Classified Transport P/L v IDI Enterprises P/L - [2010] SADC 130

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
CLASSIFIED TRANSPORT P/L v IDI ENTERPRISES P/L & ANOR
[2010] SADC 130
Judgment of His Honour Judge Herriman
21 October 2010
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - ILLEGAL AND VOID CONTRACTS - EFFECT OF ILLEGALITY OR INVALIDITY - COLLATERAL AND ANCILLARY TRANSACTIONS AND SECURITIES
ESTOPPEL - ESTOPPEL IN PAIS - EQUITABLE ESTOPPEL - PROMISSORY ESTOPPEL
Written agreement for sale and purchase of business - separate oral agreement for payment of additional sum by way of vendor finance - whether a collateral agreement and consistent with written agreement - enforceability - consideration of promissory estoppel. Finding of misrepresentation and fraud inducing formation of oral agreement - finding of promissory estoppel. Relief granted under s 87(2) of Trade Practices Act - oral contract held to be enforceable.
Trade Practices Act 1974 (Cth) s 87(2), referred to.
Walton Stores (Interstate) Ltd v Maher (1987-88) 164 CLR 387; The Commonwealth v Verwayen (1990) 170 CLR 394, applied.
Maybury & Anor v Atlantic Union Oil Company Limited (1953) 89 CLR 507; Equuscorp P/L v Glengallan Invest (2004) 218 CLR 471; Toll (FGCT) P/L v Alphapharm P/L (2004) 219 CLR 165; Nassif & Anor v Fahd & Ors [2007] NSWCA 269, considered.

TRADE AND COMMERCE - TRADE PRACTICES ACT 1974 (CTH) AND RELATED LEGISLATION - ENFORCEMENT AND REMEDIES - OTHER ORDERS OR RELIEF - VARIATIONS OF INSTRUMENTS OR AGREEMENTS
Finding of breaches of ss 52 & 82 of Trade Practices Act, ss 56 & 84 of Fair Trading Act and s 7(1) of Misrepresentation Act and that relevant conduct fraudulent. Consequential orders under s 87(2) of Trade Practices Act varying written agreement and preventing reliance on certain of its terms.
Trade Practices Act 1974 (Cth) ss 52, 82, 87(2); Fair Trading Act 1987 (SA) ss 56 & 84; Misrepresentation Act 1972 (SA) s 7(1), referred to.

TRADE AND COMMERCE - TRADE PRACTICES ACT 1974 (CTH) AND RELATED LEGISLATION - ENFORCEMENT AND REMEDIES - ACTIONS FOR DAMAGES - ASSESSMENT OR AVAILABILITY OF DAMAGES - PARTICULAR CASES - DAMAGES ARISING OUT OF PURCHASE OF LAND OR BUSINESS OR LEASE
DAMAGES - MEASURE AND REMOTENESS OF DAMAGES IN ACTIONS FOR BREACH OF CONTRACT
Measure of damages in contract, tort and under the Trade Practices Act, the Fair Trading Act and the Misrepresentation Act. Damages assessed under all headings at $82,836.69.
Trade Practices Act 1974 (Cth) ss 52, 75B, 82, 87(1); Fair Trading Act 1987 (SA) ss 56 & 84; Misrepresentation Act 1972 (SA) s 7(1); District Court Act 1991 (SA) s 36, referred to.
Marks v GIO Australia Holdings (1998) 196 CLR 494; Gates v City Mutual Life Assurance Society Ltd (1985-86) 160 CLR 1, applied.

CLASSIFIED TRANSPORT P/L v IDI ENTERPRISES P/L & ANOR
[2010] SADC 130
Introduction

This dispute concerns the sale in 2006 of premises known as the Railway Hotel in Freeling, South Australia.
Freeling is a country town just over one hour’s drive from Adelaide and the Railway Hotel is one of two licensed premises there. It had achieved a measure of fame at that time as a result of being a part-location for the television series ‘McLeod’s Daughters’, in which it featured under the fictional name of the ‘Gungellan Hotel’, a name which persists despite the termination of the series.
The plaintiff had purchased the business and the lease of the hotel in 2001 for an amount of $140,000. Its director and manager, Kerrie Price (‘Kerrie’), had then borrowed a further $140,000 and spent it renovating the premises. At that time she was also operating a courier business and she continued to do that even after its purchase.
In June 2003 Sally Anne Walker and Mark Scott joined her in a partnership to operate the hotel, but that was short-lived and the partnership was dissolved in June 2005 after they were charged with and convicted of stealing from her.
These events, coupled with her ageing father’s declining health, prompted Kerrie to put the hotel on the market in mid-2005. For that purpose she engaged Maurice Saponari (‘Saponari’) of Langfords, hotel brokers, and nominated an asking price of $400,000 plus stock at valuation. A potential buyer emerged then but ultimately Kerrie chose not to proceed with the sale. In mid-2006 Saponari was re-engaged to market it and for the same price.
Saponari was still in the process of preparing marketing materials for the sale when its potential availability came to the attention of the first defendant (‘IDI’). Its principal was the second defendant, Glenda Carter (‘Glenda’), and she and her husband, Wayne (‘Wayne’), were then residing in New South Wales. He was an undischarged bankrupt arising out of the failure of a transport or pallet business and the family had otherwise suffered a number of personal tragedies. They wanted to make a fresh start somewhere else and Glenda was looking at available country hotels around Australia in the price range of $200,000 to $400,000. To that end they had travelled in South Australia and Victoria in June/July 2006, and in the course of their enquiries about other premises they spoke to Langfords, in particular a salesperson there, Mary Burnie, who suggested to them that they might look at the Railway Hotel. It was not yet formally listed for sale but she was alert to it because her firm had the agency.
In consequence, Glenda and Wayne went to the hotel unannounced on about 2 July. They met Kerrie there and were shown over it.
During that same interstate trip they also inspected other licensed premises in South Australia and Victoria.
It is a matter of dispute but Kerrie says that soon after they returned to New South Wales, they rang her and asked if they would be wasting their time offering to buy the hotel for $320,000. She says she told them they would not be. That conversation is denied by Glenda and Wayne.
It is not disputed that subsequently the Carters came to Freeling with their two children to look at the hotel again. There are conflicting accounts as to what was then discussed about price and offers, but at all events, they returned to New South Wales without concluding any agreement.
They revisited the hotel on 13 August 2006 and on the following morning had a conversation in the hotel kitchen with Kerrie. It is central to this dispute. I will elsewhere discuss more fully their respective accounts of it but, put shortly, Kerrie’s version is that Glenda then offered to buy the hotel for $280,000, of which $200,000 would be written into the contract and the balance would be ‘off the books’ and be paid by way of a vendor loan to be repaid in instalments. Kerrie says she accepted that proposal and it was then agreed that whilst Saponari would prepare the contract for $200,000, the payment of the $80,000 vendor finance would be separately recorded in a loan agreement to be prepared by solicitors. Saponari was not to be told about it. She said those figures were then agreed to be adjusted after she told Saponari of the $200,000 amount and he recommended raising it to $201,000 to overcome the need to comply with certain statutory obligations. The vendor loan was then adjusted to $79,000. Kerrie says she then had a hotel employee come in and witness that they had orally agreed in those terms.
The Carters both deny there was any such conversation or incident and say that the only offer they made was to purchase the business for $200,000 and that it was agreed that that figure would be increased to $201,000 after Kerrie had spoken to her broker.
At all events, later that afternoon Saponari came to the hotel with a contract written up in the sum of $201,000 and took Kerrie and Glenda through its terms. They both then signed it. Nothing was said to him about the $79,000 or any amount of vendor finance.
Settlement on the sale of the hotel was ultimately delayed until 25 October but, on Kerrie’s account, soon after it was completed she presented Glenda with a statutory declaration which purported to confirm Glenda’s indebtedness to her for the $79,000. She said that Glenda took it and said she would speak to her solicitor about it. Nothing came of that and Kerrie then had two separate loan agreements prepared by her solicitor which she handed to Glenda some few months afterwards, but Glenda’s response was the same. None of those documents were ever signed by Glenda.
For her part, Glenda denied that any documents of that kind were ever proffered to her.
Kerrie further says that she personally approached Glenda several times between November 2006 and March 2007 asking about promised instalment payments and, whilst her requests were deflected by Glenda, it was never suggested to her that no further moneys were due. Glenda denied all or any such approaches.
It is common ground that after settlement the Carters carried out certain improvements to the hotel, albeit they were not all completed, but that ultimately they on-sold it in March 2007 for $300,000 plus stock. On their account, they did so because they felt victimised in the town.
At all events, they returned to New South Wales.
On Kerrie’s account, she continued to call them after then enquiring about payment of the $79,000 but received no meaningful response until she was eventually told by Wayne that she would not be paid anything. For his part, Wayne acknowledged receiving one such call from Kerrie but said her request for money was made on the footing that she had sold them the hotel too cheaply. For her own part, Glenda denied awareness of that or any demand having been made by Kerrie for any moneys prior to her solicitors’ letter of demand of 14 September 2007.
Separately, several hotel patrons were called by the plaintiff and each attested to being present during conversations between August 2006 and March 2007 when the alleged indebtedness to Kerrie was spoken about or acknowledged by Glenda and/or Wayne.
The plaintiff now claims damages for breach of what it says was a collateral contract with respect to payment of the $79,000. Further, it relies on promissory estoppel and/or what it says was misleading and deceptive conduct by the defendants in and about the circumstances which led to the formation of the agreement for sale of the hotel and its settlement.
The defendants’ position is that the contract for the $201,000 was the only one settled upon, that there was never any discussion or agreement about a further $79,000, that the contract was an entire contract in any event, that there was no misleading and deceptive conduct and that the plaintiff cannot at law recover under any of the asserted heads of loss.
I propose to first discuss the evidence of each witness and to then address the factual and legal issues.
The Evidence
- Kerrie Price
She spoke of her first contact with the Carters on the morning after a function at the hotel in July 2006. They arrived there and introduced themselves. Glenda did most of the talking, saying they were from interstate, they were looking to purchase a country hotel and that Mary Burnie of Langfords had suggested they look at the Railway Hotel as, she said, it was coming onto the market.
Kerrie said that she then told Glenda she wanted $400,000 plus stock for it. The Carters looked through the hotel and then left, saying that they would be in touch. Following that meeting, she contacted Saponari and told him of their discussions.
About two weeks after that visit, Wayne Carter telephoned her and asked whether they would be wasting their time offering to buy the hotel for $320,000 plus stock. She said they would not be. He then said they would like to come over with their family to see if they liked it and the area, and she said she would be happy with that. He asked if they could stay with her at the hotel and she said they could do that free of charge.
