P-Value Pty Ltd v Willliam McNee & Ors [2016] VSCA 223

TRADE PRACTICES - Misleading or deceptive conduct - Purchase of commercial property - Representations as to prior offer and as to tenant being a good tenant and paying rent under lease - Reliance concerning payment of rent - Dishonesty - Non-disclosure of agreement between vendors and tenant that excused the paying of rent - Causation - Damages - Trade Practices Act 1974 (Cth) ss 52, 82 - Fair Trading Act 1999 (Vic) ss 9, 159.

1 On 5 September 2008 Mrs Thi Huong Nguyen (Nguyen) entered into a contract to purchase a two-storey building at 255 Chapel Street, Prahran. The purchase price was $5,925,000 payable as to $296,250 by way of deposit and the balance on or before 15 January 2009. The contract identified the purchaser as 'Thi Huong Nguyen and/or nominee'. Nguyen determined, for land tax reasons, to proceed by a nominee. For this reason, P-Value Pty Ltd ('P-Value') was incorporated on 9 December 2008. Nguyen and her husband were the directors and she was the secretary and sole shareholder of P-Value. Nguyen and P-Value signed a nomination, dated 11 December 2008, of P-Value as substitute purchaser to take a transfer in lieu of Nguyen. On 13 January 2009 IAC Conveyancing, acting on behalf of P-Value, advised the vendors' solicitors of the nomination. Settlement under the contract occurred on 15 January 2009.

2 In May 2013 P-Value commenced a proceeding in the Trial Division alleging that it had been induced to purchase the property as a result of misleading or deceptive conduct contrary to the provisions of the Trade Practices Act 1974 (Cth) ('TPA') and the Fair Trading Act 1999 ('FTA'). The first and second defendants (respectively, Vicland Property Group No 1 Pty Ltd and Mark Marki Markii Pty Ltd) were the vendors of the property. The third defendant, William Derek McNee, was the sole director and shareholder of the second defendant and represented the vendors on the sale. The fourth and fifth defendants were a real estate agent, Rodney Morley Persichetti Pty Ltd (referred to as TBM Sales), and an employee, Richard Thomas. The sixth and seventh defendants were another real estate agent, Wellara Holdings Pty Ltd, also known under a trading name as Beller Commercial, and Fred Robert Nucara, a real estate agent and director of Wellara. Beller was established in September 2008 by Nucara and his co-director Andrew Fawell.

3 The proceeding was heard over eight days in the Trial Division between 8 September and 13 October 2014.

4 The first defendant's participation in the trial was of a limited nature. Having filed a defence, it took no further active part in the proceeding until the evidence was concluded. The second defendant did not appear at trial. That is hardly surprising as it had been deregistered in October 2012. It seems elementary, but one cannot have as a defendant something that does not exist.[1] The proceeding against the second defendant was a nullity and the supposed second defendant should have been removed from the proceeding.[2] Further, on 8 September 2014, the proceeding against TBM Sales and Thomas was struck out with no order for costs, pursuant to a settlement under which those defendants agreed to pay P-Value $20,000. On 9 September TBM Sales' notice of contribution against the first and second defendants was dismissed. TBM Sales and Thomas took no active part in the trial. All other defendants appeared and participated in the trial.

5 On 15 March 2016, the judge published reasons for judgment ('Initial Reasons'); no orders were made. On 30 March 2016, the judge by email provided revised reasons ('First Revision'). However, on 23 March, P-Value's solicitors wrote to the Court and the active parties stating that P-Value wished to raise two matters arising from the publication of the Initial Reasons. P-Value contended that the judge had overlooked P-Value's replies to the defences of Wellara and Nucara, and that the judge's reasons did not deal with the personal liability of Nucara under s 9 of the FTA in conformity with the High Court's decision in Houghton v Arms.[3] P-Value sought to be heard on those matters, and as to the form of judgment and trial orders.

6 In response to P-Value's solicitor's communication, the judge conducted a further hearing of the proceeding on 13 April 2016. Before the judge, no party objected to this course. On 19 May 2016, the judge delivered his final reasons for judgment ('Final Reasons').[4] The judge concluded, in summary, that, at a meeting on 5 September 2008, McNee, Wellara and Nucara each materially misled and deceived Nguyen and P-Value, in relation to the property, by falsely representing to Nguyen:

(a) that the public auction of the property, scheduled for 12 noon on 5 September 2008, had been cancelled because the vendors had received an offer for the property of $5,920,000;

(b) that the tenant of level 1 of the property, Two Five Five Pty Ltd ('255') was a good tenant and a good payer of rent; and

(c) that 255 had in the past paid rent to the vendors and could be expected to pay rent in accordance with the lease of level 1 of the property.

The judge found that P-Value relied on these false representations and, as a result, purchased the property for $5,925,000, which was a purchase price of $2,092,785 in excess of the fair market price of the property as at September 2008. The judge ultimately assessed P-Value's damages in the sum of $2,786,421.55. For completeness, it is to be noted that the judge also found that the first and second defendants were liable for the same damages but, noting that the second defendant was de-registered, confined judgment to the first defendant.

7 The judge also dealt with the parties' submissions about proportionate liability and the operation of Part IVAA of the Wrongs Act 1958 ('Wrongs Act'). The judge concluded that he would apportion liability: 85% against the first defendant and (relevantly so far as this Court is concerned) McNee; and 15% against Wellara and Nucara. However, as the judge made a finding of fraud against each of McNee, Wellara and Nucara, no order was made apportioning the damages found by the judge, and the judge determined that each relevant defendant was jointly and severally liable in respect of P-Value's loss and damage. In so doing, the judge relied upon s 24AM of the Wrongs Act.

8 On 27 May 2016, in accordance with his Final Reasons, the judge made orders that there be judgment for P-Value for damages (including damages in the nature of interest) in the sum of $3,175,425.47 against the first defendant, McNee, Wellara and Nucara.

9 Each of McNee, Wellara and Nucara seek leave to appeal and (if leave is granted) to appeal from the orders made against them. The first defendant has not appealed.

10 In support of his application for leave to appeal, McNee advances seven proposed grounds of appeal. In summary, McNee contends that the judge:

(a) erred in finding that McNee engaged in misleading or deceptive conduct, when the evidence was that McNee was not present in the negotiations on 5 September 2008 at the time the relevant statements were made by Thomas and/or Nucara (ground 1);

(b) erred in finding that McNee engaged in misleading or deceptive conduct by impliedly representing to Nguyen that 255 had paid rent in the past and could be expected to do so in accordance with the lease (ground 1A);

(c) erred in finding at [217] and [497] that McNee had the requisite intent for a finding of deceit or fraud within the meaning of s 24AM of the Wrongs Act 1958 (ground 2) and in finding that McNee made knowingly false representations that were not alleged by P-Value (ground 2A);

(d) erred in finding that P-Value's losses had been caused by any misleading or deceptive conduct of McNee, in circumstances where P-Value had not paid any deposit and was under no obligation to accept the nomination and knew, by the date that it accepted the nomination, that the property was not worth the price it paid (ground 3);

(e) erred in finding that P-Value had suffered loss and damage in the sum awarded, in circumstances in which the judge failed to take into account evidence that the property was worth more than the figure provided in the Dudakov valuation (ground 4); and

(f) in the event that apportionment of liability is required, erred in his apportionment of liability (ground 5).

11 In support of its application for leave to appeal, Wellara advanced eight grounds of appeal. In summary, Wellara contends that the judge:

(a) erred in finding that Nucara made the representation that the auction had been cancelled because an offer of $5,920,000 had been received for the property ('the first representation') (ground 1);

(b) erred in finding that the first representation caused P-Value's loss, alternatively all of P-Value's loss (ground 2);

(c) should have found that P-Value failed to establish that, if the first representation had not been made, Nguyen would not have purchased the property for the same price, or alternatively at a price greater than $5,568,800 (ground 3).

(d) erred in finding that Wellara was liable for the whole of P-Value's loss by reason of s 24AM of the Wrongs Act, rather than for such loss, if any, that was caused by the first representation (ground 4);

(e) erred in reopening the case, and in particular in reopening his finding that Nucara had not been fraudulent in making the first representation (grounds 7 and 8).

12 In support of his application for leave to appeal, Nucara advanced four grounds of appeal. In summary, Nucara's proposed grounds of appeal raise issues of whether the judge erred:

(a) in finding that Nucara made the first representation (grounds 1 and 2);

(b) in reopening the case, and in particular in reopening his finding that Nucara had not been fraudulent in making the first representation (grounds 3 and 4).

13 There is a measure of cross-reliance in the grounds of Wellara and Nucara:

(a) McNee's ground 3 was adopted by amendment into the applications of Wellara (as grounds 5 and 6) and Nucara (as grounds 8 and 9);

(b) Wellara's grounds 2, 3 and 4 were adopted by Nucara (as grounds 5, 6 and 7).

These further grounds were added by leave at the hearing on the basis that Wellara and Nucara respectively did not provide additional submissions thereon.

14 In support of the judge's order made against Wellara and Nucara, P-Value has filed a notice of contention which asserts that the finding of fraud against Nucara can be supported on grounds additional to those relied upon by the judge. Additionally, P-Value contends that if an apportionment of liability is required, then the apportionment of 15 per cent by the judge to Wellara and Nucara was inadequate.

15 The present is one of those cases in which strict attention to the statement of claim is necessary. This is for several reasons. First, because that is how the case was conducted. Secondly, because in a misleading or deceptive conduct case, where the conduct relied upon is constituted by representations, made orally and in the circumstances to be implied from silence, it is necessary to attend closely to the terms of the pleaded representation and the evidence given in support considered in the relevant context. Thirdly, that aspect was exacerbated in the present circumstance of several defendants the different roles of whom were reflected in differences in the case pleaded against them. Counsel referred, in particular, to Watson v Foxman[5] and Julstar Pty Ltd v Hart Trading Pty Ltd[6] to which may be added s 140 of the Evidence Act 2008. It is unnecessary to elucidate what is said in those and like authorities; we have regard to them.

16 The statement of claim commenced by pleading the leases to the ground floor tenants and then turned to the lease of level 1 of the building to 255.[7] The 255 lease was made in about June 2008 between the vendors as landlord and 255 as tenant for a period of seven years commencing on 30 June 2008. The lease provided for a rental during the first year of $200,000 plus GST, for annual increases of rental of 3.5%, and that rent be paid monthly in advance.[8] All of the defendants admitted those matters.

17 The statement of claim then pleaded what is called the rent abatement agreement, in these terms: that on a date unknown to P-Value the first and second defendants entered into an agreement with 255 that 255 would not have to pay any rent:

(a) while the first and second defendants owned the property; and

(b) during a period after the first and second defendants ceased to own the property.[9]

In particulars it is stated that the agreement was oral and made between McNee on behalf of the vendors and Victor Smith on behalf of 255. It is further stated that the period for non-payment after sale of the property was either eight months (as alleged in the County Court pleadings) or one year (as described in evidence given by McNee and Smith in the trial of the Supreme Court proceeding); these proceedings are referred to below.

