The document was said not to be an offer of finance capable of acceptance, but a summary of the basis upon which Orix would be prepared to provide finance if the applicants and any guarantors met its conditions. Orix reserved the right to withdraw its approval before the finance agreement was implemented if, inter alia, any representation provided by or on behalf of the applicants was found to be false or untrue in any material respect. The form set out the term, the interest rate, the balloon payment and the brokerage fee. It also calculated the stamp duty and the monthly rental of $3,837.87 per month. One of the conditions was confirmation that the crane would be used predominantly in New South Wales.
36 On 22 June 2001, Moody Kiddell prepared an invoice for the first month's rental and addressed it to QCE. It requested that the cheque be made payable to Orix.
37 Mr McCormick signed the statement of his and his wife's assets and liabilities on 25 June 2001. This was the same statement which was attached to the application of 20 June, 2001. On the same date, he drew a cheque in favour of Orix for the first month's rent.
38 Mr McCormick, on behalf of QCE, also signed a customer acknowledgment and declaration form addressed to Orix. He declared that the goods had been inspected, that they were as ordered, and that they were in a good and substantial repair, working order and condition. He acknowledged for QCE that Orix relied upon the declarations in entering into the asset purchase agreement and in settling with the supplier of the goods. He also acknowledged that Orix had appointed QCE as its agent to take delivery of the goods. The acknowledgement stated that the goods were located at Port Kembla and contained a description of the goods, including an engine number and serial number.
39 On 26 June 2001, Moody Kiddell received a fax which appeared to emanate from ASSCO confirming that the equipment for rental as per its purchase order JL31005 would be on hire in New South Wales only. Moody Kiddell faxed the document to Orix. On 26 June 2001, Moody Kiddell also sent Orix, by facsimile, a copy of an insurance certificate for the crane.
40 Mr and Mrs McCormick signed an asset purchase agreement as guarantors of the obligations of QCE. The asset purchase agreement described QCE as the hirer of the goods. It included a description of the goods and the hiring instalments. It was common ground that the agreement was a hire purchase agreement.
41 Moody Kiddell sent Nelson Equipment's tax invoice dated 21 June 2001 for $192,500 to Orix. Moody Kiddell also sent an invoice to Orix for its brokerage fee of $8,470. On 26 June 2001, Orix paid $7,700 plus GST as its brokerage. It paid $192,500 to Nelson Equipment's bank account in respect of the 18 tonne Franna No. 1 crane, the subject of this transaction. It also paid Moody Kiddell trailer commission of $940.80 plus GST.
42 Nelson Equipment prepared what it called a "recipient created tax invoice" addressed to QCE in respect of the purchase by Nelson Equipment of the relevant crane from QCE. The invoice provided for payment of $175,000, which was the same amount as the amount for which Nelson Equipment had invoiced Orix, less GST. On 2 July 2001, it deposited $175,000 to the bank account of QCE.
Evidence of Mr Nelson
43 Mr Nelson gave evidence that Mrs Mathers telephoned him in about mid June 2001. He said they had a conversation to the following effect:
" CM Have you spoken to Ray (referring to Ray McCormick)?
GN No.
CM Ray is purchasing a crane for $175,000. He will be ringing you with the details of the crane. We're organising finance with Orix and they will need a tax invoice from you. Ray will ring you with all the crane's particulars. I will send you through a tax invoice request. "
44 Orix relied upon Mr Nelson's evidence as showing that Mrs Mathers knew or suspected that Nelson Equipment did not own and would not acquire title to the crane before invoicing Orix. Mrs Mathers denied that the conversation occurred. I accept her denial. Mr Nelson was in many ways an unsatisfactory witness. His evidence was confused. His answers were often unresponsive. Remarkably, he professed to recalling the precise words of his conversations with Mrs Mathers, but was then unable to recount the conversations. Senior counsel for Orix accepted that Mr Nelson was far from a satisfactory witness on many aspects. He submitted however, that on issues of timing, that is to say whether he heard first from Mrs Mathers, or from Mr McCormick, his evidence was unshaken. Counsel submitted that his evidence was corroborated by Mr Wilson in respect of the last transaction and that if Mr Wilson's evidence were accepted on an important issue in relation to the sixth transaction, that would lead to a rejection of Mrs Mathers' evidence in its entirety insofar as it was inconsistent with Mr Nelson's evidence.
