December 1992. He gave evidence on 27 July 1993. His second statement includes a critique of Jansen's report of the statement of 12 October 1993. In turn, Jansen's second statement deals with Hutchinson's critique.

54. The significance of this evidence is that Jansen analysed the material that had been produced by Lipscombe and provided to the appellants in late July 1989. He also analysed material that has the appearance of showing the trading results of Abalpark, being the trustee of a family trust, for the period 1 July 1988 to 30 June 1989. That information was in evidence before his Honour and took the form of the trust's tax return and its accounts for that period. These documents were unsigned. His Honour made no express finding as to what representations had been made by Dunkley and Lipscombe concerning the profit that might be expected from the business, nor as to what profit had been generated by the business prior to its sale.

55. The gravamen of the appellants' case was that the business they purchased as a result of representations made was doomed to fail because the income likely to be derived from it would be insufficient to permit them to maintain themselves and their family and service the debt they incurred in purchasing it. They said they were induced into purchasing the business by representations as to its profitability which were false. The grounds of appeal, as expanded upon by the appellants' counsel, raised, in more specific terms, the following contentions:

(i) The trial judge failed to find that the SMH advertisement was

one factor in the appellants' decision to buy the business

(ground (a)). As part of the development of this submission the

appellants contended that the evidence of the profit and loss

accounts of the business as it actually traded in the year

ending 30 June 1989 disclosed an actual net income pre-tax of

$73,890. The advertisement, in speaking of 43% net profit on a

purchase of $420,000 plainly implied a profit of $180,000. It

was submitted that whether the advertisement was misleading was

to be determined objectively: see Taco Co of Australia Inc v

Taco Bell Pty Ltd [1982] FCA 136; (1982) 42 ALR 177 at 202. Further the two

page printout given to the appellants in July 1989, if analysed,

showed an annual net profit of $196,092.

(ii) His Honour failed to find that the advertisement was misleading.

(iii) His Honour failed to have any or any proper regard to the actual

trading results of the business (ground (h)).

(iv) His Honour erred in finding that none of the statements made or

the documents made available to the appellants by Dunkley

involved a representation that was misleading or deceptive

(ground (j)).

(v) His Honour erred in finding that had any misrepresentation been

made it would not have made the slightest difference

(ground (k)). This submission was developed in two ways.

First, it was said to be inconceivable that the appellants would

have proceeded with the purchase if they had known the true

position and second, his Honour simply was not able to determine

the effect of an assumed misrepresentation in the absence of a

finding of its existence and as to its character.

56. Other matters were raised by the appellants but they are not material having regard to the view we take of the earlier submissions.

57. Counsel went on to submit that his Honour paid undue regard to events occurring after the purchase of the business, viz, failure to sell their home at Bonnet Bay, the effect of the Newcastle earthquake and steps they took in managing the business (ground (n)) and that his Honour failed to pay regard to what was earlier described by us as the gravamen of their case.

58. The submissions of Dunkley and Lipscombe were that:

(i) The findings of fact made by the trial judge ought not be

disturbed.

(ii) The finding of no reliance should not be disturbed particularly

having regard to the combined knowledge and experience of the

appellants, the opportunity they had and took to examine the

records of the business that was made available to them, the

opportunity they had and indicated they would follow of

consulting an accountant and the apparent intention of at least

Sheedy to purchase the business as soon as he saw the

newsagencies. In any event it was submitted the disclaimer

breaks the chain of causation and reliance is not, as a

consequence, established.

59. The principles applicable to the manner in which a Full Court on appeal should deal with findings of fact by a trial Judge who has had the benefit of observing witnesses as they gave their evidence are well established and were accepted by the appellants' counsel. See Ricochet Pty Ltd and Ors v Equity Trustees Executors and Agency Company Ltd [1993] FCA 99; (1993) 41 FCR 229 at 235, Abalos v Australian Postal Commission [1990] HCA 47; (1990) 171 CLR 167 and Devries and Anor v Australian National Railways Commission and Anor (1993) 177 CLR 472 at 479.

60. It is settled law that the question of whether the conduct of a corporation contravenes s 52 is to be assessed objectively although whether individuals or groups of individuals have, in fact, been misled is a relevant consideration. Thus the conclusion of the trial Judge that the appellants were not themselves misled must, on the question of whether conduct contravened s 52, be a matter that must be given due weight.