That trip took place and the Carter family did indeed stay with her. During the course of that visit, she and Glenda had a conversation in the hotel front bar. Glenda said that she could not come up with the $320,000 that Wayne had spoken about, but they could afford $280,000. Glenda asked if she would consider that price. Kerrie’s response was that she wanted a day or two to think about it. At that time her father was seriously ill and she was keen to spend time with him and to repay moneys she owed him. He later died.
The Carters then left but returned on 13 August and Kerrie spoke of conversations she had with them in the hotel kitchen on the following day. Even during the course of her evidence-in-chief, she became confused about the sequence of events which then took place and that confusion became amplified during her cross-examination.
Even so, I am satisfied and find that she was purporting to describe a sequence of events which proceeded as follows:
·     She told the Carters that she had considered their counter-proposal to pay $280,000 for the hotel and would accept it.
·     She then suggested that they contact Saponari about that but Glenda (T/S 49):
… said quite clearly that she didn’t like him, she didn’t know what it was about him but she didn’t like him and didn’t want to deal with him, and she said “Can we do this on our own and just get him to deal with the legalities of it all?”.
·     Glenda then said she had another proposition. She said they were having difficulty in raising the money and that ‘she wanted to pay $201,000 by way of contract through the broker and the rest in monthly instalments by cash would not be recorded on the contract’ because it ‘suited her to do it that way’ (T/S 45). (I comment elsewhere about mention at this point of the $201,000 figure.) Kerrie’s reply was that she really wanted the money upfront because it was in her best interests to get the full amount but if it meant the sale would go ahead, then she would go along with it ‘(A)s long as it’s all agreed and written down’ (T/S 41). She then told Glenda she was only putting the hotel on the market because she wanted to spend more time with her father, who was ill. She owed him $80,000 because he had loaned her that amount to pay out her previous partner, so she wanted to pay him back as soon as possible. In response to that, she said, Glenda said ‘Don’t worry, ducky, we’re not going to let you down’ (T/S 45/6). Glenda then asked if they could sign up that day as they had to go back to New South Wales.
·     As the contract had to be signed that day, Kerrie said she would get Saponari to bring it up from Adelaide so she left the room and rang him about it. She then returned to the kitchen and told Glenda what Saponari had told her and that the price in the contract would have to be adjusted to $201,000 if the need for further documentation and cooling off was to be avoided. Glenda agreed to pay that adjusted figure and they agreed that the vendor loan would therefore be reduced to $79,000.
As a result of what Glenda had said to her, Kerrie said, she did not then say anything to Saponari about the additional amount to be paid by way of vendor finance.
·     Glenda then began to talk about the repayment terms for the vendor finance but Kerrie told her stop. She left the room, approached a hotel employee, Kylie Dawson (‘Kylie’), and brought her back into the kitchen. She introduced her to the Carters and said that Kylie was there to be a witness to their contract.
·     Kerrie said that she then told Kylie that she wanted her to witness the agreement she had made with Glenda for the sum of $80,000 (again there was an obvious lack of correspondence between the $79,000 and $80,000 figures) ‘as like a vendor finance-type arrangement so she agreed to be there as a witness but took no part in the conversation’ (T/S 42). She and Glenda then discussed, in Kylie’s presence, how that sum was to be repaid. Glenda proposed monthly repayments over 12 months but said that if her house in Sydney were to be sold within that time, she would pay out the loan in full or if for some reason they did not want the hotel and were to sell it, then again the debt would be paid out in full. They discussed other repayment arrangements and it was ultimately agreed between them in Kylie’s presence that Glenda would repay the loan by nine monthly instalments of $8,000 and one of $7,000.
·     Kerrie then said that she would get a solicitor to draw up a contract to record those matters and Glenda agreed to that. They shook hands on the agreement and had a cup of coffee to celebrate. Kylie returned to her duties in the hotel.
·     Later that afternoon Saponari came to the hotel, went through with each of them the terms of a contract for $201,000 and they both signed it. Neither of them said anything to him about the agreement for vendor finance of $79,000.
In the course of their discussions prior to the signing of the agreement, Wayne Carter had told her that he had nothing to do with the hotel and that it was all Glenda’s concern.
Much of the confusion and cross-examination over that sequence of events arose from Kerrie’s loose description at various times of a formal contract price of $200,000 and $201,000 and of vendor finance correspondingly of $80,000 and $79,000. The significance of those differences was that, on her account, the breakdown of the two figures changed to $201,000 and $79,000 only after she had spoken to Saponari.
She first spoke of the $200,000 plus $80,000 as being the figures that were agreed upon in the presence of Kylie but then reconsidered that and said that it was likely Kylie was called in to witness their agreement only after she had spoken to Saponari and those figures were changed to $201,000 and $79,000. She otherwise referred to discussions which were consistent with either position. In her own evidence, Kylie supported the $79,000 figure but said the agreed repayment terms involved eight instalments of $9,000 and one of $7,000.
The defence was critical of Kerrie’s conflicting evidence on this topic but I was not persuaded that it damaged her credit significantly. In the first place, that same lack of correspondence afflicted the evidence of other witnesses and it seemed to me that at various times they were either rounding off the figure of $79,000 to $80,000 or were otherwise referring to statements by Glenda, who may well herself have done that. Further, whether the timing of events was that Kylie witnessed a conversation about $200,000 plus $80,000 or $201,000 plus $79,000 does not appear to me to be a matter of particular significance. The heart of the dispute was as to whether Kylie was present at all and if so whether, in her presence, a vendor finance arrangement for $79,000 or $80,000 and repayment terms for it were witnessed.
Returning then to the narrative, Kerrie went on to say that within three days of that meeting, she obtained a statutory declaration form from a newsagent and wrote on it setting out the terms of their agreement for the $79,000. She gave it to Glenda to sign but Glenda’s response was that she wanted to first discuss it with her solicitor. The document was called for by the plaintiff’s counsel but was not produced, nor had it been discovered by either party.
There was a luncheon break but immediately after it, Kerrie said that she had thought about the proffering of that statutory declaration and that it could not have occurred three days after the signing of the agreement because the Carters had returned immediately then to New South Wales. She then believed it was more likely that she had proffered it three days to a week after the settlement date (which was 25 October).
She said she would never have signed the contract for $201,000 but for Glenda’s promise to execute a separate vendor finance agreement with respect to the $79,000.

Prior to settlement the Carters had asked her if they could stay in the hotel and organise a number of things, including fencing for their pets, the delivery of an ATCO hut for an office, phone lines and furniture. They offered to pay $150 a week rent for that and she accepted that offer. In fact, despite their staying there for several weeks pending settlement, no rent was ever paid by them.
Settlement was delayed beyond the projected date of 9 October 2006 and in the meantime Glenda approached her and said she wanted to give her some money to assure her that they were good for the purchase price. She proposed to pay her $5,000 to help her on her way. Kerrie had not asked for it but she agreed to this and Glenda then produced the document Exhibit P8 for signing. Save to the extent that it reflects upon Glenda’s credit, I am not greatly assisted by that document. It is dated 11 October 2006 and records a $5,000 advance on an agreed purchase price of $201,000. It makes no reference to any amount of $79,000 being outstanding. That omission was suggested by the defendants to be significant. I am satisfied it is, but not for the reasons advanced by the defendants.
Kerrie then went on to describe an incident involving a hotel patron, Brad Newham (‘Newham’), which occurred just prior to the settlement. Glenda and Newham were in the front bar of the hotel with her, when Glenda said to her she was grateful for the $80,000 loan. Newham intervened and commented that it was a bit of a risk, whereupon Glenda ‘threw the keys to her new Holden Thunder ute at me and said “If you don’t trust me, you can take my keys to my new ute”, but I passed them back to her and said I don’t think there’d be any need to do that’ (T/S 54).
Settlement then took place on 25 October 2006.
As, on Kerrie’s account, the first loan repayment fell due in November, she went to the hotel to see Glenda about it but Glenda said ‘Well, we’re not making the money so I can’t pay you the money’. When Kerrie replied that it was not her problem and she wanted to be paid, Glenda said ‘Don’t worry, you’ll get the money’ (T/S 55).
She waited then until the December payment was due and again asked Glenda for it. She replied ‘The pub isn’t what you said it was. I can’t afford to pay you anything’. Kerrie replied ‘You’re starting to scare me. I’ll go to the solicitor to get the legal document drawn up, I want you to sign it’ (T/S 55/6). Glenda replied that she would send any such document on to her solicitors.
It is not in question that, following that conversation, Kerrie did indeed consult her solicitors and have a loan agreement drawn between vendor and purchaser. A copy of it became Exhibit P11. On Kerrie’s account, she had attempted to see her solicitors before Christmas 2006 but they were too busy and could not see her until the New Year. Ultimately, she obtained the agreement from them in February 2007. She handed it to Glenda in the beer garden of the hotel on about 23 February and Glenda said she would get her solicitor to look at it and get back to her. She never did get back about it.
She was cross-examined over the fact that that document did not purport to reflect the arrangements previously made for payment of $79,000 and, indeed, referred to an amount of $80,000, not $79,000, and that it had other payment terms that had never, on her own account of their agreement, been discussed. Her response was that her solicitors had told her that as by then nothing had been paid, including on the six weeks’ hotel rental prior to settlement, and because loan repayments were then some four months in arrears, the higher figure and other terms had been inserted in the document.
Kerrie then went on to speak about going to the hotel on the Publicans’ Bowls Day, which was some time after settlement, to ask Glenda about the money. When she got to the hotel doorway, Wayne stood in it and put out his arms and barred her from entering. He told her she was not welcome and not to come back.
On her account, she afterwards went to the hotel nearly every day in February and March and was always told much the same thing. If Glenda were there, she would leave the hotel. Wendy Vivian, a staff member, told her on one visit that she could not let her go out the back of the hotel and later told her she had been told by Glenda to ask her to leave.
When she received no response from Glenda about the written loan agreement, she obtained a second version of it from her solicitors expressed in slightly different terms and again approached Glenda and proffered it. She proposed that they get a police officer to witness it, but Glenda then told her there was no way she was going to sign it. Neither of those loan documents Exhibits P11 or P12 was produced by the defendants when called for, nor had either been described in their List of Documents.
On 23 February 2007 she had a further conversation with Glenda about the hotel, saying she had heard it was on the market, but Glenda denied that. I am satisfied on all the evidence that by that time the hotel was, indeed, on the market and, for reasons expressed elsewhere, that that was a false denial by Glenda.
She then spoke of how on numerous occasions she attempted to telephone Glenda. On most occasions Glenda was not available and whenever she got any response, it was from Wayne, who repeatedly told her she would get her money, that they had been given a year to get it and she would be repaid. He told her that if they sold the hotel, they would then pay bills first and would pay her if anything was left.