45 Mr Wilson substantially retracted the evidence he gave in his affidavit in relation to the sixth transaction, and I do not find that his evidence corroborates that of Mr Nelson in any substantial way. Nor, do I think it important whether Mrs Mathers spoke to Mr Nelson before Mr Nelson heard from Mr McCormick. In any event, I am not satisfied that Mrs Mathers spoke to Mr Nelson at all. She was unshaken in cross-examination. While that is not necessarily a sign that she was telling the truth and Mr Nelson was not, I would readily conclude that she was a more reliable witness.
46 If I am wrong in this finding, and the conversation deposed to by Mr Nelson did occur as he deposed to, it would not follow that Mrs Mathers was on notice that Nelson Equipment would not acquire title to the crane to pass to Orix. If the conversation occurred as Mr Nelson deposed to, I would infer that in about mid June 2001 Mrs Mathers knew that Mr Nelson did not already know the details of the crane which Mr McCormick was to purchase. One could infer that Nelson Equipment did not already own the crane and that Mr McCormick intended to purchase it from a third party. However, it would not follow that Nelson Equipment would not acquire the crane from the vendor before selling it to Orix. Mrs Mathers might be put on notice that this should be checked before the transaction was completed. However, Mr Nelson's evidence, even if accepted, would be insufficient to fix Mrs Mathers with knowledge that Nelson Equipment did not own the crane at the time it supplied the invoice to Orix.
Evidence of Mr McCormick
47 The proceedings were heard in two stages. In the first phase of the hearing, Mr McCormick's whereabouts were unknown. However, whilst the judgment was reserved, Orix learned that Mr McCormick had been arrested in Queensland. It applied for and was granted leave to re-open its case to call Mr McCormick. He admitted to arranging for the making of finance applications for the acquisition of cranes that did not exist. Mr McCormick said that from 2001 to 2004 his applications for finance ceased to be for existing cranes. He described the "standard procedure" as follows:
" It was just a matter of ringing up Christine Mathers and saying 'I want to buy machines for three or four hundred thousand' , whatever it was, 'can you get me finance?' . Her reply would be, 'who is the supplier?' . I would say 'Nelson Equipment'. She would ask me for details of the equipment, which she then would supply to the financier to get a valuation and she would make application to whoever the financiers were at the time and get back to me in a couple of days. "
48 If that evidence is correct, and was a complete statement of what Mr McCormick told Mrs Mathers, there would be no reason why Mrs Mathers should suspect that Nelson Equipment did not own the equipment.
49 However, Mr McCormick went on to say that there was discussion with Mrs Mathers in which Mrs Mathers asked him whether Mr Nelson was supplying the invoice, and he said that he was. At one point, Mr McCormick said that there was no discussion about who in fact was the supplier of the equipment. However, he also said that "on a couple of occasions" he "mentioned" to Mrs Mathers that he was buying the equipment from a private supplier in another State and that Nelson Equipment would supply the invoice. He said that there were a few such occasions which occurred during the period 2001 to 2004. Under cross-examination, he said that the only transaction which he could identify as one where he had told Mrs Mathers that he had sourced a privately owned vehicle, and she had arranged finance through Orix, was a transaction in 2003 or 2004 which did not proceed. There was evidence of a proposed transaction in July 2004 which did not proceed after Orix advised that the crane would have to be inspected.
50 Mr McCormick's evidence lacked precision. The evidence which he initially gave in examination-in-chief which I have quoted above, did not implicate Mrs Mathers. That evidence was consistent with statements made by Mr McCormick when interviewed by members of the Queensland Police Force, two or three hours after his arrest in August 2005. During that interview, Mr McCormick had identified Mrs Mathers as his personal broker. He was asked the following questions and gave the following answers:
" Q. When you'd ring Moody Kiddell would you ask for her?