61. The appellants' case against Dunkley and Lipscombe depends substantially upon the comparison that is made between the representations made by Lipscombe about the profitability and trading position of the business and the actual profitability and trading position of the business at the time the representations were made. It is a comparison that forms an important part of the analysis of Jansen upon whom the appellants rely. It has as its foundation the accounts prepared by Johnson's accountant and submitted with the 1988/89 tax returns of the Johnson family trust.

62. The taxation return of Johnson and his family trust and the accounts of the trust were annexures to Johnson's statement. The statement itself was tendered without objection. The accounts of the trust and the declaration in the tax return for the trust are unsigned as is Johnson's return. Johnson did say, however that he declined to verify the accuracy of the accounts. His evidence was:

Q. Now, you have annexed to your statement, Mr Johnson,

the profit and loss figures for the year ending 30

June 1989, do you recall that?

A. No, I don't but I ...

Q. Perhaps you still have in front of you there - and if

you do not perhaps if you could be given - a copy of

your statement. Would you please turn to page 123,

Mr Johnson?

A. Yes.

Q. Now that, you would agree, is the profit and loss

account which covers both shops for the financial year

ended 30 June '89?

A. I would imagine so.

Q. And that document was prepared by your accountant?

A. Yes.

Q. From information provided to your accountants by

you, is that right?

A. Yes, that's right.

Q. And you have read that document?

A. I possibly would have glanced at it; I certainly

wouldn't have studied it.

Q. And you are satisfied that truly reflects the success

of your business during that financial year?

A. I'm satisfied that I left it to my accountant and I

see no reason to disbelieve that he would do any

figures wrong.

Q. Having looked at it yourself there is nothing there

that suggests to you that it was in any way incorrect?

A. I"m not an expert at that sort of thing I am afraid I

couldn't really.

Q. But you have looked at it?

A. I would have glanced at it certainly.

Q. And it seems to you to be correct?

A. Well, as I say, I'm really not qualified to ...

63. These accounts and returns take the same form as the accounts Lipscombe said he was given by Johnson for the period ending 30 April 1989. Also annexed to Johnson's statement were accounts for the period ending 31 May 1989. The accounts for the period ending 30 April 1989 are the same as for the period ending 31 May 1989 save for some rounding off. They disclose a gross trading profit of $146,259 (shop 1) and $70,639 (shop 2),a total of $216,898. Treating them as reflecting the position at 30 April 1989 they represent a gross trading profit of $260,278 annually. This is to be compared with the gross trading profit in the accounts of the family trust of $192,819.

64. The question arises as to how much weight can be given to these accounts. They are not verified on their face, not verified by Johnson nor was Johnson's accountant called. The accounts of the trust contain a disclaimer to the effect that they were not to be taken to be expressing an opinion that the accounts reflect the true trading position of the business.

65. The reliance that may be placed on a document will depend on the nature of the document including the purpose to which it is to be put and the circumstances in which it came into existence: see Arnotts Ltd and Ors v Trade Practices Commission (1990) 24 FCR 313 at 357.

66. It may be accepted that accounts prepared for a taxation return would, in the ordinary course, be prepared with a view to ensuring compliance with the provisions of the Income Tax Assessment Act 1936. However, the unverified accounts of trading for the period ending 30 June 1989 are central to the appellants' case and underpin the expert opinion of Jansen upon whom they rely. His opinion depends upon proof of the facts upon which it is based: see Arnotts, supra at 347.

67. The appellants bore the burden of proving those facts at first instance and, to the extent that they are inviting the Full Court to make findings contrary to the findings of the trial judge, bear the burden of proving them on appeal.

68. In his analysis of the accounts Jansen proffered the view that the accounts for the period ending 30 June 1989 may have underestimated stock in hand at 30 June 1989 by $39,000. He thus suggested that they may not be a true record of the position of the business at the time. This of course, does not explain the discrepancy between the gross trading profit figure emerging from the analysis represented by Lipscombe's figure of $308,356 and that appearing in the accounts accompanying the tax returns of the trust of $192,819. However, the real issue is whether the figures in the accounts accompanying the return can and should be accepted as correct for the purposes of comparison. The evidence of Johnson provides no basis for accepting them. It is plain that Jansen's examination of those accounts assumed their correctness. In the absence of evidence which shows that the figures in the accounts accompanying the tax returns represented the trading position of the business for the twelve months ending 30 June 1989 there is, in our opinion, no basis for concluding that the representation made by Lipscombe in the computer printouts falsely represented the actual trading position of the business. It may be accepted that the figures produced by Lipscombe portray a level of profitability that is not evident in the accounts produced by Johnson's accountant and supplied to Lipscombe for the period ending 30 April 1989. The former shows a gross trading profit of $308,356 and the latter, an annualised profit of $260,272. However the case of the appellants is not that the figures and conclusions in the Lipscombe documents misrepresented the position emerging from other sets of accounts but rather that they misrepresent the trading position of the business at the time the representations were made. It was on that basis that the appellants submitted the business they acquired was doomed to fail.

