Miletich v Murchie

Federal Court of Australia|2012-09-17|Before: Mr P, Gray J

Number of paragraphs: 127

Counsel for the applicants: Mr M Garner

Solicitor for the applicants: Colin Biggers & Paisley

Solicitor for the first and second respondents: Sparke Helmore

Counsel for the third respondent: Mr R Hay (8 and 9 August 2011)

Solicitor for the third respondent: McMahon Fearnley Lawyers Pty Ltd

Counsel for the fourth respondent: Mr P Lithgow (20 October and 8 November 2011)

Solicitor for the fourth respondent: John Dunne & Associates

IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 517 of 2010

83 EAST PTY LIMITED (ACN 094 852 507) (IN LIQUIDATION)

JUDGE: GRAY J DATE OF ORDER: 17 SEPtember 2012 WHERE MADE: MELBOURNE

On or before 25 September 2012, the applicants file and serve on the liquidator of the third respondent and on the fourth respondent: (a) an affidavit detailing the terms of settlement reached between them and the first and second respondents and, if necessary, setting out the amount the applicants claim to be entitled to deduct from any lump sum settlement by way of costs; and (b) minutes of proposed orders that reflect the reasons for judgment published this day.
The proceeding be listed for further hearing on 28 September 2012, for submissions as to the appropriate orders to be made in the proceeding. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 517 of 2010

JUDGE: GRAY J DATE: 17 september 2012 PLACE: MELBOURNE

The nature and history of the proceeding 1 This case concerns misleading and deceptive conduct on the part of a property developer and a leasing agent, by way of representations as to the nature and extent of tenancies in a shopping centre development and predictions as to the level of patronage of the shopping centre. The applicants were induced by those representations to enter into a franchise agreement and a licence to occupy an area in the shopping centre, with a franchisor who entered into a lease of that area from the developer. The principal questions to be determined are factual issues, although there is a question as to how the statutory provisions concerning the relative liability of concurrent wrongdoers should be dealt with. 2 In the course of the trial, two significant events occurred. The applicants and the leasing agent respondents entered into a settlement of the proceeding as between themselves. The developer corporation went into liquidation. The applicants then sought to join as a respondent the sole director of the developer. He elected to play no part in the trial, which caused some complexity in the conduct of the remainder of the trial, because it was necessary for counsel for the applicants to lead evidence about matters that had been the subject of admissions on the pleadings by the other parties. 3 The applicants relied on both s 52 of the Trade Practices Act 1974 (Cth) ("the Trade Practices Act") and s 9 of the Fair Trading Act 1999 (Vic) ("the Fair Trading Act"). To the extent to which the representations were as to future matters, the applicants invoked s 51A of the Trade Practices Act. Other relevant provisions are those found in Pt VIA of the Trade Practices Act, and Pt IVAA of the Wrongs Act 1958 (Vic) ("the Wrongs Act"). These provisions concern apportionment in respect of concurrent wrongdoers.

The persons involved 4 The first applicant, Kathleen Miletich, has had a long career as a school teacher. She is the mother of the second applicant, Adrian Miletich. He is a tradesman plasterer, who was operating a plastering business. The first two applicants decided that they would like to change their careers and to go into business together to run a cafe. They responded to an advertisement by Foodco Group Pty Limited ("Foodco"), which was in business as a franchisor of cafe businesses under the names Muffin Break and (through its subsidiary Jamaica Blue Pty Ltd ("the Jamaica Blue company")) Jamaica Blue. The advertisement was designed to attract people interested in running a franchise in the Muffin Break cafe chain. Through their dealings with Foodco, particularly its development manager Anthony Brusch, the first two applicants decided that a Jamaica Blue franchise would be more to their liking. In due course, the first two applicants formed the third applicant, Kalel Enterprises Pty Limited ("Kalel") and established the Kamil Unit Trust, of which Kalel was the trustee. 5 In the middle of 2006, there was a shopping centre development under construction in premises formerly used as a hardware store, with a frontage to 399 Bourke Street and another to 368 Little Collins Street in Melbourne. The development was known as the Foundry. The registered proprietor of the site and the developer of the Foundry was the third respondent, 83 East Pty Limited ("83 East"). The fourth respondent, Stephen Donnelly, was the sole director of 83 East. Mr Donnelly had an office that was part of a suite used to present the development to potential lessees of shops in the development. Justin Robison had the title of Development Manager for the Donnelly Group, of which 83 East was a constituent. 83 East's site manager for the Foundry development was Aldo Ponozzo. 6 The second respondent, Wilmot Murchie Pty Limited ("Wilmot Murchie"), carried on business as a leasing agent and had been engaged by 83 East in that capacity in respect of the Foundry development. There were times when Wilmot Murchie was not the exclusive leasing agent for 83 East. Jones Lang Lasalle also performed in that capacity. The first respondent, Alan Murchie, was a director of Wilmot Murchie. Also employed by Wilmot Murchie as a Senior Leasing Executive was Edward Geraghty.

The course of the trial 7 The proceeding was listed for trial on 8 and 9 August 2011. This time was allocated on the basis of estimates given by the parties' legal representatives that the trial would take two days. In hindsight, it is obvious that insufficient attention had been given to the preparation of the case until the last few weeks leading up to the trial. On 14 June 2011, the applicants filed an amended statement of claim, adding allegations of representations that had not been pleaded prior to that time. On 6 July 2011, Wilmot Murchie and Mr Murchie filed a defence to the amended statement of claim, which responded to the new allegations and took the opportunity to add defences not previously pleaded. 83 East filed a very substantially amended defence, which also included a number of new allegations, as well as responding to the new allegations in the amended statement of claim. All parties filed documents indicating their intention to call witnesses additional to those in respect of whom notice had already been given. The result was that the trial began on 8 August 2011 with no chance of finishing in the course of two days. It was adjourned part-heard at the end of 9 August 2011 and listed to continue on 20 October 2011. 8 In the meantime, 83 East was placed into liquidation by order of the Supreme Court of Victoria. The applicants then made application for leave to proceed against 83 East and for the joinder of Mr Donnelly as the fourth respondent to the proceeding. The application was dealt with by Jessup J as duty judge on 14 October 2011. Mr Donnelly appeared unrepresented. His Honour granted conditional leave to the applicants to proceed against 83 East, the condition being that the applicants take no step to enforce any judgment without the leave of the Court. His Honour also noted an undertaking of the applicants by their counsel that, if required they would make available for further cross-examination on behalf of Mr Donnelly the witnesses who have given oral evidence to date. His Honour joined Mr Donnelly as the fourth respondent to the proceeding and made directions for the service of documents. On or before 17 October 2011, the applicants were required to serve on Mr Donnelly an amended application, a second further amended statement of claim, the lists of documents filed by all parties in the proceeding, the exhibits tendered at the trial up to that point, and the transcript of the hearing up to that point. The applicants filed an amended application and a second further amended statement of claim on 17 October 2011. 9 On 19 October 2011, solicitors acting on behalf of Mr Donnelly communicated with the Court, and with the solicitors for the other parties, by letter sent by facsimile transmission. The letters indicated that counsel had been retained to appear on the following day to seek an adjournment "for an appropriate period of time to enable us to take proper instructions, review the documents, draw an appropriate defence and otherwise advise Mr Donnelly." The letter to the Court indicated that counsel had been briefed "for the sole purpose of seeking an adjournment of the trial". It informed the Court that, "We do not have any instructions at this time to act beyond making an application for an adjournment." 10 When the trial resumed on 20 October 2011, counsel appeared for Mr Donnelly and applied for an adjournment for a month. The application was opposed by the applicants, but not by Wilmot Murchie and Mr Murchie. Counsel for Mr Donnelly indicated that Mr Donnelly had been served on Monday, 17 October 2011. Mr Donnelly had consulted solicitors on the following day. Counsel for Mr Donnelly said that he and his instructing solicitors did not have a complete set of documents in the case, needed to acquire those documents and needed time to prepare a defence and to represent Mr Donnelly in the case. I took the view that an adjournment for a month would be more than was required. I made orders for the applicants to deliver copies of all the relevant documents to Mr Donnelly's solicitors that morning and adjourned the trial until the following Monday, 24 October 2011. 11 I was only prepared to grant a short adjournment because it appeared to me that Mr Donnelly had already been involved in the proceeding to a significant extent, instructing solicitors who had been acting for 83 East. Cross-examination of witnesses by counsel for 83 East had clearly been based on instructions given by Mr Donnelly. It appeared to me that there was no sound reason why Mr Donnelly could not have invited the solicitors who had been acting for 83 East, and who were therefore conversant with the proceeding, to act for him. There was no material explaining why Mr Donnelly needed, or chose, to engage new solicitors and counsel. There was no material explaining why, although he had been present when Jessup J made the orders of 14 October 2011, Mr Donnelly waited until after the amended documents had been served on him to engage solicitors. If he did need to engage new solicitors, there was no material to explain why he chose to give his new solicitors no instructions in relation to the case, other than instructions to seek an adjournment for a month, between the time of service of the papers on him on 17 October 2011 and the projected date for the resumption of the trial on 20 October 2011. With the exception of some issues of apportionment as between respondents, the case itself does not involve issues that are novel or that required significant research into legal issues. The issues are predominantly factual. Despite the late amendments to the pleadings, the case itself is not particularly complex. Cross-examination by counsel for 83 East had been quite brief. It seemed to me that new solicitors and counsel, in possession of all the relevant documents and instructed by Mr Donnelly, would be able to equip themselves to represent him in the continuation of the trial after an adjournment of three and a half days, in addition to the four days that Mr Donnelly had already had after he had been made aware that he had become a respondent to the proceeding in his own right. 12 It appears that Mr Donnelly and his legal representatives made little or no effort to be in a position to participate in the resumed trial on 24 October 2011. At 10.14 am on 21 October 2011, Mr Donnelly's solicitors sent by facsimile transmission to my associate a letter of that date. The letter informed me that Mr Donnelly had decided that he did not wish to instruct either the solicitors or counsel to represent him in the trial recommencing on 24 October. The letter said: We were concerned that neither we nor any other lawyers new to the proceeding could properly represent his interests at trial given the short time available for preparation and Mr Donnelly was not prepared to instruct us to proceed on that basis. Mr Donnelly is aware that the trial is recommencing on Monday, 24 October and that he is now a party to the proceeding; however, he has not advised us that he has made any alternative arrangements for representation at the trial. 13 It is clear from the letter of 19 October 2011 and the letter of 21 October 2011 that Mr Donnelly made no real attempt to participate in the trial. The former letter made it clear that, unless he were granted an adjournment of the length he sought, Mr Donnelly had decided not to participate in the trial. The latter letter confirmed this determination. 14 When the trial resumed on 24 October 2011, Mr Donnelly did not appear. Counsel for the applicant called further evidence. In the course of the afternoon, counsel for Wilmot Murchie and Mr Murchie announced that those respondents had settled the proceeding as between the applicants and themselves. I adjourned the trial until 26 October 2011. On that day, I made orders by consent giving effect to the settlement between the applicants and Wilmot Murchie and Mr Murchie. I also ordered that a cross-claim of 83 East against Wilmot Murchie be dismissed, because it was unnecessary. All that was sought was a declaration that Wilmot Murchie was a concurrent wrongdoer with 83 East within the meaning of s 87CB of the Trade Practices Act and s 24AH of the Wrongs Act, and an order that 83 East's liability to the applicants was limited to the proportion of any loss and damage for which 83 East was responsible. Such a cross-claim was unnecessary to enable the intended result to be achieved. 15 After I had excused counsel for Wilmot Murchie and Mr Murchie, counsel for the applicants called further evidence. There was then a discussion between counsel for the applicants and me as to how the trial should proceed, given that it was undefended. Because of the absence of any pleading from Mr Donnelly, there were no admissions by him, and it would be necessary for the applicants to prove each element of their case against him. I adjourned the further hearing to 8 November 2011. I also gave leave to the applicants to issue subpoenas to attend and give evidence, one being to Mr Donnelly himself. I made the subpoenas returnable at 10.15 am on 8 November 2011. Counsel for the applicants also foreshadowed an application for a freezing order in relation to Mr Donnelly's assets. I ordered that any such application be made returnable on 8 November 2011. 16 On 8 November 2011, counsel for the applicants handed up a copy of a letter to his instructing solicitors from the solicitors who had acted for Mr Donnelly in his application to adjourn the trial. The letter indicated that Mr Donnelly had been served with the subpoena to attend and give evidence and with an application for a freezing order. The letter disclosed that Mr Donnelly was in China, having left on a pre-arranged trip two days after having been served with the subpoena, and did not intend to return to Australia until 16 November 2011. The letter asserted that it was impossible for Mr Donnelly to return any sooner than that. Perhaps fortunately for Mr Donnelly, counsel for the applicants elected not to call on the subpoena directed to him. 17 The trial concluded on 8 November 2011. I reserved my judgment. I also made an order restraining Mr Donnelly from removing from Australia any of his assets and from disposing of or further encumbering a specific property of which he is the registered proprietor. I did so principally on the basis that I found that Mr Donnelly had previously sworn a false affidavit as to the financial position of 83 East. On 2 March 2011, the applicants had filed an application, returnable on 10 March 2011, seeking to restrain 83 East from removing any of its assets from Australia or disposing of them, so as to cause them to fall below a nominated sum. In response to this application, Mr Donnelly swore an affidavit on 8 March 2011, setting out what he said was the financial position of 83 East. The affidavit contained evidence of a mortgage granted by 83 East in favour of Permanent Custodians Limited to secure a loan of $6,093,000, the subject of a loan agreement dated 28 January 2011. It also contained evidence of a valuation of the security in the sum of $11,170,000. On the basis of the evidence in the affidavit, the applicants agreed to accept an undertaking that 83 East would notify them in writing before the sale of any of the units in the Foundry development was effected. Following the liquidation of 83 East, Mr Donnelly as its sole director signed a report as to the affairs of 83 East. That report discloses the mortgage to Permanent Custodians Limited, in respect of which $3,600,000 was said to be owing at the date of the report. It also discloses a mortgage to Avanour Pty Ltd, in respect of which $9,000,000 was said to be owing at the same date. This mortgage is the subject of a caveat lodged on 25 August 2011 in respect of the titles of 28 units in the Foundry. The date of the claim under the interest to which the caveat relates is 28 February 2011, eight days before Mr Donnelly swore his affidavit in response to the application for a freezing order. If this claim date is correct, it means that, when Mr Donnelly swore his affidavit of 8 March 2011, the combined total of the two mortgages to Permanent Custodians Limited and Avanour Pty Ltd exceeded the total assets of 83 East by a substantial margin. In addition, there was information that, on 8 November 2011, Mr Donnelly was in China, negotiating the settlement of a very large claim against him by a Chinese entity, and also had a significant, but unquantified, liability to the Commissioner for Taxation.

