Comit Farm Produce P/L v Valamiou - [2009] SADC 19

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
COMIT FARM PRODUCE P/L v VALAMIOU & ORS
[2009] SADC 19
Judgment of His Honour Judge David Smith
6 March 2009
EQUITY - GENERAL PRINCIPLES - FIDUCIARY OBLIGATIONS
Action by creditor plaintiff to recover monies owing from four defendants, two of whom were primary debtors and the other two were guarantors of the debt – Defendant Solicitors acting for both the guarantors and the primary debtors – consideration of ambit of Defendant Solicitors’ fiduciary duty – consideration of whether conflict of interest existed such that Defendant Solicitors were in breach of their fiduciary duty in continuing to act for the primary and secondary debtors – in relation to equitable remedies for any breach of fiduciary duty consideration of the materiality of deciding what course the client debtors would have taken had there been no breach – in relation to whether the guarantee was enforceable consideration of whether there was variation of the agreement between the plaintiff creditor and the two primary debtors such as to discharge the guarantors from liability.

TORTS
Negligence – content of duty of care – consideration of whether there was a breach of duty - Misrepresentation - discussion of the requirements for misrepresentation – reliance – inducement.

TRADE AND COMMERCE
Misleading or deceptive conduct – consideration of requirements for such conduct.

DAMAGES
Negligence – misrepresentation – misleading or deceptive conduct – deprivation of loss of opportunity to avoid detriment – causation – onus of proof – consideration of the necessity firstly to prove loss or damage of some value in order to complete the cause of action – secondly to prove or value that loss or damage such that it could sound in an award of damages – onus on claimants to prove in respect of a claim for loss of chance or opportunity that they would have acted differently had the alleged defaults not occurred.
Fair Trading Act 1987 (SA) s 56; Fair Trading Act 1987 (NSW) s 42; Misrepresentation Act 1972 s 7; Limitation of Actions Act 1936 (SA) s 48(1), referred to.
Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177; Midland Bank v Hett, Stubbs & Kemp [1979] 1 Ch 384; Duchess of Argyll v Bueselinck [1972] 2 Lloyd’s Rep 172; Austrust Pty Ltd v Astley (1993) 60 SASR 354; Hawkins v Clayton (1988) 164 CLR 539; Maguire v Makaronis (1996) 188 CLR 449; Farrington v Rowe McBride & Partners [1985] 1 NZLR 83; Hilton v Baker Booth & Eastwood [2005] 1 WLR 567; Marron v J. Chatham Daunt Pty Ltd [1998] VSC 113 ; Clark Boyce v Mouat [1994] 1 AC 428; Fitzpatrick v Waterstreet [2000] ANZ ConvR 15; Bristol & West Building Society v Mothew [1998] Ch 1; Permanent Building Society v Wheeler (1994) 14 ACSR 109 ; Boulting v Association of Cinematography Television & Allied Technicians [1963] 1 QB 606; Marks & Spencer plc v Freshfields Bruckhaus Deringer [2004] 1 WLR 2331; Theakstone v McCann (1995) 180 LSJS 208; Mallesons Stephen Jaques v KPMG Peat Marwick (1991) 4 WAR 357; Nasr v Vihervaara (2005) 238 LSJS 475; Carindale Country Club Estate Pty Ltd v Astill (1993) 115 ALR 112; Ankar Pty Ltd v National Westminster Finance (1987) 162 CLR 549; Moody v Cox & Hatt [1917] 2 Ch 17; Commonwealth Bank v Smith (1991) 102 ALR 453; Hall v Foong (1995) 65 SASR 281; Hawkins v Clayton (1988) 164 CLR 539; Pirelli General Cable Works Ltd v Oscar Faber & Partners [1983] 2 AC 1; Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514; Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 ; Malec v JC Hutton Pty Ltd (1990) 169 CLR 638; McKenzie v McDonald [1927] VLR 134; Nocton v Lord Ashburton [1914] AC 932; Brickenden v London Loan & Savings Co [1934] 3 DLR 465; Gemstone Corporation of Australia Ltd v Grasso (1994) 62 SASR 239; Smith v Hughes (1871) LR6QB 597; Goldsbrough, Mort & Co Ltd v Quinn (1910) 10 CLR 674; Summergreene v Parker (1950) 80 CLR 304; Namchow Chemical Industrial Co Ltd v Botany Bay Shipping Co (Aust) Pty Ltd [1982] 2 NSWLR 523; Nikolaou v Papasavas, Phillips & Co (1989) 166 CLR 394; Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191; Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1986) 12 FCR 477; Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 79 ALR 83; Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1986) 12 FCR 477; Edgington v Fitzmaurice (1885) 29 Ch D 459; Wilcher v Steain (1962) 79 WN (NSW) 141; Edgington v Fitzmaurice (1885) 29 Ch D 459; Wilcher v Steain (1962) 79 WN (NSW) 141; United Dominions Corp Ltd v Brian Pty Ltd (1985) 157 CLR 1; Al-Kndary v JR Brown [1988] QB 665; United Dominions Corp Ltd v Brian Pty Ltd (1985) 157 CLR 1; Al-Kndary v JR Brown [1988] QB 665; Gran Gelato Ltd v Richcliff [1992] Ch 560; Seal & Ors v Malaugh & Ors [2007] SADC 22; Gran Gelato Ltd v Richcliff [1992] Ch 560; Seal & Ors v Malaugh & Ors [2007] SADC 22, considered.

COMIT FARM PRODUCE P/L v VALAMIOU & ORS
[2009] SADC 19
TABLE OF CONTENTS
1.Introduction
·The Parties
·Course of Proceedings – Chronological Summary
·The Claims, Counterclaims and Issues
·Assessment of Witnesses - Reliability and Credibility

2.Evidence – Findings of Fact
·Early History
·Roles of George and Chris Valamiou
·Guarantee – 3rd January 2001
·Issue of these Proceedings – 30th January 2002
·Consent Judgment 18th April 2002
·Deed of 13th June 2002
·From Deed of 13th June 2002 to Reconstruction of Action February 2004
·Compromise between Comit Farm and George and Chris Valamiou – May 2005
·Aftermath

3.Claims of George and Chris Valamiou against the Defendant Solicitors
·Causes of Action and Contentions
·Legal Principles relating to the Claims
·Breaches of duty in negligence and contravention of Sections 42 and 43 of the Fair Trading Act (1987) NSW
·Breaches of Fiduciary Duty
·Conclusion as to proof of breaches and contraventions
·In any event, has loss or damage or other rights to equitable compensation been proved?
·Legal Principles relating to loss or damage
·Conclusion as to whether any loss or damage or other entitlement to a remedy proved
·Conclusion as to effect of compromise of May 2005

4.Claims of Comit Farm against the Defendant Solicitors
·Causes of Action and Contentions
·Legal Principles relating to the Claims
·Misrepresentative Conduct and Estoppel
·Conclusion as to proof of Misrepresentative Conduct and Estoppel
·In any event, has loss or damage been proved?
·Effect of Compromise of May 2005

