Plaintiff v Defendants

1 Mrs Thi Huong Nguyen (Nguyen) is a Director, Secretary, and the sole shareholder and controlling mind of the plaintiff, P-Value Pty Ltd (P-Value).

2 Nguyen came to Australia together with her brother, as a refugee from Vietnam in 1978. On arrival in Australia, Nguyen had no command of the English language. Subsequent to her arrival she married in 1984 and commenced a clothing manufacturing business with her husband in 1989 which they operated from an address in Springvale, Victoria. It would appear that the Nguyen business prospered.

3 On 15 January 2009 P-Value completed the purchase of a commercial property at 255 Chapel Street, Prahran (the Property) from the first and second defendants (the Vendors). The Contract of Sale for the Property was signed on 5 September 2008 by Nguyen, who later became a director of P-Value when it was registered in December 2008. The third defendant, William Derek McNee (McNee), then the sole Director and sole shareholder of the second defendant, and representative of the Vendors, signed the Contract of Sale for the Vendors.

(a) an auction of the Property had been organised by the Vendors for midday on 5 September 2008;

(b) in the late morning of 5 September 2008 Nguyen was taken by a real estate agent, the fifth defendant, Richard Thomas (Thomas), to an office of the fourth defendant, Rodney Morley Persichetti Pty Ltd (TBM Sales) which was located in the same street as the Property and which was opposite the Property;

(c) present at the TBM Sales office and from time to time, there were at least four real estate agents involved in, or associated with, the Vendors' campaign to sell the Property and McNee. Those persons were:

• Fred Nucara (Nucara) the seventh defendant, a real estate agent and Director of Wellara Holdings Pty Ltd, the sixth defendant which trades as Beller Commercial (Beller). In September 2008, Beller was a new venture Nucara had recently set up with his co-director, Andrew Fawell;[1]

• Richard Thomas (Thomas), the fifth defendant, a real estate agent and employee of the fourth defendant Rodney Morley Persichetti Pty Ltd (trading as TBM Sales);

• Andrew Fawell (Fawell), real estate agent and director of Beller;

• Rodney Morley (Morley), an estate agent from the fourth defendant.

(d) At a meeting in Chapel Street Prahran in the late morning of 5 September 2008 negotiations and discussions took place between McNee and real estate agents for the Vendors with Nguyen. These negotiations and discussion principally involved Nguyen, McNee, Nucara and Thomas, although Fawell, Morley and one Andrew Clifton (director and shareholder of the first defendant) were at times in attendance;

• and before the auction was due to commence, Nucara told Nguyen that the Vendors had an offer of $5,920,000 for the Property and as a result the auction had been cancelled;

• neither McNee nor Nucara told Nguyen that the "offer of $5,920,000" said to have been made to the Vendors by another potential buyer was in fact an offer for $5,568,800 and had, under its own terms, "terminated" at 10.00pm the day before, and that the "offer" had also been expressly rejected by McNee on 4 September 2008;

• Two Five Five Pty Ltd (255) was a tenant of level 1 of the Property held under a lease with the Vendors which appeared to oblige it to pay $200,000 rental per annum;
• Nguyen said to McNee and Nucara that she was concerned about the reliability and amount of the rental yield from the Property and in particular the ability of 255 to pay rent;
• Nucara told Nguyen that the main tenant at the Property which occupied level 1, 255, was a good tenant and good payer of rent;
• McNee did not correct or qualify Nucara's statement about the level 1 tenant;
• McNee agreed to the inclusion of a Special Condition in the Contract of Sale which stipulated for the provision of a $200,000 security deposit in respect of the level 1 lease to 255;
• neither McNee nor any of the real estate agents present on 5 September 2008 told Nguyen that the Vendors had entered into a rent abatement agreement (the rent abatement agreement) with 255, which permitted 255 to pay no rent while the Vendors owned the Property and granted 255 a rent free period of 12 months;
• furthermore neither McNee nor any of the real estate agents present told Nguyen that as at 5 September 2008, 255 had paid no rent for its occupation of level 1 of the Property to date.

5 The Vendor's statement for the Property included in the Contract of Sale detailed three leases with a combined total rent payable of $370,000 per annum. These leases were to 7-Eleven Stores Pty Ltd for a ground floor lease for 5 years at an annual rental of $110,000 payable from 1 July 2008, and to Balcony Nominees Pty Ltd for the rear of the ground floor for a period of 3 years commencing on 14 June 2008 at an annual rental of $60,000, and to 255 for a level 1 lease for a period of 7 years at an annual rental of $200,000, commencing on 30 June 2008. Nguyen was also provided with information by Thomas of TBM Sales in June and July 2008 about the $370,000 rent being paid by the three tenants of the Property, and that it should not be necessary for the tenant 255, which had a $200,000 per annum lease, to provide a director's guarantee to secure its rent.

6 P-Value alleges that unbeknown to Nguyen in September 2008 when she signed the contract of sale, and unbeknown to Nguyen or P-Value in January 2009 when P-Value completed the contract, 255 had paid no rent to the Vendors and had entered into the rent abatement agreement with the Vendors not to pay rent whilst the Vendors owned the Property and for a period of 12 months from the sale of the Property by the Vendors.[2]

7 P-Value purchased the Property and has subsequently discovered that it did so at a price which was about $2m above the market price at the time of purchase. This proceeding ensued.

8 By an Amended Statement of Claim dated 13 October 2013, P-Value claims against various defendants for misleading and deceptive conduct contrary to the Trade Practices Act 1974 (Cth) ('TPA') and the Fair Trading Act 1999 (Vic) ('FTA'). The specific misleading and deceptive conduct is alleged against:

(i) Vicland Property Group No.1 Pty Ltd (first defendant) and Vicland Property Group No.2 Pty Ltd (second defendant), the Vendors of the Property (the Vendors);

(ii) McNee (third defendant), the sole director of Vicland No 2;

(iii) the real estate agency TBM Sales (the fourth defendant);

(iv) Thomas (fifth defendant), a sales representative of TBM Sales during the relevant period;

(v) the real estate agency Beller (the sixth defendant Wellara Holdings Pty Ltd); and

(vi) Nucara (seventh defendant), a director of Beller.

9 As outlined above, the misleading and deceptive conduct alleged centres on the failure by the defendants to disclose the rent abatement agreement, various representations made by the defendants, either expressly or impliedly, that 255 was a good tenant and a good payer of rent and that the Property had rental income of $370,000 per annum.

10 The misleading and deceptive conduct alleged is:

(a) the failure by all defendants to disclose the existence of the rent abatement agreement;

(b) the representations made by Thomas, on behalf of TBM Sales, to Nguyen prior to the day of sale, that rent payable on the Property was $370,000 per annum and 255 had been paying and was able to pay rent under the lease of level 1 of the Property and TBM Sales were not aware of any circumstance relating to 255 which may affect its ability to pay rent under the lease;

(c) that at the meeting with Nguyen on 5 September 2008, in the company of McNee and Nucara, Thomas, acting on behalf of TBM Sales, heard Nucara state the matters in sub-paragraph (d)(i), (ii) and (iii) below and did not correct what Nucara said thereby implicitly representing that what he said was true;

(d) the representations made by Nucara to Nguyen on the day of sale that;

(i) the auction had been cancelled because the Vendors had received an offer of $5,920,000;

(e) these representations made by Nucara on the day of sale were heard by McNee without McNee correcting what was said, thereby impliedly representing that what Nucara said was true;

(f) McNee, by agreeing to the inclusion of special condition 30, which provided for a $200,000 security deposit in respect of the 255 lease, while failing to disclose the existence of the rent abatement agreement impliedly represented that 255 had paid rent in the past and could be expected to pay rent in accordance with the terms of the lease of level 1 of the Property.

11 P-Value alleges that McNee (on behalf of the Vendors), Thomas (on behalf of TBM Sales), and Nucara (on behalf of Beller) did not disclose prior to or during the meeting on 5 September 2008:

(a) the existence of the rent abatement agreement;

(b) that 255 had not paid any rent at all under the lease; and

(c) under the terms of the rent abatement agreement, 255 would not pay rent for 8 or 12 months after the property was sold.[3]

12 P-Value alleges that had Nguyen been told of the above three matters by McNee, Thomas and Nucara, she would not have executed the contract to purchase the Property, and by failing to so disclose P-Value claims that McNee, Thomas and Nucara engaged in conduct that was misleading or deceptive contrary to s 9 of the FTA and that simultaneously, by failing to disclose the said matters the first and second defendants, the fourth defendant and the sixth defendant engaged in conduct which was misleading or deceptive contrary to s 52 of the TPA and s 9 of the FTA.

(a) the difference between the price paid for the Property and the value of the Property;

(b) additional interest and stamp duty paid on the difference in price; and

(c) legal costs incurred by P-Value in litigation with the defaulting tenant 255.

14 It is to be noted that P-Value's claims are confined to claims under s 51A and s 52 of the TPA and s 4 and s 9 of the FTA.

15 The first defendant, on 19 July 2013, filed a limited defence and, on 24 October 2013 gave limited particulars thereof and otherwise took no further active part in this proceeding until after the hearing of evidence, save that on 13 April 2016 Mr Clifton appeared and sought to apply to withdraw the agreed consent orders of 6 April 2016. I refer to later in these reasons, and at that point in detail, the events of 13 April 2016, and to Mr Clifton and the first defendant's present position.

16 Although not filed, Counsel for P-Value stated the second defendant was served with originating process. However the second defendant has taken no part in the proceedings. Neither has it filed an appearance or defence.

17 McNee however admits that at all material times he was the sole Director of the second defendant.[4]

18 Although it appears that the second defendant was deregistered on 30 October 2012, no party sought to make any point about the fact that the second defendant probably did not exist at the time of issue[5] and all active parties, including the plaintiff, presented their case and submissions as though the second defendant remained in existence.

19 I have proceeded to make findings in respect of the second defendant in relation to the key events of 2008 and 2009, however for the above reasons I have not made or foreshadowed any orders against that now non-existent second defendant company. I shall await any further submissions in this regard which the parties may make prior to authentication of final orders in this matter.

20 P-Value alleges that in June and July 2008 Thomas, on behalf of TBM Sales and the Vendors, represented to Nguyen that the rent payable by tenants at the Property totalled $370,000 a year. Those representations are alleged to have been made orally by Thomas in discussions with Nguyen at a meeting at the Property in late June 2008. P-Value also says that these rental representations were made by email from Thomas to Nguyen on 1 July 2008. That email communicated a Schedule which attached a copy of leases of the Property, and a form of Contract of Sale which referred to three relevant tenancies, and which also attached a Section 32 Vendor Statement.

21 P-Value also alleges that as part of the initial discussions between Thomas, as agent for the Vendors, and Nguyen, on about 9 July 2008, Thomas informed Nguyen that there was no need for 255 to provide a director's guarantee in respect of its lease of level 1 of the Property and in so doing Thomas, on behalf of TBM Sales, implied that 255 had been paying and was able to pay rent under its lease. P-Value alleges that by this same communication Thomas and the companies for which he spoke, TBM Sales and the Vendors, represented that they were not aware of any circumstance concerning 255 which may affect its ability to pay rent under its lease of the Property. P-Value relies upon an email from Thomas to Nguyen dated 9 July 2008 which attached a proposed Special Condition for a Contract of Sale, providing for $400,000 by way of security instead of a director's guarantee in relation to rental obligations. P-Value's pleadings detail that this email was sent in response to a telephone call made by Nguyen to Thomas during which Nguyen asked why it was that there was no director's guarantee in relation to the tenants' rental obligations.

22 P-Value asserts that during August 2008 Thomas asked Nguyen on a number of occasions whether she wanted to make an offer to purchase the Property before the forthcoming day of auction. There is no dispute that Thomas telephoned Nguyen on 4 September 2008 and asked Nguyen whether she would make an offer for the Property, to which Nguyen responded that she would wait to see what happened at the forthcoming auction.

23 P-Value also alleges that at all relevant times prior to and on the day of the auction of the Property on 5 September 2008 the defendants and each of them were aware that the payments of rent by the tenants of the Property, 255 in particular, was an important matter for purchasers of the Property, including Nguyen. P-Value's case is that such awareness on the part of the defendants is to be inferred from the fact that the amount of rental was important to establish the return on the price paid to purchase the Property and because that fact affected the value of the Property.

24 The defensive cases of the defendants and the third defendant's counterclaim including the key allegation in the defendants' Defences are identified and addressed below by reference to the submissions of those parties. I note at this point however the following aspects of the defendants' cases.

25 The first defendant admits that the rent payable by the tenants of the Property was important to potential purchasers and Nguyen and adds that Nguyen made her concern about rental clear by requesting a security of $400,000 and later agreeing to accept a security of $200,000.[6]

26 McNee denies P-Value's allegations of awareness by the third defendant of the importance to potential purchasers of the payment of rent by the existing tenants of the Property. Thomas also denies P-Value's allegations to do with the importance of rental income to prospective purchasers and says that he provided written information about tenancies of the Property to Nguyen and he did so on 1 July 2008 and 4 July 2008 as set out in paragraph 16 of his Amended Defence dated 30 April 2014. Similarly, TBM Sales and Thomas deny the awareness of these same allegations made by P-Value at [19] of its Statement of Claim and so do the sixth and seventh defendants.

27 Nguyen also asserts that the defendants' awareness that payments of rent by tenants of the Property, 255 in particular, were important to potential purchasers and Nguyen is to be inferred from the text of the 'Flyer' published by Beller promoting the auction of the Property on 5 September 2008. The Flyer relied upon by P-Value stated:

• Total Rent $370,000 p.a.

• 3 tenants including 7-Eleven.

• Long leases.

28 Nguyen also asserts that Thomas' awareness of the matters referred to in the last two preceding paragraphs is to be inferred from the fact that in early July 2008 Nguyen asked Thomas about the reliability of 255 as a tenant and Nguyen requested a security deposit be provided in respect of the premises. Similarly, Nguyen asserts that McNee's awareness of its importance can be inferred from the fact that he authorised Thomas to propose the inclusion of a security bond clause in the Contract of Sale for the Property. Nguyen asserts that McNee's awareness, and that of Thomas and Nucara, can be inferred from the fact that during the meeting which occurred on 5 September 2008 Nguyen requested a $400,000 security bond because of her expressed concern about the payment of the rent by 255.

29 The first defendant does not admit the June-July 2008 representations although it concedes that the rent payable by tenants in respect of the Property at the relevant time was $370,000 per year. The first defendant also says that the security requested in the sum of $400,000 by P-Value was to cover any default in rental by 255 because Nguyen did not believe that 255 was a good tenant. McNee does not admit and denies respectively, the allegations relating to representations in June/July 2008 in paragraphs 16 and 17 of the P-Value pleading. TBM Sales responds to P-Value's allegations on these particular issues by denying such allegations, save for its pleading not admitting the allegation that in August 2008, Thomas asked Nguyen whether she wanted to make an offer for the Property. Thomas admits that he sent an email to Nguyen on 1 July 2008 with an attachment and provided Nguyen with further information in relation to the Property on 4 July 2008 and that he also sent an email to Nguyen on 9 July 2008.

Pleadings - allocation of liability - apportionment - Third Defendant

30 In the Amended Defence and Counterclaim of the Third Defendant dated 28 August 2014, McNee contends that:

(a) P-Value's claims against him are 'apportionable claims' under Part IVAA of the Wrongs Act 1958 (Vic) ('Wrongs Act');

(i) P-Value suffered the loss or damage the subject of its claim; and

(ii) the third defendant is liable for causing any of that loss and damage -

then each of the first, second and fourth to seventh defendants is a person whose acts or omissions caused that loss or damage, for the reasons set out in the statement of claim; and

(c) pursuant to s 24AI(1) of the Wrongs Act, the third defendant's liability is limited to an amount reflecting the proportion of the loss or damage that the Court considers just having regard to the extent of his responsibility for the loss or damage.

P-Value's Reply to McNee's Amended Defence and Counterclaim

31 In P-Value's Reply to Third Defendant's Amended Defence and Defence to Counterclaim dated 1 September 2014, P-Value responds that:

(a) the representations made by McNee on 5 September 2008 were made by him with no honest belief as to their truth because McNee knew at that time of the existence of the rent abatement agreement between 255 and the Vendors and also knew at that time that 255 had not paid rent and that 255 did not intend to pay rent for a period after completion;

(b) pursuant to s 13 of the Sale of Land Act 1962 (Vic) (Sale of Land Act), McNee is deemed to have made the representations he did with knowledge of their falsity;

(i) the existence of the rent abatement agreement;

(ii) that 255 had not paid rent at all under its lease;

(iii) under the terms of the rent abatement agreement 255 would not pay rent for 8 or 12 months after the Property was sold;

was done intentionally to ensure that Nguyen was not aware of those matters;

(d) in the premises above, McNee's conduct constituted fraud on Nguyen;

(e) pursuant to s 24AM of the Wrongs Act, McNee is jointly and severally liable for the damages awarded against any other defendant; and

(f) the third defendant may not rely on s 24AI(1) of the Wrongs Act to limit his liability.

P-Value made the same pleas in reply to the sixth and seventh defendants.[7]

32 The detail of McNee's counterclaim is dealt with below.

33 The plaintiff's Reply pleadings which responded to the sixth and the seventh defendants' Amended Defences both of 1 October 2013:

(a) Refer to representations pleaded at [21] of the plaintiff's Statement of Claim attributable to Beller and Nucara and alleges that those representations were made with no honest belief as to their truth. The subject representations included the offer representation, namely that on 5 September 2008, Nucara stated that the auction had been cancelled because the vendors had received an offer of $5,920,000.

(b) Alleged against Beller and Nucara, the same matters outlined in sub-paragraphs (b), (c), (d), (e) and (f) of paragraph [31] above, and in addition the plaintiff alleges that the sixth and seventh defendants are in the premises excluded concurrent wrongdoers pursuant to s 87CC(1)(b) and (2) of the TPA and that Beller and Nucara cannot rely on the apportionment and statutory liability limitation claims pleaded in [41]-[44] of Beller and Nucara's defences.

Apportionment Claims - Fourth, Fifth, Sixth and Seventh Defendants

34 The fourth to seventh defendants in their respective pleadings seek to rely on Part IVAA of the Wrongs Act and Part VIA of the TPA to establish that the misleading and deceptive conduct claims made by P-Value are an apportionable claim under the respective legislation and assert that if they have caused any of P-Value's loss they should be entitled to an apportionment.

35 McNee also pleads a claim for apportionment against all other defendants pursuant to s 24AI(1) of the Wrongs Act.

36 The fourth and fifth defendants plead for apportionment against all other defendants (except each other) pursuant to s 87CB(2) of the TPA and s 24AF(2) of the Wrongs Act.

37 The sixth and seventh defendants, Beller and Nucara also plead for an apportionment against all other defendants (except each other) pursuant to s 87CD(1) and s 87CB(2) of the TPA and s 24AI and s 24AF(2) of the Wrongs Act.

Settlement of P-Value's claims against the fourth and fifth defendants

38 By Order of the Court made 8 September 2014, P-Value's claims against the fourth and fifth defendants were struck out. This came about as a result of a settlement between these parties. The settlement sum paid by the fourth and fifth defendants to P-Value was $20,000.

39 By subsequent Order of the Court made 9 September 2014, the fourth defendant's Notice of Contribution against the first and second defendants dated 22 August 2014 was dismissed. The fourth and fifth defendants played no further part in the proceeding, despite the sixth and seventh defendants' attempts to subpoena Thomas to give evidence. Despite the extended efforts of the sixth and seventh defendants, Thomas did not give evidence at trial.

40 There were no other contribution claims filed in the proceedings.

41 P-Value issued a Notice to Admit to the first defendant on 8 October 2013 with the following alleged facts:

1. Between 30 June 2008 and 5 September 2008 Two Five Five Pty Ltd (Two Five Five) made no payments of rent in respect of premises located on Level 1, 255 Chapel Street, Prahran (Level 1).
2. After 5 September 2008 Two Five Five made no payments of rent to the first or second defendants in respect of Level 1.

42 The first defendant did not file a notice of dispute. Accordingly, pursuant to Rule 35.03(2) of the Supreme Court (General Civil Procedure) Rules 2015 (the Rules), for the purpose of the proceeding only, it will be taken the first defendant admitted the above facts.

43 P-Value also issued a Notice to Admit to the third defendant on 8 October 2013 with the same set of alleged facts as above.

44 The third defendant did not file a notice of dispute. Accordingly, pursuant to Rule 35.03(2) of the Rules, for the purpose of the proceeding only, it will be taken the third defendant admitted the above facts.

45 P-Value also issued a Notice to Admit to the sixth and seventh defendants on 8 October 2013 with the following alleged facts:

1. Prior to 5 September 2008 there had been no offer to purchase the Property at 225 [sic] Chapel Street, Prahran (the Property) from the first and second defendants for the sum of $5,920,000.
2. On 5 September 2008 Nguyen Huong signed a contract (the contract) to purchase the Property from the first and second defendants for the sum of $5,925,000.
3. Prior to the signing of the contract there had been no offer to purchase the Property for the sum of $5,920,000.

46 By Notice of Dispute dated 21 October 2013, the sixth and seventh defendants disputed the third alleged fact contained in P-Value's Notice to Admit of 8 October 2013. Accordingly, the sixth and seventh defendants admit the undisputed facts that:

(a) prior to 5 September 2008 there had been no offer to purchase the Property from the first and second defendants for the sum of $5,920,000;

(b) on 5 September 2008 Nguyen signed a contract to purchase the Property from the first and second defendants for the sum of $5,925,000.

47 The Vendors became the registered proprietors of the Property on 19 December 2007. The Vendors subsequently entered into lease agreements with three tenants for the Property:

(a) March 2008 - the front of the ground floor of the Property to 7/11 Stores for five years at commencing annual rent of $110,000;

(b) June 2008 - the rear of the ground floor of the Property to Balcony Nominees for three years at commencing annual rent of $60,000;

(c) June 2008 - the first floor of the Property to 255 for seven years at commencing annual rent of $200,000 plus GST.

48 On 25 June 2008 Beller was appointed by the Vendors as agents to sell the Property. At approximately the same time, Nguyen met with Thomas of TBM Sales and expressed an interest in the Property, which she had found for sale through the internet. Following on from this meeting in early July, Thomas provided Nguyen by email with details concerning the three tenancies of the Property. After Nguyen expressed concern about the rent payable by 255 and that no personal guarantees were provided, Thomas indicated that the Vendors were prepared to provide a $400,000 security deposit that could be drawn down in event of default by 255 on the lease and this could be included as a special condition of a Contract of Sale.

49 On 30 July 2008 the Vendors granted Beller exclusive auction authority for the sale of the Property at auction fixed for 5 September 2008. In the interim, Nguyen had sought finance for the potential purchase of the Property and in early September contacted Thomas and informed him she was still interested in the Property. Thomas informed Nguyen he could no longer deal with the Property because Beller was the exclusive agent.

50 On 3 September 2008, the Vendors, TBM Sales and Beller executed a written commission sharing agreement under which the Vendors would share any commission earned on a 50/50 basis.

51 On 5 September 2008, the day the Property was to be auctioned, Nguyen met Thomas at a café near the Property. There then followed negotiations in an office near the Property between Nguyen, Thomas, McNee and Nucara.

52 Although there is significant dispute between the parties about the conduct of those negotiations, including the surrounding circumstances and the timeframe within which they occurred, it is accepted that around midday at the TBM Sales office in Chapel Street, Prahran:

(a) a Contract of Sale was executed by Nguyen and McNee on behalf of the Vendors for the Property at the price of $5,925,000 plus GST;

(b) before execution, the Contract of Sale was amended to include a Special Condition 30 which provided for a security deposit of $200,000 for 2 years, which could be drawn down by the purchaser in the event of default of the lease by the tenant 255;

(c) Nucara confirmed that the Vendors already had an offer for the Property from another potential buyer;[8]

(d) Nguyen raised her concerns about the first floor tenant being able to pay its rent;[9]

(e) McNee informed Nguyen that the tenant of the first floor of the Property was an experienced night club operator;[10]

(f) Nguyen was not informed of a rent abatement agreement which existed between the Vendors and 255.

53 After entering into the Contract of Sale, but prior to settlement in January 2009, Nguyen sought a valuation of the Property from Bernard Cussen (Cussen), Certified Practising Valuer of Charter Keck Cramer. Cussen informed Nguyen that she had paid above market price for the Property and provided her with the contact details of a solicitor. Nguyen gave evidence that although she contacted the solicitor she did not take it further because she had already paid the deposit and did not think she could get out of the contract.

54 On 9 December 2008 P-Value was incorporated. On 11 December 2008 Nguyen nominated P-Value as purchaser of the Property, as provided for under the Contract of Sale.

55 Prior to settlement of P-Value's purchase of the Property on 15 January 2009, there were communications between the conveyancers for P-Value, IAC Conveyancing (IAC), and Schetzer Brott & Appel (SBA), acting for the Vendors. On 13 January 2009 Alan Storer (Storer), conveyancer of IAC, received an email from Phillip Nolan, solicitor of SBA, attaching a proposed guarantee deed relating to the $200,000 security deposit. A dispute arose between the parties to the Contract of Sale as to the terms of the proposed guarantee deed. This was resolved on the day of settlement. The resolution of this issue provided for a security deposit of $11,000 in respect of Balcony Nominees Pty Ltd and $200,000 in respect of 255, with any unused portion of the security deposit that applied to 255 (including any accrued interest) to be retained absolutely by the purchaser.[11]

56 The transaction for the purchase of the Property was completed by P-Value on 15 January 2009 using funds borrowed from ANZ Bank in accordance with a letter of offer dated 15 January 2009.

57 Following settlement, 255 did not pay rent to P-Value as required by the written lease. Instead, in various emails sent by Joe Cossari (Cossari) and Victor Smith (Smith) of 255, it was contended that the security deposit of $200,000 consisted of the security bond for the lease with the remaining funds of $136,000 being advanced rents to be drawn down by P-Value. In an email of 16 May 2009 it was contended that no rent would be due until 1 October 2009.

58 On 9 June 2009, P-Value commenced proceedings in the County Court against 255 for arrears of rent.[12] Following default of appearance by 255 at a directions hearings on 29 January 2010 and 12 February 2010, an order was made to strike out the defendant's Amended Defence and Counterclaim and for the defendant's Counterclaim to be dismissed.[13] Judgment in default of appearance was obtained against 255 and was entered by the County Court on 19 February 2010[14] and shortly thereafter a statutory demand was made for payment of that judgment debt.[15] Subsequently, 255's lease was terminated by re-entry on 5 May 2010. On 28 April 2010, 255 made application to set aside the 19 February 2010 default judgment, which was dismissed by the County Court on 21 May 2010 .[16] On 25 May 2010, 255 went into liquidation.

Nguyen interested in purchasing a commercial property in Chapel Street, Prahran

59 Nguyen's evidence was that in 2008 she commenced to look for properties to purchase in Chapel Street, Prahran in Victoria. Nguyen was familiar with that area having purchased a commercial property at 276-278 Chapel Street, Prahran in 1996. That property, now owned by Nguyen, is tenanted by the Commonwealth Bank.

60 In 2008 Nguyen searched the web and identified a Property which was for sale at 255 Chapel Street. Advertisements for the Property indicated that a real estate organisation known as 'TBM Sales' was the Estate Agent for the Property. The web advertisement for 255 Chapel Street, Prahran also noted that Thomas was the TBM Sales contact for that Property.

61 In about late June 2008 Nguyen met with Thomas and Morley at 255 Chapel Street, Prahran. Nguyen understood from communications she had with Thomas and Morley at about this time that Morley was Thomas' 'boss' at TBM Sales. Thomas conducted an inspection of 255 Chapel Street, Prahran with Nguyen. During the course of that inspection of the Property, Nguyen asked Thomas how much rent was being paid for the Property and Thomas stated to Nguyen that there were three tenants and in total they were paying $370,000 per annum. Specifically '7-Eleven', the ground floor tenant, was paying $110,000 per annum and the first floor tenants paying $200,000 with a further office space producing $60,000, plus GST.[17]

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

63 On 1 July 2008 Thomas sent an email to Nguyen detailing rental agreements for the three tenancies at the Property.[18] Nguyen also asked Thomas to send her a copy of the proposed Contract of Sale, which Thomas did on 4 July 2008.[19]

64 Nguyen's evidence was that she read through the materials which Thomas had sent her in early July 2008 and identified that 7-Eleven, one of the tenants, was in her view likely to be unproblematic in relation to rent. However, on looking at the materials sent, Nguyen did harbour a concern about the first floor tenant of the Property which was running a nightclub business, given the very large amount of rent that was being paid by the tenant, 255.[20] On reviewing the documents which she had received, Nguyen also noted that there was no personal guarantee provided by 255 or security deposit to secure rent.[21]

65 As a result of her concerns about rental income and the extent of rental income being paid by the nightclub on level one of the Property, and her concerns about the absence of a security deposit or personal guarantee in relation to rent from the first floor tenant, Nguyen contacted Thomas by telephone and stated that she needed $400,000 as a bond for the 'rental upstairs'. Thomas responded that he would talk to the Vendors and get back to her.[22]

66 Subsequently, via Thomas, TBM Sales emailed a proposed 'Special Condition' to Nguyen on 9 July 2008.[23]

67 Subsequently in July 2008,[24] Thomas introduced Nguyen to Nathan Stewart for the purposes of obtaining finance for the purchase of the Property.