18 In the respective defences to this plea of the rent abatement agreement:

(a) the first defendant admitted there was an agreement but otherwise denied the allegations;

(b) McNee admitted the term in (a) above, denied (b) above and alleged that the rent abatement agreement contained a term to the effect that the first and second defendants would, following completion of any sale of the property, pay $200,000 to the purchaser to be applied in payment of the $61,000 security deposit payable under the lease and otherwise toward the rent payable in the period following completion;[10]

(c) TBM Sales denied knowledge of the agreement until becoming aware of it through its involvement in the County Court proceeding;

(e) Wellara and Nucara did not admit the allegations.

19 The statement of claim then pleaded representations made to Nguyen by Thomas on behalf of TBM Sales and the vendors in June and July 2008. First, that the rent payable by tenants at the property totalled $370,000 per year. Secondly, that there was no need for 255 to provide directors' guarantees, thereby impliedly representing that:

(a) 255 had been paying, and was able to pay, rent under the lease; and

(b) they were not aware of any circumstances concerning 255 which may affect its ability to pay rent.[11]

20 It was then alleged that in August 2008 Thomas asked Nguyen whether she wanted to make an offer to purchase the property before auction, to which she responded that she wanted to wait to see what happened at auction.[12]

21 It was then alleged that, prior to and on the day of the auction, each defendant was aware that the payment of rent by tenants, in particular 255, was important to a potential purchaser and Nguyen. In particulars, reliance is placed on the following facts: that rental is necessary to establish the return, that the auction flyer stated the total rent of $370,000 and referred to three tenants and long leases, that Thomas proposed a security bond and that Nguyen asked for a security bond of $400,000 in the meeting on 5 September.[13]

22 Next, the statement of claim pleaded representations made to Nguyen at the meeting on 5 September, as follows:

(a) that Nucara, on behalf of Wellara, orally represented that:

(i) the auction had been cancelled because the vendors had received an offer of $5,920,000.00;

(b) That each of McNee and Thomas heard Nucara make those representations and, not correcting what he said, thereby impliedly represented that what he said was true.[15]

(c) Further, in the circumstances, namely that the contract of sale produced at the meeting for Nguyen's consideration stated there were three tenants at the property paying $370,000 per year, and the vendor's statement included the lease of level 1, and that McNee agreed to the inclusion in the contract of a condition for the provision of a $200,000 security deposit in respect of the lease of level 1, but did not disclose to Nguyen the rental abatement agreement - McNee impliedly represented that 255 had paid rent in the past and could be expected to pay rent in accordance with the lease.[16]

23 It is alleged that, in reliance on these representations, Nguyen executed the contract to purchase the property. It is to be noted that this plea of reliance extended to include the representations alleged to have been made to Nguyen by Thomas on behalf of TBM Sales and the vendors in June and July 2008. It is convenient to interpolate that the judge found that Nguyen did not rely on the Thomas representations and that they did not cause her to sign the contract of sale.[17]

24 The statement of claim then alleged that the representations were false in that:

(a) by reason of the rent abatement agreement, 255 had not paid rent and did not intend to pay rent until eight or 12 months after the first and second defendants sold the property;

(b) there was no offer to purchase the property for $5,920,000;

(c) 255 was not a good tenant or good payer.[18]

25 Then follow allegations that the making of the representations constituted conduct in contravention of s 52 of the TPA and s 9 of the FTA.[19] But as to this there are differences between the defendants as to the representations relied on as constituting the relevant conduct: against the first and second defendants and TBM Sales, the June and July representations were relied on; against Wellara, the express representations made at the 5 September meeting were relied on; against Thomas, the June and July representations and the implied representation that what he heard Nucara say was true; against Nucara, the express representations made at the 5 September meeting; and against McNee, each of the implied representations.

26 Then follow a series of paragraphs which allege that McNee on behalf of the vendors, Thomas on behalf of TBM Sales and Nucara on behalf of Wellara failed to disclose the existence of the rent abatement agreement, that 255 had not paid rent, and would not do so for eight or 12 months after the property was sold, and which if disclosed to Nguyen she would not have signed the contract and P-Value would not have purchased the property. In failing to make that disclosure, McNee, Thomas and Nucara contravened s 9 of the FTA. In further consequence the vendors, TBM Sales and Wellara contravened s 52 of the TPA and s 9 of the FTA.[20]

27 The statement of claim concludes with a plea of loss and damage.

28 In the light of the matters now in issue, the only additional matter in the defences is that the third to seventh defendants sought an apportionment of their liability, if any.

29 By reply to the defences, P-Value respectively alleged that:

(a) the representation or representations alleged as made in the statement of claim was or were made with no honest belief as to their truth;

(b) further or alternatively, pursuant to s 13 of the Sale of Land Act 1962, the representations are deemed made with knowledge of their falsity;

(c) the failure to disclose matters was intentional to ensure Nguyen was not aware of those matters. In those circumstances the parties' conduct was a fraud on Nguyen and liability for the damages was joint and several.

30 It was these pleas of fraud against Wellara and Nucara that the judge omitted to deal with in his Initial Reasons. There was also the other point about the personal liability of Nucara under s 9 of the FTA in the light of Houghton.

31 Nguyen came to Australia as a refugee from Vietnam in 1978. She had no command of the English language. She married in 1984 and in 1989 commenced a clothing manufacturing business with her husband, which they operated from an address in Springvale, Victoria. The clothing business was closed in 2004 due to high labour costs.

32 In 1996 Nguyen purchased a property at 276-278 Chapel Street, Prahran at auction for $1,755,000. The property was rented to the Commonwealth Bank of Australia (CBA).

33 A few years later Nguyen attended an auction of National Australia Bank (NAB) premises in Chapel Street near High Street, to see what the market was, and where she met Nucara. Once or twice subsequently Nucara helped her in relation to the review of the CBA rent.

34 From time to time Nguyen attended auctions and requested leases of properties offered for sale. In 2008 Nguyen started looking for property to purchase in Chapel Street. On account of the CBA rent having increased, she felt confident about investing in Chapel Street. She searched the web and saw the property at 255 Chapel Street advertised for sale by TBM Sales with the name and telephone number of Richard Thomas. She contacted Thomas and an inspection was arranged. The judge recorded Nguyen's evidence as to what happened as follows:[21]

In about late June 2008 Nguyen met with Thomas and Morley at 255 Chapel Street, Prahran. Nguyen understood from communications she had with Thomas and Morley at about this time that Morley was Thomas' 'boss' at TBM Sales. Thomas conducted an inspection of 255 Chapel Street, Prahran with Nguyen. During the course of that inspection of the Property, Nguyen asked Thomas how much rent was being paid for the Property and Thomas stated to Nguyen that there were three tenants and in total they were paying $370,000 per annum. Specifically '7-Eleven', the ground floor tenant, was paying $110,000 per annum and the first floor tenants paying $200,000 with a further office space producing $60,000, plus GST.

Nguyen, either at the time of her inspection with Thomas and Morley in late June 2008, or shortly afterwards, asked Thomas for more information about the rent being received for the Property.

On 1 July 2008 Thomas sent an email to Nguyen detailing rental agreements for the three tenancies at the Property. Nguyen also asked Thomas to send her a copy of the proposed Contract of Sale, which Thomas did [together with the leases] on 4 July 2008.

Nguyen's evidence was that she read through the materials which Thomas had sent her in early July 2008 and identified that 7-Eleven, one of the tenants, was in her view likely to be unproblematic in relation to rent. However, on looking at the materials sent, Nguyen did harbour a concern about the first floor tenant of the Property which was running a nightclub business, given the very large amount of rent that was being paid by the tenant, 255. On reviewing the documents which she had received, Nguyen also noted that there was no personal guarantee provided by 255 or security deposit to secure rent.

As a result of her concerns about rental income and the extent of rental income being paid by the nightclub on level one of the Property, and her concerns about the absence of a security deposit or personal guarantee in relation to rent from the first floor tenant, Nguyen contacted Thomas by telephone and stated that she needed $400,000 as a bond for the 'rental upstairs'. Thomas responded that he would talk to the Vendors and get back to her.

Subsequently, via Thomas, TBM Sales emailed a proposed 'Special Condition' to Nguyen on 9 July 2008.

Subsequently in July 2008, Thomas introduced Nguyen to Nathan Stewart for the purposes of obtaining finance for the purchase of the Property.

Nguyen also contacted the NAB about finance for the Property and that bank indicated she would be able to obtain the necessary finance.

Nguyen gave evidence that, in about July 2008, she had made no decision about the Property at 255 Chapel Street, Prahran. At about this time Thomas approached Nguyen and asked if he could act on her behalf and deal with the Commonwealth Bank in relation to the rent review for 276-278 Chapel Street, Prahran.

Nguyen explained that during the period July to September 2008, Nguyen had been in Chapel Street, Prahran and noticed that an auction board had been placed on the Property. She also noticed that the agent identified on that notice board was 'Beller', the sixth defendant. The same board advised that Nucara, the seventh defendant, was the contact person at Beller. After seeing the auction board Nguyen had made no decision as to whether she would purchase the Property and was focused on preparing to undertake a rent review of the earlier purchased property at 276-278 Chapel Street, Prahran.

35 The property was advertised for sale by auction on 5 September 2008. On 3 September TBM Sales and Wellara (Beller) signed an agreement to share commission on the sale of the property; the agreement was signed by McNee on behalf of the vendors.

36 On 4 September 2008 Nguyen again advised Thomas, in response to his call, that she did not wish to make an offer but would wait for the auction. Thomas suggested that Nguyen make an offer in the order of $5,000,000. Nguyen stated that she was not going to make any offers.[22]

37 On the morning of 5 September Nguyen was committed to attend a meeting with an officer of the CBA (Damien) in relation to the review of rent for 276-278 Chapel Street. They met, Thomas also being in attendance, at a coffee shop not far from the property to be auctioned at 255 Chapel Street. Nguyen planned to attend the auction. The judge referred to what happened following the meeting, as follows:[23]

After the conclusion of the meeting in the coffee shop between Damien, Thomas and Nguyen, Thomas suggested he take Nguyen to the TBM Sales office which was on the first floor of a building opposite 255 Chapel Street, Prahran. Thomas suggested to Nguyen that she remain at the TBM office until the auction was about to start, at which time they would then go down to watch the auction. From the TBM offices, Nguyen could see across the road to the Property and she could see people whom she thought were from the selling agent preparing for the auction, including putting up materials on the table at the Property. At about this time Nguyen also observed that the people in the vicinity of 255 Chapel Street appeared to be packing up the auction materials. Nguyen asked Thomas 'what's going on?'. Thomas said he did not know but left the TBM Sales room and returned to inform Nguyen that 'the auction is cancelled'.

After that Nguyen's evidence was that Nucara of Beller, the sixth defendant, and McNee, sole director of the second defendant, came into the same room in the TBM Sales office and joined her and Thomas. Nguyen did not know McNee.

