A draft of that letter was sent to Mr Butler and he approved it (T 529.45-530.21). Clearly, in context, the "reconciliation" was a reference to the fax of 21 September 1998 apparently received on 22 September 1998.
208 Ford Credit prepared audit reconciliation documents on 22 September 1998. A copy of those documents was exhibited to Mr Tomlin's affidavit sworn 1 July 2003. There was written on the document by hand "given to Mario 23/9 in his office". Clearly, the documents were given to Mr Tomlin on that day.
209 On 30 September 1998, the plaintiffs' solicitors wrote to Ford Credit referring to "the shortfall in the terms of the figures that have now been established". The clear inference is by then the state of the indebtedness had been established. A copy of this letter was sent to Mr Butler. He did not demur to its contents.
210 There was much other information given to Mr Tomlin over the period from 2 September to 2 October 1998. I conclude that his complaint that Ford Credit withheld financial information from him is unsustainable.
The deal with Mr Bradstreet
211 On or about 13 September 1998 (a Sunday), Mr Tomlin and Mr Bradstreet agreed that Mr Bradstreet, through a company controlled by him, would buy an interest in the Tomlin companies. As I have said, Mr Tomlin was exploring a number of alternative sources of finance (see para [196] above); his evidence was that if he wished, he could have consummated any of those arrangements. Ultimately, however, Mr Tomlin agreed to the transaction with Mr Bradstreet.
212 Initially, Mr Bradstreet agreed to make an interim loan of $270,000, to enable the indebtedness to Ford Credit to be paid out. He would acquire a 49% interest in Tomlin Motor, and the loan would be repaid through the issue of shares.
213 At some stage, the nature of the transaction changed. Mr Bradstreet, through his company, acquired not only a 49% interest in Tomlin Motor but also a half interest in the premises (owned by Mr and Mrs Tomlin). There was no additional consideration. Mr Tomlin was unable to explain this apparent change, other than to say that it was something to do with the paperwork (T 352.1-.25; see also 353.1-.14 and 355.5-.32).
214 Mr and Mrs Tomlin suggest that the interest in the premises was sold to Mr Bradstreet's company at an undervalue. The apportionment of the total of $300,000 contributed by Mr Bradstreet was as to $180,000 for an interest in the premises and as to $120,000 for an interest in Tomlin Motor. Mr and Mrs Tomlin have been unable to give any, let alone any satisfactory, explanation as to why they would sell an interest in the premises at an undervalue, particularly in circumstances where the initial arrangement was that the advance would be repaid purely out of the issue of shares. (In referring to Mr and Mrs Tomlin, it should not be overlooked that Mrs Tomlin gave no evidence at all.) Given that Mr Tomlin, as he said, had other sources of finance available to enable him to pay out the debt to Ford Credit, it is very difficult to understand why he should have chosen one that, as he now would say, was disadvantageous. At the time, he had had the benefit of advice from the solicitors who have continued to represent him; he had the support of (and offer of financial assistance from) the Motor Traders' Association; and he had the benefit of the advice of an independent accountant, Mr Butler.
215 Mr Bradstreet's evidence was, likewise, that the original arrangement was purely a purchase of shares in Tomlin Motor; his interest was in the stock (ie, the motor vehicles) of that company (T 557.4-.8; see also 571.28-572.3 and 576.14-.26). Mr Bradstreet later said that the deal was "that he got a half share in everything, the business and the land" (T 576.34). I do not accept that evidence. I think that Mr Bradstreet used his position of advantage, once he had made the loan, to renegotiate the terms of the original arrangement so that it included not only an interest in Tomlin Motor Company but also an interest in the premises.
216 It may be worth noting, in this context, that Mr Bradstreet recovered his advance "out of the profits we made … and the land sale"; and that when this had happened, he retransferred the shares in Tomlin Motor to Mr Tomlin for no consideration (T 582.38-583.28). Presumably, Mr Bradstreet had seen that the shares in Tomlin Motor might not support the investment that he had made, and sought to strengthen his position by renegotiating the terms of his investment once the advance had been made.
