Plaintiff v Defendant

AMADIO DEFENCE - Purchaser allegedly suffering from disabilities - Pleaded Amadio defence - Disabilities not made out - If disabilities existed, vendor not aware nor should have been aware - Defence not made out.

For the plaintiff on the claim and the first defendant on the cross claim

For the defendant on the claim and plaintiff on the cross claim

1 In December 2007, Lord Buddha agreed to sell to Mr Paul Harpur seven hectares of undeveloped land at Portland. Mr Harpur paid part of the deposit and then refused to proceed with the purchase. The sale was affected by Mr Gordon Turner a sub-agent of Forvale Pty Ltd, real estate agents. Lord Buddha is controlled by Mr David Gibbs, a property developer. Mr Harpur is a solicitor and property developer.

2 Lord Buddha rescinded the contract and sues Mr Harpur for damages.[1] In his defence, Mr Harpur claims that he validly terminated the contract of sale, or alternatively the contract was void or voidable and can be set aside on three grounds.

3 First, Mr Harpur alleges that certain statutory requirements of the Sale of Land Act 1962 were not observed in the contract and that he validly rescinded and terminated the contract or the contract is void or voidable. If the statutory breaches are made out, the relevant statutory law permits the Court to excuse the failure to observe the statutory requirements. If the breaches are made out, Lord Buddha seeks to be so excused.

4 Secondly, Mr Harpur claims that Lord Buddha and the real estate agent, Forvale, engaged in misleading or deceptive conduct[2] by making misleading or deceptive representations about the Portland land, that Mr Harpur relied on to enter into the sale agreement. These representations include that Lord Buddha had "lined up" a number of tenants for the property.[3] As a result, Mr Harpur claims that he rescinded the contract or that he is entitled to do so. He claims that he is thereby entitled to the return of the deposit.

5 Finally, Mr Harpur contends that when he was dealing with Lord Buddha he was at a special disadvantage or disability flowing from a stroke he had in the late 1990s that was known to Forvale as the estate agent for Lord Buddha.[4] He says that Lord Buddha has unfairly or unconscientiously taken advantage of his special disadvantage in procuring the contract to buy the Portland land. He says that as a result Lord Buddha is not entitled to retain the benefit of the contract.

6 Mr Harpur makes a counterclaim against Lord Buddha and Forvale. In his counterclaim he pleads causes of action relying on the matters raised in his defences that the contract breached the Sale of Land Act 1962 and the alleged misleading or deceptive conduct. As a result, he claims that he is entitled to have the contract of sale set aside and he claims the repayment of the deposit he paid of $425,000. He also claims loss and damages of $425,000 and further damages for the loss of use of that sum. Finally, he claims each of Lord Buddha and Forvale aided and abetted each other in the misleading or deceptive conduct and are therefore liable for the misleading or deceptive conduct of each other.

7 Lord Buddha admits that Forvale was retained as its agent on 3 December 2007.[5] Forvale admits it acted as estate agent for Lord Buddha to sell the land to Mr Harpur.[6]

8 The Portland land lies on the Henty Highway, being the main road that enters Portland for traffic travelling west along the Henty Highway from Hamilton and Heywood, and for traffic travelling west along the Princes Highway from Warrnambool and Port Fairy. The property is zoned business four (B4). That zoning entitles the land, with a permit from the council, to be used for the sale of bulky goods. A business such as Bunnings, Mitre 10 or a bedding store could be operated on the site as bulky goods businesses.

9 Lord Buddha[7] purchased the Portland land for $1.21 million in March 2007. After Lord Buddha took possession of the Portland land in March 2007, Mr Gibbs and his associates set about investigating the possibility of developing the land. They came up with a preliminary concept plan that divided the land into several uses.[8] Under the concept plan, part of the land would be used for a bulky goods store such as Bunnings, another part would be used for a supermarket and ancillary shops which would require rezoning to business one (B1), another part would be used for a petrol station, and another part might be used for a retirement village that would require rezoning to residential. Adjoining the southern side of the Portland land was land owned by the council that was zoned residential. Mr Gibbs and his associates investigated whether that land could be acquired from the council and used with part of the Portland land to develop a retirement village.

10 In the second half of 2007, Mr Gibbs approached Mr Turner, a sub-agent engaged by Forvale, to assist him to sell the Portland land. Forvale was established in about August 2007 by Mr Ronald Hutchins, an estate agent from Shepparton. Mr Turner and Mr Hutchins agreed to work together for shared commissions. Mr Turner had a sub-agent's licence. Mr Gibbs told Mr Turner that he wanted $5 million for the property and that if Mr Turner could sell the property for any more the surplus could be commission.

11 On 3 December 2007, Mr Turner obtained an authority from Mr Gibbs to sell the Portland land for $6.5 million. Mr Turner offered the land to Mr Harpur for that sum and he agreed to buy it without seeking to bargain it down. Mr Turner had been dealing with Mr Harpur on other property developments. A contract of sale was signed on 11 December 2007 and discharged on 12 December 2007 when a part deposit was paid by Mr Harpur.

12 Mr Harpur alleges that Mr Turner gave him a coloured concept plan and other documents relating to the Portland land. He alleges that Mr Turner made certain verbal representations in his negotiations with Mr Harpur that were misleading or deceptive.[9] Mr Harpur says that he relied on these misleading or deceptive representations to enter into the contract.

13 Mr Harpur had a stroke in about 1999. He claims that the stroke has left him with certain disabilities; including that he is too trusting and that he is not able to judge other people, to his disadvantage. Mr Harpur alleges that he told Mr Turner and Mr Hutchins about his disabilities and that unconscientiously they, as agents for Lord Buddha, took advantage of him in procuring him to enter into the contract.[10]

14 After the contract was signed, in January 2008, several meetings took place between Mr Harpur and Mr Turner about the Portland land. Sadly, Mr Turner unexpectedly died at the end of January. Before he died, however, on 25 January 2008 Mr Harpur defaulted in the payment of part of the deposit. His reasons for doing so included that he could no longer offer the property to his overseas partner Mr Peter von Stiegler (and through him to wealthy Indonesian investors), and a source of money he expected from another project was not available.

15 In February 2008, an extension of time to pay the deposit was negotiated with Mr Gibbs. Further deposit moneys were paid; but ultimately Mr Harpur defaulted. Lord Buddha rescinded the contract. Mr Harpur alleged that he had been misled.

16 Mr Harpur was an active property developer. At the time of the purchase, he was involved in several projects. One project involved issuing shares in a company called Compound Property Investment Pty Ltd (CPI), to raise money from wealthy investors to invest in property. In November 2007, before Mr Harpur agreed to buy the Portland land, he sought to raise some $20 million by a share issue by CPI to invest in property. To that end he prepared an information memorandum to be shown to investors and financial planners. Under the proposal, Mr Harpur would manage the investments. The proposed investments of CPI included land that lay within a "zone of growth", as the Portland land did. The role of CPI in the purchase of the Portland land is one of the issues in contention in this case.

17 As mentioned above, there are three aspects of the contract as varied which it is alleged do not comply with the Sale of Land Act 1962. The effect of these breaches is that the contract is unenforceable unless the Court excuses the breaches.

18 If Lord Buddha has validly rescinded the contract and Mr Harpur has no entitlement to damages, the parties are agreed on the damages to be paid by Mr Harpur for breach of the contract of sale.

19 Accordingly, in general terms the case involves the following issues.

(a) Did Lord Buddha and Forvale engage in misleading or deceptive conduct contrary to the Trade Practices Act 1974 and the Fair Trading Act 1999 (Vic)?

(b) If so, did Mr Harpur suffer any loss or damage by the misleading or deceptive conduct?

(c) If so, did Forvale aid and abet Lord Buddha in the misleading or deceptive conduct?

(d) Was Mr Harper labouring under a special disadvantage or disability that if known to Lord Buddha and unconscientiously taken advantage of by Lord Buddha, would entitle him at equity to avoid the contract to buy the Portland land?

(f) If so did Lord Buddha unconscientiously take advantage of its knowledge?

(g) If so, would that entitle Mr Harpur to avoid the contract?

(h) Did Lord Buddha breach the Sale of Land Act 1962 in respect of the contract or the s 32 certificate?

20 I am satisfied that Lord Buddha did engage in misleading or deceptive conduct towards Mr Harpur in breach of s 52 of the Trade Practices Act 1974 and s 11 of the Fair Trading Act 1999. In particular, I am satisfied that Lord Buddha did falsely represent to Mr Harpur that:

(a) Coles and Aldi were available, and wanted to go there [to the Portland land], as tenants;

(b) Cheap as Chips, Mitre 10 and Bunnings wanted to go there to take a lease for a bulky goods store in the project;

(c) Lord Buddha had a number of tenants lined up for the site; and

(d) Lord Buddha had some land ready for development at Portland.

Representation (c) is supported and made out by representations (a) and (b). Representation (d) is also supported by and made out by representations (a), (b) and (c).

21 Mr Harpur has not satisfied me on the balance of probabilities that the other representations were made by Lord Buddha.

22 Mr Harpur has not satisfied me that Forvale engaged in misleading or deceptive conduct in breach of the relevant sections. Mr Harpur has not satisfied me that Forvale is liable for aiding and abetting, counselling, procuring, inducing or being in any way directly or indirectly knowingly concerned or a party to, or has conspired with others to affect, the contraventions.

23 I find that by reason of the misleading or deceptive conduct, Mr Harpur paid the deposit and has lost the use of that money.

24 Mr Harpur has not satisfied me that he was suffering under a special disadvantage or disability. If Mr Harpur was suffering under a special disadvantage or disability, Mr Harpur has not satisfied me that Mr Turner and Mr Hutchins knew about or ought to have known about it.

25 In the circumstances, I have not found it necessary to deal with the alleged breaches of the Sale of Land Act 1962.

26 Mr Barrett is a real estate agent employed by Coastal Real Estate of Portland who acted for Lord Buddha in seeking to obtain tenants for the Portland land and in dealing with the Glenelg Shire Council over rezoning issues. He gave evidence. I accept Mr Barrett's evidence.

27 Mr Gaucci is a director of Lord Buddha.[11] Mr Gaucci carries on business as a real estate agent in Richmond under the name Lease Link.[12] He introduced Mr Gibbs to the Portland land and arranged for him to buy the interest of another investor in the land. He held an interest in the land at Portland through Lord Buddha, but no longer does so.[13] Mr Gaucci was involved in seeking to find prospective tenants for the Portland land. Mr Gaucci gave evidence. I accept Mr Gaucci's evidence

28 Mr Gibbs is the managing director of Lord Buddha and through his companies has a majority interest in the Portland land. He is also a director of ICR Property & Investment Group which is the acting manager for the Portland land. His occupation is property developer. He asked Forvale to find a buyer for the Portland land and other properties he owns in Gipps Street, Collingwood and at Greensborough. He did not give Forvale an authority to sell the land until Forvale had a potential purchaser. Mr Gibbs gave evidence. I found Mr Gibbs' evidence to be unreliable. His recollection was poor. I did not find him to be dishonest.

29 Mr Hassan is a real estate agent. He was involved in several projects with Mr Harpur. He advised Mr Turner to introduce Mr Harpur to the Portland land. Mr Hassan wanted one third of the commission if this introduction eventuated in a sale. Under the original authority for the sale of the property Mr Hassan was to receive a third of the $1.5 million commission. Mr Hassan did not give evidence.

30 Mr Harpur's circumstances are set out below. I found Mr Harpur to be an unreliable witness.

31 Mr Hutchins is a director and controller of the estate agent Forvale. He holds a real estate agent's licence. Mr Hutchins has a real estate agency in Shepparton known as Shepparton Real Estate. In mid 2007, Mr Hutchins decided to act as a real estate agent in Melbourne. He established Forvale. At this stage he met Mr Turner, who held a sub-agent's licence. Mr Turner agreed to join Mr Hutchins in Forvale on the basis of sharing commissions from vendors he introduced to Forvale. They commenced to work together in about August 2007. As discussed below, Mr Turner managed to secure the sale of the Portland land. It was the first sale made by Forvale. Mr Hutchins gave evidence. I found Mr Hutchins to be an honest and reliable witness. He readily gave evidence against his own interests.

32 Ms Paltaguou travelled to Lakes Entrance with Mr Turner and Mr Harpur at the end of January 2008, just before Mr Turner died. Mr Harpur alleges that he discussed his health with Mr Turner on this trip or a previous trip to Lakes Entrance. Ms Paltaguou was introduced to Mr Harpur by Mr Turner as a possible manager of the service apartments in the Lakes Entrance project. Ms Paltaguou did not give evidence.

33 Mr Ramsen is the managing director of Terrain Capital. Mr Ramsen was introduced to Mr Harpur to see whether he could assist with the development of Mr Harpur's project CPI. He and Mr Gibbs signed a confidentiality agreement on 19 May 2008[14] when he met with Mr Harpur so that they could discuss CPI. He did not give evidence.

34 Mr Rodden has an interest in the land at Portland through Lord Buddha, with Mr Gibbs. He did not give evidence.

35 Mr Turner worked with Mr Hutchins for Forvale. He held a sub-agents licence and had an arrangement that he would share certain commissions with Forvale. He secured the sale of the Portland land to Mr Harpur. Sadly, Mr Turner died on 27 January 2008, soon after the contract was signed.

36 Mr Tunbridge is Mr Harpur's accountant and business assistant. He also acts as a director of most of Mr Harpur's companies. He sees himself as a nominal director. Mr Tunbridge is a Certified Practising Accountant and at one stage was a Chartered Accountant. He has been self employed since 1978.[15] Mr Tunbridge now lives at Darlimurla. At the time of the purchase of the Portland land he lived at Mirboo North which is more than two hours from Melbourne. He gave evidence. I found his evidence of little use. He had no real recollection of the events.

37 Mr von Stiegler was described by Mr Harpur as an overseas partner who he had done a lot of business with in Indonesia. Mr Harpur intended to obtain, through Mr von Stiegler, wealthy Indonesian investors to invest in the Portland land. Mr von Stiegler did not give evidence.

38 Mr Winjam is a qualified valuer. He works in Mr Gibbs' office.[16] He prepared the brochure regarding the Portland land that was given to Mr Harpur. He was present at the variation meeting on 1 February 2008 for part of the time. He did not give evidence.

39 Mr Harpur, the first defendant and plaintiff by counterclaim, resides in St Kilda Road, Melbourne. He is a solicitor and an experienced property investor. In 1972 he was admitted as a barrister and solicitor in the Supreme Court of Victoria. Since that time, he has practised law specialising in tax and estate planning under the name Harpur & Co. He ceased to actively practise in about 1990; but has retained his practice and acts for himself in his own legal affairs. He held a practising certificate until June 2008 and renewed it in 2010.[17] He now runs his private companies including a company, Industrial Process Controls Limited, that he has had for 20-30 years designing and selling equipment for testing various types of road materials.[18] He is chairman of the company. It has a general manager who has been with Mr Harpur for 30 years.

40 Mr Harpur is the purchaser of the Portland land. He has carried out multiple property developments and at the time of his purchase of the Portland was involved in several other major property developments, including one at Corio that he soon thereafter sold for $6 million.

41 Mr Harpur's involvement in property can be described in his own words from the CPI information memorandum issued in about September - November 2007:

Mr Harpur has a long record of successfully creating businesses and a proven ability to make businesses and projects profitable in a global economy.

Since 1980, Mr Harpur has been involved in property development and investment as a consultant, investor, lawyer and developer and owner of industrial and business parks, shopping centres, mixed use developments, showrooms, offices, factories and warehouse premises.

Mr Harpur has extensive experience in acquisition, rezoning, government and authority negotiations, development, leasing and sale of property.[19]

42 CPI was among the several projects Mr Harpur was involved in at the time he agreed to purchase the Portland land. In about September - November 2007, Mr Harpur launched CPI. Mr Harpur produced an "information memorandum," similar to a prospectus, dated November 2007[20] whereby CPI sought to raise $20 million consisting of 2,000 shares at $10,000 each. The minimum application was $500,000 and the minimum subscription was $20 million.

43 The prospectus was addressed to "sophisticated investors." CPI stated in the information memorandum that "property investments will only be acquired if they fall squarely within the category of property with a significant likelihood of achieving an above average long term increase in value ("The Zone of Growth")".[21]

44 The manager of CPI was to be a company controlled by Mr Harpur. Mr Harpur and his accountant Mr Tunbridge were the sole directors of CPI although another director was envisaged. Of the $20 million to be raised; $800,000 was to be paid to Mr Harpur as commission, and a management fee of $700,000 was also to be paid to Mr Harpur.[22]

45 The CPI information memorandum stated that one of the investment properties that CPI would seek to emulate was Southlink Business Park, a property investment transformed by Mr Harpur from paddocks to a large modern business park.[23] During his cross examination it was put to Mr Harpur that the Portland land was precisely the type of investment that CPI would be interested in. Mr Harpur initially denied that, but eventually conceded it would be "ideal".[24]

46 CPI did not raise the $20 million in subscriptions. Mr Harpur agreed that a factor in CPI not getting off the ground was the difficulty in getting investors in the face of the global financial crisis.[25]

47 As discussed below, Mr Harpur sought to obtain investors in CPI through Mr Hutchins and Mr Turner as well as Mr Gibbs and Mr Ramsen. The CPI information memorandum of November 2007 was amended in February 2008[26] to seek to raise $100 million.[27]

48 Prior to the Portland purchase, all save one of Mr Harpur's property transactions had been done through companies including Transpacific Holdings, Consolidated Ventures, Southlink Holdings Pty Ltd, Pasco West Pty Ltd, and Battle Heights Pty Ltd.[28]

49 Mr Harpur suffered a stroke on Mother's Day 1999. He was in critical care at the Epworth Hospital for about six weeks and then hospitalised for another couple of months. He continued to receive treatment after he was discharged.

50 Mr Harpur says that early on the stroke affected him greatly. He says that he was in a distressed state for quite a while; but there was a significant and gradual improvement in various functions to the point where he was once again able to function in business, "albeit with looking after certain deficits that remained."[29]

51 Mr Harpur says that he has no trouble in writing or in conceptual thinking. He says that the major defects that he was left with are a memory problem which he says has resulted in some embarrassing matters in terms of appointments and such like; a dependence on people which he had never had before; "and a general inability to pick people in the way I had before."[30]

52 Mr Hay, counsel for Lord Buddha, asked Mr Harpur whether he explained his incapacities to people he gave the CPI information memorandum to. Mr Harpur said that he did not. It was put to him that he didn't do so because his incapacities weren't a major difficulty or problem for him. Mr Harpur replied:

Well, I didn't perceive it was at that stage, I do now. That's for sure.[31]

53 In re-examination, Mrs Marks SC asked Mr Harpur at what point did he realise that one of the difficulties he had arising from the stroke was the fact that he was not reading people. Mr Harpur replied:

When these problems festered, or came up - -

Which problems, Mr Harpur?

---I'm sorry. The problem in relation to this contract ---[32]

54 Mr Harpur was cross-examined by Mr Little, counsel for Forvale, about his promoting of CPI without informing those he approached of his incapacities. He readily admitted that he did not inform people of his incapacities, but added that although he had been forewarned about his deficiencies as a result of the stroke he thought he had overcome them.[33] Mr Little also asked Mr Harpur about his application for a practising certificate and, in doing so, his declaring in the application that he was a fit and proper person. Mr Harpur said that he did not consider that he had any major mental impairment.[34]

55 Mr Harpur says that in relation to financial issues or mental arithmetic, his faculties suffered quite substantially; but he overcame that by being careful in doing numbers and checking them and also passing them past his accountant, Mr Tunbridge, who has been with him for about 30 years.[35]

56 Mr Harpur says that Mr Tunbridge accompanies him to most business meetings and he also drives him to a lot of those appointments. He says that if he is going to do something he will review it together with Mr Tunbridge so he does not make any silly mistakes.[36] He plans his days with Mr Tunbridge. Mr Harpur says that he usually passes his business letters through Mr Tunbridge. Mr Harpur says that Mr Tunbridge always discusses tax matters with him. He says that Mr Tunbridge is a combination of accountant and to some extent a PA as well.[37]

57 Mr Harpur says that so far as his property development business is concerned, Mr Tunbridge is involved. He makes sure that Mr Harpur does not forget anything and does the numbers after discussing with Mr Harpur what might be achieved or what he might do with a particular development.[38] Mr Harpur says that Mr Tunbridge gets involved in feasibility studies and things of that nature. He says that Mr Tunbridge is normally involved in making decisions about properties to purchase or invest in, but not always.[39]

58 Mr Hay asked Mr Harpur about his involvement in the South Link Business Park where he managed all the design and plans. Mr Harpur also managed the construction of the subdivision. Mr Harpur has developed the Arndale Civic Shopping Centre, the Templestowe Shopping Centre, the Noble Park Business Park, the South Link Business Park, the Springvale Shopping Centre and Geelong Gate.