She then related how it became known that the first defendant had sold the hotel to George Fergusson and how she subsequently spoke to Wayne and asked if that was so and if she would be paid at settlement. He told her she would be if there were sufficient funds left over and that she could come over to collect her money after settlement. He then told her of the settlement day and time. She went to the hotel before the scheduled time of 2 p.m. that day, only to find that settlement had already been completed, that the Carters had left and were already driving back to New South Wales.
She related how she telephoned Glenda’s mobile number many times after that day but could get no response until one day when Wayne answered. He told her they had a year to pay her and that they would be using that time.
In cross-examination, she was directly challenged over much of her evidence and it was suggested she had fabricated her entire claim about agreed vendor finance of $79,000 because she had been unhappy about the resale profit made by the first defendant. Further, it was suggested to her that she had close relationships with several of the witnesses called in her case and that she had in some manner influenced the evidence they gave. She rejected both suggestions.
For reasons which I will discuss in a moment, I was not satisfied that any of the defence attacks significantly damaged her credibility. I will deal with them in detail.
She was first asked about the statutory declaration and why she had chosen to obtain and use one. She explained that she knew something of their use because she had previously worked in the prison system and had seen them used by others. She said that she had written up the document herself without any assistance and as best she recalled it was in these terms (T/S 71):
I Kerrie Lynette Price, hereby make an agreement for the repayment of $79,000 by way of instalments of nine instalments at $8,000 and one remaining at $7,000 with Glenda Carter, sole director of IDI Enterprises, to be repaid in full within 12 months.
Plainly, the recited terms were confusing and somewhat at variance with the asserted agreement but I bear in mind that she was doing her best to remember the terms of a document she had written up some four years ago and, on her account, not seen since.
She agreed that the document had not been mentioned in the plaintiff’s own List of Documents as a document she had previously had. She had not told her solicitors about it because she no longer had it to give to them and she did not think it was worth anything, anyway, because, she said, anybody could prepare a document like that.
I should say that I did not find her explanations for the generation and then the non-discovery of that document to be altogether surprising or damaging to her credit, as she appeared to me to be extraordinarily naïve about business matters. As to the change in her evidence over the timing of when she presented it, I was not satisfied much turned on that. Her assertion was not time‑critical and it appeared to me she had simply confused the contract date with the settlement date.
She agreed that the Langfords contract for $201,000 was an important document, that it would have tax implications for each of them and that their accountants would want to see it. She said, however, that it was only one part of their deal.
It was then suggested to her that there could have been no reason not to tell Saponari of the entire alleged arrangement but her response was ‘I suggested that and they wouldn’t come to it, they wanted it done off the record. By their terms’ (T/S 87), they were to keep the arrangement ‘quiet on the side’ (T/S 129). It was Glenda Carter who had said that and it was her (Kerrie’s) position that as long as they were going to honour it and get something drawn up and if it was the only way the sale would go through, then she would go along with it. She realised now that that had been a bad decision on her part and made as a result of her anxiety to get out of the hotel, repay her father and care for him.
She did not ask Saponari to draw up an IOU because Glenda did not want to deal with him at all. Had she thought it was worthwhile doing it, she could have written up her own IOU, but she did not think that would be a legal document because it would have to be witnessed, she said.
She did not ask Glenda what she meant in saying the $80,000 balance would be ‘off the record’ because she knew what she meant, namely, that Glenda did not want anybody else to know about it. She thought that was strange but if it was the way to achieve a sale, then she would agree to it.
She was tested on the contents of the phone call with Wayne and as to the family visit to the hotel. Her recollection of those events was firm and she thought that the visit to the hotel with the children was about four weeks before 14 August. Between then and 14 August there had been a lot of telephone calls, mostly from Wayne enquiring about various hotel matters.
Her evidence was confused as to when Glenda first mentioned the $280,000 figure, whether it was when they stayed at the hotel with the family or on 14 August, but I did not think much turned on that.
She was cross-examined on paragraph 6 of her Statement of Claim, which asserted that on 2 July the business had been advertised for sale, yet on the Carters’ account, Mary Burnie had told them on that day that it was only just coming on the market. She said she did not herself advertise it for sale and she did not know when Langfords had then advertised it. There was no other direct evidence on that topic.
It was further put to her that she did not tell the Carters on the morning of 2 July about the purchase price but she said she did. She had actually stopped work on a clean-up and made time to be hospitable to them. Nor was she mistaken about the subsequent phone call with Wayne and the discussion of a $320,000 price.
She was then taken to paragraph 7 of her Statement of Claim and it became clear that she was not ready to adhere entirely to what it pleaded. She said the conversation there referred to in paragraph 7.1 had in fact taken place with Wayne, and not Glenda as pleaded.
Wayne had then rung her before the family visit to the hotel, saying they could not afford $320,000 as they were having financial difficulties and would she consider $280,000, would they be wasting their time coming over about it. She told him they would not be. She had not related that conversation in her evidence-in-chief and was challenged over that. She said that it had occurred and that there was then a later conversation in the hotel front bar with Glenda on the occasion when the children came over and which in effect repeated what Wayne had told her over the phone. She was thus saying there had been two conversations about a possible $280,000 offer. Further, she said, the conversation about the $200,000 plus $80,000 identified in paragraph 7.2 had been with Glenda but had not taken place over the phone as pleaded but in the hotel on 14 August. She said the Statement of Claim was plainly wrong about those matters.
Notwithstanding those omissions or conflicts, I did not consider they damaged her credit significantly. A lack of correspondence between pleadings and evidence is an unfortunate but common occurrence in litigation. On occasions it will reflect on credit, on others it may betray a lack of communication with solicitors. Kerrie’s evidence as to when and with whom that or those conversations took place was firm and there can have been no forensic advantage in pleading it in some other way. The pleadings may indeed have reflected the level of confusion as to sequences which was manifest in other aspects of Kerrie’s evidence, but I was not satisfied it seriously damaged her credit. Not much turned on the differences anyway.
She was tested on the conversation of 14 August and was firm that Wayne had told her that day that he was bankrupt, and that he mentioned it several times. That was not, however, said in front of Kylie. In their discussions before Kylie came in, the first proposal had been that the loan would be repaid within 12 months but it had then changed to 10 months. She agreed her Statement of Claim was wrong in referring to nine payments of $8,000, it should have been eight payments of $9,000 (as, indeed, Kylie said) – again an error but not one of any particular consequence, as I find.
She was challenged about the sequence of events on 14 August and, in particular, her evidence that when she got Kylie in to witness their oral agreement, nothing had yet been said about there being no written agreement for the $80,000. She was tested on that and the strict sequence of events and said she had misunderstood the question that the court had put to her, that she had had trouble recalling things in their proper sequence, but that she was clear that the entire arrangement had been discussed and agreed prior to Kylie coming into the room. That was the reason she had been brought in. I must observe here that if it is accepted Kylie was called in, there can have been no other obvious reason for doing that.
It was put to her that there was only one offer made, of $200,000, that it was changed to $201,000 and that that was it, there was never any other or additional sum and that Kylie had never been brought in to witness anything. She disagreed with all of that.
In preparing for trial, she said, she had asked Kylie six months or a year ago to prepare a statement of what had happened just as she had asked other people. She had otherwise spoken to Kylie about the claim because everybody knew she was chasing the money.
It was then put to her that in her phone call with Wayne after he returned to New South Wales, she had asked him for money and told him it was because she had sold them the hotel too cheaply. She denied saying that and denied that was the reason she had brought her claim.
She spoke of her friendship with Newham and of going away camping with him and his wife. She agreed she was present during an incident in the hotel when Brad’s wife had an argument with Wayne about the price of bottled water.
She was tested on why she had not procured the solicitors’ agreement until six months after the August meeting. She said it was because she had thought Glenda was going to sign the statutory declaration and that that would be enough. She otherwise said she had attempted to obtain a solicitor’s appointment at Christmas time but had been unable to. She did not provide a good reason as to why she had not proffered the statutory declaration before settlement.
She had not told Piper Alderman, the solicitors who had prepared the settlement documents for sale, about the extra $80,000 because it was not to be known as part of the sale agreement. That was Glenda’s requirement.
She was critical of the type of furniture that the Carters had put in the hotel and said that whilst the kitchen had been renovated, it had been done at the landlord’s expense. She denied they had improved the standard of food and said that they halved the portions and increased the prices, and that did not go down well in a country town. She agreed, however, that they had obtained and sold a greater variety of ‘McLeod’s Daughters’ merchandise.
As to George Fergusson, he was not a close friend of hers but perhaps, she said, he could be considered a friend.
She explained how proceedings had been brought late because her father had been managing them for her, but had then died.
As I have noted, Kerrie’s evidence was sprinkled with confusion as to the order or sequence of events and the figures discussed and, as well, like other witnesses, she spoke loosely of the $200,000/$201,000 and $80,000/$79,000 figures, but overall and on the critical issue of just what was agreed with Glenda on the morning of 14 August, she was firm and convincing. I did not consider she sought to deceive or dissemble. She was properly challenged as to inconsistencies between her account and her pleadings, as indeed there were, but I was not satisfied much turned on that as paragraph 7 was plainly incorrect on any account of events.
- Wendy Vivian
Wendy Vivian (‘Vivian’) was a former employee of the Railway Hotel who had worked for the plaintiff, the defendants and Fergusson.
She recalled being present on an occasion, after the hotel was sold, when Kerrie was also there and was speaking with Glenda and Wayne. Kerrie said to the Carters that she would like to know when she was going to receive her $80,000. Glenda did not respond and simply walked away and Wayne stood there, not saying anything. Nothing further happened then.
She also spoke of instructions she had received from Glenda to the effect that if Kerrie were to visit the hotel, she was to tell her that the Carters were not available to speak to her or that they were not there and that they would get back to her later. She said that on several occasions Kerrie did in fact visit the hotel and she told her that, notwithstanding that she knew Glenda was then present in the hotel.
She went on to say that after the Carters took over the hotel, business slowly fell away and it was not very busy at all when they sold it.
She was not cross-examined.
She gave her evidence in a dispassionate and unembellished way and I had confidence in her credibility. Further, what she said corroborated, in a small way, Kerrie’s account of things. When the alleged loan was openly put to the Carters by Kerrie, they did not dispute it. More significantly, that account flew in the face of the Carters’ claims that it was not until either the phone call to Wayne (on his account), then in New South Wales, or their receipt of the solicitors’ letter (on Glenda’s account) that Kerrie first made any assertion about being owed moneys with respect to the sale of the hotel.
- Robert Ordway
Robert Ordway (‘Ordway’) was Kylie’s brother and had formed a relationship with the Carters’ daughter, Melissa, whilst they were at the hotel. He had returned to New South Wales with the family when they sold it. He said that the topic of money being owed by them to Kerrie was never discussed with him, but he was present at their home in New South Wales and overheard Wayne and Glenda speaking of it. He recalled that they spoke of an amount of $79,000 and of having no intention of paying back that money. He knew no more about it. He also recalled that Kerrie had rung the Carters’ phone number on a number of occasions when they were in New South Wales, but her calls were not answered. His relationship with Melissa ended in July 2007.

