Bruce Harvey v State of New South Wales

[2006] NSWSC 1436

CITATION:	Bruce Harvey and Anor v State of New South Wales [2006] NSWSC 1436
HEARING DATE(S):	6 June 2005, 7 June 2005, 8 June 2005, 9 June 2005, 10 June 2005, 14 June 2005, 15 June 2005, 16 June 2005, 25 August 2005, 28 November 2005, 29 November 2005, 30 November 2005, 5 December 2005, 6 December 2005, 9 December 2005, 13 December 2005
JUDGMENT DATE :	21 December 2006
JURISDICTION:	Equity Division
JUDGMENT OF:	Johnson J at 1
DECISION:	1. Verdict and judgment for the Defendant ; 2. Plaintiffs to pay the Defendant’s costs of the proceedings.
CATCHWORDS:	CLAIM FOR DAMAGES - misleading and deceptive conduct claim against State of New South Wales for false and misleading statements made by officer of the Department of Aboriginal Affairs - whether ostensible authority established to render State of New South Wales liable - whether Plaintiff put on inquiry by circumstances of dealing with officer - whether Department of Aboriginal Affairs carrying on business for purposes of Fair Trading Act 1987 - whether State of New South Wales vicariously liable for acts of officer - whether officer engaged in a frolic of his own - whether direct liability in negligence established against State of New South Wales arising from appointment of officer to departmental position and supervision of him
LEGISLATION CITED:	Fair Trading Act 1987 Law Reform (Vicarious Liability) Act 1983 Real Property Act 1900 Uniform Civil Procedure Rules
CASES CITED:	De Gioia v Darling Island Stevedoring & Lightecage Co Ltd (1941) 42 SR(NSW) 1 Challenge Finance Limited for Forshaw (No 4) (1995) 217 ALR 264 Hunt v Watkins (2000) 49 NSWLR 508 Carr v Baker (1936) 36 SR(NSW) 301 R v Serratore (1999) 48 NSWLR 101 Sirway Asia Pacific Pty Limited v Commonwealth of Australia [2002] FCA 1152 Paramedical Services Pty Limited v Ambulance Service of NSW [1999] FCA 548 State of New South Wales v RT & YE Falls Investments Pty Limited (2003) 57 NSWLR 1 Meadow Gem Pty Limited v ANZ Executors and Trustee Company Limited (Supreme Court of Victoria, Hedigan J, 18 May 1994, BC9401058); (1994) ATPR (Digest) 46-130 Northside Developments Pty Limited v Registrar General (1990) 170 CLR 146 Pacific Carriers Limited v BNP Paribas (2004) 218 CLR 451 Freeman and Lockyer v Brockhurst Park Properties (Mangal) Limited (1964) 2 QB 480 Essington Investments Pty Limited v Regency Property Pty Limited [2004] NSWCA 375 Armagas Limited v Mundogas SA (1986) AC 717 Deatons Pty Limited v Flew (1949) 79 CLR 370 State of New South Wales v Lepore (2003) 212 CLR 511 Starks v RSM Security Pty Limited [2004] NSWCA 351 Rosenberg v Percival (2001) 205 CLR 434 R v Watkins [2005] NSWCCA 164 Neill v NSW Fresh Food & Ice Pty Limited (1963) 108 CLR 362 Vozza v Tooth & Co Limited (1964) 112 CLR 316 Kingshott v Goodyear Tyre & Rubber Co Australia Limited (No. 2) (1987) 8 NSWLR 707 Sellars v Adelaide Petroleum NL and Others (1992-1994) 179 CLR 332 Malec v JC Hutton Pty Limited (1990) 169 CLR 638
PARTIES:	Bruce Harvey and Bruce Harvey Enterprises Pty Limited (Plaintiffs) State of New South Wales (Defendant)
FILE NUMBER(S):	SC 5051/01
COUNSEL:	Mr F Donohoe (Plaintiffs - 6, 7, 8, 9, 10, 14, 15 and 16 June 2005) Mr S Titus (Plaintiffs - 25 August 2005; 28, 29 and 30 November 2005; 6, 9 and 13 December 2005) Mr P Menzies QC; with Mr D Mallon (Defendants)
SOLICITORS:	Mr S Titus - Carneys Lawyers (Plaintiffs) IV Knight, Crown Solicitor's Office (Defendants)
LOWER COURT DATE OF DECISION:	---
LOWER COURT MEDIUM NEUTRAL CITATION:	---

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

Johnson J

21 December 2006

5051/01 Bruce Harvey and Anor v State of New South Wales

JUDGMENT

1 JOHNSON J: In June 2005, I embarked upon the hearing of two sets of related proceedings which were to be heard together:

(a) Equity Division proceedings 5051/01 Bruce Harvey and Bruce Harvey Enterprises Pty Limited v State of New South Wales and

(b) Common Law Division proceedings 20525/01 Bruce Harvey Enterprises Pty Limited v Victor Tjakamarra Forrest and Henry Kelly.

2 At the commencement of the second hearing day, I was informed that the Common Law Division proceedings had settled in their entirety together with cross claims in the Equity Division proceedings. By consent, I made certain orders to give effect to the settlement. Thereafter, the hearing proceeded of the balance of the Equity Division proceedings in which the Plaintiffs, Bruce Harvey Enterprises Pty Limited (“Enterprises”) and Bruce Harvey, sue the Defendant, the State of New South Wales, upon several causes of action.

Overview of the Plaintiffs’ Claims

3 The Plaintiffs maintain that the Defendant is liable to them for damages under the Fair Trading Act 1987 or in negligence with respect to actual loss, and the loss of opportunity to make significant profits from the marketing, in the context of the 2000 Sydney Olympic Games, of framed items of Aboriginal art accompanied by a Certificate of Title as tenant in common to a remote area of land outside Hill End. It is the Plaintiffs’ case that these items were to be sold to the general public, including international visitors, at a price of about $1,000.00 per item and that the project would have been very successful.

4 The Plaintiffs sue the Defendant upon the following causes of action:

(a) misleading and deceptive conduct on the part of one Adrian Tucker (then an officer of the New South Wales Department of Aboriginal Affairs (“DAA”) which is alleged to have given rise to loss or damage for which it is claimed that the Defendant is liable for damages by way of apparent authority under s.70 Fair Trading Act 1987 ;

(b) negligent misstatements on the part of Adrian Tucker which are said to have caused loss and damage for which the Defendant is said to be vicariously liable;

(c) negligence on the part of the Defendant in the employment and supervision of Adrian Tucker in 1999 and 2000 within the DAA, for which it is alleged that the Defendant is directly liable.

5 As will be seen, it is common ground between the Plaintiffs and the Defendant that Mr Tucker, whilst an employee of the DAA, made a series of false and misleading statements to Mr Harvey and persons associated with Mr Harvey. Mr Tucker is not a party to these proceedings. Nor was he called as a witness by the Plaintiffs or the Defendant. A central issue to be determined is whether Mr Tucker’s undoubted false and misleading statements give rise to any liability on the Defendant’s part to the Plaintiffs.

6 The Plaintiffs assert that ostensible or apparent authority is established so that the Defendant is liable for Mr Tucker’s false and misleading statements. The Defendant denies that this is so and contends, as well, that Mr Harvey was put on inquiry by aspects of Mr Tucker’s conduct and did not act reasonably so that, even if ostensible authority was established, the Plaintiffs cannot succeed.

7 The Defendant contends that Mr Tucker was engaged in a “frolic of his own” so that the Defendant is not vicariously liable for his actions. The Defendant contends further that the Plaintiffs have not established any cause of action in negligence arising from the selection of Mr Tucker to work in the DAA and the supervision of him in that employment.