68 Nguyen also contacted the National Australia Bank (NAB) about finance for the Property and that bank indicated she would be able to obtain the necessary finance.[25]

69 Nguyen gave evidence that, in about July 2008, she had made no decisions about the Property at 255 Chapel Street, Prahran. At about this time Thomas approached Nguyen and asked if he could act on her behalf and deal with the Commonwealth Bank in relation to the rent review for 276-278 Chapel Street, Prahran.[26]

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

71 On 4 September 2008 Thomas telephoned Nguyen and asked her whether she wanted to make an offer for the Property. Nguyen responded that she did not wish to do so but wanted to wait for the auction of the Property. In that conversation Thomas also suggested that Nguyen make an offer in the order of $5,000,000 for the Property. However Nguyen stated that she was not going to make any offers.[27]

Meeting at TBM Sales office on 5 September 2008

72 On 5 September 2008 Nguyen planned to attend the auction of 255 Chapel Street, Prahran after she had finished a separate meeting nearby in Chapel Street in relation to the review of rent at 276-278 Chapel Street.

73 On the morning of 5 September 2008, Nguyen met with Damien of the Commonwealth Bank to discuss issues concerning her Property at 276-278 Chapel Street, Prahran. The coffee shop at which they met was only about 100 metres from the Property. Thomas was also present at this meeting.

74 After the conclusion of the meeting in the coffee shop between Damien, Thomas and Nguyen, Thomas suggested he take Nguyen to the TBM Sales office which was on the first floor of a building opposite 255 Chapel Street, Prahran. Thomas suggested to Nguyen that she remain at the TBM office until the auction was about to start, at which time they would then go down to watch the auction.[28] From the TBM offices, Nguyen could see across the road to the Property and she could see people whom she thought were from the selling agent preparing for the auction, including putting up materials on the table at the Property. At about this time Nguyen also observed that the people in the vicinity of 255 Chapel Street appeared to be packing up the auction materials. Nguyen asked Thomas "what's going on?". Thomas said he did not know but left the TBM Sales room and returned to inform Nguyen that "the auction is cancelled".[29]

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

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

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

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

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

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

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

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

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

I said about that one. And then - - -

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

And who else was there when he was writing the clause, do you remember?---I can't remember. A number of people in there. I can't remember exactly, but it was Bill McNee after that signed the contract - signed the condition.[30]

77 Nguyen's above evidence that McNee signed the "condition" was a reference to Special Condition 30 of the Contract of Sale[31] which provided:

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

78 Nguyen signed a Contract of Sale for the Property on 5 September 2008 within about an hour of her being taken to the TBM Sales office in Chapel Street opposite the Property.[32]

79 At the time of signing the Contract of Sale, Nguyen mentioned to McNee and Nucara that she was not able to pay the required deposit then and there because she did not have a cheque book with her.

80 Nguyen's evidence was that she was not focused on the auction of 255 Chapel Street, Prahran on 5 September 2008 and that is why she did not have a cheque book with her at the time of the auction.[33] So as to ensure the deposit for the purchase for the Property was paid immediately, at Nguyen's suggestion, she returned home with Thomas following her, and on arriving at her home made out a cheque for the required deposit for 255 Chapel Street, Prahran and provided it to Thomas. Nguyen stated to Thomas at this time that she did not have sufficient money in her account to cover the cheque which she had provided to him and that she would organise for an electronic transfer.[34] Subsequently, on 9 September 2008 NAB transferred the deposit for 255 Chapel Street, Prahran from Nguyen's account to the account of SBA.[35]

After the purchase - Nguyen concerned about the purchase price

81 Shortly after 9 September 2008, Nguyen took steps to organise finance for the purchase of 255 Chapel Street, Prahran. In this process the valuer at an organisation called Charter Keck Cramer, Cussen, whom Nguyen had earlier engaged to review rental at her other Chapel Street Property, was contacted and when told the price that Nguyen had paid for 255 Chapel Street, Cussen informed Nguyen that she had paid too much for the Property. She mentioned to him that she had already paid the deposit and asked him what she could do. Cussen gave Nguyen a contact number for a solicitor whom she could consult.[36]

82 Nguyen's evidence was that although very soon after signing the contract she gave consideration to whether she could 'get out of the contract', because she had a valuer saying she had paid too much, she did not follow up with the solicitor recommended to her and instead contacted a conveyancing assistant, Storer, to organise the finalisation of the purchase of the Property.[37]

83 Nguyen's evidence was that she did not pursue seeking advice about getting out of the contract because she had already paid a 10% deposit.[38] In fact the deposit paid was $300,000.[39]

84 Nguyen's evidence was that because of the potential impost of land tax 'P-Value Pty Ltd' was incorporated and became the trustee company of her family's family trust which had earlier operated the Nguyen family business.[40] On 11 December 2008, Nguyen formally nominated P-Value Pty Ltd as purchaser under the Contract of Sale from Vicland No. 1 and Vicland No. 2.[41]

85 The Contract of Sale for the purchase of 255 Chapel Street was settled on 15 January 2009.[42]

86 Nguyen explained that a dispute arose in relation to the conveyance. At the time of signing the contract, Nguyen was of the understanding that there was a sum of $61,000 by way of a security deposit and a further sum of $200,000 as additional security in respect of rental. However, as Nguyen understood the finalisation of the conveyancing transaction only $200,000 of security was in effect provided.[43]

87 By February 2009, P-Value was communicating with the tenant operating a nightclub on the first floor level of the newly purchased premises at 255 Chapel Street, Prahran, a business called 'White Charlie' which appeared to be operated by Cossari.[44] Nguyen's evidence was that as early as February 2009 P-Value was not being paid any rental by the first floor nightclub tenant of the Property.[45]

88 Indeed, in February and March of 2009 the operators of the nightclub on level one of 255 Chapel Street were advising P-Value that it had been paid $200,000 in advance for rent and bonds.[46] Nguyen and P-Value knew nothing of any such position or arrangement.[47]

89 In discussions Nguyen had, on behalf of P-Value, in about early February 2009 with Cossari and Smith of the nightclub tenant, Cossari was contending that the nightclub had already paid $200,000 in advance for rent and Nguyen was responding that she wanted to be paid her rent and that the $200,000 was bond money and not by way of payment in advance for rent.[48]

90 Nguyen's evidence in relation to the rental receipts at the Property was that the ground floor tenant 7-Eleven paid its rental and has continued to do so,[49] the level one tenant 255 paid no rent to P-Value whatsoever after settlement,[50] and the ground floor tenant of the office area, Balcony Nominees Pty Ltd, paid P-Value 2 months' rent after settlement on 15 January 2009 and no rent thereafter.[51]

91 Furthermore, although unknown to Nguyen at the time she contracted to purchase 255 Chapel Street, Prahran, the first floor tenant at that premises, 255 had not paid any rent for any period of occupation before 5 September 2008.[52]

92 Nguyen's evidence was that if she had been told that the first floor tenant, 255, had paid no rent prior to 5 September 2008, she would not have purchased the Property.[53]

93 Furthermore, Nguyen was not informed that 255 paid no rent in respect of the first floor lease of the Property between September 2008 and January 2009. Nguyen's evidence was that if she had known that fact it would also have affected her decision to go ahead with the purchase of the Property and she would not have bought it.[54]

94 Nguyen was also asked if she had been aware that there had been some arrangement about 255 not having to pay rent for a period after she had purchased the Property would the Property have been purchased by her. Nguyen answered unequivocally that it would not have been purchased.[55]

95 This I interpolate was clearly a reference to the rental abatement agreement between the Vendors and 255 which the first defendant Vendor admits by [14] of its Defence.

96 I depart from Nguyen's evidence to note that McNee, in an unusual pleading in my view, admits the fact of the existence of "a rental abatement agreement" in relation to the 255 lease at the Property, pleading that "... if P-Value is not estopped ..." (I add by way of explanation, estopped it is asserted by P-Value's action in the County Court seeking to recover rent from the tenant 255) "... then the third defendant: admits that pursuant to a rent abatement agreement ..." between the Vendors with 255, the tenant 255 would not have to pay any rent while the Vendors were the owners of the Property.[56]

97 By [14(c)(iii)] of his Defence McNee pleads that if P-Value is not estopped as explained above, then he admits that the rent abatement agreement contained a term to the effect that the Vendors would, following completion of any contract of sale of the Property by the Vendors, pay $200,000 to the purchasers of the Property to be applied in payment of the $61,000 security payable under the lease and otherwise toward the rent payable in the period following completion.

98 Nucara gave evidence that he was employed as a commercial real estate agent and had acted as a real estate agent for some 20 years. Nucara is a director of Wellara Holdings Pty Ltd which trades as Beller.[57]

99 Nucara gave evidence that prior to the sale of 255 Chapel Street, Prahran and the transaction in relation to that Property he had not been instructed as a real estate agent by McNee nor was he instructed by Andrew Clifton or any company owned or operated by McNee or Clifton.[58] However, Nucara knew of the existence of McNee and Clifton. In about mid-June 2008, McNee was communicating with Nucara in relation to Nucara acting for him in respect of the sale of 255 Chapel Street.[59]

100 On 25 June 2008, Vicland appointed Beller as its agents to sell 255 Chapel Street, Prahran, by way of an exclusive sale authority.[60] An exclusive auction authority was signed by Vicland on 30 July 2008 to engage Beller as its agent to auction 255 Chapel Street.[61]

101 In July 2008 Nucara was not aware of ongoing negotiations between Thomas and Nguyen in relation to 255 Chapel Street, Prahran.[62]

102 In the first week of August 2008, Nucara met with McNee at 255 Chapel Street to inspect the Property which by then was scheduled for auction on 5 September 2008.

103 McNee authorised the advertising brochure for the sale of 255 Chapel Street, Prahran.[63] An investment report was also prepared by Beller in relation to 255 Chapel Street, Prahran and that investment report was reviewed by McNee and he had no issues with what Beller had prepared.[64] McNee approved all advertising material and the investment report.[65]

104 On 12 August 2008, Nucara received a copy of a letter which had come from the Vendor's solicitors, enclosing the contracts of sale and the Vendor's statement.[66]

105 Beller's records of persons who were interested in 255 Chapel Street, Prahran and who had inspected the Property did not recall Nguyen as a person interested or who had inspected the Property.[67]

106 On 3 September 2008, Beller and TBM Sales entered into a commission sharing agreement in relation to the Property on a 50/50 basis and an amended sale authority was executed.[68]

107 Nucara gave evidence that the commission sharing agreement came about because McNee contacted Beller and informed Nucara that another agent had a potential buyer for the Property and that he McNee considered that this buyer 'could perform on the day' and therefore McNee wanted Beller to consider sharing its commission with the other agent.[69] McNee informed Nucara that the other agent was Richard Thomas of TBM Sales.

108 Nucara gave evidence that he had seen the offer to purchase the Property signed by Mr Jialin Hu (Hu) dated 4 September 2008.[70] Nucara gave evidence that Hu had been dealing with James Rawson of Beller and that Hu had indicated to James Rawson that he did not like attending auctions but would like to make an offer on 255 Chapel Street prior to the auction which was due to take place on 5 September 2008. Hu came to Beller's office at 92 Chapel Street, Prahran and met with Nucara and at that meeting signed the offer on 4 September 2008 in Nucara's presence and the presence of another person. Nucara also confirmed that Hu's offer was an offer made as part of documents which contained a special condition that read 'this contract terminates if not signed by the Vendor by 10.00 pm on 4 September 2008'.[71]

109 Nucara's evidence was that he promptly informed McNee of Hu's offer of 4 September 2008 and that McNee responded that he would get back to Nucara about his position on that offer. McNee did revert to Nucara on the evening of 4 September 2008 and told Nucara that he did not wish to accept Hu's offer but wanted the Property to go to auction the next day.[72]

110 Thereafter Nucara communicated with Hu telling him that his offer was unsuccessful and the auction would be proceeding and suggesting that Hu attend the auction the next day.[73]

111 Nucara stated that Beller had started its operations in about December 2007 and that the 255 Chapel Street, Prahran auction was the agency's first significant transaction and an opportunity for Beller to show the market that it had arrived.[74]

112 At the pre-auction meeting on 5 September 2008, Nucara's evidence was that at the point when Thomas brought Nguyen to the first floor office of TBM Sales, those present in the room were Thomas, Nguyen, Nucara, McNee and also Andrew Fawell and Andrew Clifton who, Nucara stated went in and out of the room from time to time.

113 Nucara's evidence was that upon Nguyen entering the room with Thomas, he greeted Nguyen by saying 'it's been a long time since I've seen you' and she greeted him.[75]

114 Nucara's evidence was that apart from the meeting which he had with Nguyen on 5 September 2008 he did not have any other face to face conversation with Nguyen about the Property.[76]

115 Nucara's evidence was that McNee said at the meeting that he had already received an offer on the Property, which Nucara confirmed and added that we are in possession of a signed contract, but did not disclose the contract price.[77] Nucara denied Nguyen's evidence that at this meeting he had told her that the previous contract was for $5.92 million.[78] Nucara also refuted Nguyen's evidence that Thomas had told her that the auction had been cancelled.[79] Nucara's evidence was that the auction was cancelled when the Vendor agreed a price for the Property and the terms of sale for the Property.[80]

116 Nucara's evidence was also that during the early part of the discussion and negotiation, McNee stood up in the meeting room and said 'look, I want $6 million'.[81] Nucara's evidence was also that at this point Nguyen said that she was concerned about the first floor tenant and their ability to survive and pay the rent.[82]

117 Nucara also stated that at the meeting McNee said to those present that the nightclub tenant on the first floor had another nightclub business in the CBD and they were experienced operators.[83] Nucara's evidence was that McNee then left the meeting saying 'I'll let you decide'.[84]

118 Nucara's evidence was that he said nothing to Nguyen about the first floor tenant and Nucara denied that he stated to Nguyen that the first floor nightclub tenant was a good tenant or that it was a good payer of rent.[85]

119 Nucara's evidence also was that at about 11.45am on 5 September 2008, during the course of the discussion at the TBM Sales office he looked out the window to the Property and saw a number of people milling around including Hu and that shortly after Andrew Fawell, one of the real estate agents involved in the auction on Chapel Street, came up to the TBM Sales office where discussions were taking place and asked what was going on to which Nucara said we are in discussion and Fawell left.[86]

120 In the meeting Nucara stated that he recalled Thomas suggesting to Nguyen that she should consider asking for a higher security deposit and Nguyen asked Nucara his views on her seeking a security deposit of one year's rent of about $200,000 because of her concerns about the first floor tenant, its survival and its ability to pay rent. Nucara responded in substance that he thought the security deposit of $200,000 would be fair enough to which Nucara says Nguyen responded that she would have to have something in the contract.[87]

121 Nucara then says there was discussion about drafting a clause in the contract for a $200,000 security deposit and McNee who was involved in this conversation said that before he agreed to anything he would like to know what price Nguyen was offering again saying that if he did not get $6 million he was going to go out to auction.[88] Nucara said he said directly to Nguyen that if she did not pay the price mentioned by McNee, he will be going to auction.[89]

122 Nucara's evidence was that at about five minutes before the time fixed for the auction of the Property Andrew Fawell again came up from Chapel Street in an anxious state asking what was going on and Nucara responded that he would have to buy some time and that he did not have instructions as to whether the auction was going on or not.[90] Nucara stated that after his discussion with Fawell he returned to the negotiating table where Nguyen was discussing matters with Thomas and Thomas reported to him that Nguyen would pay $5,900,000 with a $200,000 security deposit. This was said in the presence of all in the negotiating room including Nguyen.[91]

123 Nucara then stated that at the next stage of the meeting in the TBM Sales office he and Thomas discussed what special clause should be inserted in relation to the $200,000 security deposit and McNee spoke to his solicitor and those discussions and Nucara's drafting suggestions resulted in the clause ultimately inserted in the contract which was handwritten, the first two lines being written by Thomas and the rest of the handwritten clause by Nucara.[92]

124 Nucara's evidence is that after further negotiation in which McNee said that he would reduce his asking price to $5,950,000 and Nguyen asking McNee whether he would meet her half way and after a short discussion between Nguyen and Thomas writing a price of $5,925,000 on the Contract of Sale and showing it to McNee, McNee accepted that figure as the agreed purchase price.[93]

125 Nucara says that after the price of $5,925,000 was agreed between McNee and Nguyen, Fawell returned to the room asking what was going on and McNee informed him that the auction is cancelled as the Property is sold.[94] Shortly afterwards Nucara says that McNee and Nguyen agreed that there would be only a 5 percent deposit on the Contract of Sale and the parties also agreed on a four month period to settlement.[95]

126 Nucara's evidence was that up until the point of execution of the Contract of Sale for the Property on 5 September 2008, he was not aware of any agreement between McNee and 255 that 255 would not have to pay rent while McNee owned the Property or after McNee sold the Property.[96] Nucara said he was not aware of the rental abatement agreement until after P-Value's proceedings had been issued.[97]

Cross-examination of Nguyen and submissions challenging Nguyen's evidence

127 The third defendant submits that the evidence of Nguyen in relation to the misrepresentations which she alleges must be considered against the background of Nguyen's capacity as a sophisticated, prospective purchaser of commercial real estate. I accept the submission by the third defendant which was also advanced by the sixth and seventh defendants.

128 I do not however accept the submission by McNee that Nguyen's evidence, which may have suggested that she did not know she could have pressed for more information about tenants of the Property or obtained a valuation of the Property before signing the contract, should not be accepted because of her commercial experience. In my view the team of selling agents who dealt with Nguyen on the morning of 5 September 2008 in the TBM Sales office created a context in which it was reasonable for Nguyen to have considered that there was some urgency to securing the Property if she wished to purchase it and that it was impractical to make further inquiries or undertake further investigations at that time. This is principally because on the morning of 5 September 2008 Nguyen had been told that during the meeting with a number of real estate agents including Thomas and Nucara and also with McNee present, Nucara stated that someone had offered $5.920 million for the Property.

129 McNee also submits that Nguyen gave several versions of events and the sequence of events that transpired on 5 September 2008. The submission goes further and contends that most of those versions were inconsistent with the case pleaded against the third defendant. McNee submits that, in examination in chief, Nguyen said that she was not interested in purchasing the Property or making an offer for or bid at the auction for the Property until a short time before the auction, which is inconsistent with Nguyen's earlier actions seeking detailed information about the tenants in the Property and that she had obtained and partially read the leases referred to in the sales documentation.

130 I accept Nguyen's evidence that she was not particularly interested in buying the Property at or before the auction.[98] I accept Nguyen's state of mind was that on 5 September 2008 until sometime during the meeting she was taken to at the TBM Sales office she was not focused on the auction of the Property which was to occur on 5 September 2008 and that is why she did not bring her cheque book with her to the meeting with Damien and Thomas to discuss the review of the rental from 276-278 Chapel Street, Prahran.

131 I am unpersuaded that the peripheral details of the events and conversations recounted by Nguyen and referred to in paragraph 30(a)-(r) and 31(a)-(m) of McNee's written closing submissions point to anything other then what I regard as minor, inconsequential and understandable inconsistency in Nguyen's evidence. I accept P-Value's submission that on the morning of 5 September 2008, Nguyen was unexpectedly involved in discussions and negotiations in which at least five other people were present at various stages, possibly more, and in respect of which she does not suggest she has a perfect recollection but rather is able to give firm and unequivocal evidence about those matters of significance to her which were discussed and in particular which were stated to her.[99]

(i) conceded that McNee did not say that the tenant was a "good tenant" but said he did say "you don't have any problem with them";[100]

(ii) stated that the two persons (probably Nucara and McNee) joined in all three statements about the tenant of the first floor - "they was good tenant, good payment, you don't have any problem because they have experience in running the nightclub";[101]

(iii) stated that when Nucara spoke to her about the offer of $5.92m, and if she were interested she could offer more, and she mentioned her concerns about the upstairs tenant and asking $400,000 for security, McNee said to Thomas, "Oh is that the lady you're talking about" and Thomas said "yes, she is";[102]

(iv) stated after the conversation in (iii) above, she said McNee pointed to the picture on the wall and said, "you don't have any problem with the tenants because they run the Balcony Nominees in Melbourne, it's very successful";[103]

(v) stated that she was not sure whether or not McNee was in the room when Nucara is said to have told her about the $5.920 million offer.[104]

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

Nucara's evidence was also to the effect that McNee was involved in the 5 September 2008 meeting at the time there was mention of a prior offer for the property, although his evidence was that McNee proffered this information and that no sum was mentioned.[105] Nucara's evidence was that he, McNee, Nguyen and Thomas were all in the TBM Sales Office together on the morning of 5 September 2008.[106]

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

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

133 I do not accept McNee's submission that Nguyen's evidence taken as a whole should be considered to be unreliable and probably the result of unconscious reconstruction and that her evidence should not be accepted given the evidence to the contrary from Nucara. Nor do I accept McNee's submission that Nucara withstood vigorous cross-examination without his credit being adversely affected, for reasons I will deal with below.

134 McNee also submits that Nguyen's evidence conveys that little can be attributed to what was done or said by Thomas at the meeting of 5 September 2008. McNee submits that Nguyen's evidence in relation to the extent of Thomas's involvement in the critical aspects of that meeting defy a common experience in relation to real estate agents or common sense. McNee submits that Thomas can be taken to have been eager to secure a sale to 'his purchaser' so that he could claim his commission given that he (not Beller) was the person who introduced Nguyen as a potential purchaser of the Property. McNee also submits that when considering Nguyen's evidence I should take notice of the fact that P-Value has settled with Thomas and his employer and that this occurred prior to Nguyen giving evidence, and finally that the all earned sum for which P-Value settled with Thomas is in McNee's submission insignificant in the context of P-Value's claim in this proceeding.

135 I reject the submissions made by McNee in the last preceding paragraph. In my view the evidence given by Nguyen in relation to Thomas's involvement in the meeting of 5 September 2008 does not convey an attempt by Nguyen to minimise his significance. Her evidence was that Thomas was not seen by her at this stage as an advisor. Nguyen regards Thomas simply as a real estate agent who provided her with sales information which she requested. Further, Nguyen emphasised on a number of occasions that she had not intended to purchase 255 Chapel Street until she was in the meeting in the TBM Sales office at Chapel Street on 5 September 2008. Therefore in my view Nguyen placed no critical reliance on the communications by TBM Sales and Thomas received in the lead up to the auction. Nguyen in substance confirmed this position during her cross-examination.[107]

136 I also reject the submissions because, as for the reasons I have elsewhere explained and for the reasons to which I have referred, save in relation to Nucara's evidence about who wrote out Special Condition 30, I accept Nguyen's evidence in all key and significant respects and reject Nucara's evidence where it is contradictory.

137 I also reject the sixth and seventh defendants' criticisms of what they contend are the faults and inconsistency and errors in Nguyen's evidence, all of which I also consider to be minor and insignificant. The sixth and seventh defendants asserted faults, errors and peculiarities in relation to Nguyen's evidence referred to in the sixth and seventh defendants' closing written submissions [26]-[40] concerning the events of 5 September 2008 are all in my view inconsequential and do not in any substantial way undermine Nguyen's evidence on matters of importance. I do however accept the error referred to in [34] in respect of Nguyen's evidence that Thomas had written out the entirety of the special condition in the contract. This latter matter is however in my view understandable and insignificant and does not undermine Nguyen's evidence, either generally or specifically.

138 The points made in relation to Nguyen's evidence concerning the dating of the purchase of nomination form are in my view of no moment and, if in error, have no bearing on any of the critical issues and do not justify any general devaluation of Nguyen's evidence.

139 Similarly, in relation to the submissions made by the sixth and seventh defendants to the effect that Nguyen's evidence in respect of critical representations was confused and contradictory, it is my view that these points of criticism by the defendants in their written submissions dated 29 September 2014 [41](a)-(o) are insubstantial, peripheral and do not affect Nguyen's credit in relation to the significant evidence concerning the representations made to her by statements or by silence.

140 I reject Beller's submission that Nguyen's evidence establishes or provides a proper basis for concluding that she did not recall clearly what was said at the critical meeting on 5 September 2008.

141 I reject the sixth and the seventh named defendants' assertion that Nguyen conflated what had been said between McNee and Nucara as to the adequacy of the security deposit which Nguyen sought with communications which Nguyen had received by email before 5 September 2008 and which she had received immediately after purchasing the Property in a meeting with Cossari, a director of 255. In my view there is no basis on the evidence to conclude that Nguyen's evidence conflated the above as submitted by the sixth and seventh defendants.[108]

142 Accordingly, for the reasons I have referred to above, I reject the defendants' criticisms of Nguyen's evidence and find her to be a frank, substantially consistent, truthful and convincing witness and to be preferred on points of dispute arising from Nucara's evidence.

143 For the reasons which are outlined below I give less weight to Nucara's evidence in relation to the critical communications on 5 September 2008 than I do to the evidence given by Nguyen in relation to those matters.

144 I do not accept Nucara's evidence that he took a very minor role in any negotiation at the meeting of 5 September 2008 at TBM Sales offices and that his involvement was limited to informing Nguyen of his view that a deposit of $200,000 was 'fair enough' and writing out the 'special condition'.[109] I accept Nguyen's evidence that in conjunction with a similar statement from McNee, Nucara told Nguyen that the tenant of 255 was a good payer and Nucara stated that for that reason $200,000 should be enough as a security deposit instead of the sum of $400,000 which had been earlier raised.[110] Further, Nucara stated to Nguyen during the meeting at the TBM Sales office on the morning of 5 September 2008 that Nguyen need not be concerned to obtain a security in the sum of $400,000 because the first floor tenant, 255 was a good payer of rent and there is also a prospect of further income being generated from advertising on the external walls of the Property and Nucara drafted part of the 'special condition' to provide for a security deposit under the Contract of Sale for the Property.[111] I also accept Nguyen's evidence that Nucara stated at the critical meeting that he was in possession of an offer from another potential purchaser in the sum of $5.920 million.

145 I also find that Nucara was present at the meeting at the TBM Sales office on the morning of 5 September 2008 with McNee and Thomas[112] when the prohibited misleading and deceptive representations I have found were made.

146 In my view Nucara's evidence[113] is improbable given Nguyen's evidence about events before 5 September 2008 and the email of 9 July 2008 was consistent with her evidence as to what she said at the meeting of 5 September 2008, seeking a $400,000 security deposit. It is unlikely in this context in my view that Nguyen would ask Nucara what his views were about the adequacy of a $200,000 security deposit. In my view it is much more likely in the circumstances that, as Nguyen stated in her evidence, Nucara was seeking to persuade Nguyen to reduce her security deposit requirement from $400,000 to $200,000. This is both more consistent with the natural desire Nucara would have had to remove any possible impediment to achieving the sale of the Property and consistent with Nucara's representations about the financial reliability of 255.

147 Similarly I find incredible Nucara's evidence that at the meeting on 5 September 2008, McNee mentioned that an offer had been made for the purchase of the Property but that the price was not disclosed.[114] Nucara's evidence was that no price was disclosed to Nguyen in the conversations with her which occurred on that occasion. Further, on Nucara's version of events Nguyen did not ask what the value of this prior offer was. I consider that Nguyen's account is more probable and credible.[115] Nguyen's evidence was that Nucara had mentioned the earlier offer and stated that it was $5.920M. In my view it is most improbable that a Vendor and an interested real estate agent who mentioned that they were in possession of an offer to a prospective purchaser on the eve of an auction and during the negotiation to sell the subject Property would not mention the amount offered to that point as part of their efforts to obtain a higher offer from the purchaser, or that the purchaser would not enquire as to the value of the prior offer.

148 I do not accept Nucara's evidence that although he says Hu attended the auction on 5 September 2008, Nucara did not speak to him or make any attempt to contact him.[116] When asked why he did not speak to Hu in cross-examination, Nucara responded 'because I just didn't'.[117] I note also that Nucara's evidence was that he saw Hu was in attendance at about the time appointed for the auction on 5 September 2008 but did not make any attempt to approach or speak to Hu, nor did he tell McNee, his principal, that Hu was present at the auction.[118] In my view it is highly unlikely that Nucara would not have been in contact with Hu by telephone or a face to face discussion on the late morning of 5 September 2008, and also most unlikely that he would not have informed McNee of Hu's physical presence at the premises to be auctioned on 5 September 2008, given that Nucara's evidence was that Hu had made a substantial offer for the Property, in writing on 4 September 2008 and further that that offer had not been accepted and given the circumstances that, on Nucara's evidence, there were two buyers whom Nucara considered to be interested in the Property up to 5 September 2008, namely Nguyen and Hu.[119] In my view this evidence is, in the circumstances I have outlined, incredible and I do not accept Nucara's evidence on these matters. I also consider that his evidence in this regard taints his credibility more generally.

149 I am also of the view that Nguyen's evidence in relation to the actions and statements made at the pre-auction meeting on 5 September 2008 are inherently more likely than the version of events sworn to by Nucara. That is because in my view it is inherently more likely that Nucara who was in the presence of McNee, effectively his principal, and in the company of other real estate agents seeking to sell the Property having also himself a personal interest on the day in achieving a sale and a personal interest in the commission which would be earned if the Property were sold, would be very likely to tell Nguyen that another buyer had offered a specific substantial sum of money for the Property and seek to reassure Nguyen as to the value of the potential purchase by having her believe that the rental stream associated with the Property was high and dependable and further would be likely to seek to persuade Nguyen to reduce or remove any special requirements she might have such as her concern to have a security deposit in respect of the transaction by persuading her that she needed a lesser sum of security deposit. For all these reasons the glosses to which I have referred which Nucara sought to put on his evidence about the statements which he made at the meeting on 5 September 2008 and his evidence about what was said at that meeting by McNee are significantly less likely and less credible than Nguyen's evidence on the same matters. Nguyen's evidence of the events of 5 September 2008 are also inherently more believable for the reasons I have outlined.