59 In June 2007, Mr Harpur through South Link Holdings agreed to buy a property development at Lakes Entrance for $4.2 million. South Link Holdings has now taken proceedings against the vendor making similar allegations against its agent Mr Erden Hussein as now made against Mr Turner.[40] Mr Harpur agrees that he entered into that transaction without a solicitor acting for him.[41]

60 Mr Harpur agreed that in the CPI information memorandum he held himself out as a highly competent person able to make business decisions on behalf of the investors.[42]

Mr Tunbridge's observations on Mr Harpur's abilities

61 Mr Tunbridge provides Mr Harpur with accounting services including bookkeeping, looking after payment of accounts and tax returns.[43] He also helps Mr Harpur with research work. The research involves company searches and internet research. Mr Tunbridge discusses and advises Mr Harpur on business matters that arise on a day to day basis. Mr Tunbridge says that Mr Harpur has a network of people in various fields that he looks to for advice.[44] Mr Tunbridge sees Mr Harpur on average once a week.[45]

62 After Mr Harpur had his stroke, Mr Tunbridge became far more involved in his day to day business affairs.[46] He acts more as a personal assistant than he did before his stroke. He makes sure Mr Harpur keeps his appointments and that he keeps his affairs under control. Mr Tunbridge ensures Mr Harpur's accounts are paid. He accompanies him to business meetings at times, and looks after cheque books and the records of his companies. Mr Tunbridge draws cheques and makes electronic payments.

63 Mr Tunbridge says that Mr Harpur has become far more reliant on other people on a day to day basis. He says Mr Harpur has become less confident in himself. He tends to rely on his advisers in far more depth. Mr Tunbridge says that at times Mr Harpur is not as sharp as he was before the stroke.

64 It was put to Mr Harpur that the first time he told Mr Hutchins of his stroke and his related disabilities was in a trip he made with Mr Hutchins to his Corio development in late May 2008. Mr Harpur claimed he had told Mr Hutchins earlier although he could not identify any specific conversation.[47]

65 Mr Hutchins gave detailed evidence about what Mr Harpur told him. His evidence was as follows.[48]

66 Mr Hutchins drove Mr Harpur to Geelong in late May 2008. Mr Hutchins asked Mr Harpur if he drove. Mr Harpur explained he did not drive at all as back in 1999 he had had a stroke and he had taken it on himself that he did not want to drive anymore. Mr Harpur said "because you don't know when you're having the stroke and you don't know if you're going to have the next one." He said that he had made his own decision that he would not drive.

67 Mr Harpur told Mr Hutchins that his stroke had affected his short term memory, and that he sometimes did not pick up points as quickly as he would have before the stroke.[49]

68 Mr Hutchins said he was fairly surprised to hear this. He said that in all the dealings he had had with Mr Harpur from the time he met Mr Harpur till then, Mr Harpur had never shown any real signs of forgetting anything with him. Mr Harpur was always very much on the ball in conversations they were having and Mr Hutchins was a bit surprised that it had affected his health that much.[50] Mr Hutchins did not know anything about Mr Harpur's disabilities prior to the trip to Corio.

69 Mr Hutchins said that previously Mr Harpur may have said he had had a stroke. He said that may have come up when they were talking about treatment Mr Hutchins was getting at a Melbourne hospital.

70 Mr Hutchins says that Mr Turner did not ever tell him about any illness Mr Harpur may have had.[51]

Dr Peter McArdle's opinion on Mr Harpur's medical condition

71 Dr Peter McArdle, consultant psychiatrist, gave evidence of Mr Harpur's medical condition. Dr McArdle was asked to give a report for this case. His written report was tendered in evidence.[52] Dr McArdle first saw Mr Harpur in 1999 when, following his stroke, Mr Harpur was referred to Dr McArdle for an assessment of depression.

72 For the purpose of giving his report, Dr McArdle saw Mr Harpur once on 1 March 2011. When Dr McArdle saw Mr Harpur for the purposes of preparing a report for this hearing, Dr McArdle had not seen Mr Harpur since the early 2000s. On 1 March 2011, Dr McArdle carried out on Mr Harpur a number of cognitive tests. He noted that Mr Harpur had impairments in short term recall and mild impairments in orientation. He said other areas of difficulty were in drawing complex diagrams but Mr Harpur could follow a series of commands and only had some mild inaccuracies on complex commands.

73 Dr McArdle says that tests of abstract reasoning such as understanding proverbs were all normal. On reviewing his notes, he said:

...it would appear Mr Harpur's cognitive function in some areas improved slightly from 2003 but has probably remained much the same overall. He still has a very significant impairment in short term recall and memory and to a lesser degree in language function.

74 Mr Harpur told Dr McArdle that, in regard to the issues in this case, he was not capable of doing the level of due diligence about transactions that he had in the past and that he trusts people who help him more than he might have in the past.

75 Dr McArdle says that Mr Harpur informed him that "this was a factor in him misjudging the people he was dealing with and that he came under the [sic] influence or undue influence in this particular matter."[53] Dr McArdle did not carry out any tests to confirm whether or not what Mr Harpur was telling him was indeed the case. Dr McArdle said, however, that this was "consistent" with Mr Harpur's cognitive impairment and the need to rely on others to successfully continue work.[54]

I believe that Mr Harpur's ability to make judgments as to his own best interests, has been impaired over the period since his stroke. I think there is ample evidence that he would rely on others including his wife, family and those around him, to assist him in maintaining his business and to make decisions. It is my opinion that anyone with the cognitive impairments Mr Harpur has coped with would need to rely on others to successfully continue to work, as they would support him in areas he struggles with such as recall, memory, organisation and dealing with the detail.[55]

77 Under cross-examination, Dr McArdle agreed that due to Mr Harpur's impaired short term recall he may not accurately recall what Forvale said to him in relation to the Portland land.

78 Before dealing with the relevant facts, it is useful to set out the precise representations that Mr Harper alleges were made which he claims were false or misleading. During final addresses, four of the alleged representations were withdrawn. Those representations alleged and withdrawn are as follows.

(1) [Lord Buddha] had a magnificent opportunity to buy some land ready for development at Portland;

(2) [the plan entitled "Preliminary Site Development Plan" showed the sorts of uses the property could be put;] not pursued;

(3) the Plaintiff and its principal David Gibbs held an option over the land directly to the south of the property which was owned by the local council which land could be purchased by him as well;

(4) there were other people who were interested in purchasing the property including Mark Casey;

(i) a bulky goods store;

(ii) a shopping centre;

(iii) a residential development, including an aged care village and assisted care facility;] not pursued;

(6) the Plaintiff had a number of tenants lined up for the site including "restricted retail tenants";

(7) Coles and Aldi were available, and wanted to go there, as tenants;

(8) Cheap as Chips, Mitre 10 and Bunnings wanted to go there to take a lease for a bulky goods store in the project;

(9) there were other prospective purchasers who were interested or keen to buy the property at a price of $6.5 million;

(10) there was a valuation in existence which valued the property at $6.5 million;

(11) [there were buyers for a retirement village at the other end of the property;] not pursued;

(12) [the Defendant could sell the retirement village to Mark Casey;] not pursued;

(13) [the local council were prepared to rezone the property to allow development of a shopping centre.] not pursued.

79 The representations are alleged to be partly in writing, partly oral and partly to be implied.

80 Insofar as they are in writing, they were contained in:

(a) the Preliminary Site Development Plan that was handed to Mr Harpur by Mr Turner at the offices of Forvale in or about early December 2007;[56]

(b) a document showing calculations and projections made by Mr Turner in respect of the property and its developments;

(c) a note made by Mr Harpur on Sahid Jaya Hotel paper.[57]

81 The calculation document was not tendered. It has been lost. Mr Harpur gave evidence of its contents. During the case Mr Harpur also relied on the promotional brochure[58] and the concept plan that is annexure A.[59]

82 In March 2006, Lord Buddha Pty Ltd agreed to purchase a block of land at the corner of the Henty Highway and New Street Portland for $1.1 million plus GST making a total price of $1,210,000.[60] The Portland land is approximately 7.6 hectares (18 acres) in size and consists of five separate titles. The negotiations were conducted between Mr Gaucci for Lord Buddha and the agent for the vendor, Michael Barrett, an estate agent employed by Coastal Real Estate that has offices in Portland.[61]

83 Lord Buddha acts as the trustee of a unit trust. The Portland land is the only land Lord Buddha owns. Initially, Mr Larry Dimarzie owned units in the trust along with Mr Charles Gaucci. Now, however, Mr Gibbs and Mr Rodden are the sole unit holders.

84 Power, telephone, water, sewerage and gas were close by but had not been connected to the property. At the time the land was offered to Mr Harpur it remained an undeveloped paddock.[62]

85 The Portland land is zoned B4 which means that retail premises selling bulky goods could be built on the land but not retail premises such as a supermarket. To build retail premises for non bulky goods on the land a part of it would have to be rezoned to B1. The Portland land is situated on a ring road that carries heavy traffic around the outskirts of the Portland Township to the Port of Portland. Portland has a shopping centre in the centre of the town (the CBD) and the development of the Portland land for retail use would compete with the shops in the town centre.

David Gibbs' acquisition and plans for the Portland land.

86 Some time in 2007, Mr Gibbs was approached by Mr Gaucci to acquire the interest of Mr Dimarzie in the Portland land. Mr Gibbs agreed to do so.[63] Mr Gibbs paid Mr Dimarzie a premium of $150,000 over the purchase price of the Portland land.[64] At that time, the other unit holders were Mr Gaucci and Mr Rodden.[65] As noted, Mr Gibbs and Mr Rodden are now the sole unit holders.

87 Initially, the purchase of the Portland land was to settle in January 2007, but the settlement was extended to March 2007.[66] Prior to settlement, Mr Gibbs took his interest in the unit trust. His interest is the majority interest.[67] The purchase was settled on 15 March 2007.[68] On 24 March 2007, Lord Buddha mortgaged the land to the Bendigo Bank.[69]

88 Mr Gibbs bought the land with the intention of developing it or reselling the land with an improved zoning. Mr Gibbs began the process of seeking to have the land or part of it rezoned B1 to allow small commercial premises to be built and operated. After the contract of sale was signed, Mr Gaucci asked Mr Barrett to seek out potential buyers for some of the lots, or possible tenants. Mr Barrett was told of Lord Buddha's plans including building a homemaker's centre and establishing a large fuel outlet on the corner. Mr Barrett says that his agency put up a sign on the property that attracted some interest.

89 A concept plan for the Portland land was prepared.[70] The concept plan showed possible zonings and uses for the land. Mr Gibbs arranged for it to be included in a promotional brochure given to potential buyers or tenants.

90 On 9 October 2007, Mr Gibbs made a power point presentation to a Councillor's Workshop of the Glenelg Council, including the council management team and the CEO of the council,[71] for a possible rezoning of the site and a proposed redevelopment.[72] Darren Winjam, who works for ICR Property & Investment Group, prepared the power point presentation which included the concept plan.[73] A hard copy of the presentation was prepared.[74]

91 Mr Gibbs' presentation took about half an hour.[75] There were some questions at the end which "indicated strong interest in it." Mr Barrett spoke to Mr Hornby, one of the senior officers of the council, the next day. Mr Barrett says that Mr Hornby informed him the council were "very, very interested in the proposal and generally speaking supported it fully, so it was a very favourable response."[76] Mr Barrett also says that he was told by Mr Hornby that the council would do whatever they could to help Lord Buddha in their preparation process to put the project forward and go through the necessary council processes.[77] Under cross-examination Mr Barrett said that Mr Hornby indicated that in general all of the councillors were supportive and he saw no reason why it could not go ahead.[78]

92 Mr Gibbs was cross-examined by Mrs Marks SC, senior counsel for Mr Harpur, about representations he made in the presentation. In particular he was taken to the statement that strong interest had been received from supermarket operators and that "other traditional homemaker tenants have indicated their commitment to the site should we secure a supermarket for the site."[79] He was asked whether that was the interest expressed by Safeway mentioned below.[80] He said: "no, also I think at that time we had Aldi, um, at which Charles [Gaucci] (indistinct), um, we were also talking about another IGA supermarket."[81] Mr Gibbs said that he did not believe they had been "knocked back" by Aldi and IGA, as was put to him by Mrs Marks SC.[82]

93 After the presentation Mr Gibbs spoke to Mr Stuart Burbank, the development manager or "head guy" from the council.[83] Mr Gibbs said that Mr Burbank told him that if they came up with some tenancies that were new to the town, that they [the Council] would review things at that time, and the council were not sure whether to go ahead with the rezoning.[84] Mr Gibbs explained to the Court that the council were concerned about the reaction of the existing retail community in the city area of Portland to a shopping development on the outskirts of town.

94 Mr Barrett says that on 6 July 2007 he met with Mr Gibbs in Portland. Mr Gibbs told Mr Barrett that Lord Buddha was looking to build a retirement village on the western end of the Portland land. Mr Barrett was asked about the land immediately to the south. He advised Mr Gibbs that it was owned by the council. Mr Barrett was instructed by Mr Gibbs to find out if the council would be prepared to sell the land to the south. Mr Barrett approached Mr Hornby. Mr Hornby told Mr Barrett that the council were very open to the idea subject to normal council processes for selling a property.[85]

95 Under cross-examination, Mr Gibbs said that the council were very keen to see something happen about a retirement village as the council had recently lost some [aged care] beds.[86] Mr Gibbs said that the proposed aged care facility and retirement village was to be built partly on the Portland land and partly on adjacent land owned by the City of Glenelg. Mr Gibbs said that he had Mr Barrett approach the council.

96 Mr Barrett indicated to Mr Gibbs that the council would sell the adjacent land to him for $350,000 approximately. "They wanted to see it happen....I mean he [Michael Barrett] said you can have an option, but it was an informal option, it was never formalised, it was never signed off or anything along those lines."[87] Mr Gibbs agreed that he had an informal option.[88] He agreed that he told Mr Turner that.[89] He said "[y]es I indicated that council would look at selling the land and rezone potentially part of it to a retirement village in the future, absolutely."[90] He said that they had enough information from the council that the council wanted to talk further about the proposal.[91] Mr Gibbs denied telling Mr Turner he had an option to purchase the land.[92] Mr Gibbs said that "we potentially could get an option over the land was the way it was described to him, as it always is."[93]

97 After acquiring his interest in the Portland land, Mr Gibbs approached two potential tenants. He spoke to Mr Martin Lion and Mr Matt or Tim McMillan of Woolworths [Safeway].[94] He was told that it was probably three to five years before Woolworths would actually look further at the property.[95] Mr Gibbs said he also spoke to Nick and Paul Adrankos of Milemaker Petroleum.[96] Mr Gibbs said he handed over these discussions to Mr Gaucci.[97] Mr Gibbs said that Mr Gaucci was the agent on the property and the person who approached potential tenants.[98]

98 Mr Gibbs explained that the promotional brochure headed ICR Property Investment Group "The Gateway"[99] was provided to Mr Gaucci to show to potential tenants. Mr Gibbs said that they had interest from several tenants but they would not commit unless they had an anchor tenant. He said that they were still dealing with Bunnings, "even to this day," but Bunnings was putting a decision off for another year or two.[100]

99 Mr Gibbs said that the proposed development he had in mind is described in the promotional brochure.[101] He agreed that the proposed supermarket and speciality shops would require a rezoning to B1.

Mr Barrett's and Mr Gaucci's attempts to attract tenants and buyers

100 Mr Barrett says that he was retained by Mr Gaucci to find tenants and buyers for the Portland land.

101 Most of the discussions Mr Gaucci had with potential tenants were between April and August 2006. At that time the Portland land was under contract, but settlement with Lord Buddha did not take place until the following March.[102] Mr Gaucci kept a diary entry of his contact with the potential tenants that he referred to during his evidence.[103]

102 Mr Gaucci conceded under cross-examination that the bulk of his activity in pursuing tenants was before settlement. He said that after Mr Gibbs became the major partner in the project he "pulled back" a little in actively canvassing tenants.[104]

103 Mr Gaucci says he predominantly spent his time seeking businesses suitable for B4 zoned land, such as bulky good, fast food, factories and showrooms.[105]

104 I will only deal with the prospective tenants that were mentioned by Mr Harpur in his evidence or referred to by him in his amended counterclaim. There were many other potential tenants approached. None of them committed to the project.[106]

105 Mr Gaucci had discussions with Mernique Ivokovic of Aldi.[107] Mr Gaucci said that Aldi were looking to get into Portland and they subsequently developed a site in the centre of town.[108] Mr Barrett says he never offered the site to Aldi as he helped secure land for it in the CBD where they built a supermarket.[109]

106 Mr Barrett approached the owner of Betta Electrical, Tony Fleming. His current store was too small, but he was concerned that the minimum requirement for a B4 site was about a thousand square metres.[110] I infer that he did not commit to the site.

107 Mr Gaucci said "we" spoke to Tim Schaeffer of Bunnings.[111] Mr Gaucci said that he was the state property manager or the acquisition manager. Mr Gaucci said that "we" provided Mr Schaeffer with a concept plan for the site that demonstrated how "we" saw the site being developed.[112] He was asked how he left the situation with Bunnings. Mr Gaucci said "...ultimately, and we're still in discussion with Bunnings to this day, at that point in time it was too soon for Bunnings."[113]

Bunnings, with a town the size of Portland, they probably had greater priorities and, ah, just the demographics et cetera for their model and also with Bunnings they have a standard format large box of about eight to 10,000 metres, they were in the process of finding a smaller model and they hadn't refined that smaller model for regional areas such as Portland and towns of that size and demographic mix.[114]

109 Mr Gaucci's diary referred to Paula Allard from Cheap as Chips. He said that their requirements would mean the site would need to be rezoned. Mr Gaucci said that Lord Buddha did not take that to the next level and apply for a rezone to see if they could secure them. Mr Gaucci said "[a]gain we were more interested in a supermarket or Bunnings, but we felt that that sort of user could come in time if we'd gone to the next stage."[115]

110 Mr Gaucci said that if they could rezone part of the land, they would have ideally liked a supermarket. He said "we" had discussions with Jeff Tampling of Coles.[116] Mr Gaucci said that Coles' preference was to go into the CBD but there were limited opportunities. He said that Coles were interested in the Portland land and, similar to Bunnings, asked for plans but it never went any further than that.[117]

111 Mr Barrett had direct dealings with representatives of Coles. On 20 March 2007 he met with two directors of Jacque - a company which scouts for properties - Richard Cabricki and Geoff Andrews, who were acting for Coles Supermarkets and looking for a site in Portland. Mr Barrett prepared details on five potential sites including the Portland land.[118] Mr Garry Perrin, the economic development manager for the Council, also attended the meeting.[119] The supermarket would have required the Portland land to be rezoned. Mr Barrett said that Mr Perrin advised the meeting that he thought the rezoning was "doable."[120] A couple of months later, Mr Barrett was advised that Coles wished to proceed to seek land to commence building a supermarket in Portland. Subsequently, Wesfarmers purchased Coles. Mr Barrett was then told that Wesfarmers wanted land for a Bunnings store. At that stage, Mr Barrett had met Mr Gibbs and Mr Barrett discussed with Mr Gaucci and Mr Gibbs the Bunnings proposal.[121]

112 Under cross-examination Mr Barrett added that Mr Perrin said that while he could not give a definite commitment, the rezoning was possible subject to normal processes.[122] On 6 July 2007, Mr Gibbs came to Portland and instructed Mr Barrett to offer Jaques one of the five titles of about 20,000 square metres for Bunnings.

113 Under cross-examination, Mr Barrett agreed that by June 2007 Coles had made it clear they were not going to proceed with the site.[123] He also agreed that Coles did not wish to proceed with a Coles Express outlet on the Portland land.[124]

114 Mr Gaucci says he met with Kent Barker, the local Mitre 10 operator. Mr Gaucci says that Mr Barker expressed strong interest in the site.[125] Mr Gaucci said "at the end of the day we declined to take that any further because we just didn't think that was the right user to create the drawcard for the development."

... around... July 2007, we... got quite serious about looking for tenants and I spoke to, ah, Kent Barker of the local Mitre 10 franchise. He was looking to expand his business... he had a CBD site which was very small, his lease was coming up for rent - for review, I should say, and he was looking for a larger site and,... I spoke to him about the proposed development and he was very interested in... being part of this homemaker centre. And his requirements were about eight to 10,000 square metres, which was quite a large site and he was... interested in the idea that Mr Gibbs may build this new building for him... to put his Mitre 10... retail outlet in, which would have been hardware and timber and... garden supplies. And... he was interested in possibly... he would lease that property back with possibly an option to buy... so he was very interested in that proposal and wanted to be kept informed because he... didn't have enough land in his current site in the middle of the CBD.

So how did he leave it - with Mr Barker...?

... well I... conveyed that to Mr Gibbs and he certainly... said to me that he was very keen on supporting any proposal with Mr Barker and Mr Barker continued to deliberate about that, but it didn't... proceed any further at that time.

And why was that?

... I think he was content to stay where he was,... and also I think the timeframe of the new development might have been against him a little,... he had to sign a lease where he was and he sort of needed to make a decision one way or the other, so he decided to stay where he was. But he wanted to be kept informed about the development down the track because ... he felt that he may be able to keep his CBD site as well as perhaps developing an external site. I mean, everybody in Portland knew that this - if this gateway development came off, it would be... a very big thing and people wanted to be part of it. It was going to be an important development for Portland.[126]

116 It appears from this evidence that by the time the land was offered to Mr Harpur, Mr Barker had re-signed his lease in the Portland CBD and merely wished to be kept informed about the development down the track.