Nguyen described what occurred on 5 September 2008 in the TBM Sales office opposite the Property, from about 10.45am that morning as follows:

Can you just describe step by step the conversations and what was said at this point when the people came into the room?---Yes, when Fred come in to the room and he said he has someone offer 5.90 million.

HIS HONOUR: How much?---5,920,000.

He has an offer for that amount?---Yes. Then he said if I'm interested I can offer more. Then I had asked Richard Thomas for the calculator to see if 5.920 is the yield comparing with the rental return, 370,000. And after I calculated I - - -

MR NORTHROP: What calculation did you do? What was the result of the calculation?---I just calculate if you invest million and the return is 60,000 or something like that, so the yield will be 6 per cent. So if it is over 6 per cent it would be all right.

The calculation that you made for the price of 5.92, do you recall what the rental yield was as you calculated?---Yes. I couldn't remember exactly, but it's 6 point something, 18 or something like that. I couldn't remember exactly now. But it was over 6 per cent return.

HIS HONOUR: On a total rental of how much?---370,000.

MR NORTHROP: So you have just described making that calculation. After you made that calculation, what happened next?---After I make the calculation and then I said, 'Yes, all right, it's over 6 per cent. It's all right.' But I concerned about the tenant upstairs, as I mentioned with Richard Thomas in previous - in July.

I said about that one. And then - - -

HIS HONOUR: Just pause there, Mrs Nguyen. When you said you said about that one who were you speaking to?---Speaking to Richard Thomas, because he's the one who written the special condition through the email to me regarding 400,000.

Was there anyone else in that conversation?---Yes, Bill McNee and Fred Nucara.

To both McNee and Nucara were involved in this conversation, were they?---Yes.

So just take it slowly and be sure to say who is speaking and who you are speaking to and who is there. So just proceed, Mrs Nguyen?---Yes. When I asking about 400,000 for the Two Five Five as the tenant at that time then Bill McNee said to Richard and said, 'Oh, is that the lady you're talking about?' And Richard said, 'Yes, she is.' Then Bill McNee pointed on the picture on the wall, that's Balcony Nominees, the nightclub operated I think in Melbourne. I couldn't remember the street. I think Little Collins or somewhere like that. He said, 'The tenant is - you don't worry about the tenant. They are experienced in operating the nightclub. So don't worry about that.' Then Fred Nucara told me, 'Why you need 400,000 for? They are good payer.' And then he pointed out to the advertising board here. He said I could get money from this advertising board - - -

Who said that?---Fred Nucara. So he said I could have some more income from rent for advertising.

Using the building to post advertising of some sort?---That's right.

MR NORTHROP: Was he referring to the advertising board that you can see in that photo or a different one?---Sorry, this one, yes. Bill McNee said to me Two Five Five was a good tenant - sorry, I don't have any worry about them.

HIS HONOUR: Who said that?---Bill McNee.

What did he say?---He said, 'You don't have any problem with the tenants because they have experience in running the nightclub very successfully.' And Fred Nucara told me the tenant was a good payer and I may have - I will get more rent from the board, advertising board. That make me happier. I decided to reduce from 400,000 to 200,000.

MR NORTHROP: Can you say who it was that first mentioned the figure of $200,000 as the security bond?---Fred Nucara said 200,000 should be enough instead of 400.

Did you agree to that?---After a while, yes, I did agree with that.

So you have just described having discussions about the security, the amount of the security bond, and so forth.

What happened then as far as discussions with the - - -?---After that, Richard Thomas is the one who wrote the condition on the contract book.

Were there discussions about price?---Oh, sorry. Yes, after that all that information, things like that, I make another offer is extra another 5,000 on top of it. So it becomes 9,225,000.

HIS HONOUR: Just state that figure again, please?---5,925,000.

So you made a further offer of that amount?---Yes, 5,000.

In the same conversation with the same three men?---Yes.

Who were you speaking to when you made the offer?---I spoken to - Richard Thomas is the one who always speak with me at that time, and then Richard Thomas went out and talked with McNee and then for a while after that they come in and agree with the price.

Who was it who agreed with the price?---Bill McNee.

MR NORTHROP: Why did you offer that particular figure of - - -?---Because Fred said someone had already offered 5,920,000. So in my experience in the last previous auction so normally you will put another 5,000. So that's why I offered another 5,000.

Just returning to McNee, you were told that the price was accepted. What happened after that?---After Bill McNee accepting the offer, then he asked Richard Thomas to write the condition on the contract.

And did he do that?---Yes, he did.

HIS HONOUR: The condition to do with the 200,000?---Yes.

MR NORTHROP: If you could go, please, to page 371, which is in the first volume. You see there's some handwriting there?---Yes.

To your recollection, do you recognise that writing or who wrote it?---Yes, it's Richard Thomas.

Can you say were you present when that was written? Did you see him write it?---Yes, I saw him write it.

And who else was - and was this in the same room upstairs?---Yes.

And who else was there when he was writing the clause, do you remember?---I can't remember. A number of people in there. I can't remember exactly, but it was Bill McNee after that signed the contract - signed the condition.

Nguyen's above evidence that McNee signed the 'condition' was a reference to Special Condition 30 of the Contract of Sale which provided:

The Vendor shall at settlement pay to the Purchaser the sum of $200,000.00 being a security deposit over the tenancy Two Five Five Pty Ltd to be held for a period of 2 years from settlement date which can be drawn by the Purchaser at any time if the tenant is in default of the Lease. At the expiry of two years if the tenant has not been in default then $200,000.00 shall be refunded to the Vendor.

Nguyen signed a Contract of Sale for the Property on 5 September 2008 within about an hour of her being taken to the TBM Sales office in Chapel Street opposite the Property.

38 A copy of each of the three leases was attached to the contract with the vendor's statement.

39 Nguyen was unable then and there to pay a deposit. She told McNee and Nucara that, not being focused on the auction, she had left her cheque book at home. This was overcome by Thomas following Nguyen home and there receiving from her a cheque. Nguyen advised Thomas that she would have to transfer funds to cover the cheque. It is not necessary to refer to what transpired concerning payment of the deposit. It was paid in the sum of $300,000.

40 It is convenient to note who, in addition to Nguyen, was present during the discussion at the TBM Sales office.[24] There was Nucara, Thomas, McNee and from time to time Andrew Fawell, real estate agent and director of Beller; Andrew Clifton, a director and shareholder of the first defendant; and probably Rodney Morley, an estate agent from TBM Sales. Of all these people, only Nucara gave evidence. Nor was evidence given by Robert German, a representative of Beller, and James Rawson, an estate agent working with Nucara, as to the auction and, in particular, as to when and why it was cancelled. In these circumstances, P-Value invited the judge to draw inferences and conclusions on the basis of the principles discussed in authorities including Jones v Dunkel[25] and O'Donnell v Reichard.[26] The judge concluded that Rawson and Clifton in relation to the cancellation of the auction, and McNee in relation to the conversations on 5 September, would not have given evidence supporting Nucara's version of events. The judge further said that, as a consequence of the non-calling, he ascribed more weight to Nguyen's version of events in relation to the meeting. No inference was drawn in respect of Fawell, German and Thomas.[27]

41 Nucara was a director of Wellara which the vendors appointed as agent to sell 255 Chapel Street on 25 June 2008. In his evidence in chief, in summary, Nucara stated that he had seen the offer to purchase the property signed by Jialin Hu dated 4 September 2008, and who Nucara met when Hu attended at the office to sign the offer. Nucara was aware that the offer was made on a condition that read: 'This contract terminates if not signed by the vendors by 10:00 pm on 4 September 2008'. Nucara said that he promptly advised the offer to McNee, but he did not accept the offer, saying that he preferred to go to auction. Nucara so advised Hu. The judge referred to Nucara's evidence as follows:[28]

Nucara's evidence was that McNee said at the meeting that he had already received an offer on the Property, which Nucara confirmed and added that we are in possession of a signed contract, but did not disclose the contract price. Nucara denied Nguyen's evidence that at this meeting he had told her that the previous contract was for $5.92 million. Nucara also refuted Nguyen's evidence that Thomas had told her that the auction had been cancelled. Nucara's evidence was that the auction was cancelled when the Vendor agreed a price for the Property and the terms of sale for the Property.

Nucara's evidence was also that during the early part of the discussion and negotiation, McNee stood up in the meeting room and said 'look, I want $6 million'. Nucara's evidence was also that at this point Nguyen said that she was concerned about the first floor tenant and their ability to survive and pay the rent.

Nucara also stated that at the meeting McNee said to those present that the nightclub tenant on the first floor had another nightclub business in the CBD and they were experienced operators. Nucara's evidence was that McNee then left the meeting saying 'I'll let you decide'.

Nucara's evidence was that he said nothing to Nguyen about the first floor tenant and Nucara denied that he stated to Nguyen that the first floor nightclub tenant was a good tenant or that it was a good payer of rent.

Nucara's evidence also was that at about 11.45am on 5 September 2008, during the course of the discussion at the TBM Sales office he looked out the window to the Property and saw a number of people milling around including Hu and that shortly after Andrew Fawell, one of the real estate agents involved in the auction on Chapel Street, came up to the TBM Sales office where discussions were taking place and asked what was going on to which Nucara said we are in discussion and Fawell left.

In the meeting Nucara stated that he recalled Thomas suggesting to Nguyen that she should consider asking for a higher security deposit and Nguyen asked Nucara his views on her seeking a security deposit of one year's rent of about $200,000 because of her concerns about the first floor tenant, its survival and its ability to pay rent. Nucara responded in substance that he thought the security deposit of $200,000 would be fair enough to which Nucara says Nguyen responded that she would have to have something in the contract.

Nucara then says there was discussion about drafting a clause in the contract for a $200,000 security deposit and McNee who was involved in this conversation said that before he agreed to anything he would like to know what price Nguyen was offering again saying that if he did not get $6 million he was going to go out to auction. Nucara said he said directly to Nguyen that if she did not pay the price mentioned by McNee, he will be going to auction.

Nucara's evidence was that at about five minutes before the time fixed for the auction of the Property Andrew Fawell again came up from Chapel Street in an anxious state asking what was going on and Nucara responded that he would have to buy some time and that he did not have instructions as to whether the auction was going on or not. Nucara stated that after his discussion with Fawell he returned to the negotiating table where Nguyen was discussing matters with Thomas and Thomas reported to him that Nguyen would pay $5,900,000 with a $200,000 security deposit. This was said in the presence of all in the negotiating room including Nguyen.

Nucara then stated that at the next stage of the meeting in the TBM Sales office he and Thomas discussed what special clause should be inserted in relation to the $200,000 security deposit and McNee spoke to his solicitor and those discussions and Nucara's drafting suggestions resulted in the clause ultimately inserted in the contract which was handwritten, the first two lines being written by Thomas and the rest of the handwritten clause by Nucara.

Nucara's evidence is that after further negotiation in which McNee said that he would reduce his asking price to $5,950,000 and Nguyen asking McNee whether he would meet her half way and after a short discussion between Nguyen and Thomas writing a price of $5,925,000 on the Contract of Sale and showing it to McNee, McNee accepted that figure as the agreed purchase price.

