ARONMORE Pty Ltd v Chambers Investment Planners Pty Ltd - [2001] WADC 175

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION: PERTH

CITATION: ARONMORE PTY LTD -v- CHAMBERS INVESTMENT PLANNERS PTY LTD & ORS [2001] WADC 175

CORAM: LA JACKSON DCJ

HEARD: 22-25 JANUARY & 18-21 JUNE 2001

DELIVERED : 27 JULY 2001

FILE NO/S: CIV 4017 of 1999

BETWEEN: ARONMORE PTY LTD (009 470 446)
Plaintiff
AND
CHAMBERS INVESTMENT PLANNERS PTY LTD (009 294 606)
First Defendant
CHAMBERS CAPITAL PTY LTD (065 728 289)
Second Defendant
TOBY JONES As Administrator of the Estate of the Late PETER KEVIN JONES
Third Defendant
ROBERT FENWICK
Fourth Defendant
KIMBERLEY BRUCE LEUNIG
Fifth Defendant
WILLIAM ADAMSON
Sixth Defendant
ASIA PACIFIC FINANCE CORPORATION LTD (066 445 681)
Seventh Defendant
CHAMBERS INSURANCE BROKERS PTY LTD (056 552 697)
Eighth Defendant

Catchwords:

Breach of contract - Misrepresentation - Decided on own facts

Legislation:

Trade Practices Act, 1974 (C'th)

Fair Trading Act 1987

Result:

Claim dismissed

Representation:

Counsel:

Plaintiff:     Mr A O Karstaedt
First Defendant             :     Mr A Metaxas
Second Defendant         :     Mr A Metaxas
Third Defendant           :     Mr A Metaxas
Fourth Defendant          :     Mr A Metaxas
Fifth Defendant            :     Mr A Metaxas
Sixth Defendant            :     Mr A Metaxas
Seventh Defendant        :     Mr A Metaxas
Eighth Defendant          :     Mr A Metaxas

Solicitors:

Plaintiff:     Stephen Browne & Co
First Defendant             :     Metaxas Vernon
Second Defendant         :     Metaxas Vernon
Third Defendant           :     Metaxas Vernon
Fourth Defendant          :     Metaxas Vernon
Fifth Defendant            :     Metaxas Vernon
Sixth Defendant            :     Metaxas Vernon
Seventh Defendant        :     Metaxas Vernon
Eighth Defendant          :     Metaxas Vernon

Case(s) referred to in judgment(s):

Nil

Case(s) also cited:

Nil

LA JACKSON DCJ: The plaintiff is a family company of which Carol Elizabeth Farrell ("Farrell") and her former husband were directors. The first, second, seventh ("Asia Pacific") and eighth defendants are companies being part of the Chambers Financial Group involved in activities including financial planning, insurance and finance broking. At all material times the Chambers Financial Group carried on business from offices at 35 Outram Street, West Perth. Peter Kevin Jones ("Jones") now deceased, but formerly the third defendant, the fifth defendant Kimberley Bruce Leunig ("Leunig") and the sixth defendant William Adamson ("Adamson") were all directors of one or more of the Chambers Group of companies. It is clear that Jones was the principal director and the driving force within the group. The fourth defendant Robert Fenwick ("Fenwick") was employed by the second defendant in the capacity of manager, structured finance, but was not a director.
The plaintiff has discontinued its action against the fifth, sixth and seventh defendants but I have not been informed, nor need to know, upon what basis.
The trial of this action took place in two parts. Firstly from 22‑25 January 2001 and secondly from 18‑21 June 2001. The January dates substantially concluded the plaintiff's case. Between the January and the June dates Jones died.
Due to his death Jones did not give evidence but a statement by him was tendered in evidence. When considering that statement I took into account that Jones was not cross-examined and could not give any further details of events.
The plaintiff's claim is for the sum of $100,000. On 19 April 1995 it paid that sum to the seventh defendant and despite demand it has not been repaid. The plaintiff's claim is based on breach of contract and misleading and deceptive conduct under both the Trade Practices Act1974 (C'th) and the Fair Trading Act 1987. In a nutshell the plaintiff's case is that Fenwick as an employee of the second defendant and with the connivance of Jones induced it to pay $100,000 to the seventh defendant as part of a security deposit for a loan of $1,000,000. The loan was not made and the defendants are liable for the $100,000. The defendant's case is that when a proposed loan of $1,000,000 by the seventh defendant was going to be delayed, the plaintiff sought and was offered a 12½ per cent interest in the seventh defendant for $100,000; that it accepted the offer and paid. The seventh defendant has failed but the plaintiff took a commercial risk and as there was no misrepresentation the defendants are not liable.
The background circumstances are somewhat convoluted but need to be explained. Farrell lived in a house owned by the plaintiff in City Beach. It was built on steep ground with difficult access. Some years earlier Farrell had undertaken some medical treatment the details of which I do not need to know, but towards the end of 1994, she was advised that due to that medical treatment there was a possibility that she may contract Jakob Creutzfeld Disease. Farrell had been a former Australian and world squash champion. Jakob Creutzfeld Disease can cause both mental and physical symptoms which could result in the sufferer being confined to a wheelchair. When she received the news, Farrell was as she readily acknowledged, utterly devastated. She was receiving medical advice and treatment from a number of specialists.
As a result of the news of her medical condition, Farrell decided to sell the City Beach house with a view to having a house that would be more accessible to a wheelchair and with facilities for a live‑in nursing care. She found such a house in Wembley Downs. The plaintiff also owned a house in Churchlands. Both of these houses were very valuable and had significant mortgages. Farrell was aware of the relatively high interest rates pertaining at the time. She observed an advertisement in the West Australian newspaper which read:
"PROJECT FINANCE
Term 5 yrs to 15 yrs
Interest 8% to 9.5% pa fixed
Chambers Finance Brokers
PH: BOB FENWICK - 321 3200"
Fenwick is the fourth defendant. Farrell said she saw the advertisement in the West Australian of 4 January 1995 and telephoned Fenwick the same day. By letter dated 4 January 1995 Fenwick wrote to Farrell sending her standard information about the Chambers Group of companies including the seventh defendant. That information clearly indicated that the Chambers Group was involved in project financing in a substantial way. One of the documents referred to a minimum loan of $7,000,000, another referred to credit funding of between US$10,000,000 and US$500,000,000. In particular the material referring to the seventh defendant referred to credit lines of between $7,000,000 and $70,000,000.