Appearances at the Hearing

8 At the first stage of the hearing in June 2005, the Plaintiffs were represented by Mr F Donohoe, of counsel, instructed by Mr S Titus, solicitor. At the resumed hearing of the matter in November and December 2005, Mr Titus appeared for the Plaintiffs. At all times, the Defendant was represented by Mr P Menzies QC with Mr D Mallon of counsel, instructed by Ms N Haddad of the Crown Solicitor’s Office.

The Course of the Hearing

9 The Plaintiffs called the following witnesses in support of their claims:

(a) Bruce Harvey, engineer, a Plaintiff in the proceedings (T82-112, 7 June 2005; T1-116, 8 and 9 June 2005; T93-98, 10 June 2005);

(b) Peter William McDonald, marketing consultant - Mr McDonald’s evidence concerned marketing opportunities said to be available with respect to the framed items of Aboriginal art and Certificate of Title (T106-161, 10 and 14 June 2005);

(c) Michael Wilson, financial advisor - Mr Wilson’s evidence concerned the availability of finance for the project (T171-179, 14 June 2005);

(d) Jo-Ann Zamora, web development and training consultant - Ms Zamora’s evidence concerned internet advertising and promotion issues relating to the project (T185-189, 14 June 2005);

(e) Anthony Arthur Amatto, unemployed - Mr Amatto’s evidence related to the involvement of the Wiradjuri people in the project (T246-249, 16 June 2005);

(f) Martyn Henry Betts, accountant - the evidence of Mr Betts related to accounting work said to have been undertaken for the Plaintiffs during the period when the project was under development and consideration and his involvement with Mr Harvey and Mr Tucker in 1999-2000 (T271-289, 301-318, 28 November 2005);

(g) Terence Peter Griffin, Commissioner of the Police Integrity Commission - Mr Griffin’s evidence related to an investigation carried out by him prior to his appointment to the Police Integrity Commission, whereby at the request of the Crown Solicitor’s Office, he investigated the conduct of Mr Tucker within the DAA concerning his dealings with Mr Harvey - his evidence was brief and was confined essentially to the tender of certain notes of interviews conducted during the investigation (Exhibit N) (T290-300, 28 November 2005).

10 In addition, affidavits or statements of the following persons were read in the Plaintiffs’ case with the deponent or author not required for cross-examination:

(a) Robin Geoffrey Humphreys, chartered accountant - Mr Humphreys’ affidavits contained calculations of damages for the loss of opportunity said to have arisen from the inability of the Plaintiffs to proceed with the project marketing framed items of Aboriginal art and Certificates of Title;

(b) Margaret Colleen Hole, solicitor - Ms Hole’s affidavit concerned opinions the reasonableness of a solicitor acting in certain capacities with respect to the project;

(c) Ronald John Brouwer, engineer - Mr Brouwer’s statement concerns the income which Mr Harvey could have earned as an engineer in 1999-2000;

(d) John Edward Roberts, company director - Mr Roberts’ statement relates to Mr Harvey’s business activities in and after 2001 and his business acumen in those activities;

(e) Robin Glass, investor - Mr Glass’ statement concerns his dealings with Mr Harvey on and after 29 June 2000 with respect to possible investment in the Plaintiffs’ project involving the marketing of framed items of Aboriginal art and Certificates of Title.

11 At the conclusion of the Plaintiffs’ case, Mr Menzies QC, for the Defendant, moved for dismissal of the proceedings under Part 29 r 29.9 Uniform Civil Procedure Rules (“UCPR”). Mr Titus, solicitor for the Plaintiffs, stated that the Plaintiffs wished to argue the question raised by the application for the purpose of Part 29 r 29.9(3) UCPR. Thereafter, I heard submissions and ruled that I would not accede to the Defendant’s application for dismissal of the proceedings (T357.18).

12 On such a dismissal application, the Plaintiffs’ evidence should be taken at its highest: De Gioia v Darling Island Stevedoring & Lightecage Co Ltd (1941) 42 SR(NSW) 1 at 3; Challenge Finance Limited for Forshaw (No 4) (1995) 217 ALR 264 at 268-9; Hunt v Watkins (2000) 49 NSWLR 508 at 510.

13 In evaluating a submission of “no case to answer” in civil proceedings, the Court does not evaluate the evidence nor make findings of fact. I was in the same position as a judge with a civil jury, except that I fulfil both roles. It was necessary to consider whether, as a matter of law, the Plaintiffs’ case met the standard set out in De Gioia, Challenge Finance Limited v Forshaw (No. 4) and Hunt v Watkins. If there was sufficient evidence to surmount this barrier, then, in due course, the case proceeds with it falling to me, as the trial judge, to evaluate the evidence and to decide the case and make findings of fact.

14 Where, as in the present case, the Plaintiffs’ case is based partly upon inferences which the court is asked to draw from evidence in the Plaintiffs’ case, and there are countervailing probabilities, it would be a very exceptional case in which the judge could be justified in taking the case away from a jury in civil proceedings: Carr v Baker (1936) 36 SR(NSW) 301 at 306-307. A similar approach is adopted where a submission of no prima facie case is made in criminal proceedings based upon circumstantial evidence: R v Serratore (1999) 48 NSWLR 101 at 130.

15 Having applied these principles to the submissions advanced by the parties, I refused the Defendant’s application for dismissal of the proceedings.

16 Following the rejection of the Defendant’s application for dismissal of the proceedings, the Defendant adduced evidence as permitted under Part 29 r 29.9(5)(a) UCPR. The Defendant called the following witnesses:

(a) Ian Allen Myers, Deputy General Manager of Indigenous Business Australia - the evidence of Mr Myers related to his contact with Mr Harvey concerning the project in 2000 and associated matters (T357-369, 29 November 2005);

(b) Warren Lloyd Steadman, Regional Manager, Department of Aging and Disability and Aboriginal Home Care - Mr Steadman’s evidence concerned his employment between 1998 and 2000 as Manager of the Research and Policy Unit within the DAA, in which capacity he supervised Mr Tucker and had some knowledge of Mr Harvey and his project (T369-386, 29 November 2005);

(c) Brian David Higginson, supervisor in the Department of Lands - Mr Higginson’s evidence concerned legal and practical issues surrounding the issue by the Registrar General of multiple Certificates of Title to tenants in common of land (T386-389, 29 November 2005);

(d) Neville James Moses, solicitor - the evidence of Mr Moses involved his expert opinion concerning Land Titles Office practice, the issuing of Certificates of Title and related issues concerning Mr Harvey’s project (T392-400, 30 November 2005);

(e) John Colquhoun, art dealer - Mr Colquhoun’s evidence concerned contact with Mr Harvey in late 1999 relating to the framed Aboriginal art/Certificate of Title project and the prospect of financial success arising from that project (T400-407, 30 November 2005);

(f) Gavin Ronald Bartier, solicitor in the Department of Lands - Mr Bartier’s evidence concerned his contact with Mr Harvey about the project in and after July 2000 and the question of registration and the issue of multiple Certificates of Title and the practicability, legality and cost of that step (T408-412, 30 November 2005);

(g) John Moore, Chief Executive Officer (Asia Pacific) of the Nuance Group - Mr Moore’s evidence concerned his involvement, at relevant times, as Group General Manager of Marketing and Image of the Sydney Organising Committee for the Olympic Games (“SOCOG”) - Mr Moore’s evidence touched upon the viability of Mr Harvey’s project and the question whether it could have ever received endorsement by SOCOG having regard to the criteria applicable for SOCOG-endorsed products (T412-418, 30 November 2005);

(h) Margaret Craig-Lees, Associate Professor of Marketing at the Auckland University of Technology - Dr Craig-Lees gave expert evidence concerning the practicability and viability, from a marketing perspective, of Mr Harvey’s project to market framed items of Aboriginal art/Certificate of Title (T419-444, 30 November 2005);

(i) Geoffrey William Scott, research chair at the University of Technology - Mr Scott’s evidence concerned events in 2000 when he was Director General of the DAA, issues concerning Mr Tucker and statements made by Mr Scott to Mr Griffin during his investigation (T447-467, 6 December 2005);

(j) Linda Jean Burney, Member of the New South Wales Legislative Assembly - Ms Burney’s evidence related to the period when she was Deputy Director General, and then Director General, of the DAA in 1999 and afterwards and her knowledge of Mr Tucker’s dealings with Mr Harvey concerning the Plaintiffs’ project (T468-494, 6 December 2005).