117 Mr Gaucci said that "we" had a meeting with Jeremy Scott of Scotts Petroleum on the site around 2006 or thereabouts. He said that Scotts were looking to buy a portion of the site as the pulp mill was to go ahead at that time. He said that did not go anywhere.[127]

118 As can be seen from this evidence, by December 2007 no prospective bulky goods tenant had expressed an intention to be part of the development nor had a B1 tenant.

Mr Gibbs' retainer of Mr Turner to sell the Portland land

119 In about September 2007, Mr Gibbs approached Mr Turner to sell the Portland land.[128] Mr Gibbs said that he had several conversations with Mr Turner about the Portland land. He said that those conversations were on the basis that it was B4 land; but part of the land had potential to be rezoned B1. He also told Mr Turner that the site had potential down the track for a possible retirement village.

120 Mr Gibb said that Mr Turner told him that he may have a few interested party because Mr Turner had been involved in that type of area before, and had sold quite a number of regional properties.[129]

121 Mr Gibbs was asked whether a price was discussed. Mr Gibbs said that at that stage he was happy with $5 million clear. He said that anything over $5 million Mr Turner could keep.[130] Mrs Marks SC cross-examined Mr Gibbs about the price he wanted. Mr Gibbs said that there was a valuation of $3.5 million by Les Speed of Western District Valuation when they purchased the Portland land.[131] Mr Gibbs said that there was also a valuation done by John McAnn at some stage around the $5 million mark. He then admitted that this valuation was done on 23 March 2009, after the sale of the land to Mr Harpur.[132] He said that he thought the property was worth $5 million and "it could have been up to six."[133] Under cross-examination by Mrs Marks SC, Mr Gibbs conceded that he might have agreed with Mr Turner that the asking price would be $6.5 million. He said that he did not remember.[134]

122 Mr Gibbs said that he first learnt of Mr Harpur's interest in the land when he met with Mr Turner at his home at Mount Martha to sign the sale authority at about 10.30am on 3 December 2007.[135] Mr Gibbs said that Mr Turner told him that Mr Harpur was a very experienced developer; that he had been around for approximately 20 years; that he had done numerous projects in regional areas as well as the city; and, was a very seasoned developer.[136]

123 Mr Gibbs said that there was another potential buyer mentioned by Mr Turner, Mark Casey, but his interest might have lay in the retirement village only.[137] Mr Gibbs said "that was also put on hold later on."[138]

124 As mentioned above, in the second half of 2007 Mr Harpur was involved in a development at Lakes Entrance where a hotel style building was to be constructed. He met Mr Turner and Mr Hutchins when he visited a builder, Maxcon, in Flinders Lane to obtain building costs for the Lakes Entrance project. Forvale was located in a small office on the same floor as Maxcon.

125 Mr Hutchins said that he first met Mr Harpur in early October 2007 at Forvale's office in Flinders Lane.[139] Mr Harpur was visiting Mr Turner. Mr Harpur was seeking Mr Turner's help in finding a person to manage some 90 apartments at the Lakes Entrance development.[140] The Lakes Entrance project included serviced apartments that required a manager to manage the units. Mr Turner introduced Mr Harpur to a Bronwyn Paltaguou who was experienced in conducting serviced apartments. Mr Harpur discussed with her taking a head lease at the Lakes Entrance development. Mr Hutchins said that Mr Harpur visited Forvale's office a number of times to see Mr Turner.

126 At their first meeting, Mr Hutchins said Mr Harpur told him that he was a lawyer specialising in tax minimisation and that he developed properties. He offered to help Mr Hutchins in that area.[141] Mr Harpur told Mr Hutchins about property he had developed at Corio and in Dandenong. Mr Harpur says that he liked Mr Turner and Mr Hutchins.

127 Mr Turner sought to sell to Mr Harpur a project in Flemington for the construction of residential apartments. Mr Turner showed Mr Harpur the certified plans and permits prepared and obtained for the redevelopment. Mr Harpur spoke glowingly of Mr Turner's thoroughness in presenting him with all the relevant documents. At one stage, Mr Harpur implied that these documents were prepared by Mr Turner himself.[142] In cross-examination he conceded that they were prepared by others.

128 Mr Turner prepared for Mr Harpur a marketing report setting out estimated realisable prices for each of the apartments in the Flemington project. Mr Harpur and Mr Turner met with Macquarie Bank to inquire about their interest in financing the project. Mr Turner prepared some costings that he provided to Macquarie Bank who decided not to proceed with the project.[143]

129 Mr Harpur tendered some calculations of sale prices prepared by Mr Turner for the Lakes Entrance project, set out on a sheet of paper.[144] Mr Harpur said that he used the costings to do feasibilities on the project and to provide information to potential financiers.[145]

130 I took this evidence to be relevant to Mr Harpur's reliance on Mr Turner's abilities to calculate the feasibility of a development project. It also tended to show that if there were relevant documents for a property development project that Mr Turner was able to get them together to show to Mr Harpur.

131 Over a period of about three months, Mr Harpur met with Mr Turner weekly about the Lakes Entrance project. Mr Turner drove Mr Harpur to the Flemington project and the Lakes Entrance project, perhaps twice, where on one occasion they stayed overnight.[146]

Health discussions between Mr Turner and Mr Harpur

132 Mr Harpur says that when they were at Lakes Entrance they discussed their health quite extensively. He said that Mr Turner had problems with his heart and "I guess my reciprocation was the problem I'd had when I was at the Epworth Hospital, so Gordon knew all about it."[147]

133 Mr Harpur was asked what he told Mr Turner. He said he could not remember specifically. He said he was accurate about what had happened,

... so I would have told him that I'd had the stroke, I'd been in hospital for an extended period of time. I would have told him how bad it was in the beginning and how relieved I was that things had improved substantially. I would have told him that the reason I didn't drive was that not only had I had the stroke, but I had a couple of seizures and when they happened, I went on medication for that. But the potential to have something go wrong with a seizure was just something I wasn't prepared to take any risk of.[148]

134 Mr Harpur says he did not discuss his current health in any detailed way. He says that "I guess one of the things we did make comments about was that I was forgetful in relation to some appointments because I had overlooked a couple. That was basically when I'd forgot to put them in my electronic diary."[149]

135 Mr Harpur was asked whether he asked Mr Turner to do anything as a result of his forgetfulness. Mr Harpur replied that he asked Mr Turner to make sure that he kept "notes of any meetings we had where there [were] material matters" ... "that required action, that sort of thing."[150] Mr Little put it to Mr Harpur that he never asked Mr Turner to take notes of meetings that he and Mr Turner attended. Mr Harpur said that he did. Mr Harpur agreed that if he had asked for notes to be taken he would therefore ask for a copy. My Harpur was asked whether he asked Mr Turner for a copy of any notes. Mr Harpur avoided answering the question. As it was he produced no notes taken by Mr Turner of any meeting.[151] Mr Harpur says that Mr Turner had a number of files that he kept in the boot of his car. He says that he thinks they were the files Mr Turner was working on.[152] I understood this to mean that these notes, if any, would be in Mr Turner's files.

136 Mr Harpur says that he sought the files in the car from Mr Hutchins after Mr Turner died. He says that he was told that Mr Turner's daughters would release them and that Mr Hutchins would pick them up. He says that he was subsequently told that the daughters would not release them and they never turned up. Mr Harpur says that he knows nothing more about it than that.[153]

137 It was apparent from this evidence that Mr Harpur had very little memory of what he actually told Mr Turner about his health and more particularly the effect of his stroke on his abilities. It is only implicit that he told Mr Turner that he was forgetful. There is no evidence that he told Mr Turner that he was left with a dependence on people which he had never had before "and a general inability to pick people in the way I had before" [154] or about trusting people or not being able to judge people.

138 At about 10.30am on 3 December 2007, an agency agreement between Forvale and Lord Buddha for the sale of the Portland land was signed by Mr Hutchins of Forvale and Mr Gibbs of Lord Buddha at Mr Turner's Mount Martha home.[155] Mr Gibbs said that Mr Turner probably told him a week or two before the authority was signed that he had an interested party [to purchase the Portland land].[156] Mr Gibbs said that he did not notice the division of the commission at the time.[157]

139 The authorised price was $6.5 million of which commission was agreed at $1.5 million. The commission was to be shared with Erden Property Group and Russ Corporation (Mr Turner's company).[158]

140 Mr Harpur says that he first heard about the Portland property from Mr Turner when he was having coffee with him about a week before he signed the contract for the Portland land on 11 December 2007.[159] Mr Hutchins says that Mr Turner told him that Mr Hassan had told Mr Turner to present the Portland property to Mr Harpur.

141 Only Mr Harpur gave evidence of what Mr Turner said during the negotiations between Mr Harpur and Mr Turner over the Portland land. Only Mr Harpur and Mr Turner were present during their negotiations and sadly Mr Turner died in January 2008.

142 Hearsay evidence of the conversations at those negotiations was given. At meetings between Mr Harpur and Mr Gibbs and others after the contract was signed, Mr Harpur purported to recall some of the conversations that he had had with Mr Turner in the negotiations. Mr Tunbridge and Mr Gibbs give some limited evidence of what Mr Harpur said about those conversations with Mr Turner. Mr Hutchins gives more extensive evidence of Mr Turner telling him of his conversations with Mr Harpur. Mr Hutchins also gave evidence of conversations with Mr Turner from which I am able to infer what may have been said to Mr Harpur.

143 Evidence was given of the context in which the alleged negotiations between Mr Harpur and Mr Turner took place. During the negotiations Mr Harpur was given several documents by Mr Turner. These included the marketing brochure for the Portland land prepared by the Property & Investment Group.[160] Mr Gibbs said the brochure emanated from the document presented to the Glenelg Council and prepared by Darren Winjam.[161]

144 As indicated above, amongst other things Mr Harpur relies on the promotional brochure to establish misleading and deceptive conduct.[162]

145 Section 12 of the promotional brochure headed "Proposed Development" states:

• To date only preliminary advice and concept plans have been prepared for the site as we are keen to work with Council to achieve the right outcome for the site.

• Should the site be rezoned it is proposed to develop part of the site for the following uses:

• Small service station associated with supermarket

• And the balance of the site, together with adjoining Council owned land, for an aged care facility and retirement village.

146 When Mr Turner informed Mr Harpur that the Portland land was for sale, Mr Harpur says that Mr Turner gave him a preliminary site development plan which has an area delineated in pink for a retirement village.[163] Mr Harpur says he was also given the Gateway brochure[164] "about a day maybe two days before" he signed the contract.[165] As discussed below, it appears that he was not given the brochure until he had signed the contract. He could not recall whether he was given an original or a photocopy. Mr Harpur says that Mr Turner wrote the "7" and "18" appearing on the coloured concept plan he was given.[166]

147 Mr Harpur says that he and Mr Turner discussed the coloured proposed development plan.[167] Mr Harpur says that they discussed that the proposed major service station or trucking station should be located in the commercial serviced allotments at the western end of the land. Mr Harpur says that they discussed that that would probably be preferable to breaking up the lots.[168] Mr Harpur says that Mr Turner said that the Scotts' Petroleum proposal was viable and there was another service station that was viable.[169]

148 Mr Harpur said that he was told by Mr Turner that the 18 acres marked with green on the plan could be brought into the project. He was not certain whether the seven acres were part of the project or not.[170]

149 Prior to the contract being entered into on 12 December 2007, Mr Tunbridge carried out for Mr Harpur some company and title searches and obtained maps and planning documents as follows:

(a) company search of Lord Buddha on 10 December 2007;[171]

(b) maps of Glenelg Planning Scheme for Portland;[172]

(c) town planning maps and other maps obtained on 10 and 11 December 2007.[173]

150 Mr Tunbridge says that the request to make the searches was the first time he had heard of Lord Buddha.

151 The concept plan, promotional brochure, and the preliminary site development plan were the main documents that Mr Harpur had in his negotiations with Mr Turner.

152 Mr Harpur did not give evidence of his negotiations with Mr Turner in a clear and precise fashion. To properly comprehend his evidence concerning the alleged representations it is necessary to quote it in some detail:

Question: Are you able to, if I can take you a bit further forward in time, take you to when you first heard about the property that we're all in court over, the Portland property?

Mr Harpur: Yes.

Question: Do you recall when that was?

Mr Harpur: Yes, it would have been about a week prior to the contract being signed.

Question: How is it that you're able to recall it was just a week prior to the contract being signed?

Mr Harpur: Only because I - it all happened very, very quickly, so the contract date pins it down for me.

Question: Do you recall where it was that you first heard about the Portland property?

Mr Harpur: I first heard about the Portland property from Gordon when I was with him having a coffee in a St Kilda Road coffee lounge very near my home.

Question: And that was in early December?

Mr Harpur: Yes.

Question: You've just indicated the week before the contract?

Mr Harpur: Yes, yes, early December, exactly.

Question: What was it that Gordon told you about the property?

Mr Harpur: Well, he told me that it was a terrific opportunity. By then I got to understand Gordon, or I thought I had, pretty well, and when he said that I took notice because I think he had a terrific project in Flemington that I'd looked at with him but we didn't proceed. So, he told me - because he knew I'd done some developments in bulky goods, so he told me that this one was ready to go. It was a situation where they had - firstly, the size of it was very - was quite large, about 18 acres. It was on a corner, a very important corner to Portland. He told me that. He told me that the situation was that it was fairly much a turnkey situation.[174]

....

Question: What did he tell you the property was like?

Mr Harpur: Well, he told me that the property was obviously flat with a lot of road frontage. He told me that he had tenants, there were tenants available for the property, and there were a number of names, but the two that stood out because - were really Bunnings and the interest of Coles and Aldi, because those names on a site are like gold.

....

Question: What was it that he told you about Bunning?

Mr Harpur: Well, he told me that Bunnings wanted to go there; they were in a situation where they were ready to be - get a proposal to actually go there, so it was being developed. They'd committed to the site in terms of what they wanted. He mentioned two sizes to me. One was fairly low for a Bunnings, 3000 metres, and the other one was more to the usual scale, about 6000. He told me that 3000 was a new module that they were looking at in regional areas, so.[175]

Question: Did he tell you which of those or was it both that Bunnings was interested in?

Mr Harpur: They were interested in a major part of the site and from that I devolved that the more likely it was the 6000 metres.

Question: What about Coles? What was said to you about Coles?

...

Mr Harpur: That Coles wanted to go to the site, that there had been representations by Coles to the city and that it would need the rezoning to go through to accommodate them on the site, that they were quite prepared to be involved in that process. And Gordon knew and said to me, "Well, when you've got a tenant of that size who want to go to a site and give it their imprimatur, then everything becomes much, much easier in relation to rezoning" ....[176]

Question: What was said to you in relation to Aldi?

Mr Harpur: Well, it was a very similar thing, um, he mentioned that, um, they were very keen to get into this area and they'd opened one in Warrnambool and he'd said this was the next target for them.

Question: Did he say anything else about Aldi?

Mr Harpur: Not that I - not that I can remember.[177]

....

Question: Now, did he show you a plan of the property when you had your meeting in early - - -?

Mr Harpur: Yes, he did, it was a - he showed me a few things. One was a set of titles, of five titles, um, and then there was a plan that consolidated or showed all those titles and showed the potential development could occur there, um, and that really broke into three areas. One was a straight forward B4 bulky goods, um, where the Bunnings was claimed to be the anchor tenant, um, the other area to be rezoned where the claim was that Aldi and Coles, ah, wished to go there, um, that was delineated and then, ah, at the other end, what they were - what he said to me about that being a major truck stop was that there were two parties involved, um, the - at this stage the only one that I can remember straight away is Scott, who was the major sponsor of the Adelaide Crows and had a major trucking (indistinct). And apparently when he leased any of the trucks to the owner or the operators, they were committed to using his fuel as well so that - and Portland being where it was, it was an obvious place for him to put a major truck stop and to fuel all his trucks that were flowing through there. And Gordon spoke about setting up accommodation with it as well so that truck drivers, ah, could get recharged, ah, briefly and then continue on their trips et cetera. Um, there was another one that he mentioned; I just can't remember who it was.[178]

....

Question: Do you recall if Mr Turner said anything else to you about prospective tenants for the development?

Mr Harpur: Mr Turner, apart from talking, saying that Bunnings were available and saying he also indicated to me that Mitre 10 were also, had negotiations in relation to taking a part of the site, and we discussed the fact, well, if we can get Bunnings, we wouldn't be interested in Mitre 10. So that was the basis on which that went. He told me he had an electrical, a local electrical store, I can't remember who it was, but I just don't remember, but it was one of the ones that were already operating an electrical store in Portland, in the city centre. [179]

....

153 Mr Harpur was taken to the note from the hotel note pad of Hotel Sahid Jaya Jakarta which is headed 'Gordon' followed by a mobile number. On the note is written Cheap as Chips, Mitre 10, Bunnings and Mitre 10 again. Under that is 3000, 120 days and $6.5 million. Mr Harpur was asked about the note.

Question: When did you make this note, Mr Harpur?

Mr Harpur: I would've made this note before I signed the contract. It was - I'm not sure whether it was at the meetings with Gordon or whether this was a telephone call with Gordon but it's - it's the same tenants that we discussed anyhow and we've got Mitre 10, Bunnings, Cheap as Chips and the 6.5 million, 120 days. That's taken place a couple of days prior to the signing of the contract. I can't remember whether those notes were made in a telephone conversation or in an office.

Question: This is your handwritten note?

Mr Harpur: It is my handwritten note, yes.

Question: And is this your only note that you made prior to signing the contract?

Mr Harpur: The only note that I've found or can remember, yes.

Question: And I see you've recorded Mitre 10 twice there. Do you know why that would be?

Mr Harpur: No.

Question: You've given the court evidence about what was said to you about Mitre 10 and Bunnings?

Mr Harpur: Yes.

Question: Do you recall why you've written Cheap as Chips down? Was something said to you about Cheap as Chips?

Mr Harpur: They were - yes, he indicated that they wished to go to the site as well and that's why they're noted there.[180]

154 Mr Harpur was shown the preliminary site development plan.[181]

Question: When you discussed this plan, did he say anything else to you about possible uses of the property?

Mr Harpur: In relation to this area, the discussion was about the fact that Mr Gibbs held an option in relation to additional land there which would allow squaring off of and expansion of that, um, retirement village.

Question: What was it that Mr Turner said to you in relation to that?

Mr Harpur: That, ah, David Gibbs held an option in relation to additional land to be added into that, um, that particular development of the retirement village.

....

Question: So - all right. So that that was something that he told you Mr Gibbs held an option in relation to?

Mr Harpur: Correct.

155 Mr Harpur says that Mr Turner put the pink line on the preliminary site development plan.[182] Mr Harpur says that Mr Turner told him that the area within the pink line:

.... represented the area that could be, the whole area that could be used to create the development of the retirement village and the assisted care, and it then also abutted where the Baptist Church was going to develop a new church and needed car parking, so he indicated, the spin off for the village and also the car parking economies, because the Baptist Church were not going to be able to afford to do a 200 person car park, and they were looking at a very large church.[183]

156 Mr Harpur was asked about other purchasers at $6.5 million as follows:

Question: Did Mr Turner say anything to you at that stage about the price that was being sought for this price?

Mr Harpur: He told me that the price that was being sought, there was another purchaser available who wanted to buy this property and they were in exactly the same park as I am, or he was putting to me, 6.5.

Question: So he put 6.5 to you?

Mr Harpur: Correct.[184]

Question: So why did you sign the contract so quickly after your first discussion with him? You've indicated it was within a week?

Mr Harpur: Yes, um, there was pressure on from the point of view of another buyer, um - - -

Question: What pressure was that?

Mr Harpur: Well, what Gordon said to me was, "You're going to miss this deal unless you move."

Question: And did he tell you why you were going to miss the deal unless you moved?

Mr Harpur: Well, because there was another party who was making an offer, about to make an offer. I'm not sure whether he'd made it or was about to make it, I'm not positive on that.

Question: And did he tell you at what level the other party was about to make an offer?

Mr Harpur: He'd indicated to me that the other party was around the six and a half million. He was no more specific than that.[185]

158 Mr Harpur says that he was told Mr Casey was a buyer for most of the rear section, and there was another buyer who Mr Turner did not identify who wanted to buy the commercial part of the development.[186]

159 Mr Harpur said that when he and Mr Turner discussed the price that was being sought for the property, Mr Turner told him that "he'd seen a value that was in excess of 6.5, and he said he had no doubts about the value of the property."[187] Mr Harpur says that he asked Mr Turner whether or not it was a reputable valuer, Mr Turner said yes and that it was somebody who knew the area.[188]

160 In cross-examination by Mr Hay Mr Harpur was asked about this evidence:

Question: Why didn't you actually ask to see evidence of that [other prospective buyers at 6.5]?

Mr Harpur: I didn't, I really don't know why I believed what Gordon had told me. Everything else he'd ever done had been - had checked out, as he'd gone into it, everything he'd told me had proved up, so I ---

Question: Surely you would have wanted to know what these other prospective purchasers were basing their price on?