The representations 18 In late May or early June 2006, Mr Brusch received a telephone call from Mr Murchie asking if Foodco was interested in opportunities for Jamaica Blue sites in the central business district of Melbourne. Mr Brusch said that he was interested. Mr Murchie followed this up with an email to Mr Brusch on 5 June 2006. The email suggested that Mr Murchie and Mr Brusch should meet at the Foundry, where Mr Murchie could show Mr Brusch a "walk through" video and provide him with a better appreciation of the scale and location of the development at the Foundry. The email made a specific reference to an area of 37 square metres plus a licensed seating area, located in the central atrium on the Little Collins Street level of the Foundry. Attached to the email was a scaled-down copy of a brochure, produced by Wilmot Murchie with input from 83 East and specifically Mr Donnelly, designed to attract potential lessees of premises in the Foundry. The email indicated that a hard copy of the brochure and its accompanying plans would be posted to Mr Brusch. 19 Mr Brusch made a visit to the Foundry site on 9 June 2006. He met Mr Murchie, who introduced him to Mr Geraghty. The meeting took place in a suite set up to entertain potential lessees, with a frontage onto Little Collins Street. In that suite was a model of the Foundry development. On the walls were four large drawings of the plans for the four levels of retail premises (the basement, the Little Collins Street level, the Bourke Street ground floor level and the first floor level). Mr Murchie said that there were talks with Rebel Sports and a gymnasium operator about the first floor, and that the ground floor Bourke Street level would be a high class food court. He pointed to individual shops, saying that one would sell sushi and another would be a chemist. He drew attention to the specific site on the Little Collins Street level that he was proposing for a Jamaica Blue outlet, explaining that it would take advantage of heavy foot traffic going down the travelators (which provided access between the levels, except for the basement, in an atrium-style space in the centre of the retail area), which would go directly past that shop. The designated area was described on the plans as shop T37. Mr Brusch raised the question of the inadequacy of the size of the proposed site, a subject that Mr Murchie deferred. Mr Murchie then described the mix of shops around that site, pointing to one that was to be a hairdresser, one that was to be a Ticketek kiosk, one that was to be a newsagency, as well as a juice bar, a bar and cafe, an optometrist and a continental cafe at the Little Collins Street entrance. Mr Brusch raised the question of the number of coffee machines in the premises as a whole. Mr Murchie also deferred this question. Mr Murchie also pointed to separate travelators that would go down to the basement, saying that it would be a golf warehouse. 20 Mr Murchie and Mr Geraghty then invited Mr Brusch to watch a video on a screen in the suite. Further reference will be made to the contents of this video. As it was being shown, Mr Murchie pointed to specific shops and described what they were to be. He again referred to the sushi shop. He referred to a florist and again to the chemist. He stopped the video two or three times to highlight shop T37 and its visibility from the top of the travelators as well as to someone coming down to the Little Collins Street area. He pointed out the Ticketek kiosk, the newsagency, the juice bar and the continental cafe, as well as the travelators down to the golf warehouse. 21 At the end of the presentation, Mr Brusch indicated that he was interested, subject to finding a suitable franchisee and to the area of the site being of a sufficient size. 22 Mr Brusch had already been approached by Ms Miletich and Mr Miletich, who were interested in a Muffin Break franchise. He had introduced them to the idea of a Jamaica Blue franchise, on the basis that the range of food offered by Jamaica Blue was greater than that of Muffin Break, and Jamaica Blue was aimed at a somewhat more sophisticated market. After his meeting on 9 June 2006 at the Foundry, Mr Brusch spoke again to Ms Miletich and Mr Miletich. He showed them the email copy of the brochure he had received (which was scaled down and in black and white only) and told them about the Foundry development and its possible suitability. 23 As a consequence, on 22 June 2006, Mr Brusch accompanied Ms Miletich and Mr Miletich to the leasing suite at the Foundry. There they met Mr Murchie and Mr Geraghty. For at least part of the time, Mr Donnelly was also present. Mr Robison also put in a brief appearance. 24 Ms Miletich and Mr Miletich were invited to watch the video on the screen in the leasing suite. The video includes computer-animated segments, in which a notional camera moves through the Bourke Street ground floor level and the Little Collins Street level and up and down the travelators between those levels. The segments show all shops on those levels of the Foundry occupied by specific, trading businesses. The nature of each business is made apparent either by a description of the business appearing in large letters on the shop premises in question, or by a mock business name so appearing, from which it is possible to deduce the kind of business. In addition, mock window displays are shown, indicating the type of business in a particular shop. For instance, shop T37 was shown as "CAFE/BAR". One shop on the Bourke Street ground floor level was shown as "IL RESTAURANTE". The computer-animated segments of the video show people moving about the shopping area and apparently patronising the businesses in it. From time to time, the video was stopped so that Mr Geraghty could point out specific features of the development and the specific natures of certain of the shops. 25 After the video had been shown, Ms Miletich, Mr Miletich and Mr Brusch moved around the suite, examining the model and the plans on the walls, while Mr Murchie and Mr Donnelly spoke with them. Mr Donnelly told Ms Miletich that there was going to be boutique shopping at the site. He mentioned a sporting retail outlet, either Rebel Sport or another, a gymnasium, and a Drummond Golf store. He told Ms Miletich that, on the Little Collins Street level, there would be a hairdresser, a gift shop, an Irish bar and other boutique-style shops. On the Bourke Street ground floor level, he said there would be several other quality food outlets, plus a chemist and a newsagent. He said that shop T37 was well placed, because of its proximity to the travelators linking the Little Collins Street level and the Bourke Street ground floor level, as well as to the travelator to the basement. 26 At this meeting, Ms Miletich and Mr Miletich were given copies of the brochure. The brochure is in the form of a booklet, printed on cardboard or heavy paper, slightly larger than an ordinary A4 sheet of paper. The inside of the back cover is folded to create a pocket, in which is a folded A3 size set of coloured plans of each of the four levels of the retail development. The various shop premises are shown, and designated by the letter "T" with a number. The walking areas, including the atrium area, are shown in two tones of grey and the travelators are shown in white with lines to simulate stairs. At the foot of each plan is a small elevation drawing, with the level shown in that plan coloured in. When the plan for Little Collins Street is folded and inserted in the pocket, on the outside of it is what is described as an artist's impression of that level, looking north. The impression shows travelators in the foreground. Behind the travelators on the Little Collins Street level are shown shops, including one titled "CDs'n'DVDs" and one whose title contains the word "EATERY". On the next level up is shown what appears to be a newsagency and what appears to be a hamburger shop. When the brochure and the plans are so assembled, this picture is opposite a page on which appears at the top an artist's impression of the Little Collins Street facade and, below that, what is described as "Internal view of atrium." In this latter image, which is shown from the perspective of the Bourke Street ground floor level, "IL RESTAURANTE" and "ASIAN DEL" are clearly visible. On the level above, a bedding shop is depicted. 27 Below those two pictures appear the following words in smaller font than is used anywhere else in the brochure, apart from some asterisk references to sources of particular statements. The words in this smaller font are: 83 East Pty Ltd is a member of the Donnelly Group and the developer of The Foundry building. No person should rely on the contents of this publication ("Contents") without first obtaining advice from a qualified and independent professional. This publication is provided on the following conditions: the authors, consultants and editors (including Donnelly Group and leasing agents) are not responsible for the results of any actions taken based on the Contents, nor for any error or omission in the Contents; and the publisher is not engaged in rendering legal, accounting, professional or other advice or services. The publisher, authors, consultants and editors, expressly disclaim all and any liability and responsibility to any person in respect of anything, and of the consequences of anything, done or omitted to be done by any such person in reliance, (whether wholly or partially), upon the whole or any part of the Contents. No author, consultant or editor shall have any responsibility for any act or omission of any other author, consultant or editor. A person should satisfy itself and make its own enquires [sic] as to the Contents. 28 The brochure has seven more pages. The first of them is a short introduction. The second has a statement about the history of the site and some words about the nature of the development and its aims, opposite a photograph of the Bourke Street frontage of the building, said to have been taken around 1951. The next two pages are devoted to a description of the location and some assertions as to its advantages. Those assertions include the following: A people 'ant track'. Two entrances to The Foundry create a natural link or 'ant track' from Little Collins Street through to Bourke Street. This provides a convenient and attractive internal thoroughfare onto the CBD retail core or across to Hardware Lane. 29 The next two pages show, on the right hand side an artist's impression of the Bourke Street facade and, on the left hand side text, with the headline "Forging a unique new shopping, cafe and residential experience." Under that headline, the text begins: 40 quality tenants. Along side [sic] contemporary retailers and desirable brands, The Foundry will bring a new standard of convenience and service retail to the trade area including established 'best practice' café operators and restaurants. Elsewhere on that page, the text refers to the Foundry as offering "a distinctly different [sic] and more sophisticated environment with a co-ordinated retail, food and beverage mix." There is also the statement that, "The focus for food and beverage is on choice with healthy options and a quick, convenient offering." 30 Ms Miletich read the brochure at the meeting that day and subsequently. Mr Miletich also read it subsequently. 31 Before Ms Miletich and Mr Miletich left, Mr Ponozzo came into the suite and offered to take them on a walking tour of the Little Collins Street level of the development. Together with Mr Brusch, they accompanied Mr Ponozzo into the construction site. They walked through to the atrium area. Shop premises had been completed to the point that glazing of their windows had been done. The travelators had not yet been installed in the atrium area. Construction work was still in progress on other levels. As they walked through, Mr Ponozzo pointed out specific shops and described the nature of each of them. He indicated an Irish bar close to shop T37, and a gift shop next to it, as well as a hairdresser on the other side and a florist. He referred to the basement level as including a gym, a sporting complex and Drummond Golf. Using stairs, the party moved to the Bourke Street ground floor level, where Mr Ponozzo pointed out a newsagent and a chemist shop and some of the food sites. Mr Miletich did not hear all of what Mr Ponozzo said, because he spent part of the tour walking away from the rest of the party, doing his own exploring of the site. Ms Miletich heard all of Mr Ponozzo's presentation. 32 By the combination of the video, the brochure, the model, the enlarged plans on the walls of the leasing suite, and the statements of Mr Geraghty, Mr Murchie, Mr Donnelly and Mr Ponozzo, on 22 June 2006, the respondents conveyed to Ms Miletich and Mr Miletich that, when they opened a business in shop T37, the other shops in the Foundry would be occupied and trading, that there would be people moving through the Foundry and patronising the businesses in those shops, that there would be 40 quality tenants including boutique-style shops and "best practice" cafe operators and restaurants. In other words, they conveyed to Ms Miletich and Mr Miletich that, if they were to operate a business in shop T37, they would do so in a place that was attractive to potential customers as part of a tenancy mix designed to enhance the attractiveness of the Foundry to potential customers. They conveyed these representations in trade or commerce, in that they were in negotiations with Foodco for the grant of a lease to Foodco or the Jamaica Blue company of shop T37, for the purpose of enabling Ms Miletich and Mr Miletich to operate a Jamaica Blue cafe in shop T37. 33 Those negotiations proceeded in the months following the meeting of 22 June 2006. Those negotiations led to Foodco and 83 East entering into an agreement on 7 August 2006, whereby Foodco would lease from 83 East shop T37, subject to Foodco securing a suitable franchisee for a Jamaica Blue cafe. There were then negotiations about the terms of a draft lease, which included information from 83 East to Foodco that the projected opening date of the Foundry was being pushed back to various dates towards the middle of 2007. 34 In the meantime, on 7 August 2006, Ms Miletich and Mr Miletich caused Kalel to be incorporated. They became the sole directors and shareholders of Kalel. On the following day, Ms Miletich and Mr Miletich executed a trust deed, establishing the Kamil Unit Trust. Kalel was the trustee and Ms Miletich and Mr Miletich between them held all of the units in a unit trust. The purpose of the unit trust was to acquire and exercise rights as a franchisee and a licensee of Foodco to operate a Jamaica Blue cafe from shop T37 in the Foundry. Foodco advised the solicitors acting for 83 East that a clause permitting the grant of a licence of shop T37 to a franchisee was required to be inserted into the proposed lease. 35 Together with a letter dated 15 November 2006, Foodco forwarded to Ms Miletich and Mr Miletich an agreement to enter into a franchise agreement and a licence agreement, a franchise agreement to be held in escrow, and a licence agreement to be held in escrow. The letter also advised that, when a disclosure statement in respect of the proposed lease of shop T37 had been received from 83 East, Foodco would forward a disclosure statement to Ms Miletich and Mr Miletich. 36 On 13 December 2006, there was email correspondence between Mr Murchie and Mr Brusch about the proposed disclosure statement. It is apparent from the first of the emails on that day, at 7.05 am, that Mr Brusch had been requesting the disclosure statement so that the lease could be executed. Mr Murchie was apologising for the absence of the disclosure statement on the basis that he had been off work ill for two days. He stated that "The DS form is now approved" and promised that it would be emailed that afternoon. Mr Brusch made another request at 4.08 pm, to which Mr Murchie replied at 5.02 pm, saying that preparation was under way and the disclosure statement would be on Mr Brusch's computer by the next morning. Finally, at 10.17 pm, Mr Murchie sent an email to Mr Brusch, which was copied to Mr Donnelly, attaching the disclosure statement. He invited Mr Brusch to "check the main commerce [sic] and confirm it is as per your understanding." 37 The draft disclosure statement is said to have been made pursuant to the Retail Leases Act 2003 (Vic). It is a statement by the landlord or the landlord's agent. For the most part, it constitutes a form, with two columns, the left one indicating the subject about which information is required and the right one being for the landlord or the landlord's agent to fill in information relating to that subject. The form is in several parts. Part 4 contains various requirements for information about a retail shopping centre, if the premises to be leased are located within such a centre. That part of the form contains the heading "Centre Details". The subject of the first item is "The total number of trading premises in the Centre". In the right hand column in respect of this item appears the following: The Centre is under construction. At the date of this statement, opening is anticipated on 21st May 2007. This date may be delayed. On completion it is estimated that there will be 40 premises available for leasing in the Centre. This number may change and be increased or decreased prior to the commencement of or during of [sic] after the Term Other items in this part of the form are as follows: Tenancy mix (by category) of the Centre. Women's fashion, men's fashion, specialties, cafés, supermarket, footwear, accessories, jewellery and gifts, household, services and health and beauty. Is the tenancy mix of the Centre likely to change over the term of the lease. Yes If so, provide details of presently known, or likely changes The Centre is under construction and not fully leased. The tenancy mix is therefore not certain at the date of this statement. Details of any changes to the tenancy mix are not known as at 13th December 2006. The tenancy mix is continuously subject to change to meet market demand as determined by the Landlord. Accordingly, the tenancy usage mix within the Centre may change prior to the commencement of the lease and may change from time to time during the term of the lease. Any such change to the tenancy mix may affect the Tenant's trade.