A. Correct.
Q. So you'd ring then and say 'I'm buying a crane'?
A. Mmm … mmm
Q. That's right?
A. Mmm … mmm
Q. What would be the procedure then?
A. She'd say' who's the supplier?' I'd say 'Greg Nelson'. She'd say 'OK. I'll see what I can do. Ring you back'.
Q. She'd then get on to Greg Nelson?
A. No. She'd get my file out; get my finances out; present it to a finance house or whatever; get it approved; then get an invoice from Greg. "
51 When he was cross-examined on this part of his record of interview, Mr McCormick initially denied making those statements to the police. He retracted that denial when shown the videotape of the interview. Initially, however, he denied saying that Mrs Mathers would ask "who's the supplier?". He contended that she did not ask him who the supplier was, but asked him from whom the invoice would come.
52 Orix submitted that although Mr McCormick had admitted to serious frauds, he should be accepted as a witness of truth. His admission of the frauds enhanced his credibility. He believed he was suffering from a terminal illness and was likely to die in gaol. He had no motive to implicate Mrs Mathers. Indeed, he asserted that Moody Kiddell had no knowledge of his fraudulent activity. He did not consider that telling Mrs Mathers that he was buying equipment from a private supplier, but that Mr Nelson would provide the invoice, would implicate her.
53 It appeared to me that Mr McCormick did not distinguish in his own mind between a statement that Nelson Equipment would be the supplier, and a statement that Nelson Equipment would supply an invoice. In respect of the transactions after 2001, he knew that Nelson Equipment was only supplying an invoice, and not the goods, because the goods did not exist. However, he did not tell Mrs Mathers that the goods did not exist. On his own evidence, he told her that he was buying the goods, albeit not from Nelson Equipment. Based on his own evidence, it is likely that he told Mrs Mathers that the supplier was Nelson Equipment. He may have justified that statement in his own mind on the basis that Nelson Equipment would supply an invoice. It is possible, but not likely, that Mr McCormick told Mrs Mathers that he was buying another crane, and that he would get Mr Nelson to supply an invoice. That would not convey to Mrs Mathers that Nelson Equipment did not and would not own the equipment.
54 Mrs Mathers denied that Mr McCormick at any time said that he would get Mr Nelson to give Moody Kiddell an invoice. Her reason for denying that Mr McCormick said this, was that Moody Kiddell had to request an invoice from Nelson Equipment. Otherwise, Mr Nelson would not know to whom to address the invoice. That evidence is logical, and I accept it.
55 The critical question is whether Mr McCormick told Mrs Mathers that he was buying the equipment, not from Nelson Equipment, but from a different supplier. I am satisfied that he did not say that to Mrs Mathers. There was no need for Mr McCormick to have made such a statement to Mrs Mathers, and every reason not to do so, given his knowledge that the equipment did not exist. If he had done so, it may have led to enquiries which would have disclosed his fraud.
56 It was submitted for Orix that that is a matter which should have been put to Mr McCormick in cross-examination if Moody Kiddell were to rely upon the point. I do not consider that to be correct. Before Mr McCormick was called, Moody Kiddell had submitted that there was no need for Mr McCormick to have informed Mrs Mathers about his fraudulent activities. Mr McCormick was plainly confronted with the proposition that he did not tell Mrs Mathers that he was buying the equipment from a private supplier. He conceded that he could not recall any occasion involving a financing through Orix in which he told Mrs Mathers that he was buying the equipment privately prior to the transaction, which did not proceed, in July 2004. Having obtained that concession, it was unnecessary for counsel for Moody Kiddell to further cross-examine Mr McCormick as to other reasons why his earlier evidence of having told Mrs Mathers on a number of occasions that he was buying the equipment from private suppliers, but obtaining an invoice from Nelson Equipment, should not be accepted. In any event, I do not consider that the rule in Browne v Dunn (1894) 6 R 67 precludes my taking into account as an objectively probable fact that Mr McCormick would not wish to advertise his fraud wider than was necessary, and therefore is unlikely to have told Mrs Mathers matters which, if enquired into, might disclose the fraud. It was perfectly clear that Mr McCormick's evidence that he told Mrs Mathers that he was buying the goods privately but that Nelson Equipment would supply the invoice was challenged. It could not be said that this reason for rejecting Mr McCormick's evidence could come as a surprise. There could be no question of Orix or Mr McCormick being ambushed by the submission.