Mr Harpur: I assumed, because that was the way it was put to me, that that they were basing it on the same offering that I had.[189]

161 As to the valuation for $6.5 million, Mr Harpur said:

Question: Do you recall when he mentioned the price that was being sought for the property, if you had any discussion with him about what the value of the property was?

Mr Harpur: Yes, Gordon told me that he'd seen a value that was in excess of 6.5, and he said he had no doubts about the value of the property.

Question: So, I'm sorry, he said he'd seen a valuation?

Mr Harpur: He told me he'd seen a valuation, yes. [190]

Cross-examination of Mr Harpur on representations

162 Mr Little put to Mr Harpur that he could not be certain what Mr Turner said concerning the alleged representations. He referred Mr Harpur to the fact that he took no notes and made no written record of the representations. Mr Harpur agreed that his memory was poor but insisted that he was certain of what Mr Turner said, although he could not be certain of the exact words.[191]

163 The reference in the promotional brochure to concept plans was shown to Mr Harpur.[192] Mr Hay put to Mr Harper that he had been informed that only concept plans had been prepared and that the he understood that the preliminary site development plan was merely a concept plan.[193] Mr Harpur quibbled with that and suggested he did not understand the preliminary development plan to be only a concept plan.

164 Under cross-examination by Mr Hay, Mr Harpur said that he did rely on the representation by Lord Buddha that it had a magnificent opportunity to buy some land for development at Portland. He says that with hindsight, he should not have.[194]

165 It was put to Mr Harpur that the retirement village was to be on both the Portland land and the council land. Mr Harpur said that he knew that. It was put to Mr Harpur that alarm bells would have been ringing about this. He agreed.[195]

166 Mr Hay took Mr Harpur to the alleged representation about what the property could be used for. Mr Harpur agreed that he knew leases had not been signed but said that if they were committed to the site, in his experience the developer ends up with a deal.[196]

167 Mr Harpur conceded that around the time he bought Portland he was an extremely busy man and that he was under considerable financial pressure.[197]

168 Mr Harpur conceded that he was facing financial problems with the Lakes Entrance project that arose before the Portland purchase. Mr Harpur said that he could not use the existing architect plans for the Lakes Entrance project as the architect refused to release them to Mr Harpur. This meant that Mr Harpur could not pre-sell the units as he had planned to do.[198]

169 In re-examination, Mr Harpur elaborated on the representations. Mrs Marks put to Mr Harpur for the first time that Mr Turner told him Coles wanted a 20 year lease. Mr Harpur agreed.[199] Mrs Marks SC referred Mr Harpur to his reference of a figure of 150 when giving evidence about Coles. Mr Harpur said that Mr Turner said that would be the starting rent for the Coles store including any overage on that structure.[200]

170 Mr Harpur says that Mr Turner claimed that they could do their numbers on $150 for the bulky goods and they could take that as being the figure that will be achieved from Coles in relation to this centre. Mr Harpur said: "He [Mr Turner] said that he knew that that was the basis on which Coles was prepared to go there."[201]

171 Mr Harpur was asked whether there was anything written in relation to that. Mr Harpur said yes there was and then added without being asked the following:

....and we looked at or he told me what he believed could be achieved on rentals there and he told me which tenants they had for the property. He indicated to me that they had no - there had been none of these tenants had refused the property, the ones that he mentioned to me, he said they were committed to the property and that he also understood that if you had anchor tenants like Coles or Aldi, Bunnings, then the development would be able to be to go forward because that anchor tenant always attracted a lot more participants and tenants for the development.[202]

172 After being reminded of the question, Mr Harpur said that Mr Turner wrote down some costings or a rough feasibility and set out the tenants that were available or committed to the project and the rentals. He said that the last he saw of the document it was in the back of Mr Turner's car.[203]

173 Mr Harpur said that he was told by Mr Turner at the time he signed the contract that Mr Gibbs had files on his dealings with tenants and that Mr Gibbs was prepared to be very helpful in relation to the project with these files.[204]

174 Mr Harpur was asked when he realised that Mr Turner had made misrepresentations. Mr Harpur said it was in the period leading up to the letter he wrote in July 2008 (this letter claimed Mr Harpur was mislead). Mr Harpur said that one of the most precipitous things was when the property was searched for by Mr Tunbridge to find out what Lord Buddha had paid for it.[205]

175 Mr Harpur said that he thought the council had committed to selling the property they owned which was adjacent to the Portland land.[206]

176 As set out above, Mr Gibbs said that he asked Mr Barrett to speak to the council about the adjoining land. Mr Gibbs says that Mr Barrett told him that "look you can have an option." Mr Gibbs says that it was an informal option that was never formalised.[207]

177 Mr Hutchins said that in his conversations with Mr Turner between 3 December and 12 December, Mr Turner told him that Mr Gibbs had an option to purchase the block of land next to the property.[208]

178 Mr Harpur said that Mr Turner told him that Mr Casey was prepared to buy the proposed retirement village (which included the land to be acquired from the council) "or alternatively, he would provide an operator if someone else built the retirement village. He would operate it."[209]

179 Mr Harpur said that he relied on the representation that Mr Gibbs held an option over the land directly to the south even though he knew that the council would have to advertise it for sale.[210] He agreed that he knew that the option may not go forward if the council was offered a better price. He also agreed that he would not have been able to force Mr Gibbs to exercise the option.[211]

180 Mr Harpur was asked about the representation that there were other people who were interested in purchasing the property. He admitted that he was in fact told that Mr Casey only wished to purchase part of the land and that he was interested at $3.3 million.[212] Mr Harpur then said that he was told that Mr Casey was interested in the whole land at around the same price that he was prepared to pay.[213]

181 Mr Harpur says that he trusted Mr Turner and always found him to be honest. He says that Mr Turner was a family man and was well respected by those that he worked with. Mr Harpur says that he did very little checking of what he was told by Mr Turner.[214]

182 Mr Harpur says that he did not ask for further information about the tenants who were interested in the property. Mr Harpur said that:

"....once they were identified as being .... prepared to go there, interested in....being on that site, ....that carries with it a lot - an endorsement of the site. It carries with it....the sort of....leasing you can get on that site because once you've got a .... prime tenant, then other tenants want to go there so that the leasing up of the rest becomes fairly straightforward."[215]

183 Mr Harpur says that he believed the project was a good one. Mr Harpur says that it had "....a lot of flexibility, the zonings .... allowed a lot of flexibility ....and I.... couldn't see why it wouldn't .... work as Gordon indicated."[216]

184 Mr Harpur says that Mr Turner told him that the catchment of Portland was about 100,000 people. He said:

Now, if you've got a catchment that size, then it's no wonder that you're getting the sort of .... commitments that they were.... I really believed on the basis of what I'd been told it would be a very, very good project.....the size of it ....obviously allowed [l]etting from, or as I understood they were [l]etting from, Coles, from Aldi, et cetera.[217]

185 Mr Harpur says that he signed the contract quickly as Mr Turner told him that he would miss the deal unless he moved as there was another buyer.[218] Mr Harpur says that he did not negotiate the price as on the figures done with Mr Turner the price of $6.5 million looked reasonable.[219] Mr Harpur says that he was given a section 32 statement by Mr Turner.

The 11 December 2007 meeting and the signing of the contract

186 On 10 December 2007, Mr Tunbridge did an online search of Lord Buddha for Mr Harpur.[220]

187 On 11 December 2007, a contract for the sale of the Portland land was signed by Mr Harpur.[221] The sale price was $6.5 million. The contract required a 5% deposit with $100,000 to be paid on the signing of the contract with a further $225,000 due 45 days later, on 25 January 2008.

188 Mr Harpur says that he signed the contract in a meeting with Mr Turner in an office used by Mr Turner in Flinders Lane and gave the contract to Mr Turner.[222] Mr Harpur says that after he signed the contract he rang Mr Tunbridge about the deposit cheque.[223] Mr Harpur says that he did not tell Mr Tunbridge about the purchase of the Portland land until the day he signed the contract.[224] On 11 December 2007, Mr Turner gave the vendor's statement to Mr Harpur.[225]

189 The parties agree that on that day Mr Turner gave Mr Harpur a copy of the document "ICR Property and Investment Group "The Gateway"" Henty Highway and New Street, Portland", that is the promotional brochure.[226]

190 Mr Harpur says that the deposit cheque was given to him by Mr Tunbridge and that the cheque was handed over to Mr Hutchins at a coffee lounge near his home in St Kilda Road.[227] Mr Tunbridge supports Mr Harpur in this version. He said, however, that Mr Turner was also present.

191 On the other hand, Mr Hutchins says that the deposit was handed over along with the contract at a meeting at Forvale's offices in Flinders Lane at which he, Mr Turner, Mr Tunbridge and Mr Harpur were present. Mr Hutchins says that Mr Tunbridge wrote out the cheque for the deposit in his presence. The cheque is dated 12 December 2007. Mr Harpur denies that the meeting was held at Forvale's offices.[228] He said that there was no such meeting. He said that he didn't think that Mr Tunbridge had ever been to Forvale's office.[229]

192 Mr Hutchins says that Mr Harpur mentioned CPI at the meeting. Mr Harpur denies this. He admits, however, that he did discuss CPI with both Mr Turner and Mr Hutchins "sometime earlier" but he could not be positive on the date.[230] Mr Harpur denies that he mentioned that it was his intention to on-sell the property at that meeting. He also denies discussing the opportunity to purchase the block next to the Portland land.[231] It was put to him that he asked Mr Turner to speak with Mr Casey. Mr Harpur repeated that there was no such meeting at which he said that.[232] Mr Harpur denied that he said he was not worried about the zoning issues.[233]

193 Mr Hutchins says that this meeting was the first occasion he had met Mr Tunbridge. Mr Hutchins identified the date of this meeting as 11 December 2007 in a proposed witness statement he prepared. He now realises that it was 12 December 2007 as that is the date on the receipt for the deposit that he prepared and gave to Mr Harpur. The deposit cheque is also dated 12 December 2007.

194 Mr Hutchins says that at the meeting on 12 December 2007 Mr Tunbridge asked questions of Mr Turner about the Portland property.[234] Mr Hutchins says that Mr Turner spoke to Mr Tunbridge about the prospective tenants that Mr Gibbs had been talking to. Mr Hutchins says that tenants were discussed and that these were the likes of Bunnings, Mitre 10, Cheap as Chips and although he was not sure of the exact name, a couple of other bedding shops.[235] He says that Mr Turner spoke about the need to rezone part of the property to B1 for a supermarket or the like.[236] Mr Hutchins said that Mr Harpur agreed that that would have to be done. He says that Mr Harpur said he was experienced in rezoning matters and had done it previously.[237]

195 Mr Hutchins says that Mr Turner had the contract with him and on Mr Hutchins checking the finance clause in the contract he asked Mr Harpur about it and he said he did not require finance. Mr Hutchins says that Mr Tunbridge filled out a cheque to Forvale Property Group for $100,000 and signed it in his presence.[238] Mr Hutchins says that he then filled out a receipt.[239]

196 Mr Hutchins says that he asked Mr Harpur who was going to do the conveyancing because that was not in the contract and that Mr Harpur said that he was a lawyer himself and that he and Mr Tunbridge had completed these sort of documents and transactions many, many times and this was their field.[240]

197 Mr Hutchins says that at that meeting Mr Harpur made certain observations about the zoning of the Portland property and handed over the signed contract of sale. Mr Hutchins says that after this meeting the contract was left on the desk and they went and had coffee and then Mr Turner took the contract to Mr Gibbs.

198 Mr Harpur denies that he told Mr Hutchins and Mr Turner that he was going to do all the work necessary to rezone the Portland property himself.[241] He denies being effusive about the growth potential of Portland and that he told them he had had an old International Harvester site in Dandenong rezoned and he was going to do the same thing at Portland.[242]

Mr Tunbridge's recollection of the 12 December 2007 meeting

199 Mr Tunbridge says that at the request of Mr Harpur, Mr Tunbridge drew a cheque on Transpacific Holdings in favour of Forvale for $100,000.[243] He says he took it to Mr Harpur to a restaurant adjacent to Mr Harpur's residence in St Kilda Road.[244] He says that Mr Turner was present with Mr Harpur. Mr Tunbridge does not remember any discussion that occurred at that time.[245] Mr Tunbridge has no recollection of whether Mr Hutchins was present.[246]

200 Under cross-examination, Mr Tunbridge was asked about the location of the meeting. He said his recollection was that they met at a café, but he could stand corrected.[247] Mr Tunbridge was asked about the attendance of Mr Hutchins and said that he did not believe he had been there but "had been advised that he was there."

201 Mr Tunbridge says that he can not recall any discussion with Mr Harpur that day about the purchase of the Portland land.[248]

Mr Hutchins' evidence of Mr Turner's negotiations with Mr Harpur

202 Before moving on to the post contract meetings, it is convenient to go to Mr Hutchins' evidence of his discussions with Mr Turner about his pre-contractual negotiations with Mr Harpur. As will unfold, I have found this evidence to be particularly helpful in assessing Mr Harpur's claims.

Mr Turner tells Mr Hutchins about the Portland land

203 Mr Hutchins first heard of the Portland property about late September or October in a general conversation with Mr Turner. Mr Turner told him of Mr Gibbs who he said had been a client over many years and that Mr Gibbs had offered him the right to sell properties at Greensborough, the Glassworks property in Gipps Street, Collingwood, and a property at Portland.[249]

204 In about mid-November 2007, Mr Turner told Mr Hutchins that he had an interested party for the Portland land and that he had been corresponding with Mr Gibbs to get more information on the property.[250]

205 On 3 December 2007, Mr Hutchins discussed the property with Mr Turner in some detail when Mr Turner asked Mr Hutchins to prepare the authority for Forvale to sell the property to Mr Harpur.[251] Mr Turner told Mr Hutchins that he was waiting for his client to get back to him with an offer. Mr Hutchins filled out part of the authority. The price of $6.5 million was given to him by Mr Turner.[252] Mr Turner told Mr Hutchins that in his discussions with Mr Gibbs that the asking price would be $6.5 million and that Mr Gibbs was happy with a price of $5 million and whatever "we got above the $5 million wasn't any concern of his." Mr Turner told Mr Hutchins that Mr Gibbs said that he wouldn't take anything less than $5 million.

206 After Mr Hutchins had partially completed the authority, Mr Turner left to take it to Mr Gibbs.[253] Mr Gibbs brought the authority back the next day. Mr Hutchins inserted the date of 3 December 2007.[254]

207 The authority provided for a third of the commission to be paid to the Erden Property Group. Mr Turner told Mr Hutchins that he had mentioned the Portland property to Mr Hassan and Mr Hassan had told Mr Turner to promote the property to Mr Harpur and he wanted a third of the commission on the sale for introducing the purchaser.[255] Mr Hutchins had not previously heard of Mr Hassan.

208 Mr Turner showed Mr Hutchins the promotional brochure on Portland.[256] Mr Hutchins and Mr Turner discussed how the project would move forward after it was sold and what the opportunities for the land were.[257]

209 Mr Turner told Mr Hutchins that the project would take a good bit of time, maybe up to ten years. He said that the project was zoned B4 and that allowed for bulky goods. He thought that with the existing bulky goods zoning, subject to building approvals, the development could start with bulky goods tenants. Mr Turner said to Mr Hutchins that as developers have a limited cash flow they put stages in place to develop properties.

210 Mr Turner said to Mr Hutchins that the development would commence with bulky goods because it was zoned for bulky goods and "it was ready to go with tenants that fitted into the business 4 zoning"[258] (my emphasis). Mr Turner said that once that was established, and while the developers were doing that, they would apply to the council for rezoning of part of the property to B1. Mr Turner told Mr Hutchins that the development would be able to attract a much stronger tenant to the B1 zone because it was now adjoining a bulky goods centre. Mr Turner told Mr Hutchins that the developer would then probably look to put a service station in it some time as a stage two.

211 Mr Hutchins said that this was Mr Turner's concept of how [the development] would go.[259] Mr Turner told Mr Hutchins that it would be very good to do the development in four stages with stage four being a retirement village.[260]

212 Mr Turner told Mr Hutchins that the Portland project was an ideal site for a retirement village and in developing it a developer would just do it in stages of 20 or maybe 30 units at a time. Mr Turner told Mr Hutchins that as people came along the site would generally fill up.[261]

213 Mr Turner discussed Mark Casey with Mr Hutchins.[262] Mr Turner told Mr Hutchins that Mr Casey was a developer of retirement villages. Mr Turner told Mr Hutchins that Mr Casey had a concept of attracting people from the city where they would sell their house for much more than they would be able to buy [a unit] at a retirement village.[263] Mr Turner told Mr Hutchins that he had talked to Mark Casey to see if he was interested in the project. Mr Hutchins asked him why Mr Turner wanted to put Mr Casey in the project. Mr Turner said that "at this stage we haven't got anything but as it progresses down the track further you'd look to Mr Casey to either buy it out or develop it or have Mr Harpur build it and have Mr Casey manage it for him."[264]

214 Mr Turner discussed tenants with Mr Hutchins. Mr Turner told Mr Hutchins that in his discussions with Mr Gibbs, "Mr Gibbs had told him that there was prospective tenants that they'd been negotiating with over a period of time but there was no tenancies or anything in place with it, they were just prospective because at that stage you can't ...have a tenant until you can actually offer them something off their plans."[265]

215 Mr Turner told Mr Hutchins that Mr Gibbs told him that they had been talking to some hardware chains, "from memory Bunnings and Mitre 10, and that there may have even been another one from a local guy." Mr Hutchins says that Mr Turner said they had been talking to some bedding shops. Mr Turner also told Mr Hutchins that they had had some talks with Cheap as Chips and that subject to a rezone they would push hard to get Coles or Aldi or IGA on the site.[266]

216 Mr Hutchins and Mr Turner discussed the vacant block owned by the council. Mr Turner told Mr Hutchins that there was a vacant block adjacent to the bulky goods centre of approximately seven acres that was owned by the council, it was zoned residential, and that it would be an ideal area to put a retirement village. Mr Turner told Mr Hutchins that [Mr Gibbs] had told him that they had had some preliminary talks with [the] council about buying it.

217 Mr Hutchins says that the next occasion he discussed the Portland land with Mr Turner was when Mr Turner rang Mr Hutchins. Mr Hutchins believes that this was the day prior to having a meeting to get the signed contract and the deposit cheque.[267] Mr Turner told Mr Hutchins that he had received an offer from Mr Harpur. When Mr Hutchins asked the price, Mr Turner said "I was expecting to get an offer but Mr Harpur has offered to pay the full price, [$6.5 million]. Mr Hutchins says that Mr Turner asked him to be at the Forvale office the next day being 12 December 2007 because Mr Harpur was calling in with the contract and to pay the deposit.

218 Returning to the chronology of events after the contract was entered into; on 3 January 2008 Mr Hutchins and Mr Turner met with Mr Harpur and Mr Tunbridge in St Kilda Road and then went for lunch together at the Stokehouse. Mr Hutchins says that the Portland land was discussed, including how Mr Harpur was going to move forward with his development. Mr Hutchins says CPI was discussed in general terms and an appointment was made for 9 January for Mr Harpur to bring his CPI documentation for "us to look over."[268]

219 Mr Harpur has difficulty remembering the meeting. He remembers it as an entirely social meeting.[269]

220 On 9 January 2008, Mr Hutchins, Mr Turner, Mr Harpur and Mr Tunbridge met at the Forvale offices at Flinders Lane for Mr Harpur to explain the CPI proposal to Mr Hutchins and Mr Turner. Before Mr Harpur would discuss the CPI proposal with Mr Hutchins, he required Mr Hutchins to sign a confidentiality agreement between CPI and Mr Hutchins and any other company of which he was a director, which he did.[270]

221 After the confidentiality agreement a signed, Mr Harpur showed Mr Hutchins and Mr Turner the CPI explanatory memorandum and explained how the fund would work. According to Mr Hutchins, Mr Harpur explained that the fund would acquire property for long term capital growth and acquire other properties that were generating income to balance out the income and expenses of the company as a whole. He said that at some stage on the maturity of the properties it would receive a lot of capital growth. The explanation given to Mr Hutchins was entirely consistent with the evidence of Mr Harpur as to the purpose and structure of the CPI investment fund.

222 Mr Hutchins says that Mr Harpur said that the likes of the Portland land could be put into the fund along with properties like Mr Gibbs' Glasshouse property in Gipps Street and Mr Gibbs' Greensborough property.[271]

223 Mr Hutchins says that Mr Harpur wanted to make Mr Hutchins and Mr Turner familiar with CPI with a view that they might wish to invest in it themselves, or they may have clients that wished to invest in it.[272]

224 Mr Hutchins says that Mr Harpur told them that in due course he wished to talk to Mr Gibbs about Mr Gibbs' other properties.[273]

Mr Harpur's version of the CPI meeting on 9 January 2008

225 Mr Harpur could not recall speaking to Mr Turner and Mr Hutchins about CPI on 9 January 2008. He said that he thought it could have been a lot later.[274] Mr Harpur agreed he gave Mr Hutchins and Mr Turner a CPI information memorandum and it could have been the one dated November 2007.[275] Mr Harpur said that he gave that or a similar document to several other people. The CPI information memorandum says that $20 million is sought to be raised. (Later an information memorandum seeking to raise $100 million was given to Mr Gibbs)

226 Later in January, shortly before Mr Turner passed away, a meeting was held at the Glasshouse Café between Mr Harpur, Mr Tunbridge, Mr Gibbs, Mr Turner and Mr Hutchins.