Farrell was attracted to the advertisement because the interest rates were considerably less than those which she knew the plaintiff was paying to banks on mortgages on the City Beach and Churchlands properties. She advised Fenwick of her requirements and in particular of the particular needs because of the possible Jakob Creutzfeld Disease. Farrell advised Fenwick the Wembley Downs house would cost $850,000 and that she had $150,000 and therefore needed $700,000. Fenwick was sympathetic and although the request was outside the intentions of the Chambers Group he said he would approach William Adamson to see if anything could be done. Adamson was the sixth defendant. By fax dated 25 January 1995, Fenwick enquired of Adamson whether Asia Pacific could assist. He was told it could not and he advised Farrell accordingly.
Sometime in February Farrell again spoke to Fenwick to try to persuade him to arrange finance to purchase the Wembley Downs property. Again Fenwick got in touch with Adamson who again rejected the approach. The approach in February came as a result of a meeting between Farrell and Fenwick which resulted in a letter dated 14 February 1995 Exhibit 1.109. Farrell said that she attended at a meeting at the offices of the Chambers Group at 35 Outram Street and went through this letter with Fenwick. She said she was told and understood that Asia Pacific could lend through another family company Rosemore Pty Ltd the sum of $1,000,000 which would enable her to purchase Wembley Downs. She understood the conditions to be an initial requirement to pay 15% of the loan into Asia Pacific's bank by way of security deposit. She says she was told it might take a month or two to organise the loan and she would be advised when the security deposit was required. Exhibit 1.109 contains a draw‑down provision and a recommended schedule:
"$350,00 - 4 calender months from date of contract
$300,00 - 8 calender months from date of contract
$350,00 - 12 calender months from date of contract"
Farrell denied having been told of this proposal. Clearly a draw‑down provision is inconsistent with a loan for the purpose of purchase of domestic real estate. It is an arrangement commonly in project finance where the money is needed gradually as the project is being developed. In the penultimate paragraph the letter expressly provided:
"This Letter of Offer is an indication of the terms on which the Lender is prepared to make a loan and does not constitute a binding contract on the Agent and the Lender to advance the loan and there will be no such obligation until settlement is effected."
Farrell denies having gone through this letter in any detail with Fenwick. She denies having discussed with Fenwick any proposed development project at Wembley Downs. Fenwick said they discussed sub‑dividing Wembley Downs so it would be a project for the purpose of project financing. I prefer Fenwick's evidence.
Farrell said she was required to pay $1,000 towards legal fees and an acceptance fee of $1,000. This was paid on 27 February 1995.
Later (date uncertain) Farrell said she was advised by Fenwick that the $1,000,000 was available and she should pay $100,000 being part of the security deposit and the balance of $50,000 when the money actually came through. She says she went to 35 Outram Street. She says she was shown a letter (Exhibit 1.118A). She says she was told by Fenwick it was the same as the previous letter except that the name of Rosemore had been changed to the plaintiff. Fenwick denies that was all she was told. He says that she was taken through the letter in detail. There were a number of changes including a reduction of the security deposit from $150,000 to $50,000 and a change to the draw‑down schedule to extend the period up to 3 years from the date of contract. Fenwick said, and I accept, Farrell was told that the $1,000,000 would not be available for the time being.
In April 1995 an arrangement was made between Jones and Fenwick by which Fenwick was offered a line of credit of $1,000,000. He did not have the required $150,000 security deposit. The line of credit would be granted to him provided the first $100,000 was used to purchase a 12½ per cent interest in Asia Pacific. Fenwick said, and I accept, he was pleased and excited by what he thought was a good investment opportunity.
