Murray v Duddy [2006] NSWSC 761 | Case summary

Murray v Duddy [2006] NSWSC 761 | Case summary | Zoe

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JUDGMENT (Principal/agency, breach of contract, deceit) 1 HER HONOUR: The plaintiff alleges that she successfully bid at auction for two properties "West Garawan" and "Square Bush" on behalf of her Uncle Eric, the defendant. The plaintiff alleges that he breached the agreement, made misrepresentations and deceived her. This is the second trial in these proceedings. 2 This litigation has brought about an unfortunate state of affairs. It has caused a rift within a wealthy, well respected family of landowners. The plaintiff's grandfather owned about 12,000 acres of property known as Rossmar Park upon which is located the heritage homestead "Rossmar". The properties, the subject of this claim, are located on the Liverpool Plains in the Gunnedah/Quirindi area in north western New South Wales. The plaintiff is Wendy Jill Murray. Her father was Ross Duddy. Ross Duddy was one of three brothers, his brothers being Clive Duddy and Eric Duddy. Eric is the plaintiff's uncle and the defendant in these proceedings. In this judgment I have usually referred to the plaintiff as Wendy or Wendy Murray and the defendant as Uncle Eric or Eric Duddy. 3 For the first nine years of her life Wendy Murray lived with her family at the Rossmar homestead and then together with her family moved to reside at the property known as West Garawan. In 1967 she married Robert Murray (Bob Murray) and moved to Western Australia. They have been involved in the management of farming properties throughout most of their marriage. In 1991 Wendy Murray inherited "Boala" a dryland farming property situated on the Breeza Plains. Boala was formerly part of "Breeza Station". In about 1991 Wendy and Bob Murray moved from Western Australia to Boala. 4 Wendy and Bob Murray returned to Breeza Plains. By then Wendy had inherited a dryland farm situated on the Breeza Plains called "Boala". Boala was formerly a part of "Breeza Station". At the time of the auction Wendy and Bob Murray were involved in the farming and management of Boala in a partnership arrangement. 5 On 30 September 1996 Westpac Banking Corporation (Westpac) obtained against Eric Duddy judgment for possession of "West Garawan" and "Square Bush". Westpac also obtained judgment against Mr Duddy in the sum of $3,256,255.20. The bank was proceeding to sell both properties at auction. I have referred to "properties" which up until 1998 included West Garawan and Square Bush. Square Bush played little role in subsequent events and was sold six months after the auction (November 1997) for $132,000. The subsequent events revolve around the property West Garawan. 6 Before I continue, it is appropriate that I record my observations of the plaintiff's demeanour and the defendant's evidentiary position. The plaintiff was cross examined over four days and during that time I carefully observed her. At times she became an advocate for her case. She did not feel constrained to merely answering the question but rather volunteered information that she thought would bolster her case. 7 In about May 2001 Wendy Murray wrote her version of what occurred at the auction and the aftermath. It was referred to during the trial as "the story document" (Ex E). This version is more elaborate and not entirely consistent with her evidence given at trial. She expressed a consistent theme in both the story document and in court and this was that she was endeavouring to stand up for her rights and for what she believes is correct (t 205.5). I have come to the view that Wendy Murray has tailored her evidence to portray herself in the best light possible. It is for this reason that where there are contemporaneous notes or other documentation in existence and their contents conflict with Wendy Murray's evidence, I prefer that evidence contained in the written documentation. 8 Mr Duddy is now aged 79 years. He gave evidence at the first trial. Unfortunately, due to the effluxion of time, was no longer competent to give evidence at this trial. It was the view of Dr Sid Williams psychiatrist (report 27/3/2006) that Mr Duddy would be unable to assist the Court and that he would not be competent to give evidence about the facts relating to events which occurred in 1997. Dr Williams was right. As the Court being faced with determining between two competing versions of oral conversations, it was anxious to ascertain whether Mr Duddy could give reliable evidence and whether any observations as to demeanour would be of assistance. Mr Duddy was sworn and asked some basic questions. Mr Duddy ruminated over each question before answered. Eventually, when he did respond, it amounted to only a few words. I formed the definite view that Mr Duddy did not have any useful recollection of the events that occurred on the day of the auction nor could he give any cogent evidence. Consequently this Court was not able to make any findings about Mr Duddy's demeanour or credit. The best that can be done now is to make use of the transcript of the evidence Mr Duddy gave in the previous trial together with his affidavit evidence (see Ex 5). 9 Mrs Jill Duddy (Wendy Murray's mother and Uncle Eric's sister-in-law) had furnished an affidavit and was cross examined during the first trial. Mrs Duddy was to give evidence at this trial but regrettably her husband (Wendy's father) died a few days before this trial commenced. His funeral took place on the second day of the trial. Understandably Mrs Duddy was grieving and unable to come to Sydney to give evidence at this trial. Her affidavit and cross examination at the first trial is in evidence (Ex 9). As with Uncle Eric, I did not have the benefit of observing her demeanour in Court. Her evidence is of short compass but is nevertheless important in that it is consistent with Uncle Eric's recollection of a conversation with Wendy. Mrs Duddy also gave evidence of a conversation between her and Wendy which goes directly to the issue of whether Wendy intended to retain the property for herself. 10 While I am on the topic of witness, mention should also be made of Wendy Murray's actions in the sending of faxes to two potential witnesses, namely Mr Douglas Anderson and Mr Wayne Leece. Doug Anderson was the director of Ashe Morgan Winthrop. Wayne Danvers Leece was Uncle Eric's accountant. The Court regards the faxes dated 12 April 2002 and 15 April 2004 as most inappropriate and worthy of rebuke (Ex 3). When the faxes were sent these proceedings had been on foot for seven months (S/C filed 15/08/2001). Mr Leece gave evidence at both trials and was cross examined. He was not intimidated by Wendy Murray's behaviour. However, the same cannot be said for Mr Anderson. Wendy Murray wrote to Mr Anderson telling him: "…My instincts tell me that neither of you [Mr Anderson and Mr Leece] were willing participants in the fraud that has clearly been perpetrated. As a result of Eric's determination to have his own way at any cost, you are now both about to find yourself in very serious trouble indeed. In your case, Michael Hayter intends to amend my action against Kyabram to include a joint action against you as well." 11 Elsewhere in her letter, she referred to being extremely fortunate to have Michael Hayter acting for her because as well as being a partner in the ninth most successful law firm in Australia and being an impressive man, he had the previous year personally won a $50 million fraudulent misrepresentation case. However, as it turned out Mr Hayter did not act for Wendy Murray at this trial. He had filed a Notice of Ceasing to Act [27/08/2002]. 12 Wendy Murray's letter to Mr Anderson concluded: "Please think this over carefully. Bob and I have both the capacity and intention to pursue these actions until such time as what we consider to be a fair and just outcome is achieved. I personally will go to any lengths that I have to, to ensure that justice is not only done, but is seen to be done." 13 Mr Anderson had prepared a draft affidavit and deleted a significant portion of that draft. Obviously deletions did not appear in his affidavit sworn 6 November 2003. At the first trial Mr Anderson departed from some evidence contained in his sworn affidavit, and in effect adopted the crossed out evidence in his draft affidavit. While Mr Anderson gave evidence and was cross examined at the first trial he could not be located to give evidence at this trial. Mr Anderson's letter dated 9 September 2005 to Wendy Murray's solicitor demonstrated his reluctance to be located (on the admissibility of Doug Anderson's evidence and attempts to locate him - see separate judgment). Mr Anderson's affidavit, draft affidavit and portion of the first trial transcript were admitted into evidence (Ex F).

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The day of the auction - 9 May 1997 18 On the morning of the 9 May 1997 Uncle Eric's attention was focussed elsewhere. His legal representatives were in this Court seeking an injunction to prevent the auction taking place. In Duddy v Westpac Banking Corporation (NSWSC, Santow J, 2361/97) Eric Duddy sought to stop the auction on the grounds that firstly, the mortgagee had contracted not to exercise the power of sale in the circumstances that now prevailed; and secondly, estoppel. On 13 March 1997 Westpac wrote to Uncle Eric stating "If the settlement sum of $2 million is forthcoming prior to the auction date then we are prepared to abort the auction." Santow J made a finding that the sum of $2 million could not in fact be handed over to Westpac. The action failed (Ex B(1) - Tab 16). 19 Early on the morning of the auction Wendy Murray accompanied her brother Peter Duddy to Gunnedah Golf Club the venue where the auction was to take place. Peter, who has since died (September 1998) owned "Garawan" the adjoining property to West Garawan. Wendy Murray engaged in lengthy discussions on Peter's behalf with the Westpac Regional Manager over the ownership bores and whether the main bore was situated on Crown land or on Garawan. 20 Just prior to the auction commencing Wendy Murray made an announcement to those present (which included the potential bidders): "I am acting on behalf of my brother Peter who owns the adjoining land. Peter believes that the main bore is in fact on his property and Westpac have been trying to get him to sign a document to transfer it to them. He has refused to sign that document and there is uncertainty as to the actual boundaries of the property and also the ownership of the bore." 21 A more fulsome version of her announcement to the potential bidders is contained in her story document. Wendy Murray intended to impress upon the audience that she was making this announcement because she "had a very strong sense of what is right and wrong." 22 Prior to the auction taking place Wendy Murray was aware that two offers had been made to Westpac for West Garawan and Square Bush, one in the sum of $2.1 million and the other in the sum of $2.4 million (t 38.1-15). Both Wendy and Bob Murray gave evidence that prior to the auction they had no idea as to the market value of West Garawan. I find this assertion to be unlikely. Wendy had spent her formative years living on that particular property. She had returned to the area four years earlier and owned her own property. It seems more likely than not that Wendy and Bob Murray would have been familiar with the current market values of properties in the area. 23 Bruce Gunning the valuer who had provided a valuation of West Garawan prior to the auction gave evidence on two aspects of this case; namely the valuation of West Garawan and what occurred at the auction. He was present at the auction in order to bid on behalf of a potential buyer. I found him to be an impressive, truthful witness who had an intimate knowledge of the value of the properties and in particular the value of West Garawan's water entitlements. This was an issue that loomed large at this time. I accept and prefer his valuation of West Garawan and Square Bush to those of Patrick James Wood and Robert J Patfield of Patfield & Company because of his more detailed local knowledge. I accept his evidence generally. At the commencement of the auction he recalled Wendy Murray her saying to those present "We're not really happy with this. We do not agree with what you are trying to do." 24 Eric Duddy arrived at the auction at about 2.00pm just before it commenced. When Uncle Eric arrived he approached Wendy Murray, Leon Cupples and Peter and said words to the effect "I've got $2 million but Westpac won't knock it down to me if I bid at the auction. Peter will you bid for me and then we can transfer the property back to me?" Peter said "No". It is common ground that prior to asking Wendy to bid, Uncle Eric asked Peter to bid and Peter had said "No." 25 Wendy Murray's version is that Uncle Eric then turned to her and said "Can you bid for me? I've got the money. You can transfer it back to me next week." Wendy replied, "I will do it." In the story document, this conversation is similarly recorded. The story document added some extra information, namely that it was Wendy Murray's intention that when purchasing the properties she would gain the opportunity to straighten out once and for all the ownership of the bores before she transferred it back to Eric. 26 Uncle Eric's evidence is that he said to Peter and Wendy "I've got $2 million dollars organised." Or alternatively he said "I've got access to $2 million dollars." Uncle Eric continued "but the Bank won't allow me to bid for the properties - can you buy them back for me?" Wendy Murray replied "Yes I will do it for you." 27 There is no dispute that Wendy Murray agreed to bid for the properties on Eric's behalf. But as to what was actually said, I find it is more likely than not, that on the balance of probabilities, Uncle Eric said to Wendy "I've got access to $2 million and the bank won't allow me to bid for the properties. Can you bid for me? " Wendy said "Yes, I will do it." In cross examination Eric Duddy agreed that he said the words "I have got the money or organising the money, something like that." (AB 257.4-7).