Mr Gibbs' evidence on the Glasshouse Café meeting

227 Mr Gibbs says that they discussed the current zoning of the Portland land and whether Mr Harpur was interested in acquiring the adjacent council land for a retirement village. Mr Gibbs says that Mr Harpur said he was not interested. Mr Gibbs says that Mr Harpur talked about rezoning the whole of the land to B1.[276]

228 Mr Gibbs also says that they discussed the potential tenants and says that he told Mr Harpur to get in touch with Mr Gaucci for further information about the interested tenants.[277]

229 Mr Gibbs also says that he offered to go down to the Glenelg Shire Council (which I understood to mean with Mr Harpur) but that never eventuated.[278] Mr Harpur agreed that at some point Mr Gibbs offered to accompany Mr Harpur to visit Portland to discuss the sort of things that could be done [with the Portland land].[279]

Mr Hutchins' evidence on the Glasshouse Café meeting

230 Mr Hutchins also gave evidence of this meeting. Mr Harpur says that it was the first occasion that he had met Mr Gibbs.[280] Mr Hutchins says the meeting was initiated by Mr Turner so that Mr Harpur could meet with Mr Gibbs and discuss anything quoted by Mr Turner to Mr Harpur regarding the rezoning or other issues.[281]

231 Mr Hutchins says that Mr Harpur spoke to Mr Gibbs about rezoning part of the property from B4 to B1 with a view to putting a supermarket or similar thing there at a future date. This is consistent with Mr Gibbs' recollection.

232 Mr Hutchins says that Mr Gibbs said that he had had preliminary discussions with the council regarding the rezoning and that he would be prepared to go back to Portland with Mr Harpur anytime in the future to help with a presentation or whatever else was required at the council.[282]

233 Mr Hutchins says that Mr Turner spoke at the meeting about things he wanted Mr Gibbs to clarify in relation to rezoning and potential tenants that had been discussed in the negotiations between Mr Turner and Mr Harpur. Mr Hutchins says that he could not recall exactly the tenants discussed but Mitre 10 and the likes of Bunnings and Supercheap were discussed for the bulky goods area and the discussions with Coles, Aldi, and IGA were raised for the B1 zoning once a rezoning had been approved.[283]

234 Mr Hutchins says that there was a general discussion about Portland and that it had a great development [opportunities] for the future because of the diverse activities carried on there.

235 Mr Hutchins said that they also discussed the adjoining seven acres owned by the council. He says that Mr Gibbs said that he had had preliminary discussions with the council regarding purchasing it to add on to the project and it was zoned residential. Mr Hutchins says that Mr Gibbs said that his idea was that he would change the part [of the Portland land] with an industrial piece on one end and have it rezoned residential for the potential of a future retirement village.[284]

236 Mr Hutchins says that at the end of the meeting he observed that everybody present was happy with the discussions that they had had.[285] I infer from this that there was no complaint by Mr Harpur that he had been misled by Mr Turner.

237 Mr Tunbridge gave no evidence about the Glasshouse Café meeting.

Mr Harpur's evidence of the Glasshouse Café meeting

238 Mr Harpur said he met Mr Gibbs for the first time at this meeting.[286] He recalls it was some two weeks before the deed of variation meeting on 1 February 2008.[287] Mr Harpur said that he was not able to recall what was discussed.[288]

239 Mr Harpur said that he did not think Mr Hutchins was present at the meeting but he could have been.[289] Mr Hutchins and Mr Gibbs both say that Mr Hutchins was present. Mr Harpur also said that he did not think Mr Tunbridge was present.[290] Both Mr Gibbs and Mr Hutchins say he was at the meeting.

240 Under cross-examination, Mr Harpur said that he would not have said that he wanted to rezone the whole of the land to B1 as Mr Gibbs claims, as he knew it was impossible to do that.[291]

241 Mr Harpur says that the invitation to contact Mr Gaucci could have been raised at that meeting but he does not remember.[292]

242 It was put to Mr Harpur that Mr Gibbs offered to introduce him to his contacts at the council to discuss potential rezoning. Mr Harpur said he did not believe that that was at that meeting but Mr Gibbs did offer that subsequently.[293] Mr Harpur agreed he did not take up that offer.

243 Mr Harpur agreed that Mr Gibbs said that he was looking to lease or sell the Glassworks. Mr Harpur agrees that he said that it may be a convenient way of overcoming the cash flow problems that would be generated by Portland. He agreed that he mentioned that the Glassworks could be put into CPI.[294]

244 It was put to Mr Harpur that after the meeting he travelled to Lakes Entrance with Mr Turner and Ms Paltaguou. Mr Harpur said that he was not positive and that he did not have any recollection of doing so.[295]

Mr Tunbridge's evidence of the Glasshouse Café meeting

245 Mr Tunbridge gave no evidence of this meeting in his evidence in chief. Under cross-examination, Mr Tunbridge did remember there was "one meeting" but could not recall when exactly or what was discussed.[296]

246 On Friday 25 January 2008 a second instalment of the deposit, $225,000,[297] was due but it was not paid. Mr Harpur says that it was not paid for two reasons.[298] First, he says that he was having reservations about the deal and that he was not able to revert to Mr Turner with these reservations as, he says, "Gordon had passed away."[299] (I should interpolate that this could not be true as Mr Turner did not die until after this date.) Secondly, Mr Harpur says that he found it difficult to get funds. Mr Harpur says that he proposed to get funds from internal sources and from other parties who were interested if he had the right development. Mr Harpur identified Mr Peter von Stiegler in Indonesia as the source of the other parties. Mr Harpur says that

Once it was clear that there were issues about this property which we needed to investigate and find out more about what Mr Gibbs' claims were about, once we realised that, I couldn't put it to Peter von Stiegler even though he was chasing me for a proposal at that time. So that was another source of funds that had to be, um - well, I just couldn't proceed with it in good conscience, that's all.[300]

247 On Sunday 27 January 2008, after this meeting, Mr Turner died.

The deed of variation meeting on 1 February 2008

248 On 1 February 2008, a meeting was held between Mr Hutchins, Mr Gibbs, Mr Harpur and Mr Tunbridge at Mr Gibbs' office at Mollison Street in Collingwood to deal with Mr Harpur's failure to make the payment due on 25 January 2008.

249 Mr Hutchins says that before the meeting, Mr Gibbs told him that he wanted to be in charge of the meeting. When the meeting began, Mr Gibbs began with the blunt question: "where's my cheque?" Mr Harpur said that he was struggling a bit with his funding at the time and asked would Mr Gibbs consider bringing the contract to an end. Mr Gibbs said that he was definitely not interested in that, it was a contract and the contract stood. The meeting became quite heated.

250 Mr Hutchins says that Mr Harpur asked Mr Gibbs about the prospective tenants and whether he could have a list of the tenants. Mr Harpur said "I know who they all are." He and Mr Gibbs discussed who the tenants were going to be and what kind of tenants they were.[301] Mr Gibbs said "you can have all the information relevant to Portland in regards to tenants when you pay the deposit."

251 The tenants mentioned were Bunnings, Mitre 10, Cheap as Chips and potentially Coles and Aldi. Coles and Aldi required rezoning, and Mr Gibbs assured Mr Harpur that for anything to do with the rezoning he was available to drive to Portland and discuss it with Mr Harpur.

252 Mr Hutchins says that Mr Harpur said that due to another deal that had not gone the way he planned, he was short of funds. Mr Hutchins said that Mr Harpur said that he would still like to move forward but he would need a variation to the payments to enable him to get the money together.

253 They discussed the variations required. Mr Hutchins says that Mr Gibbs said that he wanted to talk to his solicitor prior to varying the contract. Mr Gibbs and Mr Harpur put the variation agreement together.[302] Mr Hutchins says that occasionally, Mr Harpur would ask Mr Tunbridge, "What do you think, Ken? Can we - will we have the money at this stage?"

254 Mr Hutchins says that Mr Gibbs said to him that he had had to do the job of the agent and explain every thing to Mr Harpur.[303] Because of this Mr Gibbs demanded a variation of the commission, which Mr Hutchins agreed to and , a variation to the authority to sell the property was signed.[304]

255 Mr Harpur explained why he had not paid the deposit of $225,000 due on 25 January 2008. Mr Harpur informed the meeting that an overseas partner of his would not be proceeding.[305] Mr Harpur says that the partner was Mr Peter von Stiegler who he had done a lot of business with in Indonesia. When Mr Harpur was in Indonesia, Mr von Stiegler had told Mr Harpur that there was a desire of some very wealthy people in Indonesia to invest in Australia. Mr Harpur told Mr von Stiegler "that when I found the right project I'd give him a call and basically we made that arrangement."[306] He felt that he could now not put the project to him as he had worries about it.

256 It is implicit in Mr Harpur's explanation for not paying the deposit that he was expecting Indonesian investors, procured by his partner Mr von Stiegler, to participate in the purchase of the Portland land. Mr Harpur launched CPI shortly before agreeing to buy the Portland land. According to Mr Harpur, the Portland land was "ideally suited' to be acquired by CPI so long as other cash flow positive properties were also acquired. It may be inferred that Mr Harpur entered into the contract for the Portland land with the intention of CPI acquiring it with moneys provided by Indonesian investors. Mr Harpur denied that he intended using CPI to acquire the Portland land. In any event, Mr Harpur's failure to meet the deposit was squarely placed by him on the Indonesia investors not proceeding with investing in the Portland land as well as him not receiving moneys he was owed and expecting from Sovereign Property Group.

257 Mr Harpur says that he could not put the project to Mr von Stiegler as after he had the meeting with Mr Gibbs (presumably the Glasshouse Café meeting) he, Mr Gibbs, did not endorse what Mr Turner had said about the tenants. As discussed above, Mr Hutchins does recall tenants being discussed at that meeting. Mr Harpur says that Mr Gibbs said that there were a lot of interested tenants but that he would not give him the files.[307]

I did say that I had relied on what Gordon had told me and David's response was that, "Gordon's died and, you know, you're trying to slide away from this commitment," and at that stage it became a little testy. It was starting to - it was clear that we were not going to be - he was not going to honour those commitments. He was not going to stand behind Mr Turner, that was - that was clear.[308]

259 Mr Harpur was asked what made him become testy. He replied:

....he'd indicated to me that he didn't have commitment from tenants, he had tenants that were interested and that to me was quite a huge difference. As time went on, we found that they - it wasn't a question that they weren't interested, they had actually said they didn't want to go to the site ....[309]

260 Mr Harpur says that he told Mr Gibbs at the variation meeting:

....Gordon had indicated to me that re-zonings had been agreed with council, support for both, ah, to allow for a, um, supermarket style development, to change it to B1, or - and also the, um, ah, integrating of the land to go for a residential for the retirement village. And he said all of that's possible, but he said, "It's yours now." So it was - and I said, "Well, look, I've obviously paid far too much for this."[310]

261 Mr Harpur says that Mr Gibbs told him that the council was favourable to rezoning. Mr Harpur says that this was different to what he had been told by Mr Turner. When asked how it was different, he said "well, that there had been no written commitment from council and he'd made no formal application. It was very different."[311] This evidence implies that Mr Turner had suggested to Mr Harpur that there was a written commitment from the council and that a formal application for a rezoning had been made.

262 Mr Harpur says that he entered into the variation deed as he needed more time for two reasons:

The first was I didn't have the information I needed to make a proper decision on what my next move was. I just didn't know enough about what I'd been told and what was wrong and what was right, um, who really was interested, what the, ah, the council's position was, um, it became important to me to see, "Well, what are the options here?" Ah, what - how big are the problems and to what extent I might be able to come to some, ah, arrangement with David, I'm not talking about a financial arrangement, but - - - to see what might be able to be done in respect of the property .. so that we split on.... an amicable basis... and there were options that ... needed to be explored.[312]

263 Mr Harpur says that he needed more information and that Mr Gibbs said that he would give him the files when more payments were made.[313]

264 Under cross-examination, Mr Harpur denied referring to his overseas business partner[314] although in his evidence in chief he referred to Mr von Stiegler as a partner. He denied raising CPI.[315] He admitted that he did say that he would be meeting his obligations under the contract despite his reservations.

265 Mr Harpur admitted that he knew that the land had not been rezoned but denied that he knew that no application for rezoning had been made.[316] Mr Harpur agreed that at this time he knew that Coles or Aldi could not move onto the land because they were supermarkets.[317] He denied that he knew that there was no option agreement between Mr Gibbs and the council.

266 Mr Gibbs says that Mr Darren Winjam[318] was also present at the variation meeting. Mr Gibbs says that Mr Harpur told him that someone who was going to invest with him had pulled out.[319]

267 Mr Gibbs says that Mr Harpur told him he was working on a property investment company called CPI.[320] Mr Gibbs says that Mr Harpur told him that he was struggling financially and he needed more time. Mr Gibbs says that he agreed to an extension so long as the contract did not become a terms contract. Mr Gibbs says he negotiated the variation with Mr Harpur who consulted with Mr Tunbridge.[321]

268 It was put to Mr Gibbs that at the variation meeting, he and Mr Harpur had had a heated discussion. Mr Gibbs agreed that it was robust. It was put to Mr Gibbs that Mr Harpur told him that he had relied on some information and calculations provided by Mr Turner which were turning out not to be true. Mr Gibbs denied Mr Harpur said that on the day.[322] He says "it was far down the track before I had any indication of this."[323] He says that he believed that the first time Mr Harpur raised this was at the Richmond Seafood Tavern.[324] Earlier Mr Gibbs had said that the meeting at the Richmond Seafood Tavern was in May 2008.

269 Mr Gibbs was challenged on his evidence that Mr Harpur told him that he had a business partner pull out. Mr Gibbs says that Mr Harpur definitely said he had a business partner pull out and "that was the reason it started to drag out in the first place."[325] I took this to be a reference to Mr Harpur not paying the deposit.

Mr Tunbridge's version of the variation meeting

270 Mr Tunbridge says that a lot of discussion took place on the lack of documentation and follow up work that Mr Harpur had been told would be forthcoming. Mr Tunbridge says that he does not precisely remember what was said at the meeting. He said that it was a heated meeting. Mr Tunbridge produced a minute of the meeting[326] that he prepared a couple of days after the meeting. He says that after looking at his notes he is able to recall that Mr Harpur said the matters recorded in the minute. Mr Tunbridge says that he took notes of the meeting on his own volition.[327] He says that Mr Harpur suggested he might write up his notes into a summary form.

PAUL HENRY HARPUR AGAINST LORD BUDDHA PTY LTD

MEETING OF 1st FEBRUARY 2008 HELD IN BOARD ROOM OF ICR PROPERTY & INVESTMENT GROUP PTY LTD

LEVEL 1, 68 MOLLISON STREET, ABBOTSFORD, VIC. 3067

AT 12 NOON.

PRESENT: David Gibbs ("Gibbs") Lord Buddha Pty Ltd.

Paul H Harpur. ("Harpur")

Ron Hutchins. Forvale Property Group (R/E Agent)

Ken Tunbridge Harpur Group Accountant

PURPOSE: To

(a) discuss and resolve matters pertaining to the arrears of deposit monies as set out in Contract of Sale dated 11th December 2007.

(b) discuss forward planning of project.

OUTCOME: Terms of Deed of Variation dated 1st February 2008 settled and document signed by Vendor and Purchaser.

DETAILS OF

MEETING: All present agreed that the sudden death of Gordon Turner ("Turner") was a blow to all concerned and placed those present in a difficult situation as the Late Mr. Turner had been instrumental in bringing the parties together briefing Harpur and was the prime mover in the proposed development of the site.

Gibbs emphasised that he required the overdue part deposit to enable him to honour commitments made in other projects.

Harpur stated that he had relied of [sic] the information and calculations produced by Turner as agent for the vendor and had had no reason doubt [sic] what he was told.

Gibbs stated that he had not told anyone including Turner that he had tenants for the development nor that he had Council's agreement to ........................ an amendment to rezone the land to B1.

Harpur suggested that Gibbs might sell to the other purchaser he had or Harpur with his assistance might put together a consortium to carry out the project but this could take 12 some months to put in place.

Gibbs stated that he, Turner, had another purchaser at much the same price when he sold to Harpur.

Gibbs and Harpur by this time were becoming rather heated and agreed to have a break and then resume.

After some 15/20 minutes Gibbs returned, further discussion took place which resulted in the Deed of Variation being prepared and signed.

Gibbs and Harpur agreed to work together to achieve the development of the site with Gibbs to provide the details of his tenants and meetings with Council relating to the site to Harpur.

Harpur would work to form a consortium or property company to acquire and develop the property.

It was agreed by both parties that the development of the site would be a long term project which would best be completed by a property trust with substantial income from other ........................ properties.

272 Mr Tunbridge could not recall whether Mr Harpur elaborated on the minuted statement that he (Mr Harpur) had relied on information and calculations produced by Mr Turner.[328]

273 Under cross-examination, Mr Hay pointed out that the date of 24 September 2008 is written on the back of the minutes. It was put to Mr Tunbridge that the minutes were created then. Mr Tunbridge says that he did not believe that this was so.[329] Mr Hay asked Mr Tunbridge if Mr Harpur had said he had concerns before he went to the meeting.[330] Mr Tunbridge says that Mr Harpur said that he had reason to have some doubts because he had not received any additional information that was agreed to be given to him.[331]

274 Under cross-examination, Mr Tunbridge agreed that there was reference [by Mr Harpur] to a project he was anticipating some funds from that had been delayed.[332] Mr Tunbridge had no explanation why the minute did not recall this cash flow issue.[333]

275 At the end of the meeting, Lord Buddha and Mr Harpur signed a deed of variation that increased the deposit to 10 per cent. Mr Harpur was to pay $225,000 on 1 February 2008, $100,000 on or before 15 February 2008 and the balance of the deposit ($225,000) by 31 May 2008, with the settlement date being 31 October 2008 or earlier by agreement.[334] The purchase price remained unchanged although Mr Harpur was required to pay a 10 per cent deposit rather than a 5 per cent deposit. Mr Harpur also signed a section 27 statement authorising Forvale to pay the $100,000 deposit already made to Lord Buddha.

276 A letter of variation between Forvale and Lord Buddha was also signed. The letter stated that it had been agreed by parties that the authority of 3 December 2007 would be cancelled and another authority would be executed, that commission of $1 million including GST will be payable only on full and final settlement of the whole of the purchase monies, and any deposits will be paid directly to the vendor.

277 On 6 February 2008 $225,000 was paid under the contract of sale. On 15 February 2008, the $100,000 due pursuant to the deed of variation was not paid. It was paid later in March. Mr Harpur was asked why he did not pay. He said that he could not be sure. He says that obviously the funds were not there at the time but he did not exactly remember why.[335] It was put to Mr Harpur that when the moneys were paid in March he was still happy with the situation. He denied that and said at that stage he did not have enough information to know exactly where he stood.[336]

278 Mr Harpur says that he did not have a cash flow problem until problems came up with "these two purchasers" [it is not clear who he is referring to] and when Sovereign Property Group did not pay him the money it owed him.[337]

Meeting at Glassworks on approximately 20 February 2008

279 Only Mr Hutchins specifically refers to this meeting. His version is as follows.

280 Mr Hutchins picked up Mr Harpur in his car and took him to meet Mr Gibbs at the Glassworks Café.[338] Mr Harpur had asked for a meeting with Mr Gibbs. Mr Harpur wanted reassurance, mainly in relation to rezoning, and he also wanted to talk about the tenants. At the meeting Mr Gibbs suggested that they move next door to the Glassworks Hotel and have a discussion over lunch.

281 Mr Hutchins says that Mr Harpur's main concern was the rezoning. He was worried that it would it be difficult to get through. Mr Gibbs assured him that the preliminary work had been done, and provided there was an expression of interest from a major supermarket outlet such as Coles, Aldi, IGA or one of these, the council would look on it very favourably.[339]

282 Mr Hutchins says that Mr Harpur raised the issue of tenants. Mr Gibbs said "look, we've discussed the prospective tenants on lots of occasions and as I've said to you, Mr Harpur, they're available when you pay the deposit." Mr Gibbs said "everything we've got will be at your disposal."[340]

283 Mr Hutchins says that Mr Harpur wanted to know if Mr Gibbs was still interested in selling the Glassworks complex. Mr Hutchins says that Mr Harpur was interested because the Glassworks had a very good income stream from the tenants in the existing complex and it had potential for future development because of the way the roof had been constructed.[341] Mr Harpur told Mr Gibbs that he had a project that he was working on and Glassworks would fit into it extremely well. He also said that the other properties that Mr Gibbs had spoken to him about such as Greensborough would fit in because they all had an income stream.[342] Mr Hutchins says that Mr Harpur said "we'll put it all into one project." Mr Harpur said that he was working on a fund and "at some stage we'll talk about it."

