Otta International Pty Limited v Asia Pacific Carbon Pte Ltd

ny, by leave) Third Defendant (self-represented) Fourth Defendant (self-represented) File Number(s): 2015/220270

Introduction

1. By statement of claim filed on 28 July 2015 Otta International Pty Ltd (the plaintiff) claimed damages from Asia Pacific Carbon Pte Ltd (the first defendant), Asia Pacific Carbon Pty Ltd (the second defendant), Julie Kane (the third defendant) and Peter Kane (the fourth defendant) arising from monies advanced by it which were not repaid.
2. On 27 May 2016 default judgment was entered against the first defendant, a Singaporean company, in the sum of $694,711.49. The second defendant was one of its subsidiaries and went into administration. In the present matter which went to final hearing before me on the merits, the plaintiff proceeded against the third and fourth defendant for damages, including for breaches of ss 18 and 29 of Sch 2 of the Competition and Consumer Act 2010 (Cth), the Australian Consumer Law (ACL).

The relevant legislation

1. Section 18 of the ACL relevantly provides: "Misleading or deceptive conduct (1) A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. . . ."
2. Section 29 of the ACL proscribes false or misleading representations about goods or services.
3. Section 2 of the ACL defines "trade or commerce" in the following terms: "'trade or commerce' means: (a) trade or commerce within Australia; or (b) trade or commerce between Australia and places outside Australia; and includes any business or professional activity (whether or not carried on for profit)."
4. Section 4 of the ACL provides: "Misleading representations with respect to future matters (1) If: (a) a person makes a representation with respect to any future matter (including the doing of, or the refusing to do, any act); and (b) the person does not have reasonable grounds for making the representation; the representation is taken, for the purposes of this Schedule, to be misleading. (2) For the purposes of applying subsection (1) in relation to a proceeding concerning a representation made with respect to a future matter by: (a) a party to the proceeding; or (b) any other person; the party or other person is taken not to have had reasonable grounds for making the representation, unless evidence is adduced to the contrary. (3) To avoid doubt, subsection (2) does not: (a) have the effect that, merely because such evidence to the contrary is adduced, the person who made the representation is taken to have had reasonable grounds for making the representation; or (b) have the effect of placing on any person an onus of proving that the person who made the representation had reasonable grounds for making the representation. (4) Subsection (1) does not limit by implication the meaning of a reference in this Schedule to: (a) a misleading representation; or (b) a representation that is misleading in a material particular; or (c) conduct that is misleading or is likely or liable to mislead; and, in particular, does not imply that a representation that a person makes with respect to any future matter is not misleading merely because the person has reasonable grounds for making the representation."
5. Section 236 of the ACL relevantly provides: "Actions for damages (1) If: (a) a person (the claimant) suffers loss or damage because of the conduct of another person; and (b) the conduct contravened a provision of Chapter 2 or 3; the claimant may recover the amount of the loss or damage by action against that other person, or against any person involved in the contravention. . . ."
6. Section 2 of the ACL defines "involved" in the following terms: "'involved': a person is involved, in a contravention of a provision of this Schedule or in conduct that constitutes such a contravention, if the person: (a) has aided, abetted, counselled or procured the contravention; or (b) has induced, whether by threats or promises or otherwise, the contravention; or (c) has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention; or (d) has conspired with others to effect the contravention."

The plaintiff's claims

1. The plaintiff alleged that it entered into two loan agreements with the first defendant as a result of misleading and deceptive conduct by the first, second and fourth defendants. It alleged that the third defendant was involved in the contraventions by the first, second and fourth defendants.
2. The first agreement (the Investment Agreement) was executed on 3 January 2013. The plaintiff claimed that it advanced $100,000 to the first defendant and that the first defendant failed to make interest payments or repay the principal.
3. The second agreement (the Short Term Loan Agreement) was executed on 20 March 2013. The plaintiff alleged that it advanced $19,946 to the first defendant and that the first defendant failed to make interest payments or repay the principal in accordance with the agreement. The plaintiff accepted that the first defendant had paid $400.
4. In addition, the plaintiff claimed that, if either the third or fourth defendant lacked authority to execute either the Investment Agreement or the Short Term Loan Agreement on behalf of the first defendant, the third and fourth defendants are personally liable for the obligations of the first defendant under these agreements.

The alleged misleading and deceptive conduct

1. In [24] of the statement of claim, the plaintiff alleged as follows: "Acting on his own behalf and as a representative of the First Defendant and Second Defendant, the Fourth Defendant made the following representations to the Plaintiff ("the Representations"). (a) The Fourth Defendant had received: i. a Doctorate Degree in Business Administration in 2009 from Macquarie Graduate School of Management ("MSGM"); ii. a Masters Degree in Business Administration in 2007 from MSGM. (b) The Fourth Defendant was an experienced and successful business person with 36 years of experience and close personal relationships with the Indonesian government and was an accomplished business person who was at the forefront of carbon credit projects in Indonesia and Papua New Guinea. (c) The Fourth Defendant was chairman of the board of the First Defendant and he presented a business card in the name of "Dr Peter Kane" and with the title of "Executive Chairman". (d) The First Defendant would use the $100,000 proceeds under the Investment Agreement to finalise the development of a carbon credit project in the Province of West Papua, Indonesia (the "West Papua Project"). (e) As part of the West Papua Project, the First Defendant had an exclusive 30-year carbon development and trading contract for the largest virgin rainforest in Indonesia and the contract was "bullet proof" with approvals from the three main levels of the Indonesian government - the local community group, the Provincial Government of West Papua and the national Indonesian Government. The expression "bullet proof" denoted that the contract was legally binding, enforceable and unconditional. (f) The First Defendant had exclusive rights to 14 million hectares of virgin rainforest in Papua New Guinea under contracts with private landowners and such rainforest that would produce carbon credits to be sold in carbon trading and the proceeds would easily pay off the 150% annual interest under the Investment Agreement for the West Papua Project. (g) The First Defendant's costs were government guaranteed by the Indonesian government and the West Papua Project was secured by the Indonesian government. (h) The investment funds would be used by the First Defendant and would be sufficient to pay 50% of the costs for independent scientific work to develop a project design document to measure the carbon content of rainforest in terms of tonnes per hectare. (i) The First Defendant was in the final stages of completing its first project site (the West Papua Project) and the First Defendant described the first project site as being at the business stage of "Advanced / Finished Product". (j) The First Defendant would be fully self-funding within 14 months from January 2013 (by April 2014). (k) The first sales were anticipated to be made in the fourth calendar quarter of 2013 or the first calendar quarter of 2014. (l) The projected income for the West Papua Project in terms of turnover and operating profit was as follows: Year Turnover Operating Profit i Year 1 $19,200,000 $2,400,000 ii Year 2 $44,000,000 $5,500,000 iii Year 3 $76,800,000 $9,600,000 iv Year 4 $112,000,000 $15,120,000