He was cross-examined closely about what it was that he heard the Carters discussing in those conversations and whether it was merely discussing an assertion by Kerrie that they owed her $79,000 and their rejection of that assertion or whether, in the course of their discussions, they acknowledged that such a debt was owed albeit that it would not be paid. He said he was unable to answer that question and in the end I found his evidence to be of limited value. His recollection was poor and he was clearly uncomfortable in the surroundings of the court.
I found it interesting, however, that on two occasions in the course of his evidence he said that in the course of conversation the words used were that the Carters did not intend to pay ‘back’ the money and the use of that phraseology appeared to me to have some significance. Further, I accept his evidence that the Carters did discuss Kerrie’s claim. That flies in the face of Glenda’s claimed lack of awareness, prior to proceedings, of any asserted claim.
- Deane Geier
Deane Geier (‘Geier’) was a part-time employee of the hotel during the time that Kerrie was running it but did not continue in that capacity after the Carters took it over. He also had a role as a bar manager at the local bowling club. He spoke of an occasion when he went over to the hotel to purchase some supplies ‘from Kerrie’, as he described it. The timing described would have placed that visit after the settlement date but I do not read anything into his description of dealing with Kerrie because, on all the evidence, she had stayed on at the hotel assisting the Carters for some weeks after the sale.
At all events, having attended to that business, he was out the front of the hotel talking to Kerrie when Wayne came up to them and said to Kerrie that the $80,000 they owed her would be fixed up before Christmas as they had put their Sydney house on the market.
In cross-examination it was apparent he was unsure as to the precise timing of that conversation but not much turned on that, as I find.
He acknowledged that he knew Kylie and Ordway quite well, but as acquaintances not friends. He had thought that he had got on well with Wayne until a particular day when he went to order some liquor and Wayne said he would not serve him, not saying why. To this day he does not know why that was.
Aside from his obvious confusion as to when the relevant conversation took place, I must say I found him to be a detached and independent witness who strove to give a truthful account of things.
Plainly, his evidence tended to corroborate Kerrie’s account of things. He acknowledged that she had rung him in June 2007 and asked him if he could recall that conversation outside the hotel. He said he had remembered it independently of her enquiry.
- Kylie Dawson
Kylie worked at the hotel for three years before its sale to the Carters and after the Carters arrived she stayed there some two or three weeks. They had promised her more work than was provided so she left.
She recalled being in the bar one day when Kerrie asked her to come into the kitchen for a few moments. Wayne and Glenda were there and she was asked to stay there and witness an agreement they had made. Wayne said nothing during this meeting, nor did she.
She heard Glenda and Kerrie say that they had made a deal that Glenda would pay Kerrie eight monthly payments of $9,000 and one payment of $7,000 or would otherwise pay her the whole amount if their house in New South Wales was sold. They agreed that they would get that arrangement written up properly for both of them to sign.
After that was said, Glenda said to Kerrie, ‘Thank you for fulfilling my [dream] of owning a country hotel’ (T/S 183). At that point she (Kylie) left the room.
She said she was present on many later occasions when Glenda discussed that loan with other patrons at the hotel. At different times she openly spoke to 10 or 15 patrons about the amount of money she owed to Kerrie and she did that both before and after she took over the hotel. At no time did she ever say that no money was owed to Kerrie.
She also recalled being present on a couple of occasions when Kerrie spoke to Glenda at the hotel, once in particular in the beer garden when she heard Glenda acknowledge that she owed Kerrie $79,000.
She was cross-examined, in particular, about her friendship with Kerrie. She said they were the very best of friends.
She said that after she had been called into the kitchen to witness the agreement about the loan, she had later seen Glenda and Kerrie in the dining room with the hotel agent signing up documents.
She agreed that Kerrie had asked her to come to court and she assumed that was because of the money because she knew that Kerrie had not been paid. She agreed she now worked for Kerrie in the Kapunda hotel and they had discussed the matter in general conversation recently, but Kerrie had no need to tell her what had happened in the kitchen because she had independently recalled it. She remembered it vividly.
The debt was never treated as a secret in the hotel and was openly discussed by Glenda with many customers.
I found Kylie to be an impressive witness. Notwithstanding her close friendship with and employment by Kerrie, she was firm in what she said and unshaken in cross-examination. She did not appear to me to be prone to exaggerate or embellish.
- Brad Newham
Brad Newham was a company director who ran a four-wheel-drive accessories business in Gawler. He acknowledged that he knew Kerrie as a friend and had frequented the hotel.
On the day that he believed the settlement of the sale to the Carters was due to occur, he had gone to the front bar of the hotel to welcome them as the new owners but had then discovered that the settlement had not proceeded due to lack of funds. Glenda had then said in his presence that settlement would be going through as Kerrie had agreed to lend them $80,000. The figure mentioned could have been $79,000, he said.
Later in that same week he was at the hotel and Kerrie and Glenda were there. Kerrie said to Glenda that she was concerned about the loan as there was no security. He said Glenda then offered to give her the keys to her utility. Some conversation then took place which he could not recount but at the end of which Glenda said that she would soon have money, after she sold her house in Sydney, and she would not let Kerrie down. Kerrie declined the offer of the utility keys.
After the proposed settlement date but before the sale went through, he was at the hotel on several occasions when the topic of the money owing was mentioned in the presence of both Kerrie and Glenda. He remembered an occasion when Glenda said to Kerrie that as soon as the house was sold she could repay the loan and she hoped it would not take very long to sell. That was said within a week or two before settlement.
He was cross-examined and agreed that he had had an argument at the hotel with Wayne after the Carters had taken over. He and his wife had been there and his wife had complained about the price of bottled water, saying the quantity was now less and the price more. Wayne had replied that she could do what she liked. Newham objected to that so they left the hotel and never went back there.
He said he had come to live in the town in 2006, from Victoria, and it was after that time that he and Kerrie had become friends, as they both had an interest in old cars. He and his wife had taken Kerrie and Kylie up to the Birdsville Track on one occasion.
He did not think it was extraordinary that Glenda had proffered her keys to Kerrie, although he did not remember actually seeing the keys.
He had been asked to come to court by Kerrie after she had enquired whether he was present when money had been discussed. He rejected the suggestion that the Carters were not ones to discuss their business affairs openly.
Of the various witnesses who had had a level of association with Kerrie, I found him to be the most impressive. He was a person with business experience and might be expected to have taken some level of interest in what was said about the dealings over the hotel and to have remembered what was said. He had since become more closely associated with Kerrie and had had a falling out with the Carters but, even so, his evidence was given in a clear and forthright manner and with a measure of independence and detachment that satisfied me that he could be relied upon. His account of the conversation about the car keys differed slightly from that given by Kerrie, but I did not think the conflict told against either of them.
- George Fergusson
George Fergusson (‘Fergusson’) was the current licensee of the hotel, having purchased it from the first defendant in April 2007. He had purchased it not because of trading figures, as he had not had figures for the previous six months, but because of the ‘McLeod’s Daughters’ connection and his knowledge of a new building subdivision in the town. He had dealt with Maurice Saponari and Mary Burnie from Langfords.
He had known through Kerrie that the hotel had been on the market previously and had spoken to her one day at the Publicans’ Bowls Day about a potential offer of $350,000, but nothing had come of that.
He was cross-examined about the work done on the hotel at the time he bought it. He said the kitchen was ‘very partially completed’, it still needed two months’ work before it could be used. There was a rent reduction whilst work was carried out but a rent increase after it was finished. Some old fittings were reused but others were not.
All in all, his evidence was not of particular assistance. The plaintiff contended that it assisted on the question of valuation of the lease, but I was not so persuaded as there was nothing before me putting any meaningful valuation on the works or changes carried out by the Carters.
- Maurice Saponari
Maurice Saponari, the hotel broker from Langfords, was called. He said that the plaintiff had put the hotel on the market in 2005 but then taken it off for 12 months. In 2006 a new agency agreement was signed with it for a nominated price of $400,000, later revised to $395,000 plus stock at valuation.
He described how an offer of $376,000 was received from a Naracoorte couple but that deal fell through.
He recalled initial telephone dealings with the Carters and discussing with them the asking price of $400,000. He did not recall meeting them face-to-face at that time. In most of those calls he spoke to Wayne. He had made no record of any of those conversations and said it was not his practice to record discussions of that kind until matters reached the contractual stage.
By reference to his file, and although it was not specifically recorded, he felt confident in saying that he had then posted to the Carters the hotel information sheet Exhibit P14 and the brochure Exhibit P15, both of which identified an asking price of $400,000. That plainly conflicted with Glenda’s evidence and Wayne’s initial position.
His recollection was that the Carters and Kerrie had first agreed on a price of $380,000 but the Carters had not been able to raise finance and nothing had come of that. He recalled that Kerrie then rang him and said that the Carters had stayed over the weekend and she wanted him to come up to the hotel and sign them up for a price, he thought, of $180,000 or $190,000. In addition to other discussions he had had with her about that price, he advised her that it would be preferable to renegotiate for a figure of $201,000 as that would mean there would be no cooling-off period. Kerrie subsequently rang him to say that she had done that and they had agreed on that figure. He agreed to come up that afternoon with the contract and he did so. He took Glenda and Kerrie through the document clause by clause, including clause 26, and they then signed it.
He was taken back to his recollection of the offer of $380,000. He believed it was Wayne who had told him that they could not come up with that amount.
He was shown the document P8, being a receipt for $5,000 towards the $201,000 purchase price. He could not remember having seen it before.
He agreed that he had no file note relating to the figures of $180,000 or $190,000 or $380,000, but they were his recollection and he believed Kerrie had previously agreed to a Carter offer of $380,000.
As to his evidence generally, he could, of course, be criticised for not having file notes supporting his account of things, but even so, he had subsequently acted in the sale of the hotel and he was the most independent of all the witnesses who gave evidence. His claim to have sent the document P14 to the Carters was ultimately borne out by the evidence of Wayne who, whilst not conceding the matter squarely, found himself obliged to agree that he had seen a document in much the same terms.
In circumstances where he was the appointed agent for the sale of the hotel, I find it inconceivable that there would not have been any significant level of contact between him and the Carters, yet they sought to portray it in that way. There can be no other explanation for their possession of P14 or a document in similar terms. It is of particular significance too, as I find it, that he recalled an earlier agreement between the parties over a price for the hotel of $380,000 because on Kerrie’s account, as well, they had earlier resolved upon a higher figure. The amounts differ, of course, Kerrie said $320,000 and he said $380,000, but I find Saponari was likely mistaken in his recollection of the amount involved and that Kerrie was much more likely to have accurately recalled the figure.