Nucara says that after the price of $5,925,000 was agreed between McNee and Nguyen, Fawell returned to the room asking what was going on and McNee informed him that the auction is cancelled as the Property is sold. Shortly afterwards Nucara says that McNee and Nguyen agreed that there would be only a 5 percent deposit on the Contract of Sale and the parties also agreed on a four month period to settlement.

Nucara's evidence was that up until the point of execution of the Contract of Sale for the Property on 5 September 2008, he was not aware of any agreement between McNee and 255 that 255 would not have to pay rent while McNee owned the Property or after McNee sold the Property. Nucara said he was not aware of the rental abatement agreement until after P-Value's proceedings had been issued.

42 Two matters are referred to in this recounting of Nucara's evidence that are referred to below as matters that Nguyen states she was not aware of at the meeting: Hu's offer and its terms, and the rental abatement agreement.

43 Nguyen set about obtaining finance for the purchase. She approached the NAB and the ANZ Bank to ascertain the best rate. Ultimately, Nguyen accepted the ANZ's offer of a loan facility. Before that, however, the property required valuation. Nguyen deposed to having been asked to select a valuer out of three suggested to her. She chose Charter Keck Cramer and spoke to Bernard J Cussen, a director of that firm. He had previously acted for her on a review of the CBA rent.

44 Nguyen deposed that when she spoke to Cussen and asked him to carry out the valuation, she advised the purchase price and that he said that she had paid too much. She said that she asked Cussen what she could do, and that he gave her the name and number of a solicitor to contact. Cussen gave evidence on these matters: his recollection was not good but the likelihood is that the conversation occurred after he had had an inspection, or at least commenced work on the valuation exercise, not when he first spoke to her. He deposed that he advised Nguyen that 'my assessed value was coming well short of the purchase price'.

45 Nguyen rang the solicitor who asked her to bring in the contract for advice. She did not do so. As to why, she deposed that she had paid the deposit and thought she could not get out of the contract. Nguyen thus proceeded and in that connection contacted Alan McDonald Storer, a 'conveyancing assistant'[29] who Nguyen found on the web, to organise the finalisation of the purchase.

46 Returning to the matter of valuation, on 17 November 2008 - doubtless following advice from Nguyen - the NAB requested Charter Keck Cramer to assess the current market value of the freehold, exclusive of lessees fixtures and fittings, for first mortgage purposes. Charter Keck Cramer provided a written valuation report which assessed the value at $4,550,000 made up as follows:

47 The report bears the date '2 December 2008' on its cover, but in the body of the report, under the heading Date of Inspection and Valuation, it is stated that the relevant date, being the most recent full inspection, is 9 December 2008.

48 The report recommended that, at the 'core' sum assessed of $3,850,000, the property represented a suitable security for first mortgage purposes.

49 As mentioned earlier, on 9 December P-Value was incorporated, and in January P-Value's nomination as substitute purchaser was advised to the vendors.

50 As mentioned, P-Value accepted an offer of finance from the ANZ contained in a letter dated 15 January 2009, the day on which the contract was settled. The finance provided was a facility up to $6 million. Nguyen and her husband signed an acceptance and a guarantee of the facility on 15 January 2009. They signed the acceptance on behalf of P-Value in its own right and as trustee of their family trust, called the Hung Nguyen Family Trust.

51 One other important matter was resolved on the day of settlement. That was agreement upon the terms of a guarantee deed relating to the security deposit, which replaced special condition 30 in the contract. The parties to the deed were the vendors and P-Value as purchaser.

52 The offer made by Jialin Hu on 4 September 2008 referred to earlier was disclosed to P-Value on discovery of documents. It was constituted by completing the particulars of sale contained in, and signing, the contract of sale prepared for the auction. It provided for a purchase price of $5,568,800 payable by $556,880 by way of deposit and the balance 45 days from the date of the sale, being 4 September 2008. A handwritten special condition 30 stated that 'This contract terminates if not signed by the vendor by 10.00 pm on September 4, 2008'.

53 From the outset 255 did not pay rent pursuant to the lease. It paid no rent at all, claiming that it had paid $200,000 in advance for rent and bonds. Nguyen knew nothing of any such agreement.[30]

54 Further, Nguyen subsequently became aware that 255 had not paid rent for any period prior to 5 September 2008 or between that date and 15 January 2009. It further became known that the vendor had made an arrangement with 255 under which it did not have to pay rent for a period after Nguyen purchased the property. This is the so-called rental abatement agreement, the content of which is stated in the pleadings between P-Value and the first defendant and McNee.

55 Nguyen deposed that if she had been told 255 had paid no rent prior to 5 September she would not have purchased the property; if she was aware that 255 had not paid rent between the date of contract and settlement, she would not have completed the purchase; and if she had been aware of the rental abatement agreement she would not have purchased the property.

56 In June 2009 P-Value sued 255 in the County Court to recover arrears of rent, ultimately obtaining a default judgment on 19 February 2010. The judgment included the costs of the proceeding. P-Value then served a statutory demand, and terminated the lease by re-entry on 5 May 2010. 255 went into liquidation on 25 May. There was also a proceeding in the Supreme Court, brought by Cossari Smith Pty Ltd against P-Value in respect of fittings in the 255 premises; this proceeding was dismissed with an order that Cossari Smith Pty Ltd pay P-Value's costs. P-Value also made an application at the Victorian Civil and Administrative Tribunal. P-Value's damages claim includes costs of $54,852.70 incurred in these proceedings.

Did the judge err in finding that McNee engaged in misleading or deceptive conduct when the evidence was that McNee was not present when the relevant statements were made by Thomas and/or Nucara?

57 The issue is whether McNee was present when the oral representations alleged in paragraph 21 of the statement of claim to have been made by Nucara, were made. If he was not present, he could not have corrected the alleged representations. Hence, there would be no foundation for the implied representation that what Nucara said was true. This submission was made at the trial and rejected by the judge who found that McNee was present at the relevant times and did not correct what was said.[31] Those findings turned on the judge's evaluation of the evidence of Nguyen and Nucara, bearing in mind that, on the defendants' side, Nucara alone gave evidence. Further, there were significant differences in the accounts Nguyen and Nucara gave.

58 In his written and oral submissions, McNee's counsel referred to passages in Nguyen's evidence and submitted that there was 'no evidence', or that the evidence did not support a finding, that McNee had heard or was present when the alleged representations were made.

59 On the matter of the representation concerning the offer, counsel referred to evidence of Nguyen as to not recalling or knowing if McNee was present in the room, and to McNee and others coming in and out of the room. Perhaps the high point of this was her evidence - given after her reference to the offer of $5,920,000 - that she 'wasn't sure at that time Mr McNee is in the room or not'.

60 The judge considered this evidence to be:[32]

... general and related to the possibility that McNee was absent from the TBM Sales meeting room on more than one occasion and should therefore be given little weight. I also take into account in this regard that in a number of passages of her evidence, including at T269.10-30, Nguyen confirmed that McNee was in the meeting room when she was told about the cancelled auction and the $5,920,000 offer of another interested party.

Nucara's evidence was also to the effect that McNee was involved in the 5 September 2008 meeting at the time there was mention of a prior offer for the property, although his evidence was that McNee proffered this information and that no sum was mentioned. Nucara's evidence was that he, McNee, Nguyen and Thomas were all in the TBM Sales Office together on the morning of 5 September 2008.

In my view, although there was some equivocation at one point in Nguyen's evidence about McNee's presence when Nucara made the offer representation in relation to the sum of $5,920,000, I am comfortably satisfied on the predominance of the evidence given by Nguyen, confirmed by Nucara in these respects, McNee was present at the TBM Office together with Nguyen and with Thomas when the representation about the $5,920,000 offer was made by Nucara, and that the offer representation was made by Nucara very soon after all those persons were present in the TBM Office.

I am therefore comfortably satisfied that McNee was present when an offer for $5,920,000 to the Vendors was mentioned by Nucara to Nguyen and more specifically McNee heard Nucara state that there had been an offer of $5,920,000 for the Property.

61 There was also evidence of the above nature as to whether McNee was present when the good tenant/payer representation was made. Again, the judge found that he was present and that 'on the balance of probabilities he heard Nucara make the representations' and did not correct them.[33] McNee's counsel criticised this finding on the basis, in part, that it was not supported by the judge's footnote references to evidence. Counsel also referred to evidence of Nguyen that she could not say if McNee was in the room when the bond was discussed.

62 The several matters of evidence McNee's submission relies on were part only of a body of evidence which fell to be considered in an overall context. The judge was not bound to take one or several answers out of a whole and make findings that conformed with such answers. Nguyen's account of the initial making of the good tenant/payer representation was quoted by the trial judge in his account of the events of auction day which we have set out above.[34] That account was an entirely circumstantial and convincing one.

63 There is nevertheless one aspect upon which the judge erred in his findings. That concerns the first representation which, as alleged, was that Nucara stated to Nguyen that the auction had been cancelled because the vendors had received an offer of $5,920,000. It is important to note the full terms of the representation. As to this, Nguyen deposed that Thomas advised that 'The auction is cancelled'. After that, Nucara and McNee came into the room. On this evidence the representation was not made by Nucara. Nor did Thomas state that the auction was cancelled because an offer of $5,920,000 had been received. From the pleading point of view, and the present discussion, the critical point of the evidence is that Thomas advised cancellation, and that McNee and Nucara were not then present. The effect of this on the pleaded case against Wellara and Nucara is considered below in dealing with their grounds.

64 For the present purpose of McNee's case, the question is how this evidence affects the judge's findings as to McNee being present in the room when Nucara allegedly made the pleaded representations. More particularly, how did the judge deal with Nguyen's evidence concerning the first representation?

65 While the Final Reasons are long and complex, they clearly state findings against McNee that the three pleaded representations were made by Nucara.[35] That is, the case as pleaded in that respect was established. But in all of this, the judge undertook no separate consideration of the specific evidence of Nguyen as to McNee and Nucara not being present when Thomas advised cancellation, and why it was not to be accepted, in favour of the overall approach to the evidence quoted above.

66 It is, with respect, insufficient to overlook consideration of such specific evidence on the basis of the finding, which the judge made, that her evidence was to be preferred. Indeed, that finding only underscores the absence of consideration of the evidence mentioned. Having considered the specific evidence in question we are of the view that it should have been accepted.

67 The consequence in terms of McNee's ground 1 is that McNee was not in the room when Thomas advised Nguyen the auction was cancelled. The further consequence is that the first representation is not established.

68 There is a further reason for rejecting P-Value's case in relation to the first representation. When one examines Nguyen's evidence, it is plain that neither Thomas nor Nucara nor McNee said on 5 September 2008 that the auction was cancelled because an offer of $5,920,000 had been made. It was, as was contended for by counsel for McNee, Nucara and Wellara, important to observe that there was no evidence in support of this critical causal element of this alleged representation.