150 In my view the creditworthiness of both Nucara, and the potential creditworthiness of McNee who engaged him, is also lessened by the statements in the auction notes prepared prior to the auction, and approved by McNee, which incorrectly stated that there were 'substantial guarantees' for the leases associated with the Property.[120] In fact, there were no guarantees in relation to any of the leases for the Property. Nucara when cross-examined in relation to this misleading advertising material sought to support the inclusion of the statement about 'substantial guarantees' in the auction notes by saying that that statement was '... more as just a generic term that's being put in'.[121] Nucara was however forced to admit that the statement in the auction notes for the Property about its leases being the subject of 'substantial guarantees' was incorrect.[122]

151 Nucara was also forced to admit that the advertisement placed and published after 5 September 2008 which referred to the sale of the Property involving 'last minute negotiations with two buyers' was also not correct.[123] In this instance Nucara sought to explain the agency's misleading statement in the advertisement by admitting that it was incorrect but saying it was '... probably a bit of marketing flair ...'.[124]

(a) Nucara did not know of previous email correspondence referring to a $400,000 security;

(b) it has not been established that Nucara knew of the rent abatement agreement or that 255 were not paying rent.

153 Although Nucara was aware that potential purchasers, in particular Nguyen, had expressed concern about the level of rent payable in relation to the first floor nightclub and office area at the Property[125] and he had informed McNee about those concerns,[126] McNee did not confirm that the first floor nightclub tenant was paying rent. Extraordinarily, in my view, although there were concerns which Nucara knew others were expressing about the first floor tenant's ability to pay rent, Nucara's evidence was he did not ask McNee if the nightclub tenant on the first floor of the Property was paying rent.

154 Notwithstanding the above, Nucara claims he formed the view that rent was being paid:

So did you form a view one way or the other whether they were paying rent for July 2008?---The view I formed is that they were paying in accordance with the lease.

But that view was formed without making any enquiries of McNee; is that right?---No, that's right.[127]

155 I do not accept Nucara's evidence as likely or credible on this aspect. However I also consider that I am not in a position, on the evidence adduced, to make any positive finding about what Nucara and Beller actually knew in relation to 255's payment of rent. I however consider that in the circumstances, where Nucara was aware of concerns being raised by Nguyen as to the rent worthiness of 255, the tenant of level 1 of the Property, and Nucara had consciously desisted from clarifying the positon with McNee who would have known, he had no foundation for the statements he made to Nguyen on 5 September 2008 about 255 being a good tenant and payer of rent, nor was he justified in suggesting to Nguyen that she did not need more than $200,000 security for rental in relation to the tenant 255.

156 Accordingly, for the reasons I have outlined above, I find Nucara's evidence of significantly less weight than that of Nguyen on all points of conflict except on the minor issue of who transcribed Special Condition 30.

Sixth and Seventh defendants' reply to submissions about witnesses not being called

157 Beller and Nucara submit that the court may only draw inferences in respect of the failure to call witnesses who are 'in the camp' of the party who has failed to call such witnesses. Beller and Nucara also submit that it is only if persons of this type could give evidence relevant to the issue of the timing of the cancellation of the auction that P-Value's criticism as to witnesses not called has any force.

158 Beller and Nucara also point out that a concession was made at trial that the court would not be asked by P-Value to draw an inference in respect of any suggested failure to call Mr Fawell.[128] I note that I have drawn no such inference.

(a) James Rawson (Rawson) was not, on any evidence adduced at trial established as in attendance at the meeting on 5 September 2008. Those defendants also submit that the fact that he was present outside the TBM Sales is unlikely to shed any light on the issues raised by P-Value.

I do not agree. Rawson, who appears to be in the Beller and Nucara real estate agency camp as a fellow estate agent working with Nucara[129] in all likelihood would be in a position to give evidence about precisely when the auction of the Property was cancelled on 5 September 2008, and why it was cancelled.

(b) Robert German (German), a representative of Beller was not established as ever in attendance at the meeting with Nguyen at the TBM Sales office on 5 September 2008.

I accept this. In my view no inference can be drawn from the failure of any party to call German.[130]

(c) Peter Pattas (Pattas) was not established as in any way in Beller or Nucara's camp or indeed is in any way associated with any other party to the proceeding. He was a person who owned another Property somewhere nearby in Chapel Street.[131]

I also accept this submissions and draw no inference on the basis that Pattas was not called at trial.

160 I note that Clifton was a director of the first defendant Vicland Property Group No 1 Pty Ltd. I consider Clifton to be closely associated with McNee as a result of the first defendant and the second defendant being the registered proprietors of the Property from 19 December 2007. Beller and Nucara were at all material times acting as real estate agents for the Vendors in relation to their campaign to sell and the ultimate sale of the Property in September 2008.

161 For these reasons, I consider Clifton was in the McNee and Vendors' 'camp' at all material times including on 5 September 2008.

162 Similarly, McNee was in the Vendors' 'camp' and closely associated with the Beller and Nucara 'camp', and was also closely associated with the fourth and fifth defendants who were joint agents for the Vendors in the campaign to sell, and the sale of, the Property on 5 September 2008, with Beller and Nucara.

163 The active defendants also failed to call Mr Hu.

164 The defendants did not adduce evidence from witnesses beyond Nucara to corroborate and substantiate Nucara's evidence which sought to traverse key elements of the misrepresentation case put forward by Nguyen on behalf of P-Value. This was the position notwithstanding that McNee, representing the Vendors of the Property and a party to the proceedings who was present on 5 September 2008 and is the subject of claims that he had acted fraudulently.

165 Also in attendance at the critical meeting on 5 September 2008 at the TBM Sales office were Thomas, of the fourth defendant TBM Sales, and from time to time Fawell, Clifton and probably Morley of TBM Sales.[132] McNee was of course there representing the Vendors. He was also at that time the sole director of the second defendant which was one of the Vendors. It was McNee who was aware of the existing rent abatement agreement with 255 in relation to its first floor lease of the Property, as I have separately addressed.[133]

166 As I have also elsewhere mentioned, it appears that McNee was also a shareholder of the second defendant at 5 September 2008.[134] It was McNee, representing the Vendors which had jointly engaged TBM Sales and Beller to sell the Property. It was McNee, who on 5 September 2008 was, on the Beller and Nucara submission "very much in control of the sale process ...".[135] It was the companies associated with McNee, the Vendors, and probably McNee, who stood to benefit financially from a sale of the Property on 5 September 2008.

167 Notwithstanding the matters I have outlined above, McNee did not give evidence at trial and furthermore no response or sufficient explanation was given by his legal representatives for his non-appearance to defend the very grave allegations made against him.

168 I also note that notwithstanding that the pleaded case alleged by P-Value to have occurred at TBM's office on 5 September 2008 and Nguyen's disputed evidence that she was told by Nucara before 12 noon on 5 September 2008 that the auction of the Property had been cancelled, the defendants who remained active in the proceeding did not call evidence from Thomas, although he was sought to be subpoenaed, or McNee or Clifton or Morley, nor from Pattas who was present for preparations for the auction on 5 September 2008, or from German and Rawson who were said to have been present and somehow involved in the planned auction as members of the real estate industry.[136]

169 In relation to Fawell who was mentioned as being present on 5 September 2008, unsubstantiated by the evidence, medical or otherwise, it was stated by Counsel for Nucara and Beller that he had recently suffered a stroke and his memory was poor and for that reason he may or may not be called.[137] I draw no adverse inference for the fact that Fawell did not give evidence.

170 The matters in controversy in respect of which the active defendants did not call evidence from other persons present at the meeting of 5 September 2008 included whether in fact the auction scheduled for noon on 5 September 2008 was not cancelled until after Nguyen agreed to pay $5,925,000 and all contested allied representations made on 5 September 2008.

171 Most strikingly and significantly McNee, the third defendant, did not give evidence. On the defendants' case, in particular the first to third defendants, McNee was in a position to give evidence about the timing of various statements and attendances at the meeting of 5 September 2008 and confirmed details of what was said, in particular by Nguyen and Nucara, and by what he himself said at that critical meeting. As I have earlier noted it was McNee who was in charge of the sale on behalf of the Vendors[138] and he could therefore be expected to give evidence about any offers to purchase the Property which had been made by other prospective purchasers, including Hu.

172 Because of these matters referred to above and the active defendants' failure to call those persons I have identified, save for Fawell, German, Pattas and Thomas, who were present on 5 September 2008 or who were in attendance in the preparations for the auction that day, the absence of which has not been explained by the active defendants, I infer that those potential witnesses Rawson and Clifton in relation to the cancellation of the auction , and in particular McNee in relation to the conversations on 5 September 2008, would not have given evidence supporting Nucara's version of events. As a consequence I ascribe even more weight to the version of events given by Nguyen in relation to this meeting.

173 P-Value alleges that in June and July 2008, Thomas, on behalf of the fourth defendant TBM Sales, and the Vendors represented to Nguyen that the rental payable by the tenant at the property was a total of $370,000 per annum.

174 The first defendant, although it does not admit this allegation in terms, does concede that the rent payable under the leases for the Property was $370,0000 per annum.[139] McNee however does not admit this part of P-Value's representational case.

175 The June and July 2008 representation alleged by P-Value was made orally by Thomas, in discussions at that time with Nguyen, and by emails with attachments from Thomas, which attached documents including copies of the leases of the Property, a form of contract and a vendor's statement.

176 P-Value also alleges that on or about 9 July 2008, on behalf of TBM Sales and the Vendors, Thomas informed Nguyen by an email of that date, and thereby impliedly represented that there was no need for the tenant 255 to provide a director's guarantee with respect to its lease of Level 1 of the Property. The email of 9 July 2008 included an attached proposed special condition to be included in the Contract of Sale providing for $400,000 security instead of a director's guarantee.

Auction day representations - alleged by P-Value

177 P-Value alleges that on 5 September 2008, Nucara, on behalf of the sixth named defendant, represented to Nguyen that:

(a) the auction for that day had been cancelled because the Vendors had received an offer of $5,920,000;

178 P-Value also alleges at the same meeting that McNee and Thomas were present when Nucara made the representations referred to in the last preceding paragraph, and part of P-Value's case is that McNee and Thomas did not correct what Nucara said in that regard. P-Value alleges that thereby McNee and Thomas impliedly represented that what Nucara said to Nguyen on 5 September 2008 was true.

179 P-Value also alleges that during the meeting of 5 September 2008 a form of Contract of Sale was produced for Nguyen to consider. That Contract of Sale identified three tenants at the Property who were in total paying an annual rental of $370,000. The form of Contract of Sale provided to Nguyen included a copy of the lease of level one of the Property in the Vendor's statement which was attached to that contract.

180 P-Value alleges that during the course of the 5 September 2008 meeting at the TBM Sales office, McNee agreed to the inclusion of a 'Special Condition' in the Contract of Sale which provision provided for a $200,000 security deposit in respect of the lease of level 1, and P-Value further alleges that McNee did not, at the time of including Special Condition 30, disclose to Nguyen that a rent abatement agreement existed in respect of level one of the Property. P-Value alleges that by agreeing to the inclusion of the 'special condition' and failing to disclose the existence of the rent abatement agreement, McNee impliedly represented that 255 had paid rent in the past and could be expected to pay rent in accordance with the terms of the lease for level one.

181 P-Value alleges that McNee made the implied representations on his own behalf.[140]

182 P-Value also alleges that McNee's representations were made without honest belief as to their truth and that McNee intentionally failed to disclose the existence of the rent abatement agreement and that this agreement permitted 255 not to pay rent for the Property for an extended period of time after the Property was sold and that 255 had not paid any rent under its lease to the Vendor. P-Value pleads that McNee's said conduct constituted a fraud on Nguyen.[141]

183 P-Value, as well as making claims against the companies involved in the 5 September 2008 representations to Nguyen,[142] alleges personal liability against McNee, as already detailed and the estate agents Thomas and Nucara.[143]

Findings in relation to the TBM Sales meeting and negotiation on 5 September 2008

184 In relation to the critical meeting at the TBM Sales office on 5 September 2008 I find the following established on the evidence:

(a) Nucara stated to Nguyen, in McNee's presence, that the Vendors had just received an offer of $5,920,000 for the Property and the auction had been cancelled;

(b) Nucara stated to Nguyen, in McNee's presence, that 255 was a good tenant and Nguyen would not have to worry about them from the point of view of rent and 255 was a good payer of rent;

(c) McNee heard but did not correct or qualify the statements made by Nucara in subparagraph (a) and (b) above;

(d) McNee stated to Nguyen that 255 were experienced in successfully running nightclubs;

(e) McNee pointed out to Nguyen that there was a picture on the wall in the TBM Sales office and said to Nguyen that the picture was a Balcony Nominees nightclub operated in Melbourne and at the time McNee said to Nguyen that she would not have to worry about 255 as they were a good tenant and experienced in operating a nightclub;

(f) Nucara stated to Nguyen that 255 was a good payer of rent and that he could not see why she would want a $400,000 security in relation to the Property;

(g) Nucara also stated to Nguyen that she should note the advertising board on the Property at 255 Chapel Street and that she could earn money from the posting of advertisements in that location;

(h) Nguyen was persuaded by Nucara's statements to her about 255 being a good payer of rent and the Property being able to earn extra money by advertising installation made her happier and persuaded her to reduce the request for a security in the sum of $400,000 to $200,000;[144]

(i) McNee asked Thomas to write Special Condition 30 in the Contract of Sale and Thomas and Nucara drafted a special condition in the contract in relation to the extra security to be provided by the Vendor.

185 Nguyen, was induced by the statements referred to in [184(a) and (b)] above and by McNee's implied representations, by his conduct referred to in [184(c)] above, that the statements and representations made to her were true, namely:

(i) an offer had been received by the Vendors of $5,920,000 and as a result the auction had been cancelled;

(ii) the tenant of level 1 of the Property, 255, was a good tenant and a good payer of rent;

and by McNee's statement and conduct referred to in [184(i)] above that:

(iii) 255 had paid its rent in the past and could be expected to pay its rent under its lease from the Vendors in the future;[145]

and as a result signed the Contract of Sale to purchase the Property for $5,925,000.

186 Nguyen was induced by and relied on McNee's implied representation by his conduct referred to above that the matters stated by Nucara were true and by McNee's conduct in relation to Special Condition 30, which I find impliedly represented to Nguyen that 255 had paid its rent in the past and could be expected to pay its rent under the lease it had in the future.

(i) the ultimate agreement in relation to the price was by McNee;[146]

(ii) Thomas and McNee left the meeting with Nguyen for a short time to discuss the state of negotiation at a point in time just before McNee returned and agreed the price of $5,925,000.[147]

188 Given the circumstances and substance of the above conduct and statements which Nguyen relied upon to commit to the purchase of the Property, and the withholding of very material information by McNee, and the Vendors via McNee, namely that 255 had not paid any rent under its lease from the Vendors, a rent abatement agreement had been entered into between the Vendors and 255 under which 255 was not obliged to pay rent for a year, I consider McNee to be the person principally responsible for misleading and deceiving Nguyen by his said statements and silence referred to in [184(c)], [185] and [186] above, and in this paragraph of these reasons, as part of the sales and persuasion process he undertook on 5 September 2008. Similarly, I consider the Vendors also bear responsibility for McNee's conduct and failure to disclose, as their representative on 5 September 2008.

189 Further, I find that McNee by his statements and conduct referred to above at [184 (a),(b),(c),(i)] and [185], and by his failure to disclose the rent abatement agreement referred to in [186] and [188], has contravened the provisions of s 9 of the FTA by being directly and knowingly concerned with the contravention I have identified in the nature of his said statements and also his silence because he took a major role in the negotiation of 5 September 2008 knowing all the facts and knowing the falsity of the Nucara representations and because by his non-disclosures he intentionally participated in those contraventions. McNee was also the sole Director of the second defendant and representing the first defendant, a related company and co-Vendor. McNee, I find, was also the controlling decision maker and representative of the Vendors on 5 September 2008. Accordingly, for these reasons by McNee's above specified conduct the first and the second defendants also contravened s 9 of the FTA.

Further findings in relation to the conduct of the defendants on 5 September 2008

(i) Nguyen was not intending to purchase the Property on the morning of 5 September 2008 before she was subjected to the persuasive misleading and deceptive representations of McNee and Nucara which I have found to be made out against them; and

(ii) neither Nucara nor McNee told Nguyen that the offer which had been made by Hu the day before was one which had been rejected by McNee on behalf of the Vendors and was also by its own terms an offer which terminated at 10.00 pm on 4 September 2008.

191 I am affirmatively persuaded to a high degree of satisfaction that McNee, by his conduct in making the statements and representations to Nguyen referred to in [184(i)], [185(iii)], [186] and [188] above in the circumstances referred to in the next succeeding paragraph and by not correcting the statements made by Nucara referred to above in [184(a),(b),(c)] (which I find were made to Nguyen in McNee's presence) McNee did so with no honest belief in the truth of those statements and he failed to correct Nucara's said statements to Nguyen notwithstanding that he, McNee, knew that those statements were not truthful or accurate.

192 I also find that on 5 September 2008 McNee intentionally decided not to disclose that there was in existence a rent abatement agreement between the Vendors and 255 or the terms of that rent abatement agreement and deliberately did not make those disclosures so that Nguyen was not aware of those matters and so that Nguyen purchased the Property and did so for as high a price as she was, in such circumstances, able to pay.

193 In making the very serious findings I have against McNee in the last two preceding paragraphs, I have done so only after careful consideration of the evidence and after reaching a high degree of satisfaction in relation to the findings I have made as to McNee's conduct, and also bearing in mind the seriousness of such findings.

194 I also accept that Nguyen was reassured by the wrongful representations to which I have referred to in [184(a),(b),(c),(i)], [185], [186] and [188] above and relied upon each and all of those representations in deciding on 5 September 2008 to enter into the Contract of Sale with the Vendors for the Property for $5,925,000.

195 I am also satisfied that each of the said representations was false when made, or implied.

(i) Thomas, on behalf of TBM Sales and the Vendors, communicated to Nguyen that the rent payable by tenants at the Property totalled $370,000 per year. Thomas' communication of this information was by an email from Thomas to Nguyen on 1 July 2008 and an attached schedule[148] and a further email of 4 July 2008[149] which attached leases for the Property, a form of proposed Contract of Sale which referred to the three tenancies, including 255's tenancy of Level 1 of the Property and a Vendor's Statement and other documents;

(ii) on 9 July 2008 Thomas, on behalf of TBM Sales and the Vendors, sent an email to Nguyen which attached a proposed special condition for the Contract of Sale for the Property.[150] That proposed special condition stated:

Special condition 255

The Vendor shall provide the purchaser at Settlement either;

a 2 year Bank Guarantee in favour of the purchaser for the amount of $400,00.00 or

$400,000.00 cash deposited into an interest bearing bank account for a period of 2 years in the joint names of the vendor and purchaser, the interest shall follow the final destination of the deposit.

This deposit shall be additional security for the purchaser over the lease to the Tenant known as Two Five Five Pty Ltd located on level 1, 255 Chapel St, Prahran.

In the event that Two Five Five Pty Ltd should default on the lease, then the purchaser shall have the right to immediately draw down funds from this account on a monthly basis equivalent to each months rental not received from Two Five Five Pty Ltd, to compensate the purchaser for the loss of rental and outgoings until the property is re-leased to a new tenant or the existing tenant rectify's the rental not paid.

At the completion of the 2 year period, the vendor shall be entitled to redeem the amount remaining in the Bank Guarantee or bank account including any interest earned, and the vendors obligation shall cease on that day, being 48 months from Settlement date.

(iii) also on 9 July 2008 Thomas, on behalf of TBM Sales communicated to Nguyen that there was no need for 255, the tenant of the nightclub at the Property to provide a director's guarantee in respect of the lease of level 1.

Findings in relation to the 5 September 2008 Representations

197 In the circumstances which are in focus in this proceeding it was McNee who was the sole director of the second defendant and who was the person in control of negotiations and the transaction from the Vendors' point of view on 5 September 2008 and it was the Vendors McNee represented which stood to receive a very substantial sum of money as a result of the sale of the Property. Thomas and Nucara were the agents of the Vendors which McNee represented. McNee was also the sole shareholder of the second defendant at 5 September 2008, although I note that I do not regard this last likely fact as determinative in any way.

198 It is stark and uncontested that the first defendant admits that no rent was ever paid by 255 to the Vendors.[151]

199 On 5 September 2008 McNee made no attempt to correct Nucara's statement that there was an offer which had been made in the sum of $5,920,000, even though McNee well knew that Hu's offer had terminated on the evening of the day before and had also been rejected by McNee on behalf of the Vendors. I also find that on 5 September 2008 Nucara stated to Nguyen, in McNee's presence, that a $5,920,000 offer had been made for the Property. Therefore McNee, whom I am satisfied was present at the time, knew that the sum of the offer stated by Nucara was significantly exaggerated and wrong and that there was no such offer, yet McNee said nothing to correct this false statement.

200 McNee represented to Nguyen that 255 was a good tenant and a company which had run, and was running, a successful nightclub business in the CBD in Melbourne.

201 McNee heard but failed to correct and thereby I find impliedly represented to be true, Nucara's statement on 5 September 2008 that the auction had been cancelled because the Vendors had received an offer of $5,920,000 and 255 was a good tenant and a good payer of rent in relation to its tenancy of the Property.

202 McNee, by his statements and conduct on 5 September 2008, agreed to the inclusion of a special condition in the Contract of Sale for the provision of $200,000 security deposit in respect of the lease of level one, but did not disclose to Nguyen the existence of the rent abatement agreement between the Vendors and the tenant, 255.

203 I consider that, by including the special condition referred to above in the Contract of Sale and failing to disclose the existence of the rent abatement agreement, McNee impliedly represented to Nguyen that 255 had paid rent in the past and could be expected to pay rent in accordance with the terms of the lease of level 1. To suggest such a special condition, in a context where the prospective purchaser had enquired of the rent worthiness of the first floor tenant, and not to disclose the rental position of the first floor tenant, including the existence of the rent abatement agreement, was to imply to Nguyen that rent was being paid and there was no reason to expect it would not be paid during the lease.

204 McNee did not at any time prior to the signing of the Contract of Sale disclose to Nguyen:

(a) the existence of the rent abatement agreement

(b) that 255 had not paid any rent at all under the lease of the first floor of the Property.

205 I find that a rent abatement agreement as alleged by P-Value existed prior to 5 September 2008. I also find that the terms of the rent abatement agreement purported to allow 255 to avoid paying rent for a year, following the sale of the Property by the Vendors.

206 For the following reasons I find McNee, and therefore the Vendors, knew of the rent abatement agreement on 5 September 2008.[152]

207 Email correspondence between Nguyen, on behalf of P-Value, and 255 following the settlement of the Contract of Sale on 15 January 2009, that I have earlier referred to, provides reason to infer the existence of the rent abatement agreement.[153]

208 At trial, objection was raised by Counsel for McNee to any reliance by P-Value on McNee's earlier evidence before the Supreme Court in proceeding SCI 2011 00982. However I ruled that:

I haven't read the transcript, but now that Mr Mileo has said that a document purporting to be a record word-for-word of what was said on an occasion comparable to a conference but in this case in a court proceeding was received by him within 24 hours and he was astute to check it and it's an accurate record of what he recalls being said, it seems to me that it's admissible as sufficiently reliable and proved at this point and it will provide a more precise record of precisely what Mr McNee said than the summation of what he said which was given in evidence a short time ago by Mr Mileo, so I think it's slightly better evidence.[154]

209 In proceeding SCI 2011 00982, McNee gave direct evidence about the existence and effect of the rent abatement agreement. He said -

He [Mr Smith] has said he spoke with you about having a lengthy rent free period, do you remember that?---Yes, and that would have been part of our negotiations because they would have been aware that we don't hold long-term assets, we buy them, add value and on-sell them, so they would have been aware that I wouldn't have been a the landlord for a lengthy period of time.

So you were agreeable to providing a rent free period, is that what you're saying?---Yes.

And period of around a year rent free has been mentioned by Mr Smith, is that period you agreed to?---Yes.[155]

...

So your companies or the Vicland companies did not actually receive any payments of rent from 255?---That is correct.

And do you say that is because of this rent free period you had agreed to with Mr Smith?---No, I mean that during my ownership of our properties we do not expect to collect rent from tenants, that's not the purpose of our business model. What I say to the tenants when we agree upon a rent free period, that commences from the time my ownership has been passed on.

So you say the rent free period begins when you sell Property?---That is correct.[156]

210 McNee admits that no rent was paid by 255 to the Vendors.[157] However, McNee has claimed that 255 was undertaking substantial fitout works at the Property and it was bearing the costs of those works as the reason why 255 was not paying rent.

211 In my view, having regard to the evidence and circumstances identified, McNee's conduct at the TBM Sales office on 5 September 2008 was misleading and deceptive and likely to mislead or deceive. Further, as a result of his relationship with the first defendant and his role as director of the second defendant and the fact that McNee represented both Vendors in the relevant sale, the Vendors should, in my view, also be responsible for McNee's conduct.

212 I consider that McNee's failure to mention the existence of a rent free period earlier agreed between the Vendors and 255 was in the circumstances of the discussions on 5 September 2008 very misleading and deceptive.[158] I add that is because McNee was in substance the Vendor and in that respect in control of the negotiations including his two real estate agents, Nucara and Thomas, in the negotiations on 5 September 2008, and because McNee was prior to that date well aware that the first floor tenant of the Property, 255 had not paid rent and had a rent abatement agreement with the Vendor, effective for a considerable period in the future.

213 McNee's failure to mention the existence of the rent free period created by the rent abatement agreement is misleading and deceptive as was his failure to disabuse Nguyen as to the statements made by Nucara in respect of the Property on 5 September 2008 which were, as McNee well knew, not true.

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

215 Furthermore, at the meeting of 5 September 2008, Nguyen specifically raised the question of 255 being able to pay the rent for the first floor lease of the premises and she raised the amount of security which she thought should be provided to deal with this exigency. In the circumstances I find that it was misleading and deceptive of McNee not to fully disclose the existence of the rental abatement agreement and the fact that 255 had paid no rent up until 5 September 2008.

216 I also find that McNee misled and deceived Nguyen by instructing and authorising and acquiescing in his real estate agents preparing special condition 30 when he full well knew that 255 had paid no rent up to 5 September 2008 and had an agreement with the Vendors, which he represented, under which 255 was not obliged to pay rent for the first floor of the Property for some considerable time.[159]

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

218 I am also satisfied that Nucara, and thereby Beller, made inaccurate and false statements to Nguyen on 5 September 2008 which were misleading and deceptive, as follows:

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

219 I also find that Nucara heard McNee make the representations referred to at [184(e)] and [200] above, and did not correct or attempt to correct those misleading and deceptive statements thereby impliedly representing that what was said by McNee was true.

220 During the course of the meeting on 5 September 2008, Nucara also put forward a Contract of Sale and which stated that there were three tenants of the Property paying $370,000 per year.

221 However I do not consider that I have a sufficient evidentiary basis upon which to conclude that Nucara and Beller, or Thomas and TBM Sales knew 255 had not paid any rent as at 5 September 2008.

222 I am satisfied that Nguyen relied on the misleading and deceptive representations which I have identified as made by McNee, or conveyed by his conduct at the TBM Sales office on 5 September 2008, and the misleading and deceptive statements made by Nucara at the same meeting. I am also persuaded that Nguyen relied upon each of these misleading and deceptive representations, and all of them, when she considered and decided upon the advisability of buying the Property and made the offer of $5,925,000 as she did on 5 September 2008.[160] That offer was immediately accepted by McNee.

223 I am also persuaded that Nguyen's decision to buy the Property on 5 September 2008 was made under considerable pressure because she accepted what she had been falsely informed by Nucara in the presence of McNee and Thomas about the Vendors having been offered $5,920,000 by another interested party.

224 In my view it was quite clear on the evidence I have highlighted that Nguyen placed great reliance upon the income stream from the tenants at the Property she was considering purchasing, as exemplified by her undertaking calculations of the rental yield for the Property at the meeting on 5 September 2008.[161] I also find that Nguyen relied upon what she was told about the tenant of the upstairs nightclub, 255, also running a successful nightclub businesses in the Melbourne CBD and being a good tenant and a good payer of rent.

225 Further, I find that Nguyen relied upon the statements made by McNee and Nucara as to the rental reliability of the first floor nightclub tenant. Such reliance I infer from Nguyen's evidence, including that had she known that 255 was not paying rent or had agreed to a significant rent free period, Nguyen would not have entered into the Contract of Sale on 5 September 2008.[162]

226 Further, in the circumstances to which I have referred, even absent the direct evidence which Nguyen has given reflecting her reliance upon the misleading and deceptive statements I have found were made by McNee and Nucara on 5 September 2008, in my view McNee and Nucara's conduct on 5 September 2008 was likely to have induced Nguyen to enter into the Contract of Sale which McNee and Nucara and Thomas desired her to sign, because the statements and conduct I have found were wrongful on the part of McNee and Nucara were made in an auction context, to a then interested party, and were therefore statements of a kind likely to induce Nguyen to make an offer and enter into the subject contract of sale.[163]

227 The following representations were false and known to be false by McNee:

(i) at the time of the meeting at the TBM Sales office on 5 September 2008 there was no subsisting offer to purchase the Property for $5,920,000;[164]

(ii) the earlier offer by Mr Hu to purchase the Property was in the sum of $5,568,800 and not $5,920,000;

(iii) McNee knew that at 5 September 2008 the only offer to purchase the Property which had been referred to in evidence in these proceedings, namely Mr Hu's offer of 4 September 2008 in the sum of $5,568,800 was expressed to terminate at 10.00 pm on 4 September 2008, the day before the auction and the meeting at which Nguyen signed the Contract of Sale. Further, McNee knew full well that he himself had rejected Hu's offer on 4 September 2008 and therefore it could not be said at the meeting with Nguyen the next day that there was any subsisting offer to purchase the Property;

(iv) the auction had not been cancelled as a result of an offer being made by a potential purchaser other than Nguyen;

(v) 255 was not a good tenant of level one of the Property and was not a good payer of rent.