5.Summary of Conclusions and Orders

Introduction
The Parties

This action began as a simple claim for monies owing for goods supplied.
On 30^th January 2002, Comit Farm Produce Pty Ltd (“Comit Farm”), a South Australian based grower and supplier of produce, sued four members of the Valamiou family for $1,801,295.00, being monies then owed for produce sold and supplied to V & P Produce, a Sydney wholesale produce merchant. The defendants were Efstratios Valamiou, his wife, Constantina Valamiou, and their sons, George and Chris Valamiou.
Efstratios and Constantina Valamiou, according to the Business Names Extract, “carried on the business” under the name V & P Produce. George and Chris Valamiou, who, together with their father operated the business, had, on 3^rd January 2001, signed a guarantee in respect of the indebtedness of the business to Comit Farm. It is accepted in this action that Efstratios and Constantina Valamiou were the owners of the business.
The Valamious defended the claim initially on grounds that, while most of the monies claimed were owed by them, Comit Farm had not given appropriate credits for produce returned and not all of the produce supplied was of merchantable quality. Those grounds of defence were eventually abandoned.
For a time, in this action, Mr Peter Skouteris acted as solicitor for the four Valamiou defendants. He, and before him his partner, Angelo Andresakis, had been the Valamiou family solicitor for many years. He and his partner practise law as Andresakis & Associates from their offices at Parramatta. Demivale Pty Ltd (“Demivale”) conducted the legal practice of Andresakis & Associates for a brief time. As is obvious from the heading of this action, these solicitors were eventually joined as parties to this action. I will refer to them and their corporation hereafter as “the Defendant Solicitors”.
Course of Proceedings – Chronological Summary
By the time of the commencement of the trial on 6^th March 2006, this debt recovery had undergone several major transformations, culminating in May 2005, with Comit Farm settling its differences with the defendants, George and Chris Valamiou, and joining with them in claims against the Defendant Solicitors. By then, Efstratios and Constantina Valamiou were bankrupt and took no further part in the action. The Defendant Solicitors contend that the late emergence of the actions against them, firstly by George and Chris Valamiou and then by Comit Farm, demonstrates a lack of credibility in the cases against them. I will deal with that, and other contentions, later. For the moment the following chronological summary of the course taken by this action, about which there is no dispute, explains the present claims, counterclaims and responses.
1.On the 30^th January 2002, Comit Farm instituted these proceedings.
2.On the 18^th April 2002 in this Court, by consent, a judgment in the sum of $1,224,128.00 was entered in favour of Comit Farm against the four Valamiou defendants leaving $577,167.00 still in dispute.
3.On the 3^rd June 2002, after some negotiations, the four Valamiou defendants agreed to pay the full amount of the claim. A Deed particularising the agreement and its terms was signed by them on the 3^rd June 2002 and by Comit Farm on the 13^th June 2002. The Deed provided, inter alia, for the making of periodic payments (see Deed of the 13^th June 2002).
4.By the 11^th April 2003, the sum of $1,375,000.00 had been paid. There were no further payments ever made.
5.In June 2003, Efstratios and Constantina Valamiou transferred their assets to their sons. Valamios Produce Pty Ltd, whose shares were owned by George and Chris Valamiou, purchased the two stands in the Flemington Market and the business V & P Produce from Efstratios and Constantina Valamiou. That Valamiou corporation then commenced trading with Comit Farm. At this time, Efstratios and Constantina Valamiou also sold three residential properties including their home to their sons.
6.On the 21^st July 2003, Efstratios Valamiou became bankrupt and his bankruptcy was followed by that of his wife, Constantina, on the 15^th September 2003. The petitioning creditor was not Comit Farm but another unpaid supplier to the business V & P Produce. Efstratios and Constantina Valamiou thereafter have taken no further part in the action. In December 2003, an action began in the Federal Magistrates Court in which Comit Farm challenged a notice from the Official Receiver that certain of the payments made to Comit Farm pursuant to the Deed of 13^th June 2002 were preferences and so were void as against the Trustee.
7.In late 2003, Mr Skouteris and his firm ceased to act for any of the Valamious.
8.On the 9^th September 2003 because no further payments were forthcoming pursuant to the Deed of the 13^th June 2002, Comit Farm applied for Summary Judgment against George and Chris Valamiou for the balance of the monies, not the subject of the previous judgment, but which remained owing under the Deed of the 13^thJune 2002, which sum had grown to $605,525.00. This application, which was ultimately argued on the 17^th December 2003, was unsuccessful, because George and Chris Valamiou, in argument, foreshadowed a range of claims against Comit Farm, its director Francesco Mitolo and their former solicitors. The Master permitted them an opportunity to prosecute such claims.
9.On the 2^nd February 2004, George and Chris Valamiou filed and served an Amended Defence and Counterclaim in which they:
9.1    Abandoned the grounds of defence originally pleaded.
9.2    Counterclaimed against Comit Farm.
9.3    Joined into action by way of counterclaim Peter Skouteris, Angelo Andresakis, and their corporation Demivale Pty Ltd (ie the Defendant Solicitors) and Francesco Mitolo.
9.4    In the defence as amended claimed:
9.4.1that the Guarantee of the 3^rd January 2001 was unenforceable because:
·by reason of coercive and misleading threats and deceptions by Francesco Mitolo for Comit Farm and/or the active influence and control of their father, there was a lack of contractual assent;
·there was no consideration for their entry into it;
·their signatures were procured by unconscionable behaviour; and
·representations of Francesco Mitolo for Comit Farm to the effect that the Guarantee was required only to placate the Bank and so would not be acted upon or enforced gave rise to an estoppel.
9.4.2that the Deed of the 13^th June 2002 was also unenforceable because:
·there was a lack of contractual assent to the Deed by reason of the influence brought to bear by their father, the fact that they gave no instructions to any person to act for them, or to make any admissions on their behalf, they were not given any independent explanation or advice, and the Deed contained onerous provisions the nature of which were not drawn to their attention;
·it was harsh and unconscionable by reason of the above matters and in particular because it imposed a liability on them for the debt of their parents;
·their signatures were procured by the Defendant Solicitors who, insofar as they purported to act for all the Valamiou defendants, were in a position of conflict of interest – a position which the plaintiff knew or ought reasonably to have known of – and, in particular, the Defendant Solicitors did not advise them that the agreement embodied in the Deed was improvident from their point of view and that they had no obligation to enter into it; and
·an estoppel arises from the circumstances.
9.5    In the Counterclaim contended as follows:
9.5.1that Comit Farm and Francesco Mitolo, in connection with the Guarantee of the 3^rd January 2001, engaged in conduct which was unconscionable and also misleading or deceptive and in the result caused them loss and damage in contravention of s 43 of the Fair Trading Act (NSW), s 57 of the Fair Trading Act (SA), s 52 of the Trade Practices Act (Cth), s 42 of the Fair Trading Act (NSW) and s 56 of the Fair Trading Act (SA);
9.5.2that the Defendant Solicitors’ conduct, in failing to challenge the enforceability of the Guarantee of the 3^rd January 2001 in connection with the entry of Judgment in this Court on 18^th April 2002 and the execution of the Deed of the 13^th June 2002, was negligent, misleading or deceptive and unconscionable and, in the result, caused them loss and damage and so was in contravention of the common law duty of care, ss 42 and 43 of the Fair Trading Act 1987 (NSW) and ss 52, 51AA, 51AB and 51AC of the Trade Practices Act 1974 (Cth).
9.5.3that the following loss and damage was sustained:
·legal costs;
·impairment of commercial reputation; and
·lost opportunities to make profits.
9.6    In the Prayer for Relief sought 18 orders and declarations, including:
9.6.1 A declaration that the Guarantee of the 3^rd January 2001 is unenforceable;
9.6.2An order setting aside the Judgment of the 18^th April 2002;
9.6.3An order setting aside the Deed of the 13^th June 2002;
9.6.4Damages.
10.On about 5^th May 2005, Comit Farm and George and Chris Valamiou compromised the claims and counterclaims between them. A Deed dated 5^th May 2005 particularising the agreement provided, inter alia, that:
10.1     George and Chris Valamiou:
10.1.1consent to judgment being entered against them for $669,962.27 being the balance owing on the original debt together with interest;
10.1.2discontinue their action against Comit Farm and Francesco Mitolo;
10.1.3agree to prosecute their claim against the Defendant Solicitors and assign the benefits to Comit Farm; and
10.1.4agree to assist in bankruptcy action.
10.2     Comit Farm agree:
10.2.1not to enforce against George and Chris Valamiou the judgments entered and agreed to be entered in respect of the claimed debt;
10.2.2not to enforce against George and Chris Valamiou liability to indemnify Comit Farm for any sum required to be disgorged to the Trustee (now known to be $395,000.00) and costs of that action;
10.2.3to prosecute an action against the Defendant Solicitors;
10.2.4not to enforce the Guarantee given by George Valamiou’s wife Toula.[1]
11.On the 9^th May 2005, George and Chris Valamiou amended their Defence and Counterclaim by adding, inter alia, a specific plea against the Defendant Solicitors of breach of fiduciary duty.
12.On the 10^th May 2005, in keeping with the Deed of the 5^th May 2005 Comit Farm amended its claim to join the Defendant Solicitors pleading against them, inter alia, misrepresentation, misleading or deceptive conduct, negligence and estoppel.
13.On the 19^th May 2005, His Honour Judge Clayton in this Court made a series of consent orders which reflected some of what was agreed in the Deed of the 5^th May 2005.
14.Trial commenced on 6^th March 2006.
15.On the 14^th March 2006, in the midst of the evidence and in particular the cross-examination of George Valamiou, Comit Farm, Francesco Mitolo, George Valamiou and Chris Valamiou enter into a Supplementary Deed which, inter alia, seeks to explain the meaning of the Deed of the 5^th May 2005.
[1]    (NB I would have thought that Toula Valamiou's guarantee, limited as it was to the amount of the original judgment, ceased to be enforceable by the time $1,224,128.00 and the interest had been paid.)
The Claims, Counterclaims and Issues
For the following summary of the claims, counterclaims and responses thereto, I have drawn on both the final pleadings and the written and oral addresses of counsel for the parties.
I turn first to the claims by Comit Farm against the Defendant Solicitors and the responses thereto.
Comit Farm seeks various orders, declarations and damages against the Defendant Solicitors for alleged misrepresentative conduct by Peter Skouteris during the time he was acting for the Valamious in this action; that is, from January 2002 until late 2003, on the basis that the conduct constituted:
·misleading or deceptive conduct within the meaning of s 56 of the Fair Trading Act 1987 (SA) and s 42 of the Fair Trading Act 1987 (NSW);
·misrepresentation pursuant to s 7 of the Misrepresentation Act 1972 (SA); and at common law; and
·negligence.
(See Fourth Further Amended Statement of Claim filed on the 24^th March 2006)
In addition, there was a plea under the doctrine of estoppel and a rather mysterious claim that a cause of action in favour of Comit Farm against the Defendant Solicitors arose from the Bankruptcy Action.
At trial, Comit Farm abandoned its claim in common law negligence, no doubt having come to the realisation that there were considerable difficulties in establishing that the solicitor for one party in litigation owed a duty of care to the opposing party.