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The auction 28 When the auction then commenced Wendy Murray was standing next to Uncle Eric. After five minutes Bruce Gunning placed a bid on behalf of a client for $1.2 million. Wendy Murray commenced to bid against him. Uncle Eric said to Wendy "The Westpac reserve is $1.7 million." As the bidding was continuing Uncle Eric told Wendy "You can go up to $2 million." On four or five occasions Wendy Murray bid against Bruce Gunning increasing the bid each time. On those occasions Eric said to Wendy "Keep going you have to get it." 29 Bruce Gunning confirmed that he made a number of bids on behalf of a potential buyer but he withdrew from bidding when he was instructed by his principal to do so. The reason for withdrawal was because the principal became aware that he or she was bidding against Eric Duddy's niece and did not want to get involved "in this" (t 274.29). Finally Wendy Murray made a successful bid for $1.8 million. West Garawan was knocked down to her. 30 According to Wendy, Uncle Eric then grabbed her by the arm and said words to the effect "You've also got to buy Square Bush because it is tied up with my finance arrangement." Square Bush was a smaller property located in the area. When the bidding for Square Bush was a bit over $100,000 Uncle Eric said to Wendy "Keep going we need the two blocks to cover the finance". Square Bush was knocked down to the plaintiff for $135,000. The total of the two bids was $1.935 million. I accept that Uncle Eric told Wendy to keep bidding and she could bid up to $2 million. I also accepted that Uncle Eric told Wendy to bid for Square Bush as it was either tied up with Uncle Eric's finance agreement or the two blocks were needed to cover the finance. 31 At the time of the auction Wendy Murray says that it was her belief that the finance Uncle Eric had obtained would pay for the properties and that those properties could be transferred back to him in one week. Uncle Eric knew that he was not be able to get the titles back into his name until the figures were worked out and a final figure could be agreed on With Westpac under the settlement agreement. Uncle Eric denied he told Wendy that she could transfer the properties back to him within one week. On Wendy's own evidence she was intending to sort out Peter's boundary issues before transferring the property back to Uncle Eric. Hence I find it unlikely that Uncle Eric said to Wendy that she could transfer the property back to him the next week. 32 I make a finding that there was an agreement between Wendy Murray and Uncle Eric. I find that Wendy Murray was to bid at the auction and purchase the properties on Uncle Eric behalf and that Uncle Eric's finance would be used for the purchase of the properties and that the properties would be transferred back to him with one week. The first part of the agreement, namely that Wendy would bid at the auction and purchase the properties, was fulfilled. 33 Wendy Murray recorded at the conclusion of the auction when she went to sign the documents, the Westpac Regional Manager looked very pale and appeared to be in a state of shock. According to Wendy Murray at this time Warren Thibault, Westpac's solicitor said "I take my hat off to you, that was the fanciest bit of footwork I have ever seen I knew what you were up to but I couldn't stop you." (the story document). Wendy Murray signed the contract in her own name. At this stage Wendy Murray was aware that as there had been pre-auction offers of $2.1 and $2.4 million the price paid for the properties was a very good one indeed. 34 It is from this point that the evidence diverges. After the contract was signed, Wendy Murray recounted that she had a conversation with Uncle Eric's accountant Wayne Leece of Clout Brackenbury & Stewart in Quirindi whereby she told Wayne, "West Garrawan has been knocked down to me." Mr Leece replied "You little beauty." Prior to the auction Wayne Leece was involved in obtaining finance for Uncle Eric. He had been trying to negotiate a settlement between Uncle Eric and Westpac. Wendy Murray's version is that she then said to Wayne Leece "OK now what to I do about the deposit? Eric seems to have disappeared." Wayne Leece said "You will have to go to Quirindi and get your mother to withdraw some of the money she also put into Andrew Kay's Trust Account and use that for the deposit." Mr Leece does not recall this conversation nor did he refer to it in his affidavit nor does he deny that it occurred (t 381.10). Mr Leece says that he also received a telephone call from Uncle Eric where Uncle Eric said "Wendy's bought the property for me." 35 Shortly after Wendy Murray signed the contract she also telephoned her solicitor Mr Newbiggen. Mr Newbiggen's file note reads: "2.15-2.20 Telephone call to Wendy Murray. Noting that she had purchased property on behalf of Eric Duddy for $1.8 million. No written authority had been given to the Agent. Has been told his finance is in order. Cheque for deposit being arranged through Andrew Kay at Quirindi." 36 During cross examination Wendy Murray denied that she discussed finance with Mr Newbiggen. It is unlikely that the solicitor would have initially, as claimed by Wendy Murray, told her that Eric's finances were in order and then proceeded to make a later file note to himself that "[she] has been told his [Uncle Eric's] finance is in order." It is my view that Wendy Murray told Mr Newbiggen that Eric's finances were in order not the other way around. 37 At about 2.30pm Eric Duddy telephoned his solicitor, Mr Andrew Kay of Thomas Hayne at Quirindi. Mr Kay's file note recorded "1.8m bought on his [Eric's] behalf." After the auction Uncle Eric was certain that Wendy had bought the properties on his behalf. 38 Mr Newbiggen recorded a further telephone call made to him that afternoon by Wendy Murray. His file note reads: "3.10-3.15 Telephone attendance on Wendy Murray. Advising she had not heard from Andrew Kay. At this stage she is to head to Quirindi to collect the cheque. Noting that she wants some control over the property to try and prevent Eric Duddy getting into future difficulties. To contact us when she get to Quirindi." 39 So by 3.15pm on the afternoon of the auction, Wendy Murray had articulated to Mr Newbiggen her intention to gain some control over the property so as to prevent Uncle Eric getting into future difficulties. Sometime that same afternoon Mr Newbiggen drafted a deed of trust. 40 Next in time is a letter by Mr Newbiggen faxed to Mr Andrew Kay (Uncle Eric's solicitor) which relevantly says: "We have been advised by our client that she has agreed to purchase the property "West Garawan" Breeza for the sum of 1.8 million dollars from Westpac Bank at the Auction held at Gunnedah today. We are instructed that our client agreed to do this at the request of your client and on the basis that your client would be providing the funds to enable our client to complete the purchase. We understand that our client is travelling to your office to collect the necessary cheque to pay the 10% deposit for the Contract. At this stage, we understand that the Contract has not been signed. In order to record that arrangement, we enclose Declaration of Trust for signature by our client and your client, Mr Eric Keith Duddy. We would ask that the Declaration of Trust be signed before our client enters into the Contract with Westpac Bank." 41 However, by the time this letter was faxed, Wendy Murray had already signed the contract with Westpac. The trust deed accompanied this fax. Wendy Murray denied that Mr Newbiggen mentioned any declaration of trust to her. However, in cross examination she conceded that this deed reflected the agreement between herself and her uncle (t 78.57). 42 Between 4.20pm and 4.35pm there was a conversation between Wendy Murray and Uncle Eric's. Mr Newbiggen spoke to Mr Kay. Mr Newbiggen's file note of this conversation recorded: "Telephone attendance on Andrew Kay. Outlining present position. Noting that he had $300,000.00 in his trust account of which $200,000.00 was cleared funds. Not sure of the exact source of the funds but may be from Peter Duddy and George Clift. Borrowings were coming from M and S Financial Services (indecipherable) and Sawyers Solicitors of Kyabram). There was an offer of loan for $1.35 million and a further $350,000.00. Did not know the exact status of that loan or the position concerning making the loan available for the purchase by our client. Advising of declaration of trust and indemnity being passed to his office. Asking that he arrange for funding Murray to contact our office." 43 At about 4.25pm on that same day Mr Kay received the faxed trust deed. 44 At about 5.00pm, there was a meeting in Mr Kay's office. Those in attendance were Jill Duddy, Wendy Duddy, Peter Duddy and Uncle Eric. Eric says that he arrived after the others. Wendy denies that Uncle Eric attended this meeting at all. I accept that Uncle Eric may have arrived late, but was present during the meeting. This accords with Mr Kay's recollection which is that while Eric may have arrived late, he did not arrive after Wendy Murray had left. 45 During a conversation at this meeting Mr Kay was told that Wendy Murray had purchased Eric's property. Jill Duddy asked Mr Kay to draw cheques on his trust account against the bank cheque, which had been deposited in her name on the previous day. Mr Kay advised the parties present that he had received a fax (which should have included the trust deed) from Avern McIntyre. He placed the fax on the table in the room where the meeting took place. It is Mr Kay's recollection that the contents of the declaration of trust were not discussed in detail. The reason for this was that Mr Kay considered that while he had prior instructions to act for Eric Duddy in relation to the injunction proceedings he did not have instructions to act for him in relation to the trust deed. Uncle Eric agreed with this view. According to Mr Kay, one member of the group took the fax but he does not recall whom it was. Interestingly, both Wendy Murray and Uncle Eric say that neither of them saw this trust deed document until much later, but nothing turns on this. 46 During this meeting in Mr Kay's office, Uncle Eric says that Wendy said to him "I wouldn't mind retaining a small interest in the property." Eric replied "I don't see a problem with that." More importantly, Jill Duddy (aff 21/12/2001) confirmed that at this meeting her daughter (Wendy) said to Uncle Eric either "I want an interest in it" or "I want a small interest in it" and Uncle Eric replied "I can't see any reason not." Wendy Murray that this conversation took place. I find that it did. Wendy's request for an interest in the property is consistent with what she told Mr Newbiggen a few hours earlier (at about 3.15pm). Hence at 5.30pm on the day of the auction Wendy Murray told Uncle Eric she wanted an interest in the property and he agreed to this proposition. 47 Between 5.10pm to 5.20pm Mr Newbiggen recorded on that afternoon he had a further telephone conversation with Wendy Murray. Mr Newbiggen's file noted reads: "Telephone attendance on Wendy Murray. Noting that she has already signed the Contract. Advising her about Declaration of Trust and that there would be double stamp duty payable if property transferred to Eric Duddy. Advising her position in relation to finance. At this stage will need to contact M and S Financial Services to clarify position on finance. She will arrange to send contract to our office. She is to decide what interest that she will retain in the property. Advising her that [she] would be in difficulty if finance not approved." (Ex B(1) - Tab 19) 48 Initially, Wendy Murray did not recall ever having told Mr Newbiggen about what interest she would retain. She then answered that she had never made that statement and it was confusing to her as to why he had made those file entries (t 69). Mr Newbiggen's file notes are internally consistent and are also consistent with other witnesses' evidence. I accept that his file notes are accurate. 49 Nevertheless, if there was any doubt about Wendy Murray's intention to retain some interest in the property, this file note shows that at about 5.20pm Wendy Murray expressed her intention for the third time that afternoon that she was deciding on what interest she would retain in the property. At this stage Uncle Eric was agreeable to Wendy retaining an interest in the property. The file note also shows that by 5.20pm Wendy Murray was contemplating the use of the finance that Uncle Eric had previously obtained for the purchase of the properties. In summary, at about 5.20pm on the day of the auction Wendy Murray had bought the properties on behalf of Uncle Eric, she was intending to retain some interest and/or control over the property and she would make enquiries as to whether Uncle Eric's loan approval could be a source of funds for her. 50 At the conclusion of the meeting Peter Duddy drove his mother and sister (Jill Duddy and Wendy Murray) back to Gunnedah arriving at about 8.00pm. Wendy Murray then handed over the cheque being the 10% deposit to the vendor's agent Mr Pollock. They then continued on to the home of Jill Duddy's brother, Donald Taylor Clift. Bob Murray was staying on Mr Clift's property in a caravan while he was carrying out some farming work on Boala. As they got out of the car at Mr Clift's house Wendy Murray turned to her mother and said "Mum I bought that block of Eric's - Bob doesn't know." According to Jill, Wendy placed emphasis on the pronoun "I". Mrs Duddy gave evidence that when her daughter said that "it was a real shock to me really" (first trial - t 271.46). She had naturally thought that Wendy had bought the property for Eric. Jill Duddy says that she replied "Wendy you stand a chance of being divorced." Wendy Murray said "He knows that I wouldn't do anything that I couldn't handle." 51 If Mrs Duddy's evidence of this conversation is accepted, Wendy Murray now considered that she had purchased the properties for herself, not Uncle Eric. It was her name that was on the contract. While I did not have the benefit to observing Mrs Duddy in the witness box I have no reason to doubt her evidence. 52 After this conversation concluded they walked into Mr Clift's house. Jill Duddy, Donald Clift and Bob Murray were present. According to Mrs Duddy Bob had already been told by Mr Clift and his wife when they came back from the auction that Wendy Murray had bought the property. Bob had asked the arriving party whether that was right. Jill Duddy cannot now remember precisely what it was that Wendy said to Bob Murray but was to the effect that she had bought the property (Aff, 21/12/2001 - [49]-[52]). Wendy Murray categorically denied "the innuendo" that those paragraphs are meant to convey (Aff 25/03/2003 - [28]). At the first trial Mrs Duddy was cross examined on this conversation and she did not depart from being told by Wendy "I bought it for myself." (t 261-263). 53 It is my view that by that evening Wendy Murray had resolved to purchase the property for herself. While she may have purchased the properties at auction on behalf of Uncle Eric, she no longer intended to abide by that term of the agreement. She no longer intended to be Uncle Eric's agent but rather she was to become the principal. If she had told Uncle Eric that instead of wanting a small interest, she now considered the whole interest as her, the contract and/or agency agreement was breached and Uncle Eric no longer had an obligation to finance the agreement. But she did not tell Uncle Eric of her change of mind. 54 Later that evening Robert Murray says he had a conversation with his wife in which she said "I've purchased the property for Eric. We have paid the deposit using Mum's money." He replied "Where's the money to pay for the property?" She answered "Chris Newbiggen told me a day or two ago that the money was in place for Eric." (Aff 26 June 2002). I have already recorded that it is my view that Mr Newbiggen did not make such a statement to Wendy. 55 Robert Murray has a longstanding practice of writing up his farm diary each evening. This diary (Ex 7) has been a useful evidentiary tool in recounting the events that occurred after the auction. His diary entry for 9 May 1997 reads: "Wifey went to auction in Gunnedah & BOUGHT Eric's block! There was a dispute about the bore on Peter's block which she brought up at the auction & put off a few would be buyers. She is now at Cyaisca tonight with me after much shenanigans. Westpac refused to accept Eric's money when he came up with it yesterday & this is what has got our backs up. Talk about the heart ruling the head!" 56 By writing "heart ruling the head" Mr Murray intended to convey two things firstly, that his wife went ahead with purchasing West Garawan without making sure that finance was in place; and secondly, that it was a spur of the moment decision. According to Bob the weekend was uneventful because they thought that Uncle Eric had the money in place.