228 McNee knew that the last above representation was false because he knew at 5 September 2008 that the Vendors of the Property and 255 had entered into a rent abatement agreement pursuant to which at that date 255 had not paid any rent to the Vicland companies in relation to the Property and pursuant to which 255 was not obliged to pay any rent for a period of twelve months after the Vendors disposed of the Property.

229 I consider however that the evidence adduced in this proceeding does not provide a basis for me to find that Nucara and Beller knew about the rent abatement agreement and the non-payment of rent by 255 (matters known to McNee) or that the representations made by McNee were false. However, those representations were in fact false, and Nucara by the representations I have held were made by him, was therefore representing matters which were false.

230 However, I note that Nucara, who was engaged around about June 2008,[165] knew of Hu's offer[166] dated 4 September 2008 in the sum of $5,568,800 and he was aware that the offer from Hu terminated at 10.00pm on 4 September 2008[167] and further Nucara had discussed the offer from Hu with McNee and Nucara had received McNee's instruction on 4 September 2008 that McNee, on behalf of the Vendors, rejected Hu's offer.[168]

Trade Practices Act and Fair Trading Act

231 P-Value relies upon both the provisions of s 52 of the TPA and also relies upon s 9 of the FTA. P-Value however places principal reliance upon the FTA.

232 Sections 52, 51A and 82 of the TPA, and ss 4, 9 and 159 of the FTA are set out in Annexure "A" hereto.

233 I am satisfied, and find, that in perpetrating the misleading and deceptive statements and representations referred to in paragraphs [184(c) and (i)], [185(iii)], [186], [188], [192], [211] and [217] above, which are referable to McNee on their behalf, the first and second defendant Vendors perpetrated conduct in the course of trade or commerce which was misleading and deceptive contrary to s 52 of the TPA and contrary to s 9 of the FTA.

234 I am satisfied, and find, that in making the misleading and deceptive statements referred to in paragraphs [184(a) and (b)] above, referable to Nucara on behalf of the sixth defendant, Beller perpetrated conduct in the course of trade or commerce which was misleading and deceptive contrary to s 52 of the TPA and Nucara[169] and Beller perpetrated conduct in the course of trade and commerce which was misleading and deceptive contrary to s 9 of the FTA.

235 I am satisfied, and find, that in making the misleading and deceptive statements and by his conduct referred to in paragraphs [184(c) and (i)], [185], [186], [188] and [211]-[217], referable to him, McNee perpetrated conduct in the course of trade or commerce which was misleading and deceptive contrary to s 9 of the FTA.

236 I am satisfied, and find, that in making the misleading and deceptive statements referred to in paragraphs [184(i)] and [185(iii)] above McNee perpetrated conduct in the course of trade or commerce which was misleading and deceptive contrary to s 4 of the FTA in relation to a future matter.

237 I also find that making the misleading and deceptive statements and failing to correct misleading and deceptive statements made by McNee in conversations in which he and Nucara was present on 5 September 2008, Nucara was at all material times also acting for and on behalf of Beller, namely the sixth defendant, as an officer, employee, and agent although as addressed below this does not absolve Nucara of personal responsibility under the provisions of the FTA.[170]

238 P-Value's Amended Statement of Claim dated 13 October 2014, claims as a result of the alleged conduct contrary to the provisions of the TPA and the FTA P-Value has suffered loss and damage. In summary P-Value claims by way of damages:

(a) the difference between the price paid for the Property ($5,295,000) and the value of the Property ($4,550,000) - $1,375,000;

(b) the excess stamp duty paid on the $1,375,000 - $75,625;

(c) loss of rental income and expenses and legal costs incurred by it in respect of the litigation with 255 and Cossari Smith Pty Ltd to the extent it is unable to recover those amounts in those proceedings.

239 Further particulars were provided by P-Value detailing loss and damage as at 22 September 2014, as follows:

Less value of the Property (see notes below for calculation of value for purposes of damages)

Interest paid on excess from 15 January 2009 to 23 May 2013 (calculations attached)

Plaintiff's costs against Two Five Five Pty. Ltd. (including County Court, VCAT and Supreme Court)

240 P-Value's particulars of loss and damage at 22 September 2014, include the following explanatory notes in respect of the above numbered sub-paragraphs:

(i) 1 to 3: The loss and damage consists of the purchase price less the value of the Property.

The value of the Property is based on Dudakov's valuation workings as at 15 January 2009 at CB 234.7:

(a) Underlying value: Value based on market rent for the three tenancies: $3,672,215;

(b) Ground floor super rent: No allowance is made for the ground floor super rent due to the fact that P-Value has received only two months' rent for the downstairs office (T 174.19).

(c) First floor super rent: The first floor super rent is the present value of the above market rent that would have been paid from 1 February 2009 to the end of Two Five Five's 7-year lease on 29 June 2015, a total of 77 months.

P-Value received a deduction of $200,000 on account of rent, roughly equivalent to 12 months' rent commencing on 1 February 2009 (not including the rent increase due on 30 June 2009).

P-Value received three additional months' rent from Two Five Five before the lease was terminated and Two Five Five was wound up: (CB 899).

Thus the total super rent received was 15 months out of the anticipated 77 months. This is approximately one-fifth of the anticipated period.

Therefore the allowance for first floor super rent should be one-fifth of the amount of first floor super rent as specified at CB 234.7, approximately $160,000.

(d) The amount to deduct from the contract price is therefore:

Underlying value $3,672,215.00

Ground floor super rent $0.00

First floor super rent $160,000.00

Total $3,832,215.00

(ii) 4: P-Value incurred additional stamp duty on the difference between the purchase price and the value. Stamp duty on amounts exceeding $960,000 at the time of the transaction was 5.5% pursuant to s.28 of the Duties Act 2000.

(iii) 5: P-Value borrowed a total sum of $5,800,000 from ANZ Bank to purchase the Property. Interest paid by P-Value included a line fee of 1.58% line fee and on commercial bills rolled over on a regular basis (see CB 980 to CB 1030).

P-Value claims the interest paid on the excess purchase price and additional stamp duty. A calculation of interest is attached to the 22 September 2014 particulars of loss and damage. I note that this calculation is likely to require updating to the time of judgment.

P-Value will seek interest pursuant to s.60 of the Supreme Court Act from the date of the commencement of the proceeding to the date of judgment.

(iv) 6: P-Value incurred legal costs in proceedings against Two Five Five Pty Ltd, costs it would not have incurred if it had not purchased the Property. The amount of costs for each action is set out at CB 842.1

241 The value of the Property of $3,832,215 is based on Brian Dudakov's (Dudakov) valuation workings as at 15 January 2009[1] which, as referenced in sub-paragraph (i) of the last preceding paragraph, takes into account the provisions of special condition 30 contained in the Contract of Sale whereby the Vendor provides a sum of $200,000 as a security deposit over the 255 tenancy to be held for a period of two years from the settlement date which can be drawn by the purchaser at any time the tenant is in default.

242 McNee denies P-Value's damages claims and says further that any loss of rental income and litigation cost pursuing 255 and Cossari Smith Pty Ltd were not caused by the third defendant's acts, alternatively were too remote to be the subject of a damages award.

243 McNee also notes that on 24 February 2010 P-Value entered judgment in the litigation between it and 255 in the County Court of Victoria. That judgment included an order that 255 pay P-Value's costs of the proceeding including reserved costs. Further, McNee notes that on 2 August 2013 litigation between P-Value and Cossari Smith Pty Ltd was dismissed in this Court with an order that Cossari Smith Pty Ltd pay P-Value's costs including reserved costs. McNee submits that these claims are too indirect and too remote to be recoverable under s 159 of the FTA. They cannot be said to have arisen "because" of any misleading conduct by McNee in the sense in which that word is interpreted. McNee's submits that his conduct cannot reasonably be found to be (directly or by legitimate inference) the effective cause of any of these alleged losses. P-Value has costs orders in favour for the payment of its legal costs at least on a party-party basis. The fact that those orders may not be effective to enable it to recover at least the taxed or assessed costs is irrelevant on this issue. That argument applies a fortiori to the legal costs incurred in prosecuting the action in the Victorian Civil and Administrative Tribunal which arose solely because of the unlawful actions or threatened actions of 255, as the tenant of the nightclub area after settlement

244 McNee accepts that the most reliable market valuation of the Property at the time of the Contract of Sale and at settlement is that of Dudakov in the Urbis report relating to an inspection date of 18 June 2014.[171]

Sixth and seventh defendants' submissions on damages

245 The sixth defendant in its Second Further Amended Defence of 20 October 2014 and the seventh defendant in its Further Amended Defence of 28 August 2014 (defences that are substantially identical) both contend that any damages suffered by P-Value was not caused by them because:

(a) on 5 September 2008, Nguyen executed the contract to purchase the Property for $5,925,000 naming herself or nominee as purchaser;

(b) P-Value did not become registered as a corporation until 9 December 2008;

(c) Nguyen nominated P-Value to take a transfer of the Property on or about 11 December 2008;

(d) P-Value was not a party to the Contract of Sale and hence had no obligation to settle it;

(e) P-Value chose to settle the contract despite having the opportunity to end it. The "opportunity to end it" was conveyed in an email sent on 14 January 2009 from SBA to IAC Conveyancing;

(f) P-Value should in any event have any damages it suffered reduced as a result of its own failure to take reasonable care by failing prior to signing the Contract of Sale to:

(i) request and/or read documents prepared by the defendants in relation to the sale prior to the auction;

(ii) undertake its own enquiries in relation to tenancy arrangements and characteristics of the property;

(iii) satisfy itself as to the suitability of the Property and its intended purpose including obtaining a valuation; and

246 Further, the sixth and seventh defendants' argue in their joint Outline of Submissions dated 3 September 2014 that the court should not accept that this is a "no transaction" case, assuming P-Value proves the existence of a rent abatement agreement. The sixth and seventh defendants' submit that P-Value chose to settle the contract knowing that the "security deposit" in the Special Condition added to the contract on 5 September 2008 provided terms that required P-Value not to eject 255 while the sum of $200,000 credited to P-Value by way of a settlement adjustment was unused and thus allowing P-Value to keep any unused portion of the $200,000. These defendants submit that it follows that if P-Value was truly concerned about the situation in respect to 255 there was a clear warning that there was an issue in respect to the 255 lease and that all was not as it seemed, however P-Value chose to settle the Contract of Sale in any event. Beller and Nucara also submit that as a result of Special Condition 30 the purchase price of the Property was reduced from $5,925,000 to $5,725,000 and full credit must be given for this reduction.[172]

247 The sixth and seventh defendants' also accept Dudakov's valuation as being the most reliable, subject to similar qualifying statements made by the third defendant which are addressed below.[173] Further, Beller and Nucara place no reliance on the evidence of the expert Robert Bath (Bath).[174] However, it should be observed in the position of those parties on what can be fairly described as Bath's valuation evidence on an ancillary aspect which was not contradicted in any way by the defendants, Bath gave expert evidence that in his view it was a matter of importance for prospective purchasers to know if there was a rent free period in respect of rented premises being considered for purchase and that it was normal for Vendors to disclose any rent free period in the lease itself.[175]

248 The sixth and seventh defendants' also claim that any legal costs incurred by P-Value after the purchase attempting to extract the rent from the tenants are too remote to be recoverable by P-Value against them.[176]

249 Further, the expenses incurred in respect to the VCAT proceedings injuncting the tenants from continually retaking possession were bought about by the tenants' unreasonable behaviour and decisions and had nothing to do with any actions on the part of either Nucara or Beller.[177] This can be discerned from Mileo's evidence summarised as set out below at [140] of the sixth and seventh defendants' written closing submissions that:

(a) on any view the tenants' rent free period would have expired;

(b) there was no basis for the tenant to refuse to pay the rent but they were not paying and that rather than approaching the court to seek relief against forfeiture the tenant resorted to making threats, to rip items out of the premises and repeatedly changing the locks;

(c) Mileo agreed that a reasonable person should have approached the court rather than exercising self-help as had been done and that the tenant was acting completely unreasonably; and

(d) he later said the final straw was, it seems, the threats to damage the Property.[178]

250 Beller and Nucara submit that P-Value's damages claim must make allowance for the $20,000 settlement reached with Thomas and TBM.[179]

251 Beller and Nucara also refer to the offers made by McNee during the course of the trial and submit that such offers were "indicators" that the real value of the Property was higher than that put forward by Dudakov.

252 As earlier detailed, P-Value has particularised the loss and damage which it seeks to establish in its Particulars of Loss and Damage dated 22 September 2014.

253 P-Value's case is fundamentally that it would not have paid the price it did for 255 Chapel Street had it known the true state of affairs about the level one tenant at the Property, and therefore its loss is the difference between what it paid for the Property in early 2009 and the reasonable market price of the Property at the time of purchase. P-Value also claims certain consequential costs and disbursements it asserts were associated with the transaction it was misled to enter, namely, additional stamp duty, additional interest on monies borrowed and legal costs incurred in pursuing 255 for outstanding rental.

254 P-Value's core financial claim is principally based on the expert evidence contained in the Urbis (Dudakov) Report of 8 September 2008/15 January 2009 (Urbis Report).[180]

255 The Urbis Report assessed the market value of the Property as $4,280,000 (excluding GST) as at 8 September 2008, and as $4,340,000 (excluding GST), as at 15 January 2009.

256 These sums were later amended by Dudakov on 11 September 2014 because of a calculation error, described as an inadvertent double deduction of the loss of 'super' rent during the rent free period. The amendment to the calculations resulted in market valuations of $4,410,000 (excluding GST) as at 8 September 2008 and $4,440,000 as at 15 January 2009.[181]

257 These sums were further amended by Dudakov on 15 September 2014, following a request at trial during Dudakov's cross-examination for him to take into account the provisions of Clause 30 of the Special Conditions contained in the Contract of Sale for the Property. In response to this request, Dudakov considered the appropriate approach was to remove the present value of the first floor rent free allowance from the valuation calculations as at 8 September 2008 and 15 January 2009, because in his view the rent components were being effectively underpinned during the rent free period. The resultant further amendment to the calculations gave rise to a market valuation of $4,610,000 (excluding GST) as at 8 September 2008 and $4,570,000 as at 15 January 2009.[182]

258 In preparing the valuation, Dudakov was instructed to assume that prior to the sale of the Property 255 had not paid any rent under its lease. Further, Dudakov was asked to assume that there was an agreement between 255 and the Vendor of the Property that 255 need not pay any rent whilst the Property was owned by the Vendor and for a period of eight months, or alternatively 12 months, from the date of completion of the sale.[183]

259 When assessing the market value of the Property, Dudakov relied upon the definition approved by the Australian Property Institute:

The estimated amount for which an asset should exchange on the date of valuation between a willing buyer and a willing seller in an arm's length transaction, after proper marketing, wherein the parties had each acted knowledgeably, prudently and without compulsion.

260 The Urbis Report noted the following features of the Property:[184]

261 The Urbis Report as amended records land area of 247.5m² which was taken from the Title Plan. The building area figures in that same Report were derived from architectural plans, together with check measurements taken by Dudakov on site. Dudakov's stated opinion was that the above figures are sufficient for valuation purposes.

262 In the Urbis Report it is noted that:[185]

(a) the Property was zoned 'Business 1 Zone' as at 8 September 2008 and 15 January 2009;

(b) a late night on-premises liquor licence (Licence No 32291275) authorised the licensee to supply liquor on the premises subject to various conditions;

(c) Dudakov was of the opinion that the highest and best use of the Property was as an income earning investment with the prospect for redevelopment in the medium term.

263 The Urbis Report explains the Valuation Methodology adopted as follows:[186]

In assessing the market value of the Property I have considered it appropriate to primarily use the capitalisation approach.

I have had regard to the existing lease agreements together with sales of comparable properties which have sold with secure lease agreements in place. Based on my analysis of the relevant sales evidence, I have been able to determine an appropriate capitalisation rate to be applied to the assessed market rent in order to assess the value based on investment considerations.

Factors influencing the capitalisation rate include future redevelopment prospects, location, nature of improvements, date of sale, tenant profile and rental levels (above or below market).

With respect to the subject Property, based on my research, I am of the view that the passing rent for the ground floor office and first floor bar and storeroom were above market at the relevant dates. Therefore, in undertaking my valuation calculations, I have made the necessary adjustments to reflect the 'super rent' associated with two of the three tenancies.

264 Having identified and considered rental evidence for comparable properties for the first floor, ground floor retail and ground floor office, including the ways in which the rental evidence for comparable properties were superior or inferior to the subject tenancies, and the net rental (per m²) that applied to these comparable properties, the Urbis Report arrived at the following net rental rates for the subject tenancies, as at 8 September 2008 and 19 January 2009:

Ground Floor Retail: $990 per m² (adopting the passing rate)

Ground Floor Office: $250 per m²

First Floor and Storeroom: $275 per m²

265 Multiplying these net rental rates by the respective building areas of each tenancy Dudakov arrived at a total market net rental per annum of $183,611 for the Property.

266 Dudakov also had regard to sales of similar retail properties located in Chapel Street, and to other comparable locations in assessing the market value of the Property. Dudakov made the following observations in relation to the sales evidence which was researched:[187]

The sales deemed most relevant at or around the relevant date indicate a passing/equated yield range of 4.18% to 4.98%.

Factors influencing the yield and ultimately the price paid include lease profile, location, development potential and date of sale.

Taking the aforementioned sales into account, I am of the view that an appropriate capitalisation rate of 5.0% should be applied to the assessed market rent for the subject Property at both dates.

267 Dudakov states that based on the researched investment transactions, he has elected to capitalise the assessed market rent at 5.0% for the Property.[188] Dudakov justifies the use of the assessed market rent, as opposed to the passing market rent, on the basis that, in his opinion, the passing rent is above market with regard to the first floor and storeroom and the ground floor office. Dudakov does not state this explicitly in the Urbis Report, but the passing rental rate for the first floor tenancy was $930.54 per m² and $1034.13 per m² for the ground floor office tenancy, significantly higher than the assessed market rental for the tenancies of $275 per m² and $250 per m², respectively. Dudakov also states that the capitalised rate of 5.0% is slightly above the analysed yield range of 4.18% to 4.98% to reflect the greater risk profile associated with the Property due to the substantial component of income being derived from the non-retail tenancies.

268 Dudakov also undertook a below the line adjustment to reflect the above market rent available until the next market rent review to account for the 'super rent' being derived from the ground floor office and first floor bar. The 'super rent' figure was then discounted at 8.0% to reflect its higher risk profile.

269 Dudakov also made a further adjustment to reflect the rent free period for the first floor tenancy of 12 months from 8 September 2008 and eight months from 15 January 2009 as instructed.[189]

270 At trial Dudakov also gave the following evidence.

271 Dudakov explained that the capitalisation approach involves taking the rentals and capitalising or multiplying them by the market yield, producing a rate of return that an investor would require to receive on that Property.[190]

272 Dudakov explained that he chose a capitalisation rate of 5% for the market rental because the capitalisation rates of the comparable properties were 4.2%, 4.98%, 4.85% or 4.6%, with the lower capitalisation rate of 4.2% being referable to the sale taking place a year before, and that by September 2008 it was on the cusp of the GFC and this was reflective of the capitalisation rates of the other properties sold at or about that time in August and November 2008 being close to 5% and therefore he chose 5%.[191]

273 Dudakov explained that he used a capitalisation rate of 8% for the above market rent because that rent was more risky, given that if the tenant failed to pay the rent the tenancy would need to be let again and the landlord may not receive all of the rent over the period of the lease.[192]

274 Dudakov also referred to other valuation approaches that could have been taken, but expressed that he chose the capitalisation of rental approach as the Property was an investment property with comparables that could be used to provide capitalisation rates for those properties.[193] The sale of comparable properties could also be used to determine the rate per square metre as a secondary approach.[194]

275 Dudakov explained how he had completed his valuation calculations as follows:

(a) taking the rental rates per square metre which he had adopted, and then translating those into the annual market rental for each tenancy. This gave a total market rental of $183,611 per annum;[195]

(b) the total market rental of $183,611 was then capitalised by 5%, with the calculation being performed by dividing 100 by 5 to give a multiplier of 20, resulting in a value of $3,672,215;[196]

(c) adjustments were then made to take into account the additional 'super' rent to be received before the next market review (if it was paid), with the next market review being in seven years for the first floor and three years for the ground floor office;[197]

(d) the adjustments were made using a discounted cash flow analysis discounting the above market rent by 8%.[198]

276 Dudakov explained that the different valuation amounts as at 8 September 2008 and 15 January 2009 were the result of the lesser period of time over which the above market rents would be received, namely, approximately 4 months.[199]

277 At the outset of his evidence Cussen spoke of conversations he had with Nguyen prior to preparing his report. Counsel for the third defendant submitted that these communications destroyed, or at least materially affected, Cussen's objectivity as an expert.[200] I note however that Cussen's Report was prepared for a potential mortgagee in NAB (subsequently ANZ after Nguyen changed banks) and therefore because it was prepared for an independent third party is not compromised and is objective. It is also unlikely, in these circumstances, Cussen would understate the value of the Property. Cussen's Report would only benefit Nguyen if it overstated the Property value. Accordingly, I do not consider the Cussen Report to be compromised, diminished, or of no weight.

278 Cussen prepared a valuation report for the Property in late 2008 for Nguyen, subsequent to Nguyen entering the Contract of Sale but prior to settlement.[201] The valuation report was prepared in accordance with a letter of instruction 17 November 2008 from the NAB as potential mortgagee.[202]

279 At trial objection was made to the Cussen report on the basis that it was prepared in December 2008 without compliance with the requirements of Order 44. The Cussen Report was ruled to be admissible on 15 September 2014.[203]

280 Cussen valued the Property at $4,550,000 as of 9 December 2008. This value was comprised of a "core value" of $3,850,000 and a "PV of profit rental" of $700,000. Cussen used the same general method as Dudakov for determining the market value of the Property. That method was the capitalisation method applied to the assessed market rental value of the Property, with the difference between the passing rent and assessed market rent in respect of the first floor and ground floor office being separately valued and added to the total market value of the Property.

281 Cussen explained that for this valuation the appropriate method of valuation was the capitalisation method, as opposed to the comparable sales method, because the Property was offered for sale with three leases in place, which made the logical buyer for the Property an investor.[204]

282 Ultimately, in my view, Cussen's valuation was approximately the same as Dudakov's valuation. Both were founded on contemporaneous evidence of the value of the Property at the time of sale and both used the same methodology. The differences were, in my view, insignificant. Taking the average of Dudakov's September 2008 and January 2009 valuations ($4,590,000) they are virtually the same as Cussen's valuation of $4,550,000.

283 Bath, Expert Valuer for the first and third defendants, produced the "In Property Valuation Report", which valued the Property as at 20 August 2008 and 28 June 2014. Bath used the direct comparison approach to valuation as the primary method of valuation, with the capitalisation approach being a secondary calculation to act as a check upon the primary valuation approach.[205] Bath described the direct comparison approach as involving the comparison of like for like properties and making adjustments for certain characteristics and locational attributes that the Property may have.[206]

284 Bath assessed the building area of the Property to be 470m², as opposed to Dudakov's assessment of 384.01m², which led to a significant difference between the two valuations as to market value.[207]

285 When determining the capitalisation rate, Bath applied a higher capitalisation figure of 5.75% to the passing rent, rather than seeking to separate out any assessed difference between the passing rent and market rent.[208] Bath said he chose this method, as opposed to Dudakov's method, because he could not be sure what the appropriate market rent should have been.[209]

286 Bath valued the Property as at 20 August 2008 at $6,000,000.

287 However, during cross-examination it emerged that Bath had previously prepared a valuation on behalf of Cossari Smith Pty Ltd for Level 1, 255 Chapel Street to assess the market rental value assuming no internal fitout as a result of a current disputation before the courts between the landlord and Cossari Smith Pty Ltd. The inspection date on the Cossari valuation report was 24 February 2009, with the date of valuation listed as 28 June 2012. Bath accepted that if he had done a valuation of the Property in the past it would be necessary to disclose this in the report in the present proceeding.[210]

288 Bath could not remember preparing the valuation, but did not dispute that it was his work.[211] Bath accepted that the opinion expressed in the Cossari valuation report was comprehensively different to the opinion expressed in the report in the present proceeding.[212]

289 The Cossari report assessed the building area of the first floor as 212m² with a market rental rate of $220 per m², providing a market rental value of $46,000 for the first floor of the Property. This can be contrasted with Bath in the report in the present proceeding using a building area of the first floor of 248.1m² and applying a capitalisation rate of 5.75% to the passing rental of the first floor of $200,000 as the basis for the valuation.

290 Ultimately, the third, sixth and seventh defendants accepted that the valuation evidence of Dudakov is the best evidence as to market value of the Property at the time the Contract of Sale and at settlement of the contract.[213]

Conclusions as to the expert evidence on market value of the Property

291 Third, sixth and seventh defendants accept that the Dudakov Report is the most reliable valuation of the market value of the Property at the time the Contract of Sale was entered into, and at settlement. The defendants, however, make the following criticisms of the Dudakov Report:

(a) The Urbis Report is primarily the work of two of Dudakov's assistants, rather than his own work.

I reject this criticism as inconsequential in that the substance of Dudakov's evidence was that he considered and discussed with his assistants the collated material and adopted and utilised where appropriate the work of a data collection type which his assistants produced, under his instruction. I am also satisfied that Dudakov was the guiding mind in relation to the data collection and development work done to produce the Urbis Report, and that the opinions expressed therein are his own opinions. Finally, I observe that with such expert reports it is common place for the relevant expert to direct and receive and then evaluate the data and research type input provided by others, often from the specialist team employed by the organisation in which the expert works.

(b) Dudakov did not check the primary research himself, and he could not specifically recall which agents and valuers were contacted for the purposes of the preparation of the report.

I also reject this criticism of Dudakov's evidence for the same reasons I have summarised under (a) above. Further, I note in this regard that Dudakov was personally involved in a site visit of the Property as part of the evaluation of its worth and involved in the selection of comparable property data.

(c) In selecting other properties for the purposes of comparison, Dudakov and his colleagues drove up and down Chapel Street but he could not recall for how long. He otherwise had no role in the selection of comparable sales and rentals.

I reject this submission as not a fair summarisation of the evidence on this aspect. Dudakov's evidence was that he was personally involved in the selection of comparable rental properties.[214]

(d) Dudakov accepted that, without the late night liquor licence for the upstairs nightclub, the market value of the Property would be somewhat less.

I do not consider that this submission in any way impugns Dudakov's report. Further, I note that some of the comparable properties referenced in Dudakov's report included late night liquor licences.

(e) Failed to include vacant possession sales of similar properties in the comparable sales and did not include in the valuation the sale of the Property to Vicland in or about December 2007 for consideration of $4,471,500.

I reject this submission as misguided because the primary method of valuation used by Dudakov, and accepted by the active defendants as I have noted, was the capitalisation method of valuation; the Property was sold with three extant leases and there was no necessity for Dudakov to consider vacant possession sales. Furthermore, without evidence as to the probative value or significance of a comparison of the market in December 2007, the above suggested failure is not made out.

(f) Dudakov accepted that substantial renovations works to fit-out the first floor potentially could add value to the market value of the Property but not that that meant a proper valuation of the land in 2008 would have been considerably more than $4.6 million.

Dudakov's evidence in this regard, as summarised in this submission, was in the nature of a comment and was not part of his expert opinion.

(g) Any calculation of loss based on the difference between actual price and assumed market value must factor in the fact that the price paid by P-Value was $211,000 less than the purchase price in the Contract of Sale.

I reject this contention because Mr Dudakov's evidence factored in that P-Value received a deduction at settlement of $200,000 on account of rent and factored in the receipt of three months of rental by P-Value.[215]

(h) He conceded that he would certainly have given consideration to a signed offer for the Property on 4 September 2008 if he had known about it but he would have needed to know the terms of that offer to decide what weight it should have.

Dudakov's evidence in this regard was by way of comment and not in the nature of an opinion as to market value. His comment must necessarily be considered taking into account the valuation exercise he opined was appropriate in the circumstances. Further, the Hu offer was also likely to be based on representations that rent being received for the Property was $370,000 per annum, and if so, such an offer was not a reliable indication of value.

(i) Dudakov also conceded that a rent free period of eight months on a long-term lease of seven years really has no impact on the market value of the leased Property, unless the purchase occurs before the rent-free period has ended.

I reject this argument. In this instance the purchase did occur before the rent-free period under the undisclosed rent abatement agreement ended.

(j) He also accepted that a rent free period for tenants of commercial premises is a normal and usual commercial practice. For the comparable sales used in the Urbis Report any rent free period or incentive had expired.

I also reject this as a relevant matter because here the issue is the relevance of a rent free period which extended beyond the date of the completion of P-Value's purchase and was undisclosed. Further, there was no evidence adduced as to whether the comparables used did or did not have a rent free period. That it may be "normal and usual commercial practice for landlords and tenants" to have arrangements for rent free periods does not however mean that such arrangements would have no effect on the value of the relevant property.

(k) If the Court accepts and choses to rely on the Urbis Report for the valuation of the market value of the Property in September 2008 and January 2009 as part of the assessment of the loss of P-Value, it should not accept as an appropriate value the value disregarding Dudakov's treatment of what has been called the "super rent", because to do so ignores the history of the lease arrangements for the first floor of the Property, which has consistently been let to tenants as a nightclub for annual rental at or near $200,000.