38 Towards the end of the document appears the following: PART 10 − DECLARATIONS BY THE LANDLORD OR THE LANDLORD'S AGENT I acknowledge that this Statement contains all representations in relation to the proposed lease by the Landlord and the Landlord's Agent and I am satisfied that all agreements are fully reflected in this statement. I have not knowingly withheld information which is likely to have an impact on the Tenant's proposed business. Signed by the Landlord or the Landlord's Agent for and on behalf of the Landlord Below that are spaces provided for a date and a signature of the landlord or the landlord's agent. The following page contains a declaration to be made by a tenant or the tenant's agent. The first sentence of that declaration invites information as to whether the tenant has or has not obtained independent legal and financial advice before entering into the lease. The second sentence states: I acknowledge that this Statement contains all representations in relation to the proposed lease by the Landlord and I am satisfied that all agreements made with the Landlord are fully reflected in this Statement. 39 The declaration in Pt 10 of the form was apparently signed by Mr Murchie after his email of 13 December 2006. His signature appears beside the handwritten date "18/12/06". The signed version is the same as the version emailed on 13 December 2006, at least so far as the passages quoted in [37] above are concerned. 40 On 15 February 2007, Mr Murchie emailed Mr Brusch, saying: Hi Tony still no DS so as discussed here is another copy. Please can you print up and execute then fax back to me thanks [sic] Please include an initialled copy of the plan I subsequently faxed through. Alan There were no alterations to the passages quoted in [37] above. 41 Also on 15 February 2007, Mr Brusch signed the declarations by the tenant or tenant's agent on behalf of Foodco, but without indicating whether Foodco had or had not obtained independent legal and financial advice by striking out either "has" or "has not". The version of the statement that he signed had various handwritten alterations and additions. The only addition relevant to this case is in relation to the last of the items quoted in [37] above, concerning changes to the tenancy mix. At the foot of the text in the right hand column, Mr Brusch added an asterisk. In the left hand column, he added another asterisk, with the words "It should be noted that the decision to lease was based on the confirmation of only one other cafe in the Lt Collins St Level" and his initials. 42 By letter dated 18 January 2007, the Jamaica Blue company forwarded to Ms Miletich and Mr Miletich a disclosure statement. The first three pages were prepared on the Jamaica Blue company's letterhead and referred to 83 East as the head landlord and the Jamaica Blue company as the landlord. Copied into the third of those pages was the extract from 83 East's disclosure statement containing the information about the proposed opening date in June 2007, about the possibility of delay and about the expectation that there would be 40 premises available for leasing, a number that may change or be increased or decreased prior to the commencement of or during or after the term of any lease. The remainder of the disclosure statement is a direct copy of the disclosure statement received by Foodco from 83 East, and therefore contains the statements quoted in [37] above as to the tenancy mix. 43 By means of these disclosure statements, the respondents conveyed to Ms Miletich and Mr Miletich representations as to the leasing status of the Foundry. The description of the tenancy mix, coupled with the statement that the tenancy mix was likely to change over the term of the proposed lease of shop T37 conveyed that there were actual prospective tenants of other areas of the Foundry answering the descriptions of businesses listed as the tenancy mix. The words "tenancy mix" were not qualified by any word such as "proposed" or "intended", so as to alert the reasonable reader to the distinction between a tenancy mix that would be achieved and one that it was hoped might be achieved. The statements as to the uncertainty of the tenancy mix and the possibility of change "to meet market demand" reinforced to the reasonable reader the representation that there were actual prospective tenants. It conveyed that some might drop out and that others might be added, but that there were in contemplation prospective tenants who could drop out and to whom others might be added. In addition, the words "not fully leased" contained a representation that at least a substantial number of the available premises had already been leased. In the course of the trial, there were suggestions that a statement that the Foundry was "not fully leased" was sufficiently broad to describe a situation in which there were no lessees of any of the premises in the Foundry. This suggestion is clearly wrong. Whilst it might be true that, in some contexts, the antonym of "fully" might be "not at all", in the context of the disclosure statements in the present case, the appropriate antonym was clearly "partly". A reasonable reader, reading that the Foundry was "not fully leased" would have understood that there were existing leases of a substantial number of the available premises in the Foundry but not of all of them.