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Monday, 12 May 1997 57 A lot of activity occurred on 12 May 1997. The most important event being the telephone call between Wendy Murray and Uncle Eric's accountant Wayne Leece. 58 On 12 May 1997 Mr Newbiggen's file note recorded: "Telephone attendance on Wendy Murray. Discussion with her concerning matter. Noting that appeared that she may have organised alternate finance. At this stage she will hang on to the Contract until the end of the week." 59 Mr Wayne Leece had been the Duddy family accountant for many years and acted for Uncle Eric. It was Mr Leece who had had numerous dealings with Westpac on behalf of Uncle Eric and had been trying settle the dispute with Westpac prior to the auction taking place. He had also been involved with the injunction proceedings in this Court prior to the auction. It is not Mr Leece's practice to make file notes. His evidence is that while he did not have a good recall of the details leading up to the auction, he did have a very good recollection of the week before and the week after the auction. Mr Leece confined the content of his affidavit to only those events for which he has a good recollection. Mr Leece gave evidence at both trials. His evidence is important, particularly as it conflicts with the evidence given by Wendy Murray's solicitor John Lyons. John Lyons was not called to give evidence at the first trial but did so at this trial. Wendy Murray says that she had two conversations with Wayne Leece. One on the day of the auction and one on 12 May 1997. The first conversation has already been referred to in this judgment. In short, Mr Leece did not recall the conversation but did not deny that it may have occurred. 60 On Monday 12 May 1997 Wendy Murray says that Wayne Leece telephoned her and volunteered information about his client, Uncle Eric. According to Wendy Murray, Wayne Leece asked her whether she was aware that Eric did not have the money to buy West Garawan back. She replied "Why didn't you tell me when I rang you from Gunnedah." His answer was that he thought she had bought it on behalf of her family. Wendy Murray replied "No I did not. Eric asked me to bid on his behalf. I did it because Chris Newbiggen told me Eric's finance was in order." 61 According to Wendy Murray, Wayne Leece then elaborated "The arrangement was that the money Eric had obtained was to pay out the debt to Westpac up until the day before the auction, but that it was not to be used to repurchase the property. Eric knew this several days before the auction." She said "How do you know Eric knew that?" He said "I was at the meeting where Doug Anderson told him." She said "Why was there a separate condition on the finance?" He said "I've told you I've said too much already. Eric will kill me. Don't tell him I have been speaking to you." She said "How the hell am I going to find the money to complete the purchase. I have no details of the property, I have nothing." He said "All of the information you need is in a document that Doug Anderson has in Maitland." Mr Leece's view was that Eric's finance was still available at the time of the auction so Wendy Murray's account of the conversation would mean that he said something contrary to his belief. 62 Mr Leece agreed that a telephone conversation took place but recounts it somewhat differently. His version is that Wendy Murray telephoned him and said words to the effect "I need the telephone number of the loans broker in Maitland." Mr Leece has a clear recollection of his reply. That being "Why, I thought you had bid at the auction on Eric's behalf and you were buying for him." Wendy Murray replied "Why should I give it back to the old bugger - he'll only lose it again in 12 months time." Mr Leece when giving evidence stressed that he will never forget this statement because it was then that he realised Wendy was buying the property for herself and not for Uncle Eric. Mr Leece described his reaction to this news as being "floored" and feeling like a "stunned mullet" because during the week prior to the auction he had expended considerable time and effort trying to raise money so that Uncle Eric could hold onto West Garawan. 63 I prefer the evidence of Mr Leece who recounted that when Wendy phoned him she said "Why should I give it back to the old bugger - he'll only lose it again in 12 months time." In my view the reference to "old bugger" is significant. Wendy Murray's husband has also referred to Eric as "the old bugger" - see diary entry dated 16 June 1997. Wendy had (on the day of the auction) told Mr Newbiggen that she wanted some control over the properties to prevent Eric from getting into future difficulties. It would seem that either at the auction or shortly after the auction taking place Wendy Murray strongly held the view that Uncle Eric would not be able to properly manage his finances so as to retain the property. Further Wayne Leece would not tell Wendy Murray that Uncle Eric did not have the money when it was contrary to his actual belief.