69 That does not mean, however, that the judge's findings concerning the good tenant/payer representations are put at fault. As to those representations, we consider that reading the evidence as a whole, which we have done, it was open to the judge to conclude as he did as to McNee's presence in the room. Certainly, there is nothing glaringly improbable about the conclusion.

70 We might add that references to McNee being out of the room to consider Nguyen's offer and to entering the room thereafter do not indicate that McNee was not present in the room at relevant times. It is likely he would have privately considered the offer. It is also a likelihood that Thomas left the room for this purpose. Indeed, that is precisely what the judge found occurred, that 'Thomas and McNee left the meeting with Nguyen for a short time to discuss the state of negotiation at a point in time just before McNee returned and agreed the price of $5,925,000'.[36] It was well open to the judge to so find.

Did the judge err in finding that McNee engaged in misleading or deceptive conduct by impliedly representing that 255 had paid rent in the past and could be expected to pay rent in accordance with the lease?

71 This ground is concerned with the implied representation alleged in paragraphs 24 and 25 of the statement of claim. That is, that in the circumstance of agreeing to the inclusion of special condition 30 without disclosing the existence of the rent abatement agreement, McNee impliedly represented as stated above. The judge found the representation established.[37]

72 This conclusion was said to be erroneous because the judge made it without considering whether special condition 30, objectively considered, conveyed the implied representation, or was capable of doing so, and that Nguyen did not say she had so understood it.

73 The judge found that Nguyen relied on the representation.[38] This conclusion was said to be erroneous because Nguyen had not given evidence that she understood special condition 30 to mean that 255 had paid rent in the past and could be expected to pay rent in accordance with the lease.

74 The answer to this submission is found in the pleading itself. The pleading is that the implication arose in the circumstances stated. It is not pleaded that special condition 30 bore the impliedly represented meaning, or that it was capable of doing so. That was not the case. The case was that to put forward the special condition was inconsistent with the rent abatement agreement under which rent was not being paid and would not be paid for a period subsequent to purchase. It was like a smoke screen to the truth. Counsel denied there was any inconsistency, but, in substance, in the circumstances there was.

75 As to Nguyen's evidence, concerning her understanding, what counsel relied upon were a few answers in cross-examination where she was asked what she thought the special condition meant. She answered:

I think that 200,000 is there for, if the rent is unpaid, we will be able to withdraw it. But I thought another 61,000 had to be on top of it.

76 But the question and answer went to the terms of the special condition, not the alleged implication.

77 The short answer of course is that Nguyen had no knowledge of the rent abatement agreement. McNee deliberately withheld it from her. How then, could any answer she gave go to the implication, for the fact essential to its foundation was not known to her. That is also why, on its terms, the question which she answered was oblique as to its purpose and not squarely directed to the issue now sought to be agitated.

78 It was open to the judge, and correct, to find the implication established and that she relied upon it.

79 One further point was made on the matter of reliance. That was that on her evidence Nguyen had decided to offer $5,925,000 before special condition 30 was drafted. The distinction sought to be drawn is artificial. Nguyen had long been concerned with security of payment of rent by 255, and this concern was a critical issue discussed at the meeting where it had two broad aspects: the good tenant/payer representations and a provision for security. There is no substance in the submission.

Having regard to the same matters of evidence set out in relation to ground 1, did the judge err in finding at [217] and [497] that McNee had the requisite intent for a finding of deceit or fraud within the meaning of s 24AM of the Wrongs Act?

The judge erred in finding that McNee made knowingly false representations that were not alleged by P-Value.

82 Ground 1 concerned whether McNee was present in the room when the oral representations were made. As he is found to have been present at relevant times, the question raised by this ground 2 is whether the judge erred in finding fraud.

83 McNee's counsel commenced his oral submission by referring to paragraphs 214 and 217 of the judge's reasons, viz:

I consider that it was misleading and deceptive of McNee not to mention the agreed rent free period under the rental abatement agreement. Further, I find that McNee positively represented that rental in the sum of $370,000 was being received in respect of the Property whereas I find that in fact no rent had been paid by 255. McNee's representations in relation to the total amount of rent paid were communicated by the documents provided to Nguyen on behalf of the companies which he represented, namely that the Vendors were receiving $370,000 rent from the tenants at the Property including $200,000 per annum from the nightclub tenant.

...

Further, I have found that McNee deliberately and wilfully misled and deceived Nguyen in the respects I have identified above, knowing full well the position with 255 and yet making the intentional misleading and deceptive representations, to which I have referred, which he knew to be untrue, and intentionally and dishonestly withholding information in relation to the rent abatement agreement and 255's non-payment of rent so as to persuade and induce Nguyen to purchase the Property for the best price he could obtain and for a sum if possible in excess of $5,920,000.

84 For completeness, reference should also be made to paragraph 497:

Further, in making the grave findings which I have in respect of McNee's knowledge of the falsity of the misleading and deceptive communications made in his presence by Nucara on September 5 2008, and arising as a result of McNee's involvement in the inclusion of special condition 30 in the Contract of Sale, and his failure to correct Nucara and his failure to disclose the matters referred to above in relation to the rent abatement agreement, I am clearly satisfied and persuaded to a high level of satisfaction, after careful examination and evaluation of all relevant evidence, that the prohibited conduct of McNee which I have specified on 5 September 2008 was perpetrated intentionally with his knowledge of the falsity of his conduct.

85 Directing attention to paragraph 214, counsel said that the judge there identified a representation that was not alleged in the statement of claim. That was that McNee had 'positively represented' that $370,000 was being received in rent, the representation being communicated by the documents provided to Nguyen. On a fair reading of the judge's reasons, he immediately states that the representations were documentary. What the judge is saying is that when McNee, by himself or his agents, put forward the contract and lease documents the evident representation was that rent was being paid in accordance with the leases.

86 Moreover, even if the view were taken that no representation was pleaded which exactly fitted that stated by the judge, the findings of fraud would still rest on the strongest of evidentiary foundations, as the other passages in his Honour's reasons indicate. On those findings, which manifestly were open to be made, the finding of fraud for the purpose of s 24AM was not only open, but well and correctly made.

87 It remains to mention one further aspect referred to under this ground; it is a contention that the judge erred in finding at [191] and [227] that McNee dishonestly represented that the vendors had received an offer of $5,920,000 when a case of dishonesty in respect of that alleged representation was not pleaded against him.

88 The contention seems to be this. P-Value's claim of dishonesty or fraud was made in the reply to McNee's defence. The plea was that the implied representations made by McNee as alleged in paragraphs 22 and 25 of the statement of claim were made with no honest belief in their truth. But, by particulars, that was limited to his knowledge of the rent abatement agreement. In other words, the particulars seem to exclude the representation about the amount of the offer. That is consistent with the further plea in the reply that the matters alleged in paragraph 34 of the statement of claim that McNee did not disclose were confined to the rent abatement agreement and its terms.

89 This was the plea of fraud. As confined by the pleading, it did not extend to the representation as to the amount of the prior offer.

90 The judge did make the finding challenged at [191] (via [184(a)]) and [227(iii)]. The finding was not made in isolation but, as mentioned, along with other findings of the pleaded dishonesty. That is, the judge found the pleaded case of dishonesty or fraud established. Those findings did not depend on a prior finding of fraud as that now complained about. The case concerning the rent abatement agreement was distinct and separate, and was so pleaded.

91 In truth, the impugned finding of a representation concerning the offer is surplusage, yet understandable in the sense that, whether pleaded or not, it is clear that the offer was misrepresented to Nguyen, and that was to McNee's knowledge. That is part of the story, and it is inescapable that that is how the judge's finding is to be understood. What he said did not inject the judgment with error, let alone error that materially affected the findings on the matter of 255 and the rent abatement agreement.

The judge erred in finding that P-Value's losses were caused by any misleading or deceptive conduct of McNee (or any defendant) in circumstances where P-Value had not paid any deposit, was under no obligation to accept the nomination and knew that the property was not worth the price it paid.

93 McNee's counsel commenced this ground with a submission that P-Value was not a party to the contract and hence not bound to settle by paying the purchase price. This submission rested on an analysis of the legal position of a nominee purchaser. The submission then turned to relevant facts to establish that P-Value's claimed losses were not caused by conduct of McNee.

94 It is convenient to commence the discussion by noting the pleadings. The statement of claim alleged only that Nguyen 'subsequently nominated the plaintiff as purchaser',[39] which McNee admitted.[40] For their part, Wellara and Nucara respectively denied the allegation and positively alleged that P-Value was never a party to the contract;[41] P-Value's pleading in reply did not positively respond to that allegation; relevantly, it contained a general denial of allegations.

95 As a general proposition of law, a nominee does not become, by virtue of the nomination, a party to the contract.[42] The nominee may become a party by novation of the purchaser's obligations, or by reason of the particular terms of contract and the relationship in the circumstances.

96 The first question is, what did the contract of sale provide as to nomination? There are several provisions, commencing with clause 5 of the General Conditions, which provides that:

If the contract says that the property is sold to a named Purchaser "and/or nominee" (or similar words), the named Purchaser may, at least 14 days before settlement date, nominate a substitute or additional Purchaser, but the named Purchaser remains personally liable for the due performance of all the Purchaser's obligations under this contract.

10.1 If the Purchaser ("the Original Purchaser") is not in breach of any of the terms of this Contract then at any time within twenty-one days prior to the date for payment of the Balance the Original Purchaser may nominate a substituted Purchaser ("the Substituted Purchaser") by the delivery to the Vendor's Solicitors of:

1. A completed and executed "Notice of Nomination" in the form annexed hereto;
2. A guarantee executed by the Original Purchaser ... and if the Substituted Purchaser ... is a Company, the Directors of that Company in the form annexed hereto guaranteeing the performance by the Substituted Purchaser of the obligations of the Substituted Purchaser under the Contract.

1. A copy of the completed and executed "Purchaser Declaration" in the form approved from time to time by the Comptroller of Stamps.

10.2 On the nomination of the Substituted Purchaser, the following condition shall be deemed to be incorporated into the Contract:

"The Purchaser hereby expressly acknowledges that it has accepted title to the Property sold and it shall not be entitled to submit requisitions on or objections to the title of the Vendor. Conditions 1 & 2 of the said Table A of the Transfer of Land Act shall not apply to this Contract."

10.3 The Original Purchaser and each of the guarantors shall indemnify and keep indemnified the Vendor from and against any claim, penalty or demand in respect of stamp duty or costs arising from the nomination of the Substituted Purchaser.

98 As already mentioned, on 13 January 2009, P-Value was nominated as substitute purchaser. The nomination was signed by Nguyen as purchaser and P-Value as nominee, and stated:

As the property is expressed as sold to the Purchaser "and/or Nominee" (or words of like effect) then pursuant to the conditions of the Contract the Purchaser nominated the Nominee as substitute purchaser to take a transfer or conveyance in lieu of the Purchaser.

The Purchaser and the Nominee acknowledge that they will henceforth be jointly and severally liable for the due performance of the obligations of the Purchaser under the contract and payment of any expenses resulting from this nomination (including any Stamp Duty).