In particular, Comit Farm contends that the conduct of Peter Skouteris, in the time he purported to represent the four Valamiou defendants, constituted a representation by him to Comit Farm that:
·he was properly instructed by the Valamious;
·he acted with the authority of each of the Valamious; and
·there was no unresolved conflict of interest in so acting,
when such was not the case.
Rather, it is alleged that the Defendant Solicitors had neither instructions nor authority from each of the Valamious to take the various steps which were taken in this litigation, and further, there was a conflict of interest between the Valamiou parents on the one hand, and the Valamiou sons on the other, which was left unresolved.
The above statutory claims and the claim of misrepresentation require proof of loss. Comit Farm alleges that as a result of acting upon the misrepresentations it has suffered loss and damage. It claims:
· $704,521.78 which is the balance owing of the original claim of $1,801,295.00 taking into account adjustments and the running of interest and is calculated only at the date of trial, namely 6^th March 2006 (see Tracey Smith 1030); and
· $395,000 being a sum of money disgorged by Comit Farm by way of settlement of a “preference action” prosecuted in the Federal Court by Peter Ivan Macks, the Trustee in Bankruptcy of the Estates in Bankruptcy of Efstratios and Constantina Valamiou.
In the alternative to the above, Comit Farm claims the same amounts on the basis that they represent the value of the chance to recover the full amount of the claim, which chance was lost by reason of the misrepresentations and misleading or deceptive conduct of the Defendant Solicitors.
There is, in addition, a plea that an estoppel arises from the alleged misrepresentations.
Further, insofar as its action under s 56 of the Fair Trading Act 1987 (SA) is out of time, Comit Farm seeks an extension pursuant to s 48(1) of the Limitations of Action Act 1936 (SA).
The Defendant Solicitors contend, correctly in my view, that whichever cause of action is relied upon by Comit Farm, the substance of the case against them is an allegation of misrepresentation.[2]
[2] Invariably for conduct to be misleading or deceptive it must convey in all the circumstances of the case a misrepresentation (see Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 at 202).
The defence to these “misrepresentative claims” is that in the course of acting for the Valamious, and in particular George and Chris, the Defendant Solicitors did not engage in misleading or deceptive conduct vis-à-vis Comit Farm or at all. They contend further that they were properly instructed and properly authorised by the Valamious. In relation to the “conflict of interest” allegation, they contend that their conduct in acting for the Valamious could not constitute a representation that there were no, or no unresolved, conflict of interest issues.
Finally, the Defendant Solicitors argue that Comit Farm has not proven that it has suffered any loss and damage as a result of this so‑called “misrepresentative” behaviour by the Defendant Solicitors.
I now turn to the claims by George and Chris Valamiou against the Defendant Solicitors.
George and Chris Valamiou seek a range of remedies against the Defendant Solicitors, alleging that their conduct in the course of time they acted for the Valamious, that is, between January 2002 and late 2003:
·was negligent;
·was in breach of their fiduciary duties; and
·contravened the Fair Trading Act 1987 of both SA and NSW.
They claim damages, equitable damages or compensation and damages, for alleged contravention of the Fair Trading Acts.
These causes of action involve allegations that the Defendant Solicitors:
·consented to judgment being entered against them on 18^th April 2002 without instructions or authority from them;
·failed to advise them of possible grounds upon which they might challenge the enforceability of the Guarantee entered into by them on 3^rd January 2001 and failed to recommend that they seek independent advice thereon; and
·failed to advise them properly in respect of their entry into the Deed of 13^th June 2002 and failed to recommend that they seek independent advice thereon.
Further, they allege that these breaches of duty have resulted in them losing:
·the opportunity or chance to challenge the Guarantee of 3^rd January 2001 and therefore to avoid being included in the consent Judgment of 18^th April 2002 and the Deed of 13^th June 2002; and
·the opportunity to avoid a continuing involvement in this litigation and the incurring of costs in relation thereto.
The response of the Defendant Solicitors is that they did not breach their duty or contravene the Fair Trading Acts and, if they did, no compensable loss has been caused to George and Chris Valamiou.
Before turning to the evidence and my findings in respect thereof, I turn to the witnesses and their credibility and reliability.
Assessment of Witnesses - Reliability and Credibility
Comit Farm in its case, which overlapped in large measure with that of George and Chris Valamiou, called oral evidence from Tracey Ann Smith, who was the Assistant Accountant at Comit Farm, and from Nicola Minicozzi and Shelley Dunstone, who were the solicitors acting for Comit Farm in this matter.
Efstratios Valamiou and his two sons George and Chris Valamiou gave evidence in the Valamiou case.
Peter Skouteris was the only witness for the Defendant Solicitors.
I accept the credibility and reliability of all the witnesses other than of the three Valamiou witnesses.
Efstratios Valamiou was not a credible witness. The combined evidence of Tracey Smith, Peter Skouteris and Nicola Minicozzi and the documentary evidence adduced through them, indicates that by the year 2000 Efstratios Valamiou was playing a minimal role in the business which was being operated by George Valamiou, and to a lesser extent, Chris Valamiou. In his evidence, however, Efstratios Valamiou sought to minimize the role played in the business by his sons. He repeatedly characterised George, for instance, as a mere employee and salesman[3]. He denied knowing of them signing the Guarantee of 3^rd January 2001[4], being the subject of the consent Judgment of 18^th April 2002[5] and executing the Deed of 13^th June 2002[6]. He specifically protested that he would not have been a party to requiring his sons to sign a guarantee in respect of his business[7]. I find these denials and protestations to be untruthful. They are inconsistent with the pleading of George and Chris Valamiou of 2^nd February 2004 and their affidavits sworn on 15^th December 2003[8]. In those documents they assert in considerable detail that their father not only knew of, but urged and influenced them to sign the Guarantee.
[3]    T54, 175.
[4]    T165, 368.
[5]    T162.
[6]    T53, 54.
[7]    T53, 173.
[8]    See Exhibit D1 at 329, 330, 350 and 351.
In all, Efstratios Valamiou’s evidence was partisan and neither reliable nor credible.
As to the oral evidence of George and Chris Valamiou, I have concluded that neither of them were witnesses of truth. Where they perceived that to answer frankly would not be in the best interest of their case, then they declined to do so. They, and in particular George, promoted what I regard as a fallacy, namely, that they were mere employees who were subject to the constant supervision of their father and were somewhat naïve when it came to the business world in which they worked. The evidence of, in particular, Tracey Smith, Peter Skouteris and Nicola Minicozzi and the voluminous documentation adduced through them, dealing with their contact with both George and Chris Valamiou, convinces me that they were far from naïve. George Valamiou, and to a lesser extent Chris Valamiou, operated the family business on behalf of and with the authority of the family.
In the course of their evidence it became necessary for me to warn both of them against incriminating themselves of the criminal offence of perjury[9]. Of course the fact of having given such a warning is, of itself, no evidence of lack of credibility, but the inconsistency which called for it is, if it remains unexplained.
[9] Chris T320, George T594.
George Valamiou said that he did not know what a “guarantee” was[10]. He was confronted with the following paragraphs of an affidavit sworn by him in this action on 15^th December 2003 which was filed in support of the application to amend pleadings to, inter alia, seek to set aside the Guarantee:
[10] T580-582.
6.On a day in late 2000, I had a conversation with Frank, who said to me words to the effect:
“My bank has told me that my debts have to be insured. I owe them 20 million. All my debtors have to give me guarantees.”
7.Shortly after, my father showed me a document which he had received from Frank. I do not have a copy of this document and do not recall what was on it. It was a printed document, but my name, as well as the names of my parents and my brother Chris were written on the top of it.
8.Shortly after I first saw the document, Frank telephoned me and a conversation took place between us in words to the following effect:
Frank:“Have you signed the guarantee yet?”
Myself: “What do you mean?”
Frank:“I want all of you sign the fucking guarantee. I told you about this. I need it for my fucking bank. When are you going to sign it?”
Myself:“What is this all about? This is not my business, all I do is work here. This is nothing to do with me. You have to talk to my dad.”
Frank:“Listen, don’t fuck me around. All of you are going to sign this guarantee. I need it to show my bank. Do you understand? Your father owes me $1 million plus, you fucking piece of shit, you can’t go anywhere else, I’ve got you by the balls.”
Myself:“Why should I sign? It’s not my business. My parents will sign that’s enough.”
Frank:“Just sign the fucking thing. Stop worrying about it. Nothing will happen to you if you sign.”
9.After that conversation, Frank phoned me and other members of my family many times a day over a period of about three weeks. He said to me words to the following effect:
“You sign that fucking guarantee, or I’m going to screw your father’s business. You get me? You’re father’s finished.”
10.On a Friday in late December 2000, Frank phoned me and said words to the effect:
“I’m tired of you fucking me around, this is your last chance. Sign the fucking guarantee, all of you. I want it faxed to me by 4 p.m. today. Listen, if I don’t get the fucking guarantee, I stop your supply, you don’t get deliveries on Monday and you can go fuck yourselves. If you don’t send those guarantees, you’re (sic) got no business. You got me?”
11.My parents, my brother and I had a long discussion about what we should do. My brother Chris and I had a conversation in words to the following effect:
Myself: “I don’t like this one bit, but dad’s business is finished if we don’t sign this thing. What’s it mean anyway? It’s not our business. Only owners’ guarantees mean anything. He can’t do anything to us anyway. I think we should just sign, and then forget it and get on with things.”
Chris: “Well, I’m not going to sign, even for dad. You know what? Frank is running our lives for us.”
12.By the end of a conversation, all four of us agreed to sign the document and we did so. I signed because I was fearful of what would happen to my parents if I didn’t and I didn’t feel strong enough to refuse my father’s request that I do so. We then faxed the guarantee to Frank. Immediately, Frank phoned back and said to me words to the effect:
“I’ve got the fax. You’ll get your supply on a Monday. But I want the fucking original. If it’s not on my desk on Tuesday morning, you get nothing on Wednesday.”[11]
[11] See Exhibit D1 at 328-330; see also T371-379.
George Valamiou’s answers, which were forthcoming despite my warning, did not address the conflict between his oral evidence and that sworn by him in the affidavit. In fact he sought to explain away the contents of the affidavit by asserting that his then solicitor, Mr David Brown, had used the word “guarantee” in the text of the affidavit when he himself had not used that specific word[12]. Further, when questioned about the number of times such conversations as those recounted above had taken place between himself and Frank Mitolo, he said there was only one such conversation[13]. But when faced with the detail of the affidavit which asserted otherwise, he changed that to “one day ten times …”[14].
[12] T586-591, 608.
[13] T611.
[14] T625.
Chris Valamiou said that he was told by his father and his brother George to sign the Guarantee[15]. He said that when he signed it “… I didn’t think I was committing myself to anything. I just thought it was an insurance paper to me …”[16]. He added that if he knew it was a guarantee at the time he would not have signed it[17]. In his affidavit sworn in this action on 15^th December 2003, Chris Valamiou deposed, inter alia, as follows:
[15] T196.
[16] T197.
[17] T197, 200.
5. In late 2000, George told me words to the effect:
“Frank wants us all to go guarantor for dad’s business debts with him.”
6.Some time after that, my father showed me a document which he had received from Frank. I did not keep a copy of this document but remember that it was a printed form with my name written on the top. My parents’ names and George’s name were also written there.
7.On a number of occasions over the next few weeks, Frank telephoned me and said words to the effect:
“You and your brother have got to sign that fucking guarantee, or I’m going to screw you all. Your business will be finished.”
8.On a Friday in late December 2000, George said to my parents and me words to the effect:
“Frank has phoned me and said that we have to sign the guarantee, all of us, or he will stopped (sic) supplying any produce to dad. If we don’t sign today and fax it to him by four o’clock, he will cut off dad’s supplies on Monday. That means dad’s business is finished. What are we going to do?”
9.All of us then talked about whether George and I should sign the paper. George said words to the effect:
“I don’t like signing this, but, if we don’t, dad’s business is washed up.”
10.I said words the (sic) effect:
“I’m not signing, even for dad. Frank is just running our lives for us.”
11.George replied in words to the effect:
“It’s not our business, It’s dad’s. This guarantee doesn’t mean a thing. He can’t do anything to us. We should just sign. Otherwise, dad’s business is finished and it will be our fault.”
12.I did not want to sign the guarantee, but finally agreed to do so. The four of us then signed the guarantee. I have had a strict Greek upbringing. My father is the head of the family and I look to him for guidance in all-important matters. I was finally influenced to sign the guarantee because that was what my father wanted. I did not feel I could refuse.
13.My brother sent the guarantee to Frank. Later, my brother said words to the effect:
“Frank said I have to send the original paper to him or he will cut off supplies again.”
14.I only signed the guarantee because I thought dad would lose everything as he couldn’t run his business. I could not think of anything we could do to make Frank change his mind. I was not sure how much dad owed Frank at that time.
15.I felt I had to agree to whatever terms Frank was offering to him. I felt very threatened by Frank.[18]
[18] See Exhibit D1 at 323 and 324; and see also 387-391.
The affidavit evidence of both Valamiou brothers about the Guarantee is manifestly inconsistent with their oral evidence and demonstrates that their evidence generally cannot be relied upon.
Further, George Valamiou was evasive and uncooperative and from time to time denied the obvious. This particularly emerged in his evidence when he was being cross-examined about his dealings with Tracey Smith[19]. For example, he denied that he signed a letter from V & P Produce to Comit Farm dated 31^st August 2000[20] and thereby left alive the suggestion that it was forged[21]. It was one letter in a continuum of correspondence, facsimile transmissions and phone calls passing between him and Tracey Smith. I find that his denial of signing the letter was false and it was motivated by the fact that the signatory was described in the letter as the “Managing Director” which was a role George Valamiou, throughout his evidence, was attempting to disavow. It was one of the many instances when both he and his brother, Chris, promoted the charade of being naïve employees. Rather, they impressed me as being confident – even arrogant and self-assured.
[19] T468-500, 546-577, 713-742; see also Exhibits D7-D26 and D30-D33.
[20] See Exhibit D10.
[21] T481.
I consider also, that having come to an agreement with Comit Farm, which removed them from harm’s way, they were only barely interested in this action.
The above are but a few of the many instances emerging from the evidence upon which I have decided I cannot rely at all on what these two witnesses have said in crucial areas.
Accordingly, I do not accept the evidence of George and Chris Valamiou as to any of the material issues unless it is supported by other evidence which I regard as acceptable.
Evidence – Findings of Fact
I now move to the evidence and my findings of fact. The following narrative constitutes my findings. I will identify and resolve any conflict as I traverse what is essentially a chronology of events.
Early History
Efstratios Valamiou was born in Greece and immigrated to Australia in 1973[22]. He worked in the Flemington Markets in Sydney[23]. In 1992, together with his wife and George Pallis, he purchased his own business in the markets, which they called V & P Produce[24]. It operated from stalls 27 and 28[25]. After six years or thereabouts, Mr Pallis no longer retained an interest in the business[26].
[22] T23.
[23] T351.
[24] T28, 81, 82.
[25] T191.
[26] T82.
In 1991 the older son, George, commenced working in the market. He was then about 17 years old and had finished Year 10[27]. In 1992 he moved into his father’s business[28].
[27]T82.
[28] T81.
In 1996 the younger son, Chris, left school and also joined the business. He too was then about 17 years old[29]. He had completed Year 12 and also had obtained his Higher School Certificate[30].
[29] T90.
[30] T221.
By the year 2000 V & P Produce had sales or a turnover of $14,000,000 to $15,000,000 per annum[31]. The largest of its 30 to 40 suppliers was Comit Farm[32]. In 1999, 2000 and 2001 the average annual purchases of V & P Produce from Comit Farm were $4,500,000[33].
[31]T348.
[32] T171.
[33] T1055.
Over a period of 20 years, Comit Farm grew from a small market garden business, operating from a shed in Angle Vale, South Australia, to the “biggest” potato and onion grower in the southern hemisphere. It now has holdings in premises not only in the Angle Vale area but also in the Riverland[34]. The enterprise was, and still is, owned by Bruno and Angela Mitolo[35]. Francesco (“Frank”) Mitolo, who features prominently in the evidence, is the oldest of the three Mitolo sons. He is a Director of the company and manages the business[36]. At the times material to this matter, Francesco Mitolo was the sole Director[37].
[34] T1204.
[35] T1205.
[36] T1209-1210; see also Exhibit D1 at 359.
[37]T1214.
In July 1999, Tracey Smith was appointed the assistant accountant for Comit Farm, and by February 2000 had risen to group accountant[38]. As the evidence discloses, she had continual contact with George Valamiou in the two and a half years which elapsed from her initial appointment until the institution of this action.
[38] T1005.