The importance of that evidence lies in the fact that it supports Kerrie’s claim that there were earlier negotiations with the Carters and it makes sense that Saponari would have been made aware of them. His account of having had telephone dealings with the Carters is consistent, too, with Kerrie’s evidence (which for reasons expressed elsewhere I accept) that the Carters told her that they did not want to deal with him, they did not like him and that he was not to be told of the side agreement relating to the $79,000.
Conversely, in the face of their claims that they had not been aware of the asking price of the hotel at an early stage and that they had not at any time negotiated a $320,000 price with Kerrie, I did not find it surprising that the Carters necessarily professed to have had no dealings with him and, indeed, to barely recall who it was that came to the premises with the contract on 14 August.
- Defendant Witnesses
- Glenda Carter
Glenda Carter described their initial visit to the Railway Hotel. She said she could not remember how she was introduced to Kerrie, nor whether she talked with her then, nor whether they discussed the asking price, but she recalled coming back a few weeks later with the children. She was not sure whether they stayed at the hotel on that occasion but was firm that they did not discuss any offer with Kerrie because they had not yet decided whether it was the hotel they wanted.
Later again, she and her husband came back by themselves.
She could not remember whether they had had specific discussions with Langfords in the meantime but there had been contact with Mary Burnie. She could not remember whether she had met Saponari by then. They stayed overnight and discussed the hotel next morning. She and Wayne made an offer of $200,000, Kerrie left the room and came back and said she would take $201,000, and they agreed to that. Kylie was never in the room.
She agreed she later signed the contract but could not remember where it was signed and who else was there, or whether Kerrie was even in the room.
She explained the document P8, saying that Kerrie had asked her for some money in advance, so she (Glenda) had given her $5,000 towards the settlement figure. She had prepared the receipt document herself on the advice of her solicitor.
After they took over the hotel, Kerrie remained there for a few weeks and helped out.
She denied ever agreeing to pay Kerrie any money for the hotel other than the $201,000 and she had never said anything to her or anybody else about a vendor loan.
She denied ever receiving the statutory declaration or the loan agreements and the first time she was ever aware that Kerrie was claiming money was owed to her was when the solicitors’ letter of 14 September 2007 (Exhibit P9) came.
In cross-examination she said that they had sold the hotel because the family felt unsafe in the town.
She was aware in August 2006 that Langfords were acting for Kerrie and was asked why she had not sought to negotiate through them. Her answer was ‘I’m not sure’ (T/S 277). Later, she was asked again about that and said she did not know why she had spoken directly to Kerrie, it had just happened. She was also unsure whether Saponari was the agent then handling the matter and she could not remember any discussions with him. The only time a price was ever mentioned to her was on 14 August. She was unsure who first mentioned it and how it came up, but she was the one who had offered $200,000 for the hotel. She was unsure how she got to that figure or how they had got the hotel trading figures they had discussed with their accountant.
She was unsure why Kerrie was selling.
She had had no discussions with Saponari about a $400,000 asking price and did not know whether her husband had.
It was suggested she had attempted to obtain funds to support an offer of $380,000. She first asked for the question to be repeated and then disagreed.
She had no recollection of saying to Kerrie that she did not like Saponari. She was asked whether she remembered him attending when they signed the contract. She asked for that question to be repeated and then said she could not remember.
As for the information memorandum P14, she thought she had first seen it after the proceedings started. She was unsure whether she had received the flyer P15 from Saponari in the mail.
When she incorporated the first defendant in July 2006, it was for the purpose of investing in a hotel. The company had no assets and their car was purchased on its security. They had then owned a house in New South Wales. It was mortgaged, but she was unsure of the amount of equity in it. She said that there was otherwise plenty of money available through her family to buy the hotel. They had $258,000 in cash before they started looking at hotels and could have paid more, up to $400,000.
She was unsure whether her husband spoke to Kerrie two weeks after they first went back to New South Wales.
She was unsure whether it was important to know the prices for hotels before coming back to South Australia to inspect them. She was unaware of any conversation in which Kerrie was asked by them whether an offer of $320,000 would be wasting their time.
She was unsure whether settlement was delayed because they did not have the money ready.
She was unsure whether price was discussed on the second visit.
She did not remember any conversation where they told Kerrie that they could not pay $320,000 but could pay $280,000, but did not deny it was possible that it had happened. That was a marked, and as I saw it unintended, concession.
By the final trip to the hotel, they knew what the asking price was. She was unsure whether that was as a result of something Kerrie said.
It was put to her that she had offered to buy it for $280,000, with a payment of $200,000 and $80,000 in instalments. She asked for that question to be repeated and then denied it.
It was then suggested that she had proposed a written contract for $200,000, with $80,000 not to be recorded. She asked for that question to be repeated and then denied it.
She denied there was any conversation about the contract in the presence of Kylie or that anything was said about their house being sold and repayments coming from the proceeds.

She was unsure whether the contract was signed that same day and unsure whether they were then in a hurry to return to New South Wales.
It was suggested to her that the agreement was that the $79,000 loan agreement was to be drawn up by a solicitor on a later date. She asked for the question to be repeated and then denied it.
Nothing was ever said by her about an arrangement being made to avoid stamp duty or other taxes.
She denied inducing Kerrie to enter into an oral agreement, knowing it would be hard to enforce.
She was asked about the Newham conversation. She did not deny it, but did not remember it. I found that to be an unusual response. She denied proffering her car keys to Kerrie at any time.
She was asked about the Vivian incident but said it had not occurred. She disputed Kerrie’s claim that she had asked her in November and December for money, that Kerrie had proffered her a statutory declaration or the written agreements, or that she had said to Kerrie that she would get her solicitor to look at those documents. She denied she had first agreed and then decided not to pay $79,000 to Kerrie because the hotel was less busy than they had anticipated.
She was unsure about Kerrie’s claim that she went to the hotel in February asking whether they were going to sell it and that she had told Kerrie that it was not on the market.
As to Vivian’s evidence about barring people, she said it was only towards the end of her time at the hotel that she recalled giving Vivian instructions that no-one was to bother her.
She remembered that they had ‘dealt with several phone calls’ (T/S 306) when they got home to New South Wales after selling the hotel, but she had never spoken to Kerrie herself and could not remember whether Kerrie was in contact with Wayne. She denied there were any discussions with her husband about any debt owing to Kerrie and, of necessity, any such discussions in the presence of Ordway.
Overall, I had no confidence whatsoever in her credibility as a witness. On occasions during cross-examination that were too numerous to mention, she asked for questions that had been put to her to be repeated. That, of course, can be quite understandable where questions are complicated or a witness has an obvious difficulty in hearing or understanding a question, but in her case many requests for repetition were made in answer to simple and direct questions, and I was left with the distinct impression that she made those requests simply to give herself more time to think about the answers she wanted to give.
There was a ‘rote’ manner in which she answered many questions. Where she felt confident about denying a matter, her response was ‘I disagree’ and she repetitively said that. With respect to many other matters, including matters which she could ordinarily be expected to have recalled, she gave the bland and single word response, ‘Unsure’. On occasions, that answer was given by her to questions which plainly suggested matters directly in conflict with her own evidence.
Her demeanour was unimpressive and evasive, and what appeared to me to be a rehearsed manner of answering questions, coupled with her frequent requests for repetition, suggested to me a level of guile and preparedness to construct an answer that would suit her case and left me with no confidence in anything she said.
- Wayne Carter
Wayne Carter related how the family had resolved to start a new life away from their home in New South Wales because of a succession of family tragedies. They were looking to buy a country hotel. Ultimately, however, they left Freeling several months after purchasing the Railway Hotel because it was a horrible place and they felt victimised and considered they were the objects of acts of vandalism.
He described their first visit to the hotel and how Kerrie showed them around. He then described a second visit, when they went with their family. He conceded that Kerrie may have then said what the asking price for the hotel was.
He described a third trip, when they went without their children. By that time, they had narrowed the field to two hotels, including the Railway Hotel. They could have afforded to pay up to $400,000 for either.
He was unsure of dates but they stayed overnight at the hotel and the next morning had a meeting in the kitchen with Kerrie, just the three of them (T/S 315):
We just put it to Kerrie that we were happy to pay her $200,000 for the hotel. That’s what we considered it was worth. That’s basically it. Kerrie agreed.
He said that Kerrie then left the room to ring her broker and came back with a counter-offer of $201,000, which they agreed to. He identified the contract but said he had not signed it as he was an undischarged bankrupt. He had never disclosed that fact to people in the town as there was no reason to.
They had previously received some trading figures from the hotel but they were out of date.
He then spoke about the steps they took to change the hotel, including the installation of a new beer dispensing system, securing additional merchandising material for ‘McLeod’s Daughters’ and the renovation of the kitchen.
He denied telephoning Kerrie between the first and second visits and asking whether they would be wasting their time offering her $320,000.
He spoke of the incident involving Newham and his wife and an argument over the price of bottled water. He denied ever saying to Kerrie in the presence of Geier that they were selling their house in Sydney and would have the $80,000 for her before Christmas. He said he did not get on with Geier because Geier had tried to bully his wife, albeit that on his own account that incident would appear to have post-dated the alleged conversation.
He said that after the sale of the hotel to Fergusson, they received two or three phone calls from Kerrie, but he only recalled the last one and in it she said they owed her money because they had got the hotel cheaply. He did not tell Glenda of that call because she was still upset over what had happened in Freeling.
In cross-examination he agreed that he had taken an active role in the decision to move to Freeling and purchase the hotel. He was pressed over his role in these proceedings but denied that he had taken any active part in the decision to defend them.
He could not remember the date of their first visit to the hotel, but Kerrie had not then said the asking price was $400,000. He had simply enquired of Mary Burnie, saying they were interested in hotels in the range of $200,000 to $400,000, and she had referred them to the Railway Hotel, amongst others.
After they returned to New South Wales they did not speak to Langfords or Mary Burnie or Saponari. He did not appear to deny that he might have spoken to Saponari at some point prior to the purchase, but denied Saponari had told him the price was $400,000 or that he had negotiated any figure with him but then had been unable to raise finance for it.
Like his wife, he could not remember whether they stayed in the hotel with their family when they came to Freeling on the second occasion. By that time he was aware of the asking price of $400,000 but he could not remember how he knew it. He had not been told of it by Saponari.
He denied that settlement was delayed because of their inability to raise funds. I should say on this point that, ultimately, no clear evidence came before the court on that topic and I am not disposed to make any finding about it.
He agreed he had spoken to Kerrie between their first and second visits, but only for the purposes of saying they were coming. He rejected any suggestion that he spoke to her directly because negotiations through Langfords had broken down and he denied asking Kerrie whether they would be wasting their time offering $320,00.
He was not aware that Glenda had ever offered Kerrie $280,000.