The Plaintiffs’ Pleaded Claims

17 The Plaintiffs’ claims are set out in the Further Amended Statement of Claim (“FASC”) filed by leave on 9 June 2005, which is the principal source for the following narrative and which serves to introduce a number of persons and entities to be referred to later in this judgment.

18 Enterprises was incorporated on 14 June 1984. At all relevant times, the second-named Plaintiff, Bruce Harvey, was a director of Enterprises and the company acted through him as its agent.

19 By Deed of Trust dated 1 September 1999, Enterprises became trustee of the trust known as “The Australian Indigenous Peoples Hill End Land Trust” (“the Trust”).

20 Prior to 25 July 2000, Sir Barry Jowett was a director of Sydney-Beijing Development Corporation Pty Limited. He was also a registered proprietor of 99,980 out of 100,000 shares of land near Hill End comprised in Lots 63, 64 and 107 in Deposited Plan 756105, being the land comprised in Certificate of Title Volume 8647 Folio 246 (“the Land”). Sir Barry Jowett employed Henry Kelly, solicitor, in respect of his dealings with Mr Harvey and Enterprises.

21 During 1998, Mr Harvey was introduced to Sir Barry Jowett. During discussions, Sir Barry Jowett introduced Mr Harvey to the concept of the sale of 100,000 individual shares in the Land including mounted and authenticated Certificates of Title. During 1998, Sir Barry Jowett and Mr Harvey attempted to develop projects for the sale of similar products into China and elsewhere, but without success.

22 On or about 11 August 1999, Mr Harvey contacted the DAA to notify it of the project and to seek the co-operation of the DAA in its promotion. He was directed by the receptionist to Adrian Tucker, a person employed as a policy officer in the DAA.

23 On 12 August 1999, Mr Harvey met with Mr Tucker at the offices of the DAA and thereafter Mr Harvey and Mr Tucker communicated with each other concerning the Plaintiffs’ project.

24 Mr Harvey’s project involved the marketing of products in co-operation with the Wiradjuri Council of Elders (“the Elders”). As a result of Mr Harvey’s co-operation with the Elders, the project was refined to a plan to market a mounted and authenticated Certificate of Title which was said to be for the mutual benefit of Mr Harvey (or his nominee) and the Wiradjuri people. It was proposed that the Trust would develop a product for sale to the public which consisted of:

(a) a framed full freehold title deed for each of the 100,000 shares available in the Land;

(b) an authentic Aboriginal painting;

(c) a certificate of authenticity for the Certificate of Title and the painting;

which together would be mounted in a glass-enclosed frame and given an individual limited edition number.

25 It was proposed that the product would then be marketed to the public in Australia and overseas for an expected price of $A1,000.00. It would be a condition of the sale of each item that the purchaser enter into an agreement appointing the Elders as managers of the land in perpetuity.

26 It was proposed that the Trust would pay a fixed price to the painters and, after recovery of expenses, it was envisaged that the Trust would retain a profit of $250.00 per item sold.

27 On about 24 November 1999, the Elders on behalf of the Wiradjuri people, obtained a company for their use in connection with the product named Wiradjuri Council of Elders Limited, which was purchased as a shelf company by Mr Harvey on behalf of the Elders.

28 By agreement made between Enterprises and Sir Barry Jowett on 13 December 1999, it was agreed that:

(a) pursuant to a contract for the sale of land, Sir Barry Jowett would sell the Land to Enterprises with completion to take place on 24 January 2000;

(b) Sir Barry Jowett would assign the (so-called) intellectual property in the business said to be conducted by him with respect to the sale of remaining shares in the Land (99,980 out of 100,000 shares) for the price of $950,000.00 on certain terms.

The Plaintiffs’ Causes of Action

29 In the FASC, the Plaintiffs allege that nine separate sets of representations were made by Mr Tucker, each of which is alleged to have been made in trade or commerce and to constitute representations for the purposes of the Fair Trading Act 1987. The form and date of the representations alleged are as follows:

(a) oral representations allegedly made at a meeting between 13 and 31 August 1999 between Mr Harvey and Mr Tucker (the first representations) (FASC, paragraphs 14-15);

(b) written representations contained in a letter dated 31 August 1999 from Mr Tucker to Mr Harvey and Enterprises (second representations) (FASC, paragraphs 16-17);

(c) written representations contained in emails from Mr Tucker to Mr Harvey dated 24 September 1999 and 8 October 1999 (third representations) (FASC, paragraphs 18-20);

(d) written representations contained in a letter dated 26 October 1999 from Mr Tucker to Mr Harvey and Enterprises (fourth representations) (FASC, paragraphs 21-22);

(e) oral representations alleged to have been made at a meeting in 1999 at a restaurant between Mr Harvey, Mr Tucker and Rene Rivkin (fifth representations) (FASC, paragraphs 23-25);

(f) written representations alleged in a letter dated 24 December 1999 from Mr Tucker to Mr Harvey and Enterprises (sixth representations) (FASC, paragraphs 27-31);

(g) written representations contained in a letter dated 24 January 2000 from Mr Tucker to Mr Harvey and Enterprises (seventh representations) (FASC, paragraphs 32-33);

(h) written representations contained in a letter dated 7 February 2000 from Mr Tucker to Henry Kelly, solicitor for Sir Barry Jowett, a copy of which is alleged to have been copied by Mr Tucker on that date to Mr Harvey (the eighth representations) (FASC, paragraphs 34-38);

(i) written representations contained in a letter sent on or about 15 March 2000 by Mr Tucker to Mr Kelly (a copy of which is alleged to have been copied to Mr Harvey by facsimile) (ninth representations) (FASC, paragraphs 39-42).

30 The Plaintiffs allege that each of the nine representations were:

(a) misleading and deceptive within the meaning of s.42 Fair Trading Act 1987 ;

(b) made negligently by Mr Tucker (FASC, paragraph 46).

31 In the alternative to the claims under the Fair Trading Act 1987 and for negligent misstatement, the Plaintiffs allege that the Defendant owed a duty of care to the Plaintiffs and breached that duty by negligently appointing Mr Tucker to the position he held within the DAA, by not supervising or adequately supervising the conduct of Mr Tucker in his dealings with the Plaintiffs and by not supervising the correspondence between Mr Tucker and the Plaintiffs adequately or at all (FASC, paragraphs 55D-55E).

32 The Plaintiffs assert various forms of loss and damage as a result of the alleged misleading and deceptive and/or negligent conduct of Mr Tucker (FASC, paragraph 56).

The Defendant’s Response to the Claims

33 The broad approach of the Defendant to the proceedings involves admissions that Mr Tucker was employed as a policy officer by the DAA and made communications and representations to Mr Harvey in respect of funding of the project, but denies that the communications and representations were made by Mr Tucker during the course of his employment and denies that the Defendant was vicariously liable for the actions of Mr Tucker (Defence to FASC filed 29 November 2005, paragraph 4).

34 The Defendant denies that any of the nine sets of representations alleged by the Plaintiffs have been established through the documentary or oral evidence.

35 With respect to the whole of the claim of the Plaintiffs under the Fair Trading Act 1987, the Defendant says that it did not at any material time carry on a business within the meaning of and for the purposes of that Act (Defence to FASC, paragraph 31).