99 The effect of the nomination of a nominee under a contract of sale was considered by Nettle J in Commissioner of State Revenue v Politis[43] where he said that:

Plainly, however, under most nomination clauses the nominee would not acquire any rights as against the vendor, let alone the rights of the purchaser; for most nomination clauses constitute no more than a power in the purchaser to require the vendor to complete the contract by transfer of the land to the purchaser's nominee. In such cases the purchaser has rights as against the vendor to have the land transferred to the purchaser or to the purchaser's nominee, at least upon payment of the purchase price. And the purchaser has an interest in the land, in the nature of an equitable fee simple (assuming that the contract provides for purchase of the fee simple), although of course that really means no more than that the contract is susceptible to an order for specific performance at the suit of the purchaser. But the nominee does not acquire any rights as against the vendor, because the nominee is not privy to the contract. And for the same reason, the nominee has no standing in equity to obtain an order for specific performance of the contract. He must sue in the name of the purchaser or join the purchaser as a defendant. Therefore, such if any interest as the nominee may have in the land is one which derives from the purchaser, and relevantly the most that can be said is that the nominee may acquire an interest in the land equivalent to that which the purchaser had or would have had under the contract of sale.[44]

100 The question that arises is, whether, having regard to the terms of the contract, and the instrument of nomination, the nomination had the effect of making P-Value a party to the contract? McNee submitted that P-Value did not become a party to the contract. This was also the position of Wellara and Nucara.

101 On the other hand, in P-Value's written case in McNee's application, it is stated that documents prepared by the vendor's solicitors subsequent to the nomination strongly supported the proposition that the vendors treated the nomination of P-Value as creating contractual rights between the vendors and P-Value as purchaser, that is, as a variation of the contractual obligations of Nguyen. This would seem to be a reference to the Guarantee Deed which identified P-Value as sole purchaser, and which was signed on the day of settlement. As to that, it is important to bear in mind that that Deed dealt with matters in the period of 24 months from the date of settlement. As P-Value was taking title as purchaser, and was to be landlord to the tenants, it was only to be expected that it would be the named party to the Guarantee Deed. Moreover, the Deed was not executed by Nguyen in her personal capacity as original purchaser.

102 P-Value's submission then stated that it made no difference whether P-Value became contractually bound to complete the purchase. This was because it completed the purchase unaware of the true facts; but this is a different point which goes to its knowledge of the true facts, and how that relates on causation. For the moment we are simply dealing with the question whether P-Value became a party to the contract.

103 The judge considered that P-Value was bound by the contract from 5 September 2008. He drew this conclusion from the ongoing obligations of Nguyen and the statement in the nomination that 'the Purchaser and the Nominee acknowledge that they will henceforth be jointly and severally liable for the due performance of the obligations of the purchasers under the contract'. The judge described these as 'ongoing obligations' and considered that the causes of action which arose on 5 September 2008 'enured to the purchaser of the property under the contract in respect of which Nguyen and P-Value had the same rights and obligations before and after nomination and substitution in January 2009.'[45]

104 With respect, his Honour was in error in this analysis. The nomination of P-Value as substitute purchaser did not have the effect of making P-Value a joint obligor under the contract, let alone constitute a novation of the obligations of Nguyen to P-Value. The contract did not so provide. Nor did the evidence establish that the vendors so agreed. A purchaser cannot unilaterally impose a different person as a contracting party. Of course, it is evident that the vendors accepted the nomination in the sense that P-Value would, on payment of the purchase price (which was a matter for Nguyen and P-Value), take the transfer of land (and thereby title).

105 McNee's submission on causation and reliance then runs on these lines. As P-Value was not a party to the contract, the time at which to consider causation and reliance was on 15 January when it settled the contract or, at the very earliest, 13 January, when it accepted the nomination. By that time, Nguyen had advice from Cussen that she had paid too much for the property. As to that, counsel referred to evidence of Nguyen where she agreed that if she could have got out of the contract she would have. It was submitted that any inducement caused by the advice of the prior offer ceased at that stage.

106 Whether or not Nguyen could have avoided the contract she did not seek to do so. It was submitted that if she had avoided the contract - which she may not have been able to do - her loss would have been limited and likely no more than her deposit.

107 On the other hand, P-Value was in a different position: it was not contractually bound to the contract, and was not obliged to settle the purchase. Hence, it was submitted, P-Value accepted the nomination without regard to any of the alleged representations knowing (by virtue of Nguyen's knowledge) that the contract - being financed on a $6 million facility - was disadvantageous, and that paying the purchase price would result in a loss. Counsel also relied on the fact that the reason P-Value was nominated was so that Nguyen could avoid an increased burden of land tax. Counsel also referred to the fact that the statement of claim did not plead that in settling the contract P-Value acted in reliance on any of the pleaded representations.

108 McNee's submission, in essence, was that P-Value settled the transaction knowing that the price for the property was well above market, as indicated in the Charter Keck Cramer valuation, and, accordingly, that the representation as to the prior offer could not be relied upon. In that circumstance, the decision to accept the nomination and proceed to pay the purchase price was P-Value's own independent decision, and not a reasonable response to the alleged offer representation.[46] In short, the offer representation did not materially contribute to the decision to proceed with the purchase.[47]

109 It will be noted that McNee's submission concentrated upon the offer representation. That is doubtless because at the time of settlement the falsity of the good tenant/payer representation was not known to Nguyen or P-Value. That leads on to the following.

110 Although, for reasons discussed, P-Value's pleaded case based on the offer representation has failed, the claim for loss and damage caused by reliance on McNee's implied good tenant/payer representation remains. That representation, together with the information as to the amount of rent payable under the leases was relied on by Nguyen in calculating a yield of 6.2% or so, and in determining that such a yield allowed a purchase price in the order of $5,920,000. For this purpose, she could take that price (being the prior offer advised by Nucara) into account, not as proof of the pleaded case of the offer representation, but in respect of the calculation.

111 Nguyen's reliance on the yield generated by the rental would have been evident to McNee. While it is true that Nguyen later became aware that the value of the property was less than the contract price, the matter of the rental return remained unquestioned. That was because of McNee's fraudulent deception of her. It may readily be accepted, as the judge did, that his dishonest false representations materially influenced P-Value, through Nguyen, to complete the purchase and that the claimed loss was caused 'by',[48] 'because of'[49] or, in deceit at common law, as a result of, such conduct. Despite the valuation advice she had received, at the date of nomination, Nguyen still anticipated receiving the rental yield which she regarded as critical to a positive commercial outcome.

112 For completeness, the following should be added. The word 'by' appears in s 82(1) of the TPA which provides that a person who suffers loss or damage by conduct of another person may recover the amount of the loss or damage from that other person. In this case, the relevant conduct was contravention of s 52 of the TPA. The causal requirement is that the loss or damage be occasioned 'by' the contravening conduct, and the loss or damage recoverable is the 'amount' sustained.[50]

113 In the joint judgment of Mason CJ, Dawson, Gaudron and McHugh JJ in Wardley Australia Ltd v Western Australia[51] their Honours said that s 82(1) should be understood as taking up the common law practical or common-sense concept of causation discussed in March v Stramare (E & MH) Pty Ltd.[52] Thus, the question on causation was whether, on this approach, P-Value's loss or damage was caused 'by' the alleged contravening conduct of McNee. It is sufficient if the conduct was a cause of the loss or damage, it need not be the sole cause.[53]

114 Further, the reference in s 82(1) to a person who has suffered loss or damage is not confined to the person to whom the representation - alleged to constitute the contravening conduct - was made. Here the representee was Nguyen but the loss or damage was suffered by P-Value. In this circumstance, there is required to be a 'sufficient and direct link' or a 'requisite element of proximity' in order for s 82(1) to be satisfied.[54]

115 P-Value was able to succeed under s 82(1) if it could establish that it suffered loss or damage 'by' the conduct of McNee constituted by the good tenant/payer representation in the context of the leases and the non-disclosure of the rent abatement agreement.

116 The position is the same under the FTA where the requirement is that a person suffers loss or damage 'because of' a contravention.

117 It was open to the judge to find causation was established. He was correct to do so.

Did the trial judge err in finding that P-Value had suffered loss and damage in the sum awarded, in circumstances in which the judge failed to take into account evidence that the property was worth more than the figure provided in the Dudakov valuation?

118 This ground was not urged in argument before us. The lack of enthusiasm for it may explain why Dudakov's valuation report to which it relates was not included in the appeal book. Nevertheless, the ground was not abandoned and it is necessary to say something about it.

119 Dudakov assessed the market value of the property as at 8 September 2008 as $4,410,000 and as at 15 January 2009 as $4,440,000.

120 As he explained in his oral evidence, Dudakov adopted a capitalisation approach by reference to yield derived from analysis of rentals of comparable properties double-checked against analysis of comparable sales to produce a rate per square metre of building area.

121 The trial judge summarised the valuation evidence before him and in particular the valuation reports from Dudakov,[55] Cussen,[56] and Bath.[57] He also summarised the effect of Dudakov's evidence at trial.[58] He further recorded that, ultimately, the active defendants accepted that the valuation of Dudakov was the best evidence as to market value of the property at the time of the contract of sale and at settlement of the contract.[59] Nevertheless, the active defendants made 10 discrete criticisms of Dudakov's valuation which the trial judge considered and took into account.[60] It is now submitted that the trial judge erroneously disregarded conclusive factual evidence that the property retained by P-Value was worth substantially more than the valuation arrived at by Dudakov.

122 We would make the initial observation that on no view could the matters relied on be regarded as 'conclusive'. At best, they were no more than potentially relevant to the valuations in issue.

123 It is submitted first that P-Value rejected an open offer during the trial to sell the property for $6.2 million. We note first that the relevance of this offer, if any, does not appear to have been put to Dudakov in cross-examination. Secondly, we are at a loss to see that an offer put years after the dates in issue could be said to reflect the market as at those dates. Thirdly, in the course of his evidence Dudakov specifically distinguished between the very strong market which existed at the date of trial and the market which was 'teetering' as a result of the GFC at the time of the purchase of the property. The offer made at trial was in no way determinative of the values in issue.

124 Secondly, it is submitted that the judge wrongly disregarded the evidence of the offer by Hu on 4 September 2008 to purchase the property for $5,568,000. The fact of this offer was put to Dudakov and he responded first that he would need to know the full terms of the offer (which were not then put to him) and secondly that the sales evidence as a whole demonstrated a lower market value at the dates in issue. The trial judge noted this response and went on to observe that it was likely that Hu was also misled as to the passing rent being derived from the property.[61]

125 No error has been demonstrated in the judge's reasoning. In particular, there was no evidence that Hu was advised of the fact that the principal tenant of the property had paid no rental nor that he was advised of the rental abatement agreement. It follows that it is entirely possible he made his offer on the basis of misleading information in the same way as Nguyen.