Peter Skouteris joined Andresakis & Associates in 1995 and became a partner in 1997. Angelo Andresakis had previously acted for the Valamiou family. Then in 1998 or 1999, Peter Skouteris took over their work[39]. He not only worked as solicitor for the family, but also had social contact with them[40].
[39] T1380-1383.
[40] T1385-6.
The nature of the work previously done by Peter Skouteris for the Valamious was the subject of considerable evidence. Comit Farm tendered, without objection, two boxes containing 22 Valamiou files held by Andresakis & Associates[41]. One of the files pertained to this matter. Counsel for Comit Farm, Mr Robert Sallis, contended that these files were relevant to both his clients’ misrepresentation claim against the Defendant Solicitors, and also the breach of fiduciary duty claim of the Valamiou brothers in that they proved that Peter Skouteris:
·knew or must have known that it was only Efstratios and Constantina who owned the business; and
·acted for all the Valamiou defendants in matters in which one or both of the Valamiou sons were named in addition to the parents[42] notwithstanding a disparity of interest between them and their parents and the consequential conflict.
[41] Exhibit P2.
[42] See Exhibit P2, files No 7 and No 9.
I will resolve those contentions in due course. However, the evidence emerging from the conduct of “these other files” is also relevant to the roles played by George and Chris Valamiou in the business, their authority, and the allied question of the extent of their knowledge of what was happening between V & P Produce and Comit Farm.
I turn now to that issue, namely the roles played in the business by George and Chris Valamiou. I have already indicated a view about it in my assessment of the credibility of witnesses in this trial. I now set out some detailed reasons for it.
Roles of George and Chris Valamiou
Peter Skouteris, in his oral evidence, and Francesco Mitolo, in his affidavit, spoke in general terms about the roles played by the Valamiou family members in the business. Peter Skouteris addressed this topic again in connection with both the conduct of the other files and this claim by Comit Farm. The evidence of Tracey Smith and Nicola Minicozzi in this claim is also relevant to this issue.
In his generalised evidence about how the business, V & P Produce, operated, Peter Skouteris said that George was “... the predominant person”, and Chris “... was more on the accounting side of things ...”[43], but that he received instructions from both depending on the nature of the matters[44]. He said that Efstratios’ English was not “the greatest” and, though he spoke Greek, he had some difficulties at times with Efstratios[45]. In his evidence about the Comit Farm action, he said that his contact with Steve (ie Efstratios) was rare[46]. He said that Constantina would sometimes bring documents to his office for his attention[47], but nothing more. He said that they, that is Efstratios, George and Chris, were all aware of what was going on [48]. He added that when he “... spoke to one of them you were talking to all of them. They were all intricately involved. They all spoke to each other about every matter ...”[49]. He explained how he knew that[50]. In response to the suggestion that George did not know about matters other than the day to day operation, he said “To say that George had no knowledge or, sorry, didn’t know everything about the business is an absurd proposition”[51]. He said that whilst George and Chris Valamiou respected their father and his wishes, they did not always keep him informed[52]. He said that though the parents were the legal owners “George exercised the power ...”[53]. Finally, he said that on previous occasions Efstratios Valamiou said to him “... you do what the boy says the boy being George ...”[54].
[43] T1386.
[44] T1387.
[45] T1387.
[46] T1555.
[47] T1386.
[48] T1388, 1612.
[49] T1388.
[50] T1388, 1389.
[51] T1685.
[52] T1760.
[53] T1761.
[54] T1700.
Francesco Mitolo, in his affidavit, swore that after 1998 he “... hardly ever dealt with Steve and always with George Valamiou ...”[55] and that George would tell him “... to ignore his father as he just gets excited[56]. He swore also that George Valamiou, from time to time, informed him that his parents “... spent a lot of time in Greece ...”[57]. Chris Valamiou agreed that his parents, as at about 2000, were taking regular annual holidays in Greece. He considered that the suggestion of six months a time was “... a bit too long ...”, but that “... it was not unusual for them to go for three months at a time ...”[58]. George Valamiou said that these Greek holidays were for “... a month or six weeks ...”[59].
[55] See Exhibit D1 at 359.
[56] See Exhibit D1 at 360.
[57] See Exhibit D1 at 361.
[58] T233.
[59] T731.
The work carried out by Mr Skouteris for the Valamious, in those other files, has a remarkable similarity to the beginnings of these proceedings. They too were all claims for monies owing by suppliers of produce or related services. The claims arose in 1998, 1999, 2000, 2001 and 2002. The work which Mr Skouteris did, invariably, consisted of defending or delaying the claims and then negotiating terms of repayment[60]. Sometimes, by the time Mr Skouteris had been instructed, judgments had been entered and bankruptcy or garnishee proceedings had commenced[61]. Mr Skouteris said that Chris Valamiou would sometimes give him a cheque and instructions to “... pay it at the last possible date ...” [62]. He added also that he prosecuted only one claim for the Valamious in the matter of Cannizzaro, but that was in the nature of a set-off rather than “... a true debt owing to them ...”[63]. He explained that in New South Wales a debtor could admit the debt and then either negotiate to pay by instalments or apply to the court for such an accommodation. He said that the Valamious “... knew the procedure, they knew they had one and a half to two years to pay and that the court would accept such a plan ...”[64]. Finally, Mr Skouteris said that George Valamiou, and to a lesser extent Chris Valamiou, were the main sources of instructions and Efstratios Valamiou rarely instructed him[65].
[60] T1383-1388.
[61] T1386; see also Exhibit P2.
[62] T1387.
[63] T1387.
[64] T1710.
[65] T1381-1388; 1575-1580.
The evidence of Peter Skouteris about the roles played by George and Chris Valamiou, in the litigation with Comit Farm, confirms what he said above, and is best summed up by the following exchange in the course of his cross-examination:
A.... With the history of the Valamiou matters and these proceedings, whenever we received - whether it be a statement of claim, summons, a bankruptcy notice, the Valamious were also informed and made well aware of the time of compliance so they knew the progress involved, there had been numerous litigation matters, debt recovery matters where they knew.
Q.You had made an assumption there had been some cross‑communication between the family which would fill in all the bits of missing information.
A.Be it assumption or fact, yes.
Q.You didn’t, on this occasion, stop to make sure that assumptions were replaced with fact.
A.When I say ‘fact’, I mean I would talk to George, I would talk to Chris, I would talk to Steve and they all had knowledge of the proceedings and what stage we were at.
Q.Do you accept the possibility that in the totality of that process there might be gaps in the information provided to each of them.
A.No, I don’t, no.
Q.You simply assumed that each would give a complete account of everything you had said to each of them.
A.On my experience, when I was talking to them, whether I would be talking to Steven, the next conversation I’d have a few minutes later would be George. I gained the impression they were fully aware of what was happening.[66]
[66] T1612, 1613.
The above review fits in with the evidence of Frank Mitolo which I have just outlined, and that of Tracey Smith and Nicola Minicozzi, a summary of which I now turn to.
Tracey Smith’s evidence concerning her contact with the Valamiou family members and, in particular, George Valamiou, concentrated on the 18 months leading up to the institution of this action (ie from about August 2000 and 30^th January 2002). Her evidence corroborates what Mr Skouteris said about the way the family operated the business[67]. Ms Smith, in this period, was seeking the return of the executed Guarantee and was negotiating, by means of telephone and facsimile transmissions to V & P Produce, with George Valamiou about addressing V & P Produce’s intractable indebtedness to Comit Farm. She said that she dealt most often with George Valamiou. She never spoke to Constantina Valamiou, and spoke only once to Efstratios[68]. She said that she did speak with Chris, but George “was the one making the decisions” and Chris would tell her to deal with George[69]. She said that George Valamiou, in his dealings with her, whether oral or written, did not defer to his father[70]. She addressed correspondence to George Valamiou and vice-versa[71]. She said also that he would bypass her sometimes and speak with Frank Mitolo[72].
[67] T1009-1181; see also Exhibits D7-D26 and D30-D33.
[68] T1009.
[69] T1123.
[70] T092, 1123.
[71] T1025.
[72] T1124.
Nicola Minicozzi’s evidence, about his dealings with George Valamiou at about the time this action was instituted, also demonstrates that George Valamiou was the source of instructions to Peter Skouteris and had the authority to manage and make decisions for the business. By January 2002, V & P Produce’s indebtedness to Comit Farm had not been satisfactorily addressed and so, on about the 18^th January 2002, Comit Farm ceased trading with V & P Produce[73] and instructed Nicola Minicozzi to issue proceedings. On 21^st January 2002, he dispatched notices of action to the proposed four Valamiou defendants[74]. George Valamiou, who hitherto had been negotiating with Tracey Smith, then began direct negotiations with both Nicola Minicozzi and, over his head, with Frank Mitolo (1308-1314). He encouraged Frank Mitolo to instruct Minicozzi to delay the institution of proceedings by promising compliance with a schedule of repayments which were incorporated in a Deed which was forwarded to V & P Produce[75]. A deadline for the return of the Deed passed and a repayment instalment was not met[76] and so on 30^th January 2002, this action was instituted. It was only at the eleventh hour, namely at about the time of the institution of proceedings, that Andresakis & Associates, and in particular, Mr Skouteris, were instructed[77].
[73] T1022.
[74] T307; see also Exhibit P13 at 1.
[75] T1313.
[76] T1314; see also Exhibit P13 at 3.
[77] T1217, 1391; see also Exhibit P13 at 2 and 3.
So, on the basis of the above evidence, which, as indicated, I prefer to anything said to the contrary by the Valamiou witnesses, I find that by 1998, George Valamiou and, to a lesser extent, Chris Valamiou, operated the multimillion dollar V & P Produce business as knowledgeable managers on behalf of and with the authority of the family. They exercised decision making power which extended beyond day to day operations. It was a role they played throughout this litigation with Comit Farm and, in particular, in their dealings with Peter Skouteris.
Further, I consider it probable that, at the time the conflict with Comit Farm was unfolding, Efstratios Valamiou was relinquishing the reins of the business to his sons.
I now turn to the circumstances surrounding the signing of the Guarantee.
Guarantee – 3^rd January 2001
On 3^rd January 2001, Efstratios, Constantina, George and Chris Valamiou executed the Guarantee[78].
[78] See Exhibit P1 at 32.
The Guarantee document was within a bundle of documents headed Application for Commercial Credit Account. The application document which was in a sense separate from the Guarantee, was completed by George Valamiou who described himself as “salesperson/manager”[79].
[79] See Exhibit P1 at 29-33.
It is accepted that Efstratios and Constantina Valamiou were the owners of the business, V & P Produce, and so a guarantee from them was, strictly speaking, unnecessary.
The documents making up the Application For Commercial Credit Account, including the Guarantee, initially were forwarded by Comit Farm to V & P Produce by Tracey Smith in about August 2000[80]. As at that time, V & P Produce owed Comit Farm in excess of $1 million[81]. In the ensuing five months, from August until the return of the completed documentation on 3^rd January 2001, Tracey Smith repeatedly sought the return of the executed Guarantee[82]. George Valamiou passively resisted sending back the completed document. He made a number of unfulfilled promises to Tracey Smith[83]. At one stage, he claimed to have lost the documents and requested replacement copies, promising that he would bring them with him, completed, when he was due to visit Comit Farm[84]. The documents were not so delivered. Finally, when he returned the documents on 3^rd January 2001, Chris Valamiou had not signed. Ms Smith telephoned him immediately on its receipt and the following exchange occurred:
George, we need Chris to sign this.
Why?
We need Chris to sign the guarantee.
Why?
Because he’s part of the business.[85]
[80] T1009, 1103.
[81] T1104, 1105; and see Exhibit D7.
[82] T1103-1133; see also Exhibits P1 at 22, and D6-D26.
[83] T1010, 1011.
[84] T1127-1129.
[85] T1012; see also T1132.
Ms Smith said that she then returned the partially executed documents and received back, by facsimile transmission, the fully executed Guarantee[86].
[86] T1133.
I accept Tracey Smith’s evidence about the prevarication and I disregard George Valamiou’s retorts[87]. I infer that the delays and prevarications were because some or all of the Valamiou defendants were deliberately avoiding executing it.
[87] T449-455; 468-471.
As indicated, George and Chris Valamiou in their evidence claimed to be unaware of the effect of what they had signed, yet their affidavits, sworn in this action and tendered in evidence, demonstrate that they knew full well the effect of the document. In the affidavits they claimed that they were coerced into signing it by Frank Mitolo and were subject to family pressure. This contention, however, was abandoned when they compromised their action with Comit Farm in May 2005. They then reverted to, what I have already indicated was an untruthful claim, namely that they did not realise the nature and effect of the document.
In February 2002, immediately after the institution of this action, Peter Skouteris discussed the Guarantee with George and Chris Valamiou. This discussion took place in the following circumstances. On 30^th January 2002, this action was instituted and at about the same time Peter Skouteris was instructed to represent the Valamiou defendants[88]. On the 1^st February 2002, he requested, amongst other documents, the Guarantee from Nicola Minicozzi[89]. On or about the 4^th February 2002, having received the documents requested, including the Guarantee, he discussed them with George and Chris Valamiou. His evidence about the content of the discussion was to the following effect:
[88] T1515.
[89] T1224, 1225.
Q.    Did you review the statement of claim.
A.    Yes.
Q.    Did you examine or review the consumer credit and guarantee document.
A.    Yes.
Q.    What did you see from the statement of claim.
A.The first thing I saw was that all four were being sued as opposed to the usual, when you had just Steve and Tina being sued. So, obviously I inquired as to why George and Chris were being sued as well.
Q.    So of whom did you inquire.
A.    I spoke with both George and Chris.
Q.    What did you ask them.
A.By that stage I’d received the application for - the consumer credit application and I’d asked them both, on separate occasions, why did they sign this document.
Q.Do you recall what they said, as to why they signed the consumer credit application.
A.Not direct speech. I was basically searching for a reason as to - to see if they could get out of the guarantee document, for want of a better word, and I was just searching them and questioning them as to the reason behind it. I suppose I was looking for a bit of pressure or undue duress, and there was none there, I formed the opinion.
Q.You say you can’t remember their exact words.
A.No.
Q.But did they tell you the circumstances in which the guarantee document was signed.
A.From their conversations - separate conversations with myself, I formed the opinion that there was no threats or anything along those lines. It was just simple business document they’d been asked to sign by Comit Farm to tie them all up.
Q.Do you recall now whether they told you why they signed it.
A.So that they could have supply from Comit Farm. It was nothing more than that. It was just a simple supply agreement with a guarantee attached.
Q.Did you understand George to understand what the document was.
A.Yes.
Q.Did you explain to him what the document was.
A.I didn’t explain to him. I just simply raised with him why had he signed the guarantee, why did he go guarantor on effectively mum and dad’s business.
Q.Did he ask you ‘What is a guarantee?’.
A.No.
Q.Or ‘What do you mean I’ve signed a guarantee?’, or anything like that.
A.    No. He was fully aware he was tied up as well.[90]
[90] T1401, 1402.
When pressed in cross-examination about whether the Valamious understood about the law of guarantee, Peter Skouteris said “... they knew what a guarantee was ... they knew the nature of a guarantee ... they didn’t come to me when it came time to sign the guarantee ...”[91].
[91] T1702.
I find that George and Chris Valamiou knew the nature and effect of the Guarantee and freely and voluntarily signed it. I so find for the following reasons:
·Peter Skouteris, whom I accept, said that they effectively told him so when he made inquiries in February 2002[92];
·the acceptable portions of their affidavit evidence demonstrate that they knew what they had signed[93];
·the single page document constituting the Guarantee[94], is headed in bold letters “Guarantee” and the words, “Guarantee” and “Guarantor” are repeated throughout the document, such that even the most inattentive signatory could not have failed to notice how the document described itself and in what capacity he or she was signing, and further, the responses of George and Chris Valamiou to that proposition were singularly unconvincing[95];
·the inordinate delay and obfuscations by George Valamiou in arranging for the execution and return of the Guarantee to Comit Farm gives rise to the inference that the Valamious knew of its onerous nature[96];
·the delayed challenges to the Guarantee – the first mounted in February 2004 and the one against Comit Farm abandoned in May 2005 - indicates lack of credibility in the claims about the Guarantee; and
·the evidence to the contrary from George and Chris Valamiou, for reasons I have elaborated upon, lacks credibility and is manifestly implausible.
[92] T1401 and 1402 as set out above.
[93] See Exhibit D1 at 328-330 and 323-324.
[94] See Exhibit P1 at 32.
[95] See George Valamiou T459; Chris Valamiou T245-265.
[96] T1103-1133; see also George Valamiou T450-471.
Issue of these Proceedings – 30^th January 2002
Throughout 2001 trading between Comit Farm and V & P Produce continued with some stops[97]. V & P Produce’s core indebtedness did not reduce, but rather increased. In that time, Tracey Smith, with occasional interventions from Frank Mitolo, continued her efforts to encourage V & P Produce to not only reduce its core debt, but also to trade within its terms[98]. By the beginning of 2002 the debt had risen to $1,801,295.60[99]. On about the 18^th January 2002, trading ceased[100] and Nicola Minicozzi was instructed to institute these proceedings.
[97] T1144.
[98] T1133-1145; see also Exhibits D30-33 and D35.
[99] T1016, 1145.
[100] T1022; see also 1142.