217 There was an issue between the parties whether it was "foreseeable" that Mr Tomlin would enter into the deal with Mr Bradstreet either on the basis originally negotiated or on the basis finally documented. If by this it was meant to enquire whether such loss as the plaintiffs claimed they had sustained through entering into that deal was foreseeable, or could have been avoided, then the issue should be answered adversely to the plaintiffs. As I have said, Mr Tomlin had a number of alternatives open to him, including obtaining finance either from regular sources (his bank) or from private sources (family and friends). On the evidence, taking up those offers would not have required Mr Tomlin to divest control of his companies or ownership of the premises. If, therefore, he suffered loss by entering into the transactions with Mr Bradstreet whereby he did those things, that must be regarded as a result of a deliberate decision by him and not as the result (foreseeable or otherwise) of any assumed wrongdoing on the part of Ford Credit.
218 Further, in this context, it must be remembered that the objective of the transaction (and of the alternatives that Mr Tomlin considered) was to pay out the Tomlin companies' debt to Ford Credit. That was a real debt, actually owing. One way or another, it had to be discharged. I fail to see how it can be said that an individual or a company suffers loss by being required to pay an obligation that is due and owing.
Valuation issues
219 The parties devoted an inordinate amount of time and paper to debating the value of the Tomlin companies' used car stock as at 12 August and 2 September 1998, and during the bluenoting process. Mr Tomlin insisted that Ford Credit, through Mr Esh, had substantially undervalued his companies' stock, and had thereby substantially overstated the amount due by way of shortfall.
220 As I understand it, there are two reasons advanced in support of the plaintiffs' position. The first is that Mr Esh did not value, or bluenote, all available cars. The second is that he did not assign correct values.
221 I have already dealt with the first reason, in relation to the audits of 12 August and 2 September. No different considerations arise in so far as this argument is also put on the bluenoting process. I find that Mr Esh did value, or bluenote, all cars that were available.
222 The second reason can be disposed of almost as quickly. In most cases, the plaintiffs' argument is that Mr Esh failed to take account of extras, or special features, that the vehicles had. Those extras (as I shall call them) may be divided into two categories. The first category is extras recognised by the Red Book as justifying a higher value: for example, a larger or different kind of motor, air conditioning or automatic transmission. The second category is what might be called "other" extras: ie, extras not recognised by the Red Book.
223 The evidence was clear that the valuation process was to be undertaken by reference to the Red Book, and that only "Red Book" extras would be taken into account in determining value. Thus, to the extent that the plaintiffs' case suggests that the vehicles had added value, which Mr Esh failed to recognise, by reason of extras in the second category, it must fail. A valuation in accordance with the Red Book would not take account of, or allow value for, extras in the second category.
224 As to the first category of extras, Mr Esh in many cases made allowance for extras such as air conditioning or automatic transmission. However, Mr Tomlin says that a number of the vehicles valued by Mr Esh had "first category" extras, but that Mr Esh's valuation did not reflect this. An acceptance of that requires an acceptance of the uncorroborated evidence of Mr Tomlin that the vehicles in question did have such extras. For the reasons that I have given, I do not accept Mr Tomlin's evidence on that point. This aspect of the case also fails.
225 Further, in relation to "first category" extras, Mr Chalker reviewed the audits of 12 August and 2 September, and raised any concerns that he had with Mr Esh, as I have recorded in paras [138] and [169] above. It may be assumed that Mr Chalker was well aware of the characteristics and features of the relevant vehicles. It may be assumed that, if Mr Chalker thought that Mr Esh's valuation had failed to take account of first category extras, he would have raised this with Mr Esh. He did not do so.
226 Mr Chalker was also intimately involved in the bluenoting process. Indeed, he signed many of the bluenotes on which the true wholesale value was recorded. Again, it should be assumed, Mr Chalker would have detected and sought to correct any error. He did not do so.