1. The plaintiff alleged that the representations were made in trade and commerce, in the belief that the plaintiff would rely on them to enter into the loan agreements and were false, misleading or deceptive. In [27] of the statement of claim, the plaintiff also alleged: "The Representations were false, misleading or deceptive as to the following matters: (a) The Fourth Defendant has obtained a Masters of Arts degree from Macquarie University but has never obtained a Masters Degree in Business Administration or a Doctorate Degree in Business Administration at MSGM. (b) The Fourth Defendant was a failed business person and was an undischarged bankrupt having placed himself into bankruptcy on 27 July 2012. The Fourth Defendant was previously bankrupted on 3 July 2009. (c) The Fourth Defendant was not a director of either the First Defendant or the Second Defendant. The Fourth Defendant was not entitled to use the title "Dr". (d) There was no carbon credit project of the kind represented, in or near the final stages of development. (e) The First Defendant did not have an exclusive 30-year bullet proof carbon development and trading contract for the largest virgin rainforest in Indonesia since the rights of the First Defendant were and remain subject to approval by Indonesian Government. No approval by the Indonesian Government had been given then or has been given since and the Fourth Defendant lacked any reasonable basis for expecting that approval would be given. (f) The Fourth Defendant has no reasonable basis for expecting that such rights as the First Defendant had would produce revenue as represented sufficient to cover the 150% annual interest owed under the Investment Agreement. (g) The First Defendant's costs were not guaranteed by the Indonesian government and the Fourth Defendant lacked any reasonable basis for expecting that they ever would be. The West Papua Project was not secured by the Indonesian government and the Fourth Defendant lacked any reasonable basis for expecting that it ever would be. (h) The investment funds were not sufficient to cover 50% of the costs of independent scientific work to develop a project design document and the Fourth Defendant lacked any reasonable basis for expecting that they would be. (i) The First Defendant's West Papua Project was not near its final stages nor was it at a business stage that could be described as advanced or finished product. (j) The Fourth Defendant lacked any reasonable basis for representing that the First Defendant would be self-funding after 14 months (by April 2014). (k) The First Defendant has failed to produce any sales or income and the Fourth Defendant lacked any reasonable basis for expecting that sales would be made in the fourth calendar quarter of 2013 or the first calendar quarter of 2014. (I) The West Papua Project has failed to produce any income or turnover and therefore failed to produce any operating profit. The Fourth Defendant lacked any reasonable basis for expecting that the income or turnover would occur and that any profits would be made.

The facts

1. Mr Terei, the sole director of the plaintiff, appeared by leave on its behalf. The evidence adduced by the plaintiff was wholly documentary. The third and fourth defendants, who were self-represented, relied on their own affidavits as well as the affidavit of Hayden Read, who was said to be a previous director of the first defendant from 2011 to 2014. Mr and Mrs Kane were cross-examined. There were relatively few factual disputes, given that the parties appear to have largely communicated in writing.

The Carbon Service Agreement

1. On 6 April 2010 the first defendant entered into a 30-year carbon development and trading contract with the province of West Papua in the Republic of Indonesia (the Carbon Service Agreement). The Carbon Service Agreement was executed by the Governor of West Papua, Abraham Atururi, on behalf of the Provincial Government and by Mr Kane who described himself as the "Chairman" of the first defendant. The first defendant's company seal was applied to the Carbon Service Agreement.
2. In substance, the Carbon Service Agreement provided that West Papua would agree, on behalf of land owners within the province, not to develop certain rain forests which covered an area of some 8.4 million hectares, in return for carbon credits which would be allocated under the United Nations Collaborative Programme on Reducing Emissions from Deforestation and Forest Degradation (the REDD programme). The first defendant would provide services associated with the REDD programme, which was developed in 2008. Such projects are accredited by independent third parties based on calculations of carbon dioxide that would be released into the atmosphere if the lands were developed. The amount of carbon dioxide is measured by reference to what are termed "verified carbon units" (VCUs), which can be traded and purchased by high carbon emitters. The Carbon Service Agreement provided that 15% of the "Gross Revenue", being the amount received for VCUs, would be paid to the first defendant together with the "Service Fee" (cl 4). Two amendments were made to the Carbon Service Agreement, the first on 13 November 2010 and the second on 4 February 2012. Both amending documents were signed by Mr Kane who described himself as the first defendant's "Chairman".

The gap analysis

1. When difficulties arose with the first funder of the project (which will be addressed further below) Mr Kane commissioned a company known as PT Forest Carbon to conduct a so-called "gap analysis" on the proposal in the Carbon Service Agreement. The purpose of the gap analysis was to raise further funds to enable the first defendant to perform the agreement. PT Forest Carbon produced a final report dated 26 March 2012 which was written by Jeff Chatellier and Scott Stanley. The authors' note which appeared on the first page (after the cover page) read in part: "This is the third and final version of the report and has been reviewed and approved by the Managing Director of PT Forest Carbon Consultants and the client - Asia Pacific Carbon."
2. The introduction to the report said, in part: "Asia Pacific Carbon has engaged PT Forest Carbon to conduct a rapid assessment of all project documents and data associated with the West Papua Provincial REDD+ initiative. . . . This report focused on the first phase of the initiative that seeks to protect over 218,000 hectares of forest in the Teluk Wondama district, currently classified as a logging concession, but has been inactive for several years. . . . APC has been technically supported by Green Collar, a firm that originated carbon credits for REDD and energy projects, but recently has gone out of business. Green Collar staff planned and conducted the initial carbon stocks survey in 2011 and has also met various times with local communities. Both the maps and the field data in this report are from the work of Green Collar. The objective of this report is to conduct a gap analysis of the steps completed to date and provide a road map of remaining activities required to have the project validated under the Verified Carbon Standard (VCS). VCS is the most rigorous standard available and insures the buyers of the carbon credits that the project meets best management practices, including identifying and mitigating the risks to the project. The report is structured to first give an overview of the project and the data already collected. The second portion of the report reviews the critical components of a REDD+ project and the project's status in regards to completing each component. The report then provides an overall assessment of the project as it stands and details next steps in order to bring the project to market under the Verified Carbon Standard. The reader should be aware that this report is based on a desktop analysis of all APC documents related to the West Papua Forest Carbon Project, and the authors have not visited the site nor communicated with the relevant stakeholders." [Emphasis added.]