126 Thirdly, it is submitted that the vendors had purchased the property in August 2007 for $4,471,500 and spent a considerable sum in renovating it. Dudakov's evidence was that the market at the date of purchase by Vicland was much stronger than at the date of sale to Nguyen and P-Value. Further, the 2007 purchase may have involved a payment above market value and the 2008 valuation was based on directly comparable sales which occurred close to the relevant date of valuation.

127 There is nothing in this ground. No convincing basis has been established for disturbing Dudakov's opinion.

(a) in finding that Nucara made the representation that the auction had been cancelled because an offer of $5,920,000 had been received for the property (Wellara ground 1; Nucara grounds 1 and 2), and

(b) in reopening the case, and in particular the finding that Nucara had not been fraudulent in making the first representation (Wellara ground 8; Nucara grounds 3 and 4).

129 The answer to these grounds is that the judge did err as contended in (a) but not in (b). The reasons may be shortly stated, commencing with the representation.

130 As pleaded and particularised the representation is that, during the meeting on 5 September 2008, Nucara represented to Nguyen that 'the auction had been cancelled because the vendors had received an offer of $5,920,000'.[62]

131 When P-Value's counsel opened the case he told the judge that Nguyen would give evidence that she was told while in the office that the auction had been cancelled and, in response to the judge asking 'Who told her that?', counsel said: 'Mr Nucara told her that, either Mr Nucara or relayed through Mr Thomas'.

132 Then, when Nguyen gave evidence, she deposed that Thomas stated that the auction had been cancelled, and that Nucara advised the offer. As mentioned earlier, the case was throughout conducted on the pleadings. It may thus be thought surprising that, in view of the tenor of counsel's opening and Nguyen's evidence, that the case continued to be run on the pleaded representation without an amendment being sought. But it was not, and nor was amendment sought in this Court.

133 In an overall sense, it may be understood why this particular representation was pleaded as it was. It was conveying the urgency, or pressure as the judge described it, of the situation in which Nguyen found herself. That is, the auction had been cancelled and the vendors had a live offer of $5,920,000 which could be accepted if Nguyen did not make an acceptable offer. All that is understandable in terms of context, but the case was based, in part, on the representation, which was either established or it was not.

134 The judge found that, during the meeting on 5 September 2008, Nucara stated to Nguyen 'that the planned auction ... had been cancelled because the vendors had received an offer of $5,920,000'.[63] Moreover, and again for reasons already discussed, it was not open to the judge to find that it had been represented orally to Nguyen that the auction had been cancelled 'because the vendors had received an offer of $5,920,000'.

135 For reasons already discussed, it was not open to the judge to find that Nucara stated that the auction had been cancelled. Nguyen deposed that Thomas made that statement and that he did so before Nucara and McNee entered the room.[64] Further, in cross-examination Nucara was not asked if he advised the auction was cancelled.

136 It is thus that the judge was wrong to find the representation established. The finding should be set aside. This is significant as the finding was the gateway to the finding of fraud against Wellara and Nucara, they not having been aware of the rent abatement agreement. Further, the judge's findings with respect to the good tenant/payer representations are not affected, which leaves Wellara and Nucara exposed to liability for misleading or deceptive conduct.

137 That leaves the grounds concerning the reopening of the case. While counsel referred to these grounds it is fair to say that they were not pressed. In the circumstances it is not necessary to deal with these grounds or discuss the several authorities referred to in the written submissions.

138 Of course, no judgment is to be reopened except in circumstances that warrant that course. The difficulty in this case, which self-evidently the parties recognised in not objecting to the reopening, was the clear omission to deal with certain pleaded issues. Until those issues were dealt with 'all questions in the proceeding [were not] effectively, completely, promptly and economically determined', to adopt the language of the Supreme Court (General Civil Procedure) Rules 2015 r 1.14(1)(a).

139 The alternative to the judge doing what he did was to leave the Initial Reasons (as revised) as they were, to make orders on the basis of that judgment and leave P-Value to appeal on the basis the judge had omitted to consider certain issues. It was suggested that this Court could have decided the fraud case against Wellara and Nucara and the other issue concerning Nucara's liability as an employee.

140 The difficulty with that course would have been the lack of reasons of the trial judge. It is likely the matter would have been remitted to the trial judge for determination. It is readily seen that the course taken by the judge was the efficient and economic way of dealing with the matter. Accordingly, we consider, in the particular circumstances, and orders not having been made, that it was open to the judge to recall his judgment and reopen the case, and that he acted correctly in doing so. We add only, as should be obvious, that our consideration of this aspect is no more than responsive to the situation that occurred. Moreover, it was not submitted before the trial judge that his initial judgments precluded him from reopening the matter by reason of any prejudgment or apparent bias. If objection were to be made to the course adopted, it should have been made at that time. The active defendants effectively waived any procedural objection which might have been open to them and the judge proceeded with their implicit consent.

The trial judge erred in finding that the cancelled auction representation caused the first respondent (P-Value) loss or, alternatively the whole of P-Value's loss, and did so:

(a) notwithstanding that the statement of claim alleged at [37] that Nguyen would not have executed the contract and would not have purchased the property had she known the true position in respect of the representations concerning the payment of rent by Two Five Five, and the existence of a Rent Abatement Agreement, it did not allege she would not have executed the contract and would not have purchased the property but for the cancelled auction representation;

(b) notwithstanding there was no evidence that Nguyen would not have executed the contract and would not have purchased the property but for the 'cancelled' auction representation'.

The trial judge ought to have found that P-Value failed to establish that if the cancelled auction representation had not been made Nguyen would not have purchased the property for the same price or, alternatively, at a price greater than $5,568,000.

141 These grounds may be taken together. In truth, our conclusion that P-Value's case on the so-called cancelled auction representation (or, as referred to earlier, the offer representation) should have been rejected renders it unnecessary to consider these grounds. However, in view of the full argument presented, it is appropriate that we record our view.

142 It is understandable that the grounds are directed to the so-called cancelled auction representation, which we have referred to as the offer representation. It was on the basis of having found that representation established in his Initial Reasons that the judge, in his Final Reasons, went further and found fraud in its making against the representee Nucara and his principal Wellara. The element that made the representation dishonest was that Nucara knew that the prior offer was $5,568,000, not $5,920,000, and that he kept that from Nguyen. [65] This was the element that P-Value's pleading in reply primarily relied upon to establish that the pleaded representations were made by Nucara and Wellara 'with no honest belief as to their truth', and which the judge overlooked in his Initial Reasons. It is important to note that, in particulars to this plea, it was also stated that Nucara on behalf of Wellara had been told by McNee of the substance of the rent abatement agreement. It was further stated that Wellara and Nucara had intentionally not disclosed to Nguyen the rent abatement agreement, that 225 had not paid rent and would not do so for eight or 12 months after the property was sold.

143 The course of his Honour's reasoning should be explained further. In the Initial Reasons, the finding was that in making the offer representation and the good tenant/payer representation, Nucara, on behalf of Wellara, engaged in conduct which contravened s 52 of the TPA and s 9 of the FTA.[66] In the Final Reasons he clarified the finding in relation to s 9.[67]

144 It is then important to note how the judge dealt with the matter of the alleged knowledge of Wellara and Nucara of the rent abatement agreement, that 255 was not paying rent and that it would not do so for eight or 12 months after the sale. In the Initial Reasons the judge accepted that 'on the evidence it has not been established that Nucara knew of the rent abatement agreement or that 255 was not paying rent'.[68]

145 As to this, the judge proceeded to say that it was not likely or credible that Nucara had not, as he stated in evidence, enquired of McNee whether rent was being paid. Nevertheless, he was not in a position to make a positive finding as to what Nucara and Wellara 'actually knew in relation to 255's payment of rent'. However, knowing of Nguyen's concerns as to the rent worthiness of 255, and having regard to Nucara having 'consciously desited from clarifying the position with McNee', Nucara had no foundation for making the good tenant/payer representation, and had not been justified in suggesting to Nguyen that she did not need more than a $200,000 security in relation to 255.[69]

146 On these findings, in his Initial Reasons, the judge found that Wellara was liable to P-Value on the basis that the making of the offer representation and the good tenant/payer representation constituted conduct in contravention of s 52 of the TPA and s 9 of the FTA. As mentioned, the liability was limited to 15% of P-Value's assessed damages. As also mentioned, the judge found that Nucara was not liable.

147 The result of the judge revisiting the case was that he found dishonesty or fraud established, but that finding was only made in relation to the offer representation. It was not made in relation to the good tenant/payer representation and could hardly have been in the light of the judge's findings that Wellara and Nucara did not know of the rent abatement agreement or that 255 was not then paying rent and would not do so for eight or 12 months. Indeed, the judge updated that finding in his Final Reasons.[70]

148 Hence, it was only on the basis of dishonesty in relation to the offer representation that Wellara and Nucara could be, and were, found to be liable for the full amount of P-Value's damages. As we have concluded that the offer representation was not established, the case against Wellara and Nucara based on that representation must fail.

149 That leaves Wellara and Nucara with liability under s 52 or s 9 based on the good tenant/payer representation, and that only for 15% of P-Value's claim. That is an entirely different scenario from that which Wellara sought to confront with its submissions. Nevertheless, it is that to which we now turn.

150 The grounds concern an alleged evidentiary gap in P-Value's case. Counsel acknowledged that the evidence established that if the '255 representations had not been made, the transaction would not have proceeded. It did not establish that if the 255 representations had been made, but the cancelled auction representation had not been made, there would have been no transaction. In those circumstances, causation was not established.'[71]

151 Several observations arise about this submission. First, the judge found that each representation was relied on and was causative of P-Value's loss and damage. Secondly, the point and context of the submission, indeed of Wellara's submission generally under these grounds, was to attack the judge's findings on the offer representation, not the obverse. Thirdly, the offer representation being put aside, the question is whether the judge's findings on causation on the misleading or deceptive case based on the good tenant/payer representations, were supported by evidence. Fourthly, the judge found that P-Value acted in reliance on those representations in determining to complete the contract, and that the contravention caused P-Value to suffer the assessed loss and damage. Indeed, the submission concedes that if the '255 representations' had not been made, the transaction would not have proceeded. At one point, the judge put it this way:[72]

For the above reasons, I am satisfied that P-Value has established that it would not have entered into the contract of sale for the property and would not have proceeded to complete that transaction had it known the truth about the extremely equivocal rental status of 255 including that the vendors had prior to 5 September 2008 entered into a rent abatement agreement with that company and that 255 was not a good tenant or a good payer of rent.