The representations were misleading and deceptive 44 The representations made by the brochure and the video, and the oral representations made at the meeting on 22 June 2006, were representations as to future matters. They were representations as to what the Foundry would look like when it was completed and open for business. In particular, they were representations to the effect that there would be tenants in all or most of the 40 shop premises in the Foundry, carrying on businesses of the types depicted in the pictures in the brochure, the images that were part of the video and in the oral statements of Mr Murchie, Mr Donnelly and Mr Ponozzo. They amounted to a representation that the Foundry would be attractive to potential customers of these businesses, and would therefore be busy with people, some of whom would be likely to become customers of the Jamaica Blue franchise in shop T37. 45 The effect of s 51A(1) of the Trade Practices Act was that, unless Wilmot Murchie and 83 East had reasonable grounds for making these representations, the representations are to be taken to have been misleading. The effect of s 51A(2) is that, unless each of Wilmot Murchie and 83 East adduced evidence that it had reasonable grounds for making the representations, each would be deemed not to have had such reasonable grounds. Wilmot Murchie adduced no evidence at all, and certainly no evidence as to reasonable grounds for making any of the representations. Wilmot Murchie settled the case against it before the trial had reached the point at which any respondent would have been called on to give evidence, if it wished to do so. In the course of cross-examination, counsel for 83 East tendered one document, an email dated 2 October 2007 from Mr Donnelly to Mr Brusch, with a copy to Mr Murchie. The contents of this email did not bear at all on whether 83 East had reasonable grounds for making the representations that were made in June 2006. Accordingly, the representations are deemed to have been misleading and deceptive. 46 This result accords with the reality. As will be seen, when the Jamaica Blue cafe was opened in shop T37 in the middle of 2007, there were virtually no other shops in the Foundry that were tenanted. The only tenanted shops were a couple fronting onto Bourke Street and Little Collins Street respectively. There was no newsagent, no Irish bar, no chemist, no hamburger shop and no restaurant of any kind. There was no Drummond Golf shop, or any golf shop at all, no gymnasium, no sporting goods outlet. There was virtually no pedestrian activity, either by reason of customers coming to deal with businesses in the Foundry, or by reason of the so called "ant trail". Quite apart from there being no businesses in operation, there were no leases of all but a handful of shop premises in the Foundry and no prospective tenants for the shop premises that were unlet. 47 One issue that emerged in the course of the trial in relation to the brochure concerned the disclaimer in the fine print, quoted in [27] above. Whatever effect such a disclaimer might have as a matter of law in other contexts, as a matter of fact it did not cause the brochure to be anything other than misleading and deceptive as a description of how the Foundry would be once it was completed and opened. So far as the operation of s 52 of the Trade Practices Act is concerned, the question was not whether a written disclaimer operated to negate liability for statements found elsewhere in the document. The question was whether, as a matter of fact, the brochure was misleading and deceptive or likely to mislead and deceive. This question is answered by examining the brochure as a whole, including the fine-print disclaimer, and asking whether a reasonable reader in the position of Ms Miletich and Mr Miletich would understand the brochure as a whole to contain representations that could be relied on. There can be no doubt that the brochure was created with the intention of being used to attract tenants for shop premises in the Foundry. Otherwise, there would have been no point in creating it and giving it to those who showed interest in becoming tenants of shops in the Foundry. A fine-print disclaimer in formulaic and legal language is unlikely to have dispelled the overall effect of the brochure upon the mind of a reasonable reader. It is hardly surprising that the brochure would have its intended effect of making the Foundry appear to be attractive, by showing it as containing tenanted premises with operating businesses, attracting significant numbers of shoppers. 48 The evidence of Ms Miletich and Mr Miletich was that they believed the representations that were made in the brochure, in the video and by word of mouth from Mr Murchie, Mr Donnelly and Mr Ponozzo on 22 June 2006. Again, it is no surprise that the intended effect of the brochure, the video and the oral statements was achieved. Ms Miletich and Mr Miletich were thereby misled and deceived. Their acknowledgement in the declaration attached to the disclosure statement that there were no representations other than those contained in the disclosure statement itself does not establish either that no other representations were made, or that no other representations were relied on. The fact that a party to whom representations have been made does not take a subsequent opportunity to mention those representations can neither negate the making of the earlier representations nor establish that the earlier representations were not relied on. 49 The representations made by 83 East by means of what was said in the disclosure statement, and its transmission to Ms Miletich and Mr Miletich did not relate to future matters, but to the present state of affairs. It is therefore necessary to determine whether, as at the time the representations were made, they were correct as a matter of fact. As at December 2006, not a single lease of any shop premises in the Foundry had been entered into. Counsel for the applicants tendered documents relating to the process of obtaining discovery of documents from 83 East. Several opportunities were provided to 83 East to disclose any leases that had been in existence in December 2006. The documents discovered disclosed that the very first lease in the Foundry was between the Jamaica Blue company and 83 East, relating to shop T37. Other than that, there were two leases entered into on 10 April 2007, and another 12 between then and 15 October 2007, at about the time when the applicants were forced to close their loss-making business in shop T37. As at December 2006, there was no "tenancy mix" in the Foundry. The 40 or so shop premises that were to be available on completion of the Foundry were not only "not fully leased", they were not leased at all. The representations as to the tenancy mix, and as to partial leasing of the shop premises in the Foundry were likely to mislead or deceive. On their evidence, Ms Miletich and Mr Miletich were actually misled and deceived by those representations.

Reliance 50 Before the applicants can recover damages for the misleading and deceptive conduct of any of the respondents in reliance on s 52 of the Trade Practices Act, s 82(1) of the Trade Practices Act requires that they establish that they have suffered loss or damage "by" that conduct. Insofar as the applicants allege a contravention of s 9 of the Fair Trading Act, s 159(1) of the Fair Trading Act required that they show they suffered loss and damage "because of" that contravention. For the purpose of this case, the relevant way in which the requisite causal relationship between the damage and the conduct complained of is for the applicants to establish that they acted to their detriment in relying on the representations made by the respondents. Both Ms Miletich and Mr Miletich gave evidence of their reliance on the representations in making their decision to enter into a franchise agreement with the Jamaica Blue company and a licence agreement under which they were to occupy shop T37 for the purpose of carrying on business as a Jamaica Blue cafe. 51 Ms Miletich gave evidence that she read the brochure many times, took it home with her and went over it, and showed it to members of her family. She looked at it in great detail. She described it as "a very important document." The brochure and the statements made at the meeting on 22 June 2006 were understood by Ms Miletich to convey that, upon the opening of a cafe by the applicants there would be 40 quality tenants in the Foundry. On the basis of the video, the brochure and what she was told by Mr Donnelly and Mr Ponozzo on 22 June 2006, she envisaged a very light, bright, bustling shopping centre, with high-quality merchandise on sale. As a consequence, she and Mr Miletich discussed upgrading the fit-out of their proposed cafe to reflect the quality of the site and decided to go ahead with such an upgrade. If she had been told at the meeting of 22 June 2006, or at any time subsequently, that not a single shop had been leased in the Foundry, she and Mr Miletich would not have gone into the proposed cafe in the Foundry. Ms Miletich said that they would have had discussions with Mr Brusch and Foodco, with a view to operating a business somewhere else. In the meantime, Ms Miletich would have continued to work as a teacher, instead of giving notice of her resignation in February or March of 2007, which notice took effect in April 2007. 52 When she received the disclosure statement, Ms Miletich read it. She understood the source of the information in the disclosure statement to be 83 East. The statements concerning the tenancy mix and the fact that the centre was not fully leased conveyed to her the same things that had been conveyed by the earlier representations, that there would be quality fashion outlets in the Foundry. Ms Miletich expressed the view "that we were lied to from start to finish." 53 In cross-examination, counsel for Mr Murchie and Wilmot Murchie put to Ms Miletich that she read the brochure while she was in the course of making up her mind what she was going to do. She agreed with this proposition. When asked if she regarded the brochure as promotional material, she said that she regarded it "as a fairly factual account of what they were trying to achieve with the centre." She agreed that it was designed to attract her as somebody who might be looking at taking up a spot in the centre. She did not agree with the proposition that it was just "any form of commercial advertising", saying that it was "more targeted than just general advertising." She did not see the brochure as "puffery" or advertising to which no significance could be attached. She saw it as giving information to prospective lessees and as being more factual than a general advertisement. The reference to statistical material, and to its source, made her think that there might have been a basis to what was said in the brochure. Similarly, Ms Miletich was cross-examined to the effect that the video was "just a bit of advertising promotional material". Her reply was that she thought the video was "a representation of what they had hoped to achieve." 54 To a considerable extent, cross-examination of Ms Miletich was directed to trying to obtain concessions that she really ought not to have relied on what she saw in the brochure and the video, and what she was told on 22 June 2006. Such cross-examination misses the mark. The question was not whether Ms Miletich should have displayed more wisdom or discernment, so as to treat the statements made by the brochure and the video and the oral representations made to her with the scepticism they deserved. Each of the representations made was designed to influence Ms Miletich as a prospective tenant of space in the Foundry that she should make the decision to operate a business there. It is no surprise to discover that she was so influenced. The proposition that she might have given greater weight to the disclaimer in the fine print in the brochure, which counsel for Mr Murchie and Wilmot Murchie attempted to put to her, is also of no significance. As I have said in [47] above, the overall effect of the brochure, even when the fine print is taken into account, is to make representations. There was no such disclaimer in relation to the video or the oral representations made on 22 June 2006. Nor was there any disclaimer to counteract the effect of what was passed on to Ms Miletich in the disclosure statement. The sole question is whether the conduct of the respondents was misleading or deceptive, in the sense that it misled and deceived Ms Miletich. On the evidence, there is no doubt that this was the result. 55 Counsel for Mr Murchie and Wilmot Murchie also attempted to attack the proposition that Ms Miletich relied on the representations by cross-examining her about her subsequent signing of an acknowledgement to the Jamaica Blue company that "no representation or guarantee, whether oral, written or implied, can be or has been given in relation to the success, profit or potential turnover of the store." Reference was also made to an invitation in the same document for the person signing it to specify any such representation or guarantee that had been given. It might be said that a person possessing greater legal knowledge than Ms Miletich had might have attempted to specify in response to this invitation the representations that had been made to her. Section 52 of the Trade Practices Act is not directed to protecting the legally knowledgeable consumer, but to consumers in general. A person who has been persuaded by means of a representation to believe that a certain state of facts will exist at a subsequent time is unlikely to be on guard against the possibility that the representation will turn out to be untrue, to the extent that he or she will make such specific reference to it in a document of that kind. Such a person believes what he or she has been told and expects that it will turn out to be the case. Again, the question is whether there has been misleading and deceptive conduct and reliance on that conduct. 56 Cross-examination of Ms Miletich by counsel for 83 East was extremely brief, so much so that it appeared that 83 East did not wish to challenge much of what she had said. Again, there were attempts to persuade her to agree that it was not reasonable to rely on any representation, attempts which were irrelevant to the issues that had to be determined. 57 I am satisfied that Ms Miletich relied on the representations made to her by means of the brochure, the video, the oral statements on 22 June 2006 and the statements in the disclosure statement in taking the steps that she and Mr Miletich took that led to them opening a Jamaica Blue cafe in shop T37 in the Foundry. 58 Mr Miletich also read the brochure in detail. He was attracted by the statements about ant trails. On the basis of the brochure, the video and the oral statements made on 22 June 2006, he was expecting the Foundry to have 40 quality tenants and to be bustling with people passing between Bourke Street and Little Collins Street. If he had known that, on 22 June 2006 or subsequently, not a single shop in the Foundry had been leased, he would not have gone ahead with a Jamaica Blue franchise in the Foundry. In signing a letter accepting the offer of a Jamaica Blue franchise, and paying a deposit of $10,000 to the Jamaica Blue company, Mr Miletich said he was influenced by the brochure, the video presentation, and the information he was given on the site. In addition, he took from the information in the disclosure statement the belief that there would be a substantial number of tenants, in accordance with the stated tenancy mix, when the centre opened. He thought there would be a thriving ant trail, with boutique stores. When he signed the agreement to enter into a franchise agreement and a licence agreement, and the associated documents in late February 2007, he said he was influenced by the information about 40 quality tenants and the ant trail, among other things. 59 In cross-examination, Mr Miletich agreed that he read all of the information in the brochure. He agreed that he read the brochure as promotional material for the development. He also read the disclaimer in the fine print. Mr Miletich was then asked about the video and said that he believed it to be a "true representation of what they were going to do." Mr Miletich also agreed that, when he read the disclosure statement, he proceeded on the assumption that most if not all of the tenancies in the premises were leased. He maintained that the disclosure statement suggested to him that the tenancy mix stated was the mix that would be in the centre. He said he expected close to 40 tenants to be in at the completion of the centre. 60 Mr Miletich's cross-examination by counsel for Mr Murchie and Wilmot Murchie was not completed when the agreement to settle the claim against Mr Murchie and Wilmot Murchie was made. By that stage, 83 East was in liquidation and had ceased participation in the trial, so that Mr Miletich was not cross-examined at all on behalf of 83 East. As Mr Donnelly played no part in the trial, Mr Miletich was not cross-examined by anyone on his behalf. On the evidence before me, I am in no doubt that Mr Miletich relied on the representations that were made when he and Ms Miletich took the steps they took to establish a Jamaica Blue cafe in shop T37. 61 Those steps included the following. In August 2006, Mr Miletich and Ms Miletich signed a letter addressed to the Jamaica Blue company, accepting an offer of a Jamaica Blue franchise. They paid a $10,000 deposit at that time. They established Kalel and set up the Kamil Unit Trust, to be the vehicle for the business. After the Christmas break at the end of 2006 and the beginning of 2007, Mr Miletich scaled down his commitments to his plastering business, so that they would not prevent him from embarking on the proposed new business venture. In late February 2007, Mr Miletich and Ms Miletich, on behalf of Kalel, signed documents committing themselves to the conduct of the proposed business. They were an agreement to enter into a franchise agreement and a licence agreement, the franchise agreement itself and the licence agreement itself. These were to be held in escrow until such time as the Jamaica Blue company had entered into a lease of shop T37. 62 Ms Miletich and Mr Miletich spent at least a week in Sydney, undergoing training for the conduct of a Jamaica Blue cafe. The training included tuition in various aspects of the running of a business, as well as intensive training in the making of coffee. This was followed up in June or July 2007 by two weeks' hands-on experience in an existing Jamaica Blue cafe in Greensborough, during which they received training in the day-to-day operation of such a business. In the meantime, between May and July 2007, Ms Miletich and Mr Miletich set about attempting to find staff for the proposed cafe. They placed advertisements for such staff, received approximately 120 applications, interviewed 30 of those people and shortlisted 18. They engaged an experienced barista by the name of Ignatius or Iggy. 63 As I have said in [51], in February or March 2007, Ms Miletich gave notice of her resignation from her teaching job, which took effect in April 2007. As she said in evidence, if she had known the true situation in relation to the Foundry, she could and would have continued in that job. Instead, she used money she withdrew from her superannuation fund to pay expenses of entering into the business. 64 Ms Miletich and Mr Miletich also paid for the fitting out of shop T37 and the installation of items such as refrigerators, which would be essential for the conduct of the proposed cafe. 65 At the end of the first week in August, the Jamaica Blue cafe at shop T37 in the Foundry was open for business. For the first two weeks the Jamaica Blue company supplied two persons to assist in the running of the business and to continue the training. 66 In taking each of these steps, Ms Miletich, Mr Miletich and consequently Kalel relied on the representations that had been made to them by means of the brochure, the video and the oral statements on 22 June 2006. In respect of actions that took place after January 2007, they also relied on the representations made by means of the information passed onto them in the disclosure statement they received at that time. At no time did any of the respondents take any steps to correct the representations by informing Ms Miletich or Mr Miletich of the true position.