Mr Kane's bankruptcy

1. According to the National Personal Insolvency Index, on 27 July 2012 Mr Kane filed a debtor's petition and a statement of affairs, as a result of which he was made bankrupt. He remained bankrupt until he was discharged by law on 28 July 2015.

Mr Kane's capital raising attempts

1. In September and October 2012 Mr Kane researched various alternatives to fund the project. He became aware of an organisation known as the "Angel Investor Network" (AIN) and selected the AIN as a means of raising capital for the first defendant. Documentary evidence tendered by Mr Kane from the AIN demonstrated that it was a resource which did not purport to advise investors itself, but rather constituted a conduit for investment offers to be made to its members. It required persons wanting to become members to certify that they were "sophisticated investors" within the meaning of the Corporations Act 2001 (Cth) and to prove that they had sufficient funds available for investment.

Communications between the plaintiff and the defendants prior to the loan agreements

The Executive Summary

1. By email dated 5 December 2012 Mr Kane thanked Mr Terei for his enquiry regarding the project which had appeared in the AIN. A document entitled "Proposal outline/ executive summary" (the Executive Summary) was attached to the email, as well as a draft non-disclosure agreement. The project was described as "Public-Private-Partnership - Carbon Trading Project Development and Management in Indonesia". The "Short Summary" in the Executive Summary included the following: "Principal capital needed to finance finalization of initial Project Development Reports for the largest carbon trading contract in Indonesia operating as a "Public-Private-Partnership" (PPP). Exclusive contract held direct with Indonesian Government for 30 yr period."
2. The "management team" section of the Executive Summary included the following: "Australia The principal consultant has worked in both Indonesia and PNG over a period of 36 years and holds Doctorate Degree in Business Administration (MGSM), MSc, MA and BBus. The principal consultant, an Australian citizen, has a very close relationship with the Indonesian and PNG Governments at the highest levels. He is fluent in both Indonesian and Melanesian Pidgin languages."
3. The "proposal summary" section included the following: "In 2010 Asia Pacific Carbon (100% Australian owned) entered into an exclusive 30 yr carbon development and trading contract for the largest Indonesian Government owned virgin rainforest. Also holds options for several other exclusive government contracts for additional major forests in the country. Contract is directly held by the company with the Indonesian Government and has been under development since July 2010. Asia Pacific Carbon also holds exclusive contract rights to more than 14 million hectares of virgin rainforest in PNG with private landowners. The carbon trading projects are being developed under the auspices of the United Nations and known as REDD (Reducing Emissions from Deforestation and Forest Degradation). The REDD process involves assessment of forests for their carbon content measured in tonnes per hectare. The assessment must be prepared as a Project Design Document (PDD- scientific validation using international standard compliant methodologies) and then submitted to an independent accreditation body for formal Certification. Once certified the credits are then able to be sold on the world market with sales receipts paid to the asset (forest) owners. Basic logic is compensation for not permitting logging and thereby provide for offsets to high carbon emitters throughout the world. Current estimates for each credit are approximately US$4-5. Using this estimate Asia Pacific Carbon's first Indonesian projects are conservatively expected to realize a minimum value in late 2013 of approximately $20m pa and by 2016 up to $77m pa from the existing contract with Asia Pacific Carbon receiving an EBIT of 15% pa for life of the contract i.e. for 30 yrs as project developer commencing from date of first credit traded. A further 10% is set aside to pay for the ongoing scientific validation and operational costs of the PDD and Certification costs. Further 5% is put aside for independent marketing and sale of carbon credits produced. Of the 15% received by Asia Pacific Carbon it is estimated than [sic, that] a maximum of 2.5% will be used for administration and management during first three years of the project and 1.5% for following yrs. Balance as profit before tax."

The first meeting between Mr Terei and Mr Kane on 7 December 2012

1. After Mr Terei had read the Executive Summary he contacted Mr Kane to meet and discuss the project. According to Mr Kane, he first met Mr Terei on 7 December 2012 at a café in Wahroonga. Mr Kane admitted that in about December 2012 he provided his business card to Mr Terei. It had the logo of "Asia Pacific Carbon" on it and read as follows: "Dr Peter N Kane DBA, MBE, MSc, BBus - FAICD, FCILT Executive Chairman Asia Pacific Carbon Pte Ltd"
2. The signature block at the foot of Mr Kane's emails was to the same effect, although in his emails he was described simply as "Chairman". I infer that his business card was provided on 7 December 2012 or soon afterwards. At the meeting on that date Mr Terei informed Mr Kane that he made investments through his company, the plaintiff. Mr Kane told Mr Terei about the Carbon Service Agreement and a business plan which he said he would provide to Mr Terei.
3. In his affidavit of 28 September 2016 Mr Kane admitted: "It was clear from the meeting that Terei had no experience in environmental forest management and the carbon industry in general."
4. By email dated 10 December 2012, sent at 9.47am, Mr Terei responded to Mr Kane's email of 5 December 2012 and attached his curriculum vitae (CV) "as discussed". Mr Terei's CV indicated that he was a chemical engineer with an extensive background in environmental pollution control and assessment.

The APC Business Plan

1. I infer there was a discussion between Mr Terei and Mr Kane on 10 December 2012 which led to Mr Kane sending an email to the plaintiff which contained links to various carbon standards which were said to apply to the relevant projects. Mr Kane also gave Mr Terei access to a "Dropbox" which included a 46-page document entitled "Asia Pacific Carbon Pte Ltd Business Plan Capital Raising- November 2012" (the APC Business Plan). Before Mr Terei had been given access to the APC Business Plan he had signed, and returned to Mr Kane, a copy of the Non-Disclosure Agreement which Mr Kane required to be executed before providing access to further information about the project.
2. The APC Business Plan contained the following paragraphs under the heading "Legal Form of Ownership": "The company is structured with the parent being Asia Pacific Carbon Pte Ltd, that is a limited liability company (LLC). It is privately owned by a sole 100% Australian shareholder. It has established two subsidiary companies; Asia Pacific Carbon Pty Ltd in Australia and Asia Pacific Carbon (PNG) Pty Ltd in PNG. The company has structured itself with a parent in Singapore to take advantage of the attractive taxation regimes which Singapore offers."
3. According to the APC Business Plan, the first defendant was entitled under the Carbon Service Agreement to 15% of the amount realised for the sale of carbon credits, which were estimated to be worth approximately US$4-5 each. A calculation of the value of APC's business was set out in the APC Business Plan as follows: "Pricing Structure Calculations The current assessment of total VCUs that will be produced from the first Indonesian project i.e. the West Papua - Forest Carbon Program (WP-FCP) is based upon the following factors to determine project value: • Land Area-4.2 million Ha • Average VCU per Ha -120 for year one then increasing to 200 over three years • Current market price per VCU - $4-5 • Life of contract - 30 years • Payment to APC -15% plus costs Based upon the above, the minimum investment return to APC once the project is fully developed over the next three years is as follows: 4.2m ha x 120t x $4 x 15% 30yr $10,080,000 per annum (based upon the creation of 16,800,000 VCUs pa)." [Emphasis in original.]
4. The APC Business Plan also contained a calculation of the value of its business if the VCU price increased to $15 in 2015 and the VCUs per ha improved to 200 tonnes, which would lead to the creation of 28 million VCUs per annum. The value of the business on that alternative basis was said to be 28,000,000 x $15 x 15% = $63 million.