152 These findings were well open, and warranted, on the evidence. No error is demonstrated.

153 The central point Wellara's counsel sought to make, notwithstanding the judge's findings, was that Nguyen desired to buy another commercial property and that once she knew that the yield was in excess of 6%, she exercised her own judgment to make an offer and sign the contract. That is, her decision to enter into the contract was based on her own judgment, not relying on the offer representation. Alternatively, it was probable that the transaction would have proceeded at a price somewhere between the rejected offer of $5,568,000 and $5,925,000. Again, it is seen that the submission was directed to the offer representation in an attempt to avoid the finding of fraud. In terms it does not address the good tenant/payer representation, as to which the judge's findings stand.[73]

Apportionment and P-Value's notices of contention

155 The judge found that McNee, Wellara and Nucara each materially misled and deceived Nguyen and P-Value by falsely representing to Nguyen:

(a) the auction of the property had been cancelled because the vendors had received an offer of $5,920,000;

156 We have concluded that the judge was wrong to find for P-Value in relation to the first of these representations, and that the judge's conclusions in respect of this representation should be set aside. However, we have concluded that there was no error in relation to the judge's findings with respect to the second and third representations. This means that, on the judge's findings, McNee, Wellara and Nucara are each liable to P-Value in respect of the good tenant/payer representations. Moreover, while the judge's finding of fraud against McNee remains in respect of these representations, there is now no extant finding of fraud against Wellara and Nucara - the judge having found that he was not satisfied that at the time of the meeting on 5 September 2008, Wellara or Nucara knew of the existence of the rental abatement agreement or that 255 had not paid any rent under the lease of the property.[74]

157 If there is no finding of fraud against Wellara and Nucara, then those parties are entitled to the benefit of the proportionate liability provisions in pt IVAA of the Wrongs Act. That is the effect of s 24AM of that Act.

158 P-Value seeks (by its notices of contention) to support the original finding of fraud against Wellara and Nucara, so as to engage s 24AM and deprive those parties of the benefit of the apportionment provisions in the Wrongs Act. Additionally, P-Value contends that if there is to be an apportionment then an amount greater than the judge's foreshadowed apportionment of 15 per cent should be ordered.

159 P-Value is not the only party that submits that an apportionment of 15 per cent against Wellara and Nucara is too low. Ground 5 of McNee's application for leave to appeal asserts:

[I]n the event that apportionment of liability is required, the learned trial judge erred in finding that Mr McNee and the first and second defendants were both individually and jointly culpable and responsible for 85 per cent of P-Value's loss and damage.

160 It may immediately be observed that if P-Value succeeds in its notices of contention in supporting the finding of fraud against Wellara and Nucara, then no question of any apportionment will arise. However, if P-Value is unsuccessful in that argument then, as we have said, s 24AM of the Wrongs Act is not engaged and Wellara and Nucara are entitled to the benefit of the apportionment provisions.

161 Further, if (because of a lack of any finding of fraud against Wellara and Nucara) an apportionment of Wellara and Nucara's liability is required, the apportionment will have to be done afresh. This is because the apportionment performed by the judge proceeded on the basis that P-Value had established the first of its three alleged representations against McNee, Wellara and Nucara, and also on the basis that a finding of fraud had been made against Wellara and Nucara. Any apportionment now required to be performed will be in respect of only the two representations found to have been conveyed, and on the basis that Wellara and Nucara have not had a finding of fraud made against them.

162 P-Value's case at trial in relation to the allegation of fraud against Wellara and Nucara in relation to the good tenant/payer representations was that:

(a) Nucara and Wellara had no honest belief in the truth of those representations because they had been told by McNee of the substance of the rent abatement agreement; and/or

(b) pursuant to s 13 of the Sale of Land Act 1962, Wellara and Nucara were deemed to have had knowledge of the falsity of the good tenant/payer representations.

Each of these matters were said to establish the fraud required by s 24AM of the Wrongs Act so as to disentitle Wellara and Nucara from relying upon the apportionment provisions in that Act.

163 However, in contrast with the first basis upon which P-Value asserted fraud at trial, in its notices of contention P-Value asserts that the finding of fraud against Wellara and Nucara can be supported on the basis that Wellara and Nucara were recklessly indifferent to whether or not the good tenant/payer representations were true. That said, as it did at trial, and again in this Court, P-Value relies upon s 13 of the Sale of Land Act 1962.

164 Wellara and Nucara submitted that, as P-Value did not plead a 'recklessly indifferent' fraud case against them, P-Value should not now be permitted to make that argument in this Court. P-Value responded by observing that in paragraph [138] of its outline of closing submissions at trial it submitted:

The representations made by Nucara regarding the ability of 255 to pay rent amount to fraud because, if nothing else, he was recklessly indifferent as to whether or not 255 was in fact a good tenant paying rent.

165 Notwithstanding this statement in P-Value's closing written submissions, Wellara and Nucara are correct in submitting that the recklessly indifferent fraud case now sought to be maintained was not pleaded or, in reality, run at trial. Moreover, in our view, beyond the mere throw away assertion made by P-Value in its closing written submissions, there was (and is) no substance in the 'recklessly indifferent' fraud case now sought to be maintained. Certainly, the matter was never squarely put by counsel for P-Value to Nucara in cross-examination.

166 We see no reason to doubt the correctness of the judge's conclusion that he was not satisfied that, at the time of the meeting on 5 September 2008, Wellara or Nucara knew of the existence of the rental abatement agreement or that 255 had not paid any rent. That finding answered the first limb of P-Value's fraud case against Wellara and Nucara at trial. In the circumstances, this limb of P-Value's notices of contention (fraud as a result of reckless indifference) must be rejected. We turn now to the s 13 of the Sale of Land Act 1962 argument.

167 Section 13 of the Sale of Land Act 1962 relevantly provides:

13 Burden of proof as to knowledge of falsity of representation

(1) In any action commenced in respect of the sale of any land if it is proved that any representation made on such sale was false and that any party to such action was induced by such representation to enter into a contract to purchase such land the person making such representation shall be deemed to have made the same with knowledge of its falsity unless he proves -

(a) that he had reasonable ground to believe and did believe that the representation was true or that he had no reason to suspect that the representation was false; and

(b) that otherwise he had acted innocently.

...

168 Section 13 of the Sale of Land Act 1962 is a deeming provision. It deems a person making a representation to have knowledge of falsity in certain circumstances. Section 24AM of the Wrongs Act, like s 1041M(1) of the Corporations Act 2001 (Cth), is designed to exclude conduct involving particular moral culpability.[75] It is one thing to cast a burden on a party to prove a matter or be deemed to have knowledge of a representation's falsity.[76] It is another to establish fraud and have a 'finding of fraud' made as required by s 24AM of the Wrongs Act 1958. The mere operation of s 13 of the Sale of Land Act 1962 is not enough to warrant a finding of fraud being made against Wellara and Nucara in circumstances where, as here, the trial judge was not satisfied that Wellara or Nucara knew of the existence of the rental abatement agreement or that 255 had not paid any rent.

169 For these reasons, we reject P-Value's submissions that there should now be a finding of fraud against Wellara and Nucara.

170 P-Value was correct when it submitted that, when considering the apportionment, a comparison had to be made between the relative departures of each party from relevant standards and that a comparison also had to be made between the relative causal contributions to P-Value's loss. Immediately, it might be observed that a finding of fraud (in this case against McNee) involves a finding of a very large departure from standards. While the judge's reasoning on the issue of apportionment is now of limited relevance having regard to the fact that we have overturned the judge's conclusions in respect of the cancelled auction representation, we see no error in the judge's general analysis of the other various competing considerations so far as an apportionment is concerned. In the end, we agree with the judge's conclusions about McNee's involvement and responsibility.[77] It is also noteworthy that the benefit that was obtained from the making of the false representations (being P-Value entering into the contract at a price greater than market value) flowed to the vendors and McNee, rather than Wellara and Nucara.

171 In all of the circumstances, we would assess the appropriate apportionment of Wellara and Nucara's liability at 15 per cent.

172 For these reasons, the applications by Wellara and Nucara succeed, the result being that their liability is reduced to the amount being 15% of the adjudged loss and damage. McNee's application succeeds in the sense that, as P-Value's case on the offer representation fails, the finding of fraud based on that case is set aside; but otherwise the application fails. The consequence is that the judgment and orders against McNee must stand. We will ask counsel to confer and submit orders as considered appropriate.

[1] Corporations Act 2001 (Cth) s 601AD(1).

[2] CTG Pty Ltd v Yamamori (Hong Kong) Pty Ltd (1992) 10 ACSR 534; Amcus Pty Ltd v Hurst Rentals Pty Ltd (No 2) [2010] NSWSC 239; (2010) 77 ACSR 550; LexisNexis, Halsbury's Laws of Australia, vol 120 (as at 20 March 2013) [14830].

[3] [2006] HCA 59; (2006) 225 CLR 553 ('Houghton').

[4] P-Value Pty Ltd v Vicland Group [2016] VSC 100.

[5] (1995) 49 NSWLR 315.

[6] [2014] FCAFC 151.

[21] Final Reasons [61]-[70] (citations omitted).

[23] Final Reasons [74]-[78] (citations omitted).

[26] [1975] VicRp 89; [1975] VR 916, 929.

[31] Final Reasons [132], [184], [491(v)], [492(ii)].

[33] Final Reasons [491(v)]. See also [184] and [492(ii)].

[34] See [37] above.

[35] Final Reasons [184(a)], [185(i)], [201], [218], [491(v)], [492(ii)-(iii)], [557].

[37] Final Reasons [186], [191], [203], [206].

[38] Final Reasons [185], [186], [222], [226].

[41] Wellara and Nucara respective defences [26], [40A].

[42] Joseph Street Pty Ltd v Tan (2012) 38 VR 241, 242 [3].

[43] [2004] VSC 126; (2004) 55 ATR 491.

[44] Ibid 494 [11] (emphasis added). Voumard, The Sale of Land, 2-792 [2365]. And see Southage Pty Ltd v Vescovi [2014] VSC 141 [68]-[69].

[46] Henville v Walker [2001] HCA 52; (2001) 206 CLR 459 [28]-[29] ('Henville'); Julstan Pty Ltd v Hart Trading Pty Ltd [2014] FCAFC 151 [72].

[48] Trade Practices Act 1974 s 82(1).

[50] Marks v GIO Australia Holdings Ltd [1998] HCA 69; (1998) 196 CLR 494; I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41; (2002) 210 CLR 109.

[51] [1992] HCA 55; (1992) 175 CLR 514, 525.

[52] [1991] HCA 12; (1991) 171 CLR 506. See also Henville 489-90 [95]-[96].

[54] Janssen-Gilag Pty Ltd v Pfizer Pty Ltd [1992] FCA 437; (1992) 37 FCR 526; Finishing Services Pty Ltd v Lactos Fresh Pty Ltd [2006] FCAFC 177 [31]-[32]; 428 Little Bourke Street Pty Ltd v Lonsdale Street Café Pty Ltd [2009] VSC 133 [42]-[45].

[61] Final Reasons [291(h)], [294(c)].

[63] Final Reasons [491(iv)], [492(iii)]. See also [184(a)], [185(a)], [201], [218], [557(b)].

[65] Final Reasons [534], [541]-[542].

[68] Initial Reasons [151], [220], [554]; Final Reasons [152], [221].

[75] ABN AMRO Bank NV v Bathurst Regional Council [2014] FCAFC 65; (2014) 224 FCR 1, 307 [1568] (Jacobson, Gilmore and Gordon JJ).

[76] Cf Sale of Land Act 1962 s 13.