The true state of the Foundry 67 The projected opening date of the Foundry was deferred on several occasions. Finally, Foodco or the Jamaica Blue company arranged for the fit-out of shop T37 to be completed, and the Jamaica Blue cafe opened during the week beginning 6 August 2007. The first couple of days involved the training of 18 people who had been engaged as part-time casual employees to staff the cafe. From about 8 August 2007, the cafe was open for business. There was very little business available. At that time, work was proceeding on the fitting-out of an area on the first floor Bourke Street level as an IGA supermarket. The only other businesses that were open were a coffee outlet with a frontage to Little Collins Street, and a travel agent with a frontage to Bourke Street. No other shop on the Little Collins Street level had been fitted out. All of the shop premises were unlit, and the lighting in the common areas appeared to be operating at less than full capacity, so that the whole of the Foundry was dark and gloomy. 68 Air curtains at the entrances from Little Collins Street and Bourke Street did not appear to be operating properly, so that cold air circulated through the atrium area, from the Bourke Street level down to the Little Collins Street level. The circulating air carried a substantial amount of dust, whether generated by the IGA supermarket operations or by unsealed concrete elsewhere in the building. Because of the winter weather, the failure of the air curtains and the lack of heating, the area was uncomfortably cold. The travelators linking the Bourke Street level with the Little Collins Street level were often not operating. There was a suggestion in cross-examination of Ms Miletich that apparent idleness of the travelators was due to their being operated by sensors which detected the approach of a person and started the travelators moving. Ms Miletich said that frequently cones were placed to indicate to anyone approaching that they should not attempt to enter upon the travelator. Mr Miletich confirmed that the travelators were closed frequently, so that work could be performed on them. He also said that the directions in which the travelators operated were alternated between mornings and afternoons, so that anyone passing through the building more than once was apt to become confused about the direction in which a particular travelator would be operating. 69 Noise from the fitting-out of the IGA supermarket two floors above was audible at the Little Collins Street level. The toilets were kept locked. If any customers wished to use the toilet, Mr Miletich would have to go and unlock the toilets. Whenever he tried to leave the toilets unlocked, they would be locked by someone else. When he complained to the Centre Manager about the absence of toilets for customers, he was told that the area was not classed as a food court, so that there was no obligation to provide customer toilets, and the toilets were for the use of staff of businesses operating in the Foundry. 70 There were also problems associated particularly with the running of the Jamaica Blue cafe. The operation of the extractor fans in the kitchen area depended upon the operation of the air conditioning, to remove the fumes extracted by the fans, but the air conditioning was not operating, so the extractor fans did not work properly. Their proper operation was essential to the functioning of the kitchen. Further, there was a leak in the ceiling outside the door of a storage area allocated to the Jamaica Blue cafe for the storage of stock. What appeared to be sewage dripped from the ceiling, staining the floor and the wall and causing a most unpleasant odour. Despite complaints by Mr Miletich to the Centre Manager, it was some time before the leak was remedied and before remedial works were carried out. Those works included the cutting out of plaster that had been saturated and stained by the leak, to remove the damage caused by the leak. 71 Not surprisingly, there were few people coming to, or passing through, the Foundry, who were likely to be customers of the Jamaica Blue cafe. There were no shops inside the Foundry with which people could do business. Those who used the "ant trail" through the Foundry were unlikely to do so again, once they saw the state that it was in. From the beginning, the takings of the business were low. They did not even come up to the level of the wages that had to be paid to the part-time casual staff who came to work in the cafe. Over the ensuing weeks, Ms Miletich and Mr Miletich were forced to dismiss the staff progressively. The last to go was the expert barista, whom they retained for as long as possible on the basis that he was an asset to a business that held itself out as specialising in coffee. 72 Both Ms Miletich and Mr Miletich worked hard in the business. Mr Miletich arrived at about 7.00 am each day from Monday to Friday (the business did not open on Saturday), sometimes having to wait for the caretaker to open the roller door to allow him access to the Foundry. He flushed the coffee machine and prepared to serve coffee, as well as breakfast to anyone who wished to be fed. In some cases, people who were working on the IGA supermarket fit-out would buy breakfast. Typically, Ms Miletich would shop at a suburban supermarket near her home for fresh food items that would be required for a day's trading. She would arrive at about 7.30 am and commence preparing and selling food. Other staff were rostered at times when increased trade would be expected, and there were staff available to be called in on short notice if required. At about 5.00 pm, the cafe would close. Mr Miletich would do the cleaning and leave at about 6.00 pm. 73 At no time did the business make a trading profit. By 22 October 2007, it was clear that there was no prospect of it doing so. By that time, the IGA supermarket was open, but its presence had no impact at all on the trade of the Jamaica Blue cafe. A couple of other food outlets had opened on the Bourke Street level. A hairdresser on the Little Collins Street level had opened on a part-time basis, utilising only an apprentice. None of these other businesses had any positive impact on the trade of the Jamaica Blue cafe. On the advice of Mr Brusch, Ms Miletich and Mr Miletich came to the premises on a weekend, emptied and cleaned out their refrigerators, cleaned the premises and vacated them. They left behind tables and chairs and other items that had been used in the business, particularly items that bore the Jamaica Blue logo.