36 In relation to the whole of the FASC, the Defendant says that:

(a) Mr Tucker acted outside his authority as an employee of the DAA and outside his scope of employment;

(b) Mr Tucker was not authorised to act, behave and conduct himself in the manner alleged by the Plaintiffs in these proceedings and he was not directed or authorised to so act (Defence to FASC, paragraph 32).

37 With respect to the claims in negligence, the Defendant denies both vicarious and direct liability.

Relevant Legal Principles

38 There is little dispute between the parties concerning the legal principles applicable to the claims for relief. Rather, the controversy lies in the application of these principles to the facts of the case.

Claims Under the Fair Trading Act 1987

39 The Fair Trading Act 1987 binds the Crown in right of the State insofar as the Crown in right of the State carries on a business, whether directly or by an authority of the State: s.3(1) Fair Trading Act 1987.

40 The term “business” includes a business not carried on for profit and a trade or profession: s.4(1).

41 “Public authority” means a public or local authority constituted by an Act (whether or not a statutory body representing the Crown), a Government Department of an administrative office: s.4(1).

42 The term “trade or commerce” includes any business or professional activity: s.4(1).

43 A person shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive: s.42(1).

44 Section 70 Fair Trading Act 1987 relates to conduct by directors, servants or agents. It was common ground before me that s.70(3), (4) and (5) were the relevant parts of s.70 for the purpose of these proceedings. Those provisions state:

“ (3) If, in a proceeding under this Part in respect of conduct engaged in by a person other than a body corporate, it is necessary to establish the state of mind of the person, it is sufficient to show that a servant or agent of the person, being a servant or agent by whom the conduct was engaged in within the scope of the servant’s or agent’s actual or apparent authority, had that state of mind.

(4) Conduct engaged in on behalf of a person other than a body corporate:


(a) by a servant or agent of the person within the scope of the actual or apparent authority of the servant or agent, or

(b) by any other person at the direction or with the consent or agreement (whether express or implied) of a servant or agent of the first-mentioned person, if the giving of the direction, consent or agreement is within the scope of the actual or apparent authority of the servant or agent,
shall be deemed, for the purposes of this Act, to have been engaged in also by the first-mentioned person.

(5) A reference in this section to the state of mind of a person includes a reference to the knowledge, intention, opinion, belief or purpose of the person and the person’s reasons for that intention, opinion, belief or purpose.”

45 It was common ground between the parties that Mr Tucker did not have actual authority of the Defendant to act in the way in which he did. The relevant concept for the purpose of this case is apparent or ostensible authority. I will return to this issue shortly.

46 The claim under the Fair Trading Act 1987 will only run if the Court is satisfied that the Defendant, through the DAA, was “carrying on business” (s.3(1)) or was engaged “in trade or commerce” (s.42(1)).

47 The term “business” is not capable of a precise definition and its meaning is to be derived from the context in which it is used: Sirway Asia Pacific Pty Limited v Commonwealth of Australia [2002] FCA 1152 at [51]. The expression “carry on a business”, in its ordinary meaning, signifies a course of conduct involving the performance of a succession of acts and not simply the effecting of one solitary transaction: Sirway at [52]. A business may still be carried on when the activities engaged in are purely altruistic or charitable in scope: Sirway at [54]. Usually, the less commercial the character and objectives of an organisation, the greater the degree of system and regularity required for the organisation’s activities to be characterised as a business: Paramedical Services Pty Limited v Ambulance Service of NSW [1999] FCA 548 at [86].

48 It was common ground between the parties that relevant principles were to be found in the decision of the Court of Appeal in State of New South Wales v RT & YE Falls Investments Pty Limited (2003) 57 NSWLR 1.

49 Spigelman CJ observed that it is necessary to identify with some degree of precision the particular conduct in issue in proceedings, in order to determine whether that conduct can be characterised as having been performed “in trade or commerce” or in the course of “carrying on a business”: Falls at 5 [24]. The Chief Justice observed, at 5 [24], that the conduct in issue in that case involved representations to the effect that a particular proposal under consideration by a government department (the Department of Agriculture) was “highly unlikely” to be rejected or that approval was “almost a foregone conclusion”, and that the representations were made by an officer of the Department of Agriculture in the course of the administration of two of the large number of acts for which that Department was responsible.

50 At 7 [33], Spigelman CJ agreed with Hodgson JA that it was not possible to characterise the conduct in question in Falls as the “carrying on of a business” or as having been engaged “in trade or commerce”. The Chief Justice concluded that it was erroneous to take one aspect of the scheme of compensation and thereby characterise the process as a whole. Spigelman CJ concluded that “the governmental character of the process remains not only the dominant but, in my opinion, the sole characterisation of the process” (at 7 [33]).

51 Sheller JA, in Falls at 9 [47], agreed that the representation was not made in the course of a business carried on by the New South Wales Department of Agriculture, a department with no separate legal status. Sheller JA observed that the concept of the Crown carrying on a business “is a difficult one in borderline cases” and “the answer tends to be more intuitive than the product of a process of reasoning”. Sheller JA at 9 [47] adopted what was said to Sundberg J in Sirway Asia Pacific Pty Limited v Commonwealth of Australia at [62] that, because the New South Wales Department of Agriculture’s activity in Falls “so obviously relates to the execution of a government function which is in the interests of the community, it does not have the characteristic of carrying on a business”. Sheller JA concluded that the assignment to the Department of part of the owner’s interests in the proceeds of sale in Falls was to achieve a policy objective and had nothing to do with business considerations and, accordingly, the Fair Trading Act 1987 had no application to the representation complained of (at 9 [47]).

52 In Falls, Hodgson JA at 34-35 [129]-[135], considered whether the Crown, through the Department of Agriculture was carrying on business for the purpose of the Fair Trading Act 1987. Hodgson JA accepted, at 34 [129], that the fact that certain activities are part of the provision of governmental services will generally be relevant to the question whether or not they amount to the carrying of a business although it will not be conclusive. Hodgson JA accepted, at 34 [130], that a government agency may be carrying on a business, by activities which are themselves only a part, perhaps even a small part, of activities which are, when considered as a whole, plainly the provision of government services and not a business. However, his Honour said at 34 [131] that “the activities in question must be sufficiently systematic and regular, and sufficiently similar to commercial activities that private persons might engage in, to justify being characterised as a business”. Hodgson JA concluded that the New South Wales Department of Agriculture was not relevantly carrying on a business and, for similar reasons, the representations were not made in trade or commerce (at 35 [135]).

53 I will return later in this judgment to apply these principles to the facts of the present case.

Ostensible Authority

54 It is common ground that Mr Tucker was not acting within the scope of his actual authority and the Plaintiffs put their case as one of ostensible or apparent authority.

55 If Mr Tucker was acting within the scope of his apparent authority, then the Defendant may be liable for breach of the Fair Trading Act 1987 (s.70(4)) if other elements of the statutory claim are made out.

56 Whether or not someone has ostensible authority to act on behalf of a principal depends, not on the conduct of the person who has purported to act on behalf of the principal, but rather on the conduct of the person or body alleged to be the principal, being the person or body upon whom liability may be fixed: Northside Developments Pty Limited v Registrar General (1990) 170 CLR 146 at 187; Pacific Carriers Limited v BNP Paribas (2004) 218 CLR 451 at 466-467 [36]. In Pacific Carriers Limited v BNP Paribas, Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ said at 466-467 [36] (footnotes excluded):

“It is not enough that the representation should come from the officer alone. Whether the representation is general, or related specifically to the particular transaction, it must come from the principal, the company. That does not mean that the conduct of the officer is irrelevant to the representation, but the company’s conduct must be the source of the representation. In many cases the representational conduct commonly takes the form of the setting up of an organisational structure consistent with the company’s constitution. That structure presents to outsiders a complex of appearances as to authority. The assurance with which outsiders deal with a company is more often than not based, not upon inquiry, or positive statement, but upon an assumption that company officers have the authority that people in their respective positions would ordinarily be expected to have. In the ordinary case, however, it is necessary, in order to decide whether there has been a holding out by a principal, to consider the principal’s conduct as a whole.”