The second meeting between Mr Terei and Mr Kane on 18 December 2012 and the offer

1. According to Mr Kane, the two men met again on 18 December 2012 to discuss the proposal. At the meeting Mr Kane formed the impression that Mr Terei was a "professional investor".
2. Following the meeting on 18 December 2012, Mr Kane, who continued to represent that he was the Chairman of the first defendant, wrote in the following terms to Mr Terei: "Thank you once again for your time today and I hope that I was able to better explain what we are doing, where we are going and the processes involved. As I offered, I confirm that we, Asia Pacific Carbon Pte Ltd (APC), would accept on [sic] offer from Otta International Pty Ltd (Investor) for an investment of $100,000 in our current West Papua Forest Carbon Program with the following conditions: 1. Interest on the investment would be 150% pa for three years after the first credits are traded; 2. Investment to be repaid before other disbursement from credits sold; 3. Investor to have right to convert to investment amount into equity in company (APC) based upon an independent assessment of company's net present value (NPV) at anytime throughout the term of the investment with the investment amount plus interest at the time of conversion to equity to be on a pro rata value of the NPV; 4. Investor to have 12 month option to increase investment to $500,000 in the same terms as initial investment; 5. Investor to be engaged to work with PT Forest Carbon in Indonesia to complete the Environmental Assessment Report of the Project Design Document on the Wondama Project with such work to be paid by APC on Australian standard industry commercial terms; and 6. APC to provide security for investment funds by way of company guarantee over assets and equity in the company. Should you agree to the above terms I am happy to prepare an Investment Agreement to confirm the terms and forward the same to you with an aim to have completion prior to Christmas. Also happy for you to prepare an Investment Agreement."

Further correspondence regarding Mr Terei's further request for information

1. On 19 December 2012 at 9.51am, Mr Terei emailed Mr Kane, asking for further information, including the current net present value (NPV) of the first defendant; the company structure and names of the directors; the duration and extent of his engagement (referred to in 5. of the email set out above); and an assurance that the first defendant had sufficient resources to allow the completion of the first project within 14 months.
2. Mr Kane responded by email at 1.23pm on 19 December 2012. He set out a calculation of NPV for the first defendant which led to a figure of $5.11m, after which he said: "This does not of course take into account the projected earnings over the first five years which is commonly used to value a commercial entity in which case the NPV would be: $5.11m (Yr 1) + $5.28m (Yr 2) + $11.52m (Yr 3) + $20.72m (Yr 4) + $20.72m (Yr 5) = $63.35m. The above figures are taken from the Business Plan pages 36-39."
3. In response to Mr Terei's enquiry concerning company structure, Mr Kane said: "Company Structure All contracts and agreements are held with Asia Pacific Carbon Pte Ltd which is a Singaporean parent company which 100% owns Asia Pacific Carbon Pty Ltd (Australia) and Asia Pacific Carbon (PNG) Pty Ltd. Please see attached company extracts for the Singaporean entity together with the Australian entity's registration and ASIC extract. The PNG company extract is in Port Moresby and can be provided as necessary. The Australian and PNG companies are registered solely as local administrative entities for the parent. All banking conducted through the Australian account."
4. The company searches referred to in the above extract were attached. The search for the first defendant was dated 9 May 2011 and showed that the first defendant had three directors: Mr Kane and Julie Kane, both of whom resided in the same address in Sydney and were said to be Australian citizens; and Koh Carina, who was said to be a citizen of Singapore and resided there. The search recorded that Mr Kane had been appointed as a director on 7 April 2005; Mrs Kane had been appointed as a director on 15 December 2010; and Ms Koh was appointed secretary on 14 February 2011, and as director and managing director on 15 March 2011. Mrs Kane was recorded as being the sole shareholder.
5. The searches showed that the second defendant had a single director, Mrs Kane, who was appointed on 1 November 2011, and that the shares in the second defendant were wholly owned by the first defendant.

The evidence of Mr Kane's qualifications from Macquarie University

1. The plaintiff tendered a search of Mr Kane's qualifications at Macquarie University which recorded that Mr Kane had a single qualification from Macquarie University, a Master of Arts conferred on 24 September 2009. It was not suggested that this search was conducted for any purpose other than for these proceedings. When the record was put to Mr Kane in cross-examination by Mr Terei, he said that he regarded the document as "simply an error". He denied that he had any obligation to correct the records of Macquarie University.
2. Mr Kane tendered various documents from Macquarie University. The first was an email from the Registrar of Macquarie University dated 21 September 2009 inviting him to a graduation ceremony. There was nothing in the email to indicate the degree to which the invitation related. Mr Kane also tendered an email from the Macquarie University Institutional Research Unit dated 6 October 2009 inviting him to complete a survey about his experience at Macquarie University. Mr Kane also tendered his own Alumni profile. The first page of the profile said the following: "Welcome to your Alumni Web Community profile page. You can change the information that is displayed on your profile by switching to 'Edit Mode' and clicking 'Customise My Profile'."
3. Under the heading "MACQUARIE EDUCATION INFORMATION", Mr Kane's first degree was said to be "Doctor of Business Administration" from the Macquarie Graduate School of Management (MGSM) and his second degree is said to be "Master of Arts", from the same institution. Under the heading "OTHER EDUCATION INFORMATION", there was a reference to a Master of Science in 1991; a Master of Business Administration (MBA) in 1988 from the University of Southern Queensland; and a Diploma in Languages from the Australian Defence Force School of Languages in 1975 and 1985.
4. Mr Kane also relied on correspondence from Macquarie University addressed to "Dr Kane".
5. I am satisfied, on the balance of probabilities, that Mr Kane has not received either a Doctorate in Business Administration or an MBA from Macquarie University. The business record obtained by the plaintiff from the university's records is sufficient, in my view, to prove the negative. The evidence adduced by Mr Kane is not sufficient to displace the inference to be drawn from the search conducted by Mr Terei. The alumni record appears to contain only that which Mr Kane has inserted himself. That a letter might be addressed to someone as "Dr" proves no more than that is how the person has asked to be addressed.