Loss and damage 74 The loss claimed by the applicants is calculated in part by reference to amounts they expended in establishing and operating the Jamaica Blue cafe at the Foundry, and in part by the opportunity cost of Ms Miletich and Mr Miletich devoting themselves to the setting up and conduct of the business, rather than pursuing earning opportunities elsewhere. 75 On 29 May 2007, Ms Miletich paid by her own personal cheque the sum of $42,282 to Crak Shopfitters Pty Ltd, in satisfaction of an invoice for that amount, by way of deposit for the fitting out of shop T37. 76 On 30 July 2007, Ms Miletich transferred $150,000 from her personal credit union account to an account opened with the St George Bank Limited entitled "Kalel Enterprises Pty Ltd t/a Jamaica Blue" ("the Kalel bank account"). This was the account through which the majority of the expenses in connection with the opening of the business and its conduct were paid. Payments were made from the Kalel bank account by means of bank cheques in satisfaction of the following invoices: an invoice dated 8 May 2007 from J L Lennard Food Equipment Pty Ltd in the sum of $16,886.10, in respect of a cake display unit; an invoice dated 17 July 2007 from Retail Traders Insurance Broking for $2,910.00 in respect of an insurance premium; an invoice dated 17 July 2007 from Benga Designs for $12,122.00, in respect of signage; an invoice dated 18 July 2007 from Crak Shopfitters Pty Ltd for $93,661.00, in respect of the completion of the fit-out of shop T37; and a further invoice dated 18 July 2007 from Crak Shopfitters Pty Ltd for $5,000, in respect of the retention amount in the contract for the fit-out of shop T37. 77 From the Kalel bank account were paid a number of payments for the running costs of the Jamaica Blue cafe, including payments for wages, food and other stock, stationery and utility charges. On 22 October 2007, there was a little over $5,000 remaining in the account. On that day, Ms Miletich transferred $5,000 from the Kalel bank account to her own personal credit union account. The Kalel bank account was closed on 15 January 2008, at which time the sum of $108.43 was paid out to Ms Miletich. 78 After the closure of the Jamaica Blue cafe, Ms Miletich made two payments from her personal credit union account in respect of the business, one of $1,122.75 to Origin Energy on 31 October 2007 and one of $358.45 to Telstra on 31 October 2007. 79 The total amount contributed by Ms Miletich was therefore $188,654.77. This total is arrived at by adding the payment of $42,282 made on 29 May 2007, the sum of $150,000 transferred on 30 July 2007 and the two amounts paid on 31 October 2007 and deducting the amounts of $5,000 and $108.43, which Ms Miletich recovered from the Kalel bank account. It should be noted that this amount includes amounts of goods and services tax ("GST") on payments that incurred that tax that equalled $172,968, the GST amounts totalling $15,714. No doubt the payments of GST were capable of being reclaimed by Kalel when it accounted for the GST it collected on goods sold and services rendered by it. Presumably the GST paid out was claimed and set off against the amount owing by Kalel. I do not think that the result in this case is that the amount of GST paid out of Ms Miletich's contributions should be deducted from the amount of the loss. Overall, the business made a loss and any GST recouped or set off against GST owing was submerged within that loss. The effect was that Ms Miletich suffered the loss of the full amount, not only of the amount after deduction of GST. 80 Mr Miletich also made contributions. On 2 August 2006, he purchased a bank cheque for $10,000 to pay a deposit to the Jamaica Blue company, incurring a fee for the issuing of the cheque of $8, making a total of $10,008. On 18 October 2006, Mr Miletich purchased a further bank cheque for $64,580, which was used to satisfy an invoice from the Jamaica Blue company for the balance of the amount then due to it in respect of the proposed franchise agreement. 81 On 2 August 2007, Mr Miletich also purchased three bank cheques, totalling $66,678.57, including a fee for the issue of those cheques. The cheques were used to pay $45,618.80 towards an invoice dated 18 July 2007 from the Jamaica Blue company for $58,815.81, for posters for hoarding, head office supplies and the balance of the opening budget; an invoice dated 31 July 2007 from Moffat Pty Limited for $10,496.86, in respect of kitchen appliances; and an invoice dated 1 August 2007 from Reward Distribution for $10,517.91, in respect of crockery, cutlery, glassware, kitchen utensils and cleaning utensils. 82 The total of the amounts contributed by Mr Miletich was therefore $141,266.57. Again, $12,842 of this amount represents GST. For the same reasons I have stated in [79] above, I regard this amount as part of the loss suffered and not as an amount that was or could have been recovered in a meaningful sense. 83 In addition, the applicants paid to the St George Bank the sum of $11,907.14 in respect of a bank guarantee in favour of 83 East to secure the payment of rent for shop T37. There is no evidence that this guarantee was ever called in by 83 East. There is evidence that it has not been the subject of any release or discharge by either 83 East or the St George Bank, and is not recoverable by the applicants. It is therefore to be regarded as a loss suffered by them. 84 As I have said at [51], Ms Miletich gave notice in about February or March 2007 of resignation from her job as a school teacher employed by the State of Victoria, to take effect at the end of April 2007. It was reasonable for her to take this step at that time, because of the expected opening date of the Foundry known to her at that time, and because of the need for her to be involved in the making of preparations for the opening of the Jamaica Blue cafe in shop T37. She therefore had no income from teaching after the end of April 2007. Following the failure of the cafe business, she was not able to find work as a teacher until 1 March 2008, when she commenced relief teaching. 85 A claim is made for $61,991 in respect of the whole of the period from 1 May 2007 to 1 March 2008. The claim is based on the actual figure of Ms Miletich's income of $70,422 between 1 July 2006 and 30 April 2007, increased by 5% for the period in question on the basis of "CPI". I doubt that there is any automatic adjustment of the salary of a teacher on the basis of CPI increases and I doubt that a 5% pay increase would have been achievable at the time for a school teacher employed by the State of Victoria. In addition, I am not satisfied that Ms Miletich acted reasonably to mitigate her loss by not broadening her search for other employment after the failure of the cafe business. I am therefore prepared only to allow her a claim for lost income for the period from 1 May 2007 to 31 October 2007, a period of six months, at the rate at which she was earning at the date of her resignation. The loss is therefore $35,211, inclusive of any liability for income tax in respect of that amount. 86 Mr Miletich was a self-employed plasterer. In respect of the year ended on 30 June 2006, he earned $56,288. For the seven months from 1 July 2006 to 31 January 2007, Mr Miletich earned $29,669 from his plastering business. At that rate of earning, his income for the full financial year to 30 June 2007 would have been $48,035. After January 2007, Mr Miletich scaled down his business in order to prepare for the opening of the cafe business. After the end of April 2007, he did no further plastering work. Both the scaling down and the cessation of his business, in anticipation of the opening of the Foundry and of the Jamaica Blue cafe in shop T37 were reasonable steps for Mr Miletich to take. He did not resume work as a plasterer until 25 January 2008. A claim is therefore made for a partial loss between 1 February 2007 and 30 April 2007, and for a total loss between 1 May 2007 and 25 January 2008. The first period is reasonable. The second is excessive. In my view, there is insufficient evidence that Mr Miletich acted reasonably to mitigate his loss once the Jamaica Blue cafe closed. I would allow him a claim for total loss from 1 May 2007 until 30 November 2007, to give him a reasonable time either to seek employment, or to re-establish his business, as a plasterer. 87 The calculation of the amount claimed on behalf of Mr Miletich also includes an allowance of 5% for a notional increase based on "CPI". Again, without evidence that Mr Miletich's income would have increased by this amount, I do not allow that notional increase. My calculations are based on the notional income for the full financial year ended 30 June 2007 of $48,035. On this basis, the amount claimed for partial loss for the period 1 February 2007 to 30 April 2007, a period of three months, is $12,009, less 55% of that sum, which was Mr Miletich's estimate of the amount by which his income was reduced by reason of the scaling back. Fifty-five percent of $12,009 is $6,604.95. Deducting that sum from $12,009 gives a total of $5,404.05 for the three month period. 88 In respect of the period from 1 May 2007 to 30 November 2007, a seven month period, the projected total is ascertained by dividing $48,035 by 12, giving a figure of $4,003, and multiplying that by seven, giving $28,021 as Mr Miletich's loss of income for that period. His total loss of income is therefore $33,425.05. 89 Although there were separate amounts contributed by Ms Miletich and Mr Miletich, and a number of the payments were made through the Kalel bank account, it is pointless to separate the losses to the different applicants, especially in light of the lack of evidence of the origin of the amount paid for the rental guarantee. For the purposes of giving judgment, the amounts lost by the three applicants should be aggregated, and an award of damages made in their favour for that sum (subject to any considerations of relative responsibility among respondents). 90 To the extent to which there were allegations in the respondents' defences of conduct by the applicants contributing to their own losses, I reject those suggestions. It is true that Ms Miletich and Mr Miletich were not experienced in the conduct of a cafe business. As a consequence, however, they took all reasonable steps to place themselves in a position in which they would be competent in running the business. They underwent training in Sydney and gained personal experience at Greensborough (see [62] above). They engaged appropriate staff, including an experienced barista. They received advice and support from Foodco about the operation of the business. The failure of the business was not due to any lack of competence on their part. Nor was it due to any lack of application. On the evidence given by Ms Miletich and Mr Miletich, I am confident in finding that they did the best they could to make the business a success in extremely difficult conditions. The failure of the business was due to the state of the Foundry at the time of its opening, and thereafter, particularly the complete absence of any other shops operated by tenants within the Foundry and the consequent failure of the Foundry to attract potential customers. If the Foundry had been as it was represented at, or shortly after, the time of the opening of the cafe in shop T37, it is probable that the applicants would have been able to establish a successful business. The suggestion that they did not allow themselves enough working capital to sustain them in the initial stages also cannot be accepted in the circumstances of this case. 91 The loss suffered by the applicants therefore amounts to a total of $398,557.39. The whole of this loss was the result of their reliance on the representations made by the respondents in respect of which the applicants have claimed.

Interest 92 Section 51A of the Federal Court of Australia Act 1976 (Cth) requires the Court to award interest on a judgment for a money sum, upon application, unless good cause is shown to the contrary. In the present case, the applicants have sought interest on any judgment for damages. No good cause has been shown why such an order should not be made. 93 The rate of interest is left in the discretion of the judge. The Court's Practice Note CM16 assists in the exercise of the discretion concerning the rate of interest by establishing a preferred rate of 4% above the cash rate last published by the Reserve Bank of Australia before the commencement of each half year period. In my view, it is appropriate to adopt that rate in the present case. 94 The calculation of interest submitted on behalf of the applicants attempts to isolate each different item of loss and to calculate interest from the date on which it is said to be suffered. In my view, that is not the correct basis on which interest should be calculated. When the applicants paid out money for the purpose of establishing the Jamaica Blue cafe at shop T37 in the Foundry, they did so not expecting an immediate return on that expenditure, but expecting that, in time, the business would return a surplus of income over expenditure for their benefit. Likewise, when Ms Miletich resigned from her employment, and when Mr Miletich scaled down and then ceased his plastering business, each did not expect to receive an income as an immediate substitute for the income foregone. Had the business been successful, income would have accrued to them in due course. The loss they suffered crystallised on 22 October 2007, when the business was closed because it was unviable. It is from that date that interest should be calculated on the total amount of the loss. To the extent to which there were items of expenditure actually paid later than that date (see [78] above), those amounts are not large in the context of the overall loss suffered, and are more than balanced by amounts paid at an earlier date. It is convenient to calculate interest on the entire amount of the loss from 22 October 2007. Interest so calculated, at the rate referred to in [93] above applicable from time to time until the date of judgment will be included in the judgment.