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The alleged telephone call to Uncle Eric on 12 May 1997 64 As a response to the information provided by Mr Leece, Wendy Murray said that she telephoned Uncle Eric and directly asked him "Do you have the money to purchase West Garawan from me?" He said "Of course I do." She said "I have heard that the money was only available to pay out the debt to Westpac but not to repurchase the place at auction." He laughed and said "I got you didn't I. Now you will have to go into partnership with me." She said "How dare you. We were just about to help our daughter buy a house in Brisbane because they are wasting money renting." He said "That doesn't matter, they are young, it won't hurt them to wait." She said "Eric I demand that you find the money immediately to take this place back." Wendy Murray also recounts the conversation with Uncle Eric in these terms "I immediately confronted Eric, who denied that he didn't have the money & demanded that I give him the place back. Then he turned around & laughed & said that he knew that if he got me to buy West Garawan I wouldn't be able to handle it & we would have to go into partnership with him." This story account omitted the sentence "I demand that you find the money immediately to take this place back." 65 The conversation as recounted in the story document suggested that Wendy Murray confronted Uncle Eric face to face. How else would she have known that he "turned around"? In cross examination when asked to explain this inconsistency she said that "I may have used the wrong terminology there. It was definitely a phone call." (t 191.5-17). The inconsistency cannot be explained as wrong terminology. 66 Uncle Eric denied this conversation with Wendy Murray ever took place. Wendy says she reported the conversation back to Bob (Aff, 08/08/2002 [34]). Robert Murray's diary entry for 12 May 1997 does not make any mention of conversations with either Wayne Leece or Uncle Eric. Wendy Murray's evidence is inconsistent as to whether she had this purported conversation with Uncle Eric face to face or by means of the telephone. This would have been a critical conversation for Wendy Murray. If this conversation did take place it is expected that Wendy Murray would have had a clear recollection as to whether it was face to face of by telephone. It is my view that it is more likely than not that this conversation did not in fact take place. 67 Wendy Murray instructed her new solicitor John Lyons to act for her. Wendy says that prior to the first consultation she spoke to Mr Lyons by telephone and in that conversation told him that she had bought the property on behalf of her uncle. Her reason for a change of solicitor was because Mr Lyons's office was in closer proximity to her residence.

[20]

The end result was that Wendy Murray bought the property for $1.8 million. Her Accountant, George Paul, now sees that she has got a capital gains tax problem and that the property should have been bought in the partnership name. The deposit was paid by her mother, $180,000.00, through Andrew Kay's trust account." 71 As far as it goes, it is a fairly accurate summation of events. Wendy Murray asserted that this file note refers to an amalgam of events some of which took place later than 14 May 1997. She does not understand why he wrote that, as it does not reflect what was discussed (t 19). But I do not think this is so. I accept the solicitor's evidence that the events recorded in the file note occurred between 12 and 14 May 1997 but not thereafter. As previously stated nowhere in the file note is there a reference to Wendy buying the properties on behalf of Uncle Eric. An objective reading of this file note would lead to the conclusion that Wendy Murray had bought the property on her own behalf. 72 However, John Lyons gave evidence that his recollection was that "Wendy told him that she had bought property for $1,800,000 for Uncle Eric when neither she nor her uncle had any funds. "Nevertheless, it is very odd indeed that the most critical piece of information did not make its way into the contemporaneous file note. 73 When asked about the intention of the file note, Mr Lyons gave evidence that Wendy Murray told him that she had bought the property on behalf of Eric and that Eric could not settle. According to the solicitor, this meant that Wendy Murray had two options either to proceed with the contract or forfeit the deposit which would leave her other assets at risk. If she were to proceed with the purchase, her accountant advised that it should be bought on behalf of the partnership. Wendy Murray says that at this consultation with Mr Lyons she did not discuss capital gains tax problems. Mr Lyons said it was possible that he had spoken with George Paul, Wendy's accountant. I accept Wendy's explanation that Mr Lyons probably spoke with Mr Paul about capital gains tax problems. 74 It is difficult to reconcile Mr Lyons's evidence that he was told by Wendy Murray on 12 or 13 May 1997 that she had bought the property for Uncle Eric and neither she nor her uncle had any funds. Mr Leece's evidence is that on 12 May 1997 when he said to Wendy "I though that you had bid on Eric's behalf and you were buying it for him?" She replied "Why should I give it back to the old bugger he'll only lose it again in 12 months time?" In order to reconcile these two statements I find that Wendy did make "the old bugger" statement to Wayne Leece and that she also told John Lyons she had bought the property for Uncle Eric but Uncle Eric had no funds. This meant that so far as John Lyons was concerned, Uncle Eric had no money and Wendy Murray would have to either complete the contract or forfeit the deposit (being her mother's money) and put her other assets at risk. If I am wrong and it was not Wendy Murray's intention to keep the properties for herself by the evening of the auction it is my view that by 12 May 1997 at the latest she had decided that she and her husband would keep West Garawan and Square Bush for themselves. By this time Wendy Murray had also told both her mother and Mr Leece that she intended to keep the property for herself. 75 Meanwhile on 13 May 1997 Jill Duddy and Peter Duddy went to see Wayne Leece at his office. Wayne Leece observed Jill Duddy to be distressed, angry and agitated. They had a wide ranging discussion and although Mr Leece cannot recall everything that Jill Duddy said, he does remember that she said "I have been hoodwinked by Wendy. She's conned the $200,000 I lent to Eric out of me to use as the deposit - she's buying if for herself. It became clear to me over the weekend. The whole family has been trying to save the place for Eric. We have been conned by Wendy." Peter Duddy also was not pleased. Mr Leece recalled Peter saying "She conned me out of half my water licences. She's on a committee in Tamworth and talked me into signing over half my licences on the basis it would be better to spread them around when allocations are cut. It's the last thing she's going to get out of us." (Aff, 11/07/2002 - [22] - [30]). 76 The events that occurred after 13 May 1997, which I have subsequently detailed, do not really assist with the determination of the issues in dispute. Much effort was expended obtaining finance and finding a suitable lessee for West Garawan. These tasks largely fell to Bob Murray. Other than an entry on 17 August 1997 where Bob recorded "Eric denied any knowledge of money not available to purchase at auction" nowhere does he record Eric saying he did not have any funds. [Bob Murray's emphasis]. Even from Bob Murray's diary entries, Eric's actions are consistent with his belief that the Murrays were seeking out finance and trying to sort out some arrangement with him. Eric Had by this time already agreed to Wendy having some interest in the property. Uncle Eric arranged for the Murrays to be provided with his valuations and financial records. Uncle Eric continued to phone his loans broker Doug Anderson and ask "Doug why can't I get the money."

[21]

Mr Carrigan - Uncle Eric's former lessee of West Garawan 77 Mr John Peter Carrigan lives at "Nagirrac", (Carrigan spelt backwards) Boggabri. He is a farmer and works in partnership with his sons. He gave evidence and was cross examined. He is 80 years of age. Mr Carrigan deposed (aff 31/10/2005) that he had a long term acquaintance with Wendy Murray's father. He was first introduced to Eric Duddy in the mid 1990's in relation to prospective share farming of irrigation lands on West Garawan. Shortly after he had entered into a share farming partnership arrangement with Eric Duddy. It was during this time that he met the Wendy Murray. By May 1997 the partnership had completed share farming operations for the season. On 9 May 1997 Mr Carrigan attended the auction and was present when West Garawan and Square Bush were knocked down to the Wendy Murray. 78 On 12 May 1997 Mr Carrigan says that he received a telephone call from Wendy Murray who said words to the effect "Can you come over to Tamworth to talk to my husband and I." Mr Carrigan cannot recall if a proposition was put to him about leasing or share farming. He recalled that there was some discussion about how to get there and that Wendy Murray sent him the directions by fax. 79 On 13 May 1997 Mr Carrigan drove from Boggabri and met with the Murrays. He remembered having some difficulty finding the property and that when he arrived he parked his car in what turned out later to be in an inappropriate spot in that a truck arrived delivering gas bottles. After this meeting Mr Carrigan discussed with his sons the further involvement in farming operations on West Garawan. This meeting with the Murrays on 13 May 1997 accords with Bob's diary entry "This pm, John Carrigan told us that he would prefer to sharefarm the irrigation country up to 1000 acres on a 1/3 to 2/3 basis." 80 On 20 May 1997 John Carrigan says he rang Wendy Murray. Mr Carrigan's diary note for that date confirmed this. He recorded that he told Wendy Murray that he and his sons would not lease at Breeza. However, Mr Murray's diary entry for 19 May 1997 (not 20 May 1997) recorded that John Carrigan wanted "lease only." 81 In cross examination Mr Carrigan denied that after the auction he contacted the Murrays to advise them that he still wanted access to West Garawan (t 400.8-11; 401.44-47). He also denied that he contacted the Murrays to ask them about share farming the property for the next season. Apart from taking their machinery off the property as far as he was concerned West Garawan had a new owner and that was the finish (t 402.1-17). Both Wendy and Bob Murray gave evidence that John Carrigan approached them about leasing West Garawan. I prefer and accept Mr Carrigan's evidence. This means that on Monday, 12 May 1997 Wendy Murray had started taking steps to find someone to lease or sharefarm West Garawan.