227 Further, the evidence as to unvalued first category extras is unacceptable. It comes only from Mr Tomlin. Not only do I reject that evidence because of my general conclusion on his credibility, I think that it is inherently unsatisfactory. Mr Tomlin in most cases did not purport to have an actual recall of the vehicles in question. His evidence that they had extras of some kind was based on what he said was his usual practice (for example, only buying used vehicles that had air conditioning), or by some process of inference or deduction based on the price he paid. Even leaving aside my views on his credibility, I would not find that evidence sufficiently persuasive to convince me that Mr Esh had overlooked some first category extra.
228 This is not to say that Mr Esh did not make mistakes in the valuation process. He did. Indeed, although with some reluctance, he conceded that he did. For example, he might have failed to identify the type of transmission that a car had; he might have failed to identify the kind of motor that it had; or he might have made a simple transposition error in checking the Red Book. But it is to be expected that, in undertaking the valuation of approximately 150 vehicles in a relatively short period of time, mistakes will be made. No doubt, that is one of the reasons why Mr Chalker checked the audit process and raised concerns with Mr Esh. But it does not follow that any mistakes that were made are indicative of negligence. In this context, it is necessary to bear in mind that the relevant Tomlin company was indebted to Ford Credit for the full amount advanced on the vehicle, and that the full amount would have to be repaid sooner or later. A mistaken undervaluation might accelerate payment of part of the amount owing; it would not mean that something was paid that could never be owing.
229 I conclude that the plaintiffs have failed to make good their case that Ford Credit (or Mr Esh) negligently valued the Tomlin companies' used car stock at any of the relevant dates.
Unconscionable conduct
230 The plaintiffs relied on ss 51AC and 52 of the Trade Practices Act 1974. They submitted that the actions of Ford Credit over the period August to October 1998 were relevantly unconscionable, or misleading and deceptive. They referred, in this context, to the valuation of the used car stock, the demands for payment of shortfalls, the alleged pressure to sell to Kloster Ford, the decision to terminate the bailment facilities, and the other matters that I have dealt with above.
231 Substantially for the reasons that I have already given, I do not accept this aspect of the plaintiffs' case. I find that there was nothing unconscionable, or misleading or deceptive, in Ford Credit's acting in the way that it did. It was legally entitled to act as it did. There was good reason for it to act as it did. In acting as it did, it was not motivated by any irrelevant or improper consideration.
Damages
232 In view of the conclusions to which I have come, it is unnecessary to consider the plaintiffs' case on damages. However, both to guard against the possibility that my conclusions on liability may be wrong, and because I have concluded that in any event the plaintiffs have not made out a case for damages, I will deal briefly with this question.
233 If the damages case arose for consideration (ie, if Ford Credit had breached some contractual or other duty owed to the plaintiffs, or had been guilty of unconscionable conduct), it would in any event fail for two reasons. The first is that there is no causal connection between the conduct complained of and the damages said to have been suffered. The second is that the plaintiffs have not proved that they suffered any damage.
Causation
234 The plaintiffs' case on causation was in essence that the business of the Tomlin companies had declined (in terms of gross sales) after the events of August and September 1998. Thus, they submitted, the events of August/September 1998 must have caused, or should be inferred to have caused, the decline in sales.
235 Underlying that submission is the proposition that Ford Credit's conduct in some way damaged the image or reputation of the business of the Tomlin companies. But the evidence does not make good that proposition. At the most, there is some evidence of what might be called "pub talk", coming from witnesses such as Mr Moores and Mr Giggins. That evidence is hopelessly vague and unspecific, and could not make good the necessary causal link between Ford Credit's actions and the decline in the Tomlin companies' sales. And in any event, when one goes to the circumstances that are said to be the foundation of the pub talk - specifically, the presence of Ford Credit officers on site during September and October 1998, and the brief chaining up of the premises on 11 September 1998 - it is apparent that there is no basis on which to assume some causal connection.