At about this time Farrell was seeing Fenwick regularly to urge him to assist her in finding finance. Fenwick told Farrell about his investment in Asia Pacific and she asked why she could not do the same. Fenwick said he would ask Jones. He did so and Jones agreed and said that the $100,000 in Asia Pacific could be used as part of the plaintiff's security deposit for the loan when it eventuated.
It was as a result of this arrangement that the security deposit referred in Exhibit 1.118A was reduced to $50,000.
Farrell denies this conversation but I do not accept her evidence. She says that she paid the $100,000 being part of the security deposit. I do not accept her version of these events.
Farrell says she was tricked into signing the application for the shares by Fenwick. She said Fenwick advised her that the letter Exhibit 1.118A was in substance the same as the letter Exhibit 1.109 except for the change in the name of the borrower from Rosemore to the plaintiff and that she was given a bundle of documents about 1 cm thick to sign without explanation. Fenwick denies her evidence. He says he went through Exhibit 1.118A with Farrell explaining the changes to her. He says she was never given a large bundle of documents required to be signed. Indeed he says, and I accept, that he signed his documents in relation to the acquisition of the share in Asia Pacific at the same time as Farrell did in the boardroom at 35 Outram Street.
At the same time as Farrell signed the documents on behalf of the plaintiff she signed a consent to act as a director and some bank documents. Farrell admits having signed a consent to act as a director but denies it had any relationship to her acquisition of an interest in Asia Pacific. She says that on 19 April 1995 Fenwick telephoned her and advised her that Jones would like her to be a director of Asia Pacific. She says he said was also being offered a position as a director. Her evidence was Fenwick said they wanted her to be a director because she was a woman who was involved in business and who had been a previous world squash champion. Farrell says that after consulting her former husband she agreed. Fenwick denies that conversation. It was never contemplated that he would become a director of Asia Pacific. Although we have no evidence from Jones on that subject certainly Adamson was very positive in his evidence asserting that Fenwick would never have become a director.
Further evidence in support of the proposition that Farrell was tricked into signing an application for shares is said to be the financial state of Asia Pacific at the time. Adamson said he returned from Europe on 7 April 1995 and spoke to Jones. A deal to raise considerable finance in Europe had fallen through. Adamson and Jones discussed the matter and Jones decided that in the absence of such funds Asia Pacific could not continue and its operation should be put on hold. At that time, according to Adamson, Asia Pacific was worth no more than the $2 of its paid up capital and had debts of the order of $40,000. Adamson said that he heard that there was a proposal to invite Farrell to become a shareholder by payment of $100,000 for 12½ per cent of Asia Pacific. He said he was concerned that Farrell was not aware of the true circumstances of Asia Pacific and pressed both Fenwick and Jones on that subject. Fenwick denies that occurred. Jones' statement is silent on the subject. Fenwick said he was confident about the future prospects for Asia Pacific and that is why when he was offered a 12½ per cent interest in the company he grabbed it thinking it would be in his long term interest. He says that's why he encouraged Farrell to get involved. Counsel for the plaintiff says that information was clearly wrong and one needed only to look at the bank accounts and Adamson's failure prior to his return to Australia early in February 1995 to see that that was the case. I have some difficulty in accepting Adamson's evidence that he was as pessimistic as he now says he felt. If things were as bad as that why was he going overseas again on 12 May 1995. He was well aware that Farrell had become a shareholder and now says that he questioned Jones as to what value she was getting. However his memorandum of 11 May 1995, Exhibit 2.99 in which he referred to the selling of the shares to both Fenwick and Farrell merely questions whether they have paid for them rather than whether they are getting fair value. It seems to me that Adamson has coloured the position he has taken as part of his support for Farrell. I accept the evidence of Fenwick where it is in conflict of that of Adamson. I did not consider Adamson's evidence to be satisfactory. On many occasions he acknowledged that he could not remember details and was speaking "from memory". In answers to a number of his questions he clearly indicated that he was unhappy to give any evidence which was contrary to Farrell's interests and seemed not to appreciate that as a witness he was obliged to say what his recollection had said what occurred rather than what might assist one's side or harm the other.