[22]

Events on and after 14 May 1997 82 On 14 May 1997 Wendy Murray informed Mr Newbiggen that she was going to instruct John Lyons to act on the purchase of the properties. Mr Newbiggen's file noted recorded: "Telephone attendance on Wendy Murray. Noting that had now decided to use John Lyons of Lyons Barnett Kennedy to act on the purchase in view of possible difficulties. Nothing had been sorted out in relation to finance. Brief discussion concerning the possible selling of property and going through procedure there. Would get in touch if anything further required." [my emphasis added] 83 There was no explanation of what those "possible difficulties" were. Mr Newbiggen was not called to give evidence. 84 On 14 May 1997 Uncle Eric says that he went to Boala and in the course of conversation he said to Wendy and Bob "We'll have to work out this deal." Wendy Murray replied "We have a good relationship with a guy in Western Australia and access to cheaper money. He said that if ever we need it we could get it cheaper than anywhere else." Uncle Eric said "Good, investigate it and see what sort of a deal they will offer." After that conversation Uncle Eric was in contact with the Murrays by telephone. Uncle Eric says that he recalled that on one occasion Bob Murray said "We need the valuations." Uncle Eric told him that Doug Anderson had them in Maitland and that he would ring Mr Anderson and get him to make them available to him (Bob Murray). After that discussion Uncle Eric recalled saying to the Murrays "We've got to get together to sort this out." 85 On 14 May 1997 (the same day that the Murrays had discussions with Uncle Eric) they made enquiries about finance. Bob Murray's diary recorded "We contacted the Mortgage Bureau [at Maitland] - we await their response." By 14 May 1997, the Murrays were taking steps to arrange finance for them to purchase West Garawan and Square Bush and to lease or sharefarm West Garawan. 86 On Friday 16 May 1997 Bob Murray recorded that he "Went to Maitland & picked up submissions at a place next door to the Maitland branch of the Mortgage Bureau" and "The Mortgage Bureau's Harry Ryder rang to say that they will help us as best they can." A perusal of the Ashe Morgan Winthrop (finance brokers) file shows that it contained numerous financial documents pertaining to Eric Duddy. These documents included cash flow projections and assets and liabilities statements. The document headed "Investments as at 1 July 1996" listed investments which totalled approximately $1,500,000 (Schedule 2). Eric Duddy's consolidated position (Schedule 8) showed assets of $5,615,845.09, liabilities of $2,411,224.00, which left a surplus of $3,204,621.09. However Eric Duddy's assets were recorded as including Square Bush (101 ha) valued at $175,000 and West Garawan (857 ha) valued at $3,042,000, these properties totalled $3,217,000. It is puzzling that even though Uncle Eric had "left them [the Murrays] high and dry" aside from the valuations neither of them looked at the other documents which detailed Uncle Eric's financial position. The two valuations of West Garawan were by Patrick James Wood and Robert J Patfield of Patfield & Company dated 5 May 1997. Each valuations was close to $3,000,000 being $3,042,000 and $2,296,000 respectively. 87 During this period there was some discussion between Uncle Eric and the Murrays about leasing West Garawan. Uncle Eric recalled Wendy saying to him that the bank would not finance it unless they had a lease. He told Wendy to work out what sort of a lease it would be and that he would have a look at it. Sometime shortly after this discussion Uncle Eric went to see Wendy's solicitor John Lyons at his office. Uncle Eric said to Mr Lyons that it would be better if the lease was in his name until he could sort things out with the bank and that he had all the plant and equipment to work it and to do the earthworks as well. Mr Lyons replied that when it was sorted out that they would have a look at it. Uncle Eric then received a telephone call from Bob Murray who said that they were having problems getting the finance and "What about we use that other money that you arranged?" Uncle Eric replied that he could not see any problem and to get onto Doug Anderson as he had it all organised and that the money was sitting there waiting to be collected. Uncle Eric drove to the Murrays to speak to them about the money and Bob Murray said "We didn't plan on you being a part of it." Sometime later Uncle Eric received a letter from Lyons Barnett Kennedy, solicitors. This letter dated 19 June 1997 informed Eric Duddy that if he had a proposal for a lease he should put the proposal in writing and once he had the proposal he should seek instructions from the Murrays (Ex 10). 88 On 16 May 1997 Bob Murray collected Eric Duddy's finance application from the office of Ashe Morgan Winthrop at Narrabri (B(1) - Tab 4). For the Murrays to have obtained this file Uncle Eric must have authorised that course of action. This is consistent with Uncle Eric's versions of events. It was a 2½ hour trip to Narrabri. 89 Wendy Murray deposed that on numerous occasions during the four week period after the auction Uncle Eric would arrive unannounced at their house. He would demand that they give him back his place. Wendy says that she told Uncle Eric that as soon as he came up with the money for it he could have it back because she did not want it. Uncle Eric said that he did not have the money at the time and that he needed her to go into partnership with him. Wendy says that she told Uncle Eric that they would not go into partnership with him and asked how were they supposed to pay for the property. Uncle Eric said "It's your problem, you signed the contract." Uncle Eric denied that these conversations took place (Aff [34] - [35]). 90 Bob Murray explanation as to why he never told Eric to leave them alone was because in one of his meetings with them Uncle Eric said "I felt like taking a rifle to someone at Westpac" and this straight away told him that Uncle Eric was on edge, very nervous and he should be treated with kid gloves (t 427.52-60). 91 The next day (17 May 1997) the Murrays explained the situation to Peter and Ian "more facts wanted - the Mortgage Bureau checked out." On 19 May 1997 Bob Murray's diary recorded there was much activity. Bob Murray was taking active steps to obtain finance and lease West Garawan.

[23]

92 The diary entry says: "What a day! Spoke to John Lyons - Mortgage Bureau - Enforceability Contract - Westpac & Peter's land - Access to land Brian Elliott - financing Jane Leake - here Wednesday John Carrigan - we want lease only Ross Pollock - lease rates Peter Sanson - opportunity to quote Neville Hamblin - as above Retorque - new rota v's doing up 2nd hand David Tudgey - meet 1PM tomorrow Ross Clymo - finance with 35% equity" 93 On 21 May 1997 Bob Murray was still working on obtaining finance and leasing out West Garawan. His diary entry recorded "Jane Leake came today & we developed cash flows for 97/98 & 98/99 on Garawan. Peter Sanson came & said that he would pay $30/acre to lease the dryland country…" 94 On 22 May 1997 Bob Murray's diary entry recorded that when he went to West Garawan and did moisture probes and nut grass inspections he spoke to Ian at the shed. That same day John Lyons had written to the Murrays requesting the sum of $84,490 for stamp duty. John Lyons was instructed to carry out a land title Register of Causes Writs and Orders, Bankruptcies and Insolvency searches in relation to Eric Duddy. An advertisement seeking expressions of interest in leasing 1,000 acres at West Garawan appeared in "the Land". 95 The following day, namely, 23 May 1997 Mr Murray recorded "Jane Leake came & helped with CFB's most of the day - very effective." On 24 May 1997 Bob Murray had decided that after spending 2½ hours with Neville Hamblin and his son Robert that they would be good people to lease the block. 96 On 25 May 1997 Bob Murray produced a business plan for R O and W J Murray (Ex B(1) - Tab 30). This plan included a brief description and cash flow of Boala, his resume and their plans for West Garawan. Their plans for West Garawan were as follows: "We propose to lease this property for 4 years and already have 4 interested parties. One applicant has already indicated that he would be prepared to pay $200,000 up-front lease payments while at the same time carrying out earthwork improvements. What I would like to see is the construction of a tail water return system, some laser levelling and possibly the construction of a storage dame to enable the utilisation of the river allocation. The costs associated with these earthworks would be deducted off the last lease payment. These improvements would significantly increase the value and operating efficiency of 'West Garawan'. It is at this stage we intend to sell our 'Boala' property and take over the operation of 'West Garawan' ourselves." 97 Bob Murray's diary entry for that day recorded: "Shaun Fitzgerald & Steve? from Moree who showed some interest in leasing Eric's country (it's not Eric's it ours at this stage) and I showed them around the block." 98 By 25 May 1997 Bob Murray definitely regarded West Garawan as their property not Uncle Eric's. 99 On 27 May 1997 Bob Murray phoned John Lyons to keep him up to date. He contacted the Commonwealth Development Bank. Negotiations as to the lease were continuing. On 28 May 1997 Bob Murray received a faxed proposal from Steve Yates and Shaun Fitzgerald. They would carry out the earthworks as well as pay the $200,000 per year. 100 At 2.00pm on 29 May 1997 the finance brokers Brian Elliott and Doug Anderson visited Boala to discussed finances. According to Bob Murray they were delighted to hear the "Westpac versus Wendy saga" of 9 May 1997 first hand. The upshot of their visit was that their financiers were the only ones to accept the $3 million valuation and they could probably provide finance. The Murrays had only one potential lessee at this stage. A decision was made by the Murrays to ask their solicitor John Lyons to delay settlement while they remained in contact with the financiers (diary entry, 29/05/1997). 101 On 30 May 1997 Bob Murray faxed documents to Maitland (to the financiers). He also travelled to Narrabri where he met with Steve Yates and Shaun Fitzgerald the potential lessees. Bob Murray asked them to come up with a farm plan for the next two years. In Bob's opinion "They're well meaning but their strength is in earthworks rather than farming and although they can have access to all farm equipment for 1st year, I don't think they've done their sums properly on the farming side." 102 On 29 May 1997 Wendy and Bob Murray had a meeting with Brian Elliott and Doug Anderson to further discuss finances. After that meeting Mr Anderson wrote a letter to Ashe Morgan Winthrop (dated 30/5/1997) in which it is recorded: "They have purchased the "West Garawan" property originally with the intention of holding it temporarily until Eric Duddy sorted out his problems with the Westpac Bank but given the ongoing dispute involved and given Eric's age they have now decided to keep the property, lease it out for four years and during that time they will further improve their own property and sell it off to reduce debt to a manageable level." 103 On 1 June 1997 Bob recorded that "Eric is staying the night with us, wants to form an association with us to keep his block." 104 On 2 June 1997 Mr Murray's diary had an intriguing entry which said that they "saw Eric off after much agonising." At 3.00pm the Murrays received advice from John Lyons to go ahead with the purchase and to cross one bridge at a time. The last entry for that day reads "The money is likely to be approved tonight tomorrow." 105 On 3 June 1997, as predicted, M & S Financial Services wrote to R O & W J Murray c/- their brokers offering them a loan by Kyabram Property Investments Pty Ltd of $1.6 million on the basis that the Murrays gave a first mortgage over the land at Quirindi and a charge over all irrigation licences. Payments due under the mortgage were to be made quarterly on the first days of February, May, August and November. The gross amount payable each quarter was to be $35,400. 106 Wendy Murray in her story document recounted that: "In the weeks following the auction Eric nearly drove us mad, demanding that we give the place back to him and/or go into partnership with him. Bob asked what he could contribute to the partnership and he said, 'A drilling rig and some seed wheat'. We told him that we were quite happy for him to come up with the money and take if off our hands, but all we got was silence. Eric refused to leave us alone and things got so bad that on the 16th June, I was forced to order him out of the house very late at night and slam the door on him. He had been threatening to take me to court because I had 'stolen' his finance and wouldn't give him back his place. We had also become very concerned because we knew that Eric had visted John Lyons on more than one occasion. One of the receptionists had told me that Mr Duddy had sat in the waiting room and refused to leave until Mr Lyons saw him. Once when Bob and I came out of John's office who should be sitting there, with 'an appointment to see out solicitor' but Eric. I remember Bob saying at the time, 'I don't like this, who is John going to believe?"