284 Mr Hutchins says that he knew the fund was CPI. Mr Harpur did suggest that he would bring CPI along at a future date.[343]

285 Mr Harpur was cross-examined about a meeting held at the Glassworks Café in late February or early March 2008 where Mr Hutchins, Mr Tunbridge and Mr Gibbs were present. He denies saying at the meeting that he was trying to put together a syndicate. Mr Harpur says that he intended to finance the acquisition of the Portland land from his bank.[344]

286 On 3 March 2008, $50,000 was paid, as part payment of the $100,000 due on 15 February.

287 On 17 March 2008, $50,000 was paid as the final part payment of the $100,000 due on 15 February 2008.

288 On 30 April 2008, Mr Harpur, Mr Gibbs and Mr Hutchins met at the Glassworks Café followed by lunch at the Vine Hotel, Richmond. Mr Gibbs says that Mr Tunbridge was also in attendance.[345] Mr Gaucci attended the lunch at the Vine Hotel but not the earlier meeting. Mr Harpur agreed that Mr Hutchins organised the meeting and picked up Mr Harpur.[346]

Mr Hutchin's evidence of the Vine Hotel meeting

289 Mr Hutchins says that Mr Harpur wanted the meeting[347] as he wanted to talk to Mr Gibbs. The variation meeting payments had not been met in line with the agreement. Mr Harpur wanted to talk with Mr Gibbs about CPI, the Glassworks, and the Greensborough property, and putting a package together with Portland.

290 Mr Hutchins drove Mr Harpur to the meeting. Mr Gibbs suggested that they should go to the Vine Hotel.

291 Mr Hutchins says that Mr Gibbs asked Mr Harpur if he had done anything more at the council about rezoning Portland.[348] Mr Harpur said that he hadn't but he was still looking forward to doing that with Mr Gibbs.

292 Mr Hutchins says that they went over the same "old stuff" about the prospective tenants for the Portland land. Mr Gibbs said "as I've told you Paul, when you've paid your full deposit everything in relation to the tenants will be available for you."[349]

293 The main topic of the meeting was CPI. Mr Harpur explained how CPI was going to work as a managed fund which would hold a large amount of money. CPI would take on projects that had long term growth, such as properties that were going to become more valuable by the uses they could be put to.

294 Mr Hutchins says that Mr Harpur wanted Mr Gibbs to consider going into a joint venture type arrangement. Mr Harpur proposed that he would, if he could, put into CPI Mr Gibbs' properties and the Portland land. CPI would have the Glassworks, with a guaranteed fixed income from the tenants there; Greensborough, making two properties with an income stream; and Portland, without an income stream. The income from the tenancies would offset the non income [from Portland] but [achieve] capital growth.[350]

295 Mr Harpur said that his intention was to move forward and develop the Portland land as a bulky goods centre.[351]

Mr Gaucci's evidence of the meeting at the Vine Hotel

296 Mr Gaucci says that Mr Harpur and Mr Gibbs discussed Mr Harpur purchasing the Glasshouse development and the Greensborough property of Mr Gibbs. Mr Gaucci says that Mr Harpur was "very much in acquisition mode."[352]

297 Mr Gaucci says that he mentioned to Mr Harpur the Portland land and asked Mr Harpur how he was travelling with settlement. He says that Mr Harpur replied that he was on track to settle.[353]

298 Mr Harpur says that he discussed possible ways forward with the project. He says that he let it be known that he was very unhappy about the situation. He says that he did not believe that he had been given the correct information.[354] Mr Harpur says that they discussed the tenants not being in place and that zoning was not going through the council.

299 Mr Harpur says that Mr Gibbs said that he had never made any commitment that there were tenants there, and that he had never made any commitments that there would be a rezoning going through.[355]

300 Mr Harpur was asked whether after that meeting he decided to do some title searches. He says he did and referred to title searches done by Mr Tunbridge. Mr Harpur says that he then found out what Lord Buddha paid for the land. He says he was horrified at the price.[356]

301 Mr Harpur says that he could not remember telling Mr Gaucci that he was on track to settle. He says he could have said that.[357] It was put to Mr Harpur that he told Mr Gibbs at that meeting that he was thinking of selling the Portland land and Mr Gibbs said he was happy to assist. Mr Harpur says that he does not remember saying that but it was possible, as at that stage he was not aware of all the major difficulties with the property.[358] Under cross-examination, Mr Harpur says that he discussed selling the Portland land seeing that Mr Gibbs had another purchaser.[359]

302 Mr Harpur agrees that he told the meeting that he was owed $400,000 by the Sovereign Property Group.[360] He denies giving that as a reason that he was having trouble paying for the Portland land.

303 Under cross-examination, Mr Harpur agreed that at the meeting there was discussion about a financial broker being involved in finding investors for CPI to solve his cash flow problems.[361] Mr Harpur added that a CPI "look alike" with a finance broker with a full licence would help to solve the problems he had with the Portland land.[362] When pressed whether CPI would be a potential solution, Mr Harpur agreed that if it could be coupled with cash flow positive properties it would have been "ideally suitable" for CPI.[363] However he insisted that the Portland land did not fit with the criteria of CPI.[364] Later in the cross-examination, Mr Harpur said that CPI was never intended or set up for Portland at any stage.[365] He says that his discussion with Mr Gibbs to solve the Portland problem involved using a CPI like vehicle.[366]

304 Mr Little put it to Mr Harpur that as cash flow problems arose would not he make every effort to see if there was an alternative purchaser. Mr Harpur said that, at the stage the cash flow problems arose, it was not clear that the cash flow problems could not be overcome.[367] Mr Harpur says that if what he had been told was true the matter could have moved forward and he could have funded it as a development project from his own bank.[368]

305 Mr Harpur says that the cash flow problem meant that he had to sell other property to be able to cope going forward, such as his development at Corio. He says, however, that the cash flow would have been handleable if the Portland project was "real."[369]

Mr Gibbs' evidence of the meeting at the Vine Hotel

306 Mr Gibbs says that zoning was discussed and that Mr Gaucci joined them at the Vine Hotel where they discussed tenants "he had."[370] Mr Gibbs evidence was imprecise and did not clearly distinguish between meetings.

307 On 19 May 2008, Mr Harpur met with Mr Gibbs and Michael Ramsen and provided them with a confidentiality agreement[371] and a CPI information memorandum.[372] Mr Ramsen was the managing director of Terrain Capital which raised capital for property projects.

308 Mr Gibbs and Mr Ramsen signed the confidentiality agreement. Mr Gibbs says that Mr Harpur told him that he had some interest from people in Indonesia who were trying to invest in Australia. Mr Harpur told Mr Gibbs, and presumably Mr Ramsen, that he wanted CPI to purchase the Portland land. Mr Harpur also expressed interest in purchasing two other properties for CPI that Mr Gibbs had - one in Gipps Street, Collingwood with 27 tenancies and one at Greensborough that had a bank and a Godfreys as a tenants.[373] Mr Gibbs said that he had to do what he could to help out because it was obviously in his interest to getting the sale of the Portland land settled.[374] I understood by that statement, that Mr Gibbs arranged for Mr Ramsen to be present to help CPI to buy the Portland and other land.

Cross-examination of Mr Harpur on 19 May 2008 meeting

309 Mr Harpur agreed the purpose of seeing Mr Ramsen was to assist him in raising capital for CPI. Mr Harpur denied saying that he told the meeting he wanted to put the Portland land into CPI but added that he did say that if funds were raised in CPI and they could put some of Mr Gibbs' cash flow positive properties into CPI then "it would help deal with Portland."[375]

310 Mr Gibbs gave evidence of a meeting with Mr Harpur in May at the Richmond Seafood Tavern. Mr Gibbs says that Mr Harpur was becoming more difficult to deal with and coming up with excuses why he could not perform the contract.

311 Mr Gibbs says that Mr Harpur said "look I have been told the wrong information by Ron."[376] Mr Gibbs says that this was the first time that Mr Harpur claimed that Mr Turner had provided information that was turning out not to be true.[377] Mr Gibbs says that he explained to Mr Harpur that he [Mr Harpur] knew about the zoning and that he had to approach the council about the retirement village. He says he reminded Mr Harpur that he [Mr Harpur] hadn't talked to the council or rung Mr Gaucci to get the leads [about tenants] which Mr Harpur had accused Mr Gibbs of holding back.[378] Although it is not clear, it is probable that the meeting of 19 May 2008 was held before the meeting at the Richmond Seafood Tavern. The allegation by Mr Harpur that Mr Turner misled him is more consistent with the event of the non payment of the deposit on 31 May rather that an attempt to put the Portland land into CPI.

Cross-examination of Mr Harpur on Richmond Seafood Tavern meeting

312 Mr Harpur denied this was the first time he alleged that he had been misled by Mr Turner. He says that he had already raised that issue. He confirmed that he said at the meeting he had been misled.[379]

Cross-examination of Mr Gibbs on the post contract meetings

313 Mr Gibbs agreed that he sought to encourage Mr Harpur to proceed with the purchase.[380] Mr Gibbs said that he told Mr Harpur that "we can get potentially an option on the land for a retirement village."[381] Mr Gibbs said he would have indicated they had been speaking to tenants. He denied telling Mr Harpur that he had another purchaser.

314 On 31 May 2008, the $225,000, due pursuant to the deed of variation, was not paid.

315 On 25 June 2008, a default notice was served by Lord Buddha.

316 On 1 July 2008, Mr Harpur sent a letter to Mr Gibbs at ICR Property & Investment Group under the letter head of Trans-Pacific Holdings Pty Ltd stating that he had been mislead and deceived into entering into the purchase.[382] The letter stated as follows:

Dear David,

RE: PORTLAND LAND. HARPUR FROM LORD BUDDHA PTY LTD

I have been working with you to find a solution to the problems generated by my inability to use the above land for accommodation including inter alia aged care facility and retirement village or shops/supermarket as claimed by your agent, Mr Gordon Turner and as specified in the documents prepared by your company and provided to me.

The documents have now been found to be misleading and false in important respects but were relied upon by myself when working through the options for the land usage with Mr Turner.

An essential part of Mr Turner's claims were that the land value was more than the purchase price and that the land was ideal for constructing and operating a retirement village.

Recent enquiries have revealed that your company purchased the land for $1,210,000 and its value at the time of sale was similar and nothing like the value alleged by your agent.

It is obvious that there was no way that your agent could have been truthful in his claims as to the land's value or the used to which it could be put.

I have been mislead and deceived into entering into the above purchase. I am not bound by the Contract and suggest and urgent meeting to discuss the current situation and way forward.

Yours Sincerely

Paul H Harpur

Chairman of Directors.

317 On 3 July 2008, a rescission notice was served by Lord Buddha.

318 On 25 July 2008, Lord Buddha's solicitor advised in a letter to Mr Harpur that the contract of sale was at an end. On 8 August 2008, Mr Harpur advised in a letter to Lord Buddha that if the contract of sale is not void or already rescinded, he rescinds the contract of sale.

319 Mr Gibbs retained Jason Willox of Savilles to try and sell the Portland land after the rescission. He had no success.

320 Under cross-examination by Mr Little, Mr Harpur agreed that at the same time that he entered into the contract to purchase the Portland land he entered into three contracts involving similar agents. He acquired the Lakes Entrance project to build some 200 units which would have cost some $20 - $30 million. Mr Hassan was the agent for the vendor. He also bought an industrial property in Werribee with Mr Hassan and the engineer, John Lascaris, who put the Lakes Entrance project together.[383] And he bought the Portland land.

321 Mr Harpur investigated a Flemington project that Mr Turner introduced him to. The asking price was $7.5 million.[384] Mr Harpur also looked into student apartments in Adelaide. Mr Harpur was selling his development at Corio, which he ultimately sold for about $6 million.[385]

322 Mr Harpur was involved in the Westbourne Fields project at Tarneit of about 100 lots. He underwrote some of the lots.[386] On completion the land value would be about $20 million. Mr Hassan introduced him to the project.

323 In July 2008, Mr Harpur showed Mr Hutchins a residential site he owned in Bolston Street Southbank for which he had a building permit for a high rise development.[387] In June 2008, Mr Harpur showed Mr Hutchins a property at 180 Maher Road Laverton that he owned. He said that he was going to turn it into high rise accommodation.[388]

Advisers that Mr Harpur had access to at the time

324 Mr Harpur had used solicitors at Mills Oakley and Minter Ellison in the past, and he was in contact with an architect Mr Antonio Calabro from SAC architects about the Lakes Entrance property. He was being assisted by Mr Tunbridge. Mr Harpur was in a joint venture with Mr John Lascaris, an engineer and town planner. He was in contact with Mario Bertone regarding a feasibility study for Portland.[389] He was also having dealings with Maxcon builders.[390]

FINDINGS ON MISLEADING OR DECEPTIVE CONDUCT CLAIM

325 Before considering whether Lord Buddha and Forvale engaged in misleading or deceptive conduct, it is necessary to determine whether Mr Harpur has satisfied me on the balance of probabilities that Mr Turner made the alleged representations. Mr Harpur has given direct evidence of those representations. Mr Harpur on his own evidence suffers from short term memory loss. His poor memory evidenced itself in his being unable to distinguish clearly between the several meetings held after the contract was entered into. There are also aspects of Mr Harpur's evidence that I am not satisfied are true. It will be necessary to elaborate on these matters. This raises the issue of whether Mr Harpur's evidence of the representations is reliable.

326 There is, however, evidence, particularly from Mr Hutchins, that tends to corroborate parts of Mr Harpur's evidence as to what he was told in the negotiations leading up to the contract. Mr Hutchins gives evidence of conversations he had with Mr Turner about his dealings with Mr Harpur during the negotiations. These conversations tend to corroborate Mr Harpur's allegations of what he was told by Mr Turner. There is also evidence of statements made by Mr Harpur in the meetings that followed the signing of the contract that tend to corroborate some of his evidence as to what Mr Turner told him during the negotiations. Mr Harpur has given some of this evidence. Others who attended those meetings, in particular Mr Hutchins and occasionally Mr Gibbs, also gave evidence of Mr Harpur's statements at those meetings that tends to support Mr Harpur's allegations of what he was told by Mr Turner in the negotiations leading up to the contract.

327 Mr Hutchins gave his evidence clearly and with precision. He could recall the separate meetings after the contract was signed. His evidence is not contradicted by other evidence. The evidence he gave was against his interest as the owner of Forvale. Generally, I have accepted his evidence. Where it is inconsistent with the evidence of others, I have preferred his evidence.

328 Mr Tunbridge was present at the 12 December 2007 meeting, the 3 January 2008 lunch, the Glasshouse Café meeting on about 20 January 2008 and the variation meeting of 1 February 2008. I find that he has very little if any recollection of what transpired at these meetings. He did recall that Mr Harpur told the variation meeting that moneys he was expecting had not been received. Apart from that, Mr Tunbridge presented minutes of that meeting that he said were taken from notes. The notes were not produced and I am not satisfied the minutes were prepared soon after the meeting. The hand written date of 24 September 2008 on the back of the minutes was not satisfactorily explained.

329 In the light of that introduction, I will set out my findings on what I perceive to be the relevant matters in deciding whether Mr Harpur has satisfied me on the balance of probabilities that the representations were made.

330 In about September 2007, Mr Gibbs retained Mr Turner of Forvale to find a buyer for the Portland land. At that stage, Mr Gibbs had only had limited contact with potential tenants. He spoke to Safeway and Milemaker Petroleum. Neither of these feature in Mr Turner's alleged representations. Although, Mr Gibbs said that Mr Gaucci was the person who approached potential tenants, Mr Barrett, at the request of Mr Gaucci, seems to have carried out a large part of this work as well.

331 There is no suggestion that Mr Turner sounded out any prospective tenants. I find that any information he had about prospective tenants came from Mr Gibbs and perhaps Mr Gaucci.

332 At about the time Mr Turner was offered the Portland land to sell, Mr Turner met Mr Harpur. They struck up a friendship that developed into a business relationship. Mr Turner sought to sell Mr Harpur a development project at Flemington without success. He also assisted Mr Harpur to find a manager for units to be built at the Lakes Entrance project. They saw each other on a regular basis.

333 Mr Harpur told Mr Turner that he had had a stroke in 1999. I am not satisfied that he told Mr Turner that he had any residual disabilities from the stroke save perhaps a reluctance to drive. Mr Harpur did not give evidence that he told Mr Turner that he suffered from short term memory loss, or could not pick people as he had before the stroke, or was too trusting.

334 Mr Harpur told Mr Hutchins about the stroke he had had after the contract was signed, on a trip to Corio. I accept Mr Hutchins' evidence that Mr Harpur told Mr Hutchins that he sometimes did not pick up points as quickly as he would have before the stroke and that he sometimes had a little bit of trouble with his short term memory.[391] I accept Mr Hutchins' evidence that he was not aware of those disabilities beforehand and that he was surprised when told. I accept that he had found Mr Harpur did not show any real signs of forgetting anything with him and that on the contrary he was always very much on the ball with conversations.[392]

335 In about September 2007, Mr Harpur commenced a project to raise moneys from investors to invest in real estate through CPI. In about late November 2007, Mr Turner introduced Mr Harpur to the Portland land. Mr Harpur was shown the preliminary plan of the retirement village and a concept plan of the possible uses of the Portland land. Mr Harpur did not discuss the possible purchase with his accountant Mr Tunbridge. I will not make any findings about the alleged representations until I have completed my findings save to say that Mr Harpur did produce a contemporaneous note on which he recorded the names Bunnings, Mitre 10 and Cheap as Chips. This note supports Mr Harpur's evidence that Mr Turner discussed these possible tenants with him.

336 At this stage, I need to set out my findings on what transpired between Mr Turner and Mr Hutchins before the initial deposit was paid. These conversations are important as they support the allegation of Mr Harpur that Mr Turner discussed with him how the Portland land might be developed. Further they support the allegation that Mr Turner discussed with Mr Harpur, as part of his marketing of the Portland land, the prospective tenants that might be available.

337 In about September or October 2007, Mr Turner told Mr Hutchins that Mr Gibbs had offered him the right to sell the Portland land, the Glasshouse property and property at Greensborough. In mid November 2007, Mr Turner told Mr Hutchins that he had an interested party in the Portland land. I infer that this was Mr Harpur. Mr Turner told Mr Hutchins that he would be corresponding with Mr Gibbs to get more information on the property. I infer from this that Mr Turner was obtaining from Mr Gibbs information to pass on to Mr Harpur to assist him in making his decision about buying the Portland land.

338 At some stage around this time, Mr Turner had a discussion with Mr Hutchins about how the project could proceed. This discussion supports Mr Harpur's contention that he discussed with Mr Turner how the project could proceed and that Mr Turner did calculations on the development.

339 Mr Turner told Mr Hutchins that the project was zoned B4 which allowed for bulky goods. Mr Turner told Mr Hutchins that he thought that with the existing bulky goods zoning, subject to building approvals, a developer could start with bulky goods tenants. Mr Turner said to Mr Hutchins that as developers have a limited cash flow they put stages in place to develop properties.

340 Mr Turner said to Mr Hutchins that a developer would commence with bulky goods because it was zoned bulky goods and "it was ready to go with tenants that fitted into the business 4 zoning"[393] (my emphasis). I infer that the reference to "it" being ready to go was a reference to the proposed development as indicated on the concept plan. Mr Turner said that once a developer had that established and while the developer was developing the site, the developer would apply to the council for rezoning of part of the property to B1. Mr Turner told Mr Hutchins that a developer would be able to attract a much stronger tenant to the B1 zone because it was now adjoining a bulky goods centre. Mr Turner said to Mr Hutchins that the developer would then probably look to put a service station in some time as a second stage. I infer from this evidence that this was Mr Turner's concept of how the development would proceed.[394] Mr Harpur alleges in substance that this is what he was told by Mr Turner as well. Mr Turner also told Mr Hutchins that subject to a rezone they would push hard to get Coles, Aldi or IGA on the site.[395]

341 This evidence supports Mr Harpur's evidence of how Mr Turner marketed the project to Mr Harpur, including telling him that the project was ready to go, in the sense that there were tenants available to allow the bulky goods part to commence, with the possibility of a rezoning for B1 tenants. Of particular importance is the statement by Mr Turner that it was zoned bulky goods and "it was ready to go with tenants that fitted into the business 4 zoning."[396] That supports Mr Harpur's evidence that he was told tenants were "lined up."

342 Mr Hutchins says that subsequently Mr Turner told him that Mr Gibbs had told him that there were prospective tenants but there were no tenancies or anything in place. That does not fit easily with the statement that "it was ready to go with tenants that fitted into the business 4 zoning."

343 On 3 December 2007, Mr Turner obtained from Mr Gibbs an authority to sell the Portland land for $6.5 million. Mr Turner offered the Portland land to Mr Harpur for $6.5 million. Mr Harpur accepted the offer. On 11 December 2007, Mr Harpur met Mr Turner at Forvale's office and signed the contracts which he handed to Mr Turner. He gave his own name, or nominee, as purchaser. That day, Mr Harper telephoned Mr Tunbridge and asked him to come to Melbourne the next day to pay the deposit on the purchase. On the day before, Mr Tunbridge had done some zoning searches. These were tendered. I accept that Mr Harpur did not discuss with Mr Tunbridge his proposed purchase in any detail.