Adamson went to Europe in May 1995 followed in July by Jones. Despite their efforts they were unsuccessful in raising funds and later that year all of its prospective borrowers were advised that Asia Pacific would be unable to proceed. It is unclear whether Farrell was also advised but certainly she became aware that she would not be getting the money to purchase the Wembley Downs property from Asia Pacific. She therefore arranged to sell City Beach which the plaintiff did in May 1996 for $525,000. The plaintiff had also entered into a contract to sell the Churchlands property. In May 1996 Farrell consulted Tony Joyner from Parker & Parker. There is some conflict in her own evidence as to why she had originally consulted him. There was a meeting at Joyner's office early in May 1996 at which both Farrell and Jones attended. Farrell says at that meeting Jones offered to purchase her shares in Asia Pacific for $100,000. In correspondence following the meeting requests were made by Joyner to Jones to clarify the position so far as the shares are concerned. The correspondence is quite inconsistent with Farrell's assertion that there was an offer made by Jones to purchase the shares and in the circumstances I do not accept what Farrell has to say on that topic.
If Farrell's version of events was correct then the $100,000 had been paid to Asia Pacific by way of a security deposit on behalf of the plaintiff and her registration as a shareholder was a sham and a fraud. It is inconceivable that if she believed that to be the situation she would not have told Joyner at the time he was corresponding with Jones with a view to selling the shares for $100,000. The first time any demand was made for the $100,000 on the basis that it was a security deposit was in a letter from Legal Aid to Asia Pacific in December 1997.
The plaintiff's case relies significantly on Farrell's credibility. I do not accept her evidence where it conflicts with that of Fenwick for a number of reasons.
Shortly before these events had occurred Farrell was in a highly emotional state due to the advice she had received as to the possibility of her having contracted Jakob Creutzfeld Disease. When she was giving her evidence on that particular topic she became emotional and broke down. I can understand the reason for the emotional distress that she was suffering at the time and of course would sympathise with the position in which she found herself . In giving her evidence from time to time she explained that she was unable to clearly recall events because of the stress of the time explaining that she was "under four specialists". It may well be that at that time of her life she was not in a fit state to be making serious commercial decisions but that is not a matter suggested on the pleadings and nor could it be. Unless it could be shown that the defendants were aware of the plaintiff's position and as part of misleading and deceptive conduct alleged took advantage then that would not assist the plaintiff. In my view her recollection of events is coloured by the emotion at the time and that is a matter which must effect the view that I have of her reliability as a witness.
Farrell reported the events to the police. Inquires were made by the Fraud Squad. I do not know the outcome of those inquiries. I do not know, nor is it relevant, whether charges were preferred or not or if they were the outcome of them. What was relevant was that a deposition was taken from Farrell by the investigating police. Counsel for the defendants sought to attack her credibility on the basis of differences between her evidence and what was contained in her deposition. I have been a criminal court Judge for some 9 years and have presided over many hundreds of cases. The accuracy of the taking of depositions is, I have to say, in my experience often questionable. The police inquiring into matters do not often record the information in the same precision as would a lawyer taking a proof of evidence. I do not accept any differences appearing between the deposition and Farrell's evidence is a matter which goes to her credibility.