Mr Kane's bankruptcy

1. The circumstances in which Mr Kane was declared bankrupt are set out above. In cross-examination Mr Kane admitted that he was a director and Chairman of the first defendant when he became bankrupt. In his submissions, Mr Kane made admissions in the following terms: "I had no knowledge at that time that there was any problem with me being a bankrupt in Australia of holding a position of being a director of a foreign company. When I became aware that I was not allowed to be a director of a foreign company, I immediately took steps to remove my name from that company. HER HONOUR: When did you become aware of that? DEFENDANT P KANE: I didn't become aware of that until it was approximately, I think it was around ‑ would have been late 2014 and I believe that is also in my affidavit, employment there so I resigned immediately from that company."
2. Mr Kane confirmed in cross-examination that, before he filed the debtor's petition, he made Mrs Kane aware of the consequences for her of his bankruptcy.

The evidence of Hayden Read

1. Mr and Mrs Kane relied on the affidavit of Hayden Read sworn 27 June 2017. Mr Read was not available for cross-examination during the hearing, which lasted for the whole of 6 September 2017, as he was overseas. Mr Kane informed me that Mr Read could probably be available for cross-examination on 8 September 2017. The parties agreed that his affidavit could be read despite Mr Read's unavailability for cross-examination and that this would be preferable to deferring the conclusion of the hearing until 8 September 2017. I indicated that I would take into account, in assessing the weight of Mr Read's evidence, the circumstance that he had not been cross-examined.
2. Mr Read deposed that he was previously a director of the first defendant from 1 November 2011 until 30 October 2014. This evidence is inconsistent with the company search of the first defendant which was provided by Mr Kane to Mr Terei under cover of an email dated 19 December 2012 (referred to above). I note that Mr Read's email address (which was given on his affidavit as his contact email) is a form of his name followed by "@apcarbon.com", which is the same email as is used by the third and fourth defendants. I note that there is no explanation in his affidavit as to his continued relationship, if any, with the first or second defendants.
3. In his affidavit Mr Read deposed that in about October 2011 the project's funder, First Growth Ventures Pty Ltd, became unable to provide further funds and Green Collar Group Pty Ltd, a Sydney-based carbon development consultant, had just been dismissed by Mr Kane. He said that the WP-FCP could have become self-funding subject to the "completion of Project Approval". There was no explanation of what this meant. He also deposed: "The WP-FCP then required independent third-party validation and final certification by a further independent third party as required by the United Nations protocols."
4. Mr Read also deposed that Mr Kane was "actively seeking out a further investor(s) or funder(s) for the First Defendant since the default of First Growth Ventures Pty Ltd and continues to do so."

General principles

1. It is necessary to address the representations alleged in [24] of the statement of claim since, in the present context, the "conduct" proscribed by s 18 of the ACL will generally comprise a misrepresentation: Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 at 202 (Deane and Fitzgerald JJ). It is also necessary to determine, as a factual question, whether the representations were made by Mr Kane and, if so, whether he made them solely on his own behalf or on behalf of either or both of the first and second defendants, or any combination thereof (Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82) and whether Mrs Kane was involved in their making.
2. In respect of any representation made, it is necessary to address whether the plaintiff has established that it was false, misleading or deceptive; or, where the defendants bears an onus (because the representations are as to future matters), whether that onus has been discharged. Although the plaintiff has claimed that the defendants' conduct also amounted to a breach of s 29 of the ACL, it is not necessary to address this claim separately as the conduct that is proscribed by s 29 also falls within s 18 of the ACL.
3. Whether conduct is misleading or deceptive is to be determined by the court objectively: Taco Company of Australia Inc v Taco Bell Pty Ltd at 202 (Deane and Fitzgerald JJ). In respect of each representation it is also necessary to address whether the plaintiff has proved that it suffered loss as a result of the conduct and, if so, the quantum of the loss. Damages in this context are usually to be measured by reference to the same principles as in the law of tort: Gates v The City Mutual Life Assurance Society Limited (1986) 160 CLR 1 at 14-15 (Mason, Wilson and Dawson JJ); [1986] HCA 3.

The requirement that the conduct must have occurred "in trade or commerce"

1. The proscribed conduct must have occurred "in trade or commerce". Having regard to the context in which each representation extracted above (and addressed below) is alleged to have been made, I am satisfied that each, if made, was made in trade or commerce. The purpose of the representations was to persuade the plaintiff to lend money to the first defendant and pay it into the second defendant's bank account. There was no relationship between the plaintiff and any of the defendants other than the business relationship which was engendered by the prospect of the plaintiff lending money to the first defendant at the request of the fourth defendant.

The representation that Mr Kane had a doctorate of Business Management and an MBA ([24(a)(i) and (ii)] of the statement of claim)

1. The representation that Mr Kane had a doctorate of Business Management from MGSM was made in terms in his email signature block and other statements to similar effect made in the Executive Summary and the CV he sent to Mr Terei on 20 December 2012. The representation that he had an MBA from MGSM was made in the CV. For the reasons given above I am satisfied that both representations were false since the search of Macquarie University is sufficient to prove the negative. When Mr Kane made the statement he was purporting to make it on behalf of the first defendant, as its Chairman. I am also satisfied that it was made by Mr Kane on his own behalf. Accordingly, I am satisfied that the representations alleged in [24(a)(i) and (ii)] were made by the first and fourth defendants.