57 There is a further reason why, considered objectively, it is improbable that Mr McCormick would have made such a statement to Mrs Mathers. Had he done so, there is no reason Mrs Mathers would not have sought to process the transactions as private sales. Mr McCormick said that he told her that the invoice would be supplied by Nelson Equipment because finance houses would not accept invoices from small or irrelevant suppliers. I do not accept that he made that statement to her. She was an expert in the area. It is unlikely that Mr McCormick would have told her what finance houses would or would not accept. Moreover, there was no evidence that Orix would not have financed the transaction as a private sale. To the contrary, Orix's own documentation shows that it did provide finance for private sales, although it required its settlement officers to take steps to verify the seller's ownership. There is no reason Mrs Mathers would not have processed the transaction as a private sale, had she been told that that is what it was.
58 It was submitted for Orix that Mrs Mathers went along with Mr McCormick in order not to offend the client, for the sake of the brokerage that would be earned on the transactions, and because the transactions had to be completed urgently. However, I cannot conceive that Mrs Mathers would jeopardise Moody Kiddell's relationship with Orix for these reasons. Mrs Mathers appeared to be intelligent and efficient. I am confident that had she been told that Mr McCormick was buying equipment from a private supplier, she would have dealt with the financing as the financing of a private sale. She would not have jeopardised Moody Kiddell's substantial relationship with Orix by acquiescing in a fraud.
59 There are additional reasons for preferring the evidence of Mrs Mathers to that of Mr Nelson and Mr McCormick. Mr Nelson was in a curious position. Although he is a defendant to the proceeding and was separately represented, he was called as a witness by the plaintiff. It emerged in cross-examination that Mr Nelson had reached an agreement with Orix, whereby Orix would not enforce any judgment which it obtains against him. In my view, his evidence was coloured by a desire to assist Orix in its case against Moody Kiddell. He also sought to minimise his own responsibility for misleading Orix by issuing a tax invoice for goods he knew he did not own and would not acquire, by blaming Mrs Mathers.
60 It is also of concern that after Mr McCormick was interviewed by the police, and before he prepared an affidavit in the proceedings, he had a private interview with Mr Nelson about the proceedings. Mr Nelson was a friend of Mr McCormick's. Mr McCormick was anxious for him to be excluded from the police inquiries. Mr Nelson made a subsequent visit to Mr McCormick with the plaintiff's solicitor, for the purpose of obtaining an affidavit from Mr McCormick. In the course of oral evidence, Mr McCormick denied having been shown Mr Nelson's affidavit. However, Mr McCormick swore an affidavit on 14 September 2005, in which he deposed to having read Mr Nelson's affidavit. I think Mr McCormick's evidence was coloured by a desire to assist Mr Nelson by passing some of the responsibility for the transactions onto Mrs Mathers.
Inferences as to Mrs Mathers' Knowledge: the Failed 2004 Transaction
61 Orix relied upon evidence given by Mr Olencewicz in relation to the transaction in July 2004 which did not proceed. In March 2004, QCE asked Mrs Mathers to arrange finance for a machine over a term of five years. Orix gave approval for finance, but only for a four-year term. QCE placed the business with another financier on a five-year term. On 16 July 2004, QCE approached Mrs Mathers to arrange finance for another machine. She said that she would reactivate the undrawn approval facility which Moody Kiddell had on file from Orix if QCE was happy with a four-year term. Mr McCormick said that that would be appropriate. Mrs Mathers contacted Mr Olencewicz at Orix who advised that the 12 March 2004 approval was still valid. Mr Olencewicz advised that so long as the description of goods was the same and the purchase price was no dearer, Moody Kiddell could proceed on that approval. On 21 July 2004, Moody Kiddell sent by courier the standard settlement documentation for the purchase of a Franna crane including an invoice from Nelson Equipment for $302,500, an invoice from Moody Kiddell for brokerage, and the first month's rental cheque. The documents were also sent by email to Mr Olencewicz on 21 July. Settlement had been scheduled for that day.
62 On the morning of 21 July, Ms Riley, a settlements officer at Moody Kiddell, received a telephone call from Mr Olencewicz. He told her that the matter would not settle that day because the insurer was not acceptable to Orix, and that Orix would need to inspect the goods. He told her that there was a new policy regarding inspection and that without an inspection the matter would not settle that day. She took the file to Mrs Mathers. Mr Olencewicz could not recall his conversation with Ms Riley, but I am satisfied that it occurred.