344 On the next day, Mr Harpur and Mr Tunbridge meet with Mr Turner and Mr Hutchins at Forvale's office. Mr Tunbridge drew a cheque for the deposit. I do not accept Mr Harpur's evidence that the deposit was paid at a coffee lounge near his home in St Kilda Road. I accept Mr Hutchins' evidence.

345 According to Mr Hutchins, Mr Turner spoke to Mr Tunbridge about the tenants Mr Gibbs had been talking to. These included Bunnings, Mitre 10, Cheap as Chips and a couple of bedding shops.[397] I accept this evidence. It supports Mr Harpur's evidence that Mr Turner had been discussing with Mr Harpur prospective tenants including these. As discussed elsewhere, Bunnings, Mitre 10 and Cheap as Chips were recorded on Mr Harpur's note, made on the hotel note paper. The fact that Mr Tunbridge asked about them supports Mr Harpur's case that he was told about these prospective tenants by Mr Turner.

346 As indicated above, Bunnings was not a prospective tenant. It had rejected the proposal of taking a tenancy at that time. There was no basis for Mr Turner to inform Mr Harpur that Bunnings was a prospective tenant for the bulky goods store.

347 There were several further occasions after the contract was entered into when prospective tenants were discussed by or with Mr Harpur. On 3 January 2008, Mr Turner, Mr Hutchins and Mr Harpur met for lunch at the Stokehouse in St Kilda. Significantly, they discussed how Mr Harpur was going to move forward with the development.

348 According to Mr Hutchins the Glasshouse Café meeting, at the end of January 2008 (but before 25 January 2008), between Mr Harpur and Mr Gibbs, was initiated by Mr Turner so that Mr Harpur could meet with Mr Gibbs and discuss anything quoted by Mr Turner to Mr Harpur regarding the rezoning or other issues, which I infer to include prospective tenants.[398]

349 At that meeting, Mr Turner raised the things he wanted Mr Gibbs to clarify in relation to potential tenants that had been discussed in the negotiations between Mr Turner and Mr Harpur. Mr Gibbs discussed with Mr Harpur the potential tenants for the Portland land. Mitre 10 and the likes of Bunnings and Supercheap were discussed for the bulky goods area, and Coles, Aldi, and IGA were discussed for the B1 area once a rezoning had been approved.[399] According to Mr Gibbs, at this meeting he told Mr Harpur to get in touch with Mr Gaucci for further information about the interested tenants.[400] I accept this evidence.

350 According to Mr Hutchins, at the variation meeting on 1 February 2008 Mr Harpur asked Mr Gibbs about the prospective tenants and whether he could have a list of the prospective tenants. Mr Harpur said to Mr Gibbs "I know who they all are." He and Mr Gibbs then discussed who the tenants were going to be and what kind of tenants they were.[401] Mr Gibbs said to Mr Harpur "you can have all the information relevant to Portland in regards to tenants when you pay the deposit."

351 I find that the tenants discussed by Mr Gibbs and Mr Harpur were Bunnings, Mitre 10, Cheap as Chips and potentially Coles and Aldi. It was mentioned at that meeting that Coles and Aldi required rezoning. Mr Gibbs assured Mr Harpur that for anything to do with the rezoning he was available to drive to Portland with Mr Harpur to discuss it with the council.

352 At the Vine Hotel meeting, I find that Mr Gibbs said that he, Mr Gaucci and Mr Harpur discussed the tenants Mr Gaucci "had."[402] I infer that the tenants Mr Gaucci had is a reference to prospective tenants for the Portland land.

353 These findings support Mr Harpur's allegation that he was told that the development was ready to go and that Bunnings and Mitre 10 had at the very least expressed interest in taking up a tenancy. I accept that "ready to go" was meant to and did convey to Mr Harpur that the existing B4 permit and the interest from Bunnings and Mitre 10 as B4 tenants meant that Mr Harpur had reasonable grounds for believing that he could immediately commence to redevelop the Portland land.

354 In substance, the evidence I accept supports the finding that Mr Turner marketed the Portland land to Mr Harpur on the basis the land was ready for immediate development in the sense that it had zoning for bulky goods businesses and that such businesses had expressed an intention, or at least an interest, in commencing a business on the site in the immediate future.

355 The evidence I accept also supports a finding that Mr Turner marketed the land to Mr Harpur on the basis that once a rezoning to B1 was obtained that there was the opportunity to get Coles, Aldi or IGA on the site. As indicated above, Coles and Aldi had decided to operate in the CBD of Portland.

356 There were, however, certain aspects of Mr Harpur's evidence that detracts from its reliability which in turn reflects on the reliability of his evidence of what he was told by Mr Turner.

357 Mr Harpur's evidence was generally unsatisfactory. His recollection of meetings held was poor. He was unclear on the circumstances surrounding the making of the contract. Significant parts of his evidence were a reconstruction. He often said "I would have", indicating that he was only speculating. He also often appeared to be formulating the context and his views before giving evidence of what he said. He consistently failed to answer questions directly and without equivocation. In many instances his evidence was contradicted by other witnesses, whose evidence I prefer. I now turn to several specific aspects of his evidence which raise doubts about the reliability of his evidence.

358 Mr Harpur attended many meetings after the contract was entered into but did not repeat at these meetings what he is alleged to have been told by Mr Turner. I find that the first occasion that he made a complaint that Mr Turner had misled him about the tenants, or other matters, was at the Richmond Seafood Tavern some time in May. I do not accept Mr Harpur's evidence to the contrary that he made complaints about Mr Turner earlier.

359 The letter that Mr Harpur wrote on 1 July complaining that he had been misled by Mr Turner only deals with the use of the Portland land. It does not make any complaint about representations about tenants or the pleaded representations. It is solely limited to representations about the use to which the land could be put, which all go to planning matters. Mr Harpur withdrew these complaints during the trial.

360 Mr Harpur also failed to adequately explain why he bought the Portland land in the circumstances when:

(a) he purchased it about a week after being introduced to it by Mr Turner;

(c) he did not give evidence that he had even been to Portland;

(d) he did not make any independent inquiries about the property save to carry out a company search and download some planning information;

(f) he did not discuss the purchase with his accountant and fellow director Mr Tunbridge, or his other advisors.

361 If Lord Buddha made the representations that it is alleged to have made and Mr Harpur believed them that does not explain why he behaved as he did. Why would an experienced property developer make no meaningful inquiries about a purchase that involved paying $6.5 million for a vacant block of land on the edge of Portland?

362 Mr Harpur conceded that he knew it needed to be rezoned and that would take time. He gave no evidence of knowing anything of substance about Portland. I do not believe Mr Harpur was being fully frank with the court in saying that he bought the land in those circumstances because he believed and trusted Mr Turner. In my view there were probably other factors at play that led him to take such an imprudent step as he did.

363 I find that the explanation probably lies in his own evidence that he expected the property to be acquired through his overseas partner, Mr von Stiegler, who was investing moneys on behalf of wealthy Indonesian investors.

364 Mr Harpur gave evidence that he could finance the purchase of the Portland land with a bank loan. Mr Harpur, however, gave no evidence of his financial resources. He had purchased the Lakes Entrance project for $4.2 million and that had run into problems. He had purchased a property in Werribee. He was attempting to sell his Corio development. He gave evidence that he found it difficult to finance the deposit for the Portland land. I am not satisfied that Mr Harpur could finance the purchase with a bank loan. I find that it was likely that Mr Harpur had found himself in a financial jam that he was trying to extract himself from as the real intended purchasers of the Portland land had pulled out.

365 Mr Harpur was adamant that CPI was not set up for the Portland land. I accept that was the case as CPI was set up in at the latest by November, as shown by the CPI information memorandum shown to Mr Turner and Mr Hutchins. I do not accept, however, that Mr Harpur did not intend to put Portland in CPI when he agreed to buy it. His admission that he was expecting funds from the Indonesian investors to pay the deposit carries with it the implication that he bought the land in the first place for them to invest in. If he was expecting money from the Indonesian investors then he must have been expecting that they would purchase the property or at the minimum invest in it. CPI was the logical means to achieve that end. The Portland land was in a "growth zone" and was the type of property that CPI proposed to invest in. Mr Harpur admitted that the Portland land was "ideally suited" for CPI if other cash flow positive properties could also be acquired by CPI to achieve cash flow neutrality.

366 It would have been obvious to Mr Harpur that Mr Turner had no personal knowledge of what negotiations there had been with prospective tenants. Mr Harpur as an experienced property developer must have known that that information about potential tenants was given to Mr Turner by or on behalf of the vendor, Lord Buddha. Mr Harpur said in evidence that he was told by Mr Turner at the time he signed the contract that Mr Gibbs had files on his dealings with tenants and that Mr Gibbs was prepared to be very helpful in relation to the project with these files.[403] I find that Mr Turner told Mr Harpur that his information about the tenants was provided by Mr Gibbs. Mr Harpur knew little if anything about the vendor. He had a search done of Lord Buddha the day before he signed the contract.

367 Mr Hutchins gave detailed evidence about the meeting held in Forvale's office when Mr Tunbridge drew the deposit cheque on 12 December 2007. Mr Harpur denied there was any such meeting and denied the matters that were discussed at that meeting. At first Mr Tunbridge also denied there was such a meeting, but eventually conceded it may have taken place. I find there was such a meeting. Mr Harpur could not recall the meeting even though it was a particularly important one as it was when the deposit was paid. He insisted the deposit was paid in a café in St Kilda Road. I reject Mr Harpur's evidence on the paying of the deposit.

368 Mr Hutchins gave extensive evidence of Mr Harpur's statements about Portland and the rezoning at the meeting where the deposit was made. Mr Harpur denied making these statements. I reject Mr Harpur's evidence.

369 Mr Harpur was asked why he did not pay the deposit that was due on Friday 25 January 2008. He said in substance that he had reservations about what Mr Turner had told him and he was unable to consult with Mr Turner about those reservations as Mr Turner had died. In fact Mr Turner died on the Sunday after the meeting. Mr Harpur's explanation was not true.

370 I find that Mr Harpur's reasons for not paying the deposit were that his partner and the Indonesian investors decided not to proceed with the purchase and that the moneys Mr Harpur was expecting were therefore not available. Further, I find that he was also experiencing cash flow difficulties through his various property developments.

371 Mr Harpur's evidence about his disabilities is at odds to the description he gave of his abilities in the CPI prospectus. He was seeking to raise up to $20 million initially and then $100 million from investors. He agreed he would be an active member of the organisation managing the investments.[404] It is difficult to accept that a solicitor who had the disabilities that he claims would seek to raise $100 million from the public and represent he had the skills that he did, when he knew he was labouring under the disabilities that he claims he was. I find that Mr Harpur exaggerated his disabilities.

372 Mr Harpur initially alleged that Mr Turner had misled him about the rezoning of the Portland land. He alleged that Mr Turner had told him that a rezoning application had been made to the council and had received a favourable response from the council. On the other hand, he was expressly told in the marketing brochure that the development plans were only concept plans. Mr Harpur as an experienced property developer knew that any application for a rezoning took up to years of work and involved reports of town planners and other professionals. That required work was not consistent with the plans being "concept plans." I find that Mr Harpur made this allegation without reasonable grounds.

373 As indicated, all these factors detract from the reliability of Mr Harpur's evidence.

374 Mr Harpur bears the onus of satisfying me on the balance of probabilities that Lord Buddha made the representations that he alleges. For the reasons I have given, I do not accept Mr Harpur's evidence on the alleged representations except where his evidence is supported by other evidence that I accept.

375 Due to the supporting evidence canvassed above and in particular the evidence of Mr Hutchins and the contemporaneous note, I am satisfied that in order to induce Mr Harpur to buy the Portland land, Lord Buddha marketed the Portland land to Mr Harpur on the basis that the land was ready for development. In particular I am satisfied that, as alleged, Lord Buddha did represent to Mr Harpur that:

(a) Coles and Aldi were available, and wanted to go there [to the Portland land], as tenants;

(b) Cheap as Chips, Mitre 10 and Bunnings wanted to go there to take a lease for a bulky goods store in the project;

(c) Lord Buddha had a number of tenants lined up for the site; and

(d) Lord Buddha had some land ready for development at Portland.

Representation (c) is supported and made out by representations (a) and (b). Representation (d) is also supported by and made out by representations (a), (b) and (c).

376 Mr Hutchins' conversations with Mr Turner before the contract was entered into support the inference that these representations were made. Further, Mr Hutchins' evidence on the post contract meetings also supports the inference that the representations were made by Mr Turner. I have canvassed at length the occasions on which the prospective tenants were discussed and that the discussions did refer to those prospective tenants named above.

377 The representations were false or misleading. I find that the land was not ready for development. Contrary to the representations made to Mr Harpur, Coles and Aldi were not available and did not want to go to the site. Cheap as Chips, Mitre 10 and Bunnings did not want to take a lease for a bulky good store in the project. It was not contended by Lord Buddha that if these representations were made they were true.

378 Due to the lack of supporting evidence (that I accept), Mr Harpur has not satisfied me on the balance of probabilities that the other alleged representations were made by Lord Buddha.

379 As to the representation that Lord Buddha and its principal David Gibbs held an option over the land directly to the south of the property which was owned by the local council, which land could be purchased Mr Harpur as well, I am satisfied that Mr Turner did discuss the possible use of the council land with Mr Harpur.

380 Mr Gibbs admitted telling Mr Turner that the council would look at selling the land and potentially rezoning part of it for a retirement village in the future.[405] On the other hand, Mr Gibbs denied telling Mr Turner that he had an option to purchase the land.[406]

381 Mr Hutchins agreed that Mr Turner told him in the discussions that they held between 3 December and 12 December 2007, that Mr Gibbs had an option to purchase the block of land next to the property.[407]

382 Both Mr Gibbs and Mr Hutchins recall the council land being discussed at the late January 2008 meeting at the Glasshouse Café. Mr Gibbs said that Mr Harpur said he was not interested at the time in buying the adjacent council land.[408] Mr Hutchins said that Mr Gibbs told Mr Harpur that he'd had "preliminary discussions" with the council regarding purchasing the council land to add on to the project and about his idea for its development.[409]

383 If Mr Harpur believed Mr Gibbs held a binding option over the council land, one would expect that he, as an experienced property developer, would ensure that the option formed part of the contract of sale. He did not do so.

384 I am not satisfied that Mr Turner represented that Mr Gibbs held a legal or binding option over the council land. I am not satisfied that Mr Turner went any further than indicating the "preliminary" discussions that had been held with the council.

385 As to the alleged representation that there were other people who were interested in purchasing the property including Mark Casey, I am satisfied that Mark Casey was mentioned in discussions between Mr Turner and Mr Harpur. Mr Hutchins gave evidence of discussing Mark Casey with Mr Turner.[410] That conversation only went to Mr Casey's possible interest in the retirement village part of the potential development of the property.

386 Mr Harpur was asked about the representation that there were other people who were interested in purchasing the property. He admitted that he was in fact told that Mr Casey only wished to purchase part of the land, and that he was interested at $3.3 million.[411] Mr Harpur said that he was told that Mr Casey was a buyer "for most of it [the Portland land], that rear section."[412] Mr Harpur later gave contradictory evidence that he was told that Mr Casey was interested in the whole land at around the same price that he [Mr Harpur] was prepared to pay.[413] Mr Harpur's own evidence about Mr Casey was confusing and contradictory. Mr Harpur has not satisfied me on the balance of probabilities that Lord Buddha made the representation alleged.

387 As to the alleged representation by Lord Buddha that there were other prospective purchasers who were interested or keen to buy the property at a price of $6.5 million, I am not satisfied on the balance of probabilities that that representation was made. Mr Turner did not mention that matter to Mr Hutchins. Mr Harpur did not allege the representation had been made at the post contract meetings.

388 As to the alleged representation by Lord Buddha that there was a valuation in existence which valued the property at $3 million, I am not satisfied such a representation was made. There is no evidence that Mr Turner mentioned such a valuation to Mr Hutchins. Mr Harpur did not allege such a representation was made in the post contract meetings.

THE TRADE PRACTICES ACT 1974 and the FAIR TRADING ACT 1999 (VIC)

389 At the relevant time, s 52 of the Trade Practices Act 1974 provided:

52 Misleading or deceptive conduct

(1) A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

...

53A False representations and other misleading or offensive conduct in relation to land

(1) A corporation shall not, in trade or commerce, in connexion with the sale or grant, or the possible sale or grant, of an interest in land or in connexion with the promotion by any means of the sale or grant of an interest in land:

(a) represent that the corporation has a sponsorship, approval or affiliation it does not have;

(b) make a false or misleading representation concerning the nature of the interest in the land, the price payable for the land, the location of the land, the characteristics of the land, the use to which the land is capable of being put or may lawfully be put or the existence or availability of facilities associated with the land; or

(c) offer gifts, prizes or other free items with the intention of not providing them or of not providing them

...

391 At the relevant time, s 11 of the Fair Trading Act 1999 (Vic) provided:

A person must not, in trade or commerce, engage in conduct that is liable to mislead the public as to the nature, the characteristics, the suitability for their purpose or the quantity of any services.

Did the representation constitute misleading or deceptive conduct?

392 As outlined above, I have found that the representations were misleading and deceptive.

393 For conduct to be misleading or deceptive, it is not necessary that it convey an express or implied representation.[414] It is sufficient that the conduct leads or is likely to lead another party into error.[415] In this case, however, Mr Harpur has relied on precise representations. Whether or not conduct amounts to a representation is a question of fact to be decided by considering what was said and done against the background of all surrounding circumstances.[416] In order for conduct to contravene s 52, it is not necessary for the conduct to be the sole cause of a person being misled or deceived.[417] Recovery under s 52 is

'...founded by the applicant's actual reliance upon the misleading or deceptive conduct of the respondent although that conduct was not the only factor in the applicant's decision to enter a particular agreement, and although the applicant did not seek to verify the representation or did so inadequately and so failed to discover their falsity.'[418]

394 I find that the misleading or deceptive representations did constitute misleading or deceptive conduct contrary to s 52 and s 11.

395 In Civoken v Madden Grove,[419] Whelan J set out the principles which apply where it is alleged that misleading representations induced a particular course of conduct. Whelan J was quoting from McHugh J in Butcher[420] when he said the following principles apply:

(1) The complainant must rely on the representation or conduct.

(2) If a material representation is made ... which is calculated to induce the complainant to enter into a contract and that person in fact enters into the contract, an inference arises that the person was induced to do so by the representation or the conduct.

(3) The inference may be rebutted by showing, for example, that the complainant, before entering into the contract, had actual knowledge of the true facts and knew them to be true or that the complainant did not rely on the representation or the conduct.

(4) The representation or conduct need not be the sole inducement. It is sufficient that it played some part, even if only a minor part, in contributing to the formation of the contract.

396 In his submissions, Mr Little, on behalf of Forvale, stated that Mr Harpur must establish as a threshold consideration that he held a mistaken belief as a result of something said to him.[421]

397 I find the misleading representations made by Lord Buddha, as referred to above, were made to induce Mr Harpur to enter into the contract for the sale of the Portland land. I find that Mr Harpur relied on these representations and I infer that he did enter the contract based on these inducements. I find that Mr Harpur did not have actual knowledge of the true facts in relation to the above representations and therefore the inference has not been rebutted.

398 I find that the representations were not the sole inducement. I find, however, that they played some part in contributing to Mr Harpur's decision to buy the property.

LIABILITY FOR THE MISLEADING AND DECEPTIVE REPRESENTATIONS MADE BY MR TURNER

399 Under s 84 of the Trade Practices Act 1974, conduct engaged in by an agent of a body corporate is deemed to have also been engaged in by the body corporate. Section 84 provides:

84 Conduct by directors, servants or agents

(1) Where, in a proceeding under this Part in respect of conduct engaged in by a body corporate, being conduct in relation to which section 46 or 46A or Part IVA, IVB, V, VB or VC applies, it is necessary to establish the state of mind of the body corporate, it is sufficient to show that a director, servant or agent of the body corporate, being a director, servant or agent by whom the conduct was engaged in within the scope of the person's actual or apparent authority, had that state of mind.

(2) Any conduct engaged in on behalf of a body corporate:

(a) by a director, servant or agent of the body corporate within the scope of the person's actual or apparent authority; or

(b) by any other person at the direction or with the consent or agreement (whether express or implied) of a director, servant or agent of the body corporate, where the giving of the direction, consent or agreement is within the scope of the actual or apparent authority of the director, servant or agent;

shall be deemed, for the purposes of this Act, to have been engaged in also by the body corporate.

...

400 Mr Turner was acting as an agent for Forvale. He had a sub-agent's licence and made representations about the Portland land based on information given to him by Mr Gibbs. On 3 December 2007, Mr Turner, on behalf of Forvale, obtained an authority from Lord Buddha to sell the Portland land for $6.5 million. Thus, clearly, Forvale was acting as an agent for Lord Buddha. I find that Lord Buddha is deemed to have engaged in the misleading and deceptive conduct of Mr Turner.[422]

Is Forvale liable for the representations of Mr Turner?