69. We are of the opinion that there is no basis upon which to disturb the trial Judge's finding that none of the statements made, or documents made available to the appellants by Dunkley on or before 31 July 1989 involved a representation which constituted conduct that was misleading or deceptive.

70. His Honour made the following findings in relation to the applicants' case against the NAB:

(i) The evidence of Lipscombe and Wilmot should be accepted in

preference to that of the appellants in relation to the

meeting with Wilmot on 31 July 1989 at the NAB's Port

Macquarie Branch. His Honour found that the two computer

printouts which contained the financing proposals for the

business as prepared by Lipscombe, were not in the

possession of Wilmot or the NAB and were not discussed at

that meeting.

(ii) His Honour said that this conclusion must affect Sheedy's

credibility on other matters.

(iii) The discussion at the meeting on 31 July 1989 related to

Abalpark's profit and loss account for the period ended

30 April 1989.

(iv) Wilmot had constructed a notional net profit for ten months

after operating expenses using Abalpark's accounts to April.

His Honour accepted that Wilmot explained that the notional

net profit would represent an annualised profit of

approximately $120,000 from which interest costs on the

borrowing of $400,000 would have to be deducted. While this

was denied by Sheedy, his Honour did not accept that denial.

His Honour was satisfied that Wilmot had explained the

deduction of interest expenses to Sheedy.

(v) There was nothing in the evidence to suggest that the NAB

assumed any responsibility for giving advice to the

appellants on the merits of the business. Wilmot's evidence

left his Honour in no doubt that he said nothing that would

create such an impression.

(vi) None of the statements made or documents made available to

the appellants by the NAB on or before 31 July 1989 involved

any representation that was misleading or deceptive.

(vii) Even had any representation been capable of being so

characterised it would not have made the slightest difference

to the appellants.

71. In ground of appeal (b) the appellants contend that his Honour found that Wilmot explained the deduction of interest expenses from an annualised profit of $120,000 using the notional net profit of 10 months to 30 April 1989 and failed to find that this, in itself, was misleading.

72. The evidence of Wilmot accepted by his Honour was that at the meeting Wilmot had the accounts for the business for the ten months ended 30 April 1989. These documents showed that the net profit of the business after add-backs was $101,456. Based on a projection of that figure for a twelve month period to 30 June 1989, the net profit after adjustment amounted to $121,757. There is then taken from that figure, an amount of $70,000 which is the approximate servicing costs on the loan of $390,000 at 17.2% and an overdraft of $10,000 at 21.75%. This resulted in a surplus of $51,000 as set out in the statement of Wilmot.

73. In cross-examination, the evidence given by Wilmot was "largely agreed to" by Sheedy. Sheedy, however, said that he did not understand that interest charges had to be deducted before a net profit could be ascertained. His Honour did not accept this. He formed an unfavourable view as to the credit of Sheedy on this point and stated, after expressing his finding of disbelief, that the evidence of Sheedy "reeked of reconstruction after the event in order to convey the impression that his state of mind in 1989 accorded with a possible view of the documentary materials brought into existence at that time".

74. Mrs Sheedy agreed that Wilmot referred to the net figure after add-backs of $101,456 for the ten months, but denied that he projected that figure forward and mentioned a sum of $121,757. She also denied that Wilmot referred to deducting $70,000, which was the approximate servicing cost on the loan, from a figure of $121,757. She denied there was any reference to a surplus of $51,000. She agreed, however, that Wilmot did say words to the effect that from the figures before them it was an excellent newsagency. She did not deny that he said words to the effect that "from those financials" or "on those figures", he could not see any problems that would be experienced in meeting financial commitments to the bank.

75. Both appellants agreed in cross-examination that they understood what they were being told by Wilmot about financial matters was based on the profit and loss figures to the end of April 1989. Mrs Sheedy referred to these documents as "the financials". The evidence does not establish that the trading figures shown in the financial statement to the end of April 1989 were either correct or incorrect.