It is at this stage of the narrative of events, namely late January 2002, that the Defendant Solicitors, and in particular Peter Skouteris, begin acting for the Valamious. The Valamious allege against him, in their evidence, that he took steps in this litigation without their full knowledge, instructions and authority. In order to make findings about that contention, it is necessary to canvass the progress of the litigation. For this exercise, I confirm my findings as to the roles played by George and Chris Valamiou in the business. However, the issue which still remains is whether Peter Skouteris had instructions from, and was authorised by, the four Valamiou defendants to, inter alia, consent to the Judgment of the 18^th April 2002 and orchestrate the commitment to, and the execution of, the settlement Deed of the 13^th June 2002.
On the 21^st January 2002, as a prelude to instituting this action, Nicola Minicozzi served Notices of Demand by post on the proposed Valamiou defendants[101]. There followed a flurry of activity just before the issue of these proceedings. I find as follows in respect of this period.
[101] T1215, 1307-8; see also Exhibit P13 tab 1.
·On the 22^nd January 2002, George Valamiou sought advice from, but did not then pass the conduct of the matter over to, Peter Skouteris on the 23^rd January 2002[102];
[102] See Skouteris T1392; see also Exhibits D37 and D28 at [10].
·George Valamiou telephoned Frank Mitolo on the 24^th January 2002 and offered to pay the debt at $50,000 per week and so Frank Mitolo instructed Nicola Minicozzi to delay issuing proceedings[103];
[103] T1215; see also Exhibit D28 at [5].
·A Deed (“Repayment Deed”)[104] was prepared by Nicola Minicozzi and on or about the 25^th January 2002 was forwarded to the Valamious[105];
[104] See Exhibit P1 at 51.
[105] T1313‑4; see also Exhibit D28 at [7, 8].
·By the 29^th January 2002 the Deed had not been returned[106]; and
[106] T1314.
·On the 30^th January 2002, Nicola Minicozzi spoke with Peter Skouteris on the telephone and the gist of the conversation as noted by him was:
On 30^th January 2002 I telephoned Andresakis & Associates, Solicitors for the defendants in Sydney. I spoke to Mr Peter Skouteris. I explained that I had been trying to contact George Valamiou. Skouteris informed me that:
(a)he was familiar with this matter as George Valamiou had consulted him with respect to the debt and the Deed,
(b)George Valamiou was supposed to have brought the Deed back to him the previous day but had failed to do so,
(c)that “Valamious was not going anywhere” when I questioned him as to whether or not there would be “skipping”,
(d)that George Valamiou claimed the real debt was $1.4 million and not $1.8 million,
(e)when I questioned him on whether or not the Valamious family “was going to go through” he said “No”.
We left it on the basis that I would send him a copy of the proceedings and a copy of the Deed and that he would chase up George Valamiou to seek a resolution of the matter. Peter Skouteris told me that he (Skouteris) was the one who had recommended the $50,000.00 per week repayment schedule.[107]
[107] See Exhibit D28 at [10].
Late on the 30^th January 2002 the proceedings herein, claiming $1,801,295.00, were instituted against the four Valamiou defendants.
Consent Judgment 18^th April 2002
I turn to the evidence and my findings in respect of the period from the issue of proceedings on the 30^th January 2002 until the entry of the consent Judgment of the 18^th April 2002.
Following the issue of the proceedings there was contact and negotiations between the parties by their lawyers. An Appearance was entered and a Defence filed and served. Then on the 18^th April 2002, before a Master of this Court, the Adelaide solicitor representing the four Valamiou defendants, Mr Richard Eckermann, admitted that the defendants accepted liability for $1,224,128.00 of the claimed $1,801,295.00 and so, by consent, judgment was entered against the Valamiou defendants in that sum, leaving the balance to be resolved[108].
[108] See consent Judgment of 18th April 2002.
George and Chris Valamiou claimed to be ignorant of precisely what was happening in this period and what Peter Skouteris was doing and for whom.
In particular, George Valamiou in his evidence said that:
·he was not aware that he was a defendant to the Comit Farm proceedings until in 2005[109];
·in 2002 he had no dealings with Peter Skouteris in connection with the “proceedings by Comit”[110];
·he only became aware of Mr Eckermann entering an Appearance and later a Defence to the proceedings for him and his brother “about six months ago” (ie approximately September 2005), rather, he understood that the Appearance was entered by the Adelaide solicitor for this father[111];
·he gave no instructions to any person to either enter a Defence or file an Appearance on his behalf[112];
·he became aware of Mr Eckermann having consented to a judgment against himself, his parents and his brother for approximately $1.2 million only six months ago (ie September 2005)[113];
·he did not give any instructions to any person to consent to such a judgment[114]; and
·between the beginning of February 2002 and the end of April 2002 he had no discussions with Mr Skouteris “... concerning these proceedings”[115].
[109] T91, 142, 143.
[110] T90, 91.
[111] T91.
[112] T91.
[113] T91, 92.
[114] T91.
[115] T92.
Some variations to this intractable position emerged in cross-examination when George Valamiou was confronted with, for instance, documents suggesting otherwise. However, the above remained his primary position.
So too, Chris Valamiou’s primary evidence as to this period was much the same[116].
[116] T200-203
These claims of ignorance are untenable and are in conflict with not only the evidence of Peter Skouteris, which I prefer, but also other oral and documentary evidence.
I set out hereunder in narrative form my findings of fact and the evidence, both direct and circumstantial, on which I have relied.
1.George Valamiou instructed Peter Skouteris to act in the Comit Farm matter[117] in about late January 2002.
[117] T1515.
2.The recitals in the Repayment Deed, which was forwarded to George Valamiou by Nicola Minicozzi on about the 25^th January 2002, spell out that George and Chris Valamiou were liable having guaranteed the debt of V & P Produce[118].
[118] T1313‑4 and see also Exhibit P1 at 51.
3.The Notices before action, posted on the 21^st January 2002 and directed to each of the Valamiou defendants, were headed Notices to Guarantors[119].
[119] T1215, 1307-8; see also Exhibit P1 at 48, 49.
4.Then following the receipt of the said Notices, George Valamiou was responsible for what I have called a “flurry of activity” in which he attempted to resolve the matter before the issue of proceedings[120]. Indeed on the morning of the day after the issue of proceedings, namely the 31^st January 2002, he sent the following facsimile message to Frank Mitolo.
[120] See [78] above.
V & P Produce
FRANK MITOLO
We are going through the deed with the solicitor.
By the way we are still making the payments into your account every week. We don’t need to cause any trouble. Payment will be made and receipts will be faxed over.
Payment will start from Monday 4/02/02 and every week after that.
Your figure is a different amount than ours. Credit notes have not been taken off your account. Everything will be ... over to you!
We know we owe you a great amount of money and we don’t denie (sic) that. I am sorry it’s happened this way, but payment will be coming every week.
Thank you
George Valamiou[121]
[121] See Exhibit D28 at [13].
Later on the 31^st January 2002, George Valamiou telephoned Nicola Minicozzi on his mobile and said “... something about agreeing to everything and that he was faxing the Deed through ...”. In response, Nicola Minicozzi replied that he should be dealing with his solicitor[122].
[122] See Exhibit D28 at 15.
5.The Summons and Statement of Claim, particularising the basis of the claims against, in particular, George and Chris Valamiou, were served on each of the Valamiou defendants on about the 1^st February 2002 and were probably explained by either George or Chris Valamiou to their father[123].
[123] T27-28, 669-675.
6.The diary of Peter Skouteris[124] shows the following appointments:
[124] See Exhibit D37.
·appointment with George Valamiou on 23^rd January 2002;
·appointment (unannounced) with one of the Valamious 6^th February 2002;
·appointment with George Valamiou on the 8^th, 13^th and 21^st February 2002;
·appointment (unannounced) with one of the Valamious on 22^nd February 2002, most likely being George Valamiou[125].
[125] T1520; see also Exhibit D36 tab 6.
7.George Valamiou must have told Peter Skouteris, perhaps at the appointment of the 23^rd January 2002, that the “real debt” was $1.4 and not $1.8 million because Peter Skouteris conveyed precisely that to Nicola Minicozzi when speaking with him on the 30^th January 2002[126].
[126] See Exhibit D28 at [10]).
8.Peter Skouteris faxed a copy of the letter from Nicola Minicozzi to him dated the 1^st February 2002 to George Valamiou at V & P Produce’s office, in order to obtain instructions thereon. The letter enclosed the Credit Application and Guarantee and a Reconciliation of V & P Produce’s account with Comit Farm[127]. The fax imprint and the fax journal report is some independent support for this[128].
[127] T1398-1399.
[128] See Exhibit D36 tab 4.
9.Nicola Minicozzi had previously forwarded to Peter Skouteris copies of the Summons, the Statement of Claim and the Repayment Deed. These documents were received by Peter Skouteris on the 4^th February 2002[129].
[129] T1400-1401; and see also Exhibit D3.
10.Peter Skouteris about the 4^th February queried that George and Chris were defendants and in particular sought their instructions as to the Statement of Claim and Guarantee[130]. He also requested instructions from either George or Chris Valamiou as to what the family agreed was owing to Comit Farm and in response “$1,577,968” was hand written on the top of the letter Exhibit D3 by George Valamiou or possibly Chris[131]. The most likely candidate for having endorsed that sum on the letter was Chris Valamiou[132].