The representation that Mr Kane was an experienced, successful and accomplished business person ([24(b)] of the statement of claim)

1. Mr Kane admitted that the representation in [24(b)] was made. In any event the plaintiff has established that words to the effect pleaded in [24(b)] were contained in the documents provided to the plaintiff by Mr Kane when he met and corresponded with Mr Terei. The question is whether it was false or misleading or deceptive at the time it was made. The plaintiff relied on the circumstance that Mr Kane had filed a debtor's petition on 27 July 2012 and contended, on that basis, that the representation was false, or at least misleading or deceptive.
2. An unqualified statement, which, if qualified, would be true, can be misleading or deceptive in certain circumstances. It was submitted on behalf of the plaintiff that for Mr Kane to make the representation without qualifying it by disclosing that he had filed a debtor's petition on 27 July 2012 amounted to misleading or deceptive conduct. In Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1986) 12 FCR 477 Bowen CJ said, by reference to s 52 of the Trade Practices Act 1974 (Cth), the statutory predecessor to s 18 of the ACL at 489-490: "Dealing with the question of misrepresentation constituted by silence, there are cases which show, for example, that an omission to mention a qualification, in the absence of which some absolute statement made is rendered misleading, is conduct which should be regarded as misleading. So too is the omission to mention a subsequent change which has occurred after some statement which is correct at the time has been made where the result of the change is to render the statement incorrect so that thereafter it becomes misleading. This also may be regarded as constituting misleading conduct. . . "
3. In Henjo Investments Pty Ltd v Collins Marrickville Pty Limited (No 1) (1988) 39 FCR 546, Lockhart J said at 557: "At common law, silence can give rise to an actionablemisrepresentation where there is a duty upon the representor toreveal a matter if it exists, and where the other party is thereforeentitled to infer that matter does not exist from the silence of therepresentor: W Scott Fell & Co Ltd v Lloyd (1906) 4 CLR 572, perGriffith CJ at 577; Halsbury's Laws of England, 4th ed, vol 31, para1052. The circumstances in which silence may constitute misleadingconduct under the Act were referred to in Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1986) . . . 12 FCR 477. That case established that silence may be relied on in order to show abreach of s 52 when the circumstances give rise to an obligation to disclose relevant facts: see Bowen CJ . . . at 490; Lockhart J . . . at 504; and Jackson J . . . at 508. The duty to disclose is not confined to cases where there are particular relationships, such as trustee and beneficiary or solicitor and client, principal and agent and guardian and ward. There is no useful purpose in seeking to analyse the circumstances in which the duty to disclose will arise as this must depend on the facts of each case."

The representation that Mr Kane was chairman of the board of the first defendant ([24(c)] of the statement of claim)

1. Mr Kane admitted in his amended defence that he had made this representation on his own behalf. The representation (which is alleged in full in [24(c)] of the statement of claim) is, in effect, a representation that Mr Kane was a director of the first defendant and the chairman of the board. The evidence relied on by the plaintiff included the business card which Mr Kane gave to Mr Terei on which he was described as "Executive Chairman" and the signature block on the emails Mr Kane sent to Mr Terei which described him as "Chairman". Mr Terei also relied on the provision by Mr Kane of the company search of the first defendant which showed that Mr Kane was a director but which did not reveal that he was disqualified from acting as such.
2. Mr Kane accepted that he described himself as "Chairman" and "Executive Chairman" but contended that the use of these descriptions did not result in any representation that he was actually a director of the first defendant. He relied on the circumstance that one could be a "Chairman" of various associations and groups without being a director of such associations or groups. Although he accepted that he was not entitled to be a director of the first defendant while he was bankrupt, he said that he was not aware that his capacity to be a director of a foreign corporation was affected by his bankruptcy until some years after he filed his debtor's petition.
3. I accept Mr Terei's submissions on behalf of the plaintiff that the representation that he was "Chairman" or "Executive Chairman", in the context of the first defendant's business, amounted to a representation that he was a director of the first defendant and was entitled to hold that office at the time the representation was made and entitled to perform the role which the office entailed. The term "Executive Chairman" also implied that he was entitled to play a management role with respect to the first defendant. It is also of significance that both the Investment Agreement and the Short Term Loan Agreement were executed by the first defendant by fixing the common seal to the document. Section 127(2)(a) of the Corporations Act provides that a company with a common seal may execute the document if the seal is fixed to the document and the fixing of the seal is witnessed by two directors of the company. In these circumstances, by reason of s 128(1) of the Corporations Act, the plaintiff was entitled to assume that the document had been duly executed by the first defendant (s 129(6) of the Corporations Act). The plaintiff was also entitled to assume that both Mr and Mrs Kane had been duly appointed and had authority to exercise the powers and duties customarily exercised by directors (s 129(2)). There is no evidence to suggest that the plaintiff knew or suspected that these assumptions were incorrect: s 128(4) of the Corporations Act.

Representations that the project was in its final stage of development and would shortly be self-funding and income producing ([24(d), (i), (j), (k) and (l)] of the statement of claim)

1. The representations alleged in [24(d), (i), (j), (k) and (l)] can be grouped together since they all relate to a single topic, namely the stage at which the project had reached at the time Mr Kane sought the plaintiff's investment. I am satisfied that Mr Kane made these representations on his own behalf and also on behalf of the first defendant.
2. I am satisfied that the representation in [24(d)] and the similar representation in [24(i)] were made. The Investment Summary section of the Executive Summary set out above described the "Business stage" as "Advanced/ Finished Product". The Business Plan described the WP-FCP was "at an advanced stage for its first project site". The representations in [24(j),(k) and (l)] appear from those documents as extracted above. The representation in [24(j)] that the project would be self-funding within 14 months was also made in the "Financial Plan" section of the APC Business Plan.
3. Mr Kane did not appear to dispute that the representations in this category were made as alleged. In his amended defence he admitted representation [24(d)] without qualification. He admitted representation [24(i)] as it related to the first project site being at an "advanced stage". He admitted [24(j) and (l)] "in so far as it relates to the First Defendant securing full investor funding by the end of January 2013" ([29] of his amended defence).
4. He sought to explain these representations in his oral submissions as follows: "At para (j), 'The first defendant will be fully self‑funding for 14 months in January 2000, by April 2014', and that was subject to the fund rates, the successful fund raising. Bearing in mind at all times there was a business plan, or business proposal, whichever way you wanted to put it. It was not a business report, or a conclusion, it was subject at all times to raising those funds . . ."
5. There was material provided to the plaintiff, which on closer analysis would have revealed that there were long-term projections which might be inconsistent with the representations in this category. It is significant that the representations were made in documents which were described as summaries.
6. It emerged in Mr Kane's evidence at trial that, in effect, all projections and predictions were subject to his obtaining further funding, of which the plaintiff's $100,000 comprised only a small percentage of what was required. The statements I have identified in the promotional material referred to above were not qualified to indicate that they were conditional on further funding being required. Nor was it disclosed to Mr Terei that the previous funder, First Growth Ventures Pty Ltd, had defaulted. Had Mr Kane, on his own behalf or on behalf of the first defendant, disclosed to the plaintiff that the projections and representations were subject to capital raising (which required substantial funds in excess of what the plaintiff was proposing), the representations could not be shown to be misleading and deceptive. However, as referred to above, Mr Kane admitted that the representations in this category were, in effect, only realistic if capital was raised.