I consider that P-Values treatment of "super rent" set out in its Particulars of Loss and Damage, utilising Dudakov's Report, is appropriate in all the circumstances.[216] In P-Value's "super rent" claim, part of Dudakov's valuation has been subtracted to take into account that such rent was, for the most part, not paid by the tenants of the first floor, and also in a minor respect the ground floor office. In my view the large rental loss associated with the level 1 255 tenant was caused by P-Value being misled and deceived and thereby entering into the Contract of Sale for the Property which in turn directly resulted in P-Value having a tenant (255) which refused to pay rent on the basis of the undisclosed rent abatement agreement it had with the Vendors. The damages detailed in the P-Value Particulars of Loss and Damage I have referenced were for those reasons, I consider, in a very real and directly connected way caused by the misrepresentations I have found were made by McNee, the Vendors and Beller. Accordingly, the adjustment of super rent set out in the Plaintiff's Particulars, to which I have referred, properly identifies the P-Value loss and damage.

292 It is in my view logical and appropriate to so treat the super-rent allowance in the Dudakov report and such an approach is not precluded, as the sixth and seventh defendants contend, because it takes into account "subsequent events" to effect an adjustment to the super-rent item calculated by Dudakov. Dudakov's super rent calculation is itself in the nature of a future projection of rental income, analysed on a "present value" basis.

293 Finally, there is in my view no proper evidentiary basis upon which to conclude that the history of the first floor rental of the Property will probably result in a similar rental being attained for Level 1 in the foreseeable future.

(a) the active defendants accept Dudakov's evidence is the most reliable as to value;

(b) the Dudakov valuation is supported by the contemporaneous report conducted by Cussen, both in the methodology and the similar market value arrived at;

(c) the purported offer by Hu, and the price paid for the Property by Vicland in 2007, are not necessarily indicative of the Property's market value for the reasons outlined above because of the possibility of different market conditions and because the Property was refurbished between late 2007 and September 2008 and Hu's offer was likely influenced by representations of rental income of $370,000 per annum for the Property in September 2008;

(d) in my view for the reasons outlined in the last two preceding paragraphs in response to the particular points raised by the third and the sixth and seventh defendants, Dudakov's opinions as to the valuation of the Property is not impugned or of less weight;

(e) at all events there are in my view no substantive criticisms of Dudakov's valuation conclusions nor do the defendant parties submit that I should accept any alternative expert opinion on the proper valuation of the Property;

(f) the active defendants do not take issue with the calculation of the P-Value interest claim of $523,239.86;

(g) the sixth and the seventh defendants do however take issue with the P-Value claim for statutory penalty interest, submitting that a "commercial rate" should apply from issue of these proceeding in May 2013 to the date of judgment because this is a commercial dispute, rather than the statutory interest which may otherwise be applicable. This interest claim does not however form part of P-Value's calculations of Loss and Damage and Dudakov's report;

(h) no issues appear to be raised by the active defendants in relation to the P-Value claim for additional stamp duty in the sum of $115,103.18;

295 Similarly, for the reasons dealing with causation referred to above in relation to the super-rent adjustment in the Dudakov report, I also consider that P-Value is entitled to recover the legal costs it has incurred in pursuing and dealing with the recalcitrant tenant acquired through the Contract of Sale for the Property, both in the County Court, the Supreme Court and at VCAT. The P-Value legal cost claim is in the sum of $54,852.70.

296 In my view these expenses are in the nature of loss and damage which has arisen and been incurred because of the misleading conduct of McNee and the first and second defendants, and Nucara and Beller. I consider that in essence all the action which P-Value took in the courts and the tribunal was necessary and reasonable and in practical and commercial terms all these actions were because of the rental issues generated by the rent abatement agreement or were caused by the underlying rent abatement issues.

297 I am satisfied that the Plaintiff has proved and is entitled to recover loss and damage in the sum of $2,786,421.55.

298 I am also satisfied, subject to my reasons below in relation to the apportionment claims in this proceeding, that P-Value is entitled to recover the damages it has proved pursuant to s 159 of the FTA and in respect to the first, second and third defendants, and the sixth and seventh defendants.

299 I consider for the reasons addressed in relation to the detail of P-Value's damages claim that the defendants I have held to be liable to P-Value, by their respective contraventions of the TPA and FTA, as found in relation to each of them, have caused the plaintiff's loss and damage in the sum I have determined is established.

The fourth and fifth defendants - TBM Sales and Thomas

300 Although the fourth defendant, through Thomas, made representations by way of communications concerning the tenants of the Property and the rental yield of the Property, prior to 5 September 2008, Nguyen's evidence was that as at the morning of 5 September 2008 she did not intend to purchase the Property.

301 Nguyen's evidence was also that she did not place any significant reliance on the communications she received concerning the Property prior to 5 September 2008.

302 Nguyen also stated that this was the reason she had not come to Chapel Street with her cheque book on the day of the auction. Furthermore Nguyen's general evidence was that she did not see Thomas as an advisor but just another agent.

303 Accordingly, in my view, the representations alleged by P-Value to have been made by Thomas and TBM Sales before 5 September 2008 were not causative in that they were not relied on by Nguyen on 5 September 2008 and did not cause Nguyen to sign the Contract of Sale to purchase 255 Chapel Street Prahran on 5 September 2008.

304 By the time the meeting at the TBM Sales office on 5 September 2008 got underway, Nguyen was focusing on the yield from the Property including issues concerning the tenants in particular the first floor tenant's rental reliability and ability to pay its rent.

305 The pleaded case against TBM Sales, through Thomas, and Thomas personally in relation to 5 September 2008 is that Thomas heard Nucara state to Nguyen that the auction had been cancelled because the Vendors had received an offer of $5,920,000 and heard Nucara's statements that 255 was a good tenant and good payer of rent, and that Thomas, by not correcting what Nucara said, thereby implied that what Nucara said was true.

306 It is also to be noted however that P-Value only alleges that TBM Sales contravened the provisions of the TPA and FTA by its conduct in June and July 2008 and not on the basis of any TBM Sales representation on 5 September 2008.[217]

307 P-Value alleges that Thomas, on behalf of TBM Sales, failed to disclose the existence of the rent abatement agreement or that 255 had not paid any rent under its lease or that under the rent abatement agreement 255 would not have to pay any rent for 8 or 12 months after the Property was sold.[218]

308 For the reasons I have outlined below I am not satisfied that Thomas and through Thomas, TBM Sales, were aware at 5 September 2008 of the existence of the rent abatement agreement or that 255 had not paid any rent under its lease or that under the rent abatement agreement 255 would not have to pay any rent for 12 months after the Property was sold.[219] Accordingly, I do not consider that Thomas or TBM Sales can be criticised or be liable for failing to disclose the matter referred to in the last preceding paragraph above and alleged by P-Value at [35] of its Statement of Claim.

309 In my view, Thomas and TBM Sales conduct was innocent in relation to the campaign to sell the Property and in relation to their conduct on 5 September 2008.

310 At the meeting at the TBM Sales office on 5 September 2008, as earlier outlined, the evidence is that Thomas's key involvement was minimal, namely:

(a) Thomas wrote a small part of special condition 30. Nguyen gave evidence that Thomas wrote special condition 30, Nucara's evidence was that Thomas wrote the first two lines before he took over. A consideration of special condition 30 at CB371 shows that the first two lines are clearly written in a different hand than the remainder of the special condition and I accept Nucara's evidence on this point;

(b) Nguyen spoke to Thomas about her anxiety concerning the first floor tenant with McNee and Nucara present at this point.[220]

(i) Nucara said that he had an offer from another potential purchaser for $5,920,000

(ii) McNee pointed to the nightclub and reassured Nguyen about the first floor tenant, 255;

(iii) Nucara reassured Nguyen about the first floor tenant and recommended to Nguyen that $200,000 should be enough by way of security deposit[221] and that 255 is a good tenant.

311 I am however not satisfied that Thomas or TBM Sales had any knowledge of the true state of affairs in relation to the above three matters at [310](c).

312 Further, I consider, as also earlier addressed, that Nguyen's evidence establishes that she did not place any significant reliance on what Thomas said and did at the meeting at the TBM Sales office on 5 September 2008. In this regard in substance Nguyen's evidence was that she did not regard Thomas as an advisor but simply as an estate agent who provided her with requested sales materials.[222] In these circumstances I think it unlikely Nguyen would have relied, in any significant way, on what Thomas said or did at the 5 September 2008 meeting.

313 By way of counterclaim, McNee alleges that an agreement (the "Heads of Agreement") was made on 25 November 2013 between P-Value and the Vendors to settle these proceedings upon the terms set out therein.[223]

Mediation between the Parties (P-Value, the first defendant and the third to seventh defendants of this proceeding) took place on Monday 25 November 2013. At the mediation it was agreed as follows:

1. Subject to clause 2 below, the Parties agree not to take any step in Supreme Court Proceeding No SCI-13-02593 (including any claims or cross-claims)("the Proceeding") until after 15 April 2014.

1. P-Value agrees to sell 255 Chapel Street, Prahran ("the Property") including to execute any relevant Contract of Sale of real estate, if an offer is procured for the purchase of the Property for not less than $5,800,000 ($5.8M) by 31 March 2014.
2. In the event that the Property sells for more than $5.8M P-Value will retain the surplus.
3. The First and Third Defendants agree to pay all marketing costs and agent commissions to sell the Property. For the avoidance of doubt, P-Value agrees to allow the First and Third Defendants to choose the estate agent to be used to sell the Property including to negotiate with such agent in relation to the marketing costs and commissions to be paid such agent.
4. P-Value agrees to cooperate with all reasonable requests of the First and Third Defendants in relation to the sale of the Property, including the lawful eviction of the current tenant of Level 1 of the Property ("the Premises"), taking steps to secure the relevant liquor licence for the Premises in the name of the Vendor and to ensure that such liquor licence forms part of the sale of the Property.
5. The First and Third Defendant have the option to purchase the Property prior to 31 March 2014 for $6,000,000.
6. The First and Third Defendant have the option to purchase the Property between 31 March 2014 and 14 April 2014 for $5.8M, and in such circumstances such sale will be deemed to be a sale in accordance with clause 3 and 12 herein.
7. P-Value is to provide the First and Third Defendants with a suitable Contract of Sale of real estate and Vendor's statement within 14 days of today to enable the Property to be sold as contemplated above.

1. Subject to the First and Third Defendants procuring the execution of a Contract of Sale of real estate for the Property by a buyer before 31 March 2014 for not less than $5.8M, the Parties release and forever discharge each other from all claims, costs, suits, liabilities and expenses whether in law or in equity arising out of or in relation to the subject matter of the Proceeding.
2. For the avoidance of doubt, if the Property is not sold as contemplated in Clause 3 above, there will be no prejudice to any of the Parties in the future conduct of the Proceeding including in relation to any prejudice that such delay may cause or may be argued against any other party such as in relation to an application for strike out, security for costs or further discovery.

315 McNee alleged that in breach of the Heads of Agreement, P-Value:

(a) did not provide the first and third defendants with a suitable Contract of Sale of real estate and Vendor's statement within 14 days of 25 November 2013;

(b) wrongly insisted on a sale by auction when such mode of sale was not provided for by the Heads of Agreement; and

(c) failed and refused to sign an estate agent's authority in the standard Real Estate Institute of Victoria (REIV) form submitted by Colliers, the estate agents chosen by the first and third defendant, in accordance with clause 5 of the Heads of Agreement.[224]

316 McNee asserts that by reason of the above failures and P-Value's refusal to sign the estate agent's authority in the standard REIV form submitted by Colliers:

(a) Colliers would not proceed with the task of advertising the Property for sale or securing a purchaser for the Property; and

(b) the Vendors have lost the opportunity to satisfy the condition in clause 12 of the Heads of Agreement.

317 McNee also alleges that at the material time Colliers had potential purchasers interested in the Property.[225]

318 McNee asserts that P-Value has by its conduct prevented the Vendors from procuring the execution of a Contract of Sale of real estate for the Property by a buyer before 31 March 2014, for not less than $5.8 million,[226] and thereby McNee argues that:

(a) the condition in clause 12 of the Heads of Agreement is taken to have been satisfied or alternatively satisfaction of that condition by the first and third defendants has been dispensed with by P-Value; and

(b) the first and third defendants have been released by P-Value in the terms of clause 12 of the Heads of Agreement.[227]

319 McNee's counterclaim also claims that further or alternatively, the Vendors have suffered loss and damage by reason of P-Value's breaches of the Heads of Agreement, being the loss of the chance to satisfy clause 12 of the Heads of Agreement and obtain a release by P-Value.[228]

320 In its Reply dated 1 September 2014 to the Third Defendant's Amended Defence and Counterclaim, P-Value:

(a) admits it did not provide a Contract of Sale within 14 days;

(b) alleges that it did provide a Contract of Sale on 20 December 2013;

(c) does not admit that it insisted on a sale by public auction;

(d) denies that it refused to sign an estate agent's authority;

(e) contends that the authority it was asked to sign;

(i) made P-Value liable to pay commission and marketing costs;

(f) alleges that the Vendors did not agree to pay the amount of commission or marketing costs sought by the agent.

Decision on McNee's Counterclaim and asserted release and discharge of all claims

Failure to provide the first and third defendants with a suitable Contract of Sale and Vendor's statement within 14 days of 25 November 2013

321 P-Value concedes that it failed to provide a suitable Contract of Sale and Vendor's statement within 14 days of 25 November 2013, instead providing those documents on 20 December 2013. The reason for the delay given by Mark Mileo (Mileo), solicitor for P-Value, was that the section 32 and Contract of Sale received from the conveyancing solicitor, who was instructed by Nguyen, were "riddled with mistakes and misstatements which would render them useless".[229] These problems were conveyed by Mileo to Dimitrios Diakou (Diakou), solicitor for McNee, on 11 December 2013, along with Mileo's intention to have the documents prepared again. On 19 December 2013, Mileo sent an email to Diakou and Mr James (James) attaching the Contract of Sale and section 32,[230] ten days after it was required to be provided by clause 9 of the Heads of Agreement.

322 In my view, 10 days' delay by P-Value in providing a Contract of Sale, considered in the circumstances, particularly in the context of the 4 months available to sell the Property, was not in the nature of a breach of any critical or essential terms of the proposed arrangement between the parties and has not been shown to be critical or to have caused nonfulfillment of the sale contemplated by the Heads of Agreement, despite the effect of the Christmas period in 2008.

323 Further, in my view, the reason given by P-Value for the delay in providing a suitable contract of sale is reasonable, namely that there was a need to address inadequacies in the proposed Contract of Sale and Section 32 documentation.

324 Further, and independently, NcNee and the Vendors have not established that any consequence followed from any delay by P-Value in providing a suitable Contract of Sale to the Vendors. Such delay as occurred has not been shown to have prevented Colliers from proceeding or preventing the Heads of Agreement from being implemented.

Insistence upon sale by auction when such mode of sale was not provided for by Heads of Agreement

325 By email sent on 27 November 2013 to Diakou, Mileo stated that his client's instructions were that the sale should proceed by way of auction.[231] After receiving the agent's proposed sale authority, Mileo sent Diakou an email on 18 December 2013 requesting that changes be made to the authority, one of which was that "an auction authority rather than sale authority should be prepared with a reserve of $5.8 million".[232] Diakou replied by email on the same day, rejecting that request on the grounds that there was no requirement in the Heads of Agreement to procure a purchaser for the Property by means of an auction or to run an auction campaign.[233]

326 Further discussions between Mileo and Diakou, and Mileo and Daniel Wolman (Wolman), a real estate agent employed by Colliers, took place on 21 January 2014,[234] which show Mileo was still requesting sale by auction at this stage. However, it appears from the ongoing communication between the parties after 21 January 2014 that Mileo was no longer insisting upon sale by auction. Rather, the primary unresolved issue upon which the parties were focused was the form the estate agent's sales authority would take.

327 I do not consider that P-Value was in breach of the Heads of Agreement by taking the attitude it did to the mode of the sale in respect of the Heads of Agreement, both because of P-Value's above conduct in relation to this issue and because the Heads of Agreement are silent as to mode of sale. The Heads of Agreement in my view leave open and arguable whether it was for P-Value to sell pursuant to the terms of Clause 3 of the Heads of Agreement or the first and the third defendants to "sell" and in doing so determine the mode of sale. At all events, like the late resolved issue of a suitable form of Contract of Sale, P-Value's conduct in relation to determining the mode of sale of the Property was not critical and did not bring about the nonfulfillment of the main object of the Heads of Agreement, namely the re-sale of the Property.

Failure to sign the estate agent's authority in the standard REIV form

328 Mileo received the estate agent's authority in the standard REIV form by email on 16 December 2013 from Diakou.[235] Mileo responded by email to Diakou on 18 December 2013. The email relevantly stated:

1. The exclusive authority should come to an end on 31 March 2014.
2. There should be no continuing authority or at best a continuing authority of 1 day.
3. An auction authority rather than sale authority should be prepared with a reserve of $5.8 million.
4. The expenses and commission are to be paid by the first and third defendants not by the Vendor/plaintiff.
5. In the general conditions the definition of ""Sold" should be amended to read "sold" is the result of an enforceable contract being signed by the purchaser and the Vendor with a 10% deposit being paid as clear funds to the agent or the Vendor's solicitor and "sale" and "sell" by the purchaser have corresponding meaning."

329 In Diakou's reply by email of the same day he informed Mileo that items 1, 2 and 4 were agreed to, while items 3 and 5 were rejected.[236] Item 5 was rejected because "this is not my client's responsibility".

330 On 21 January 2014 Mileo sent an email to Wolman (cc: Diakou and James) with the exclusive sale authority with "amendments as discussed".[237] The amendments made to the exclusive sale authority included:

(a) replacing references to "Vendor" with "third parties";

(b) changing the exclusive authority period from "120 days" to "31 March 2014" and the continuing authority period from "60 days" to "Nil";

(c) amending the definition of "sold" at 1.13 of the General Conditions;

(d) adding 1.17 to the General Conditions, which stated ""Third parties" means William Derek McNee and Vicland Property Group No.1 Pty Ltd (ACN 120 079 227)";

(e) the crossing out of various other provisions, including:

(i) an agreement that the Vendor/third party will pay the agent's commission if the Property is sold during the continuing authority period;

(ii) an item that dealt with what would happen if there was not time stated as to the exclusive authority period;

(iii) an item that required the Vendor to take reasonable steps to pursue the purchaser for any unpaid deposit (including by legal proceedings) and to pay the professional fees of the agent from the deposit paid or recovered;

(iv) an item that gave the agent the right to deduct their fees and any taxes from the deposit moneys held by the agent;

(v) an item that appoints the agent as the Vendor's attorney under power so that the agent could direct the Vendor's solicitor or conveyancer to pay the agent their fees out of any deposit moneys held by them; and

(vi) an item that allowed the agent to sign a Contract of Sale which contains terms of sale agreed to by the Vendor upon the written request of the Vendor.[238]

331 Wolman replied by email to Mileo on 21 January 2014, stating that he accepted the changes of "Vendor" to "third party" and the change to condition 1.13, however he was "uncomfortable signing with all other conditions removed" and "unable to accept the amended authority which you have provided as too many clauses have to be deleted and I must follow company policy at Colliers and use the standard REIV form".[239]

332 Mileo then emailed Diakou and James on 22 January 2014 informing them that following discussions with Wolman after his email of 21 January 2014 that he had informed Mileo "Colliers were not prepared to have the authority amended in any way" and "all of the concessions that he was prepared to make in respect of the authority as set out in his emails were off the table".[240]

333 Subsequent communications between the relevant parties indicate that at this point they had reached an impasse.

334 In the circumstances outlined, I do not consider that P-Value either breached the Heads of Agreement by failing or refusing to sign an estate agent's authority in the standard REIV form submitted by Colliers as alleged, or that P-Value caused the Vendors to lose the opportunity to satisfy Clause 12 of the Heads of Agreement.

335 By Clause 5 of the Heads of Agreement the first defendant and McNee agreed to pay all marketing costs and agent's commission to sell the Property. By the same clause the first defendant and McNee were given control of the selection of a selling agent, decisions about marketing costs and the commission to be paid to the selling agent.

336 Critically, P-Value was ultimately asked to sign an agent's sales authority which rendered P-Value liable to pay selling agents commission, and also the marketing costs, and furthermore to do so in circumstances where there was no approval of the proposed Agent's Authority by the Vendors. P-Value was therefore justified in taking the stance it did concerning the proposed agents sale authority which would on execution render P-Value immediately liable to the agent for commission and advertising costs, notwithstanding the terms of Clause 5 of the Heads of Agreement.

337 Further, there are in my view additional reasons why the third defendant's counterclaim should not succeed including:

(a) there is no requirement under the Estate Agents Act 1980 for an agent to hold an authority signed by the vendor. The relevant obligation is to have an authority signed by the person from whom the agent will:

... obtain, or seek to obtain, any payment ... (s.47A(1));

(b) there is no explanation as to why the above amendments proposed by Mileo were not accepted. Wolman stated in an email that he was "happy with" the proposed clause 1.13.[241] In evidence Wolman said there was nothing wrong with clause 1.13.[242] Therefore, it is not open to conclude that P-Value was being obstructive or uncooperative;

(c) there is no evidence that the authority was acceptable to the first defendant. Indeed the first defendant expressed dissatisfaction with the marketing costs;[243]

(d) the draft Contract of Sale was not sent to the agent. Further, McNee expressed a desire and intent that the re-sale process end;[244]

(e) it is not established that there were any buyers for the Property. The person mentioned as interested, Richard Wong appears to have been misinformed about the rent.[245] Wolman in his evidence acknowledged the differences between the figures in the email of 18 December 2013 and the leases would be significant.[246]

338 Neither the agent nor the third defendant did anything in 2014 to advance the Heads of Agreement. I also note that McNee had the option to purchase the property for $6,000,000 prior to 31 March 2014, and for $5,800,000 between 31 March 2014 and 14 April 2014, per clauses 7 and 8 of the Heads of Agreement.

Proportional liability - Wrongs Act 1958 (Vic) and Trade Practices Act 1974

First defendant - Vicland Property Group No. 1 Pty Ltd

339 The first defendant did not plead for apportionment of liability against other defendants, nor does it plead a contribution or reduction of damages case against P-Value.[247]

340 The first defendant appeared by counsel on the first day of the trial and announced that the matter was likely to proceed undefended by it and further that the first defendant did not propose to play any further party in the proceeding. Both of these foreshadowed matters transpired, save that on 13 April 2016 Mr Clifton appeared and sought to apply to withdraw the agreed consent orders of 6 April 2016. I refer to the submissions and events of 13 April 2016, and Mr Clifton and the first defendant's position in more detail below.

Second defendant - Mark Marki Markii Pty Ltd

341 No appearance or defence was filed by the second defendant. However service of the second defendant was stated by the plaintiff to have been effected on 30 October 2012.[248] Materials tendered at trial established that the second defendant was deregistered before the commencement of trial.[249]

342 The second defendant therefore did not itself raise any claims of apportionment or for contribution.

343 McNee admits that he was the sole Director of the second defendant at all material times. It also appear that McNee was for a time the sole shareholder of the second defendant.

344 As already mentioned, McNee was the sole director of the second defendant in 2008. However, although McNee's legal representatives played a major part in these proceedings, including at trial, and although P-Value's pleadings alleged many matters against McNee including fraud, McNee did not give evidence at trial, nor did he seek to explain his absence from the witness box.

345 McNee pleads that if he is found to be liable in relation to P-Value's claims, those claims are apportionable under Part IVAA of the Wrongs Act and McNee claims that the first and the second defendants and also the fourth, fifth, sixth and seventh defendants are joint tortfeasors who have caused or contributed to the same loss and damage. McNee submits that the fourth and the fifth defendants should bear 50 per cent of the liability to P-Value with the rest of the defendants sharing the remaining 50 per cent.

346 McNee seeks to have his liability limited to the proportion of loss and damage suffered by P-Value which is just having regard to McNee's responsibility for any such loss and damage pursuant to s 24AI(1) of the Wrongs Act.

347 In response to McNee's Amended Defence and Counterclaim dated 28 August 2014, P-Value, by its Reply pleading dated 1 September 2014, alleges that the representations by McNee, alleged in paragraphs [22] and [25] of P-Value's Statement of Claim were made by McNee with no honest belief as to their truth, in that McNee knew of the existence of the rent abatement agreement between the Vendors and 255 and McNee knew that 255 had not paid any rent and that 255 did not intend to pay rent for a period after completion of the sale of the Property.

348 P-Value's Reply also relies upon s 13 of the Sale of Land Act under which P-Value alleges that McNee is deemed to have made the representations in paragraph [22] and [25] of P-Value's Statement of Claim with knowledge of their falsity.

349 It is convenient here to set out s 13 of the Sale of Land Act which provides as follows:

13 Burden of proof as to knowledge of falsity of representation

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

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

(b) that otherwise he had acted innocently.

(2) No term or provision of any agreement (whether entered into before or after the commencement of this Act) for the sale and purchase of any land therein shall be so construed as in any way to prevent the purchaser from claiming or being awarded damages or any other relief in respect of any fraudulent misrepresentation in connexion with the purchase of such land.

350 Further P-Value's Reply alleges that McNee failed to disclose:

(a) the existence of the rent abatement agreement;

(b) that 255 had not paid any rent at all under the lease of the Property;

(c) under the terms of the rent abatement agreement 255 would not pay rent for eight or twelve months after the Property was sold;

(d) and alleges that McNee's failure to disclose the above matters was intentional so as to ensure that Nguyen was not aware of those matters.

351 P-Value asserts that McNee's intention not to disclose the above matters is to be inferred from the fact that McNee did not disclose them even though the payment of rent by 255 was discussed at the meeting of 5 September 2008. P-Value also asserts that McNee's intention not to disclose the matters referred to is to be inferred from the circumstances and so as not to dissuade Nguyen from purchasing the Property.

352 P-Value by its Reply pleads that by reason of the above matters:

(a) McNee's conduct constituted a fraud on Nguyen; and

(b) pursuant to s 24AM of the Wrongs Act, McNee is jointly and severally liable for the damages awarded against in the other defendant; and

(c) McNee may not rely upon P-Value's claims being 'apportionable claims' under Part IVAA of the Wrongs Act, nor his assertion that if he (McNee) is liable to P-Value then the first and second and fourth, fifth, sixth and seventh defendants also caused P-Value's loss and damage and therefore McNee's liability is limited to an amount reflecting an apportionment of loss and damage having regard to the extent of McNee's responsibility for such loss and damage pursuant to s 24AI(1) of the Wrongs Act.

353 McNee makes no claim against P-Value that it contributed to its own loss and damage.

Fourth defendant (TBM Sales / Rodney Morley Persichetti Pty Ltd) and fifth defendant (Richard Thomas)

354 The fourth and fifth defendants' pleadings asserted an entitlement to an apportionment of liability pursuant to the Wrongs Act and s 87CB of the TPA. Their pleaded case included an apportionment case against the first and second, third, sixth and seventh defendants. The fourth and the fifth defendants also claimed contribution and reduction of damages claims in relation to P-Value's claims.

355 On the first day of trial, counsel for the fourth and fifth defendants and counsel for P-Value announced that a settlement had been reached between P-Value and the fourth and the fifth defendants. Thereafter the fourth and the fifth defendants took no active part in proceedings.

356 Further, although at trial mention was made on a number of occasions that Beller and Nucara were endeavouring to locate and subpoena Thomas to attend the trial to give evidence, Thomas was apparently not able to be located and served with a subpoena and ultimately did not attend or give any evidence at trial.[250]

357 The terms of settlement between P-Value and the fourth named defendant and the fifth named defendant included those defendants paying $20,000 to P-Value.[251]

358 On 8 September 2014 I ordered that P-Value's claim against the fourth and the fifth defendants be struck out, with no order as to costs.

359 On 9 September 2014 I ordered that the fourth defendant's Notice of Contribution against the first and second defendants dated 22 August 2014 be dismissed.

Sixth defendant (Beller) and seventh defendant (Nucara)

360 The sixth and the seventh defendants allege substantially the same proportionate liability case against the first and second, third, fourth and fifth defendants in the proceedings under s 87CD of the TPA and s 24AE and s 24AF of the Wrongs Act. The sixth and seventh defendants plead an entitlement to have any liability to P-Value limited to the amount reflecting the proportion of loss and damage which the court considers just having regard to the extent of responsibility by the sixth and the seventh defendants. However, the sixth defendant does not seek apportionment against the seventh defendant and the seventh defendant does not seek apportionment against the sixth defendant.

361 The sixth and seventh defendants also raise claims of contributory negligence and reduction of damages against P-Value.

Proportionate liability - third defendant's submissions - McNee

362 McNee adopts the submissions in paragraphs 166-173 of the written submissions of the sixth and the seventh defendants dated 29 September 2014, summarised below.

363 McNee's submission in relation to apportionment against Thomas and the fourth defendant also adopt paragraph 203, 205(a)-(c) and 216-213 [sic] of the Nucara and Beller submissions.

364 McNee also submits that because P-Value's claim is an apportionable claim the court should assess any culpability to be attributed to McNee against the culpability of all other defendants who are or were parties. Accordingly, McNee asserts that if he is liable because of his non-disclosure of the rent abatement agreement, and/or other claims made by P-Value, the Court should take into account the effect of any representations it finds were made by Nucara and Beller on Nguyen's decision to enter into the Contract of Sale for the Property.

365 McNee submits that Nucara and Beller should bear some proportion of the responsibility for the losses sustained by P-Value.

366 McNee submits that an apportionment of culpability to Nucara and Beller is particularly appropriate because McNee asserts that P-Value's evidence only establishes, at its highest, that McNee may have told Nguyen at the 5 September meeting in 2008 that she did not have to worry about the upstairs tenant because they were very experienced in operating the nightclub.

367 McNee submits that in the above circumstances a proportion of not less than 50 percent of P-Value's loss should be attributed to Thomas and 'TBM Sales' with the rest of the defendants sharing the remaining 50 percent of liability equally.