The liability of Mr Donnelly 95 When Mr Donnelly was added as the fourth respondent to the proceeding, the applicants made further amendments to their statement of claim. The case they pleaded against Mr Donnelly has two alternative bases. First, there is an allegation that Mr Donnelly himself contravened s 9(1) of the Fair Trading Act. This involves focussing on representations that Mr Donnelly himself made to the applicants, as distinct from the totality of the representations made by 83 East. The second basis is that Mr Donnelly is alleged to have aided, abetted, counselled or procured each of the contraventions by 83 East (as well as by Wilmot Murchie and Mr Murchie), to have been directly or indirectly knowingly concerned in, or party to, each of those contraventions, or to have induced each of those contraventions, and was therefore a person involved in a contravention, pursuant to s 75B(1)(a), (b) and (c) of the Trade Practices Act. This basis for the claim focuses on the extent of Mr Donnelly's involvement in the representations made by 83 East, Wilmot Murchie and Mr Murchie, and on his knowledge of the essential elements of those contraventions. See Yorke v Lucas (1985) 158 CLR 661, especially at 668-670 per Mason ACJ, Wilson, Deane and Dawson JJ. Such knowledge does not have to include knowledge that what is being done amounts to a contravention, ie that representations are misleading or deceptive, but only requires knowledge of the facts that would enable the representations to be characterised in that way. See Medical Benefits Fund of Australia Ltd v Cassidy [2003] FCAFC 289 (2003) 135 FCR 1 at [15] per Moore J, [74]-[75] per Stone J and [17] per Mansfield J agreeing. 96 It is necessary to look first at what Mr Donnelly actually did by way of making the representations that were the subject of this proceeding. 97 Following the settlement of this proceeding between the applicants on the one hand and Wilmot Murchie and Mr Murchie on the other, Mr Murchie was called to give evidence on behalf of the applicants. According to his evidence, the brochure that was given to Ms Miletich and Mr Miletich was prepared by a marketing design consultant. A number of meetings took place with the marketing design consultant, attended by Mr Donnelly, as well as Mr Robison and Mr Murchie. Mr Donnelly gave the final approval to the brochure. On this basis, Mr Donnelly was responsible personally for the content of the brochure and, consequently, for the representations it conveyed. He authorised its use by Wilmot Murchie and its employees in negotiations with prospective tenants of shop premises in the Foundry. 98 On the basis of the evidence of Ms Miletich, I find that Mr Donnelly was also present personally at the meeting Ms Miletich, Mr Miletich and Mr Brusch attended on 22 June 2006, and that he spoke to Ms Miletich and made the representations to her to which I have referred in [25] above. 99 There is no direct evidence linking Mr Donnelly with the contents of the video shown to Ms Miletich and Mr Miletich on 22 June 2006. To the extent that oral representations on that day, made by Mr Murchie, Mr Geraghty and Mr Ponozzo differed from or went beyond what Mr Donnelly himself said, there is no evidence enabling me to find that Mr Donnelly made those representations. Nor is there evidence that Mr Donnelly made the representations that were contained in the disclosure statement. 100 It is then necessary to determine the extent of Mr Donnelly's knowledge of the circumstances of the contraventions of s 52 of the Trade Practices Act by 83 East, Wilmot Murchie and Mr Murchie. To some extent, the evidence as to this knowledge depends upon Mr Donnelly having been the principal intended recipient, or the intended recipient of a copy, of various emails. In relation to this evidence, the applicants relied on s 71 of the Evidence Act 1995 (Cth) ("the Evidence Act"), the effect of which is to make a record of an email communication admissible evidence of the identity of the person who sent it, the date and time at which it was sent and the identity of the person to whom it was addressed. Further, s 161 of the Evidence Act creates a presumption that an electronic communication of which a record is tendered was sent or made in the form shown in the record, was sent or made by the person appearing from the record to have sent it, was sent or made on the day and at the time it appears to have been sent and was received at the destination to which it appears to have been sent. That presumption is rebuttable if "evidence sufficient to raise doubt about the presumption is adduced". No such evidence was adduced in the present case. 101 To the extent to which the applicants rely on representations contained in the brochure, by reason of the matters I have referred to in [97] above, Mr Donnelly had knowledge of the content of those representations, and of the fact that they were intended to be made to prospective tenants of premises in the Foundry. To the extent to which the representations were contained in the video, Mr Donnelly had knowledge of the content of those representations and of the fact that they were being made to prospective tenants of premises in the Foundry. This knowledge arose from the fact that Mr Donnelly's office was adjacent to the leasing suite in which Wilmot Murchie entertained prospective tenants, including Ms Miletich and Mr Miletich. On the evidence of Mr Murchie, the video was running almost continuously in the leasing suite. I infer from these facts, and from the fact that Mr Donnelly himself attended in the leasing suite while the video was being shown to Ms Miletich and Mr Miletich on 22 June 2006, that he was well aware of the content of the video and of the fact that it was being shown to prospective tenants, including Ms Miletich and Mr Miletich. 102 To the extent to which representations were also made by means of the disclosure statement, Mr Donnelly was also aware of their content and of the fact that they were being conveyed to prospective tenants. A copy of Mr Murchie's email to Mr Brusch, attaching the draft disclosure statement (the terms of which were not altered between then and when they were ultimately conveyed to Ms Miletich and Mr Miletich) was sent to Mr Donnelly at the same time. 103 Mr Donnelly also had knowledge of the true state of the leasing of the Foundry at all times. The executed leases that were eventually discovered by 83 East, and tendered on behalf of the applicants to show that none of them was in existence prior to the applicants acting in reliance on the representations, all bore the signature of Mr Donnelly, as the sole director of, and on behalf of, 83 East. I infer that Mr Donnelly alone had the authority to execute leases. He therefore knew what leases were, and more importantly what leases were not, executed. Further, he was a recipient of a copy of an email from Mr Robison to Mr Murchie on 8 June 2006, only two weeks prior to the attendance of Ms Miletich and Mr Miletich at the leasing suite. In that email, Mr Robison expressed concern about the lack of progress in negotiation with prospective tenants. He referred to a growing "exhausted" list and a "very thin list of back-up prospects." He requested that Mr Murchie insert into an attached spreadsheet, containing categories of possible tenants, names of such possible tenants, including the "exhausted" list. Mr Robison expressed concern with the level of resources and the rate of activity of Wilmot Murchie, and expressed the view that "it is hard to see how we will meet the leasing targets." It would have been clear to Mr Donnelly from this email that there were difficulties finding any tenants at all for the Foundry. 104 On Mr Murchie's evidence, I find that there were regular meetings between representatives of 83 East and representatives of Wilmot Murchie, every couple of weeks, to discuss the progress of leasing of the Foundry. Mr Donnelly attended all or most of these meetings. He would have known from those meetings about the lack of tenants of shop premises in the Foundry. In August 2006, Mr Murchie sent a letter to Mr Donnelly as a follow up to one of these meetings. The first page of the letter is dated 23 August 2006 and the subsequent five pages each bear the date 25 August 2006. The letter refers to "5 deals with solicitors instructed." One of those five was Jamaica Blue. It also referred to letters of offer sent to another six retailers and the expectation that at least two of them would progress further. It predicted that around 30% of tenancies would have a realistic opportunity of having signed agreements to lease within the next six to eight weeks, "leaving 70% still to be leased." The letter proposed that the opening date of the Foundry be deferred. It also recommended a change in the marketing strategy, involving a move away from boutique retailers towards "smaller style food concepts". The letter went into considerable details about the difficulties of leasing to retailers in the Foundry, because the Foundry was to be open only for five days each week, the location was disadvantageous, and the development did not include an office tower. As a result of this letter, Mr Donnelly can have been under no illusions as to the absence of binding agreements with any tenants. 105 Even after the applicants and the Jamaica Blue company had become committed to opening a Jamaica Blue cafe at shop T37 in the Foundry, Mr Donnelly was well aware that the tenancy situation was far from good from the point of view of 83 East. In March 2007, Mr Murchie requested of Mr Donnelly confirmation as to the leasing status of the Foundry, for the purpose of passing on that information to a prospective tenant. Mr Donnelly responded by email, attaching a spreadsheet, setting out what he described as the rent schedule as at February 2007. The spreadsheet referred to 14 shops that had been leased and seven more as being "Under Offer". In fact, there were no leases executed at all. Even if Mr Donnelly could have been optimistic that leases of 21 shops would come into existence, it was clear, even at that stage, that barely half of the shops in the Foundry were to be tenanted in the foreseeable future. 106 On the basis of the representations Mr Donnelly made personally, or authorised personally, he would be liable under s 9 of the Fair Trading Act. The difficulty would be in dissecting from the overall representations for which 83 East was responsible those attributable directly to Mr Donnelly. The evidence of the applicants is as to reliance on the representations as a whole, and not separately on specific ones made by Mr Donnelly. In respect of the representations as a whole, however, it is clear from the facts that I have recounted in [97]-[105] above, that Mr Donnelly had knowledge of the circumstances of the contravention of s 52 of the Trade Practices Act by means of the representations made in the brochure, in the video, orally on 22 June 2006 and by means of the disclosure statement. Mr Donnelly was therefore knowingly concerned in or party to the contraventions of s 52.