76. Basically, the issue as to the representations made by the NAB turn on credibility. The position is that his Honour found contrary to the evidence of the appellants, that the NAB did not represent that it regarded the business as a viable proposition and saw such a contention as "extraordinary".

77. Wilmot's evidence was that at no stage during the meeting or in any other conversation did he ever say that he knew whether or not the figures in the documents which he had received were accurate, nor did he say that he knew anything about the business itself. This evidence is neither glaringly improbable nor is the contrary incontrovertibly established. He said that when reference was made to the figures, he made it clear that he was basing his statements on the figures given to him by Lipscombe and to figures used by Lipscombe.

78. For the above reasons the Court is not satisfied that his Honour erred as alleged in respect of this ground.

79. In ground (f) the appellants assert that his Honour erred in finding there was no evidence to suggest the NAB had assumed responsibility for giving advice to the appellants on the merits of the business.

80. In relation to this matter in cross-examination Sheedy said:

"Q. So that apart from the bank's need for its

own purposes to satisfy about the

serviceability of any loan it was making

you did not understand that the bank

undertook a role of investment adviser as

far as its customers were concerned, did

you?

A. No, I didn't - I didn't presume that they

took the role of an investment adviser, no

I did not.

Q. And your understanding at the time was

that the bank's only concern in matters

such as this was to ensure the

serviceability of the loan; is that right?

A. Correct."

81. Earlier in his cross-examination Sheedy had stated that he knew and understood at the relevant time the importance of obtaining his own professional advice about the matter.

82. Mrs Sheedy agreed that she was aware that it was important to use professional advisers when spending a large amount of money on property and that when she was looking at the question of whether she would buy the two newsagencies, she understood that it was important to use professional advisers in relation to the transaction. One of the first things that she did after it appeared that the purchase was to proceed was to go and see her solicitor, McRobert, and then to see an accountant, Woodward.

83. In the light of the above, the Court does not consider that his Honour erred in finding that there was no evidence to suggest that the NAB had assumed responsibility for giving advice to the appellants on the merits of the business.

84. In the written submissions reference was made on behalf of the appellants to some evidence by Wilmot that he knew that the income capacity of the business would be of importance to the appellants. He agreed that he had given the appellants to understand that he had looked at the figures provided to him and he thought it was a good business. This does not establish that Wilmot had assumed responsibility to give advice on the accuracy of the figures relating to the business.

85. In the course of oral argument a submission was made against the NAB that because it had obtained information about the business and the assets of the appellants and had some idea of what their living expenses might be, and with this information approved a loan of $400,000, there was therefore a representation by the NAB that the business was sound and viable enough to cover payments to it and provide for the living expenses of the appellants.

86. There are many differing circumstances which may cause a bank to make an advance. It cannot be stated as a general proposition that where a bank forms the view on the information before it, that a loan is capable of being serviced and repaid by the borrower, it follows that the bank is making a representation that the borrower can service and repay the loan. If this were a correct statement then approvals by banks could lead to a result that if the loan was not met the bank could be sued for misrepresentation under the Trade Practices Act 1974 (Cth) or the Fair Trading Act 1987 (NSW). In these circumstances a loan might be taken to be a representation as to the financial backing, business acumen and/or managerial capacity of the borrower. This is not a line of reasoning which we accept. It may be, in particular instances, that there are circumstances where an approval and communications relating to it might be one of a number of relevant matters which lead to a contravention of s 52. But that is not so in the present case.

87. Ground of appeal (g) is that his Honour erred in failing to find that Wilmot's conduct was not misleading or deceptive given his version that he explained there would be annualised profit of $121,757 in circumstances where the actual performance was substantially less.

88. In our view it was open to his Honour to find that the evidence did not support the conclusion that Wilmot represented to the appellants that there would be an annualised profit of $121,753. The reasons for his views have been covered above.

89. It is said also in ground (k) that his Honour also erred in finding that even if a representation had been capable of being characterised as misleading or deceptive it would not have made the slightest difference to the appellants. This raises the reliance question which is dealt with in more detail later. It is however, clear from his Honour's finding that he disbelieved the appellants' evidence in relation to reliance.