[130] T1400-2, 1407, 1525; see also Exhibit D3.
[131] T1407.
[132] T242-3, 295-7; see also Exhibit D4.
11.Having obtained from the Law Society the names of two solicitors who might act as Adelaide agents, Peter Skouteris was specifically instructed by George Valamiou to engage Richard Eckermann because George Valamiou told him that Richard Townsend, who was the other person recommended, had acted against Comit Farm in the matter of Mondello[133]. Notably, Peter Skouteris’ file note relating to this discussion is dated the 22^nd February 2002 and his diary records an appointment with “a Valamiou” on that day. Also, file number 19 of the other files[134] discloses that Richard Townsend did act for Mondello Farms Pty Ltd in a claim against V & P Produce. On the 22^nd February 2002 Peter Skouteris, in accordance with his instructions, engaged Richard Eckermann[135] and wrote to him engaging him to act for the Valamiou defendants in Adelaide[136].
[133] T1520; see also Exhibit D36 tab 6.
[134] See Exhibit P2.
[135] T1522.
[136]T1521‑2; see also Exhibits P1 at 64, and D36 tab 7.
12.On the 22^nd February 2002, Richard Eckermann filed an Appearance and duly notified Nicola Minicozzi of having done so[137].
[137] See Exhibit P13 tab 9.
13.On the 25^th February 2002, Chris Valamiou faxed a Statement of Account and an Adjustment Note relating to V & P Produce’s trading account with Comit Farm from V & P Produce’s office to Peter Skouteris[138].
[138] T1523-4; see also Exhibit D36 tab 8.
14.On the 26^th February 2002, Peter Skouteris telephoned Nicola Minicozzi and told him that the outstanding debt should have been $1.034 and not $1.8 million and that Comit were going over to Sydney for a meeting to resolve it[139]. On the same day, Peter Skouteris wrote to Nicola Minicozzi:
[139] T1226.
·Enclosing the said Statement of V & P Produce’s account with Comit Farm as at the 20^th February 2002;
·Suggesting the outstanding balance was $1,034,433.90 by reason of taking into account a number of credits; and
·Requesting an extension of time in which to file a Defence to enable discussions to take place at the meeting set for the 27^th February 2002.[140]
[140] T1524; see also Exhibit D38 tab 9.
Peter Skouteris obtained the above information about the claimed extent of indebtedness from, he said, either George or Chris Valamiou[141]. It is esoteric knowledge and probably came from Chris Valamiou who was in charge of “accounts receivable”[142]. Further, Peter Skouteris said that it was George Valamiou who informed him that a meeting was to be held on the 27^th February 2002[143].
[141] T1524.
[142] T190.
[143] T1524.
15.Then on the 27^th February 2002, Peter Skouteris wrote a detailed letter to Mr Eckermann particularising the Defence to be filed[144]. Again, Peter Skouteris said that the instructions for that letter came from George Valamiou[145].
[144] T1525; see also Exhibits D26 tab 9, and P1 at 72.
[145] T1525, 1529.
16.Before the Defence was filed and served, Nicola Minicozzi wrote to Peter Skouteris – letter dated the 28^th February 2002 – explaining that the V & P Produce’s analysis of the accounts was in error and why[146].
[146] T1529, 1530; see also Exhibit D28 tab 11.
17.Nonetheless, on the 4^th March 2002, Mr Eckermann filed and served a Defence in accordance with his instructions, pleading, inter alia:
The Defendants deny that they are indebted in the sum of $1,801,295 as alleged.
The defendants say they (sic) plaintiff has failed to give credit for goods previously returned and further that not all goods supplied were of merchantable quality.[147]
[147] See Exhibit D1 at 215, 216.
18.The reaction to the Defence from Nicola Minicozzi was a request for further material facts and a warning that a Notice to Admit would in due course be served[148].
[148] See Exhibit D1 at 215, 216.
19.On the 11^th March 2002, Peter Skouteris received from RG Eckermann & Co a letter dated the 8^th March 2002 enclosing, inter alia, a Notice to Admit Facts served by Nicola Minicozzi. This letter has a handwritten endorsement on it of Peter Skouteris which he said indicates that the letter was given to Chris Valamiou on the 18^th March 2002[149]. In particular, Peter Skouteris said that, having made a copy of this letter for himself, he handed it to Chris Valamiou in his office and said to him “... look we need to provide the information sought in this letter ...”[150]. Peter Skouteris said that he believed that the Notice was “... dealt with by Richard Eckermann direct with the Valamious ...”[151]. Indeed, Nicola Minicozzi said that he required a response to Comit Farm’s Notice to Admit on the 22^nd March 2002[152].
[149] See Exhibit D5.
[150] T1531.
[151] T1531.
[152] See Exhibit D28 at [26].
20.Then by facsimile transmission on the 17^th April 2002 Richard Eckermann wrote to Andresakis & Associates in the following terms:
April 17, 2002
Andresakis & Associates
P.O. Box 475
Parramatta NSW 2124
By facsimile 029891 5883
Dear Sirs
RE VALAMIOS ATS COMIT FARMS
We advise that we attended before Master Norman in the District Court this morning on the status hearing/application for striking out of Defence of the Plaintiff.
The plaintiff’s Solicitor was quite impassioned about obtaining summary judgment and indicated that his client believed that the defendants were preparing to leave the country and that they were under surveillance by private investigation firm.
I naturally opposed the order and sought further seven days to comply with the request to file a more explicit defence and to deal with the issues of the notice to admit. However the Master chose another course and that was to adjourn the mater to tomorrow at 3:25 pm at which time we were to advise the details of the amount in dispute. We expect that he will then give judgment to the Plaintiff for amount not in dispute.
The matter needs to be attended to urgently. If we do nothing I expect the Master will give judgment to the defendant for the whole amount claimed.
Yours[153]
[153] See Exhibit D36 tab 12; see also T1534.
21.As a consequence of the above “warning” letter:
·Peter Skouteris conferred with George Valamiou and took instructions from as to precisely what was admitted to be owing[154].
[154] T1535; see also Exhibit D36 tab 13.
·Peter Skouteris then wrote two letters, which I am satisfied he drafted in front of his client as was his practice, and faxed them off to Richard Eckermann in the course of the 18^th April 2002[155].
[155] T1536-7; see also Exhibit D36 tab 14; and see also Exhibit P1 at 75 and 77.
In particular, Peter Skouteris instructed Mr Eckermann that the sum of $1,224,128.00 was admitted to be owing and particularised how the balance namely $577,167.00, was calculated. In the second letter, Peter Skouteris authorised Mr Eckermann to offer to pay the sum of $1,224,128.00 at $15,000.00 per week on a without prejudice basis before the hearing of the application “... and on an open application to the Court should judgment be entered and a short time period be given for payment ...”[156].
[156] See Exhibit P1 at 77.
22.The Valamiou defendants through the agency of George Valamiou, particularly after the “warning” letter of the 17^th April 2002 from Mr Eckermann, were aware of the prospect of a judgment being entered. This, after all, was not a new experience for the Valamious. Peter Skouteris, in the course of preparing the response to the said warning letter, namely the letter dated the 18^th April 2002[157], discussed with George Valamiou the “distinct” possibility that judgment might be entered. On this topic I note the following exchange between Peter Skouteris and cross examining counsel:
[157] See Exhibit P1 at 75.
Q.    Prior to 18 April 2002, did you explain the possibility of this judgment being entered against all four Valamious, in the sum of $1.2 million approximately, on a joint and several basis. Did you explain that possibility to any of the four Valamious.
A.    Yes.
Q.    Who.
A.    My letter of 18 April 2002 – can I go back to it?
Q.    Yes.
A.    The one at pp.75 and 76 deals with what’s in dispute, I obtained those instructions from, I believe, George. Steve and Chris were also made aware that it was a distinct possibility that judgment may have been entered on 18 April.
Q.    Made aware by whom.
A.    By me. I had discussions with them. As soon as I received Richard Eckermann’s letter that judgment may be entered we basically got a move on and put together what we thought was in dispute. When I say ‘We’ I meant the Valamious getting together and giving me instructions via George. And that’s the basis of the subsequent correspondence to Richard Eckermann.[158]
23.At 2.20 pm on the 18^th April 2002 Richard Eckermann informed Nicola Minicozzi by telephone that he was instructed to “consent to $1,224,128.00 today and need to put the balance in a defence ...”[159].
24.Later, on the afternoon of the 18^th April 2002, Mr Eckermann informed the Master that he had been instructed to make an open offer to the Court of $1,224,128.00 with payment by instalments and that he would seek a stay. The Master made the following orders:
1.The Plaintiff recover from the Defendants part of its claim namely the sum of $1,224,128.00.
2.These proceedings continue in relation to that part of the Plaintiff’s claim not disposed of (including interest and costs) and that the Defendants may file and serve an Amended Defence and Counterclaim to the balance of the Plaintiff’s claim within fourteen days of the date of this Order
3.The question of the costs of this application be reserved pending the final disposal of the proceedings.
[158] T1713. (Note the reference in the above quoted transcript to “pp.75 and 76” is a reference to pages of the volume Exhibit P1.)
[159] T1229; see also Exhibit P1 at 78.