Representations concerning the Carbon Service Agreement (paragraphs [24(e), (f) and (g)])

1. The representations alleged in paragraphs [24(e), (f) and (g)] can conveniently be dealt with together as they relate to the rights of the first defendant under the Carbon Service Agreement. Having regard to the context in which the representations were made, which included that they were made to induce the plaintiff to advance money to the first defendant, I am satisfied that Mr Kane made them on his own behalf and also on behalf of the first defendant. Mr Kane partially admitted these representations. In his amended defence his response to [24(f)] included in a section entitled "particulars": "At all material times the Plaintiff knew that the projects in Papua New Guinea were not being developed for several years into the future with the Plaintiff having no investment interest in those projects. This information was made known by the Fourth Defendant to Mr Terei, the managing director of the Plaintiff both orally and in writing."
2. The matters raised by Mr Kane in these particulars do not, in my view, affect the question whether the conduct was misleading or deceptive. In substance, Mr Kane's submission appears to be that the plaintiff did not rely on the representation as he knew the true facts. This question will be considered further below in the context of causation.
3. In effect, the plaintiff's case in relation to these representations is that the first and fourth defendants represented that the first defendant had unconditional rights under the Carbon Service Agreement, when in fact the rights of the first defendant under the Carbon Service Agreement were subject to the approval of the Indonesian Government and such approval had not yet been given.
4. The plaintiff relied on various statements in the material with which he had been provided to establish the representations, including the following, from the Executive Summary: "Exclusive 30 yr government contract - in place".
5. The plaintiff submitted that the content of the footnote reference for the current asset in the first defendant's balance sheet to substantiate the secured loan, which read "Secured by Carbon Service Agreement (Contract) dated 6 Apr 10", carried with it the representation alleged in [24(f)]. I am satisfied that this representation was misleading and deceptive for the same reasons as in respect of the representation alleged in [24(e) and (g)]. A contract cannot be the source of exclusive rights which would produce income in circumstances where it remains conditional. This agreement was conditional because it was subject to the approval of the Indonesian Government, which was not obtained.

Whether Mrs Kane was involved in the contraventions by the other defendants

1. Under s 236 of the Competition and Consumer Act, a person who suffers loss or damage by conduct done in contravention of s 18 of the ACL may recover the amount of the loss or damage by action against any person involved in the contravention. Under s 2 of the ACL, a reference to a person being involved in such a contravention is to be read as a reference to a person who has aided, abetted, counselled or procured the contravention; has induced the contravention; has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention; or has conspired with others to effect the contravention.
2. In order to establish its claim against Mrs Kane the plaintiff must establish that, in respect of one or more of the contraventions found against the other defendants, she was a participant in the sense that she knew the essential facts constituting the contravention: Yorke v Lucas (1985) 158 CLR 661; [1985] HCA 65 at 667-670. Whether she is liable as an accessory does not require the plaintiff to prove that she knew that the representations were false or misleading. All that the plaintiff is required to prove is that the accessory knew of the essential matters which permitted the representations to be characterised in that way: Medical Benefits Fund of Australia Ltd v Cassidy; John Bevins Pty Ltd v Cassidy (2003) 135 FCR 1; [2003] FCAFC 289
3. In [30] of the statement of claim, the plaintiff alleged that Mrs Kane aided, abetted and/or procured and/or was knowingly concerned in the misleading and deceptive conduct of the first and fourth defendants. In addition, the plaintiff alleged in [31] of the statement of claim, that the third defendant was "involved" in the contraventions by the other defendants. The plaintiff did not allege that Mrs Kane was a primary contravenor.
4. I am not satisfied that the second defendant itself made the representations alleged or was involved in the transaction except as a repository for the funds invested by the plaintiff. In these circumstances I do not consider that Mrs Kane was, merely on the basis that she was a director of the second defendant, "involved" in the contraventions of the first and second defendants. However, the more general allegation in [31] of the statement of claim (which has not been particularised) requires consideration of the extent to which she personally played a part in the representations made by the first and fourth defendants.

Whether the plaintiff relied on the representations

1. Proof of causation for a claim for damages for misleading or deceptive conduct was addressed by Gleeson CJ in Henville v Walker (2001) 206 CLR 459; [2001] HCA 52, who said at [13]-[14] as follows: "[13] It will commonly be the case that a person who is induced by a misleading or deceptive representation to undertake a course of action will have acted carelessly, or will have been otherwise at fault, in responding to the inducement. The purpose of the legislation is not restricted to the protection of the careful or the astute. Negligence on the part of the victim of a contravention is not a bar to an action under s 82 [of the Trade Practices Act] unless the conduct of the victim is such as to destroy the causal connection between contravention and loss or damage. The respondents knew the purpose for which their representations were being relied upon by the appellants. The Full Court accepted that the making of the representations amounted to engaging in misleading or deceptive conduct in trade or commerce. There was no warrant for a conclusion that the negligence of the appellants in relation to the feasibility study was the sole cause of the decision to undertake the project. [14] For there to be the necessary causal relationship between a contravention of s 52, and loss or damage, so as to satisfy the requirements of s 82(1), it is not essential that the contravention be the sole cause of the loss or damage. As Brennan J pointed out in Sellars v Adelaide Petroleum NL [(1994) 179 CLR 332 at 356-357], where the making of a false representation induces a person to act in a certain manner, loss or damage may flow directly from the act and only indirectly from the making of the representation; but in such a case the act 'is a link - not a break - in the chain of causation'. In the present case there were two concurrent causes of the imprudent decision to buy the land and undertake the development project. The conduct of the respondents was one of those causes. That is enough."
2. As noted above, Mr Terei, who was relevantly the human agent of the plaintiff, did not give evidence. Accordingly there is no direct evidence that the plaintiff relied on the representations. It is well established that the absence of direct evidence of reliance does not preclude a finding of reliance. The principles summarised by Wilson J in Gould v Vaggelas (1985) 157 CLR 215; [1985] HCA 75, a case which concerned a claim for damages for fraudulent misrepresentation, as follows at 236: "1. Notwithstanding that a representation is both false and fraudulent, if the representee does not rely upon it he has no case. 2. If a material representation is made which is calculated to induce the representee to enter into a contract and that person in fact enters into the contract there arises a fair inference of fact that he was induced to do so by the representation. 3. The inference may be rebutted, for example, by showing that the representee, before he entered into the contract, either was possessed of actual knowledge of the true facts and knew them to be true or alternatively made it plain that whether he knew the true facts or not he did not rely on the representation. 4. The representation need not be the sole inducement. It is sufficient so long as it plays some part even if only a minor part in contributing to the formation of the contract."