In a number of respects the evidence she gave was within itself unsatisfactory. Her demeanour seemed to me to change to some extent when perhaps it suited her cause. When she first came into court she was moving very slowly. She frequently spoke very slowly and hesitantly and gave the impression of not understanding what were often very simple propositions put to her. Her physical demeanour was not uniform. Neither was her apparent appreciation of the questions put. Whilst on many occasion she appeared hesitant and not to understand the matters put, on other occasions she was most forceful and clearly in total control of the evidence she was giving. There were a number of specific matters that caused me some concern as to her credibility. She was asked whether she knew anyone called Wiacek (pronounced with a "W") and the name was spelt out to her. She looked puzzled at the name and denied she knew anyone of that name. When it was put to her that she knew someone called Wiacek (pronounced with a "V") she said she remembered someone of that name because he was an architect who had come to inspect the property at City Beach. But when she was further pressed it transpired she had had a personal relationship with Wiacek even going on holiday to Europe with him. Wiacek in his evidence said he had a relationship with Farrell and part of the reason they went to Europe together was to introduce her to his family in Poland. An honest witness when asked about a Wiacek (no matter how pronounced) would have responded to the question that he had probably got the spelling wrong. Indeed it would I think be common knowledge that the V's and W's in middle European surnames sometimes get mixed up. Indeed Wiacek seems to have been someone of importance in another aspect. He made an offer for the house at City Beach for $995,000. It was subsequently sold for $525,000. Originally the plaintiff's claim sought damages for the loss in value in the sale at City Beach allegedly caused by the failure of Asia Pacific to meet its contract and to lend the plaintiff $1,000,000. That claim has been abandoned. It seems Wiacek's offer might well have been made simply for the purpose of getting evidence to support an exaggerated claim for damages. The abandonment of a claim in a significant amount of money has not, to my view, been satisfactorily explained.
Adamson gave evidence supporting Farrell. In my view he was unashamedly in her camp and his evidence was coloured accordingly. Objectively, however, it is to be noted that whilst he was in Europe on the trip commencing on 13 May 1995 he sent glowing and enthusiastic reports back to Jones as to prospects for arranging finance. He extolled Jones to move quickly and was obviously acting with a great deal of enthusiasm. In his evidence he tried to paint Asia Pacific as a $2 company with no value. Investment in a company is not just a matter of valuing its net assets but also a consideration of its prospects in the future. Clearly at about the time Farrell was dealing with the company, Adamson was enthusiastic as to its future prospects. His evidence is inconsistent with the way in which he was dealing with the company at the time.
By contrast to Farrell and Adamson I found Fenwick to be a credible witness. He gave his evidence in a credible manner. On occasions he obviously got things a bit mixed up but that was to be expected after such a long passage of time. His evidence on the essentials was unshaken and consistent with the documentation created at the time.
Counsel for the plaintiff argued I should not accept Fenwick's evidence for a number of reasons. In particular he placed emphasis on the question of whether the shares in Asia Pacific were to be used as a lien as part of the security deposit. At p 286 in cross‑examination it was put to Farrell that Fenwick had told her he had spoken to Jones who had approved the purchase of the shares and that the $100,000 worth of shares would be part of the security deposit by Asia Pacific taking a charge or lien over the shares. Fenwick denied that proposition. It is to be presumed from such a specific question that it was asked on instructions given to defendants' counsel. In his evidence Fenwick said it was possible he might have had some discussion with Jones or Farrell about the subject of a lien taken over the shares but said he could not recall such a discussion. In Jones' statement, Exhibit 26 at par 10, Jones said the shares could be used as part of the security deposit.
There is a problem insofar as Jones' evidence is concerned. He, of course, was not able to be cross‑examined or to amplify the statement made by him. In his video record of interview with the police he clearly had no recollection of any conversations on the subject of the shares in some way forming part of the security deposit although clearly they were linked because he acknowledged that after she became a shareholder by paying $100,000, the security deposit required was reduced to $50,000.
I do not accept that the difference in the evidence with respect to whether or not the shares were to be a lien for the purposes of the security deposit has any impacted upon Fenwick's credibility. Certainly he appears to have given more specific instructions to his solicitors than his evidence indicated but it is, I think, only a matter of degree. In the defendants' case, it is a matter of no significance whether or not the shares were to be a lien for the purpose of the security deposit. The fact was that the required security deposit was reduced by the value of the shares, namely, $100,000. That was not recorded in any formal way in Exhibit 1.118A. As I have noted, I accept Fenwick's evidence that Jones said to simply change the letter of offer by recording the security deposit as $50,000 rather than $150,000, but there is no reference to the $100,000.