[26]

Explained we needed a quick answer because we needed to get on with the lease. … He'll get back today…" 113 At 11.10am Jim Lyons called John Lyons back with an offer of $2 million. While the file note does not record that this offer was refused, it must have been. As Jim Lyons phoned John Lyons with an offer of $2.26 million "offer to 5.00pm." John Lyons replied "2.2 clear" nothing more. The next entry said he would give a bit to him $2,250,000, commission really. I take this to mean Jim Lyons counter offered the sum of $2.25 million which would include some commission for himself ($50,000.00). Nothing further is recorded. 114 On 6 June 1997 Bob Murray recorded that negotiations had begun with the buyout of the contract and that they would finish up with a figure somewhere between $2.2 to $2.3 million. Bob was negotiating with the ANZ bank and the second advertisement seeking "expressions of interest in leasing 1,000 acres at West Garawan" appeared in the "the Land". On Saturday 7 June 1997 Bob took a Volvo S70 car for a spin. 115 On 10 June 1997 Bob's diary records that John Lyons rang to say that "We had a deal - Jim Lyons's people (the Paspaleys, we think) have agreed to buy out the contract for $2.26M. Ian also phoned to say that Peter Sanson will be finished with the combine by Thurs. morning." 116 On 11 June 1997 Jim Lyons phoned to say "that his buyer is backing off to 2/4 thus, can't be trusted." On 12 June 1997 Bob was still negotiating with ANZ Bank. The next day Bob noted "They're putting the lease agreement in place." 117 Wendy Murray says that Peter Bracher the director of Paspaley Pearl phoned her and indicated that he wanted to inspect the West Garawan. Shortly after that telephone call from Mr Bracher, Wendy Murray said that she received a telephone call from Eric who said "My new partners want to inspect West Garawan." She asked who the "new" partners where. Eric said "The Paspaley Pearl people. They own Kurrajong Park at Coolah." She asked how much they were prepared to pay and Eric said "You are going to have to be prepared to lose $250,000. It will do you good to lose that money. After all of the problems you have caused me you deserve to lose." Eric Duddy in his affidavit denied that this conversation took place. The inspection took place on 20 June 1997. 118 During cross examination at the first trial Uncle Eric denied that he used the word "partner" but agreed he spoke to Wendy about the Paspaley Pearl people wanting to inspect the property (AB 270). At this time Uncle Eric knew that the Murrays were having difficulty obtaining finance. His reason for introducing the Paspaley Pearl people was firstly, because Nick Paspaley gave him an indication that he would be prepared to do a deal over a period of time and allow him to remain on the property; and secondly, that it was a fall back position in that the Paspaleys were potential purchasers of West Garawan. 119 Peter Bracher confirmed that in June 1997 he inspected West Garawan but did not believe it was a good fit with their property Kurrajong Park at Coolah and the price was too high (Aff, 02/09/2005). Wendy Murray's evidence is that Mr Bracher also said that if they were to make an offer it would be a very low one and he told her that under no circumstances would they be prepared to go into partnership with Eric Duddy. While Uncle Eric agreed that he accompanied Mr Bracher upon the inspection, Mr Bracher does not mention the presence of Eric Duddy. Nor does Mr Bracher depose that he said "if we are to make an offer, if would be a very low one." The next day, 21 June 1997, Wendy Murray inspected a house at Nerringha. 120 On 1 July 1997 the loan and mortgage documents were signed by the Murrays. On 9 July 1997 Bob's diary recorded "Wifey not happy talking to Eric before settlement takes place - he may do something to stop it." On 10 July 1997 the purchase of West Garawan and Square Bush by Wendy Murray from Westpac was completed. The Notices of Sale were issued in the names of R & W Murray. On 28 July 1997 Bob's diary recorded "John Lyons seems confused as to the facts of our so-called 'trust' with Eric." 121 Two days later on 30 July 1997 Bob consulted John Lyons and noted: "Appointment with John Lyons. - Westpac have no claim on us - Eric has no claim on us - He'll establish the breakdown of 2M - advises, we agree, no p'ship [indeciperable] yet." 122 This entry "no p'ship [indecipherable] yet" is most perplexing in the light of John Lyon's confusion as to the facts of the Murrays so called trust with Uncle Eric. 123 On 9 August 1997 the Murrays' partnership wrote to Wendy's mother, Jill Duddy "formalising your loan." (Ex 4). The Murrays agreed to pay interest until they sold either Boala or West Garawan and then they would be in a position to repay the loan. In the meantime they were to make quarterly payments from 9 August 1997 in the sum of $2,563.88. They fell into arrears. 124 On 17 August 1997 Bob in his diary referred to Eric and Clive Duddy knocking on their door at 8.00am with three requests. They were firstly, that they wanted to graze on the Murrays side of river; secondly, take the sorghum; and thirdly, they needed more time to clean up shed and its surrounds. 125 Bob recorded: "Despite Wifey and I agreeing beforehand not to relent, she was worried how close to the edge Eric was & convinced me to go their way on the first 2 points. We continued to resist any grazing by them on our side of the river. I wont relent, but I'm not sure about Wifey. Eric denied any knowledge of money not available to purchase at auction." [Bob Murray's underlining] 126 On 7 November 1997 the purchase of Square Bush from Wendy Murray to Pursehouse for $132,000 was completed.

[28]

Eric Duddy's belief as to whether he had funds available 131 Earlier in this judgment I made a finding that Uncle Eric told Wendy Murray that he had access to $2 million. But did Uncle Eric at the time he made this statement, believe it to be true? 132 On 6 May 1997 Kyabram Property Investments (the mortgagee) offered Eric Keith Duddy a loan of $1.35 million and North Central Securities offered Eric Duddy a loan of $350,000. "West Garawan, Square Bush and Railway Siding at Spring Ridge" were to be offered as security for the loans. If Eric Duddy wished to accept the offers he had to sign the letter (together with a consent form and cheque) to M & S Financial Services Pty Limited within 10 days and pay the requisite fees. 133 On 6 May 1997 Eric Duddy signed both these offers and drew cheques in the sums of $4,250 and $300 (see Ex 6) and gave them to the finance broker Mr Doug Anderson (Aff, - Lee [9] - [10]). The cheque for $4,250 was cashed but it appears that the cheque (No 306) for $300 was not. Mr Leece confirmed that Eric Duddy completed the documentation and drew the cheque. It appears that no mortgage documentation was actually prepared. 134 On 6 May 1997 Ashe Morgan Winthrop (the brokers) wrote to Eric Duddy stating and confirmed that they were able to obtain loan approvals (referred to above) on the subject property. The purpose of funding was expressed to be "take out existing lines of credit with Westpac Bank". However it was the understanding of Mr Leece (the accountant) that the finance was still available to Uncle Eric at the time of the auction. Mr Leece said that in his view the finance obtained by Uncle Eric did not expire prior to or at the auction. Robert Hugh Bishop, a company director and finance broker (formerly with Kyabram) gave short evidence. It was his view that because he never sighted an acceptance of those offers, that the loan lapsed prior to the auction (t 68.29-36). So far as Uncle Eric was concerned he had signed the document and drawn the cheques. It may be that the brokers failed to forward the documentation to the lenders 135 As previously stated Mr Douglas Anderson was carrying on a mortgage broking business with Brian Elliot under the name of Ashe Morgan Winthrop. I have already commented earlier in this judgment about my reservations concerning Mr Anderson's evidence. Mr Anderson arranged finance for Eric Duddy and Wendy and later for Robert Murray. Mr Anderson deposed that in the weeks following the auction he received at least one telephone call from Eric Duddy in which he said "Doug why can't I get the money." Mr Anderson replied "Eric the loan was approved to pay out Westpac not to purchase the property." Mr Anderson deposed that he also received calls from Wayne Leece in which he said "Eric has been phoning me he wants the money." He replied "The money is not available." 136 Uncle Eric deposed that with the $2 million organised there were sufficient funds to enable Wendy Murray to buy the properties for him and to pay the stamp duty and expenses. He knew that he had sufficient equity in his life insurance polices to pay any additional moneys needed. Prior to auction Uncle Eric had spoken to his brother Ross who had agreed to allow him to mortgage Spring Ridge (Aff [90]). 137 At the first trial during cross examination Uncle Eric agreed that he said to Wendy Murray that "I have got the money or organising the money … which I believe I did have." (AB 257.15). It did not register with Uncle Eric at the time of the auction that he would have to have come to some resolution with Westpac to extinguish the balance of his debt after the sale of the properties as he was under a lot of stress. (AB 257.35). 138 The following question in cross examination was put to Uncle Eric. "Q. On your account what Mrs Murray did is akin to highway robbery in this sense: not only did she take the property for herself but she was so barefaced about it she even went to the finance company that you had used to arrange finance. That is what you suggest, isn't it? A. Yes that is precisely." (AB 265-266) 139 Uncle Eric agreed that when Wendy Murray went to the auction she did not have any finance in place but he "believed the other finance of Kyabram would have been enough to put a deal together, even if it meant taking somebody else in as well." Uncle Eric agreed that Wendy Murray was reliant upon him to come good with the purchase money but said there would have been other ways of doing it other than what was done. Uncle Eric asserted in evidence that he could have put a deal together if given a chance. (AB 266.17-26). 140 When asked whether it was only when he (Uncle Eric) said that he did not have the money that Wendy Murray then had to look to find the finance to complete this transaction. Uncle Eric replied "It - there would have been other ways suggested, people with still an interest in the property." (AB 266.28-33). While Uncle Eric denied that he told Wendy Murray that he did not have the money, the prior answer is premised on the basis that he did tell Wendy Murray that he did not have the money. This appears to be inconsistence with the rest of his evidence. 141 Uncle Eric had prior to the auction signed the loan acceptance and drew cheques for the fees incurred in processing the loan. Wayne Leece believed that the finance was still available to Uncle Eric. While I acknowledge that one of Uncle Eric's answers in cross examination seems inconsistent with the balance of his evidence, his evidence together with his approach of making enquiries with the Murrays' solicitor, his accountant and Doug Anderson the broker after the auction as to why he could not get the money, leads me to accept that at the time Uncle Eric made the statement that he had access to $2 million he believed it to be true.