90. The appellants also allege in ground (m) that there was an error in failing to make any finding of fact about whether and if so, when, Mrs Sheedy made up her mind that Fodure should buy the business. In response to this contention it can be said that his Honour made a finding that there was no reliance by either Mr or Mrs Sheedy and it does not matter that there was no specific finding as to when Mrs Sheedy made up her mind whether the company ought to buy the business. See Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247. In that case it was held that the duty of a judicial officer to provide reasons for his decision in respect of findings of fact from which no appeal lies, is sufficiently satisfied by the giving of grounds for, and not the detailed reasoning in support of the findings of fact. It is not necessary for a judge to make an express finding in respect of every fact leading to, or relevant to the final conclusion of fact. Nor is it necessary that there be reasoning from one fact to the next along a chain of reasoning to the conclusion. See Mahoney JA at 271. The judgment needs to reveal the ground for, although not the detailed reasoning in support of, the findings of fact (per McHugh JA at 282).

91. Another argument on behalf of the appellants was that Wilmot's conduct created in the appellants an expectation that the NAB would advise them and that he was in fact advising them on the merits of purchase and that there was a breach of fiduciary duty.

92. The evidence supports the conclusion that there was no expectation on the part of the appellants that the NAB would so advise them. In our opinion there is no evidence to support the existence of any fiduciary duty, nor of a duty imposed on the part of the NAB in the circumstances such as would found an action in negligence in the event that the figures provided to the NAB by Lipscombe were wrong or misleading.

93. Accordingly, in relation to Wilmot and the Bank we do not consider that any basis has been made out by the appellants to disturb the findings made by the trial judge.

94. The grounds of appeal relied on in relation to Woodward are grounds (a), (i) and (k).

95. In the case against Woodward the appellants allege that on, or about 4 August 1989, there was a meeting at his office in Sydney. It is further alleged that Woodward contracted, and/or owed a duty to the appellants to exercise due care and the skill of a chartered accountant in and about the purchase of the business. It is said that on 4 August 1989 Woodward made three representations, namely:

(a) that he had examined the figures of the business presented to him

by Lipscombe;

(b) that the figures were adequate to operate the business, and

(c) that the appellants should purchase a shelf company to operate

the business.

97. Reliance is then pleaded, together with the allegation that Woodward did not have reasonable grounds for making the representations and that the representations were misleading and deceptive, or likely to mislead or deceive. In addition it is alleged that Woodward breached his contract with the appellants and was negligent.

98. His Honour's findings were that on the evening of 3 August 1989 Lipscombe faxed to Woodward the financing proposal, the computer printouts for each shop and the particulars of sale. He met with the appellants at his office on the morning of 4 August 1989. There was little discussion about the figures provided by Lipscombe. Sheedy told Woodward how he and his wife hoped to finance the purchase and Woodward advised them to obtain a shelf company to purchase the business. Woodward referred to some taxation and superannuation benefits of running the business as a company. He expressed a view that he saw no reason to set up a family trust. There was some discussion about book keeping and the appellants said that they would arrange with their solicitor to acquire a company.

99. Subsequently, the appellants signed the agreement for sale dated 14 August 1989.

100. On 31 August 1989 Sheedy called Woodward to arrange an appointment that afternoon and he delivered the company documents for the shelf company (Fodure) which was the vehicle for the purchase. The appellants saw Woodward again on 4 September 1989 and informed him that they had bought the business. There were some discussion about opening a bank account in the company's name and the keeping of books and records, including taxation requirements.

101. On 23 November 1989 Mrs Sheedy telephoned Woodward and asked him to prepare an application for registration of Fodure as a group employer for tax purposes and shortly thereafter he forwarded such an application to her with a notice of change of registered office.

102. In his reasons for judgment his Honour referred to the allegation of misrepresentation against Woodward. He stated his conclusion that there was no evidence whatsoever that Woodward ever said that he had examined the figures made available to him by Lipscombe and pronounced them adequate to operate the business. He found that no material had been made available to Woodward for checking and that there was not any evidence that he was ever asked to do so. He considered there was no substance in the contract count since there was no evidence Woodward was asked to check any material. His Honour found that no statement made by Woodward involved a representation that was misleading or deceptive.

103. In the defence filed by Woodward, he agreed that, on or about 4 August 1991, he met with the appellants and that there was general discussion in relation to the proposed method of purchasing the business, including which vehicles could be utilised, and also whether the figures forwarded by Lipscombe to Woodward indicated that the cash flow of the business was adequate to sustain the proposed borrowings advised to Woodward. The defence also stated that Woodward advised the appellants that a shelf company should be selected as the purchasing vehicle for the business. He said that on the figures presented to him by Lipscombe, the cost of the proposed borrowings advised by the appellants would be able to be accommodated, but it would be best for them to complete the sale of their house first. He also expressed some concern because the lease over one of the newsagencies would expire in August 1991 and that there was no option.