63 Later in the morning of 21 July 2004, Mr Olencewicz and Mrs Mathers discussed the matter by telephone. They differ as to who telephoned whom. In June 2004, Orix had introduced a policy requiring an inspection of the goods prior to settlement. It had not advised Moody Kiddell of its change of policy. According to Mr Olencewicz, he told Mrs Mathers of the change of policy and she responded by saying:
" Why didn't you tell me this last week when I discussed the new deal with you? The deal has to settle today. The crane is in Blackall in Queensland. "
64 Mrs Mathers denies saying this, or words like it, in the first conversation on 21 July. According to her, after she protested about Orix applying its new policy to this transaction which was due to settle on that day without having given notice of the change of policy, and after arranging for Mr Moody to call senior officers of Orix about it, she telephoned Mr McCormick and told him of Orix's requirement. Mr McCormick was angry and told her to forget it, as there was "a bloke at the bank who would do it". She said there was no need to do that as they could get the matter attended to that day. She asked him where the crane was located, as it should delay the settlement by only half a day. Mr McCormick told her that it was probably located at Gladstone Wharf. Gladstone is in Queensland. Mr McCormick told her that he would just go through the bank. She asked him to find out exactly where the crane was located, who they should contact, and she would arrange for someone to go there. She told him that it would not cost him anything. Mr McCormick said that he would ring her back. He did not.
65 According to Mrs Mathers, she then rang Mr Olencewicz, and in the second call told him that the crane was at a wharf in Gladstone. She asked if they could settle the matter that day and have the inspection done the following day. Mr Olencewicz said no, she should find out exactly where the crane was. She then telephoned Mr McCormick again. He said that he had rung Gladstone and the crane was somewhere on the way to Blackwater to work on a gas pipeline, and that she should not worry about it as he had spoken to the bank and they would be around in two hours with the papers.
66 The significance of Mr Olencewicz's evidence is that if his recollection of the sequence of events is accurate, Mrs Mathers knew that the crane was located in Queensland before she spoke to Mr McCormick. The invoice showed Nelson Equipment as the supplier, but it had not yet been paid for the equipment by Orix. Orix submitted that it could be inferred that Mrs Mathers knew or suspected, as a result of her previous dealings, that although Nelson Equipmentwas shown on the invoice as the supplier, in fact, it was not the supplier. If it had been, she would have expected the goods to be in Nelson Equipment's possession, not in Queensland.
67 Mr McCormick gave evidence that Mrs Mathers spoke to him about Orix's requirement that the equipment be inspected. He said that Mrs Mathers told him "we have a bit of a problem and they want to inspect the equipment". He said that Mrs Mathers told him that she had told the finance company that the machine had left the day before. According to Mr McCormick, Mrs Mathers told him that Orix thought that the equipment was in Nelson Equipment's yard and it was not. Mr McCormick also said that he told Mrs Mathers that he was purchasing the equipment from people in Gladstone.
68 Orix relied upon this as evidence that in relation to this transaction, Mrs Mathers knew that Nelson Equipment was not the true supplier of the goods. This went to her credit and also provided an inference that she was aware of that matter in relation to the earlier transactions.
69 I prefer Mrs Mathers' evidence to Mr McCormick's evidence. I do not accept that he told her that he was buying the crane from people in Gladstone. Nor do I accept that she told Mr McCormick, in effect, that she had tried to deflect Orix's inquiry by telling Orix that the crane had left Nelson's yard.
70 I also accept that Mrs Mathers did not tell Mr Olencewicz that the crane was in Queensland until after Mr McCormick informed her of that purported fact on 21 July. If her recollection of the sequence of conversations is correct, and I thought she was a generally reliable witness, that would mean that she did not disclose that fact to Mr Olencewicz until the second of their conversations on that day. Whilst Mr Olencewicz was confident that the matter was raised in the first of the conversations, I do not think that this was a matter of such significance that he could be sure that that was so. Neither he nor Mrs Mathers kept a diary note of their conversation. In some respects Mr Olencewicz's recollection of events concerning the transaction was faulty. For example, contrary to his own affidavit, he said that he recalled receiving the documents by courier by Moody Kiddell on 20 July. However it is clear from Moody Kiddell's records and the use of overnight couriers that the documents were not sent to Orix until the following day. Likewise, Mr Olencewicz did not recall talking to Ms Riley, when it is clear that he did.