57 A claim that someone is bound by the acts of someone having ostensible authority “may be rejected on the ground that the circumstances of the case were such as to put the party who makes the claim on inquiry to ascertain the actual state of affairs. Those circumstances may be the nature of the transaction or facts of which the claimant was aware”: Northside Developments Pty Limited v Registrar General at 154, 164 (Mason CJ), 178, 181 (Brennan J) and 212 (Gaudron J). As will be seen, this principle assumes particular importance in this case.

58 If Mr Harvey is acting on behalf of a disclosed principal (Sir Barry Jowett), then Mr Harvey, as agent, has no right of action against a third party: Bowstead and Reynolds on Agency, 17th edn, 2001, paragraph 9-010. Where the principal is undisclosed at the time of contracting, the contract is made with the agent and he is personally liable and entitled on it. If an agent is acting for an undisclosed principal then, if he sues in tort, he can generally only recover his own loss and not that of the principal: Bowstead and Reynolds on Agency at paragraph 9-013.

59 An apparent or ostensible authority is a legal relationship between the principal and the contractor created by a representation, made by the principal to the contractor, and in fact acted on by the contractor that the agent has authority to enter on behalf of the principal into a contract of a kind within the scope of apparent authority so as to render the principal liable to perform any obligations imposed upon him by such contract. To the relationship so created, the agent is a stranger. He need not be (although he generally is) aware of the existence of the representation, but he must not purport to make the agreement as principal himself: Freeman and Lockyer v Brockhurst Park Properties (Mangal) Limited (1964) 2 QB 480 at 503-504; Essington Investments Pty Limited v Regency Property Pty Limited [2004] NSWCA 375 at [39].

60 Ostensible authority comes about where the principal, by words or conduct, has represented that the agent has the requisite actual authority, and the party dealing with the agent has entered into a contract with him in reliance on that representation. The principal in these circumstances is estopped from denying that actual authority existed. In the commonly encountered case, the ostensible authority is general in character, arising when the principal has placed the agent in a position which in the outside world is generally regarded as carrying authority to enter into transactions of the kind in question. Ostensible general authority may also arise where the agent has had a course of dealing with a particular contractor and the principal has acquiesced in this course of dealing and honoured transactions arising out of it: Armagas Limited v Mundogas SA (1986) AC 717 at 777; Essington Investments at [43].

61 In Pacific Carriers Limited v BNP Paribas, it was observed at 467 [38]:

“A kind of representation that often arises in business dealings is one which flows from equipping an officer of a company with a certain title, status and facilities. In Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd , for example, the court spoke of the representation that might flow from supplying a particular person with ‘a blank order form, thus arming him with a document which, when he signed it, would bear the hallmark of authenticity’ ((1975) 133 CLR 72 at 80; 7 ALR 527 at 533). The reference to corporate administrative procedures under which an officer is armed with a document to which he or she can, by signature, impart an appearance of authenticity is a reminder of the wider principle of estoppel which may be relevant to a question of ostensible authority ( Northside Developments Pty Ltd v Registrar-General (1990) 170 CLR 146 at 200; 93 ALR 385 at 422; 2 ACSR 161 at 198 per Dawson J, CLR 212; ALR 430–1; ACSR 206–7 per Gaudron J). The holding out might result from permitting a person to act in a certain manner without taking proper safeguards against misrepresentation.”

62 It will be necessary to consider the evidence to determine whether the Plaintiffs have established that Mr Tucker had ostensible authority from the Defendant to act in the way he did so as to satisfy the requirements of s.70 Fair Trading Act 1987 and the general law with respect to this aspect of the claim for damages.

Vicarious Liability of the Crown

63 The Crown is vicariously liable in respect of a tort committed by a person in the service of the Crown in the performance or purported performance by the person of a function, where the performance or purported performance of a function is in the course of the person’s service with the Crown or is an incident of the person’s service: s.8(1)(a) Law Reform (Vicarious Liability) Act 1983.

64 An employer cannot be vicariously liable for the acts or omissions of an employee who acts “on a frolic of his own”: Deatons Pty Limited v Flew (1949) 79 CLR 370; State of New South Wales v Lepore (2003) 212 CLR 511 at 535-536 [41]; Starks v RSM Security Pty Limited [2004] NSWCA 351 at [12]-[13].

65 It will be necessary to make findings of fact for the purpose of determining whether Mr Tucker was engaged in “a frolic of his own” in his dealings with the Plaintiffs in 1999 and 2000.

Determination of Issues Affecting Liability

Preamble

66 It is appropriate to first consider the question of liability. There is a substantial and separate body of evidence touching the question of damages. For the moment, I will place that evidence to one side.

67 It is appropriate to take as a starting point with respect to liability the point in time at which Mr Harvey came to meet Mr Tucker in August 1999 and commenced contact with the DAA.

68 It should be kept in mind, however, that by that time, Mr Harvey had not been able to successfully advance his project involving framed items of Aboriginal art and Certificates of Title.

69 In July 1999, World Vision Australia had declined to be involved in the project because of concern that the name of World Vision would be “tarnished” as a result of connection with the Trust and/or Enterprises (Exhibit 9). The Sydney Olympic Games were to take place in September 2000. Mr Menzies QC submits that Mr Harvey’s conduct towards Mr Tucker, and his willingness to proceed in his dealings with him, were tinged by financial desperation to progress the matter. As will be seen, there is force in this submission.

70 What follows represents a narrative of relevant facts, together with my findings on issues of significance.

Events Before August 1999

71 In March 1995, Mr Harvey acquired an interest in an undivided 1/100,000th share, as tenants in common, of land at Hill End formerly owned by Sir Barry Jowett. Sir Barry Jowett had initiated a scheme to market the Land in China. It was originally known as the “Lord Edward Trust” (T104, 7 June 2005). The scheme as marketed by Sir Barry Jowett involved the Land only, and despite his efforts, only about 10 Chinese people had taken up the idea of remembering their ancestors by buying this concept (T104.5, 7 June 2005). The shares were being marketed at that time at $149.95 each. The experience of the “Lord Edward Trust” provided no cause for optimism with respect to Mr Harvey’s later project.

72 Mr Harvey attempted to obtain Olympic endorsement, but was unsuccessful. He took the concept of sale of land together with Aboriginal artwork to World Vision Australia in November 1998, but the proposal was rejected by World Vision Australia in July 1999.

73 Mr Harvey’s concept was to market the proposal in the run up to the Olympics and during the Olympics (Affidavit of Mr Harvey, 6 March 2004, paragraphs 9 and 10). The proposal, as ultimately settled, was to sell, for $A1,000.00 each, a 1/100,000th undivided share as tenant in common in the Land, together with an Aboriginal painting. The painting with the Certificate of Title was to be framed together to comprise a “limited edition”.

74 The Land in question at Hill End was valued by the Valuer General at $25,000.00 and Mr Harvey placed a value of $50,000.00 on it (T106.40, 7 June 2005).

75 The Registrar General is required to effect the registration of a transfer in registrable form, provided his fee is paid and registration is not opposed by the Office of State Revenue (s.100(3) Real Property Act 1900; Affidavit of NJ Moses, 17 December 2003, annexed statement, paragraph 16).

76 Following the withdrawal of World Vision Australia from its participation in Mr Harvey’s project, he determined to seek another source of funding.