[29]

The pleadings 142 Wendy Murray pleads three causes of action against Eric Duddy. Firstly, that Wendy Murray was acting as Eric Duddy's agent; secondly, Eric Duddy breached the terms of the contract with Wendy Murray; and thirdly, false and misleading conduct. The principal/agency claim 143 The plaintiff pleads in the amended final amended statement of claim (AFASC - 03/04/2006 [1] to [7]) that on 9 May 1997 by oral agreement the defendant appointed the plaintiff as his agent to bid for at auction the rural properties known as West Garawan and Square Bush and to do on behalf of the defendant all things necessary and incidental to effecting the purchase of the properties. It was a term of the plaintiff's appointment that she was authorised to bid on behalf of the defendant up to $2 million in effecting the purchase of the properties. Pursuant to her appointment as agent the plaintiff successfully bid for at auction the properties. By an agreement in writing dated 9 May 1997, made with Westpac as mortgagee in possession and the plaintiff acting as agent on behalf of the defendant, the plaintiff executed contracts for the purchase of West Garawan at the price of $1.8 million and Square Bush at the price of $135,000. The plaintiff paid to Westpac these sums. By reasons of her appointment as agent the plaintiff pleads that she is entitled to an indemnity in respect of the said sums from the defendant, but the defendant has wrongfully failed and refused to pay the plaintiff the said sums or any part thereof. 144 The defendant pleads that the plaintiff paid the sums to Westpac in the capacity of principal not as agent for the defendant and denies that the plaintiff is entitled to an indemnity. (D 10/04/2006 [3] & [4]). 145 At law, agency is a consensual relationship, resulting from agreement between the parties that one should act as agent for the other. An agency may be gratuitous. It is recognised by the law that certain persons who act on behalf, or for the benefit of another person, should be entitled to be indemnified in respect of losses, liabilities and expenses incurred in performing that role - see Betts v Gibbins (1834) 2 Ad & EI 57; 111 ER 22. On 9 May 1997, Wendy Murray acted as agent for her principal, Uncle Eric when she had the properties West Garawan and Square Bush "knocked down" to her at the auction. 146 However, there is no duty to indemnify an agent who has acted unlawfully, or in breach of his/her duty, or negligently. In Thacker v Hardy (1878) 4 QBD 685 Lindley J stated: "Upon general principals an agent is entitled to indemnity from his principal against liabilities incurred by the agent in executing the orders of his principal, unless those orders are illegal, or unless the liabilities are incurred in respect of some illegal conduct of the agent himself, or by reason of his default." 147 The right of indemnity will be denied where the payments or liabilities are not effected on the principal's behalf, are outside the course of the agent's employment, or are otherwise outside of or beyond his or her express authority - see Paterson v McCallum [1921] NZLR 869. The defendant submitted that the only step taken by Wendy Murray in the course of the agency with the authority of Uncle Eric on her own case was bidding at the auction. The defendant went on to say that this liability was met by the entity constituted by her partnership with her husband, extinguishing any personal liability as an agent of Uncle Eric. 148 It is my view that on 9 May 1997, Wendy Murray agreed to buy the property as agent for her principal Eric Duddy, and she did so. However, by the evening of 9 May 1997 or by 12 May 1997 at the latest Wendy Murray decided to act contrary to Uncle Eric's authority when she decided to keep the properties for herself. This view accords with what Wendy Murray had told her mother and Wayne Leece. She later decided that while the purchase was in her name, the loans were to be taken out in a partnership with her husband Robert Murray. 149 The plaintiff acted inconsistently with the principal/agent relationship such that the relationship was put to an end. The principal/agent relationship was severed on 12 May 1997 at the latest. This claim fails. The contract claim 150 The plaintiff pleads (AFASC [14] - [17]) that at the auction an agreement was made between the plaintiff and the defendant that the plaintiff would bid for West Garawan and Square Bush at the auction. The plaintiff says that the agreement was that she would purchase the properties as agent for the defendant and the defendant would provide all of the purchase moneys for the properties and that Uncle Eric would take control of the purchase of the properties after the auction. The plaintiff pleads that she bid for and brought West Garawan for a price of $1.8 million and bid for and bought Square Bush for $135,000. The plaintiff says that by no later than 16 May 1997 the defendant informed her that he was not able to provide the funds to purchase the properties. 151 The plaintiff pleads that prior to settlement of the properties the defendant by his conduct indicated to her that he was unable to find the finance to complete the purchase of the properties. The plaintiff says that the defendant firstly, did not offer and/or provide the moneys required for the purchase of the properties or any moneys; secondly, the defendant did not offer and/or provide any additional security to enable funds to be acquired for the purchase of the properties; thirdly, the defendant did not take control of the purchase of the properties; and fourthly, the defendant did not provide the opportunity for the plaintiff to transfer the title of the properties to the defendant. The plaintiff pleads that the defendant repudiated the agreement with her. 152 The defendant says that while the plaintiff accepted his invitation to bid at the auction and entered into the contract for sale in that capacity she completed the contracts as principal not as his agent. The defendant says that if there was in fact any agreement made on the terms alleged that the agreement is void for uncertainty; and/or was repudiated by the plaintiff at or shortly after the auction in that she evinced the intention never to have been or no longer to be bound by the agreement, which repudiation was accepted by the defendant no later than 29 July 1997, and the agreement was thereby brought to an end; and/or was between the auction and July 1997 abandoned by the plaintiff and the defendant; and/or is unenforceable as it was not evidenced by a note or memorandum in writing sufficient to satisfy s 54A of the Conveyancing Act 1919 (NSW). 153 In relation to repudiation the defendant denies that he repudiated the agreement. The defendant also denies that any alleged repudiation by the plaintiff was communicated to him nor did he the alleged repudiated (D [9] - [14]). In reply the plaintiff says there was part performance of the agreement by her. 154 The defendant submitted that firstly, there was intended to be a legally binding contract between him and Wendy Murray. Secondly, the terms agreed to were that the plaintiff was to bid for the properties, the plaintiff to 'purchase' the properties 'as agent' for the defendant, the defendant to provide all purchase monies and the defendant would 'take control' of the purchase after the auction. 155 I agree that Wendy Murray and Uncle Eric intended there to be a legally binding relationship between them. The terms they agreed upon were that Wendy Murray would bid for the properties at auction, she was to 'purchase' the properties 'as agent' for Uncle Eric, Uncle Eric then was to provide the finance for the purchase, and when the properties were purchased by Wendy Murray they would be transferred back to Uncle Eric. 156 Later on the day of the auction Uncle Eric and Wendy Murray agreed that Wendy Murray could retain an interest in the property. The form that the interest would take was not the subject of any further discussion or agreement. 157 Wendy Murray complied with the term of the agreement that at the auction she would buy the properties as agent for Uncle Eric. Wendy Murray successfully bid for the properties and signed the contract for the sale in her name. However, by the evening of 9 May 1997 or 12 May 1997 at the latest Wendy Murray had decided to keep properties for herself. She did not at any time inform Uncle Eric of her decision either verbally or in writing. Wendy Murray told Eric that she had access to cheaper money but at the same time she sought details of his financiers and obtained his permission to get his files so she could seek finance from Uncle Eric's financiers. The Murrays did not keep Uncle Eric abreast of the steps they were taking to obtain finance. There is no record in Bob's diary of the Murrays asking Uncle Eric to provide all or any of the funds. On the contrary there is an entry that Uncle Eric "denied any knowledge of money not available to purchase at auction." (17/08/1997). Uncle Eric did not by 16 May 1997 nor at any stage inform Wendy Murray that he was not able to provide the funds to purchase the properties. He was kept in the dark. He described being Wendy Murray's actions as "highway robbery". At no stage did the Murrays entertain the prospect of going into partnership with Uncle Eric and/or requiring Uncle Eric to provide part of the purchase money. Wendy Murray gave evidence that during the four week period after the auction Uncle Eric would turn up at their house and demand they give him his place back. This was during the time that Bob Murray considered that West Garawan was theirs and not Eric's [25/05/1997]. 158 On 29 May 1997 Mr Anderson (the broker) wrote a letter to Ashe Morgan Winthrop saying: "They have purchased the "West Garawan" property originally with the intention of holding it temporarily until Eric Duddy sorted out his problems with the Westpac Bank but given the ongoing dispute involved and given Eric's age they have now decided to keep the property…" 159 By 29 May 1997 the Murrays had told their broker that they had now decided to keep the property. 160 On 2 June 1997 Bob Murray recorded that they saw Eric off after much agonising. However, as at 20 June 1997 Uncle Eric was aware that Wendy Murray was keeping the properties for herself or on behalf of the partnership with her husband. Uncle Eric introduced Nick Paspaley to the Murrays because he though that Nick Paspaley was prepared to do a deal with him over a period of time and allow him to remain on the property. Even as late as 9 July 1997 Wendy Murray was not happy talking to Eric before settlement took place because she thought that Uncle Eric might do something to stop it. On 10 July 1997 settlement took place. On 28 July 1997 after settlement had taken place Bob Murray recorded that John Lyons (the solicitor) seemed confused as to the facts of the Murrays so called "trust" with Eric. It is my view that as at 20 June 1997 Uncle Eric became aware that Wendy Murray by her conduct repudiated the contract. 161 While Wendy Murray had decided to repudiate the contract on 12 May 1997 at the latest, Uncle Eric became aware of Wendy Murray's repudiation on about 20 June 1997. As at 20 June 1997 the contract was at an end. She decided to keep the properties and pay for them and that is exactly what she achieved. Wendy Murray did not suffer any loss or damage. This claim fails.