104. These defences do not in terms concede that there was any detailed examination of the figures forwarded by Lipscombe although they do indicate that he must have looked at them. We consider that when his Honour referred to "examining" the figures he was using the term "examining" in the sense of close and detailed consideration and verification. When reference is made in the judgment to "no material having been made available to Woodward for checking", we take this to be a reference to information which Woodward was requested to verify.

105. So far as Woodward is concerned, the principal allegation made is that he checked the figures given to him and represented that he had done so and stated that the figures were adequate to operate the business, and/or that the business was viable.

106. In his statement Sheedy alleges that Woodward said on 4 August 1989:

I have been talking to Tony Lipscombe and I have

received faxes relating to the business. I am

impressed by what I saw and your description of

the business.

107. In her statement Mrs Sheedy did not assert that Woodward said that he had examined the figures and that they were adequate to operate the business, or that the business would be viable. She stated that she did not specifically tell Woodward to check anything in relation to the purchase of the newsagencies because she believed him to be a professional and that her belief was that she was paying him for his advice. She said that she assumed that there would be "a format" that chartered accountants adhered to in checking out a business, and that Woodward had never said that the loan would be too much, or expressed concern if the house was not sold. She said that he did not say anything which deterred her from proceeding with the purchase of the business. She said that if he had pointed out that the income from the newsagencies would not support the borrowings she needed, she would never have gone ahead with the purchase.

108. In cross-examination Sheedy testified that Woodward had said when referring to the figures:

..... on the face of it they look pretty good.

(Emphasis added)

109. His understanding of that statement was that the figures themselves looked all right and that Woodward was not, in making that statement, commenting as to whether the figures were true and/or accurate. Sheedy agreed that he knew more about the accuracy of the figures and hence their relationship to the true position than did Woodward. The transcript reads:

Q. All he had were those figures from Mr

Lipscombe?

A. True.

Q. And you understood when he said : "on the

face of it they look pretty good", that

what he was saying was, well the figures

in this printout look all right; was not

he?

A. That's true, yes.

Q. He was not saying to you that they were

true was he?

A. No, he wasn't saying to me that they were

true.

Q. In fact at the time that he said that to

you he had - I withdraw that. At the time

that he said that to you had been

considerably deeper into those figures

than he had, to your knowledge?

A. Yes, that is correct, yes.

Q. Mr Woodward explained to you what the

benefits were of operating the business

through a shelf company?

A. Yes, it was discussed.

110. Mrs Sheedy agreed that at the meeting Woodward said in reference to the figures:

111. She understood at that stage that Woodward had nothing more than Lipscombe's figures in front of him and that he was referring to the sheets in front of him at the time he was speaking. It does not appear that any other documents were available at the meeting which would enable the figures to be verified. She did not understand him to be saying that the figures necessarily were correct. There was subsequently some discussion in relation to a shelf company.

112. She also agreed that there was nothing said in the course of the meeting with Woodward about Woodward checking Lipscombe's figures and there was no question by either Sheedy or Mrs Sheedy or Woodward as to the price being paid for the business. She also agreed that prior to the exchange of contracts she did not get back to Woodward, nor so far as she was aware did Sheedy contact Woodward, or receive any correspondence from Woodward.

113. In our view, it was open to his Honour to conclude that there was no representation made to the effect that the figures before Woodward at the meeting on 4 August indicated that they were adequate to operate the business, or that the business was viable.

114. In relation to the contract claim, in the light of the above, it was open to his Honour to form the view that this was without any substance as against Woodward.

115. Sheedy agreed that by 21 July 1989 he had decided to purchase the business provided he could arrange finance and sell the house. There was agreement that the price stipulated was to be the purchase price and the only question which remained was the question of structure.

116. Sheedy agreed that before he left Port Macquarie on 31 July 1989 he had agreed to purchase the newsagencies. By 29 July 1989 he agreed that, subject to finance, and on the proviso that the Bonnet Bay property was sold, he and his wife had decided to purchase the newsagencies. When it was put to him that when he rang Woodward he wanted to be advised as to the best way to handle the transaction, he did not disagree. At that time when he saw Woodward the only thing left to determine so far as he was concerned, was the structure of the business and it was upon that subject Woodward gave advice. By the time he had discussions with Woodward he and his wife had assumed that they were paying a fair price for the business.