For conduct to be misleading or deceptive the conduct must convey in all the circumstances of the case a misrepresentation[349]. In each case “it is necessary to examine the conduct, whether representational in character or not, and ask the question whether the impugned conduct of its nature constitutes misleading or deceptive conduct”[350]. Whether particular conduct is misleading or deceptive is a question of fact which turns upon the circumstances of each case. In Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd[351], Gibbs CJ at 198 said of the words of s 52 as follows “... one meaning which the words mislead and deceive share in common is to lead into error.” Whether conduct is “misleading or deceptive or is likely to mislead or deceive” is an objective question of fact for the Court to decide in all the circumstances of the case. The section contemplates the effect of the conduct on reasonable people[352]. Silence can amount to “misleading or deceptive conduct”[353].
[349] See Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 at 202.
[350] See Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 79 ALR 83 per Lockhart J at 93.
[351] (1982) 149 CLR 191.
[352] Puxu per Gibbs CJ at 198-9.
[353] See Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1986) 12 FCR 477.
For common law misrepresentation the above, in substance, is also applicable[354]. A misrepresentation is a representation which does not accord with the true facts. The representation need not be the sole or decisive inducement. Rather, what is required is that it was a real inducement in the sense of materially affecting the representee’s decision[355]. Where damages are sought pursuant to the Misrepresentation Act 1972 (SA), rather than rescission, as is the case here, the acting in reliance on the representation must be shown to have caused loss or damage. As to silence or non-disclosure, unless there is a special relationship where disclosure is required, as a general rule, silence is not a misrepresentation[356]. “Misleading or deceptive conduct” has a broader reach in this area.
[354] See Contract Law in Australia 4^th ed, JW Carter and DJ Harland Ch 10 and 11.
[355] See Edgington v Fitzmaurice (1885) 29 Ch D 459 per Bowen LJ at 483; Wilcher v Steain (1962) 79 WN (NSW) 141 at 144.
[356] See United Dominions Corp Ltd v Brian Pty Ltd (1985) 157 CLR 1 at 5-6.
The focus here is whether there has been conduct which does not accord with the true facts, and which conveys a misrepresentation or leads into error. The impugned conduct can be positive action or, particularly in the case of the claim of “misleading or deceptive conduct”, can be silence.
Misrepresentative Conduct and Estoppel
At a factual level each of these misrepresentative claims fail. The “representations” have not been proved to be wrong in fact or lead into error. Indeed, I regard it as inappropriate to characterise the behaviour of Peter Skouteris as “a representation” at all. However, if it can be said that Peter Skouteris, by his positive conduct or silence, “represented” in the legal sense to Nicola Minicozzi and his client Comit Farm:
·that he was properly instructed to act;
·that he was authorised to take the steps which were taken;
·that George and Chris Valamiou appreciated the nature and effect and the legal ramifications of the steps which were taken throughout the action; and
·that there were no unresolved conflict of interest problems,
those representations were true.
I refer here to my findings of fact and to my conclusions in respect of the claims by George and Chris Valamiou against the Defendant Solicitors. For those reasons there has been neither misleading or deceptive conduct, nor misrepresentations by the Defendant Solicitors as alleged.
There is a further reason, which, in the light of the above adverse findings of fact, is an additional basis upon which Comit Farm’s claims fail. The contention here is effectively that Peter Skouteris, by doing nothing more than continuing to act for all four Valamiou defendants and then later George and Chris Valamiou, was representing to Comit Farm that he had complied with professional standards when he had not so complied. A representation must be some positive statement or conduct including silence or inaction which is material and which invites reliance and induces a reaction. Perhaps it is legitimate to assert that when a legal practitioner speaks in court for a party or files an Appearance in an action, he or she is representing to “the other side”, and to the court, that he or she is authorised and instructed to act in the matter, but beyond that it is sophistry to characterise the ongoing legal representation of one party as constituting a representation in the legal sense to the other party that acceptable standards of care are being exercised. Also, as is required in cases of “misleading or deceptive conduct”, the reaction to the conduct needs to be reasonable[357]. For Comit Farm to fashion its conduct, and I am not satisfied that it has established that it did so, on assumptions made about what might or might not have happened in the “Valamiou camp” during the time Peter Skouteris was acting, would not be reasonable.
[357] See Puxu per Gibbs CJ at 198-9; see Elders Trustee & Executor Co Ltd v EG Reeves Pty Ltd (1987) 78 ALR 193 at 241.
The above contention by Comit Farm is not far removed from saying, as it did in its now abandoned claim in negligence, that the scope of the duty of care owed, in the law of negligence, by a solicitor acting for a party engaged in litigation includes exercising care and diligence in respect of not only his client, but also third parties such as the opposing party. The general rule is that there is no duty of care of such scope[358]. There are exceptions. I refer for example to Hawkins v Clayton[359] in which a solicitor who drew and retained custody of a Will for his client testator was later held to owe a duty of care to a residual beneficiary who was unknown to him. Rather, a solicitor, as I have indicated, owes undivided loyalty to his or her client save only for the overriding duty he or she owes to the court. To suggest in the ordinary case that he must be watchful of the impression he might be conveying to “the other side”, is inconsistent with that precept. Further, it has the potential to give rise to difficulties with keeping confidences and with legal professional privilege.
[358] See Al‑Kndary v JR Brown [1988] QB 665; Gran Gelato Ltd v Richcliff [1992] Ch 560; Jackson & Powell on Professional Negligence 3^rd ed, at 4-16 – 37.
[359] (1998) 164 CLR 539.
Conclusion as to proof of Misrepresentative Conduct and Estoppel
Accordingly, the claims for damages for common law misrepresentation and for misleading or deceptive conduct pursuant to s 56 of the Fair Trading Act 1987 (SA), if it is not statute barred, and pursuant s 42 of the Fair Trading Act 1987 (NSW), if it applies, and is not also statute barred, fail. Neither the claimed misrepresentations nor the claimed misleading or deceptive conduct has been proved. The pleaded claim of estoppel also fails. It is dependent on proof that Comit Farm acted to its detriment in reliance upon representations made by the Defendant Solicitors from which they now seek to resile. On my findings of fact the Defendant Solicitors do not seek to resile from any “represented” position.
In view of these conclusions, it is not necessary to decide whether Comit Farm is, in any event, statute barred from prosecuting its claim under the two Fair Trading Acts, and whether s 42 of the Fair Trading Act 1987 (NSW) has application. However, for a full discussion of much the same time limitation problem in the context of a claim under s 56 of the said Act I refer to Seal & Ors v Malaugh & Ors[360].
In any event, has loss or damage has been proved?
[360] [2007] SADC 22 at [111] – [135].
As indicated, proof of loss or damage is an ingredient or prerequisite for the claims of misleading or deceptive conduct and misrepresentation. I set out hereunder the pleaded claim of loss.
51    Relying on and induced by the representations, the plaintiff:
51.1   continued to supply produce to the said Efstratios Valamios and Constantina Valamios trading as “V & P Produce”, thereby:
51.1.1increasing the debt owed by the said Efstratios Valamios and Constantina Valamios trading as “V & P Produce” to the plaintiff, and
51.1.2diminishing the reduction of the debt owed by to the said Efstratios Valamios and Constantina Valamios trading as “V & P Produce” to the plaintiff that was effected when the said Efstratios Valamios and Constantina Valamios trading as “V & P Produce” made payments on their account;
51.2   forbore from commencing or continuing legal proceedings to recover the amount owed by the said Efstratios Valamios and Constantina Valamios trading as “V & P Produce” to the plaintiff, thereby:
51.2.1increasing the debt owed by the said Efstratios Valamios and Constantina Valamios trading as “V & P Produce” by reason of interest accruing on the account, and
51.2.2decreasing the plaintiff’s prospects of recovering the debt owed by the said Efstratios Valamios and Constantina Valamios trading as “V & P Produce”; and
51.3   in June 2003 accepted an Application for commercial Credit Account from Valamios Produce Pty Ltd, a company established and controlled by the first and second defendants.
52The plaintiff was induced by and relied upon the representations in permitting the Summary Judgment which it assumed would be enforceable against each of the said then four defendants (including the first and second defendants) to be entered in favour of the plaintiff against each of the said then four defendants (including the first and second defendants) jointly and severally.
53The plaintiff was induced by and relied upon the representations in permitting the Deed of Settlement to be negotiated, agreed upon, entered into and signed by the parties thereto (including the first and second defendants) which it assumed would be enforceable against each of the said then four defendants (including the first and second defendants) in favour of the plaintiff against each of the said then four defendants (including the first and second defendants) jointly and severally.
(See Fourth Further Amended Statement of Claim [51], [52] and [53])
In my view, Comit Farm has failed to prove that any such detriment was caused by the alleged conduct or representations of the Defendant Solicitors. I turn to the reasons why.
As at the 30^th January 2002, when this action was instituted, trading had ceased between Comit Farm and V & P Produce and the debt claimed was $1,801,295. That sum, together with interest, is reflected in the two judgments entered in this action (ie on the 18^th April 2002 and 19^th May 2005).
The pleas, as referred to above, stripped of their legal jargon, appear to be that the misrepresentative conduct of the Defendant Solicitors has caused loss or damage to Comit Farm by inducing it to consider that the recovery of the debt was, in a sense, a foregone conclusion because, in addition to the clearly liable parents, the two sons had also accepted liability when in fact their liability was not such a foregone conclusion. Put another way, had Comit Farm known that George and Chris Valamiou were not securely liable with their parents, but had prospects of escaping liability, it would have behaved differently and so avoided some of the losses it has incurred.
Comit Farm is said to have behaved to its detriment in the following respects:
·firstly, on or about the 12^th September 2002, the Deed having been agreed upon and executed and payments due there under were being made, Comit Farm resumed supply of produce to V & P Produce on a cash account and then shortly later a seven day account,[361] and thereby increased the debt and/or impaired V & P Produce’s ability to repay the debt in full by requiring it to use what money it had for current supplies;
·secondly, it forbore from proceeding “hard and immediately” against Efstratios and Constantina Valamiou and thereby lost the chance of recouping more from them than it did (ie $1,375,000 but less $395,000 disgorged to the Trustee); and
·thirdly, in about June 2003, following the transfer by Efstratios and Constantina Valamiou of the business to Valamious Produce Pty Ltd, Comit Farm commenced supplying that corporation.
[361] Tracey Smith T1142-3
I turn to the first of the above propositions.
Tracey Smith’s evidence makes it clear that there were no monies owing on either the cash or the seven day accounts[362]. So there was no increase in the level of debt. To the extent that the plea is that ongoing resumed trading meant that V & P Produce had less money to apply to the old debt because it was expending what money it had on current purchases, there is simply no acceptable evidence that such was the case. If the submission is that Comit Farm, by continuing to trade with V & P Produce thereby passed up the opportunity or chance of trading more profitably with another buyer, then there is no evidence at all to support that let alone justify an assessment of the value of this lost chance. Indeed, it is clear that Comit Farm throughout had been keen to maintain trade with the Valamious, notwithstanding the litany of broken promises and agreements. The reality emerging from the evidence is that Comit Farm’s decision to keep trading with V & P Produce probably had nothing to do with any representation arising from the Judgment of 18^th April 2002, the Deed of 13^th June 2002 or the silent ongoing legal representation of the Valamious by Peter Skouteris, but rather it was motivated by the good commercial sense of keeping V & P Produce trading, though on strict terms, so that it could repay the debt from its cash flow. Tracey Smith said as much in her evidence[363].
[362] T1136-7, 1143-3.
[363] T1143-4, 1036.
So I find that there is no such loss or damage proved.
I now turn to the second proposition that Comit Farm suffered loss and damage by desisting from proceeding immediately against the primary debtors, Efstratios and Constantina Valamiou. This is effectively a claim for a lost opportunity to do better against the Valamiou parents than the $1,375,000 recouped from them by the 11^th April 2003 (but from which $395,000 had to be paid to the Trustee). In the midst of the trial this became an issue because it was not pleaded. I offered counsel for Comit Farm the opportunity of amending. I indicated that I would grant leave but on stringent terms. Faced with the inevitable adjournment and an adverse order for costs, counsel withdrew the voluminous proposed amendment. I agree with counsel for the Defendant Solicitors that there being neither pleadings nor evidence, rank speculation is all that remains of this contention.
The third plea is that Comit Farm suffered loss or detriment as a result of entering into a trading arrangement with George and Chris Valamiou’s company, Valamiou Produce Pty Ltd in about June 2003 when that company purchased the stands in the market from V & P Produce. Neither the evidence nor the submissions provide any sensible hint at why and how this action by Comit Farm could constitute a loss. Apart from a vague criticism of the company by Tracey Smith, there is no detail about its trading history, and no indication that Comit Farm suffered any loss at its hands much less the linking of any loss to the conduct of the Defendant Solicitors. To the extent that this is a claim for a lost opportunity or chance to trade with another entity more profitably, there is no evidentiary foundation for it. Rather, I infer from the evidence of, in particular, Tracey Smith, that Comit Farm decided to deal with the new corporation in the hope that the repayments under the Deed, which had stopped, as indicated on the 11^th April 2003, might resume[364]. At about this time Nicola Minicozzi, on behalf of Comit Farm, was attempting to have the Valamiou defendants resume payments. So a clear and sensible commercial imperative motivated this action. No detriment has been shown to flow from this action by Comit Farm much less one which could be linked to assumed defaults by the Defendant Solicitors.
[364] T1170-5.
By [52] and [53][365], as set out in [242] above, Comit Farm contend that it suffered detriment, loss or damage in that it was induced by and relied upon the representations of the Defendant Solicitors in permitting:
·the entry of the Summary Judgment of the 18^th April 2002; and
·the agreement embodied in the Deed of the 13^th June 2002.
[365] See Fourth Further Amended Statement of Claim.
The word “permitting” is hardly appropriate. Rather, Comit Farm pressed for both the entry of the Judgment and for the agreement embodied in the Deed. The detriment here pleaded is that in permitting the above, namely the Judgment and the Deed, it assumed that they would be both enforceable against all four Valamious jointly and severally. The pleading perhaps means to assert that the value of the Judgment and the Deed against George and Chris Valamiou was less than it was in respect of their parents because the alleged defaults of the Defendant Solicitors left open, to George and Chris Valamiou, a prospect of challenging the enforceability of the Guarantee and then what followed in its wake, namely the Judgment and the Deed. Extrapolating from that the plea seems to be that Comit Farm, had it known that Peter Skouteris was in default in the way alleged, would have focussed the action on the Valamious parents by either proceeding only against them and/or by separating any action against the sons. Whatever the permutation and combination, this plea reduces to a contention that Comit Farm would have been better off focussing on and proceeding expeditiously against the Valamiou parents. I have dealt with their contention immediately above.
Whatever the underlying basis of the pleas in [52] and [53][366] it does not translate into any identifiable loss.
[366] Ibid.
Pursuant to [71][367] Comit Farm claims the sum, now known to be $395,000, being the indemnity agreed to by George and Chris Valamiou for the sum disgorged by Comit Farm to the Trustee. It is not clear how Comit Farm’s liability to disgorge this sum has been caused by any conduct of the Defendant Solicitors. Neither the order of the Federal Magistrates Court, nor the agreement of George and Chris Valamiou to pay it makes it loss or damage caused by the Defendant Solicitors. The only way in which Comit Farm’s liability to disgorge this sum could be ascribed to any conduct of the Defendant Solicitors, is to contend that, but for their conduct, Comit Farm would have pursued Efstratios and Constantina Valamiou more expeditiously and, in that way, even if they were later bankrupted there was a chance of any payments being made outside the relation back period. I refer here and adopt my previous conclusions in [248] as to the plea about forbearing to proceed “hard and immediately” against the parents and, in particular, to Comit Farm’s decision not to take up the opportunity to amend and thereby attempt to shore up this plea. Accordingly, there is no adequate pleading and not sufficient evidence to enable this Court to conclude that this lost opportunity had “some value” such that it could sound in an award of damages.
[367] See Fourth Further Amended Statement of Claim.
Paragraphs 71 to 74[368] in their entirety seek to recover from the Defendant Solicitors not only the sum of $395,000 and the balance of the original claim sum (calculated by Tracey Smith to be $704,521.78 as at the 6^th March 2006), but also all other monies outstanding and pleaded as owed by the four Valamiou defendants together with interest and income tax obligations.
[368] Ibid.