Mr Harvey Meets Mr Tucker

77 On or about 11 August 1999, on his account, Mr Harvey contacted the Office of the Minister for Aboriginal Affairs and spoke to a lady and said “I have a project relating to indigenous peoples that I think would be very successful for the Olympics” and requested to speak to the Minister. He was told “You’ve got to go through the Department of Aboriginal Affairs before you get to him [the Minister] in the first instance”. Mr Harvey then said “What is the procedure? … Can I have the number of the contact people?”. The Plaintiff was then given the telephone number of the DAA (T83, 7 June 2005).

78 Mr Harvey described his initial contact with Mr Tucker as follows (T109-110, 7 June 2005):

“MENZIES: Q. When you went to the Department of Aboriginal Affairs wasn't what happened that you attended the office, you were speaking to a receptionist and in the course of your conversation somebody walked out of the lift and you were told, ‘That's the man you should speak to, Mr Tucker’?
A. Yes, I think, yeah, that's what happened, yeah.

Q. Is that right?
A. I got confused before whether he said you have to talk to Tucker but now I recall he did come out of the lifts as I was speaking to the lady the day before that I met him with my accountant.

Q. And that's when you were introduced to him?
A. Uh huh.

Q. You made an arrangement to come back and see him the next day, is that right?
A. And bring some art and the concept, yes.”

Early Concerns About Conflict of Interest

79 At the first meeting with Mr Tucker, Mr Harvey (who was accompanied by his accountant, Mr Betts) had concerns about a possible conflict of interest arising from Mr Tucker’s proposal to involve his partner, Suzanne Ingram, and a company, Jariah Productions Pty Limited, in the project. Mr Harvey was asked in cross-examination (T62-64, 9 June 2005):

“Q. You went into the building and just by happenchance Mr Tucker came out of the lift when you were talking to the receptionist?
A. Yes.

Q. She said something to the effect, ‘Well, here is the man you need to see’?
A. ‘That's the man’. She was talking about the man and he got out of the lift.

Q. He introduced himself to you?
A. Yes.

Q. Told you he was a policy officer?
A. Yes.

Q. Did you ask him what does a policy officer do, or anything of that nature?
A. I asked him whether he handled this type of thing and he said yes.

Q. And then you told him what the idea was?
A. Yes.

Q. And he was very keen about it?
A. Yes.

Q. And in the course of that very first conversation he mentioned to you Susan Ingram?
A. The second conversation, I believe. Well, on the 12th.

Q. On the 12th?
A. As I recall.

Q. The first conversation was nothing more than a formal introduction, wasn't it?
A. Yes, to see if they had interest.

Q. So the second conversation, that took place in his office?
A. Next day.

Q. And Mr Betts was with you?
A. I believe my accountant had a piece of art in his hand in the framed pieces.

Q. In the course of that very first conversation Mr Tucker said, well, something to the effect, ‘It was by extraordinary coincidence Susan Ingram, my defacto, just happens to be a Wiradjuri and she works for the Land Council’ or words to that effect?
A. Yes.

Q. And he suggested that she be involved in it?
A. Yes.

Q. Through her corporation Jariah Productions?
A. In relation to the art and that, yes.

OBJECTION. QUESTION ALLOWED

Q. You immediately said, ‘Well, wait a minute, wouldn't there be a potential conflict of interest’?
A. Yes.

Q. Because you knew, through your dealings with government and large corporations, of the risk of conflict?
A. Yes, and public servant pecuniary interests.

Q. So straight up, first meaningful, if you like, or lengthy conversation, a conflict of interest looks to you at least as if it might be looming?
A. It wasn't the first meaningful. The first meaningful conversation was the description of the project and all the rest of it.

Q. The first lengthy conversation?
A. The first conversation about Jariah I raised the point of the conflict of interest knowing they were government departments.

Q. It was pretty plain, wasn't it?
A. Well, I thought it was

Q. And you took that up?
A. I did. I asked the question.

Q. And his response was ‘There's no conflict because her company's done that before’?
A. Exactly.”

80 Mr Harvey observed that he regarded the practices being discussed by Mr Tucker at the meeting on 12 August 1999 as “questionable” but that Mr Tucker had assured him that nothing was wrong (T65, 9 June 2005).

81 Mr Betts had told Mr Harvey that there may be a conflict of interest arising from Mr Tucker wishing to have his girlfriend, Ms Ingram, as manager of the Trust (T313, 28 November 2005):

“Q. Well please, Mr Betts, just answer my question. You thought it was pretty odd, didn't you?
A. Yes.

Q. And you told Mr Harvey that you thought it was pretty odd, didn't you?
A. No. I think I told him it may be a conflict.

Q. A conflict?
A. Yeah.

Q. Well, that's a pretty serious matter, isn't it? A conflict is a serious matter?
A. That's correct.”

82 Mr Harvey agreed that he was “desperate to get the thing off the ground” at the time of the first meeting with Mr Tucker (T66.9, 9 June 2005). Mr Harvey was asked by Mr Menzies QC (T66-67, 9 June 2005):

“Q. And the only way out, that you could see at that time, was pulling off a deal which would restore your financial fortunes; that's right, isn't it?
A. I objected to the word ‘pulling’ of a deal.

Q. Entered into a successful entrepreneurial scheme?
A. That is better.

Q. Which would save your financial fortunes?
A. I like that.

Q. You like that?
A. Yes.

Q. And this was going to help the indigenous people?
A. Exactly.

Q. And the funds to help the indigenous people were going to come from the State?
A. The sale of the trust, the grant, to the Wiradjuri, yes.

Q. And it involved the Wiradjuri people getting a grant of money and paying that money, at least half of it, as I understand it, to Mr Jowett for the land?
A. They were going to purchase half of the trust and I was going to pay Jowett.

Q. Where were the funds coming from which would enable you to pay Jowett?
A. From the government grant.

Q. How were you going to get the government grant? You are not a Wiradjuri person?
A. No. The Department of Aboriginal Affairs assured me they could get the grant which would enable the Wiradjuri to put half of the trust the money would be put into the trust. The trust would pay Jowett. The trust would have a manager from the Wiradjuri people as well as auditors and all the rest of it.

Q. How much money were you putting in?
A. I was just putting in the scheme, that was my contribution.

Q. Are you familiar with the concept, or the description of a concept, being all smoke and mirrors?
A. Of course.

Q. That is what you were doing, wasn't it? It was all smoke and mirrors?
A. No. It was a viable project.”

83 Mr Harvey sought to raise $3 million by way of a grant to the Wiradjuri people who would then apply that grant to acquire a half share in the Trust. The Wiradjuri people did not have funds themselves to invest in the project (T248.15, 16 June 2005, Mr Amatto). Mr Harvey would hold 50 per cent of the Trust. The sum of $3 million would be disbursed, as to $1 million, to purchase “the land and intellectual copyright for the subdivision concept” (Affidavit of Mr Harvey, 6 March 2004, paragraph 18) and the balance would fund full production and advertising of the product.

84 On 27 August 1999, Mr Harvey and Mr Betts picked up Mr Tucker and took him to a fish market restaurant for lunch, for which Mr Harvey paid. There was further discussion concerning the involvement of Ms Ingram and conflict of interest. According to Mr Harvey and Mr Betts, Mr Tucker said that “it happens all the time within the indigenous community”.