368 McNee's submission in relation to the application of s 24AM of the Wrongs Act adopts paragraphs 176, 179, 180 and 181 of the sixth and the seventh defendants' submissions, which are also addressed below.

369 McNee submits that there is no evidentiary basis for a finding of fraud or dishonesty against himself personally in relation to anything he is found to have said or done, or not said or done, arising out of the sale of the Property. On this basis McNee submits that there is no foundation for P-Value's submission precluding apportionment on grounds of McNee relevantly lacking an honest belief in certain of the representations to Nguyen on 8 September 2008, and McNee intentionally failing to disclose certain matters and that McNee's conduct constituted fraud in specified respects.

Sixth and seventh defendants' submission in relation to proportionate liability - Beller and Nucara

370 Beller submits that the claims against it are apportionable claims within the meaning of s 87CB of the TPA and s 24AF(1)(b) of the Wrongs Act.

371 Beller seeks apportionment against two groups of persons, namely:[252]

(a) The first, second and third defendants (Vicland Group and McNee) referred to by Beller and Nucara as the Vendors; and

(b) The sixth and the seventh defendants argue that the following provision of the Wrongs Act is relevant as a result of the above orders made on 8 and 9 September 2014 in relation to the fourth and fifth defendants, Thomas and TBM Sales.

372 Wrongs Act s 24AI(3) provides:

In apportioning responsibility between defendants in the proceedings, the court must not have regard to the comparative responsibility of any person who is not a party to the proceeding unless the person is not a party to the proceeding because the person is dead or, if the person is a corporation, the corporation has been wound up.

373 The sixth and the seventh defendants submit that:

(i) The requirement to be a party does not apply to the proportionate liability regime under the TPA. The claim against Beller was put on the basis of a breach of s.9 of the FTA and s.52 of the TPA.

(ii) No claim for contribution is made between defendants and, nor can a claim for contribution be made against the fourth and fifth defendants now by reason of s.24AJ of the Wrongs Act.

(iii) In its written closing submission dated 29 September 2014 the sixth and seventh defendants submitted that judgment has been entered against the second defendant by default and judgment has been entered in respect to the fourth and fifth defendants striking out P-Value's claim.

(iv) In oral closing submissions the sixth and seventh defendants corrected the above submission by noting that in fact no judgment has been entered against the second defendant.

(v) In Beller's submission each of the Vendors and Thomas became parties when named by P-Value in the writ and the sixth and the seventh defendants submit that because no order has been made under Order 9.06 of the rules removing any of those persons as parties, the first and second defendants and Thomas remain parties to this proceedings. Their submission is that those defendants remain parties unless and until "removed", despite any judgment that has been entered against or in favour of them.

(vi) The sixth and the seventh defendants submit that the entry of judgments cannot deprive Beller of its already pleaded and opened proportionate liability defences.

(vii) The sixth defendants submits that in the event that the court finds that either the second or fourth and fifth defendants are no longer parties then, pursuant to the leave reserved, Beller seeks an order that they be joined as defendants pursuant to s 24AL of the Wrongs Act.[253]

374 Although I consider that all defendants remain parties to these proceedings at this time, and further I consider that the settlement between the plaintiff and the fourth and fifth defendants which has occurred in this proceeding does not disable or effect the apportionment claims which have been pleaded by the active defendants, I also note that the second defendant has since 30 October 2012 been deregistered by ASIC.[254]

375 Further, I observe that my findings on liability in these proceedings which exculpate Thomas and TBM Sales, preclude any apportionment against the fourth and fifth defendants. Further my findings of dishonesty in relation to the third defendant, and the sixth and seventh defendants, effectively deprives McNee, Beller and Nucara of the entitlement to seek contribution against other defendants.

376 Finally, I also note in relation to the sixth and the seventh defendants' submission in subparagraph [373](ii) above that in these proceeding there was only one contribution claim filed and that was by the fourth defendant on 22 August 2014, by orders made on 9 September 2014 that contribution claim was dismissed.

377 Beller and Nucara acknowledge in their submissions that P-Value's reply pleading alleges fraud on the part of Beller. However, the Beller submissions seem somewhat confused on this point because in other parts of their submission those parties also appear to assert that the P-Value case does not advance a claim in fraud against Beller.[255]

378 In Beller's submission no finding of fraud can be made against it in relation to the rent abatement agreement because that case was not pursued and Beller submits that, in any event, there is no claim by P-Value against Beller alleging fraud.[256] In this regard Beller also submits that it is insufficient to justify a finding of fraud on the basis that there might be some incidental finding that Beller had made a statement, or statements, without having a reasonable basis for doing so.

379 Beller submits that for there to be a proper basis under s 13 of the Sale of Land Act for it to be disentitled to the benefit of proportionate liability there would have to be a direct and specific finding of fraud involving dishonesty or moral turpitude against Beller.[257]

380 Beller also submits that for the Wrongs Act provisions excluding apportionment to operate against it P-Value would be required to establish a causative element in relation to Beller's conduct, in addition to a direct finding of fraud against Beller in connection with s 24AM of the Wrongs Act, or a finding of relevant intention to cause economic loss that is the subject of the claim of fraudulent misrepresentation causing such economic loss pursuant to s 87CC of the TPA.[258]

381 Beller submits that there was no allegation by P-Value that it intended to cause economic loss in connection with any aspect of P-Value's claims.[259] Beller submits that there was no allegation by P-Value of any fraud on the part of Beller which caused P-Value any relevant economic loss.

382 Further, Nucara submits that P-Value did not put directly to him that he had acted dishonestly. Nucara also submits that there was no evidence that established any dishonesty on his part.[260]

383 Nucara, and it appears Beller, submit that P-Value makes only one relevantly live allegation against them, "in this context", namely that there had been a previous offer of $5.92M. The submission is that this allegation by P-Value cannot be shown to have caused P-Value's loss.[261]

384 Nucara and Beller also submit that s 13 of the Sale of Land Act is directed to only the establishment of an onus of proof.

385 Nucara and Beller submit that representations by Nucara were not relied upon by P-Value and further did not induce Nguyen or P-Value to enter the contract, rather at most Nucara's representations were only relevant to the size of the security deposit or potentially the sale price, and therefore there is no basis upon which P-Value can rely upon s 13 of the Sale of Land Act.

386 Nucara and Beller submit that if Nucara is found to have made representations that 255 was a good tenant, Nucara's statements in that regard were made with no reason for him to suspect that the representation was false because:

(i) he was not aware of the rent abatement agreement; and

(ii) he had been told by McNee that the operators of the nightclub on level one of the Property were experienced operators of the nightclub, which is consistent with Nucara's representation.[262]

387 Nucara and Beller also submit that if the deeming provision in s 13 of the Sale of Land Act was sufficient to establish fraud, rather than a requirement for dishonesty, then the effect of the apportionment defence would be unavailable to almost all estate agents and Vendors of Property, which cannot be the intent of Parliament.[263]

388 Ultimately, Beller makes the overarching submission that it is entitled to the proportionate liability defence.

Submissions of Beller and Nucara in relation to apportionment with the first, second and third defendants (the Vendors)

389 Beller and Nucara submit that the overwhelming reason for any loss suffered by P-Value arose from acts of the Vendors in making and concealing the rent abatement agreement and further that this agreement was with tenants who were in some way connected with the Vendors or their associates.[264]

390 Beller and Nucara refer to Nguyen's evidence that if she had known that 255 had not paid any rent before 5 September 2008 she would not have bought the Property and Beller and Nucara also refer to her evidence that if she had known that no rent had been paid between September 2008 and January 2009 she would not have gone ahead with the purchase, and finally if she had known that there was some arrangement whereby 255 did not have to pay rent she would not have purchased the Property.

391 Nucara and Beller submit that there were occasions during the course of communications and discussions between the Vendors and Nguyen when the rent abatement agreement ought to have been disclosed and was not, including the July 2008 emails and at the meeting on 5 September 2008.

Beller and Nucara's submissions as to apportionment in relation to the fourth and fifth named defendants Thomas and TBM Sales

392 Beller and Nucara submit that the role of Thomas and TBM Sales caused P-Value loss and they point to the 'uncontradicted evidence before the court' that Thomas knew of the rent abatement agreement.

393 Beller's submissions also rely upon the following elements of P-Value's case against both Thomas and TBM Sales, namely that Thomas:

(i) told Nguyen (by email and orally) that the rent payable on the Property was $370,000 a year; [265]

(ii) impliedly represented to Nguyen that the tenant was paying rent and that TBM and Thomas were not aware of any circumstances that would affect 255's ability to pay rent;

(iii) engaged in misleading conduct by Thomas 'remaining silent' after hearing Nucara make a statement about the tenant which Thomas did not correct;

(iv) failed to tell Nguyen about the rent abatement agreement or its terms (conduct by 'silence');

(v) by an email of 9 July 2008 Thomas and TBM communicated to P-Value that 255 had been paying and was able to pay rent under the lease and that TBM was not aware of any circumstances concerning 255, which may affect its ability to pay rent under the lease;[266]

(vi) at the meeting on 5 September 2008 Thomas heard Nucara make statements to Nguyen that the auction had been cancelled because the Vendors had received an offer of $5,920,000 and that 255 was a good tenant and a good payer of rent. The claim is that by not correcting Nucara, Thomas impliedly represented that what Nucara said was true;

(vii) Nguyen's evidence was that Thomas was with her when these statements of 5 September 2008 were made;[267]

(viii) Thomas (on behalf of TBM) "failed to disclose" to Nguyen that the tenant had not paid rent under the lease, that it would not be required to pay rent for 8 or 12 months after the Property was sold, and of the existence of the rent abatement agreement.

394 Beller also relies upon the many dealings between Nguyen and Thomas and TBM in which Beller asserts Thomas should have and could have informed Nguyen of the existence of the rent abatement agreement. These dealings relied upon by Beller include:[268]

(a) When Nguyen initially became interested in the Property she found it on the internet and it was listed by TBM Sales.[269] That is where she discovered the name of Thomas.[270] She rang him and then inspected the Property with him.[271] During the inspection she was aware there was a nightclub upstairs but it was not at that point operating.[272] She asked Thomas what the rent was and was told it was $370,000 for three tenants[273] and was given a breakdown of that rent.[274] Nguyen then requested and received information from Thomas in a series of emails.[275]

(b) Nguyen accepted that she received the contract from Thomas and read through it.[276] She was worried about the tenants of the nightclub upstairs because the rent was, in her words, "very huge".[277] She also noticed that there were no personal guarantees on the 255 lease.[278] She then rang Thomas and asked for $400,000 as a bond for the rental upstairs.[279] Nguyen's evidence was that it was Thomas who told her that there were no personal guarantees in the leases.[280]

(c) Thomas said he would speak to the Vendor and get back to her[281] which then resulted in the email sent 9 July 2008.[282] He drafted a proposed special condition to give effect to the bond.[283]

(d) Nucara and Beller submit that there is no doubt that the July emails, authored by Thomas, with his logo and branding, were his own and relevant to Nguyen's decision to purchase the Property.[284]

(e) Thomas then introduced Nguyen to a financier by the name of Nathan Stewart.[285]

(f) Thomas then assisted Nguyen in respect of a rental review for the Commonwealth Bank building.[286]

(g) Nguyen's evidence was that the day before the auction Thomas rang her and asked her if she wanted to make any offer for the Property to which she responded she wanted to wait for the auction day and Thomas suggested that she might put $5 million or offer $5 million.[287]

(h) Nguyen's evidence was that she was with Thomas for the duration of the meeting[288] and that Thomas was the one who was always speaking with her at that time.[289]

(i) After the contract was signed Thomas followed Nguyen home to obtain a cheque for the deposit.[290]

(j) Thomas continued to be in touch with Nguyen in respect of the purchase for some time including emails on 9 December 2008.[291]

(k) Nguyen's evidence was that the agent referred to at CB632 was Thomas.[292]

(l) It is clear Thomas continued dealing with the matter for some time after the contract including contacts with Storer.[293] Storer confirmed the dealings with Thomas.[294]

(m) Storer's evidence was that Nguyen had told him that Thomas had explained the special condition of the contract to him[295] and that he had correspondence with Thomas.[296]

395 Beller and Nucara submit that Thomas in effect performed the role of a trusted advisor to Nguyen throughout the relevant transaction.

396 I reject the above submissions and do so on the basis that there is an absence of any evidence from Nguyen which would support such a finding and because Nguyen gave evidence that she did not place trust in Thomas but simply regarded him as a salesman, who responded to her requests by providing information in relation to the sale of the Property. This is made clear enough by the following evidence given by Nguyen:[297]

I understand. In terms of Thomas, Thomas had met you as a real estate agent. He was showing you the Property, he introduced you to a finance broker, he introduced you to a solicitor, Mr Free; yes?---Yes.

He was the man who in effect was assisting you with the purchase of this Property, wasn't he?---Well, yes, first because I rang him and then he assist me with whatever I request.

Did you put some trust in this man?---I don't think so. Just normal. Just normal. He's a salesman. He will give me all the information that I need to.

When you were speaking to him in the room at the time just before you signed the contract, was he a person who you regarded as being somebody who was being helpful to you?---I did every assessment the same. They just try to help you and to be able to sell the Property. It's normal.

You just thought he was trying to sell the Property. He was being nice to you because he's going to sell the Property?---Well, I think everybody's the same.

397 I also reject Beller and Nucaras' submission that there was 'uncontradicted evidence before the court' that Thomas and TBM Sales knew of the rent abatement agreement between the Vendors and the tenant 255. There was in my view no evidence which established this fact in relation to TBM Sales and Thomas. The only element of evidence which exists in this regard against TBM Sales and Thomas was the pleading filed in the County Court.[298] This is a document pleading matters which were not established as fact in relation to TBM Sales and Thomas and which did not approach establishing their knowledge of the rent abatement agreement.

398 No dishonesty or wilful recklessness was in my view expressly, or if intended, adequately pleaded by P-Value against TBM Sales or Thomas. Bearing in mind the seriousness of the allegation made by the sixth and the seventh defendants against TBM Sales and Thomas, namely that they knew of the rent abatement agreement but failed to disclose that matter to Nguyen on 5 September 2008 or before, and given the lack of evidence, to which I have referred, bearing on TBM Sales and Thomas in this regard, I am certainly not satisfied to a high level of satisfaction that TBM Sales and Thomas knew of the rent abatement agreement on or before 5 September 2008; indeed I am not satisfied simply on the balance of probabilities that they possessed such knowledge at the material times.

399 Nucara and Beller also submit on the basis of their more detailed submissions outlined above, in connection with apportionment and associated matters, that P-Value contributed considerably to its own loss and that the conduct of the Vendor group and Thomas and TBM also significantly contributed to P-Value's losses. These issues, and the Beller and Nucara submissions referred to above, are addressed below.

Proportionate liability - Plaintiff's submissions

P-Value urges a finding of fraud against McNee, Nucara and Beller

400 P-Value contends that McNee, Nucara and Beller should not be entitled to have their liability apportioned. P-Value relies upon s 24AM of the Wrongs Act and the two limbs of s 87CC(a) and (b) of the TPA.[299] Those and other relevant provisions of the Wrongs Act and the TPA are set out in Annexure "A" hereto.

401 I observe in relation to this part of the P-Value pleaded case that it is only McNee, Beller and Nucara who are the subject of allegations of dishonesty and fraud[300] and it is only McNee, Beller and Nucara who are expressly said to be excluded from the apportionment scheme under the Wrongs Act. Furthermore, I note again that the first and second defendant did not seek apportionment against any other party.

402 P-Value submits that the Wrongs Act provisions do not require a causal connection between the conduct of the wrongdoer and the loss caused by the party harmed but applies where 'a finding of fraud' is made. P-Value accepts that under the above sections of the TPA the party found to have perpetrated prohibited conduct must also be shown to have thereby caused the economic loss and damage suffered by the party harmed.[301]

403 P-Value also in its submissions emphasises its reliance upon the allegations which it makes in its reply pleadings including its reliance upon s 13 of the Sale of Land Act.

404 P-Value also submits that the defendants have made no attempt to show that they believed that the representations which P-Value alleges they made, were true. P-Value notes that s 13 of the Sale of Land Act deems representations made in relation to the sale of land which induce a person or persons to enter into a contract to purchase that land are deemed to be made with knowledge of falsity. In P-Value's submission, the defendants have neither sought to establish that they believed the relevant representations were true nor have they sought to demonstrate a basis for making the representations alleged against them. Accordingly, P-Value contends that a finding should be made under s 13 of the Sale of Land Act that the representations made by McNee, Nucara and Beller were made with each of those parties knowing the falsity of those representations and that those representations amounted to fraudulent representations.

405 In relation to the above allegations I note that P-Value has not however pleaded expressly that any party, other than McNee, Beller and Nucara, intentionally misled or deceived or was fraudulent. Further the plaintiff only pleads reliance on s 13 of the Sale of Land Act against McNee, Beller and Nucara.

406 P-Value also submits that in the context in which McNee, Nucara and Beller made the representations alleged it is not necessary for such representations to involve subjective dishonesty or moral turpitude for those representations to be in the nature of fraudulent representations.

407 In Krakowski & Anor v Eurolynx Properties Ltd & Anor[302] the High Court said the following in relation to fraud on the part of the vendor, Eurolynx:

If Eurolynx be treated as knowing that the purchasers were buying on the faith of the rent which the Property itself would yield, it must have known that the purchasers would believe that the rent reserved according to the copy of the instrument of lease produced represented the commercial rent that the premises the subject of the proposed purchase would yield and that there was no other agreement conferring on the lessee a financial benefit which was reflected in the rent reserved. When the separate agreement secured Swaeder's agreement to execute a lease reserving a rent of $156,000 per annum from 11 September 1989, Eurolynx' production of a copy of the instrument of lease without reference to the separate agreement cannot be explained as a failure to advert to the possibility that the rent was what the Property would yield without supplement from financial assistance contractually conferred on the lessee... Although Lord Blackburn's dictum about a representor's difficulty in establishing mere honest blundering must be taken to refer only to an evidential burden, not an ultimate burden, of proof, the purchasers' burden of proving fraud in the present circumstances is more easily discharged when Eurolynx called neither those who represented it in the early negotiations with the purchasers nor their solicitor.[303]

...

This was not a case in which a defendant had simply not disclosed a fact; it was a case in which negotiations for sale of unit 12 had taken place on the footing that a lessee for the Property on offer had been found who was willing to pay a rent of $156,000 for a lease of that Property. By its s 32 statement and by the proffered Contract of Sale, Eurolynx had disclosed that the lease affected unit 12 and the question was whether that statement carried the representation that the terms of the instrument of lease contained the contractual arrangement between lessor and lessee or, putting the representation in another but identical way, whether the terms of the instrument of lease were unaffected by any other agreement between the lessor and lessee. In Tapp v Lee, Chambre J said:

Fraud may consist as well in the suppression of what is true, as in the representation of what is false. If a man, professing to answer a question, select those facts only which are likely to give a credit to the person of whom he speaks, and keep back the rest, he is a more artful knave than he who tells a direct falsehood.[304]

408 P-Value's written closing submission at [137] in relation to fraud is limited to submitting that McNee alone should be found to have acted fraudulently both on the basis of the operation of s 13 of the SLA and at law.[305] The plaintiff also makes similarly grave submissions against Nucara and Beller.[306]

409 I also note in this regard that P-Value has only directed a limited case in relation to alleged wrongful representations against the first and the second defendant.[307]

410 P-Value confines its expressly pleaded claims of:

(i) representations made with no honest belief;

(iv) exclusion from the apportionment regime under the Wrongs Act;

(v) the application of s 13 of the Sale of Land Act,

to the third defendant McNee and the sixth and seventh defendants.[308]

411 In relation to Nucara, P-Value submits that there was in fact no offer ever made of $5,920,000 and points out that Hu's offer was in the sum of $5,568,800.[309]

412 I again note that the pleaded case against Nucara, and the other parties associated with this allegation, is that it was represented that the auction on 5 September 2008 had been cancelled because the Vendors had received an offer of $5,920,000.

413 P-Value submits that the representations made by Nucara relating to 255's ability to pay rent also amounted to fraudulent representations because Nucara was recklessly indifferent as to whether or not 255 was in fact a good tenant paying rent.[310]

414 I have elsewhere found that Nucara made prohibited representations and I have also elsewhere found in relation to the offer representation of $5,920,000 that Nucara, and through Nucara, Beller, did so dishonestly.

Plaintiff's submissions as to the relative responsibility/apportionment of the defendants

415 P-Value submits that, if contrary to its primary submission, the court were to consider apportionment between the defendants, the task should be to assess the extent to which each 'group' of defendants were responsible for the consequences of their conduct.

416 P-Value submits that the defendants accept that there are three groups of defendants namely the Vendors (the Vicland Group Companies and McNee), TBM Sales and Thomas, and Beller and Nucara. I note that in the submissions presented by the parties not only did P-Value characterise the defendants as falling into three groups, but so also did the sixth and seventh defendants at [165] of their closing submissions in relation to the apportionment sought by Beller.[311] The third defendant however sought to have each of the defendants addressed individually.[312]

417 P-Value's primary apportionment submission is that if there is any apportionment it should be shared equally between the Vendors (the Vicland Group of Companies and McNee) and Beller (Beller and Nucara). P-Value contends that it was the combined conduct of these parties which resulted in Nguyen executing the Contract of Sale on 5 September 2008.

418 P-Value submits that on the evidence adduced at trial it is unlikely to succeed in a claim against the third group of defendants, namely TBM Sales and Thomas.[313] P-Value relies upon Nguyen's evidence that she was not relying upon Thomas as her advisor and considered him to be a salesman.[314]

419 P-Value submits that in the absence of any evidence from McNee the Court should not attribute any fault to TBM Sales or Thomas.

420 P-Value puts forward the hypothesis that had Thomas given evidence, he '... would have no doubt contended at trial that the emails he sent in July 2008 simply passed information provided to him by the Vendor as did the emails of 1 July and 4 July and 9 July 2008'.

421 P-Value observes in its submissions that Beller is not entitled to rely on the assertions made by the Vicland Property Group in the County Court fourth party proceeding[315] and that Beller is entitled to rely upon s 83(2) of the Evidence Act 2008 (Vic) (Evidence Act). Section 83(2) provides for an exclusion of evidence of admissions against third parties and provides more specifically that:

'The evidence may be used in respect of the case of a third party if that party consents.'

422 This provision is located in Part 3.4 - Admissions of the Evidence Act. P-Value submits that statements made by McNee in the proceeding in the Supreme Court involving Cossari Smith operate only as admissions against McNee in this proceeding and that what McNee said cannot be used against other parties in the current proceeding which are defined as third parties for the purposes of s 83 of the Evidence Act 2008. In that provision, third party means a party to the proceeding concerned, other than the party who, as provided in s 83(4)(a) made the admission or as provided in s83(4)(b) adduced the evidence. P-Value submits that what McNee said in the Supreme Court proceedings involving Cossari Smith cannot be used against other parties in the current proceedings if those parties fall within the intent of the phrase 'third party' in s 83 of the Evidence Act.

423 P-Value submits that each of Nucara and Beller is a third party under s 83 of the Evidence Act and further observes that those parties did not consent to the use of McNee's admission in respect of the case against them, nor similarly did TBM Sales or Thomas consent.

424 P-Value also submits that McNee's evidence in the Supreme Court proceeding involving Cossari Smith amounted to a denial of any knowledge of the contents of the Fourth Party Notice.[316] P-Value adds that McNee's own oral evidence in those Supreme Court proceedings contradicted an eight month rent free period.[317]

425 P-Value submits that there is no evidence admissible against Thomas or TBM Sales that they knew about the existence of the rent abatement agreement or that Thomas made false representations during the course of the meeting on 5 September 2008.

426 On the above issue as to the admissibility of evidence in another proceeding I refer to my earlier conclusion that there is no sufficient evidentiary basis for me to find that either Thomas or Beller knew of the rent abatement agreement.

427 Further, I refer to my above findings that McNee's evidence in the above mentioned Supreme Court proceedings is admissible and probative against him in these proceedings. I also consider that such evidence is on the plain language of s 83 of the Evidence Act referred to above, inadmissible against parties other than McNee in this proceeding, although I observe that in the circumstance outlined above in relation to McNee's involvement for, and his relationship with, the first and second defendants, his knowledge of the existence of the rental abatement agreement is to be imputed to the Vendors.

McNee's reply submissions in relation to apportionment of liability

428 McNee submits that it is legally incorrect to group the first, second and third defendants together as a class and apportion their responsibility as a group of defendants.[318] McNee submits that each of the first, second and third defendants are concurrent wrongdoers and submits that the court is required by s 24AI of the Wrongs Act to limit the liability of each of those defendants separately.

429 McNee submits that if P-Value is entitled to rely upon the FTA to avoid contribution, McNee is also entitled to rely upon the points earlier raised by the third defendant in relation to contributory negligence. In particular as clarified by the High Court in ACCC v TPG Internet Pty Ltd,[319] P-Value must establish a sufficient causal link between the prohibited conduct and the error made on the part of the person exposed to it, and the court's observation that s 52 of the TPA was not enacted to assist persons who failed to take reasonable care for their own interests.[320]

430 McNee also submits and relies upon the closing submissions of Beller and Nucara as to what is required for a finding of fraud so as to disentitle a party from relying upon a proportionate liability defence.[321]

431 Beller and Nucara submit that P-Value's argument that there should be an equal apportionment between the Vendors and Beller is unsupportable because P-Value's case against the Vendors involves deliberate concealment by them of the rent abatement agreement and an extraordinary failure to mention anything about the rental abatement agreement during the discussions about 255 at the meeting on 5 September 2008, whereas P-Value does not allege any equivalent conduct on the part of Beller and Nucara[322] but only that Nucara's representations about 255 were on the basis that he was recklessly indifferent to whether 255 was a good tenant or a good payer of rent.

432 Beller and Nucara also submit that P-Value's attempt to avoid attributing fault to Thomas and TBM Sales, is not consistent with P-Value's decision to sue Thomas in the first place and to pursue that claim to trial, settling with Thomas for $20,000 on the first day of trial.

433 Beller notes that the Fourth Party Notice in the County Court proceedings between Vicland No 1 and 2 and P-Value, TBM Sales and Thomas was admitted into evidence in these proceedings unconditionally on P-Value's tender. Beller and Nucara submit that the Fourth Party Notice dated 4 December 2009 is therefore admitted as evidence for all purposes in these proceedings. Beller submits that it is entitled to rely upon the Fourth Party Notice as evidence that Thomas and TBM Sales knew of the rent abatement agreement.

434 The Fourth Party Notice contains allegations that Thomas knew about the rent abatement agreement. However, the Fourth Party Notice does not prove these allegations and there is no evidence before me that a defence was filed by Thomas admitting the claims made therein.

Contract initially entered into by Nguyen - thereafter P-Value nominated as purchaser - P-Value completes the purchase of the property

435 The Beller parties argue on the issue of causation that both on the basis of a lack of privity and an absence of reliance, P-Value is not entitled to succeed upon its claims against Nucara and Beller.

(a) P-Value did not exist at the time of the contract in September 2008, did not sign the contract of sale and could not have at that time acted in reliance upon representations made by Beller, via Nucara's statements. P-Value was not incorporated until 9 December 2008;

(b) Nguyen nominated P-Value to take the transfer of the property in January 2009;

(c) P-Value as nominee was not a party to the contract of sale and therefore itself not bound to complete the contract of sale. In this regard it is also submitted that the contract of sale here is in all relevant respects to the same effect as the contract of sale in the case of 428 Little Bourke Street Pty Ltd v Lonsdale Street Café Pty Ltd & ors;[323]

(d) P-Value was here not bound to settle the contract of sale, because on 14 January 2009 the vendor's solicitor informed the purchaser's solicitor that P-Value could "walk away" from the contract. However, on the sixth and seventh defendants contention, P-Value chose to complete the contract of sale by accepting a "new deal" by accepting the sum of $200,000 earlier characterised as a security deposit, as an adjustment in the purchaser's favour, and agreeing with the vendor that P-Value would not eject the level 1 tenant at the property while any part of the $200,000 sum remained "unused";[324]

(e) Beller and Nucara also submit that it should be borne in mind in relation to issues of causation that, after purchase, Nguyen was aware of issues in relation to 255's lease at the property and was also informed that she had paid too much for the property and P-Value is seeking to recover that "excessive expenditure" having failed to recover unpaid rent in relation to the property.

437 The third defendant's submissions[325] appear to accept that P-Value has established that had Nguyen known the true position in relation to the main tenant, 255 at 5 September 2008, she would not have entered into the contract of sale. However, the third defendant seeks to make a point against P-Value's case by submitting that Nguyen gave no evidence that had P-Value known either of the above facts on or after 8 December 2008, it would not have completed the purchase or taken the transfer of the property at settlement and submits that there is no other evidence on the topic.

438 The third defendant also observes that P-Value's nomination under clause 10.1 of the contract of sale was provided out of time, although the third defendant's submissions does not elaborate any relevant legal consequence as a result.[326]

439 The third defendant submits that P-Value was never a party to the contract of sale and therefore not bound to settle the purchase. The third defendant also submits that prior to settlement P-Value should be taken to know that it had paid more than market value for the property and knew that there would be an adjustment to the settlement sum, coupled with a promise not to evict the first floor tenant until arrears exceeded $200,000. The third defendant submits that in these circumstances P-Value could have chosen not to settle and that ultimately therefore P-Value did not sustain any loss because of any misleading or deceptive conduct by McNee on 5 September 2008.

440 I do not consider that the circumstances here, wherein Nguyen signed the contract of sale for the property in September 2008, in reliance as I have found on prohibited representations and thereafter incorporated an entity of which she is a Director and sole shareholder[327] to complete the transaction and become the registered proprietor of the property, either gives rise to an absence of required causation or prevents P-Value from recovering any damages it can establish in relation to that purchase.