He recalled the negotiations in the kitchen, but not the date of them, and thought he had had some input into the conversation but denied Kerrie’s account of it and rejected that Kylie was present there at any time. The offer they had made of $200,000 was based on their own assessment of the hotel’s worth and after their inspection of other hotels. Their own accountant had actually advised them not to buy it at all.
He then said, somewhat extraordinarily, that he did not then know that Kerrie’s asking price had been $400,000. He was taken back to his earlier evidence on the point and changed his response (T/S 337).
He was asked whether Kerrie’s reaction to their offer of $200,000 was one of surprise and whether she had said anything. His response was that she said ‘I accept that’ (T/S 337/8). There was then the following exchange:
Q. You see that is around half the asking price.
A. Congratulations, what a bargain.
The court asked him whether he was asserting that Kerrie had then said that, but he said no, he was the one saying it and he did then think the price was a bargain. That glib comment starkly contrasted with his earlier claim that his accountant had advised him against buying the hotel and his own assessment that the hotel was worth only $200,000.
He did not recall Glenda saying it was urgent that they return to New South Wales that day and the difficulties of otherwise having only an oral contract to rely upon did not cross his mind.
It was put to him that his family finances were then tight and he disagreed, but when it was suggested that, on his own account, they were borrowing practically all of the purchase price from family, he conceded that.
He was present when the contract was signed but could not remember whether anybody else was present, in particular Saponari, and could not remember anybody going through the contract terms.
He said that part of their reason for soon on-selling the hotel was because it was not as profitable as they had expected it to be.
He first denied the suggestion that Kerrie had worked in the hotel for a few weeks after settlement, but after further cross-examination he came round to the position that she had been there but had not done any physical work except for some deliveries.
He denied the Geier incident and denied at any time barring Kerrie from coming into the hotel.
He did recall that Kerrie had rung them in New South Wales several times asking to be put through to Glenda, but save for one call, he could not remember anything else about what was said in those conversations. Even so, he found them annoying. He did remember one call when Kerrie said she was owed money because the hotel had been sold too cheaply.
He denied that Ordway had been present when he and his wife had discussed money said to be owing to Kerrie.
He said he had spoken to his wife about all these events but they had tried to avoid talking about them.
He said there had never been any agreement that they would pay rent for the hotel pending settlement.
Generally, I found him to be considerably more alert than his wife. He seemed to have a measure of business know-how but his presentation was over-confident.
In the face of Saponari’s evidence, which was independent and straightforward, his assertion he had had no dealings with him and barely knew who he was, was simply not credible.
Further to that, he tripped up in a couple of significant places during the course of his evidence. I refer, in particular, to his evidence about his knowledge of the asking price, about family finances and about Kerrie working on in the hotel. I also regarded his sarcastic response ‘Congratulations, what a bargain’ as not merely reflecting a level of sarcasm and offensiveness, but as directly conflicting with his other claims about the hotel’s value. His assertion that he had no recollection of the content of all but one of Kerrie’s telephone calls to their house in New South Wales, after they returned, was unbelievable. He could not or did not advance any other reason why Kerrie might be repeatedly calling them. I found it extraordinary that he, like Glenda, claimed no recollection of staying at the hotel with their children on their visit there and it appears to me extremely unlikely that Kerrie would have allowed them what was, in effect, at least two months’ free occupation of the hotel with consequential trading benefits.
Like his wife, he adopted a ‘rote’ manner of replying to propositions put to him with which he disagreed, simply uttering the word ‘incorrect’, and his answers came in an overly defensive tone.
I formed the distinct impression that despite his desire to be seen as a person simply in the background, no doubt because of his bankruptcy, he was in fact the major party either conducting or controlling the dealings with Kerrie.
Where his evidence conflicted with that of Saponari, Geier or Ordway, I unhesitatingly preferred their accounts and otherwise I preferred the evidence of all plaintiff witnesses over his.
Discussion
It is against the background of that evidence that I am called upon to make factual findings.
There were a number of minor disputes but the significant factual issues raised by the plaintiff’s case were as follows:
(1)Did the Carters negotiate with Kerrie from an asking price for the hotel of $400,000 down to $320,000 and then to $280,000 as Kerrie says, or was there only one offer of $200,000?
(2)Did Kerrie and Glenda orally agree, on 14 August 2006, to the sale and purchase of the hotel for $280,000, of which $201,000 would be formally recorded as the contract sum and the balance of $79,000 would be vendor finance to be recorded by way of a separate agreement?
(3)If yes, did they then agree that the defendants or one of them would pay that balance of $79,000 to the plaintiff by eight monthly instalments of $9,000 and one of $7,000, that if for some reason the hotel or their property in New South Wales was sold in the meantime, the balance owing to Kerrie would be paid from the proceeds and that they would have a separate agreement drawn up to record that loan?
(4)If yes, was Kylie Dawson present when those terms were confirmed between Kerrie and Glenda?
(5)Did Kerrie prepare and give to Glenda any one or all of the statutory declaration and the two loan agreements to which she referred and did Glenda take them and say she would refer them to her solicitor for advice?
(6)Did either Glenda or Wayne speak to particular persons at or near the hotel at various times before or after settlement, confirming their indebtedness to Kerrie for vendor finance of $79,000 or $80,000?
(7)Did Kerrie personally approach Glenda in November and December 2006 and on various occasions up to March 2007 asking for repayment of loan moneys and did Glenda never, on any such occasion, deny the asserted debt?
(8)During a telephone conversation with Wayne after the Carters had returned to New South Wales, did Kerrie ask Wayne when the loan was going to be repaid and did Wayne not then dispute the debt but otherwise refuse to make any payments to Kerrie?
The resolution of those factual questions falls to be determined not merely by an evaluation of the credibility or the reliability of the principal parties, but also having regard to the credibility of the accounts of those witnesses who tended to corroborate the plaintiff’s account and, as well, the documentary materials tendered in evidence.
At the commencement of the trial I expressed misgivings about whether the plaintiff’s pleadings and supporting evidence could potentially lead to a finding that the contract relied upon by it was an illegal one, as from one perspective it might have been viewed as one designed to avoid payment of tax or stamp duty. The defence had not raised that issue. As the evidence emerged, I continued to have reservations about the circumstances in which the defendants had allegedly proposed an ‘off the record’ payment arrangement. Even so, the issue was never pleaded by the defendants (refer Harry Goudias v Akakios[1]) so it does not appear I should decide it and, in the event, the evidence did not ultimately reach the height of establishing any level of mutuality about a possible attempt to defraud the revenue. Whilst, accepting the plaintiff’s case, there may have been grounds for suspicion about such a plan on the part of the defendants, Glenda and Wayne denied the existence of the suggested arrangement. Kerrie’s evidence was to the effect that they were seeking an off-the-record arrangement for their own reasons, that she then believed that unless it was put into effect there would be no sale and that she was prepared to go along with it, albeit that she required it to be documented. Her latter requirement and indeed the steps she subsequently took to have a formal loan agreement prepared and signed, argue against her complicity in any such scheme.
[1] (2007) 97 SASR 93
For those reasons, I have not found it necessary to further consider the question of illegality.
For reasons already touched upon, in almost every instance where the evidence of Kerrie conflicted with that of Glenda or Wayne, I preferred Kerrie’s account. Her ability to recall and separate events in strict sequence was limited indeed and she spoke loosely of the different contract figures. These flaws were the subject of significant and valid criticism by the defence, but I did not regard them as indicative of fabrication or unreliability; indeed, I was of the view that overall there was a consistent thread in her account of critical matters.
Standing alone, I would have preferred her evidence over that of Glenda and Wayne, anyway, but it did not stand alone. It was corroborated strongly or otherwise by the evidence of each plaintiff witness called. Despite Kerrie’s close friendship with Kylie, I found her to be impressive and credible and she did not attempt to elaborate on her account of her dealings with the Carters – as she easily might have had she been intent upon deceit. I am satisfied she was, indeed, present during the discussion on 14 August and heard the parties agree that Glenda would pay Kerrie the sum of $79,000 in the manner alleged and that the terms of that agreement would later be reduced to writing. I am further satisfied she was present in the hotel on a number of other occasions when Glenda discussed that loan arrangement with other hotel patrons and on a particular occasion in the beer garden when Glenda acknowledged she was indebted to Kerrie, and by inference the plaintiff, in the sum of $79,000. Her evidence as to this was corroborated by others.
As I have noted, I had less confidence in Ordway’s recollection, but despite his confusion, he referred to conversations between the Carters about the alleged debt and about paying ‘back’ moneys to Kerrie.
The witness Vivian spoke about Wayne affirming their indebtedness to Kerrie for $80,000 and otherwise about steps undertaken by Glenda at the hotel to prevent Kerrie having access to her. Her evidence was not challenged and no good explanation was ever proffered by Wayne or Glenda as to why Glenda wanted to avoid seeing Kerrie.
Geier was a credible and relatively independent witness and he supported a similar conversation about indebtedness.
Newham was a particularly impressive witness and his evidence was plainly corroborative as to the debt and the incident involving car keys. He acknowledged a more recent friendship with Kerrie and a falling out his wife had with Wayne, but I did not think either matter told against his independence.
Attempts were made by the defence to discredit all those parties, either because of their closeness to Kerrie or because of bad blood between them and the Carters, or both, but individually, and in a collective way too, I found myself satisfied they were witnesses of truth.
Of particular significance was the evidence of Saponari, who spoke of a level and frequency of dealing with the Carters and of detail that cannot sit with their respective claims to have had virtually nothing to do with him. I very much prefer and accept his evidence over that of the Carters and he was truly independent. His claimed level of dealing with them cannot be reconciled with their account of things, but it does mesh with Kerrie’s claim, which I accept, that Glenda told her she did not like him and did not want to deal with him. I found him to be a reliable witness who had no axe to grind and, with the single reservation as to the accuracy of his unaided recollection of actual figures negotiated, I accept everything he said.

Whilst the steps taken by Kerrie, at some considerable expense, to have the loan agreements prepared might be regarded as self-serving acts and not truly corroborative of her account, the fact, as I find it, that she gave them to Glenda and that Glenda took them without disputing a liability is pertinent because Glenda’s own account was a firm denial that she ever received either and, indeed, she said she first heard of any claim by Kerrie about a debt at about the time of the letter of demand. There is no doubt that Kerrie had had those documents prepared at that earlier time and at some considerable cost, and I find it inconceivable (whatever of Glenda’s denial of indebtedness) that they were not then presented to her for execution.
Conversely, I had no confidence whatsoever in the credibility of either Glenda or Wayne. For reasons already discussed, each presented unconvincingly in the witness box and, in particular, Glenda’s claimed lack of recall about certain matters, her continued requests for repetition of questions asked and her rote responses to any propositions which either troubled her or with which she did not agree, led me to conclude that she could not be relied upon at all. By way of contrast, Wayne was over-confident, glib and dismissive.