85 By facsimile dated 31 August 1999, Mr Tucker wrote to Mr Harvey on DAA letterhead:

“I refer to our recent discussions regarding the proposed Australian Indigenous Peoples Hill End Land Trust.
As you are aware the location of the land is Wiradjuri country meaning the Aboriginal people that the land traditionally belonged to are of this group. I have informally approached the Wiradjuri Council of Elders, who I must say reacted with barely restrained enthusiasm, and briefly outlined your proposal. The Council immediately recognised the benefits and was able to provide me with some information in regards to the establishment of the cottage industry and the availability of Wiradjuri artists that would be able to contribute to the project.
I can say with confidence that there would be minimal problems in regards to establishing the cottage industry and accessing the artists that would be required as employment programs are currently operating throughout the region. I can provide you with more information about this aspect if you require.
The purchasing of the land from Sir Barry Jowett is feasible out [sic] would require formal proposals to be developed and submitted to the Commonwealth Development Corporation (CDC) and/or to the Indigenous Investment Fund (IIF). Once the proposals are developed and submitted it would take 6-8 weeks to obtain a decision. I believe the decision would be a positive one because of the economic benefits for Aboriginal communities.
The appropriateness of the Wiradjuri people eventually controlling the Trust and the land would also contribute to a positive outcome from the CDC and/or IIF.
To move the project forward, exempting the land purchase from the equation, to a point of having the cottage industry and artists ready to begin working would require 6-8 weeks. I have approached Ms Suzanne Ingram, Jariah Productions Pty Ltd, with a view to acting as your liaison with the Wiradjuri Council of Elders. Ms Ingram is a Wiradjuri woman who has extensive personal and professional networks throughout the region that includes west of the Blue Mountains through to Hay, down to the NSW/Victorian border and as far north as Dubbo. Ms Ingram would be of great assistance in facilitating the involvement of the Wiradjuri people.
In closing I would like to state that I am genuinely excited about the project and I am confident that the project will not be at all difficult to initiate and will be successful with many positive benefits, in both the short and long term, for all involved. If you have any further queries please do not hesitate to contact me on 9290 8723.”

86 In the first half of September 1999, a further meeting took place between Mr Harvey, Mr Betts and Mr Tucker at a restaurant in Balmain. Mr Betts and Mr Harvey allege that Mr Tucker said that funding was available from the CDC if and when the Elders were given the grant and purchased 50 per cent of the Trust. Mr Harvey and Mr Betts allege that they returned to the DAA office and were introduced to Ms Burney. This is denied by Ms Burney. As will be seen, I do not accept the evidence of Mr Harvey and Mr Betts that they met Ms Burney on this occasion or at all.

87 On 24 September 1999, Mr Tucker sent an email to Mr Harvey in the following terms:

“Here is an update for you.
1. After the meeting with you I referred the matter onto Suzanne Ingram of Jariah Productions for discussions with the Wirudjari [sic] Council of Elders. Suzanne met with the full Council on Saturday. She relayed some feedback to me and it all seems very positive. The Council are extremely excited and have initiated the following:
a. A company search and land title search for their own peace of mind. I expect that I will facilitate this process and get it completed in about 14 days.
b. Begin the development of the submissions/investment application. Completion is expected a few days after response of the company and land search.
c. They have stared to identify the best areas for the cottage industry aspect.
d. They have begun compiling a list of artists to undertake work.
Bruce, I would expect that Suzanne will contact you on Monday 27 September with a more detailed report of the meeting.
The Council did say that they were appreciative of the appropriate approach that you are taking and would not like to see it go off the rails. I do not believe that now that they are aware of the land at Hill End that they will let to [sic] much else be done with it. I am glad you are doing it this way because they would be really pissed if it was done any other way. They do have a range of legal options they could take if they feel that are getting screwed. These options include:
a. Slapping an Aboriginal Heritage Order on it. Which means that it is purchased from the vendor at current market value. etc, etc. This would also block any future sale.
b. A land rights claim. Probably wouldn’t succeed but would take 2-3 years before the owner could do anything with it.
So I am happy that everything is being done the right way.
I will talk to you soon.”

88 On 1 October 1999, Ms Suzanne Ingram, the Managing Director of Jariah Productions Pty Limited (and Mr Tucker’s partner) sent an email to Mr Harvey in the following terms:

“I write following discussions I have had with you and Mr Tucker about the Hill End Trust Project.

I introduced the project to the Wiradjuri Council of Elders at their recent meeting in Parkes, NSW. The Council was very pleased to hear the proposal and have indicated a keen interest to be a part of the project. To this end, Council has asked that I take care of the initial steps to establish their involvement. This management will be conducted under the auspices of my company, Jariah Produstions [sic] Pty Ltd.

Since speaking with you and Adrain [sic] , I have given some thought to marketing and management aspects. I have approached Mrs Evonne Goolagong-Cawley to gauge her interest. You are no doubt familiar with Evonne as a two-time Wimbledon tennis champion. What you may not be aware of is that she is a Wiradjuri woman. Evonne has also given me a firm indication of her willingness to participate in the project. This should provide a significant marketing edge for promoting the sales.

May I add that the Council praises you for acting appropriately and has asked me to extend an invitation to you to speak to the full Council of Elders at their next meeting.

In relation to your offer as Manager, Australian Indigenous Peoples Hill End Land Trust, I am pleased to accept the position. The Wiradjuri Council of Elders has asked me as a Wiradjuri person to be responsible for safeguarding their involvement.

I look forward to speaking to you again soon.

Yours sincerely
Suzanne Ingram
Managing Director
Jariah Productions Pty Ltd.”

89 On 8 October 1999, Mr Tucker sent an email to Mr Harvey as follows:

“I hope that this finds you well. Soory [sic] I have been a bit uncontactable this week but we have had a Chinese government delegation in the office. One was one of the Foreign Affairs Secretary (Mr Wang) the other is one of the Trade Secretary (Mr Yao) plus about seven lackeys. I asked if either had heard of Sir Barry. They hadn't. Didn't think they would considering the amount of people in China. But made very good contacts for future.

Just a brief update on what has been happenning [sic] to date.

1. The contract has been forwarded to the Councils legal people and I am hoping to get some feedback today. Verbal feedback at least.

2. You have been invited to attend the full Council of Elders meeting. I will get the dates for you.

3. I should have a draft investment submmission [sic] finished by earl next week. I will need to talk to you about certain aspects of the submission.

4. The cottage industry component is starting to shape up with facilities in Bathurst, Wellington, Cowra, and Orange benig [sic] the most likely places. There are about 200 Aboriginal people on work for the dole schemes that are able to be accessed quickly if needed. There is a number of skilled wood workers that would be perfect to get it started.

Anyway I will talk to you very soon with some preliminary comments from the Elders legal people.
Regards … Adrian Tucker.”

90 On 21 October 1999, Ms Ingram wrote to Mr Harvey on the letterhead of Jariah Productions Pty Limited as follows:

“Dear Bruce

I refer to our most recent meeting to discuss the Australian Indigenous Peoples Hill End Land Trust. Please be advised that I can confirm the following:

· the Wiradjuri Council of Elders intends to enter into a partnership with Bruce Harvey Enterprises regarding the purchase of a fifty per cent share in the Trust

265 With respect to the claim arising from Mr Betts’ professional costs, the Defendant submits that he was a most unsatisfactory witness with no satisfactory records. Mr Menzies QC submits that the claim smacks of reconstruction and opportunism. It was submitted that Mr Betts was unable to justify any of the elements of his account by any record and was unable to separate those parts of his account which would in any event by unrelated to any claim made with respect to the Defendant, for example, work done by Mr Harvey with respect to the failed attempt to involve World Vision Australia in the project.

266 The Defendant submits that, if liability had been established, a modest award of damages at best could have been expected in the Plaintiffs’ favour.

The Expert Evidence Concerning Damages

267 The Plaintiffs’ evidence with respect to the loss of an opportunity to make a substantial profit was itself shaky, comprising Mr Harvey’s hopes and unimpressive expert evidence from Mr McDonald, Ms Zamora and Mr Amatto. A strong body of expert evidence has been adduced by the Defendant which undermines the Plaintiffs’ case on damages with respect to loss of opportunity to make profits from the marketing of the items.