Counsel for the plaintiff also endeavoured to make something of the change from Exhibit 1.109 to 1.118A. He suggested that the reason for the reduction to $50,000 was because $100,000 had already been received as part of the security deposit. I do not accept that line of reasoning. If a security deposit of $150,000 was required in order to secure the loan of $1,000,000 then I would have expected the letter to have reflected it. The fact that part of it might have already been paid before the transaction had been completed would not alter the fact that $150,000 was being required for the security deposit. The defendants say because Farrell had purchased shares in Asia Pacific to a value of $100,000 the required security deposit had been reduced. That is consistent with Fenwick's evidence. The fact that no other part of the letter has been altered is also consistent with Fenwick's evidence that Jones told him to simply reduce the required security deposit in the letter.
Counsel for the plaintiff also refers to documents such as Exhibit 1.141 and following in which in June 1996 Jones writes to Farrell obviously at her request advising her of the anticipated income. On behalf of the plaintiff it is said that this information is clearly false. It certainly appears to be but in the absence of any evidence from Jones we have no explanation about it. It might be that Farrell had asked for that sort of information so as to encourage a lender to lend her money for Wembley Downs. In the absence of Jones any suggestions are speculative and I do not think it appropriate to use those exhibits against the interests of the defendants. In any event, one is concerned about the events of April 1995 not of June 1996.
It is suggested that the sequence of events in April were that Exhibit 1.118A was typed on 18 April 1995 and on that day Fenwick got in touch with Farrell advising her that there were documents that needed signing. That does not seem to be in issue. It was also that day that he advised Farrell of his offer to acquire 12½ per cent interest in APFC for $100,000 and her expression of interest. He says he will speak to Jones which he does. Jones says that Farrell can become a director and that the purchase of shares for $100,000 means that the equity deposit is reduced to $50,000. Farrell comes in on 19 April 1995 and signs the letter of intent, Exhibit 1.118A and the consent to become a director and the application for shares and gives Jones the two cheques totalling $100,000. The next day the cheques are banked.
At its meeting of 20 February 1995 Asia Pacific allots shares to both Farrell and Seabird (Fenwick's company). It is suggested that the payment of the money before the shares have been issued is sinister and indicates that the $100,000 payment was not in fact related to the shares at all. I do not accept that line of reasoning. It would not be unusual to pay the money for the shares upon the application, particularly with a small private company in which it is clear that Jones is the prime mover. A lot was made of the receipt signed by Fenwick for the $100,000 which did not specify what the sum was paid for in contrast to a receipt for $2,000 where the reason for the payment was itemised. Once again anything turns on that distinction. No executed share scrip has been found. Once again with a small private company I do not consider that to be peculiar. The Memorandum and Articles of Association have not been tendered in evidence. It may be there is some restriction on the sale of shares. As it is not a publicly listed company then it is unlikely the shares would be traded and the need for share scrip would simply not exist.
There were a number of minutes of meetings on 18, 19 and 20 April 1995. It seems to me that what has probably happened in accordance with the usual fairly sloppy way that a small private company might be run is that the minutes of what is expected to occur at the meeting are prepared in advance and sometimes it does not happen. Once again I don't think there is anything particularly sinister about that and the absence of Jones as a witness makes it really impossible to test it. In any event in the end the evidence as provided by the minutes of the company meetings are far less important than the direct evidence of Fenwick and Farrell.
It is suggested on behalf of the plaintiff that this was always a confidence trick because of the financial situation of Asia Pacific. In Exhibit 3.208 Fenwick is obviously concerned as to an apparent change in the company's fortunes. I note that is a memorandum dated 4 May 1995 and perhaps tends to confirm his enthusiasm for the company a couple of weeks before rather than the contrary.
The fact that Adamson might have thought the company was on the ropes in April 1995 does not necessarily mean that Fenwick would have been aware of his views or indeed that it was true. Even if Asia Pacific were having difficulties it is part of the Chambers Group which might otherwise have been very successful. The plaintiff suggests that Fenwick's evidence should not be accepted for a number of reasons. Included in those reasons was his evidence that his first contact with Farrell was in December 1994. Exhibit 23 seems to indicate the dates are wrong, but it is of no significance.
The statement of claim pleads misrepresentation by the defendants with respect to the payment of the $100,000. Farrell did not give evidence that she relied upon the representations, for example, those contained in the annexures to the original letter sent by Fenwick to Farrell. For example the $640,000,000 worth of contracts. Counsel for the plaintiff suggests an implication could be drawn that Farrell must have been influenced by such grandiose statements. To succeed in a misrepresentation case the plaintiff must say she relied upon the representations. If she fails to do so then she cannot succeed on that ground.
It is for the plaintiff to prove her case against the defendants. Her case is that she paid the $100,000 to Asia Pacific for the purpose of a security deposit to borrow $1,000,000 to finance the purchase of the house at Wembley Downs. At the end of the day the issue was a contractual one. I do not accept the plaintiff had a contract with Asia Pacific to borrow $1,000,000 and that the payment of $100,000 was a security deposit for that loan. I accept that the plaintiff fully well knew that she was buying the shares in Asia Pacific. If she did not appreciate that then it was because of the emotional state in which she was in at the time. It was not because of any misleading or deceptive conduct on behalf of the any of the defendants and in the circumstances the plaintiffs claim must be dismissed.