[30]

Misrepresentation 162 The plaintiff pleaded that on 9 May 1997 prior to the auction the defendant represented to her firstly, that he had finance approved to enable him or the plaintiff on his behalf to purchase the properties up to $2 million; and secondly, that he would provide purchase moneys for the properties if the plaintiff purchased the properties at auction on his behalf. 163 At the time of making the representation the plaintiff pleaded that the defendant knew that she relied on him to exercise all due care, skill and diligence in and about making the representations; secondly, that the plaintiff would act on the representations, thirdly, the defendant did not have the sum of $2 million to enable the properties to be purchased by her; fourthly, the defendant did not have a loan approval from a financial institution which would enable him to contribute $2 million for the purchase of the properties; fifthly, that $2 million was inadequate to satisfy his indebtedness to Westpac; sixthly, that he did not have sufficient security for a loan approval from a financial institution which would enable him to borrow the sum of $2 million or sufficient funds for the purchase of the properties at auction; and seventhly, that he would remain indebted to Westpac after being credited with the proceeds of sale of the properties at auction on 9 May 1997. 164 The plaintiff pleaded that she acted upon those presentations believing them to be true. Those representations were untrue or alternatively made with reckless indifference as to whether they were true or false and as a result of relying on those representations she acted to her detriment and suffered loss and damage (AFASC [20] - 24A]). 165 The defendant pleaded that he believed the representations to be true as he had funds available up to a limit of $2 million or that such funds would have been available when required to meet the payment obligations undertaken by the plaintiff is she purchased the properties. The defendant pleaded that any loss and damage which the plaintiff may have sustained or was likely to suffer was not occasioned by any reliance on any representation or any alleged breach of agreement by the defendant, but by the plaintiff's election to complete the purchases and to work the properties during the period from July 1997 to 2005; and/or that the plaintiff failed to mitigate any loss occasioned by any reliance upon any alleged representation or any alleged breach of agreement by him in that the plaintiff acted unreasonably in firstly, completing the contracts to purchase the properties without availing herself of the financial arrangements put in place by the defendant or his assistance or at all; secondly, failing to promptly reduce her mortgage debt by applying the proceeds of sale of Square Bush to that debt, reselling West Garawan and/or selling her property Boala and applying the proceeds of those sales to that debt; thirdly, entering into a lease of West Garawan, the reliability of which was in doubt; fourthly, raising further loans against the security of West Garawan and Boala; fifthly, failing to comply with the terms of her loan agreements and mortgages of West Garawan and Boala; and sixthly, resisting and/or delaying possession by the mortgagees of West Garawan and Boala, including contesting related proceedings (D [17] - [22]) 166 At law, a claim in deceit depends upon telling a lie to deliberately make an untrue declarative statement to another person. In other words, to say something one believes to be false, with the intention that the other person will be misled and believe it true, and with the intention that the other person wrongly believes that the teller also believes it to be true. The plaintiff submitted that the deceit claim depended entirely upon the assertions that, Eric Duddy did not have $2 million available at the auction, Eric Duddy represented to Wendy Murray that he did, Eric Duddy knew he did not and Wendy Murray relied on that representation to her detriment. 167 It has to be determined firstly, what were the terms of the representation; secondly, whether the representation was true; and thirdly, whether Uncle Eric believed it to be true. The first representation was by Uncle Eric that he had the finance available to pay for the properties. As already stated, it is my view that Uncle Eric at the time of making the statement believed that he had access to $2 million. He believed the statement to be true. This claim fails. If I am wrong and Uncle Eric did make a false and misleading statement I accept that Wendy Murray acted in reliance of that statement. However, it is debatable as to whether Wendy Murray acted to her detriment. 168 The plaintiff's claim fails. There is a verdict and judgment for the defendant. 169 If I am wrong and there was either a principal/agency relationship or there was a breach or repudiation of the contract by Uncle Eric or misleading representations then I turn to consider the issues of damages. Damages 170 The components of the damages claim are as follows.

[37]

(5) Costs and disbursements incurred in holding and marketing West Garawan $ 21,276.86 $ 4,966,792.60 Less net proceeds of sale of West Garawan $2,915,532.51 Less net proceeds of sale of Square Bush $ 129,204.50 Less National Australia Bank Payout - National Australia Bank $ 230,500.00 Total $ 1,691,555.59 171 These figures are largely based on the reports of Mr Loughton dated 17 July 2002 and 1 July 2003. 172 The defendant submitted there was no necessity for any expenditure on the property, other than the interest payments on the original purchase price which Wendy and Bob Murray were meeting until April 2000. The defendant submitted that the allocation according to hectares planted was flawed in that it failed to account for the benefits of irrigation over dryland farming and the allocations according to undisclosed and unproven statements of Bob Murray could not be accepted. The defendant also submitted that the reports of Mr Loughton were unsatisfactory and that after deductions were made, penalties, interest on extra borrowings, overheads for Boala and the 'notional wage' for Bob Murray there did not appear to have been any loss from the conduct West Garawan. According to the defendant when the increase in capital value was added, the Murrays made a substantial profit. The defendant further submitted that none of the expenditure claimed was by Wendy Murray. 173 The major items included in Mr Laughton's calculation of damages are firstly, the principal loan and the costs of purchasing West Garawan and Square Bush; and secondly, the interest payments on the loans. The Murrays borrowed $2.35 million yet the purchase price of West Garawan and Square Bush was less than this amount being the sum of $1.935 million. I accept that the Murrays would have needed to borrow moneys to pay for the obtaining of the loans and the conveyancing costs which are referred to as costs and disbursements. This amounted to $138,531.85. The Murrays would have been obliged to borrow $2,073,531.80. The Murrays actually borrowed a sum greater than this, namely $2.35 million, which was $276,468.20 more than was required. Of the $276,468.20, $230,500 was used to pay out the Murrays' existing loan with the National Australia Bank. 174 The Murrays first attempt to sell the properties occurred on 5 June 1997 just over three weeks after the auction. While it appears that Paspaley Pearl made an offer of $2.1 million prior to the auction, the managing director Peter Bracher does not refer to making an actual offer after the auction took place. The Murrays were looking to make a profit of $200,000 after expenses if Paspaley Pearl made an offer. It turned out that the Paspaley Pearl agent did not have the authority to make any offers. It is my view that there was no genuine offer made by Paspaley Pearl in June 1997. Hence, Wendy Murray could not have sold the properties to Paspaley Pearl at that time. 175 Between the end of 1997 until September 2001 Wendy Murray says that she and Bob attempted to sell Boala. Their attempts to sell Boala included auctioning the property in July 2000 (but there were no bidders), and preparing a brochure themselves and then circulating the brochure to people who had responded to advertisements with an enquiry. Wendy Murray's evidence is that initially they tried to sell Boala by putting it on the market themselves and Bruce Gunning was aware that they were trying to sell it (t 139). Wendy Murray says that they never received an offer on the property, the main reason being because there was so much uncertainty within the local community as to the water rights attached to rural properties. 176 On 15 May 2000 Bruce Gunning prepared a proposal for the marketing of a combination of properties including West Garawan. If the properties were sold, West Garawan's asking price was just over $3 million (t 270.26). Bruce Gunning also prepared a valuation of West Garawan as at March 2003 at $2.44 million. While in May 2000 West Garawan may have been valued at $3 million by March 2003 the value of the property had fallen to $2.44 million. The main reason for the decrease was the uncertainty as to groundwater entitlements. According to Mr Gunning the areas groundwater entitlements had been reduced by 70%. 177 The Murrays accepted in cross examination that they had met their commitments from 1997 to 2000. They had drawn more funds only because of flood damage to both properties. The flood damage meant that they had to carrying out extra earthworks. They agreed that they had held off selling Boala in the hope of obtaining more than its then value once it gained an irrigation licence. While the Murrays were meeting their commitments it was not necessary for them to actively market the sale of West Garawan. In May 2000 (three years after the auction) the Murray defaulted on the loans due to further floods and the lack of interest in Boala caused by government water reforms (t 18, 332, 352, 443). Ultimately Wendy Murray sold West Garawan for the sum of $2,915,532.51 which is substantially more than the price she paid for the property in 1997.

[40]

Applying the rule in C Czarnikow Ltd v Koufos [1969] 1 AC 350 at 385, Lord Reid said that: 'The crucial question is whether, on the information available to the defendant when the contract was made, he should, or the reasonable man in his position would, have realised that such loss was sufficiently likely to result from the breach of contract to make it proper to hold that the loss flowed naturally from the breach or that loss of that kind should have been within his contemplation.'" 183 The normal measure of damages is the contract price less the market price at the contractual time fixed for completion. If the market price at the time fixed for completion exceeds the contract price the vendor has not suffered any damage by the loss of the bargain. 184 In Bridges v MacPhail 3 BPR 97189, 7 April 1977 Needham J stated that it is not the general rule that the vendors' damages for breach of contract by the purchaser should include interest payable on the vendors' mortgage. Needham J said that the vendors were not entitled to wait until they received an offer higher than the valuation as at the date of the breach and then fix the purchaser with all the costs attendant upon such waiting. This principal supports the proposition that where there has been a breach of contract Wendy Murray is not entitled to wait until they receive an offer higher than the valuation. 185 Wendy Murray would have been entitled to the contract price less the market price as at 10 July 1997 (the settlement date). She would not have been entitled to damages flowing from her decision to wait until they received an offer higher than the contract price, nor is she entitled to interest on penalty rates. While there is no evidence as to the market price as at 10 July 1997, it is unlikely to have decreased. Wendy Murray would have been entitled to the costs incurred in obtaining the loans and the conveyancing costs relating to the purchase, being the sum of $138,531.85. She is not entitled to the other components of damages.

Murray v Duddy

At a glance

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Judgment (45 paragraphs)

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Legislation Cited (1)

Cases Cited (8)

Cited By (1)