236 In truth, I think, the pub talk was based on a perception that Mr Tomlin's businesses were in a financially precarious position. They were. But that was not the defendant's fault. It was the result of Mr Tomlin's mismanagement, reflected in the abysmal financial performance to which I shall shortly turn. Ford Credit cannot be blamed for this, any more than it can be blamed for taking steps that were legally open to it to protect its position in the face of the financially precarious financial status of the Tomlin companies.
237 Thus, on the plaintiffs' evidence, there is no basis to find a causal link, and their "post hoc propter hoc" reasoning should be rejected. But in any event, there is an explanation for the downturn in sales. It is that there was a nationwide, statewide and regional downturn in sales of new and used vehicles at this time. Although Mr Tomlin sought to suggest that his business would have been immune from even the regional downturn, I do not accept that proposition. I think it likely that the sales performance of the Tomlin companies followed, although not necessarily in an exact way, the sales performance of other businesses as measured by data collected by Ford Credit's accounting expert, Mr Andrew Ross.
238 In this context (although it is relevant also to the plaintiffs' case on breach of duty) there is a telling analysis of the problems faced by the Tomlin companies in a letter from their solicitors to Ford Credit dated 30 September 1998. That letter sought, among other things, to ascribe reasons for what it described as "the current conflict". It said, on this topic:
"Looking at the overall situation objectively, the factors bringing about the current conflict include the overpayment by Ford Credit of the $200,000 amount, the revaluation of motor vehicles according to the Current Red Book valuation process which values the vehicles at a much lesser amount than our client can in the normal course of business liquidate used cars at to recoup larger amounts [sic]. No doubt this would be an industry problem with the introduction of cheap imports, in particular the Korean vehicles having a flow-on devaluing effect to second hand vehicles. Objectively our clients [sic] position is no different to other dealers in this regard."
239 None of the three reasons that is given is demonstrative of any breach of duty on the part of Ford Credit. (That is why, as I have said, the letter is relevant not just to the question of causation but also to the question of breach of duty.) The first reason refers to the double payment of $197,550. As I have said, that was a mistake on the part of Ford Credit; but it was a mistake of which Mr Tomlin was aware, and on which he decided to act by spending the money to defray his companies' expenses. The second accepts that it is appropriate to ascertain the true wholesale value of stock by reference to the Red Book, and makes a point about the commercial consequences. The third (which might be thought to be a somewhat unusual complaint to make on behalf of a dealer in Hyundai vehicles), as with the second, speaks not of fault on the part of Ford Credit.
240 It is clear that the author of the letter was of the view that the three factors that he outlined led to the dispute between his clients and Ford Credit. Not only are those causes not indicative of any fault, or breach of duty, on the part of Ford Credit; the description of them, and the inference fairly available that they are the real causes of the dispute, together contradict the case on causation that is now put. I have no doubt that the observations in that letter were made on the instructions of Mr Tomlin. I think that the letter - in particular, the paragraph that I have quoted - is a compelling refutation of the case that the plaintiffs now seek to advance.
241 Finally, on this point, although it is correct to say that the gross sales of the Tomlin companies decreased after the events of August and September 1998, their profitability actually increased: something that I shall discuss, but that is inconsistent with the plaintiffs' case on causation.
242 Thus, as I have said, I find that there is no causal connection between the actions of the defendant and the downturn in the Tomlin companies' sales.
No damage in any event
243 The plaintiffs relied on a report prepared by an accountant, Mr Darel Hughes. Mr Hughes said that the plaintiffs had suffered loss, excluding interest and ongoing loss of profits, in the sum of $4,904,007. This loss comprised three elements:
Loss of profits until 30 June 2003 $3,745,295
Loss of value of business at 30 June 2003 973,712
Loss on disposal of premises 185,000
Total: $4,904,007