401 Mr Harpur also alleges that Forvale engaged in the misleading and deceptive conduct as alleged against Lord Buddha.

402 Forvale contends that it did not, by the conduct of Mr Turner, engage in misleading or deceptive conduct. It relies on a line of authorities that distinguishes between the liability of the agent and the agent's principal where the agent merely passes on information provided by the principal.

403 In Butcher the purchasers of waterfront land brought an action for misleading or deceptive conduct against a real estate agent who had produced a brochure to promote a forthcoming auction of land that incorrectly showed a swimming pool to be within the property being sold at auction. The successful bidders contended that the brochure was misleading or deceptive and that the agent that produced it and provided it to them was liable to them for misleading or deceptive conduct. The agent contended that he had not engaged in misleading or deceptive conduct as he merely passed on information provided to him by the vendors, and this was known to the purchasers.

404 The High Court of Australia held that the agent was not liable. The central principle was explained by the majority Gleeson CJ, Hayne and Heyden JJ as follows:

The relevant principles. In Yorke v Lucas, Mason ACJ, Wilson, Deane and Dawson JJ said that a corporation could contravene s 52 even though it acted honestly and reasonably:

"That does not, however, mean that a corporation which purports to do no more than pass on information supplied by another must nevertheless be engaging in misleading or deceptive conduct if the information turns out to be false. If the circumstances are such as to make it apparent that the corporation is not the source of the information and that it expressly or impliedly disclaims any belief in its truth or falsity, merely passing it on for what it is worth, we very much doubt that the corporation can properly be said to be itself engaging in conduct that is misleading or deceptive."

In applying those principles, it is important that the agent's conduct be viewed as a whole. It is not right to characterise the problem as one of analysing the effect of its "conduct" divorced from "disclaimers" about that "conduct" and divorced from other circumstances which might qualify its character. Everything relevant the agent did up to the time when the purchasers contracted to buy the Rednal land must be taken into account. It is also important to remember that the relevant question must not be reduced to a crude inquiry: "Did the agent realise the purchasers were relying on the diagram?" To do that would be impermissibly to dilute the strict liability which s 52 imposes.

For the following reasons, the agent did not engage in conduct towards the purchasers which was misleading. Whatever representation the vendor made to the purchasers by authorising the agent to issue the brochure, it was not made by the agent to the purchasers. The agent did no more than communicate what the vendor was representing, without adopting it or endorsing it. That conclusion flows from the nature of the parties, the character of the transaction contemplated, and the contents of the brochure itself. [423]

..... [the court considered, the nature of the parties, the character of the transaction and the contents of the brochure]

....

Hence it would have been plain to a reasonable purchaser that the agent was not the source of the information which was said to be misleading. The agent did not purport to do anything more than pass on information supplied by another or others. It both expressly and implicitly disclaimed any belief in the truth or falsity of that information. It did no more than state a belief in the reliability of the sources.[424]

405 Mr Little argued that if the information communicated by Mr Turner to Mr Harpur was incorrect, then the Court should find that Mr Turner was merely passing on to Mr Harpur information provided by the vendor, Lord Buddha, and that Mr Harpur was aware that the information emanated from Lord Buddha. Accordingly, the Court should not find Forvale was liable for Mr Turner's representations. Mr Little again relied on Whelan J in Civoken for this submission. In Civoken Whelan J referred to and relied on the High Court decision in Butcher.

406 In Civoken Whelan J stated that the judgments in Butcher did not differ in relation to the principles to be applied. In particular, he said that all of the judgments proceeded

'on the basis that conduct which amounts to no more than communicating or passing on representations made, or information provided, by another, without endorsing or adopting it, is not misleading conduct by the person acting for these purpose as the "conduit", because the information is incorrect or the representation is untrue'.[425]

'...the issue is accurate characterisation of the conduct. If a person makes it clear that all they are doing is repeating what someone else has said, then the representation that person makes is not misleading unless in fact the other person did not say it'.[426]

408 Mr Little argued that it would have been obvious from the context of the conversations that Mr Turner's representations were not derived from personal knowledge of the land and prospective tenants but rather from what he had been told by Lord Buddha.[427] Mr Little contends that Mr Turner was a mere conduit passing on the information provided by Lord Buddha.

409 I agree that it would have been obvious to Mr Harpur that Mr Turner had not spoken to the potential tenants. Mr Harpur has not satisfied me that Mr Turner was endorsing the accuracy of what he had been informed by Lord Buddha and passed on to Mr Harpur. Whelan J said "the issue is accurate characterisation of the conduct." The relevant conduct is the conduct of Mr Turner in making the statements that are the basis for the representations I have found made out. The relevant conduct has to be characterised as "a whole" taking into account his conduct up until the contract was made, as the High Court said in Butcher.

410 The conduct of Mr Turner includes giving Mr Harpur the brochure, on 12 December 2007, that clearly came from the vendor. The relevant circumstances also include Mr Harpur's acknowledgment at the meeting on 12 December 2007 that he was told by Mr Turner that Mr Gibbs had files on his dealings with tenants and that Mr Gibbs was prepared to be very helpful in relation to the project with these files.[428] I infer from that evidence that Mr Harpur was aware that the source of the information on the tenants was Mr Gibbs of Lord Buddha, the vendor. Mr Little also pointed to the preliminary site development plan and the coloured map of Portland that were given to Mr Harpur by Mr Turner as being documents that were not produced by Forvale.[429]

411 Mr Little's submissions are also supported by events after the contract was signed. Mr Harpur first met Mr Gibbs at the Glasshouse Café in January before Mr Turner died. Mr Hutchins said that the meeting was initiated by Mr Turner so that Mr Harpur could meet with Mr Gibbs and discuss anything quoted by Mr Turner to Mr Harpur regarding the rezoning and other issues.[430] I took Mr Hutchins' reference to "quoted" to mean that Mr Turner wanted Mr Harpur to meet Mr Gibbs to discuss information given to Mr Turner by Mr Gibbs about prospective tenants that Mr Turner had in turn quoted to Mr Harpur. Mr Hutchins says that Mr Turner spoke at the meeting about things he wanted Mr Gibbs to clarify in relation to rezoning and potential tenants.

412 It must be kept in mind that the communications I am addressing are only the communications that support the alleged representations that I have found Mr Harpur has made out.

413 I find that the accurate characterisation of Mr Turner's conduct is that he merely acted as a conduit for representations being made by the vendor Lord Buddha. I find that the relevant information that Mr Turner conveyed to Mr Harpur to make out those representations was information that he obtained from Mr Gibbs. Further, I am satisfied that Mr Harpur understood that the relevant information that was being conveyed to him by Mr Turner was information that emanated from Mr Gibbs and Lord Buddha and that Mr Turner had no independent knowledge as to the accuracy or otherwise of the information he was passing on to Mr Harpur from the vendor Lord Buddha. Mr Harpur has not satisfied me that Mr Turner or Forvale endorsed or adopted the relevant representations. I am not satisfied that Forvale engaged in misleading or deceptive conduct. I therefore dismiss Mr Harpur's claim against Forvale on this ground.

414 Mr Harpur alleges[431] that Forvale was a person involved in the contravention of ss 52 and 53A(2) of the Trade Practices Act 1974 and/or s 11 of the Fair Trading Act 1999 (Vic) by Mr Turner, as Forvale is a person who:

(c) has been in any way directly or indirectly knowingly concerned or party to; or

415 In Yorke v Lucas,[433] Mason ACJ, Wilson, Deane and Dawson JJ held that for a person to be found to have aided, abetted, counselled or procured a contravention of the Act, they must have done so intentionally and with knowledge of the essential matters which make up the contravention.[434] Their Honours further held that, in relation to 'being a party to a contravention', a person must be an "intentional participant, the necessary intent being based upon knowledge of the essential elements of the contravention".[435]

416 In Yorke, it was alleged that the individual whose company acted as the estate agent in the sale of a business was liable as an accessory for the misleading or deceptive conduct of the vendor of a business. The vendor gave to the individual agent false sales figures of the business. The individual did not know or suspect they were false. The High Court held that for the purchaser to succeed against the individual under the accessory provisions it would be necessary to prove that the individual knew the sales figures were false.

417 Mr Harpur has not satisfied me that Mr Turner had such knowledge. In his final submissions, Mr Harpur did not make any submissions to support this contention. I find this claim is not made out.

418 Mr Harpur argued that as he had a stroke which makes him forgetful and too trusting of others, and as Mr Turner knew about this, it would be unconscionable for the contract to be enforced against him. In Commercial Bank of Australia v Amadio,[436] Deane J set out the relevant test for unconscionability:

(a) that a party or person is under a 'special disability';

(b) the 'special disability' was so evident that it would be prima facie unfair for the other party to rely on acceptance to the terms of the contract; and

(c) the onus is on the stronger party to show that the transaction was fair.[437]

419 Mr Harpur claims that Mr Turner was aware of his disabilities as they had discussed their health quite extensively during a trip to Lakes Entrance. Mr Harpur could not remember exactly what he told Mr Turner about his health, but said that he 'would' have told him about the stroke.[438] Mr Harpur said that, as a result of the effects of his stroke, he asked Mr Turner to make notes of meetings where material matters were discussed.[439] No notes of this nature were introduced in evidence by Mr Harpur. There is no evidence that Mr Turner was aware of the effects of Mr Harpur's stroke. Mr Hutchins says that Mr Turner did not ever tell him about any illness Mr Harpur may have had.[440]

420 Mr Hutchins said that Mr Harpur told him about his stroke in late May 2008 and had outlined the ongoing effects including unwillingness to drive and the effect on his short term memory.[441] Mr Hutchins said he was surprised to hear about the stroke as up to that time Mr Harpur had shown no signs of his health being affected.[442]

421 As noted above, Mr Harpur's evidence about his disabilities is at odds to the description he gave of his abilities in the CPI prospectus, and the fact that he was seeking to raise, firstly up to $20 million and then $100 million from investors. Again, as noted above it is difficult to accept that a solicitor would represent he had the skills that he did, when he knew he was labouring under the disabilities that he claims he was. I have already found that Mr Harpur exaggerated his disabilities.

422 I find that Mr Harpur was not suffering from health issues so severe that they could be classed as a 'special disability or disadvantage'. Even if he was so suffering, I find that Mr Turner and Mr Hutchins did not know about this disability or disadvantage. I find there has been no unconscionable conduct in relation to Mr Harpur in this matter.

ALLEGED BREACH BY LORD BUDDHA OF THE SALE OF LAND ACT 1962

423 Mr Harpur alleges that the contract between the parties was voidable because it did not comply with a number of requirements under the Sale of Land Act 1962 (Vic).

424 In particular, Mr Harpur claims that the contract did not comply with:

(a) requirements of a terms contract to disclose the existence of a mortgage and how it is to be dealt with at settlement set out in ss 6 and 14 of the Act;

(b) requirements of terms contracts and provisions governing deposit monies set out in Division 3 of Part 1 of the Act, particularly s 25; and

(c) certain provisions relating to vendor's statements as set out in s 32 of the Act.

425 It is unnecessary for me to decide these intricate and time consuming issues as I have found in Mr Harpur's favour on the misleading and deceptive claim. Accordingly, I will not undertake the fruitless task. As it was, very little time was spent on addressing these issues. I acknowledge that counsel provided me with very helpful written submissions on these issues.

(a) An order for payment of the sum of $425,000.00.

(c) Further, or alternatively, equitable compensation.

(d) Further, or alternatively, damages pursuant to s 82 Trade Practices Act 1974; and/or s 159 Fair Trading Act 1999 (Vic).

(e) Further, or alternatively, orders pursuant to s 87 Trade Practices Act 1974; and/or s 158(2) Fair Trading Act 1999 (Vic).

(f) Interest pursuant to statute, or alternatively, compound interest.

(h) Such further or other order as the Court thinks fit.

(a) there be judgment for Mr Harpur on Lord Buddha's claim against Mr Harpur;

(b) there be judgment for Mr Harpur on his counter claim against Lord Buddha;

(c) there be judgment for Forvale Pty Ltd on Mr Harpur's counter claim against it;

(d) pursuant to s 82 Trade Practices Act 1974 and s 159 Fair Trading Act 1999 (Vic) that Lord Buddha pay Mr Harpur the sum of $425,000.00 and damages in the nature of interest.

I will hear the parties on costs and the calculation of interest. I direct that Mr Harpur bring in short minutes for the consideration of the parties and the Court.

428 Mr Gaucci said that they had had discussions with several petroleum firms including APCO, AA Petroleum and United. Each of these involved an offer to sell a portion of the land. There was lukewarm interest from United and APCO.

429 Mr Barrett spoke to Adrian Barnes of Barnes Furniture and Carpet Centre. He said that they thought they might combine with Betta Electrical all in one large store. He said they were very interested in the site and wanted to be kept informed about future developments.[443] Mr Barrett stated that they were discussing potential tenants and all were indicating a strong interest but it was dependant on when the development was likely to occur and what kind of costs were involved.[444]

430 Mr Gaucci said "we" also spoke to Hector at BCF (Boating, Camping and Fishing) (also owned by Supercheap). He said they had some interest in the site but their comment was that if the development could get Bunnings they would go there tomorrow.[445] He said they indicated they would come to the site if Bunnings was an anchor tenant.[446]

431 Mr Barrett spoke to Brydens' Tyres who were interested if there was a truck refuelling depot.[447]

433 Mr Gaucci said he spoke to Ryan Herd of Harvey Norman. He said they had some interest in the site but their comment was that if they could get Bunnings they would go there tomorrow.[448] Mr Gaucci was shown his diary/journal. It disclosed that he had had discussions with Harvey Norman on 7 July 2006. He said that although interested Harvey Norman did not commit.[449]

434 Mr Gaucci spoke to the local IGA operator.[450] Mr Gaucci said IGA was loath to do a second store given the demographics of Portland. He said IGA thought it was going to be a number of years before that part of the town needed a store or a second store.[451]

435 Mr Barrett said he spoke to the IGA operator, and he was involved in stores he had elsewhere and it was not quite the right time for him.[452]

436 Mr Barrett spoke to Ms Crockett in about August 2007. She was looking for a thousand square metres to create a child's play centre within a supermarket complex.[453] That proposal did not transpire.[454] Mr Barrett refers to the inquiry in an email of 29 August 2007 to Mr Gibbs and Mr Gaucci.[455]

437 Mr Barrett also spoke to a local pharmacist.[456]

438 Mr Gaucci had discussions with Tony Riland from Metcash.[457] Mr Gaucci said that his diary record of 8 August 2006 records that Tony Riland from Metcash went and had a look at the site.[458]

439 Mr Gaucci spoke to Graham Holeman from NQR. Mr Holeman showed genuine interest and came to Portland to view the site. His store was too small to "kick this development off."[459] Mr Gaucci was asked to explain what he meant by "interest." He said it was one thing to get interest in the site and another to be signed up. He said the first thing is that they don't slam the door in your face.[460]

440 Mr Gaucci said they spoke to Paul Upton of McDonalds. He said they preferred to go into the CBD and subsequently they have done so.[461]

441 Mr Barrett also took an inquiry from a national auto parts dealer. He suspects it was someone like Supercheap auto. The inquiry went nowhere.[462]

442 Mr Gaucci said he spoke to Wayne Hancock of Red Rooster who expressed "some interest."

443 Mr Gaucci spoke with Shell and Michelle O'Donoghue came to Portland to inspect the site.

444 Mr Gaucci said "we" also spoke to Supercheap Auto, Harvey Norman and BCF (also owned by Supercheap). He said they had some interest in the site but their comment was that if they could get Bunnings in the development they would go there tomorrow.[463]

445 Mr Barrett says he was approached by Whitehead Timber Sales which had a site nearby and were interested in acquiring one of the titles at the west end of the land for their business. The purchase did not proceed.[464]

446 Mr Barrett at his meeting in August with Mr Gibbs informed him that the Baptist Church had purchased land to the south of the Portland land requiring a large car park. The pastor was keen to meet Mr Gibbs to discuss a proposal about sharing a car park with the Portland land.[465] Subsequently, Mr Gibbs, Mr Gaucci, and Mr Simpson of the Baptist Church met. Mr Gibbs agreed to share the car park. Mr Gibbs also informed Mr Simpson about his proposal to build a retirement village at the Western end of the Portland land. Mr Simpson and Mr Gibbs agreed that the project had synergy with shops, a retirement village and a church.[466]

I certify that this and the 8280 preceding pages are a true copy of the reasons for Judgment of Robson of the Supreme Court of Victoria delivered on 9 August 2011.

[1] Amended statement of claim of 23 October 2008, Courtbook 32.

[2] In breach of ss 52 and 53A(2) of the Trade Practices Act 1974 and s 11 of the Fair Trading Act 1999 (Vic).

[3] Mr Harpur's amended defence to further amended statement of claim and amended counterclaim, 15 April 2011, [17], [21].

[4] Mr Harpur's amended defence to further amended statement of claim and amended counterclaim, 15 April 2011, [34]-[35].

[5] Lord Buddha's third amended reply and amended defence, 18 May 2011, [20].

[6] Forvale's defence to amended defence and counterclaim of the second defendant by counterclaim of 16 January 2009, Courtbook 93, [2].

[7] Lord Buddha is part of the IPC Property & Investment Group that is controlled by Mr Gibbs: transcript, 40.

[8] The concept plan is annexed as annexure 2.

[9] The particulars rely on the preliminary site development plan (exhibit D5); a document showing calculations and projections made by Mr Turner (this could not be found and was not tendered); and a note on Sahid Jaya Hotel note paper (exhibit D8). During the trial Mr Harpur also relied on a coloured concept plan (exhibit D6) and a brochure (exhibit D7). Mr Harpur said that he was given the coloured concept plan (exhibit D6) at the same time as he was given the development plan (exhibit D5) in early December (Transcript 226 lines 4-8). Mr Harpur says he was given the development plan (exhibit D5) in early December (Transcript 215 lines 10-16; 218 lines 18-19; 219 lines 16-19).

[10] Mr Harpur's amended defence to further amended statement of claim and amended counterclaim, 15 April 2011, [34].

[40] Transcript 262-263, exhibit P24 (statement of claim re Lakes Entrance purchase).

[70] The plan is annexed as annexure A.

[71] See Mr Barrett's email of 29 August 2007, exhibit P18.

[75] Mr Barrett gave detailed evidence of how the presentation was conducted.

[80] See paragraph 96 of this judgment.

[106] These are referred to in annexure B.

[138] Transcript 46, see also cross-examination at 79-80.

[160] Exhibit D7 tendered at transcript 234. It had Mr Harpur's handwriting on the back. Lord Buddha tendered a different but similar brochure as P2. It contained a conclusion and contact details for Mr Gibbs that do not appear in the brochure given to Mr Harpur.

[162] As indicated above, the brochure is not relied on in the pleadings but was relied on during the trial.

[163] Exhibit D5, tendered at transcript 225.

[166] Exhibit D6, tendered at transcript 229.

[171] Exhibit D14, tendered at transcript 489.

[172] Exhibit D 20, tendered at transcript 509; Mr Tunbridge was not certain when he obtained these.

[173] Exhibit D21, tendered at transcript 511 and also discussed at transcript 351.

[192] First dot point at 28, exhibit D7.

[220] Transcript 488; search exhibit D14.

[245] See also cross-examination at transcript 522, line 9 and 546, line 6.

[277] Transcript 48, lines 28; 49, line 4.

[286] Transcript 243, line 28; 244, line 5.

[289] Transcript 287, lines 25-30; 288, line 9.

[389] Exhibit D9, email of 13 March 2008.

[400] Transcript 48, line 28; 49, line 4.

[414] Butcher v Lachlan Elder Realty Pty Ltd (Butcher) [2004] HCA 60; (2004) 218 CLR 592, 603 [32], per Gleeson CJ, Hayne and Heydon JJ; Miller v BMW (Miller) (2010) 241 CLR 357, 368 [15], per French CJ and Kiefel J.

[415] Johnson Tiles Pty Ltd v Esso Australia Ltd [2000] FCA 1572; (2000) 104 FCR 564, 589 [63], per French J (with whom Beaumont and Finkelstein JJ agreed); Miller, 368 [15].

[416] Taco Co of Australia Inc v Taco Bell Pty Ltd [1982] FCA 136; (1982) 42 ALR 177 at 202 (Deane and Fitzgerald JJ) cited with approval by the High Court of Australia in Campomar v Nike International [2000] HCA 12; (2000) 202 CLR 45, [100] (Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ).

[417] Butcher, 638 [150] (McHugh, J).

[418] Henjo Investments Pty Ltd v Collins [1988] FCA 40; (1988) 39 FCR 546, 558-559.

[419] (Civoken) [2006] VSC 283 [522].

[421] Steutel & Anor v Kimple Pty Ltd [2005] VSCA 312 [32] and [47] per Chernov JA.

[422] Section 84 of the Trade Practices Act 1974.

[431] Amended defence to further amended statement of claim and amended counterclaim of 15 April 2011.

[432] Pursuant to s 75B of the Trade Practice Act 1974 and s 145 of the Fair Trading Act 1999 (Vic).

[433] (Yorke) [1985] HCA 65; (1985) 158 CLR 661.

[436] (Amadio) [1983] HCA 14; (1983) 151 CLR 447.