Apportionment of liability 107 It is clear from the application by which the proceeding was commenced that the applicants claim pursuant to both s 52 of the Trade Practices Act and s 9 of the Fair Trading Act. Reliance on both of these provisions is confirmed by the statement of claim in its final amended form. 108 Part VIA of the Trade Practices Act contained provisions designed to limit the liability of concurrent wrongdoers in relation to apportionable claims to the amount that the Court considers just, having regard to the extent of the particular respondent's responsibility for the loss and damage, and preventing the giving of judgment against the respondent for more than that amount. It is clear from s 87CB(1) of the Trade Practices Act that the claim in the present case is an apportionable claim for the purposes of Pt VIA. The claim is one for damages under s 82 of the Trade Practices Act for economic loss caused by conduct that was done in contravention of s 52. Further, by s 87CB, there is a single apportionable claim, even though the claim for that loss and damage is based on more than one cause of action, whether or not of the same or a different kind. Thus, Pt VIA of the Trade Practices Act applies to the entirety of the claim for the applicants' loss and damage, even though that claim is based in part, or in the alternative, on a cause of action pursuant to State legislation. 109 For the purposes of Pt VIA of the Trade Practices Act, a "concurrent wrongdoer" is one of two or more persons whose acts or omissions caused, either independently of each other or jointly, the loss or damage. Section 87CB(5) makes it clear that 83 East continues to be a concurrent wrongdoer, even though it is being wound up. 110 The principal operative provisions of Pt VIA of the Trade Practices Act are found in s 87CD. It is helpful to set out those provisions, to the extent that they are relevant to the present case: (1) In any proceedings involving an apportionable claim: (a) the liability of a defendant who is a concurrent wrongdoer in relation to that claim is limited to an amount reflecting that proportion of the damage or loss claimed that the court considers just having regard to the extent of the defendant's responsibility for the damage or loss; and (b) the court may give judgment against the defendant for not more than that amount. ... (3) In apportioning responsibility between defendants in the proceedings: ... (b) the court may have regard to the comparative responsibility of any concurrent wrongdoer who is not a party to the proceedings. (4) This section applies in proceedings involving an apportionable claim whether or not all concurrent wrongdoers are parties to the proceedings. (5) A reference in this Part to a defendant in proceedings includes any person joined as a defendant or other party in the proceedings (except as a plaintiff) whether joined under this Part, under rules of court or otherwise. 111 Section 87CI(a) of the Trade Practices Act provides that nothing in Pt VIA "prevents a person being held vicariously liable for a proportion of an apportionable claim for which another person is liable". 112 The provisions of Pt IVAA of the Wrongs Act are similar to, but not identical with those of Pt VIA of the Trade Practices Act. An "apportionable claim" is defined so as to include a claim for damages for a contravention of s 9 of the Fair Trading Act. The provision in s 24AF(2) of the Wrongs Act concerning proceedings with two or more different causes of action does not appear to be as broad as that found in s 87CB(2) of the Trade Practices Act. The definition of "concurrent wrongdoer" in s 24AH(1) of the Wrongs Act, and the provision in s 24AH(2) relating to a concurrent wrongdoer that is insolvent, being wound up, has ceased to exist or has died are substantially the same in effect as the similar provisions of the Trade Practices Act. So also is the operative provision in s 24AI(1) of the Wrongs Act similar to s 87CD(1) of the Trade Practices Act. There is a marked divergence between the two pieces of legislation arising from a comparison of s 87CD(3)(b) of the Trade Practices Act with s 24AI(3) of the Wrongs Act. The former provisions allows a Court, in its discretion, to have regard to the comparative responsibility of any concurrent wrongdoer who is not a party to the proceeding. The Wrongs Act provision provides that the Court "must not have regard to the comparative responsibility of any person who is not a party to the proceeding" unless such a person is not a party because (if a natural person) the person is dead or (if a corporation) the corporation has been wound up. Section 24AP(a) of the Wrongs Act matches the vicarious liability provision of s 87CI(a) of the Trade Practices Act. Section 24AP(b) of the Wrongs Act contains a provision not found in the Trade Practices Act, however, to the effect that nothing in Pt IVAA of the Wrongs Act prevents a person from being held jointly and severally liable for damages awarded against another person as agent of the first-mentioned person. It may be that this provision is not of great significance because, in normal circumstances, a principal will be vicariously liable for the conduct of an agent engaged to act on behalf of the principal. Ordinarily, the relationship of principal and agent will be caught by the vicarious liability provisions in s 87CI(a) of the Trade Practices Act and s 24AP(a) of the Wrongs Act in any event. 113 There is authority in State courts, in relation to legislative provisions to the same effect as those found in Pt VIA of the Trade Practices Act and Pt IVAA of the Wrongs Act, that there is an obligation on a party seeking to limit its liability to an amount of an apportionable claim determined to be just, having regard to that party's responsibility for the loss and damage claimed, to plead and to prove the facts necessary to invoke the power of the Court to make the necessary determination. In Ucak v Avante Developments Pty Ltd [2007] NSWSC 367 at [34]-[35], Hammerschlag J held that a defendant who wishes to assert that there is a person who is a concurrent wrongdoer must plead the existence of a particular person, the occurrence of an act or omission by that particular person and a causal connection between that occurrence and the loss that is the subject of the claim. This approach was followed in GEJ & MA Geldard Pty Ltd v Mobbs & Ors (No 2) [2011] QSC 33 at [56]-[60], where Ann Lyons J also referred to the judgment of Einstein J in Nemeth v Prynew [2005] NSWSC 1296, in which his Honour had adopted the view that a defendant wishing to have the benefit of a limitation on liability bore the onus of pleading and proving the elements of the statute providing for that limitation. 114 The proposition that it is for a respondent to plead and prove the elements necessary to give rise to a determination that that respondent's liability is to be limited to a particular amount is based on sound considerations. A Court ought not to be required to act on its own initiative, and to search for the complete range of possible concurrent wrongdoers in relation to any apportionable claim, for the purpose of taking it upon itself to work out the extent of the responsibility of each of those possible concurrent wrongdoers for the loss claimed. The responsibility must lie with a party who is sued to make the claim with respect to other possible concurrent wrongdoers. The requirement to plead and prove the necessary facts involves the requirement to set out in the pleading, in this case the defence, the material facts, and any necessary particulars, to justify the claim for the limitation of liability, and to cast upon an alleged concurrent wrongdoer responsibility for the remainder. In the early stages of this proceeding, O 11 r 2(a) and O 12 r 1(1) of the Federal Court Rules contained the specific requirements to plead material facts and necessary particulars. In the course of the conduct of the proceeding, these obligations came to be found in r 16.02(1)(d) and r 16.41(1) of the Federal Court Rules 2011 respectively. 115 In their amended defence, Mr Murchie and Wilmot Murchie pleaded reliance upon Pt IVAA of the Wrongs Act in relation to the claim against Mr Murchie and reliance on Pt VIA of the Trade Practices Act in relation to the claim against Wilmot Murchie. In each case, they pleaded that each of the applicants, 83 East, Foodco and the Jamaica Blue company were concurrent wrongdoers. It is difficult to understand how any of the applicants could be regarded as a concurrent wrongdoer with any of the respondents, especially in light of the specific exception relating to a "plaintiff" in s 87CD(5) of the Trade Practices Act (a provision that does not appear to have a counterpart in the Wrongs Act). In any event, I have rejected any suggestion that the applicants were, to any extent, the authors of their own misfortune. To the extent to which Mr Murchie relies on the provisions of the Wrongs Act, any attempt to raise any comparison with the conduct of Foodco or the Jamaica Blue company appears to fall foul of s 24AI(3). Whilst s 87CD(3)(b) permits the Court, in its discretion, to have regard to the comparative responsibility of a concurrent wrongdoer who is not a party to the proceeding, on the evidence before me it is difficult to see how either Foodco or the Jamaica Blue company could be regarded as a concurrent wrongdoer. There is no evidence that either engaged in misleading and deceptive conduct towards the applicants. One or other of them did pass on the information contained in the disclosure statement, including the representations from that information on which the applicants relied, but there is nothing to indicate that Foodco or the Jamaica Blue company made any representation to the effect that any of those representations was true. They were simply the vehicle for communication between 83 East and the applicants. 116 Mr Murchie and Wilmot Murchie pleaded no material facts at all in support of their assertion that the applicants, 83 East, Foodco and the Jamaica Blue company were concurrent wrongdoers, or bearing upon the determination of the extent of the responsibility of Mr Murchie or Wilmot Murchie or any of those alleged to be concurrent wrongdoers. They merely asserted the conclusion that there were concurrent wrongdoers and that their own liability was limited to the extent that the Court would consider just, having regard to the extent of their own responsibility for the loss and damage claimed. If Mr Murchie and Wilmot Murchie had not entered into a settlement of the claim against them, their failure to plead properly their reliance upon the apportionment provisions would have been an obstacle to their attempt to limit their liability by reference to those provisions. 117 In its amended defence, 83 East pleaded only that Wilmot Murchie was a concurrent wrongdoer, and sought only that the liability of 83 East should be limited to so much of the applicants' loss and damage that the Court considered to be just, having regard to the extent of Wilmot Murchie's responsibility for that loss and damage. 83 East pleaded no material facts, save that it asserted that Wilmot Murchie was a concurrent wrongdoer "on the grounds set out in the Applicants' Statement of Claim". It pleaded no material facts by reference to which the Court could make any determination of the relative extent to which each of Wilmot Murchie and 83 East were responsible for the applicants' loss and damage. In any event, Wilmot Murchie (and Mr Murchie and each other relevant person employed by Wilmot Murchie) was the agent of 83 East. As principal, 83 East was vicariously liable for the conduct of Wilmot Murchie as its agent. Pursuant to s 87CI(a) of the Trade Practices Act, and pursuant to s 24AP(a) and (specifically) (d) of the Wrongs Act, the apportionment provisions of both Acts are inapplicable when such vicarious liability exists. Even if Wilmot Murchie could have limited its liability by establishing that 83 East was a concurrent wrongdoer with it, 83 East is precluded from doing so in relation to Wilmot Murchie's conduct, by reason of the vicarious liability of 83 East. 118 Mr Donnelly did not plead at all. He therefore did not invoke any of the provisions that might have been utilised to limit his liability by reference to any other possible concurrent wrongdoer. If he had done so by reference to 83 East as a concurrent wrongdoer with him, potentially difficult issues would have arisen. A corporation is an artificial entity, which can act only by means of human beings who perform acts on its behalf, or fail to perform on its behalf acts it is required to perform. The task of determining the relative responsibility for inflicting loss and damage of a corporation and its sole or principal human actor, in a case such as the present, would be extremely difficult. In many cases, the outcome of that task would necessarily be that all or most of the liability was cast upon the individual, who had the actual responsibility, for which the corporation is liable. Such a result would appear perverse in light of the fact that, pursuant to the Trade Practices Act, the principal target is necessarily a corporation, for constitutional reasons. It would be odd if the effect of the apportionment provisions were to take away the liability of the corporation and cast it upon the individual who becomes liable only because of the operation of s 75B of the Trade Practices Act. 119 These issues do not have to be resolved in the present case, however, because of the absence of any pleading by Mr Donnelly. Nor is there any pleading by 83 East that Mr Donnelly was a concurrent wrongdoer with it. In any event, such a pleading by 83 East would be futile, as it is vicariously liable for the acts or omissions of Mr Donnelly in his capacity as its sole director. Section 87CI(a) of the Trade Practices Act and s 24AP(a) of the Wrongs Act preclude 83 East from casting a portion of its liability onto Mr Donnelly. 120 The result of this analysis is that the apportionment provisions are inapplicable to the present case. They are inapplicable because of the absence of the pleading and proof necessary to invoke them. In the case of 83 East, they are inapplicable because of its vicarious liability for the conduct of Wilmot Murchie and for the conduct of Mr Donnelly. Neither 83 East nor Mr Donnelly has succeeded in limiting its or his liability to the applicants.

The effect of the settlement with the first and second respondents 121 The result of this reasoning would be that the applicants would be entitled to enter judgment against 83 East, and against Mr Donnelly, for the entirety of the amount of loss and damage I have determined they have suffered, together with interest calculated as I have determined. The difficulty in the present case arises from the settlement entered into by the applicants with Mr Murchie and Wilmot Murchie. The likelihood is that, as a result of that settlement, the claim of the applicants has been satisfied in part. The terms of the settlement have not been disclosed to me. Counsel for the applicants offered to do so, but I declined on the basis that I did not wish to be influenced in determining any issues of apportionment by knowledge of what the applicants had already recovered through the settlement. In addition, counsel for the applicants submitted that the settlement was no bar to the entry of judgment against 83 East and Mr Donnelly for the whole amount of the loss and damage the applicants were found to have suffered. The submission was that the rule against double recovery operated only at the level of execution of a judgment, so that the applicants would be bound not to execute any judgment against 83 East and Mr Donnelly for more than the shortfall after taking into account whatever was recovered by means of the settlement with Mr Murchie and Wilmot Murchie. 122 In making this submission, counsel for the applicants relied on a passage in the judgment of Byrne J in Gunston v Lawley [2008] VSC 97 (2008) 20 VR 33 at [56], where his Honour said: The common law has never had any difficulty with a plaintiff obtaining a series of judgments which, if all were satisfied in full, might mean that it received more than the total amount of its proved loss or damage. What is not permitted is that the plaintiff actually recovers in the aggregate a sum greater than its proved loss or damage. This is the rule against double compensation referred to in Boncristiano v Lohmann. So much was not in issue before me. [Footnote omitted] 123 The relevant passage in Boncristiano v Lohmann (1998) 4 VR 82 is in the judgment of Winneke P at 88-89, with whom Charles JA and Batt JA concurred. At 88, Winneke P said: in cases where the plaintiff seeks to recover from the several defendants compensation in respect of the same damage it is fundamental that the plaintiff cannot recover more than the total damage which he or she has sustained. Where the claims for damages are concurrent, in the sense that the claims "overlap", recovery by the plaintiff of the whole or part of the loss claimed from one defendant will necessarily be taken into account in assessing the damages to be recovered from the other. His Honour then referred to Townsend v Stone Toms & Partners (1984) 27 BLR 26. In that case, a building owner sued both a builder and an architect. The building owner compromised the claim against the builder by accepting a payment into court and proceeded with the claim against the architect. A submission similar to that made in the present case was made in that case, namely that the trial judge should have ignored the settlement with the builder and entered judgment against the architects for the full amount of damages, because the partial satisfaction provided by the builder should only be taken into account at the time when the judgment was executed against the architects. The English Court of Appeal rejected that submission. In Boncristiano at 89, Winneke P quoted from the judgment of Oliver LJ in Townsend at 38: The starting point, and one on which there is a good deal of clear authority, is that where a plaintiff with concurrent claims against two persons has actually recovered all or part of his loss from another, that recovery goes in diminution of the damages which will be awarded against the defendant. A plaintiff can never, as I understand the law, merely because his claim may lie against more than one person, recover more than the total sum due. 124 Winneke P then referred to Banque Keyser Ullman S.A. v Skandia (U.K.) Insurance Co. Ltd. (No. 2) [1988] 2 All ER 880 at 881-882. In that case, Steyn J (as he then was) held that the amount of a settlement against one joint tortfeasor must be taken into account in determining the amount of damages to be awarded against another joint tortfeasor. His Lordship also held that, in the case of a lump sum settlement, the costs incurred by the claimant in pursuing the joint tortfeasor with whom the settlement was reached should be deducted from the lump sum, in order to determine the amount to be taken into account in assessing damages against the other joint tortfeasor. 125 These are the principles that should be applied in the present case in assessing the amount for which judgment is to be given against 83 East and Mr Donnelly, and the amount of interest. It will therefore be necessary for me to be told the details of the settlement achieved between the applicants and Mr Murchie and Wilmot Murchie.

Conclusion 126 For the foregoing reasons, I propose to order that judgment be entered against 83 East and against Mr Donnelly in favour of the applicants. Further evidence will be required before the amount of that judgment and, consequently, the amount of interest to be included in the judgment, can be determined. The appropriate course is to order that the applicants file and serve an affidavit detailing the terms of settlement reached between them and Mr Murchie and Wilmot Murchie and, if necessary, setting out the amount they claim to be entitled to deduct from any lump sum settlement by way of costs. The applicants should also be ordered to file and serve minutes of proposed orders that reflect these reasons for judgment. The proceeding should be listed for further hearing on a suitable date, on which submissions as to the appropriate orders can be made. 127 I also propose to order that 83 East and Mr Donnelly pay the applicants' costs of the proceeding, so far as those costs have been incurred in relation to the claim against 83 East and Mr Donnelly. I certify that the preceding one hundred and twenty-seven (127) numbered paragraphs are a true copy of the reasons for judgment herein of the Honourable Justice Gray.

Fair Trading Act 1999(Vic)ss 9, 9(1), 159(1)

Trade Practices Act 1974(Cth)ss 51A, 51A(1), 51A(2), 52, 75B(1)(a), 75B(1)(b), 75B(1)(c), 82, 82(1), Pt

Evidence Act 1995(Cth)ss 71, 161

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