117. The appellants refer to a memorandum of fees rendered by Woodward on 15 January 1990 which refers, among other matters, to "discussions in relation to the acquisition of the business and the financing of the purchase and reviewing the detailed information provided". Having regard to the whole of the evidence we do not consider that this reference makes good the submission that there was a contract to verify the figures provided by Lipscombe. Moreover, on a fair reading of the memorandum of fees, the primary emphasis is on the financial and taxation affairs of the company during the five months ended 31 December 1989, and on advising in relation to the purchase of a shelf company and on outlining the advantages and disadvantages of such a structure. The reference to "... reviewing the detailed information provided" does not specifically refer to any written information. However, assuming that it does refer to the figures provide by Lipscombe, it does not establish that there was an agreement to verify or substantiate any figures provided by Lipscombe. The terms of the memorandum of fees are consistent with an arrangement to advise concerning the structure of the transaction on the basis of the figures provided by Lipscombe. In cross-examination Woodward testified that he was not aware that the appellants were coming to him for general advice about buying a business. He denied that they were looking to him to advise them about the profitability of the business. As far as he was concerned the only matter they came to talk about was the structure of the business. He said that he gave the appellants to understand that, on the figures that he had in front of him, they could afford to buy the business. When asked to explain what he was referring to in relation to advising for the purchase of the shelf company for business purposes, and outlining the advantages and disadvantages, and charging for reviewing the detailed information provided, he stated that he was giving the appellants advice as to the structure they should use to buy the business, and that the meetings and discussions related to the purchase of a shelf company for business purposes.

118. In our opinion there was evidence available to his Honour on which he could reasonably find that there was no substance in the contract count because no agreement had been reached in relation to verification. Also, there was evidence on which he was entitled to find that Woodward did not represent that he had checked the figures of the business presented to him by Lipscombe. Furthermore, on the evidence, it was open to his Honour to find that Woodward did not make a representation that the figures presented to him by Lipscombe were adequate to operate the business or that the business was a viable business.

119. In his reasons the trial Judge dealt with the question of reliance very briefly. Having found against the appellants on all issues raising questions relating to misleading and deceptive conduct, there was no reason for him to do otherwise. On the question of reliance his Honour said

None of the statements made, or documents made available, to

the Sheedys by Dunkley or the NAB on or before 31 July 1989

involved a representation that was misleading or deceptive.

Nor did any statement made by Mr Woodward on or about 30

August 1989. However, even had any representation been

capable of being so characterized, I do not consider that it

would have made the slightest difference to the Sheedys.

Both of them had worked in banks in their youth and were

perfectly capable of understanding the various financing

propositions put to them by the NAB. Mr Sheedy made up his

own mind about whether Fodure should buy this business.

His only difficulty was to convince his wife to sell their

home at Bonnet Bay. Mr Lipscombe was never consulted to

give finance advice.

In the period prior to the earthquake Mr and Mrs Sheedy

expressed their satisfaction with the business. It is said

that at this time they did not realize the ramifications of

the financing. What is clear is that the business was

acquired in the expectation of selling the Bonnet Bay

property. That did not happen for over a year. The sale

was almost $100,000 less than anticipated. The earthquake

hit. They leased new, expensive motor vehicles. They

took on extra staff. Shop 2 was sold. Fodure and the

Sheedys were involved in a succession of different loan

transactions, none of which was in contemplation by 30

August 1989, and none of which was in any sense caused by

any representation of the type alleged against Dunkley, the

NAB or Mr Woodward.

120. Grounds of appeal (j), (k), (l) and (n) refer to this passage of the reasons. We consider for the reasons given above, that there was evidence on which his Honour was entitled to find that there was no reliance by the appellants on any representation made by or on behalf of the respondents. It was open to his Honour, in our view, to make such a finding on the basis that the appellants made their own enquiries, and acted on their own enquiries, as to whether the business should be purchased.

121. It is a question of fact whether there was reliance on a representation. It is clear from his Honour's findings that he disbelieved the appellants' evidence in relation to reliance.