71 I do not consider that Mr Olencewicz's evidence affects Mrs Mathers' credibility. I do not infer from what she said on 21 July 2004 that she knew or suspected that Nelson Equipment was not the supplier of goods whose purchase was financed by Orix. There may have been many reasons why Nelson Equipment had a crane it owned in Queensland. The fact that Mrs Mathers evinced no surprise at being told by Mr McCormick that the crane was in Queensland does not indicate that she suspected that Nelson Equipment did not own it. It was not put in cross-examination that this was a fact which indicated that Nelson Equipment did not own the crane.
72 Orix submitted that Mrs Mathers' response to Orix's new policy to require that goods be inspected was so extreme, that it could not have been motivated only by a concern in relation to the settlement of the transaction on that day. Particularly is that so when Mrs Mathers suggested that it was not too late to inspect the equipment on that day. She spoke to Mr Moody and tried to have him contact Mr Olencewicz's superiors to persuade them not to apply the new policy in this case.
73 There is no doubt that Mrs Mathers was angry by what she learned on 21 July 2004. Her anger was not with the introduction of the new policy. She was angry that Orix had not told Moody Kiddell, one of its major introducers of business, of its change of policy until the very last moment. She regarded that as inefficient. I do not draw any adverse inference from her reaction to being told of Orix's change of policy.
Conclusion on Mrs Mathers' Evidence
74 Senior counsel for Moody Kiddell and Mrs Mathers understandably stressed the principles in Briginshaw v Briginshaw (1938) 60 CLR 336 at 361-362 as to whether I should find that Mrs Mathers was told of matters which indicated that Nelson Equipment did not have title to the goods for which it rendered its invoices to Orix. It was submitted that the allegation was serious, that it was inherently unlikely, and that the consequences of such a finding for Moody Kiddell and Mrs Mathers would be grave. Before making such a finding, I would need to feel an actual persuasion that Mrs Mathers had been told such facts. It was submitted that I could not be reasonably satisfied that she was told of such facts by "inexact proofs, indefinite testimony, or indirect inferences". All this I accept. However, it would do less than justice to Mrs Mathers to say that I was not persuaded, having regard to the principles in Briginshaw v Briginshaw, that Orix's charge against her had been made good. Rather, I am satisfied that Mrs Mathers was not told that Nelson Equipment did not own the equipment the subject of its invoices. She was not told that Mr McCormick was buying the goods from another person. She did not ring Mr Nelson to advise him that Mr McCormick was purchasing a crane, and ask Mr Nelson to send an invoice when he had the particulars from Mr McCormick. She was not told of facts that might have caused her to suspect that Nelson Equipment did not own the goods the subject of its invoices. I have no hesitation in preferring her testimony to that of Mr McCormick and Mr Nelson.
Orix's Claims Against Moody Kiddell in Respect of the First Transaction
75 Orix seeks recovery from Moody Kiddell of $192,500 paid to Nelson Equipment, and the brokerage and trailer commission paid to Moody Kiddell. It acknowledges that the quantum of its claim is to be adjusted to reflect the value of rental payments received from QCE. The determination of the quantum of any such adjustment has been deferred.
76 Orix alleged that Moody Kiddell was knowingly involved in the payment of $192,500 by Orix to Nelson Equipment, and assisted Nelson Equipment to obtain that payment with knowledge that Nelson Equipment did not own or have any interest in the 18-tonne Franna No. 1 purportedly sold to Moody Kiddell, or knowledge of facts that would indicate that to it. Orix alleged that Nelson Equipment held the $192,500 received from Orix on trust for Orix. As I understood the allegation against Moody Kiddell, it was that Moody Kiddell was liable to account to Orix as a constructive trustee for the $192,500 received by Nelson Equipment, presumably, on the ground that it knowingly assisted a breach of trust by Nelson Equipment. Orix did not plead that Moody Kiddell assisted, knowingly or otherwise, in Nelson Equipment's breach of trust in paying $175,000 to QCE. Rather, Orix's claim, as pleaded, was that by assisting Nelson Equipment to receive the money which it held on a constructive trust for Orix, Moody Kiddell itself became a constructive trustee and liable to account for the funds, irrespective of its knowledge of how Nelson Equipment dealt with the trust moneys. However, Orix submitted that it could be inferred that Moody Kiddell understood that Nelson equipment would pay the money to QCE.