441 This is because although it was Nguyen who was on 5 September 2008 induced to enter into the contract of sale for the property, that commitment was unconditional and thereafter it made no difference whether Nguyen completed the contract of sale or, as specifically provided for, she nominated another person or entity which in due course did so.

442 The extent of the unconditional commitment made on 5 September 2008 is reflected by the terms of special condition 10 of the contract of sale. That term provided:

A guarantee executed by the Original Purchaser any guarantor under the contract and if the substituted purchaser and any one or any more of them is a company, the directors of that company in the form annexed hereto guaranteeing the performance of the substituted purchaser of the obligations of the substituted purchaser under the contract.

443 The form annexed to the contract of sale guaranteeing the performance of the substituted purchaser included the following terms:

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

444 Nguyen and P-Value were subject to congruous obligations from 5 September 2008 and Nguyen, by reason of the prohibited representations which induced her to contract on 5 September 2008, and the person or entity she chose to complete that contract and hold the property, were entitled to recover for loss and damage caused by such prohibited representations because the relevant causes of action which arose on 5 September 2008 enured to the purchaser of the property under the contract of sale in respect of which both Nguyen and P-Value had the same rights and obligations before and after nomination and substitution in January 2009.[328]

445 The position in the 428 Little Bourke Street case was different. There the nominee was aware of the true state of affairs before it agreed to an accepted nomination.

446 In the instant case P-Value agreed to accept the nomination, borrowed funds and completed the purchase transaction unaware of the falsity of the representations I have held were wrongly made by the vendor. Furthermore, Nguyen's evidence was that she would have terminated the contract of sale with the first and second defendant if she considered she could do so without losing the deposit.[329]

447 Nguyen is also the sole shareholder in P-Value, as opposed to the circumstances in 428 Little Bourke Street, where the nominee was a unit trust consisting of four units, each unit being owned by a different family.

448 In 428 Little Bourke Street the subject loss in the nominee was caused by the nomination being accepted and the nominee electing to proceed to complete the purchase knowing the true position as to the key features of the property in issue.

449 I am also of the view that the negotiation to adjust the sum payable at settlement, which included the vendor's solicitor on 14 January 209 stating that "P-Value" could "walk away" from the contract of sale, cannot in the overall context of the correspondence between the vendors and the purchaser and on a fair reading of the vendor's solicitors letter dated 14 January 2009, in the chain of communications of which it is in part to be construed as an offer by the vendors to the purchaser to abandon the purchase without any ramification. The more likely objective construction of that statement is that it was intended to relate to the purchaser walking away from any arrangement where contract moneys would be held for a period in respect of rental obligations, alternatively there would be a one off adjustment at settlement.

450 Consistent with this conclusion, the vendor's solicitor communicated with the purchaser's solicitors on 15 January 2009[330] clearly seeking to press on with the contract of sale. I reject the sixth and seventh defendants' contention that this letter from Nolan was attempting to place difficulties in the purchaser's path and in effect urging the purchasers not to continue with the contract of sale.

451 Storer's evidence on this issue included that there was no suggestion between the solicitors for the parties dealing with the conveyance that the contract of sale would be brought to an end.[331]

452 In relation to the last of the earlier outlined arguments advanced by Beller and Nucara in relation to causation, I do not consider that anything turns on or can be made of it being at one point informally stated to Nguyen that she had paid too much for the property and I do not accept that in any concrete or credible manner Nguyen had received "... clear warnings that there was an issue in respect of the Two Five Five lease and that all was not as it seemed ...".

453 I also reject the third defendant's submissions in relation to causation and reliance. I am satisfied, as I have held that Nguyen entered into the contract of sale in reliance upon the misleading and deceptive representation made to her by both McNee and Nucara on 5 September 2008. Nguyen's evidence also was that she did not have any prospect of getting out of the contract of sale, once she had signed that contract[332] and she believed that she could not abandon the contract without at least losing the deposit she had paid. This I consider to be the substance of Nguyen's evidence at T215.04-08.

454 Furthermore, there is no evidence supporting a finding that at any stage did Nguyen or P-Value intend to, or consider, bringing the contract of sale signed on 5 September 2008 to an end for refusing to complete. From these circumstances I infer that Nguyen and P-Value's attitude to their obligations under the contract of sale was because they were unaware of the true position in relation to 255's payment of rent and the existence of the rental abatement agreement.

455 I also infer from Nguyen the above evidence which reflected her consideration of whether she and P-Value were locked into the contract of sale, that had she become aware before settlement of the true position in relation to 255's rental position and the existence of the rent abatement agreement she and P-Value would not have completed the purchase, at least not on the terms of 5 September 2008.

456 I have above addressed and rejected the causation arguments in part based on the fact that P-Value was not a signatory to the contract of sale. I have also rejected the contention that there was anything known to Nguyen or P-Value about the likely market value of the property or the way in which it was agreed the final contract sum adjustments would be made in relation to security for the rent payable by the first floor tenant, which at law could be said to have given P-Value a choice as to whether or not to settle the purchase in mid-January 2011.

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

458 For the reasons I have also outlined above I am satisfied that had Nguyen and P-Value become aware after 5 September 2008 of the true rental position in relation to 255, and or the existence of the rental abatement agreement, they would not have completed the purchase, at least not on the terms of 5 September 2008.

459 The sixth and seventh defendants submit that pursuant to s 82(1B) of the TPA there should be considerable reduction to any damages P-Value would otherwise be awarded under that Act because of P-Value's failure to take reasonable care. Beller and Nucara argue that P-Value's claimed loss was caused by its election to settle the contract of sale.

460 I note that I have rejected the above argument and elsewhere stated my reasons for doing so. In essence I have concluded that at no time before settlement was P-Value aware of the circumstances which could have entitled Nguyen and P-Value to avoid the contract of sale. Further, at no time did the vendors communicate to Nguyen or P-Value that P-Value could treat the contract of sale as at an end, and at no time did Nguyen or P-Value consider that the contract of sale could be avoided without at least losing the deposit paid on 9 September 2008.

461 Beller and Nucara submit that Nguyen should have obtained a valuation before she committed to the purchase of the property and P-Value should not have proceeded to accept the nomination as purchaser without properly informing itself. They also submit that in the circumstances Nguyen was under no time pressure because on 5 September 2008 she thought the auction had been cancelled. Beller and Nucara submit that Nguyen was careless in not obtaining a valuation and advice about her options in respect of the contract of sale and making her own enquiries about the tenancy arrangements at the property prior to signing the contract of sale and prior to the nomination of P-Value. Beller and Nucara again submit that prior to settlement Nguyen knew about issues with the tenants and considered what she could do after being told by a Mr Cussen in early December 2008 that she had paid too much for the property.

462 I reject each of the above arguments that assert Nguyen or P-Value acted carelessly in the purchase of the property. I consider that in the circumstances of this matter, Nguyen' contract with the vendors on 5 September 2008, without having earlier obtained a valuation for the property did not exhibit any carelessness on her part, nor did the fact that Nguyen and P-Value did not obtain a valuation of the property before the December 2008 nomination of P-Value as purchaser. Nguyen did a basic valuation of the property using the represented rental income stream and the represented pre-existing offer and she should be entitled to rely on those representations. Further, as a general rule, failure to obtain a valuation alone should not be treated as amounting to contributory negligence.

463 In relation to Nguyen's contracting on 5 September 2008, I consider that the evidence established that prior to that date Nguyen had not decided to attempt to purchase 255 Chapel Street Prahran and that Nguyen went to Chapel Street Prahran on the morning of 5 September 2008 not intending to purchase the property.

464 I further consider that the evidence establishes it was not until induced to do so by McNee and Nucara in the TBM sales office in the late morning of 5 September 2008 did Nguyen decide to purchase. I am also satisfied on the evidence that as a result of the matters conveyed to Nguyen by McNee and Nucara at the TBM sales meeting with Nguyen, Nguyen was in fact under considerable time pressure to make an effective offer to purchase the property in the late morning of 5 September 2008. This time pressure was a direct result of the combined purchase efforts of McNee and Nucara who, at that time, informed Nguyen that the vendors had an offer from a potential buyer to pay $5,920,000 for the property, a fact stated by Nucara and not in any way corrected by McNee, even though the offer Nucara referred to had been made on 4 September 2008 and had been expressed to be on the basis that it "terminated" at 10pm on 4 September 2008 and further both McNee and Nucara knew that on 4 September 2008 McNee had rejected that offer. McNee and Nucara also knew that the conditional offer of 4 September 2008 was in the sum of $5,568,800 and not for the $5,920,000, the sum which I have found was stated by Nucara to Nguyen.

465 Nucara also admitted during his cross examination by the plaintiff's counsel, that at the time of his statements to Nguyen on the morning of 5 September 2008 he did not have an offer of $5,920,000 in relation to the Property.[333] Therefore, given that I have found that Nucara made the alleged representation as to an offer of $5,920,000 to the Vendors, I am comfortably persuaded that Nucara's representation that there had been an offer of $5,920,000 was not made on the basis of any honest belief and was a lie.. Further, although it was not expressly put to Nucara the he had intentionally and or dishonestly failed to inform Nguyen that the Hu offer had terminated and had been rejected by McNee, or that Hu's offer had been for a sum significantly lower than $5,920,000, or that he, Nucara, had lied about there having been an offer of $5,920,000, I am satisfied that the plaintiff did in substance put to Nucara that his evidence as to what was said at the meeting on 5 September 2008 was false and that he did not have an offer to purchase the property for $5,920,000, but had told Nguyen that he did.[334]

466 In the circumstances outlined above on 5 September 2008, I consider that Nguyen was under considerable time pressure to make an offer better than $5,920,000 if she wanted to have a prospect of purchasing the property and under considerable pressure to do so before someone elsewhere beat her to the purchase.

467 In those circumstances and for the above reasons, I reject that Nguyen failed to take reasonable care, or in any way caused her own loss or, in due course, loss to P-Value as a result of not obtaining a valuation or further information about the property and the position with the first floor tenant 255 or in not seeking legal or other advice about the purchase prior to Nguyen signing the contract of sale on 5 September 2008.

468 Further, I consider that between 5 September 2008 and settlement on 15 January 2009 no circumstance became known to Nguyen or P-Value which resulted in either failing to take reasonable care or in any way causing their own loss, by nominating P-Value to complete the purchase or by Nguyen or P-Value not seeking to avoid the contract of sale. Further, on the matter of P-Value taking over the completion of the contract of sale, I refer again here to my reasons as to why such nomination does not defeat the reliance or causation components of P-Value's case.

469 Finally, on these aspects I repeat my findings elsewhere that neither the Vendors nor Nguyen or P-Value ever decided or offered to bring the contract of sale to an end and Nguyen and P-Value were at no stage likely to be able to "walk away from the contract" without at least foregoing the deposit Nguyen had paid.

470 Further, contributory negligence does not afford the defendants a defence in relation to P-Value's claims under the FTA. That legislation, as applicable in 2008, did not provide for or allow a reduction in damages otherwise recoverable, on account of the claimant's conduct.

471 The sixth and seventh defendants submit[335] that there is doubt about whether a plaintiff can choose between different remedies to avoid a statutory defence of contributory negligence per BHPB Freight Pty ltd v Cosco Oceania Chartering Pty Ltd (No 3).[336] Here however it is the application of the TPA which would be relevant and this point does not need to be decided in this case for the factual reason stated below. Further, I observe that the comments made in BHPB Freight relied upon by the sixth and seventh defendants at [62] are obiter, and I have found in any event that there was no contributory negligence on the part of P-Value.

472 The third defendant asserts that because P-Value sought payment of rent from 255 in the County Court proceedings, P-Value[337] cannot now allege that the rent abatement agreement had the effect that 255 would not have had to pay any rent during a period after the Vicland companies ceased to be owners of the property.

473 The third defendant's submissions[338] observe that the rent abatement agreement relied on by P-Value is a collateral agreement between the landlord (the first and second defendants) and their tenant (255) of level 1 (and downstairs storage area) at the property.

474 Paragraph [38(b)] of P-Value's statement of claim alleges:

By failing to disclose that under the terms of the rent abatement agreement Two Five Five would not pay rent whilst the Vicland companies owned the property or for a period of 8 or 12 months after the property was sold each of McNee, Thomas and Nucara engaged in conduct that was misleading or deceptive contrary to s 9 of the Fair Trading Act.

475 The third defendant points out that:[339]

In the County Court proceeding, P-Value sued 255 for unpaid rent for five months from February to June 2009.[340] P-Value succeeded and recovered judgment for the five months rent of $91,666.65 plus interest and costs.[341]

476 Arising from this asserted setting the third defendant submits:[342]

P-Value cannot now assert in this proceeding that, as against the parties to the County Court proceeding or their privies and as a matter of law, 255 was not liable for rent in the period February to June 2009. As between P-Value and Two Five Five, the County Court judgment and order is conclusive of Two Five Five's legal liability for the rent under the Lease for that period.

The Vicland companies were joined as parties to the County Court proceeding. Each of them has the benefit of, and is bound by, the estoppels arising from the County Court judgment.[343] McNee was not joined as a party but he is a privy of Vicland No. 2, the Second Defendant,[344] and so is bound by and therefore, has the benefit of the same estoppels. Put simply, none of P-Value in this proceeding, the Vicland companies and McNee can be heard to say in this proceeding that 255 was not legally liable to pay the rent reserved by the Lease for the five months from February to June 2009.

Accordingly, the allegation in paragraph 14(b) cannot be maintained and P-Value is estopped from making it to the extent that it is an allegation that by reason of the rent abatement agreement 255 was not legally liable to pay the rent reserved by the Lease for the five months from February to June 2009. As those months are within both 8 and 12 months after settlement occurred, the allegation pleaded and maintained in the hearing of the proceeding contradicts the County Court judgment. P-Value is estopped and precluded from making it.

The position is the same as regards paragraph 38(b) of the SOC. As at 5 September 2008, McNee may have thought that 255 was not legally liable to pay the rent reserved by the Lease for the five months from February to June 2009. He has not given evidence. The transcript from the Cossari-Smith proceeding that was tendered in evidence (over the objection of the Third Defendant) to something from which his state of mind at another time might be inferred but that is not evidence of the state of his mind as at 5 September 2008.

By reason of the County Court proceeding and order, 255 has been found to be legally liable to pay the rent reserved by the Lease for the five months from February to June 2009. For P-Value to now assert that McNee failed to disclose what is now known not to be the legal position would involve a departure from the state of affairs asserted by P-Value in the County Court proceeding on the basis of which it secured judgment in her favour.

The allegation in paragraph 38(b) of the SOC requires P-Value to deny the res judicata between it and the Vicland companies created by the County Court judgment which both binds, and ensures [sic] for the benefit of McNee as the Second Defendant's privy in this proceeding.

Having conducted the County Court proceeding upon the footing that 255 was legally liable to pay the rent reserved by the Lease for the five months from February to June 2009, the same Plaintiff in this proceeding cannot adopt an inconsistent footing for this proceeding.[345]

477 Paragraph [14] of P-Value's statement of claim alleges:

On a date unknown to P-Value Vicland No 1 and Vicland No 2 entered into an agreement with Two Five Five (the rent abatement agreement) that:

(a) Two Five Five would not have to pay any rent while the Vicland companies were the owners of the property;

(b) Two Five would not have to pay any rent during a period after the Vicland companies ceased to be the owners of the property.

PARTICULARS

The agreement was oral and was made during discussions between McNee on behalf of the Vicland companies and Victor Smith on behalf of Two Five Five.

The existence and terms of the rent abatement agreement are described in pleadings filed by Two Five Five and the Vicland companies in County Court proceeding CI-09-2545 and in evidence given by McNee and Smith in the trial of Supreme court proceeding SCI-2011-982.

The period after the Vicland companies sold the property during which Two Five Five would not be required to pay rent was either 8 months (as alleged in the County Court pleadings) or one year (as described in the evidence).

Copies of the pleadings and a transcript of the evidence may be inspected at the office of P-Value's solicitors by prior arrangement.

478 P-Value's submission in answer to the above alleged estoppel is that the principles of res judicata do not apply in the circumstances of this case because P-Value has not ever contended that it is bound by the terms of the rent abatement agreement. P-Value submits that P-Value's case in this proceeding is that the rent abatement agreement was made between the vendors and their tenant at the property 255, as was well known to McNee and the vendors. P-Value submits that its case is not that the rent abatement agreement precluded action against 255.

479 In my view there is no res judicata or estoppel which prevents P-Value's case in this proceeding being advanced and adjudicated on for the following reasons.

480 In this proceeding P-Value's reliance is on the Vendors, McNee, Beller and Nucara wrongfully misrepresenting the position of the tenant 255 and failing to disclose the existence of an earlier rent abatement agreement, which was current, in relation to Level 1 of the property which they were negotiating to sell to Nguyen on 5 September 2008.

481 P-Value's case does not seek to establish the enforceability of the rental abatement agreement. Whether, ultimately the rent abatement agreement was enforceable against the vendors and/or P-Value is not to the point. The undisclosed existence of that agreement between the vendors and the main tenant of the property that they were marketing on 5 September 2008, was sufficiently material to Nguyen, and in my view objectively so, in the context for its non-disclosure to amount to prohibited conduct entitling P-Value to recover damages on a no transaction basis as claimed. Further, in my view this is so whether or not the rent abatement agreement when tested was upheld or found to be unenforceable in its terms.

482 Further, it was in my view not inconsistent for P-Value to sue 255 seeking to recover rental which had not been paid in relation to the Property, and in such proceedings in the County Court seek to assert that the rental abatement agreement was no bar to P-Value recovering of rental, while in this proceeding relying on the existence and failure to disclose the rent abatement agreement. That is provided in those proceedings P-Value was able to identify an argument, with sufficient prospects of success to satisfy the relevant requirements of the Civil Procedure Act 2010, it was entitled to do so and have its entitlement to rent decided in its favour, which may have involved a finding elsewhere that the rent abatement agreement was somehow not to be an impediment to P-Value's entitlement to rent recovery from 255. In my view, to pursue the recovery of outstanding rent in this way does not estop or otherwise prevent P-Value from pursuing its damages claims in this proceeding in which its claim is that at the time of contract prohibited representations were made to it, including in relation to 255 and its rental position and in relation to the non-disclosure of the existence of the rent abatement agreement.

483 Finally in [14] of his Amended Defence and Counterclaim dated 28 August 2014, McNee pleaded that "the whole of the claim ..." advanced against him by P-Value is estopped by reason of P-Value pursuing and obtaining judgment, well after settlement, of rental due from the tenant 255. However, the failure of McNee to disclose the existence of the rent abatement agreement on 5 September 2008 is only one element of the representations made by McNee and is not congruous with the representations as to 255 being a good tenant and payer of rent. Therefore all of these allegations and related causes of action can be pursued even if, which I have rejected, there was an inconsistency as alleged between the allegations in this proceeding and the cited County Court proceeding, and an earlier adjudication as to the effect of the rent abatement agreement.

484 Finally, I consider that McNee has identified no action or forbearance by him in reliance upon any representation by P-Value nor has McNee identified any detriment arising from such action or forbearance by him which would result from P-Value being permitted to change its position.

485 I note McNee's Amended Defence and Counterclaim [14(c)] pleads, amongst other things, that if his estoppel case is rejected he admits that there was an agreement between the vendors and 255 that 255 would not have to pay rent while the Vicland companies were the owners of the property but denies that the tenant did not have to pay rent after the Vicland properties ceased to be the owners of the property.

486 For the above reasons I reject McNee's submissions that the plaintiff's claims against him are estopped and/or are the subject of res judicata.

487 I make the following findings in relation to the parties' apportionment claims outlined above.

488 For the reasons stated below I consider that, save and apart from McNee's personal liability which I shall return to address, it is appropriate to 'group' the Vendors and McNee because in all material ways and at all material times, McNee's conduct as an officer and agent of the second defendant Vendor and agent of the first defendant was also the conduct of the first and the second defendant and should be imputed to those companies, and to group together Thomas and the fourth defendant who did not participate in the trial beyond the first day of hearing, and finally to consider and group together Beller and Nucara who acted as the selling agent of the Vendors.

489 I note in relation to the Vicland Group of defendants that the second defendant did not take an active role in the proceeding. Only McNee on his own behalf pleaded in some substance, was represented at trial by Counsel, including Senior Counsel, and filed an outline of opening and closing submissions dated 9 September 2014 and 30 September 2014 and reply submissions dated 8 October 2014. I also note that McNee was the sole director of the second defendant from June 2006 through until July 2012.

490 I consider that the Vendor group comprising the second and the third defendants bear by far the greatest level of responsibility and culpability for P-Value's losses claimed in this proceeding

491 I regard McNee, and the first and second defendant companies he represented, both individually and jointly as culpable and responsible for 85 per cent of P-Value's loss and damage, and for this high degree of responsibility and culpability because:

(i) McNee largely controlled and orchestrated the conduct of the Vendors' real estate agents on 5 September 2008 including in relation to that part of the sales campaign constituted in part by the meeting with Nguyen on 5 September 2008 in the offices of TBM Sales in Chapel Street, Prahran;

(ii) prior to the commencement of the meeting with Nguyen on 5 September 2008, McNee and the Vendors knew that although an offer had been received from a potential purchaser named Hu, that offer in the sum of $5,568,800 was both expressed to terminate at 10.00pm on 4 September 2008 and had also been expressly rejected by McNee on 4 September 2008. Accordingly the Vendors and McNee knew on 5 September 2008 that there was in fact no live or acceptable offer in existence from any prospective purchaser at the time they were speaking to Nguyen. McNee and the Vendors also knew that the sum which had been at one point earlier offered by Hu was $5,568,800 and not the sum of $5,920,000;

(iii) at 5 September 2008 the Vendors and McNee knew that the Vendors had earlier entered into the rent abatement agreement with 255 which tenanted the first floor of the Property and that pursuant to that rent abatement agreement 255 was not obliged to pay rent for its occupation as tenant:

(a) while the first and the second defendants were owners of the Property at 255 Chapel Street, Prahran;

(b) during a period, it is likely, of twelve months after settlement of a sale by the vendors;

(iv) during the meeting with Nguyen on 5 September 2008, Nucara stated to Nguyen:

(a) that the planned auction of the Property at noon on 5 September 2008 had been cancelled because the Vendors had received an offer of $5,920,000.00;

(b) the tenant of the first floor of the Property, namely 255, was a good tenant;

(c) the tenant of the first floor of the Property, namely 255, was a good payer of rent;

(v) McNee was I find present[346] and I also find on the balance of probabilities heard Nucara make the representations referred to in the last subparagraph above and did not correct those representations by Nucara or in any way attempt to modify, qualify or correct those representations with Nguyen;

(vi) at the meeting of 5 September 2008, McNee suggested and McNee and the Vendors agreed to include special condition 30 in the Contract of Sale for the Property;

(vii) however, notwithstanding Nguyen's express focus on the first floor tenant's rent worthiness, McNee and the Vendors did not disclose or in any other way communicate to Nguyen that a rent abatement agreement applied to the tenant of the first floor of the Property and in this way I considered McNee and the Vendors impliedly represented to Nguyen that 255 was and had been paying rent in respect of its occupation of the Property and further impliedly represented to Nguyen that the purchaser of the Property could expect 255 to continue to pay rent as required by its lease of the first floor of the Property;

(viii) I also find that neither McNee nor the Vendors at any stage disclosed to Nguyen the most relevant facts well known to them namely that:

(a) a rent abatement agreement had been entered into with the tenant of the first floor of the Property;

(b) that the tenant of level one of the Property, 255 had up until 5 September 2008 paid no rent to the owners of the Property in respect of its occupation of level one of the Property;

(c) that pursuant to the rental abatement agreement, 255 would not be obliged to pay any rent for its occupation of level one of the Property for an ongoing period of twelve months;

(ix) Nguyen relied on the wrongful representations made by McNee and the first and second defendants and on 5 September 2008 entered into the contract of Sale for the Property which in turn has caused P-Value extensive loss and damage;

(x) in my view as a result of the above, the main reason for P-Value's loss and damage was McNee and the companies he represented entering into and then concealing the existence of the rent abatement agreement and concealing from Nguyen that the tenant of the first floor had paid no rent since taking possession.

492 I also consider that Beller and Nucara are, to a significantly lesser degree, responsible and culpable for P-Value's losses claimed in this proceeding. In my view the level of responsibility and culpability attributable to Beller, and as separately addressed below Nucara personally, as a result of the conduct of Beller's Director, officer, servant and agent Nucara, is in relation to Beller and Nucara both individually and jointly, 15 percent of the plaintiff's losses. Beller is responsible and culpable to this lesser degree because:

(i) the conduct of its agent Nucara was of less significance on 5 September 2008 by reason of his involvement in the sales meeting with Nguyen at that time as the agent engaged by principals which were represented and controlled in this setting by McNee;

(ii) the representations which I have found Nucara made were all made in the presence of McNee and McNee controlled the meeting and was in a position to correct material misstatements or omissions;

(iii) however, I also consider that Nucara created an atmosphere which was pressing on Nguyen by falsely communicating to Nguyen that there was an offer in existence in the sum of $5,920,000 and for that reason the auction had been cancelled;

(iv) as I have earlier found, I am not satisfied that at the time of the meeting on 5 September 2008, Nucara or Beller, knew of the existence of the rental abatement agreement or that 255 had not paid any rent at all under the lease of the Property;

(v) the presence of McNee, as the representative of the Vendors at the time Nucara made the representation to which I have referred, and the likelihood that McNee would correct or qualify all statements to Nguyen, heard by McNee which were inaccurate or somehow misleading, coupled with McNee being in control of the sales process and probably the meeting in the TBM Sales office on 5 September 2008 also diminishes Nucara's responsibility and culpability. Further, it would be very uncomfortable at the 5 September 2008 meeting for Nucara to correct or contradict McNee, or diverge from his instructions. In my view, this significantly lessens but does not completely absolve Nucara and Beller of responsibility and culpability.

493 My observations, conclusions and findings in the last three preceding paragraphs are relevant to the apportionment of responsibility and damage as between the defendants who have claimed apportionment. However, such observations, conclusions and findings are operative only if I am wrong in finding, as I have, that McNee and Nucara, and Beller for which Nucara acted, conducted themselves dishonestly thereby becoming disentitled to any statutory apportionment with other concurrent wrongdoers.[347]

494 I do not consider that the fourth defendant and Thomas are responsible or culpable for any part of P-Value's loss and damage claimed in this proceeding for the reasons I have earlier outlined.[348] In my view the fourth defendant and Thomas are not responsible or culpable principally because:

(i) In relation to P-Value's alleged representations against Thomas, acting on behalf of TBM Sales and the Vendors prior to 5 September 2008, referred to in P-Value's Statement of Claim as the 'June and July 2008 representations', I consider that the evidence from Nguyen is that up until the morning of 5 September 2008 she was not induced by anything which had been communicated to her to treat for, or bid for, or purchase the Property.

(ii) Nguyen's evidence was that although she planned to attend the auction of the Property on 5 September 2008 she was at the time she attended the pre-auction meeting in Chapel Street with Thomas and a representative of the Commonwealth Bank, her tenant at 276-278 Chapel Street, Prahran was not planning to attempt to purchase the Property at the auction which she was aware would be conducted later that day. Part of Nguyen's evidence to that effect was that she had not brought her cheque book with her to Chapel Street on 5 September 2008.

(iii) Nguyen also gave evidence that once she had been engaged in negotiations by the Vendors' team of real estate agents in the TBM Sales office on 5 September 2008, her focus was on what was said to her about the rental income for the Property and the $370,000 the Property was yielding in rent and the relationship of that yield to what it would be prudent to pay for the Property.[349]

(iv) Nguyen's evidence did not convey that in making the decision she did on 5 September 2008 to buy the Property she relied upon the June and July communications she had received from Thomas on behalf of TBM Sales and the Vendor companies.

(v) Nguyen's evidence which was not sought to be challenged in cross-examination by any other party was that Nguyen did not place trust in Thomas and regarded him as a salesman who did no more than provide her with information she requested in relation to the Property.[350]

495 I do not consider that Nguyen materially relied upon any communication coming to her from Thomas or TBM Sales.

Significance of the Wrongs Act and the Fair Trading Act and the Trade Practices Act in relation to contributory culpability and apportionment

496 As a result of my above findings in relation to McNee, and McNee's deliberately wrongful conduct, s 13 of the Sale of Land Act is of application to McNee. Further the provisions of s 87CC of the TPA and s 24AM of the Wrongs Act also apply to exclude McNee from any right to apportionment of responsibility or liability.[351]

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

498 Furthermore, I accept P-Value's submission that none of the defendants in this proceeding attempted to show that they believed that the alleged representations advanced by P-Value in its case were true, nor did any defendant make any attempt to demonstrate the basis for making any of the representations alleged against them by P-Value.

499 On 15 March 2016 I handed down reasons for judgment and proposed orders in this matter, reserving the finalisation of orders until after the parties had the opportunity to consider my reasons and provide further submissions on interest and costs, if required and the final form of orders. Those reasons for judgment were also the subject of further revision which was provided to the parties on 30 March 2016, under cover of an email dated 23 March 2016 (the transmission of which was unfortunately delayed over the Easter vacation).

500 Prior to the provision of proposed revised reasons on 30 March 2016 P-Value's solicitors, by letter dated 23 March 2016, communicated to the Court and the active parties in the proceeding that P-Value wished to raise two matters arising from the reasons for judgment handed down on 15 March 2016. Those matters were, firstly, that in P-Value's contention it appeared that I had overlooked P-Value's replies to the defences of Beller and Nucara which alleged that certain representations made by those defendants were made without an honest belief in their truth, including the representation that there was an offer to purchase at the price of $5,920,000 and that the replies to Beller and Nucara also relied on s 13 of the Sale of Land Act and provisions of the Wrongs Act and the TPA relevant to apportionment. Secondly, P-Value contended that the reasons handed down in March 2016 did not deal with the personal liability of Nucara under s 9 of the FTA as construed by the High Court of Australia in Houghton v Arms.[352] P-Value's letter of 23 March 2016 also sought a date on which the court could hear the parties in relation to the above matters and as to the form of judgment and final orders in the matter.