Findings
I am, indeed, satisfied and find that from about the time they first visited the hotel, Glenda and Wayne were alert to the asking price of $400,000, not merely because Kerrie spoke of it to them but because I am satisfied Saponari also told them of it and sent them soon afterwards a sale flyer which spelled it out.
I am further satisfied and find that Wayne subsequently telephoned Kerrie and asked whether she would consider an offer of $320,000 and Kerrie said she would. I find, as well, that Saponari was made aware of that position and it is likely that that is the figure he mistakenly recalled as $380,000 but which he believed the parties had agreed upon, subject to finance.
I am then satisfied and find that the Carters subsequently informed Saponari and Glenda informed Kerrie that they were unable to procure finance sufficient to support a purchase price of $320,000.
I find that the Carters subsequently proposed directly to Kerrie that she accept a price of $280,000. I am unable to make a firm finding as to whether that figure was proposed by Wayne or Glenda or both of them, but I am satisfied and find it was first put to Kerrie by one or other or both of them prior to 14 August. I then find that at the commencement of their discussions on 14 August, Kerrie told Glenda that she would accept their offer to pay $280,000 for the hotel.
I am further satisfied and find that at this point of their conversation, Kerrie suggested they arrange settlement matters through Saponari but that Glenda said that she did not like him and did not want to deal with him, and said ‘Can we do this on our own and just get him to deal with the legalities of it all?’.
Those findings necessarily reject the position taken by both Carters that the only offer ever made to purchase the hotel was one of $200,000 made on 14 August, an offer that was then adjusted and accepted in the sum of $201,000. They were both at pains in their evidence to distance themselves from any marked interest in the hotel or significant level of dealing with Saponari prior to that day, so much so that they claimed to have no recollection of staying there with their two children during a visit from New South Wales - a stay I am satisfied took place. That asserted memory lapse I found to be extraordinary.
I am satisfied and find that in that conversation of 14 August, Glenda told Kerrie that she could not raise the $280,000 purchase price that had been discussed and asked if Kerrie would accept $200,000 then and $80,000 in monthly instalments.
I then find that the conversation and events proceeded as Kerrie related and in the sequence I have set out in discussing her evidence above. I find that ultimately Kerrie and Glenda agreed that the written contract would be for $201,000, that there would be an additional ‘off the record’ payment of $79,000 to be provided by way of vendor finance and repaid by Glenda by eight monthly instalments of $9,000 and one of $7,000, and that it would be confirmed later by a separate written agreement. I further find that Kylie was called in to witness and did hear the parties repeat those agreed terms. Conversely, I find it highly unlikely in all the circumstances that Kerrie would have agreed to sell the hotel, for which she had previously received a $376,000 offer, albeit one that did not ultimately proceed, for a price of $201,000.
I am satisfied and find that Kerrie had by then acceded to Glenda’s request not to tell Saponari about the vendor finance, nor to have him involved in any documentation concerning it, and that in consequence Saponari was never told anything of it.
I find that later that afternoon Saponari visited the hotel with a contract for a purchase price of $201,000 and went through each and every term in it with Glenda and Kerrie. The plaintiff, as Kerrie’s known and disclosed principal, was the vendor and Glenda or her nominee was the purchaser. Glenda’s nominee was the first defendant. Separately, by virtue of clause 34 of the contract (Exhibit P4), Glenda agreed to guarantee the performance of the first defendant under it and to indemnify the plaintiff against any default. The parties then signed that contract and the Carters left and returned to New South Wales.
I find that either at that meeting or soon after it, the Carters asked if they could go into occupation of the hotel, make some preparations for their entry and operate it prior to settlement and Kerrie agreed to that on terms that the Carters would pay an occupation rental of $150 per week.
I am further satisfied and find that the nominated settlement date in that contract of 9 October was not met and settlement did not occur until 25 October. Neither of the defendants, at settlement or at any time thereafter, paid any rental to the plaintiff.
I am further satisfied and find that the settlement delay was the reason asserted by Glenda for tendering to Kerrie on 11 October (and not at Kerrie’s request, as I find) an amount of $5,000 on account of that $201,000 contract figure, but I am persuaded she had a more sinister reason for doing that. In conjunction with that tender she provided the document P8, which purported to repeat the asserted transfer price of $201,000 and which she ensured they both signed and had witnessed. It was an odd arrangement on its face as Glenda or her nominee need only have paid that sum directly to Langfords in addition to the contract deposit they were holding or, indeed, to Piper Alderman, who were conducting the settlement, and obtained a receipt from either of them. Her sinister purpose, as I find it, was to attempt to shore up or add weight to her claim that $201,000 was the only agreed price by having Kerrie sign a document in those terms, and to further what I find was Glenda’s ultimate plan to deny the existence of any agreement to pay $79,000 to the plaintiff and to avoid making that payment.
As to reducing the vendor finance arrangements to writing, I accept Kerrie’s evidence that her original intention was to have a loan agreement in respect of the $79,000 prepared before settlement. That did not occur, however, and instead, within a few days of settlement, she drew up and handed to Glenda the statutory declaration I have mentioned. She did not then believe a simple IOU or letter confirming the debt would be ‘legal’.
I find that Glenda accepted that document, that it did purport to record the agreed arrangements for repayment of the $79,000 and that she said she would have her solicitor check it. I find that was in fact never dealt with by her, nor did she intend to deal with it, nor was it discovered or produced by the defendants. For her own part, Kerrie had not retained a copy and she mistakenly believed, as I find it, that it was thus not a document to be disclosed in discovery. Kerrie’s approach to this, and indeed her evidence as to it, displayed a naïve and unbusinesslike approach to the matter that characterised her approach to the whole transaction, but I am satisfied she did not herself then see it that way.
I am further satisfied that as events transpired, Kerrie’s concerns about having that loan agreement recorded in writing were eased and pushed somewhat into the background by the conduct of both of the Carters who, I find, variously and openly told a number of people in and about the hotel, and in particular the witnesses Vivian, Geier, Dawson and Newham, that Kerrie had advanced that amount, or $80,000 as it was loosely described, to them to assist the hotel purchase.
I find that when the first monthly payment was due in November 2006, Kerrie went to Glenda and asked for that instalment but that Glenda informed her that as they were not making any money, she could not pay it there and then. Kerrie accepted that but made a further visit in December and asked for that instalment, only to be told by Glenda that the hotel was not what she had represented it to be and they could not pay her then.
I am satisfied that by this time Kerrie was concerned about what was happening and sought before Christmas 2006 to arrange an appointment with solicitors Meister Belperio Clark to have a loan agreement prepared. She was unable to procure an appointment before then and it was not until February that she finally procured a form of loan agreement for tendering to the Carters. That document was produced (P11) and I am satisfied that it was obtained by Kerrie from Meister Belperio Clark and was paid for by her. The second defendant denied ever seeing or receiving it and it was criticised by the defence because it referred to a loan amount of $80,000, made no reference to instalments and contained other specific provisions relating to default interest. Kerrie’s explanation for that was that the figure had been increased by her solicitors to $80,000 because the Carters had promised but failed to pay her an occupation rental for the period of time they were in the hotel prior to settlement. Further, she said, the solicitors had told her that as the defendants were already in breach of the loan agreement, they had fashioned it in a different form. I find that to be a plausible explanation. The defendants then owed over $1,000 in rental and had not paid four monthly instalments on the $79,000 debt.
I am further satisfied and find that Kerrie gave that agreement to Glenda for signature, that Glenda took it and again said she would refer it to her solicitors. I further find that she never returned that document to Kerrie, nor did she intend to, and it was not produced by the defendants when called for at trial. I make the same findings with respect to the document P12, which was a further agreement obtained by Kerrie from her solicitor and tendered to Glenda after she had not had returned the first loan agreement.
I am further satisfied and find that on numerous occasions between November 2006 and March 2007 Kerrie went to the hotel asking to speak to Glenda but that Glenda deliberately made herself unavailable. I find that on one occasion Wayne physically barred Kerrie from entering the hotel to speak to Glenda. I am further satisfied and find that Glenda instructed the hotel staff, including Vivian, that if Kerrie was to come there, she was to be told that Glenda was not available, even if she were then present in the hotel. The unchallenged evidence of Vivian was significant in this respect and all of this conduct flies squarely in the face of the claim by each of the Carters that they knew nothing of Kerrie’s claim until after they returned to New South Wales.
I am satisfied and find that Glenda falsely denied to Kerrie in about February or March 2007 that they had placed the hotel on the market but that ultimately, when it became publicly known, Wayne told Kerrie that she would be paid the amount of the loan if funds became available at settlement. Wayne told Kerrie of the settlement date and time and Kerrie attended the hotel just prior to then, only to discover upon ringing Ordway that she had been deceived about it and that the Carters had already settled and left with him to return to New South Wales.
I am satisfied and find that Kerrie subsequently rang Glenda’s mobile number on several occasions and that Glenda either failed to answer or otherwise provided only a recorded message. I find that on one occasion she was able to make contact with Wayne’s phone and upon her enquiry about the debt he told her that they had a year to pay and would be using it. I am satisfied that Wayne’s conflicting account of that conversation was false.
On the basis of those findings, I am satisfied and find that the conduct of Glenda was on and from 14 August misleading and deceptive, and intentionally so. I find that she did not herself or through the first defendant then have any intention of ever paying the $79,000 to the plaintiff and that her proposal to split up the purchase price in the manner I have found was engineered with a view to procuring the hotel for $201,000 only and later disavowing the existence of any verbal agreement to pay the balance.
Her stratagem was to hint at some kind of ‘under-the-counter’ arrangement as an explanation for her proposal and as a means of ensuring that neither Saponari nor the settlement solicitors were told of it and nothing was then recorded in writing. It was an explanation which, in her naïveté, Kerrie accepted. Glenda then sought to bolster that position by proffering the further $5,000 advance and with it the elaborate ‘agreement’ recording the existence of only one contract price. In addition and to assuage any concerns held by Kerrie, I am satisfied she and Wayne spoke publicly about the debt, assuming that they were safe in doing that in the absence of any written document. Further, Glenda deliberately deflected Kerrie from her pursuit of any instalment payments by not disputing the first defendant’s indebtedness but otherwise proffering numerous excuses for their delay and by receiving from her and promising to attend to the statutory declaration and the two loan agreements she was given. Both defendants were thus successful in stalling any action by Kerrie before the first defendant on-sold the hotel and the Carters left the State.
I am further satisfied and find that at all relevant times, Glenda acted and purported to act on behalf of the first defendant, whether or not its precise identity was then disclosed, and that by virtue of her proprietorship of that entity, she was its instrument for all purposes.