77 The second claim was that Moody Kiddell breached s 52 of the Trade Practices Act by representing that Nelson Equipment owned the 18-tonne Franna No. 1, that it would pass title in the equipment to Orix on payment of the purchase price, and that QCE would hire the equipment from Orix. Orix says that it relied on Moody Kiddell's conduct in each of the representations by entering into the asset purchase agreement with QCE, paying the sum of $192,500 to Nelson Equipment, and paying the brokerage and trailer commission to Moody Kiddell.
78 Orix's third claim against Moody Kiddell relates to the brokerage fees and trailer commission. It claims repayment of the brokerage fees as money paid for consideration which has wholly failed, or as money paid under a mistake. It claims repayment of the trailer commission on the ground that on the proper construction of the agreement for the payment of trailer commission and in the events which happened, trailer commission was not payable, and the trailer commission was paid under a mistake.
Accessorial Liability as a Constructive Trustee
79 Orix submitted that the facts known to Mrs Mathers would communicate to a reasonable person a general understanding that there was a fraud being committed. This, it was submitted, was sufficient to render Moody Kiddell liable as an accessory (Yeshiva Properties No. 1 v Marshall (2005) 219 ALR 112 at 116-118, [18]-[22]). Orix accepted that to succeed on this cause of action it would be necessary for me to accept the evidence of Mr McCormick, or Mr Nelson, or both, in preference to that of Mrs Mathers. For the reasons I have given, I do not accept their evidence. Mrs Mathers and Moody Kiddell did not know of the fraud practised on Orix by Mr McCormick and Mr Nelson. Nor did they know of facts which would communicate to a reasonable person in their position a general understanding that such a fraud was being committed. It is therefore unnecessary to consider whether the matters alleged, if established, would be sufficient to make Moody Kiddell liable as an accessory for Nelson Equipment's breach of trust.
Misleading and Deceptive Conduct by Moody Kiddell
80 In entering into the asset purchase agreement with QCE, paying Nelson Equipment, and paying the brokerage and trailer commission, Orix relied upon the documents supplied to it by Moody Kiddell. The documents were compiled by Moody Kiddell. Moody Kiddell had authority to generate Orix's standard form loan documents. It included in the documents details of the crane to be purchased, the identity of the supplier, location of the crane, purchase price, and the terms of the proposed lease to QCE. The application stated that "the client has been in the crane hire business for many years and all equipment is hired to BHP via ASSCO Shipping at Port Kembla". As the crane did not exist, these statements were misleading. The statements were made by Moody Kiddell from information supplied to it. Mr Olencewicz would not have proceeded with the deal if he had any doubt about the ability of Nelson Equipment to convey title. Nor would he have proceeded with the deal if he had been aware that the crane was not to be used at BHP Steel at Port Kembla and was not to be hired to ASSCO. If he had had any doubts about the existence of the crane he would not have proceeded. This evidence of Mr Olencewicz was not challenged. On the other hand, as I have said, Orix knew that Moody Kiddell had obtained the information from another source and that they were not warranting its correctness. Orix did not rely upon Moody Kiddell to check that the information was correct.
81 Orix referred to Yorke v Lucas (1985) 158 CLR 661 at 666 where Mason ACJ, Wilson, Deane and Dawson JJ said:
" It is, of course, established that contravention of … section [52] does not require an intent to mislead or deceive and, even though a corporation acts honestly and reasonably, it may none the less engage in conduct that is misleading or deceptive or is likely to mislead or deceive: … That does not, however, mean that a corporation which purports to do no more than pass on information supplied by another must nevertheless be engaging in misleading or deceptive conduct if the information turns out to be false. If the circumstances are such as to make it apparent that the corporation is not the source of the information and that it expressly or impliedly disclaims any belief in its truth or falsity, merely passing it on for what it is worth, we very much doubt that the corporation can properly be said to be itself engaging in conduct that is misleading or deceptive. "