The alleged defaults of the Defendant Solicitors did not lose Comit Farm’s chance of recovering these sums. On my view of the facts, neither George nor Chris Valamiou would have behaved any differently than they did if Peter Skouteris had done all that it is contended he should have done. Even if they would have behaved differently, and in particular, challenged the Guarantee, the end position was likely to be much the same as it was immediately prior to the Deed of 5^th May 2005. Accordingly, the chance of avoiding those claimed losses is a meagre prospect and not of such value as to sound in any calculable loss.
Therefore for the above reasons, no case has been made out on the evidence that the Defendant Solicitors, accepting the allegations of misrepresentation and misleading or deceptive conduct, have caused those claimed losses or rather the chance of avoiding them.
Therefore, the claims by Comit Farm also fail on the grounds that no loss or damage has been proved to have been suffered.
Effect of Compromise of May 2005
Finally, the Defendant Solicitors submitted that if Comit Farm suffered any loss, which was denied:
·that as a consequence of the Deed of the 5^th May 2005 and the Orders of this Court of the 19^th May 2005, it became the author of that loss; and/or
·that by not enforcing the Judgment of the 18^th January 2002 and the Deed of the 13^th June 2002 Comit Farm unreasonably failed to mitigate that loss.
The above dual contention was faintly argued. It is a further alternative submission. I do not propose to address it.
Summary of Conclusions and Orders
George and Chris Valamiou have not proved against the Defendant Solicitors:
·breaches of duty in negligence;
·misleading or deceptive, or unconscionable, conduct in contravention of ss 42 and 43 of the Fair Trading Act 1987 (NSW); and
·breaches of fiduciary duty.
Further, George and Chris Valamiou have not proved that loss or damage has resulted from any breaches or contraventions.
In respect of the alleged breaches of fiduciary duty, George and Chris Valamiou have not proved that, even if the alleged breaches were committed, they suffered detriment which could be linked to the breaches establishing an entitlement to equitable remedies such as equitable compensation.
Accordingly, the counterclaim of George and Chris Valamiou against the Defendant Solicitors fails and should be dismissed. There will be judgment for the Defendant Solicitors against George and Chris Valamiou on the counterclaim.
Comit Farm has not proved against the Defendant Solicitors:
·misrepresentation at common law or pursuant to s 7 of the Misrepresentation Act 1972 (SA); or
·misleading or deceptive conduct in contravention of s 56 of the Fair Trading Act 1987 (SA) and s 42 of the Fair Trading Act 1987 (NSW).
In relation to the plea of estoppel, Comit Farm has not proven any basis for making the declarations and orders sought.
The claim for an indemnity in respect of the Notice under s 139ZQ of the Bankruptcy Act 1966 is not a cause of action and should be dismissed.
Further, Comit Farm has not proved that loss or damage has resulted from any misrepresentation or contravention as claimed.
Accordingly, the claims of Comit Farm against the Defendant Solicitors fail and should be dismissed. In respect of the claims there will be judgment for the Defendant Solicitors against Comit Farm.
The solicitors for the Defendant Solicitors should bring in Minutes of Order.
I will hear the parties as to costs.