122. When determining the issue of reliance the impression made on the trial judge is often of central importance. Apart from surrounding circumstances and inherent probability, a judge is often guided by the manner in which questions are answered or otherwise dealt with. The essential task which confronts a judge in deciding a question of reliance often involves an assessment of the influences which would actuate a party in the light of a specific fact situation. As was pointed out in Devries (supra) at 479, even when a finding is only partly based on the trial judge's assessment of the trustworthiness of witnesses who have given oral testimony, allowance must be made for the advantage which the trial judge has enjoyed in seeing and hearing the witnesses give the evidence. This aspect is important in the present case where his Honour did not accept the evidence of the appellants on several important issues.

123. His Honour found that Sheedy made up his own mind about whether the business should be bought. It is clear from the context in which this finding appears, that his Honour formed the view that Sheedy decided independently of any statements or information given to him by the respondents that his company should buy the business. His Honour found that the only difficulty which Sheedy saw in the way of buying the business was that Mrs Sheedy was reluctant to sell the home at Bonnet Bay.

124. In his judgment the trial Judge referred to the following relevant matters:

1. Prior to the earthquake in Newcastle on 28 December 1989, the

appellants expressed their satisfaction with the business.

2. Their contemporaneous complaints to the NAB were directed at the

incidents of the banking relationship, namely the debiting of

interest, referral of cheques, securities requirements and so

forth. They also directed complaints at the stocktakers.

3. They were not without some experience in financial matters. Both

of them were capable of understanding the various financing

proposals put to them by the NAB.

4. In the first half of 1989, after becoming interested in the

purchase of the newsagency business and making enquiries, Sheedy

attended a seminar by a firm of business brokers on the subject of

newsagencies. He was familiar with the contents of newsagency

records and with prices being asked for newsagencies. He had

externally inspected about 20 newsagencies and had spoken with the

managers of two newsagencies in Orange and Armidale respectively,

at Easter and in June 1989.

5. Sheedy in July 1989 had been shown by Lipscombe how to verify

figures set out in disposal sheets and computer printouts.

6. The appellants had instructed a solicitor to act for them on the

purchase and had discussed the agreement with him. They had taken

the purchase agreement home for perusal. There was no warranty in

the finally executed agreement as to the takings of the business.

Moreover, the agreement contained a disclaimer clause (clause 18),

to the effect that the purchasers acknowledged that, in entering

the agreement, they had not relied on any statement or

representation given by the vendors, or anyone on their behalf in

respect of the subject matter of the agreement other than

contained in the agreement. This agreement was executed on 14

August 1989.

125. Subject to what follows concerning the disclaimer clause all of these facts were relevant matters to which the trial Judge was entitled to take into account in assessing the totality of the evidence.

126. The law is well settled that to establish reliance it is not necessary to show that a representation was the sole or even a dominant consideration leading to entry into a contract. It is sufficient if the factor or consideration or matter played more than a trivial or insignificant role in the making of such a decision. If a representation is made which of its nature or content could be expected to influence the making of a decision in a particular way then, prima facie, such a representation would be taken as a matter relied on by the decision maker. See Gould and Anor v Vaggelas and Ors (1985) 157 CLR 215 at 236.

127. We do not accept the argument advanced on behalf of the vendors to the effect that the disclaimer clause in the agreement affords a defence in the present case. Reference was made on behalf of the first two respondents to the decision in Rumpe v Camrol Pty Ltd (1985) ATPR 40-522. In that case Morling J was satisfied that whenever there was a discussion as to the hours of operation of a restaurant, it was made clear in the conversation that, although the representor stated that he believed the premises were licensed until 3am, the applicants should rely on their own enquiries. In the circumstances of that case, his Honour while finding that it was incautious, if not to say reckless, of the respondents to state, in a newspaper advertisement, that the premises were licensed until 3 am, nevertheless, on the whole of the evidence, it played no part in the decision of the applicants to enter into the agreement. He found that by the time the agreement was signed, the applicants had been told that they should not rely on the statement, but should make their own enquiries. There is no evidence in the present case as to whether the solicitor acting for the appellants directed their attention to the disclaimer clause.

128. It is evident from the matters referred to by his Honour and from the references to transcript appearing earlier in these reasons, that the appellants were conscious of the need for professional legal and accounting advice, and that they made their own independent enquiries in relation to the purchase of the business.

129. Having regard to the various matters canvassed in these reasons we are not persuaded that his Honour erred in reaching the conclusions which he did as to misrepresentations, reliance, and contractual or tortious duty.

130. Accordingly, this Court is of opinion that the appeal should be dismissed with costs.