I find that the plaintiff is entitled to recover damages against the first defendant for misleading and deceptive conduct under s 52 and s 82 of the Trade Practices Act 1974 (Cth) and against the second defendant under s 7(1) of the Misrepresentation Act 1972 (SA), ss 56 and 84 of the Fair Trading Act 1987 (SA) and ss 52, 75B, 82 and 87(1) of the Trade Practices Act on the footing, as I have found it, that she was directly and knowingly concerned in that deceit and in causing the plaintiff loss and damage.
Further, I am in the circumstances disposed to and do make orders under s 87(2) of the Trade Practices Act to the following effect:
(1)varying the terms of the written agreement (Exhibit P4) as of the date it bears by deleting clause 26 thereof (s 87(2)(b)) and in such other manner as is required to ensure it is not in conflict with the terms of the oral agreement for payment of the $79,000 that I have found proven. I will hear from the parties as to any necessary or consequential amendments;
(2)in any event, preventing the first defendant from enforcing or relying upon the provisions of clause 26 or upon any asserted conflict between the written contract P4 and the oral agreement for payment of $79,000 (s 87(2)(ba));
(3)that the second defendant have a concurrent liability with the first defendant to pay the plaintiff’s loss or damage (s 87(2)(d)).
The plaintiff separately sought damages for breach of the alleged oral contract to pay it the sum of $79,000, pleading that that agreement was collateral to the written agreement P4. The defendants responded that such a claim was not maintainable as the written contract for $201,000 was an entire contract, that such was expressly acknowledged by the parties in clause 26 and that its terms were quite inconsistent with the terms of the alleged oral agreement.
The defendants sought to rely upon the well established principle that:
A collateral agreement made in consideration of a main agreement cannot effectively subsist unless it is consistent with the main agreement. Once an agreement is made in writing it is treated, unless the parties are shown otherwise to intend, as the full expression of their obligations. If it is established that the writing was intended to contain only part of a fuller agreement it may be otherwise.
(Maybury & Anor v Atlantic Union Oil Company Limited[2])
and indeed that position has been repeatedly affirmed (see Equuscorp P/L v Glengallan Invest[3], Toll (FGCT) P/L v Alphapharm P/L[4] and Nassif & Anor v Fahd & Ors[5]).
[2] (1953) 89 CLR 507
[3] (2004) 218 CLR 471
[4] (2004) 219 CLR 165
[5] [2007] NSWCA 269
Prima facie here it must be said that the collateral agreement relied upon by the plaintiff is necessarily inconsistent with the written contract P4, but even so I am not persuaded the ordinary principle should apply and for the reasons that:
(1)the authorities make it abundantly clear that it will only apply in the absence of fraud, mistake or misrepresentation (see Toll at [46] and Equuscorp at [33]);
(2)I have already found that the defendants’ conduct here was wilfully fraudulent and in any event misleading and deceptive;
(3)in consequence I have made orders under s 87(2) of the Trade Practices Act varying the terms of P4 so as to remove any inconsistency with the oral agreement.
I therefore find that the oral agreement for payment of $79,000 was indeed collateral to the written agreement P4 and that, in any event, by reason of my variation order the defendants may not seek to rely on clause 26 of P4 or any other asserted inconsistency between them.
If I am wrong in that conclusion and the defendants are correct in contending that the oral contract with respect to the $79,000 is prima facie and at law unenforceable, then I am minded to accept the plaintiff’s submission that the defendants are estopped from relying upon that contention by reason of the doctrine of promissory estoppel.
In Waltons Stores (Interstate) Ltd v Maher[6] per Brennan J:
It is unconscionable to refrain from making the denial and then to leave the other to bear whatever detriment is occasioned by non-fulfilment of the assumption or expectation.
In my opinion, to establish an equitable estoppel, it is necessary for a plaintiff to prove that (1) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff's action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise. For the purposes of the second element, a defendant who has not actively induced the plaintiff to adopt an assumption or expectation will nevertheless be held to have done so if the assumption or expectation can be fulfilled only by a transfer of the defendant's property, a diminution of his rights or an increase in his obligations and he, knowing that the plaintiff's reliance on the assumption or expectation may cause detriment to the plaintiff if it is not fulfilled, fails to deny to the plaintiff the correctness of the assumption or expectation on which the plaintiff is conducting his affairs.
[6] (1987-88) 164 CLR 387 at 428

Here, I find that the plaintiff assumed a relationship of debtor/creditor existed between it and the defendants over payment of the sum of $79,000; that the defendants, by the words and conduct of Glenda, falsely and deliberately induced that expectation; that in consequence the plaintiff, relying on that inducement, did not at or prior to settlement obtain written confirmation from the defendants of the terms of their agreement for payment of that figure and instead went on to complete settlement of the sale; that the defendants well knew and intended that the plaintiff would not take that step; that if the oral contract is, as the defendants contend, unenforceable, the plaintiff will suffer detriment in the nature of an inability to recover the sum of $79,000; and that the defendants squarely refused to fulfil the plaintiff’s expectation.
For all these reasons I am satisfied it would be unconscionable for the defendants to seek to rely upon the terms of clause 26 of P4 or upon any allegation asserting that the oral agreement for payment of the $79,000 was unenforceable as a collateral agreement or at all.
It matters not that the assumption was induced by a representation as to future intention (see The Commonwealth v Verwayen[7]).
[7] (1990) 170 CLR 394
I should further say, although it is not pleaded, that I am satisfied and find the defendants’ conduct in and about the representation made as to payment of the $79,000, was fraudulent and they are in any event liable in tort for deceit. I make such a finding by virtue of s 36 of the District Court Act 1991 (SA).
I turn then to consider the plaintiff’s damages claims based upon:
(1)breach of contract; and
(2)the defendants’ misrepresentations and misleading and deceptive conduct.
In each case it asserted that the proper measure was equivalent to the unpaid sum under the oral agreement, namely, $79,000.
I am satisfied, and it was not seriously in contest, that in contract it may recover damages which will restore it to the position it ought have occupied had the contract been performed, namely, here, payment of the sum of $79,000.
But there was lengthy argument about the proper measure of damages for misrepresentation and misleading and deceptive conduct.
The defendants relied upon Gates v City Mutual Life Assurance Society Ltd[8] in contending that the proper measure is the tortious one and otherwise said the plaintiff had adduced no evidence as to the value of the business at the relevant time so as to provide any foundation for an assessment of damages in tort. I am not persuaded as to that argument and for the reasons:
[8] (1985-86) 160 CLR 1
(1)It appears to me that the High Court in Marks v GIO Australia Holdings[9] made it abundantly clear that Gates ought not be regarded as establishing the immutable position that the appropriate measure of damages for breaches of s 52 of the Trade Practices Act is to be as in tort. That same reasoning may well apply to assessment of loss under the Misrepresentation Act. I refer to passages at [11-15] of the judgment of Gaudron J, and in particular where, after discussing Gates, Gaudron J observed:
[9] (1998) 196 CLR 494
The distinction between "expectation" loss and "reliance" loss for the purposes of the law of contract is well recognised. However, it is a distinction that is apt to mislead if transposed into other contexts. Contrary to what might be thought, the term "expectation" loss does not indicate that damages are payable simply for thwarted expectations. Rather, damages are payable for the loss involved in non-performance of the contract. Even if a contract is not susceptible of specific performance, the other party is legally entitled to expect its performance. Hence the expression "expectation loss"!
The matter may be put another way. Non-performance is, in effect, the loss of a contractual promise which, itself, is a valuable right. That loss must be compensated by an award of damages in the sum that represents the value of that right. Moreover, other losses may be sustained in consequence of the breach and, if so, they, too, must be compensated by an award of damages. On the other hand, the law of tort confers no right over and above a right to recover damages for loss sustained in consequence of the wrongful act involved.
When regard is had to the different nature of contractual and tortious liability it is apparent that the so-called different "measure of damages" in contract and tort is no more than a convenient way of indicating that the wrong involved and, thus, the loss occasioned by a breach of contract is of a different kind from that involved in and occasioned by the commission of a tort. The position is explained in McGregor on Damages:
"In contract ... the wrong consists not in the making but in the breaking of the contract and therefore the plaintiff is entitled to be put into the position he would have been in if the contract had never been broken, or in other words, if the contract had been performed. The plaintiff is entitled to recover damages for the loss of his bargain. In tort, on the other hand, no question of loss of bargain can arise: the plaintiff is not complaining of failure to implement a promise but of failure to leave him alone."
Once it is appreciated that references to the "established measures of damages ... [for] contract and tort", as in Gates, signify different kinds of loss and not different methods by which loss is measured, it is irrelevant to inquire as to the appropriate measure of damages for the purposes of ss 82 and 87 of the Act. Rather, the task is simply to identify the loss or damage suffered or likely to be suffered and, then, to make orders for recovery of that amount under s 82 or to compensate for or prevent or reduce that loss or damage under s 87 of the Act.
Further, in the joint judgment of McHugh, Hayne and Callinan JJ at [38]:
It can be seen, therefore, that both ss 82 and 87 require examination of whether a person has suffered (or, in the case of s 87, is likely to suffer) loss or damage "by conduct of another person" that was engaged in the contravention of one of the identified provisions of the Act. That inquiry is one that seeks to identify a causal connection between the loss or damage that it is alleged has been or is likely to be suffered and the contravening conduct. But once that causal connection is established, there is nothing in s 82 or s 87 (or elsewhere in the Act) which suggests either that the amount that may be recovered under s 82(1), or that the orders that may be made under s 87, should be limited by drawing some analogy with the law of contract, tort or equitable remedies. Indeed, the very fact that ss 82 and 87 may be applied to widely differing contraventions of the Act, some of which can be seen as inviting analogies with torts such as deceit (eg, s 52) or with equity (eg, s 51AA) but others of which find no ready analogies in the common law or equity, shows that it is wrong to limit the apparently clear words of the Act by reference to one or other of these analogies.
(2)Here, I find I am able to directly identify the loss suffered by the plaintiff and it is the loss of the benefit of the defendants’ promise to pay it $79,000. That is the extent of the plaintiff’s claim, anyway, and I am satisfied it is made out.
(3)I would likely be satisfied, anyway, on all the evidence that the value of the hotel was established by the amount the defendants, negotiating at arm’s length, agreed to pay for it, namely $280,000, and that proper restoration of the plaintiff’s pre-contractual position would be achieved by assessing its loss in tort at $79,000. If damages for deceit or under the Misrepresentation Act are to be assessed in that manner, then I find they have been established in that amount, anyway.
I therefore assess the plaintiff’s damages at $79,000 and in addition find that the plaintiff is entitled to recover the costs of engaging solicitors to prepare the two loan agreements ignored by the defendants. Those costs I fix at $3,836.69, thus yielding a total sum of $82,836.69. I further fix a lump sum of $7,500 in lieu of interest, resulting in a total figure of $90,336.69.
There will be judgment for the plaintiff against both defendants in that sum. I will hear the parties as to any consequential orders and costs.