501 As a result of the above a hearing in relation to the issues which had been raised by P-Value was sought to be fixed for 4 April 2016, however due to the unavailability of various of the parties representatives, that hearing occurred on 13 April 2016. Prior to 13 April 2016, P-Value filed submissions dated 4 April 2016 in relation to the abovementioned issues it had raised, Beller filed submissions dated 12 April 2016 and Nucara filed submissions dated 12 April 2016.

502 On 13 April 2016 the following representatives appeared for the parties: Mr Northrop of Counsel for P-Value, Mr A Clifton, Director, appeared for the first defendant, Mr Noonan of Counsel for McNee, Mr Scotter of Counsel for Beller and Mr Gronow of Counsel for Nucara. Those Counsel made oral submissions, which also took into account their earlier filed written submissions, and were in essence as follows:

503 P-Value submits that Beller and Nucara should be found to have acted fraudulently in relation to the representation on 5 September 2008 that there was an offer of $5,920,000 in respect of the Property and that those parties should also be deemed to have acted with no honest belief in relation to the same representation by reason of the provisions of s 13 of the Sale of Land Act.

504 Neither P-Value's written closing submissions nor P-Value's written submissions of 4 April 2016 submitted expressly or directly that Nucara's evidence establishes that he admitted that no offer of $5,920,000 was made on 5 September 2008 and therefore if it was found that Nucara made the offer representation alleged in [21(a)] of the plaintiff's Statement of Claim I should then find that Nucara told a deliberate lie in that regard.[353] That submission, and its evidentiary basis, was made clear in P-Value's oral submissions on 13 April 2016.[354]

505 P-Value also submits that Nucara should be found to be personally liable in relation to his conduct under s 9 of the FTA. Similarly, P-Value's written closing submissions, while arguing the application of Houghton v Arms in respect of McNee's personal liability for conduct he perpetrated when representing the first and second defendants, did not make any such submission in any express and direct way in respect of Nucara. Furthermore, P-Value's closing oral submissions did not address Houghton v Arms or the basis for Nucara's personal liability under s 9 of the FTA.[355] That submission was made clear in P-Value's written submissions dated 4 April 2016 and in oral argument on 13 April 2016.

506 However, P-Value contends that it is entitled to judgment against both Beller and Nucara for the full amount of its damages and that a defendant, in Beller and Nucara's position, that is found to have acted fraudulently, is disentitled to the benefit of apportionment of liability under the Wrongs Act, or otherwise.[356]

507 P-Value also provides an updated calculation of interest on its claims, correcting its earlier claim and bringing its updated claim for damages to $2,786,421.55, plus damages in the nature of interest in the sum of $832,071.28, as detailed in [22] of P-Value's written submissions of 4 April 2016.

508 P-Value also seeks judgment against the first defendant and McNee in the sum of $2,786,421.55, plus damages in the nature of interest pursuant to s 60 of the Supreme Court Act 1986 (Supreme Court Act) in the sum of $832,071.28.

509 Additionally, the plaintiff seeks its costs of the proceedings, including any reserve costs, on an indemnity basis against the first defendant and McNee because of the way in which they conducted this defence, in particular because McNee wasted time by raising issues but not giving evidence in support of his case and by relying upon Mr Bath as a valuation expert in the proceeding.

510 P-Value seeks judgment against Nucara and Beller in the sum of $2,786,421.55, plus damages in the nature of interest pursuant to s 60 of the Supreme Court Act in the sum of $832,071.28.

511 P-Value seeks its costs of the proceedings, including any reserve costs, against Nucara and Beller on a standard basis.

512 On the question of costs and interest, a number of the active parties have submitted that they should be given a further opportunity to make submissions in relation to costs and the third defendant seeks to make further submissions as to final adjustments to the judgment sum and the seventh defendant seeks to advance additional arguments in relation to interest. These remaining issues are the subject of direction which I have made below.

513 Prior to the further hearing on 13 April 2016, the first defendant's solicitors sent P-Value's solicitors a letter of consent to judgment in favour of P-Value against the first defendant. This letter from the first defendant was copied to the representatives of the other active parties and the court. That letter of consent was included in an email from the first defendant's solicitors, Bowman & Knox, dated 6 April 2016 attaching a signed "Proposed Judgment against First Defendant" for P-Value's execution and filing. The same email also advised that the first defendant did not intend to appear or participate in the forthcoming argument on 13 April 2016, regarding the liability of Nucara and Beller.

514 The terms of the first defendant's Signed Proposed Judgment dated 13 April 2016 reflected that the following orders were agreed and sought, by the first defendant:

1. There be judgment for the plaintiff against the first defendant in the sum of $2,786,421.55 together with damages in the nature of interest pursuant to s 60 of the Supreme Court Act 1986 in the sum of $832,071.28;
2. The first defendant pay the plaintiff's costs of the proceeding, including any reserved costs, on an indemnity basis.

515 P-Value it appears accepted and agreed to the first defendant's above proposed judgment by signing the first defendant's proposed orders for judgment. Those signed orders were filed on 6 April 2016.

516 At the hearing on 13 April 2016, Mr Clifton, a Director of the first defendant, appeared in person and informed the court that the first defendant had terminated the engagement of Bowman & Knox. At that time Mr Clifton also sought to have the earlier filed consent judgment against the first defendant withdrawn.

517 No basis for the withdrawal of the agreed judgment dated 6 April 2016 against the first defendant was mentioned or relied upon by Mr Clifton. No material in support of Mr Clifton and or the first defendant's request or application has been filed. No materials were, or have been, filed with the Court either by the first defendant or Bowman & Knox in relation to the withdrawal of Bowman & Knox as the lawyers for the first defendant.

518 By email to the Court on 15 April 2016 (5:03pm) Mr Clifton forwarded the following note:

Dear Associate,

I, Andrew Clifton director of the first defendant am in the process of engaging new legal practitioners to act on my company's behalf.

In the meanwhile, I respectfully seek to withdraw my consent to the attached proposed Judgement against the First Defendant.

I thank you in anticipation.

519 Attached to the above is a copy of the same Proposed Judgment Against First Defendant referred to above.

520 Although in my view, on 6 April 2016 the first defendant agreed with the plaintiff as to the terms of judgment to be entered against it, and on 6 April 2016 the first defendant facilitated the filing of a signed copy of that consent judgment, I consider in the circumstances, including the circumstance that Mr Clifton, who it would appear, is not legally trained and is now dealing with the first defendant's position in this proceeding without the assistance of a legal practitioner, that I should not rely upon the consent orders of 6 April 2016, at least without providing the opportunity of hearing further from the first defendant and the plaintiff on these matters. In this regard I also note that the plaintiff has not sought to complain about the first defendant purporting to withdraw its agreement to the consent orders of 6 April 2016.

521 Further, given the apparent failure of the first defendant's lawyers to comply with the court's requirements in relation to a change or withdrawal of representation,[357] I shall direct that a partner of the legal practice Bowman & Knox attend Court on Friday 27 May 2016 at 9.00am to clarify the status of that firm in relation to the first defendant and this proceeding.

522 McNee made no submissions on 13 April 2016 in relation to the issues raised between the plaintiff and Beller and Nucara and noted that he would only be making submissions in the event that the court was moving to make final orders.[358] Counsel for McNee also observed, and thereby noted, that his client did not regard the effect of entertaining the submissions addressed on 13 April 2016 as in any way waiving the third defendant's potential entitlement to seek to bring an appeal in this matter, in due course, if so advised.[359]

523 I note that at trial Beller and Nucara were jointly represented by the same solicitors and counsel. However, at the hearing on 13 April 2016 Beller and Nucara were separately represented.

(a) Beller opposes P-Value's submission that there should be a finding of fraud against Beller;

(b) P-Value's allegations at [37] of its Statement of Claim amount to a "no transaction" case which is founded solely on the plaintiff's rent abatement agreement representation and not on the alleged representation to do with a prior offer of $5,920,000. Beller also submitted, in this regard, that it is not alleged that "but for" the offer representation, the plaintiff would not have purchased the property;

(c) Section 13 of the Sale of Land Act is of no application in this case.

I deal with these submissions separately and below.

525 In my view P-Value's pleading is, on a fair reading, more broadly put than is argued for by Beller. At [26] of P-Value's Statement of Claim, P-Value alleges that it relied upon all the pleaded representations and prohibited conduct which induced it to enter into the contract of sale for the property. The prohibited conduct relied upon included the offer representation pleaded at [21(a)]. At [30] and [32] of P-Value's Statement of Claim, the offer representation is alleged to have constituted prohibited conduct by Beller and Nucara. By P-Value's pleading at [40] of its Statement of Claim, P-Value relies upon all instances of prohibited conduct by the defendants as giving rise to its loss and damage and giving rise to all loss and damage.

526 Accordingly, although P-Value at [34] to [39] of the Statement of Claim identifies certain undisclosed matters, including the existence of the rent abatement agreement at [37], as further instances of prohibited conduct under the FTA and the TPA at [38] and [39] of the Statement of Claim, which if disclosed would have dissuaded P-Value from entering into the contract of sale, this part of the plaintiff's pleading does not in my view, taking P-Value's Statement of Claim as a whole, derogate from P-Value's pleaded reliance upon the prohibited conduct by way of the representations pleaded at [21], including the offer representation at [21(a)], as conduct which is relied upon and which induced the plaintiff to enter into the fraught contract and thereby suffer the loss and damage claimed because, and as a result of, that prohibited conduct.

527 Further, as I have earlier held, Nguyen was relevantly induced by all the wrongful representations, including the offer representation at [21(a)] of P-Value's Statement of Claim.[360] Further, I consider that it is contrary to the evidence I have identified, including at [222], [223] and [226], and impractical and unrealistic to endeavour to attempt to ascribe parts of the plaintiff's loss and damage as arising from, or being caused by, particular prohibited representations and not by others.[361]

528 Beller also argues against P-Value's case that any finding of fraud is sufficient to disentitle a defendant from reliance on the proportionate liability regime provided for by the Wrongs Act, and that in the result this entitles P-Value to full recovery of its claim against Beller (and Nucara).

529 Beller's submission in this regard is that s 24AM of the Wrongs Act does not apply to Beller because a defendant to an apportionable claim must be legally liable to the plaintiff for the relevant loss and damage, and in the present case Beller is not a party to an apportionable claim because Beller is not liable to P-Value in relation to the rent abatement agreement representations alleged in P-Value's Statement of Claim.[362]

530 Beller cites Play Australia Pty Ltd v Papadimitriou[363] in support of its argument that P-Value cannot by alleging a number of different representations as part of the same cause of action, make persons who had no involvement in making one of those representations liable for that conduct, even if there has been fraudulent conduct found in respect of another representation which forms part of the same cause of action.[364]

531 In my view, however, there is little assistance for Beller to be derived from Papadimitriou because in Papadimitriou it was held that the defendants were not liable for any of the alleged representations and accordingly there was no work in the circumstances for s 24AM of the Wrongs Act.

532 I consider this issue to be resolved here in P-Value's favour because s 24AM of the Wrongs Act is of application where, in a proceeding, a defendant against whom apportionment is sought is found to be liable for damages and also found to have acted fraudulently. The operation of the section pivots on both a finding of liability for damages caused by concurrent wrongdoers and a finding of fraud against a concurrent wrongdoer in the proceedings in relation to which the apportionment claim is made. These requirements are made out in this proceeding in respect of both Beller and Nucara.

533 Furthermore, I have found that all the representations which were wrongful and prohibited, including the offer representation, caused P-Value's claimed loss and damage and I consider it contrary to the evidence I have identified, including at [222], [223] and [226], and impractical and unrealistic to endeavour to attempt to ascribe parts of P-Value's loss and damage as arising from, or being caused by, particular prohibited representations and not by others.[365]

534 For the above reasons Beller is jointly and severally liable for P-Value's established loss and damage pursuant to the provisions of s 24AM of the Wrongs Act because it has both been found to be liable for damages in respect of an apportionable claim and it is the subject of a finding of fraud in this proceeding.

535 Beller is also, for the same reasons, excluded by the operation of s 87CC(1)(b) and (2) of the TPA from any limitation and apportionment of concurrent wrongdoer liability because I have found Beller fraudulently caused the economic loss claimed by the plaintiff. Further, s 87CC(2) of the TPA provides that the liability of an excluded concurrent wrongdoer is to be determined in accordance with the legal rules which are relevant, namely the imposition of joint and several liability, absent the application of any statutory provision altering that position.

536 In my view, the above findings and conclusions also defeat Beller's argument that P-Value's offer representation case can only result in P-Value succeeding in the recovery of $356,200, being the value of what Beller argues is the loss of chance to purchase the property at a price between $5,568,800 (Mr Hu's offer) and the contract price of $5,925,000. For the reasons I have already addressed, I do not consider that P-Value's recovery is so limited and I regard the offer representation as one of several unlawful representations which materially contributed to the whole of the plaintiff's loss and damage.

537 Beller also made submissions in support of it only being ordered to pay a portion of the plaintiff's costs.

538 Because McNee, and Beller, in particular, have requested that any argument as to costs, and other details potentially effecting the form of final orders be entertained after the handing down of these reasons, but before the time of final orders, I shall deal with questions of costs and any appropriate final adjustments to the sums claimed by the plaintiff[366] and as to interest, including P-Value's claims in relation to interest in the nature of damages, and including any submissions by Beller in relation to paragraph [22] of its written submissions dated 12 April 2016, after the parties, including the first defendant have made any further submissions on these matters, pursuant to the direction in that regard I shall make when handing down these reasons.

539 Nucara opposes P-Value's application and submission that there should be a finding of fraud against Beller and Nucara and opposes P-Value's application and submission that Nucara is personally liable under s 9 of the FTA.

540 Nucara also adopts Beller's submissions referred to and dealt with above.[367]

541 Having considered P-Value' and the defendants' written submissions and argument provided and made in April 2016, I am comfortably satisfied, as I have earlier found, that Nucara, and by his conduct as Director of Beller, his employer Beller, represented to Nguyen on 5 September 2008 that the first and second defendant vendors were in possession of an offer to purchase the property for $5,920,000 and did so without any honest belief in the truth of that representation.

542 Furthermore, Nucara admitted in his evidence given under cross-examination that he was not in possession of such an offer of $5,920,000 at the time of his communications to Nguyen at the TBM Sales office on 5 September 2008.[368] It follows that the offer representation by Nucara was made with no honest belief on Nucara's part as to the truth of that representation and was deliberately dishonest.

543 I do not consider, given P-Value's express Reply pleadings alleging dishonesty and fraudulent conduct by Nucara and Beller, and its pleading placing reliance on s 13 of the Sale of Land Act to establish knowledge of falsity,[369] that it is a meritorious or determinative point for Beller and Nucara to argue that P-Value failed to mention fraud against those defendants in its Statement of Claim as part of its "primary case".

544 Similarly, in my view, Beller and Nucara's submission that P-Value failed to put to Nucara in cross-examination that he acted fraudulently or dishonestly does not, in the circumstances of the conduct of this matter, preclude findings of dishonesty and fraud against Nucara and Beller. This is because in this proceeding and in relation to the representations made by Nucara on 5 September 2008, P-Value's counsel in substance put to Nucara that what he was saying about the statements made on 5 September 2008 was false, and also because there is at law no prescriptive way in which a party asserting such a case is required to put allegations of dishonesty or fraud to a relevant witness or party. It is sufficient, as was undertaken by P-Value in this proceeding, for it to put to Nucara, and thereby effectively to Beller, that Nucara had falsely conveyed the offer representation to Nguyen on 5 September 2008 knowing that there was in fact no such offer in existence. Further, it was put in substance to Nucara that his evidence in relation what was said on 5 September 2008 as to an existing offer to the Vendors, was false.[370]

545 Nucara also argues that because his conduct was undertaken solely in his capacity as a Director and employee of Beller, such findings are inconsistent with Nucara being found personally liable under s 9 of the FTA. Nucara argues that the applicability of Houghton v Arms depends upon a particular ascription of personal liability, namely that the relevant conduct was engaged in by the employees themselves and the relevant acts were the conduct of someone who contravened the prohibition in s 9 of the FTA.[371]

546 I am unpersuaded by Nucara and Beller's arguments that the High Court decision in Houghton v Arms does not bind me to find that Nucara is directly and thereby personally liable under the provisions of s 9 of the FTA in this case where Nucara made the representation I have found he did.

547 At [40]-[42] of Houghton v Arms, the High Court has clearly held that an individual is personally liable for their prohibited conduct, pursuant to s 9 of the FTA, notwithstanding that the wrongdoer's conduct occurred in the course of their employment while undertaking the role of employee and or officer of their employer. My findings that Nucara only did what he did on behalf of Beller does not protect or exclude him from liability for his misleading and deceptive conduct. Accordingly, in this case where Nucara made the representation I have found he did, his is fixed with personal liability by force of s 9 of the FTA.

548 Further, for the reasons explained above in relation to Beller's arguments, pursuant to the provisions of s 24AM of the Wrongs Act, Nucara is jointly and severally liable for P-Value's established loss and damage because he has both been found to be liable for damages in respect of an apportionable claim and he is the subject of a finding of fraud in this proceeding.

549 Nucara's conduct in making the offer representation with no honest belief as to the truth of that representation defeats his potential entitlement to avail himself of apportionment pursuant to the provisions of the Wrongs Act, and pursuant to s 24AM of that Act renders him jointly and severally liability to P-Value for the damages awarded to P-Value in this proceeding. Further, there being no claim by the plaintiff that the TPA is of application to Nucara, it is unnecessary to deal with the plaintiff's Reply dated 25 October 2013 [5(b)] which raises the application of s 87CC (1)(b) and (2) which may in other circumstances preclude an appointment under the TPA.

550 Nucara also makes observations in relation to his position in relation to P-Value's calculations of damage and in relation to costs.

551 Nucara's submissions of 12 April 2016 and oral submissions on 13 April 2016, are predicated on Nucara being afforded a further opportunity to make submissions as to the form of final orders, including in relation to interest and costs. I shall receive and deal with such submissions, if necessary and when convenient.

Sale of Land Act 1962 (Vic) - Nucara and Beller

552 As a result of the wrongful conduct referred to above, Nucara, and Beller through its Director Nucara, are, by operation of s 13 of the Sale of Land Act both also deemed to have made the offer representation[372] with knowledge of the falsity of that representation. I so hold because I am satisfied that in this proceeding in respect of the subject sale of land it has been proved to my comfortable satisfaction that the offer representation was knowingly false, for reasons I have earlier stated, and I am similarly satisfied that P-Value by its Director, alter ego and controlling mind, Nguyen, was induced by that representation to enter into the subject contract to purchase the property. I am also comfortably satisfied that Nucara and Beller did not act innocently in respect of the sale of land and the making of the offer representation for the reasons I have explained.

553 I reject the sixth and seventh defendants submission that the Sale of Land Act is inapplicable to the representations found to have been made in this proceeding. I do not accept that P-Value was not induced by the established representations, including the offer representation, to enter into the subject contract, or that the entity nominated to complete the purchase under the contract of sale is not a party to the contract of sale for the purposes of s 13 of the Sale of Land Act. I consider that the clear purpose of s 13 of the Sale of Land Act is to facilitate the establishment of knowledge of falsity by a party making a wrongful representation on such a sale. Bearing in mind this clear remedial and facilitative purpose, and supported by the broad language of that section, which defines its scope in the following language "in any action commenced in respect of the sale of any land" and in relation to "any representation made on any such sale" and when "any party to any action was induced by such representation to enter into a contract to purchase the land", I consider that the subject section of the Act extends and catches both Nguyen and P-Value both of whom, for the purposes of the Act, entered into the contract to purchase the relevant land. For the above reasons, and also for the reasons I have earlier addressed in connection with the contractual nomination of P-Value, in my view both Nguyen and P-Value were here induced to enter into a binding contract to purchase the Property.

554 Further however, for reasons I have also dealt with separately elsewhere, in respect of the representations at [21(b) and (c)] of P-Value's Statement of Claim I am satisfied that Nucara and Beller had no reason to suspect that those particular representations were false and I therefore consider that they acted innocently in respect of those representations.

The position of the active parties in relation to further submissions and potential revisions to existing reasons for judgment, prior to final authenticated orders

555 I note in relation to the above issues and the parties' submissions concerning P-Value's letter of 23 March 2016 and related matters, and my consideration of what if any changes and revisions I should make to the revised reasons provided to the parties on 30 March 2016, that no party objected to the making of any submissions by any other party and no party objected to my further consideration of the issues raised or the making of further revisions and changes to my existing reasons for judgment, before making final orders.

556 I consider that in the circumstances, including where final orders have not been made and accordingly where there has been no authentication of orders, I have powers under Rule 36.07, and in addition inherent power, to make any change or revision to my existing reasons for judgment which I consider to be necessary to ensure that the ultimate outcome and final orders in this proceeding are just and fair to, and as between the parties.[373]

557 In this matter, for the summary reasons which follow, I have decided that by wrongful representations both express and implied:

(a) McNee, Nucara, and also Beller, by its officer and agent Nucara, materially misled and deceived Nguyen and P-Value in relation to the purchase of the Property by representing to, and thereby convincing Nguyen that the tenant of Level 1 of the Property was a good tenant and good payer of rent;

(b) McNee, Nucara, and also Beller, by its officer and agent Nucara, materially misled and deceived Nguyen and P-Value in relation to the purchase of the Property by representing to, and thereby convincing Nguyen that the public auction of the Property, scheduled for 12.00 noon on 5 September 2008, had been cancelled because the Vendors had received an offer for the property of $5,920,000;

(c) McNee materially misled and deceived Nguyen and P-Value in relation to the purchase of the Property by representing to, and thereby convincing Nguyen that 255 had in the past paid rent to the Vendors and could be expected to pay rent in accordance with the lease of Level 1 of the Property;

(d) each of the above representations concerning the tenant of level 1 of the Property and the cancellation of the auction, the $5,920,000 offer for the Property and the past and likely future payment of rent by the tenant 255 were false;

(e) McNee and the first defendant and the second defendant wrongfully and materially misled and deceived Nguyen and P-Value by failing to disclose to Nguyen on 5 September 2008 that:

(i) the tenant 255 had not paid any rent at all under its lease of Level 1 of the Property;

(ii) prior to 5 September 2008 the Vendors and the tenant 255 had entered into a rent abatement agreement;

(iii) under the terms of the rent abatement agreement the Vendors had agreed with 255 that 255 would not be required to pay rent during the time the Vendors owned the Property and further would not be required to pay rent for twelve months after the sale of the Property by the Vendors;

(f) the wrongful representations made by McNee in sub-paragraphs (a), (b), (c) and (e) above were made by McNee without him having any honest belief in their truth and McNee's conduct in failing to disclose the matters referred to in the last preceding subparagraph was intentional and was intended by him to ensure that Nguyen was not aware of those matters;

(g) all the above wrongful representations made by McNee were made by McNee without him having any honest belief in their truth and were intentional and McNee had no reasonable ground to believe and did not believe that the representations were true;

(h) the wrongful representation made by Nucara in sub-paragraph (b) above in relation to an offer of $5,920,000 was made by Nucara without him having any honest belief in its truth;

(i) P-Value relied on the wrongful representations referred to above and in the result purchased the Property for $5,925,000, which was a purchase price of $2,092,785.00 in excess of the fair market price of the Property at September 2008. P-Value thereby suffered loss and damage in that sum together with additional loss and damage in relation to stamp duty ($115,103.18), interest ($543,680.67) and legal costs ($54,852.70) associated with unsuccessfully pursuing 255 for unpaid rent and dealing with related issues. The plaintiffs' established entitlement to damages includes all these said amounts, less the $20,000 received by P-Value under its settlement with the fourth and the fifth defendants, and is a total recoverable sum of $2,786,421.55;

(j) The second defendant took no part in these proceedings and is deregistered;

(k) McNee and the first and second defendants are principally responsible and liable for the plaintiff's loss and damage as a result of the wrongful representations referred to above which were made by them and on an apportionment, each of those parties both individually and jointly, bear 85 percent liability for P-Value's losses and damage;

(l) Wellara Holdings Pty Ltd (Beller) and Nucara are also responsible for P-Value's losses, but to a much lesser degree, and on an apportionment, each of those parties individually and jointly, should bear 15 percent of the responsibility and liability to P-Value for the loss and damage it has suffered;

(m) because McNee, Nucara and Beller made intentional and dishonest representations these parties are disentitled to, and precluded from, an apportionment of liability against other parties and bear joint and several liability to the plaintiffs;

(n) the fourth and fifth defendants are not liable to P-Value;

(o) Nucara, Beller's Director, is, pursuant to s 9 of the FTA, personally responsible for the representations he made to P-Value;

(p) P-Value is entitled to recover from McNee and the first and second defendants, Wellara Holdings Pty Ltd (Beller) and Nucara, the sum of $2,786,421.55 in accordance with the above findings, plus interest, including damages in the nature of interest, subject to submissions as to any matters which may affect P-Value's entitlements to the amount of interest and legal costs.

(a) the third defendant McNee is culpable and liable for the plaintiffs' established loss and damage in the sum of $2,786,421.55, plus damages in the nature of interest;

(b) the first defendant Vicland Property Group No 1 Pty Ltd is culpable and liable for the plaintiff's established loss and damage in the said sums referred to in (a) above;

(c) the second defendant, Mark Markii Mark II Pty Ltd is culpable and liable for the plaintiffs' established loss and damage in the said sums referred to in (a) above, and were that company not deregistered, it would be the subject of the same judgment and orders as McNee and the first defendant;

(d) McNee and Nucara and by his conduct Beller, as explained in the above reasons, are culpable and liable for deliberate and dishonest conduct towards the plaintiff and therefore the liability of these defendants is not excluded or limited pursuant to any statutory apportionment provisions;

(e) the fourth and the fifth defendants Rodney Morley Persichetti Pty Ltd (TBM Sales) and Richard Thomas are not liable to the plaintiff because the plaintiff placed no material reliance on any representation made by the fourth and the fifth defendants;

(f) McNee and the first and second defendants and Wellara Holdings Pty Ltd (Beller) the sixth defendant, and Nucara the seventh defendant are also culpable and jointly and severally liable to the plaintiff in the sum of $2,786,421.55. However if I am in some way incorrect in my conclusions as to the exclusion of apportionment as a result of fraudulent conduct on the part of McNee and Beller and Nucara, then undertaking an apportionment I consider that having regard to the extent of McNee and the first and second defendant and Beller and Nucara's responsibility for the plaintiff's loss and damage, it would be just to limit McNee and the first and second defendants joint and individual liability to a combined total of 85 percent of P-Value's said recoverable loss and damages and Beller and Nucara's joint and individual liability to a combined total of 15 percent of P-Value's said recoverable loss and damage;

(g) Fred Nucara, the seventh defendant, is, pursuant to s 9 of the FTA, personally liable on the plaintiff's claims, notwithstanding that at all material times he acted as an officer, servant and agent of his employer the sixth defendant. Nucara is also jointly and severally liable in the sum of $2,786,421.55;

(h) questions of the plaintiff's entitlement to interest, including the recoverable sum of damages by way of costs and any questions as to the cost entitlements of any defendant are reserved to allow for any further submissions on these matters.

(a) against McNee in the sum of $2,786,421.55, plus damages in the nature of interest;

(b) against Vicland Property Group No 1 Pty Ltd in the sum of $2,786,421.55, plus damages in the nature of interest;

(c) against Wellara Holdings Pty Ltd (Beller) in the sum of $2,786,421.55, plus damages in the nature of interest;

(d) against Nucara in the sum of $2,786,421.55, plus damages in the nature of interest.

560 I shall reserve my decision on questions of interest, including the precise sum of damages in the nature of interest (most recently calculated by P-Value to be in the sum of $832,071.28), costs and the final form of orders in this matter until the parties have had the opportunity to address these matters.[374]

I certify that this and the 171 preceding pages are a true copy of the reasons for Judgment of Digby J of the Supreme Court of Victoria delivered on 15 March 2016 and subsequently revised on 30 March and 19 May 2016.

Wrongs Act 1958 (Vic)

Part IVAA of the Wrongs Act relevantly provides:

(a) a claim for economic loss or damage to Property in an action for damages (whether in tort, in contract, under statute or otherwise) arising from a failure to take reasonable care; and

(b) a claim for damages for a contravention of section 9 of the Fair Trading Act 1999.

(2) If a proceeding involves 2 or more apportionable claims arising out of different causes of action, liability for the apportionable claims is to be determined in accordance with this Part as if the claims were a single claim.

(3) A provision of this Part that gives protection from civil liability does not limit or otherwise affect any protection from liability given by any other provision of this Act or by another Act or law.

(1) A concurrent wrongdoer, in relation to a claim, is a person who is one of 2 or more persons whose acts or omissions caused, independently of each other or jointly, the loss or damage that is the subject of the claim.

(2) For the purposes of this Part it does not matter that a concurrent wrongdoer is insolvent, is being wound up, has ceased to exist or has died.

24AI Proportionate liability for apportionable claims

(1) In any proceeding involving an apportionable claim -

(a) the liability of a defendant who is a concurrent wrongdoer in relation to that claim is limited to an amount reflecting that proportion of the loss or damage claimed that the court considers just having regard to the extent of the defendant's responsibility for the loss or damage; and

(b) judgment must not be given against the defendant for more than that amount in relation to that claim.