Damages

1. The plaintiff has established that it suffered loss because of the conduct of the third and fourth defendant and that the conduct contravened s 18 of the ACL. Accordingly, it is entitled to recover the amount of the loss by action against Mr Kane and against Mrs Kane, as she was involved in the contravention referred to above with respect to the non-disclosure of Mr Kane's bankruptcy. It is not necessary to address the first defendant's liability as judgment has already been entered against it.

The damages to be awarded against Mr Kane

1. The measure of damages for a claim under s 236 of the ACL is the difference between the plaintiff's position as a result of the defendants' conduct and what the plaintiff's position would have been but for that conduct: see Gates v The City Mutual Life Assurance Society Limited at 14-15 (Mason, Wilson and Dawson JJ). This measure of damages is to be distinguished from the measure of damages for breach of contract, which entitles the injured party to that sum of money which will put it in the position in which it would have been had the contract been performed.
2. In the present case, I am satisfied that, but for the misleading and deceptive conduct of Mr Kane (and the first defendant), the plaintiff would not have advanced monies to the first defendant under either the Investment Agreement or the Short Term Loan Agreement. No evidence was led as to how, if at all, the plaintiff would have invested the monies it had available for investment in late 2012 and 2013. In these circumstances it is, in my view, appropriate to compensate the defendant for the loss of the use of the money over the period from the time it was advanced, with deductions to take account of the sums paid. In these circumstances it is appropriate for interest at pre-judgment rates to be awarded on the principal sum.
3. I understood Mr Kane to submit that the capital sum advanced by the plaintiff to the first defendant should be reduced to take account of the net amount paid, from which the consultancy fee of $16,500 payable to the plaintiff for the first three months of Mr Terei's work had already been deducted. I reject this submission. The monies advanced by the plaintiff to the first defendant amounted to $100,000. They were advanced in three separate payments, which were made between 8 and 11 January 2013. Although the total amount actually paid into the second defendant's bank account was less than that to take account of the consultancy fees, there was no cross-claim that alleged that the plaintiff was not entitled to those fees.
4. The monies advanced under the Short Term Loan Agreement totalled $19,946 and were advanced over two days: 20 and 21 March 2013, $400 of which was repaid between 27 December 2013 and 6 February 2014.
5. The plaintiff is entitled to pre-judgment interest to compensate him for the loss of the use of the money from the date of its payment (less deductions for any repayments). The following calculations have been performed by reference to the Court rates for pre-judgment interest as set out in Practice Note SC Gen 16. The interest on $100,000 is assessed from 11 January 2013 to 20 September 2017 and amounts to $38,665.64. The interest on $19,946 is assessed from 21 March to 27 December 2013 and amounts to $1,362.34; interest is assessed on $19,546 (to take account of the admitted payments of $400) from 27 December 2013 and amounts to $5,894.70. The total sum, which will be the judgment sum, is $165,868.69.

Damages to be awarded against Mrs Kane

1. The question that arises with respect to Mrs Kane's liability for her involvement in the conduct is whether her involvement was a cause of the plaintiff being induced into advancing money to the first defendant under the Investment Agreement and the Short Term Loan Agreement. Such is the stigma associated with bankruptcy, that I am satisfied that it was. Her involvement in the non-disclosure of Mr Kane's bankruptcy led Mr Terei to rely on the representation that Mr Kane was a successful businessman and to assume, in effect, that there was no such stain on his professional reputation. Mr Terei had no reason to invest in the first defendant over any other investment possibility. Although the returns were plainly significantly higher than usual commercial rates, there was nothing in Mr Terei's approach to suggest that he was a mere gambler or that he was not alive to the need for his investment to assure a return, at least of his capital. In these circumstances there is no basis to distinguish the quantum of damages for which Mrs Kane is liable from the quantum for which Mr Kane is liable.

Further claim against Mr and Mrs Kane

1. As referred to above, the plaintiff claims that if either the third or fourth defendant lacked authority to execute either the Investment Agreement or the Short Term Loan Agreement on behalf of the first defendant, the third and fourth defendants are personally liable for the obligations of the first defendant under these agreements.
2. The third defendant, as a director of the first defendant, had authority to execute these agreements on its behalf. Although Mrs Kane was described as a witness on the execution pages of the agreements, what she was witnessing was the fixing of the first defendant's seal on the agreement, which is an orthodox part of the execution by a company of an agreement.
3. Section 127(2) of the Corporations Act provides that a company may execute a document if the seal is fixed to the document and the fixing is witnessed, relevantly, by two directors of the company. In the present case, the seal was witnessed by Mrs Kane. Mr Kane, who also purported to witness it, was at the relevant time disqualified from acting as a director of the first defendant. This fact has the consequence that neither the Investment Agreement, nor the Short Term Loan Agreement, was duly executed under s 127 of the Corporations Act. However, s 127(4) of the Corporations Act provides that s 127 does not limit the ways in which a company may execute a document, including a deed. In order to determine whether these two agreements were validly executed, it is necessary to consider the requirements for valid execution in the first defendant's constitution.
4. The first defendant's constitution is not in evidence. Accordingly, it cannot, on the state of the evidence, be determined whether the Investment Agreement and the Short Term Loan Agreement were validly executed. In these circumstances I am not satisfied that these agreements were not validly executed by the first defendant. As this matter has not been proved, it is unnecessary to consider whether the third or fourth defendants would have been liable under the agreements to make restitution of the monies advanced by the plaintiff, or on any other basis.

Costs

1. I have been informed that there have been offers made which may affect the costs orders. If none of the offers has any effect, it is desirable that the matter be finalised. Accordingly I will make orders for costs but reserve liberty to make an application for a different order.

Orders

1. For the reasons set out above, I make the following orders: 1. Judgment for the plaintiff against the third defendant in the sum of $165,868.69. 2. Judgment for the plaintiff against the fourth defendant in the sum of $165,868.69. 3. Subject to order (4), order the third and fourth defendants to pay the plaintiff's costs of the proceedings. 4. Any party, who wishes to make an application for a costs order other than the order in (3) above, must make an application in writing to my Associate within seven days of the date of these orders and serve the application on the other parties. Such application will be dealt with on the papers, after an opportunity has been given for the other parties to respond in writing.

Amendments 21 September 2017 - Corrected formatting DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 21 September 2017