268 Mr Neville James Moses gave expert evidence on conveyancing issues for the Defendant. He identified practical and legal difficulties with the documentation prepared as part of the Hill End project. Under cross-examination, he agreed with the suggestion that it appeared that the documentation had been prepared by a non-lawyer (T399). When asked under cross-examination, he said that he would not personally have paid $1,000.00 for the framed item of Aboriginal art and Certificate of Title (Exhibit A) (T397-398).

269 Mr John Colquhoun gave expert evidence concerning the art market. Mr Harvey had spoken to Mr Colquhoun in late 1999 about the project, but Mr Colquhoun was not interested because he was “sceptical of the scheme as it seemed like a ‘get rich quick scheme’”. He felt it was “too complicated and they would not sell well enough to the general public”. He agreed that Exhibit A was a “novelty”, but did not constitute an example of “traditional Aboriginal art”.

270 Mr Colquhoun considered that the Certificate of Title detracted from the integrity of the painting in Exhibit A (T403). He said that marketing of such objects would be undertaken by him at no more than a gross price of $A550.00 per item (T406-407). He did not note any increase in interest by buyers of Aboriginal art as a result of the National Day of Reconciliation in May 2000 (T406).

271 Mr Gavin Bartier said that the Registrar General would probably have been bound to issue 100,000 duplicate Certificates of Title with respect to the Hill End project upon payment of the requisite fee. That fee would have been about $50.00 per Certificate of Title ($500,000.00) and $60.00 as the request fee (T412).

272 The Defendant called Mr John Moore to give evidence. Mr Moore had played a significant role with SOCOG in 1999 and 2000. He did not consider that the Hill End project would have received SOCOG approval. He did not consider Exhibit A would have been especially marketable in 2000, especially at a price of $1,000.00 per item (T416).

273 Dr Margaret Craig-Lees was called by the Defendant. She was a marketing expert who had provided reports with respect to the Hill End project for the Defendant. Dr Craig-Lees did not consider that the items would have been especially marketable, being far too expensive, at $A1,000.00 per item (T427). From research she had undertaken, the sale of Aboriginal artefacts did not really gain from the Sydney Olympics in 2000 (T431).

Assessment of Claim

274 This group of witnesses called by the Defendant provided a strong body of evidence pointing to the fanciful nature of the Plaintiffs’ project. A number of steps would have been required, in the ordinary course of business, to advance the Hill End project further. Most of those steps had not been taken by Mr Harvey. Even if the Plaintiffs had received funding for the project so that the framed items were created, it is speculative in the extreme to determine any level of success in the project. The strong probability is that a limited number of items, measured in the hundreds and not the thousands, would have been sold.

275 If this project was ever to get off the ground, it would have been necessary for the Plaintiffs to do a number of things:

(a) a team of artists would have been required to paint the pictures;

(b) transport would have been required from country areas to Sydney for paintings to be framed;

(c) premises would have been needed in the Sydney area to construct the pictures and provide a business centre for arranging distribution;

(d) an elaborate organisation would have been required to arrange for registration of Certificates of Title in the name of buyers with a short turnaround time;

(e) payment to the Registrar General would have been required for each registration of a transfer;

(f) competent framers would have been required to construct the framed painting and Certificate of Title, together with any mounted plaque to be inserted on it;

(g) a network of sale outlets would have been required to enable the marketing of the paintings – something far more developed than internet marketing would have been required;

(h) premises for posting and shipping to Australian and overseas destinations would have been required, together with personnel to carry out these functions.

276 All of the steps referred to in the preceding paragraph would have required an elaborate, costly and sophisticated business plan if an efficient marketing system was to be established.

277 All of this goes to the question of whether this was a realistic proposal which could be put into effect.

278 Significantly, the evidence does not demonstrate that there was a past successful market for similar items. The “Lord Edward Trust” marketing experience does not assist the Plaintiffs. Tellingly, the marketing concept has not been taken up since by any person, although it would have been open to an entrepreneur to do so if he or she saw fit. A powerful barometer to assess the chance of profiting from this scheme is that no person had profited from a similar scheme in the past and no one was prepared to undertake such a project since then.

279 If the point had been reached in the proceedings where the Plaintiffs demonstrated liability so that there was an entitlement to damages, a modest verdict would have resulted comprising of the following elements:

(a) I would have allowed the sums of $59,688.00 as the purchase price for land and $765.00 as stamp duty on that purchase price;

(b) I would not have allowed any part of the claimed sum of $80,000.00 said to arise from the St George Bank loan - I am not satisfied that the Plaintiffs have established that this sum, or part of it, is recoverable as damages in this action;

(c) I would have allowed a modest sum for Mr Betts’ professional services, not exceeding $5,000.00;

(d) I would have allowed part of the claim by Mr Harvey for lost income which could have been earned by him as an engineer, but this sum would not have exceeded $50,000.00 having regard to the period of time to which it could relate and be claimable in this action;

(e) interest would have been allowed on the sums permitted above;

(f) on the state of the evidence, I would not have awarded damages with respect to the loss of chance claim - the evidence satisfies me that the concept was fanciful and, even if the Plaintiffs had managed to produce and market the framed items, the project would have been a significant financial failure productive of loss, and not profit.

Conclusion

280 I have concluded that the Plaintiffs have failed to establish their cause of action against the Defendant under the Fair Trading Act 1987. I am not satisfied that the Plaintiffs have established the element of ostensible authority with respect to Mr Tucker. Nor am I satisfied that the Plaintiffs have established that the DAA was carrying on business in a sense which could attract the provisions of the Fair Trading Act 1987.

281 I am satisfied that the activities of Mr Tucker with respect to Mr Harvey may be appropriately characterised as Mr Tucker being engaged in a “frolic of his own” in the sense recognised by the law, so that the Defendant is not vicariously liable for Mr Tucker’s false and misleading statements or, for the purpose of one aspect of the negligence claim, his negligent misstatements.

282 Even if the Plaintiffs had demonstrated ostensible authority with respect to Mr Tucker, I am satisfied that Mr Harvey acted entirely unreasonably when he was put on inquiry with respect to Mr Tucker on 12 August 1999 and when subsequent events only served to fortify the need to take reasonable steps to verify Mr Tucker’s activities. Far from taking these steps, I am satisfied that Mr Harvey turned a blind eye to the problems and moved forward in his association with Mr Tucker motivated by a mix of hope and financial desperation.

283 The Plaintiffs have failed to establish their cause of action in negligence arising from the selection and supervision of Mr Tucker within the DAA.

284 Even if the Plaintiffs had demonstrated liability with respect to one or more of their causes of action, I would not have been satisfied that any award of damages ought extend beyond some of the out-of-pocket expenses claimed by the Plaintiffs. On the evidence, the loss of chance claim was speculative in the extreme with the strong probability of a loss being suffered if the project had even been implemented.

285 The Plaintiffs have failed entirely in their claims. Although costs are discretionary, costs would ordinarily follow the event: Part 42 r 42.1 UCPR. I have considered whether there are features of this case which ought see no costs order made against the Plaintiffs. It is the undoubted fact that Mr Harvey had the misfortune to meet Mr Tucker and then deal with him in and after August 1999. It is clear that Mr Tucker conducted himself in a fashion which was detrimental to the Plaintiffs. However, the Plaintiffs do not sue Mr Tucker in these proceedings. They seek to make the State of New South Wales liable for Mr Tucker’s wrongdoings. They have failed. Further, I have found that Mr Harvey was clearly on notice, from an early time, that all was not right with Mr Tucker, but pressed on regardless, motivated by hope and financial desperation. In the exercise of discretion, I am satisfied that the appropriate order is that the Plaintiffs pay the Defendant’s costs of the proceedings.

286 With respect to each of the causes of action pleaded in the FASC, there will be a verdict and judgment for the Defendant. The Plaintiffs are ordered the pay the Defendant’s costs of the proceedings.

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