Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd - [2008] WASC 133

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION: COMPUTER ACCOUNTING AND TAX PTY LTD -v- PROFESSIONAL SERVICES OF AUSTRALIA PTY LTD [2008] WASC 133

CORAM: SIMMONDS J

HEARD: 2, 5 - 9, 28 NOVEMBER, 3, 5, 10 DECEMBER 2007, 29 FEBRUARY 2008

DELIVERED : 9 JULY 2008

FILE NO/S: CIV 2265 of 2006

BETWEEN: COMPUTER ACCOUNTING AND TAX PTY LTD
Plaintiff
AND
PROFESSIONAL SERVICES OF AUSTRALIA PTY LTD
First Defendant
MARTIN PAUL BANNING
Second Defendant

Catchwords:

Action for damages for negligent misstatement, deceit, and misleading or deceptive conduct - Whether misrepresentations or misleading or deceptive conduct - Whether reliance

Damages for acquisition of commercial investment property in reliance on misrepresentations and misleading conduct - Measure of damages for capital loss - Damages for loss of rental income - Damages for loss of investment opportunity - Whether exemplary damages available - Whether interest should be ordered - Whether expert evidence as to value admissible

Legislation:

Fair Trading Act 1982 (WA), s 9, s 10, s 79
Supreme Court Act 1935 (WA), s 32
Trade Practices Act 1974 (Cth), s 51A, s 52, s 75B, s 79, s 82

Result:

Action successful
Judgment for the plaintiff

Category: B

Representation:

Counsel:

Plaintiff:     Mr P Mendelow
First Defendant             :     Mr K J O'Toole
Second Defendant         :     Mr K J O'Toole

Solicitors:

Plaintiff:     Bowen Buchbinder Vilensky
First Defendant             :     O'Toole & Oprandi
Second Defendant         :     O'Toole & Oprandi

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

Akerhielm v De Mare [1959] AC 789
Argy v Blunts & Lane Cove Real Estate Pty Ltd (1990) 26 FCR 112
Atra v Farmers & Graziers Co-op Co Ltd (1986) 5 NSWLR 28
Automasters Australia Pty Ltd v Bruness Pty Ltd [2004] WASCA 229
Banning v Wakka [2007] WADC 17
Bembridge v Just Spectacles Pty Ltd [2006] WASC 185
Bride v Australian Bank (Unreported, WASCA, Library No 960565, 25 September 1996)
Broome Cassell & Co [1972] AC 1027
Commonwealth v Cornwall (2007) 229 CLR 519
Commonwealth v Murray (1988) Aust Torts Reports 80-207
Cotogno v Lamb [No 3] (1986) 5 NSWLR 559
Crystal Auburn Pty Ltd v I L Wollermann Pty Ltd [2004] FCA 821
Davie v Edinburgh Magistrates [1953] SC 34
Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31
Derry v Peek (1889) 14 App Cas 337
Elders Trustee & Executor Co Ltd v E G Reeves Pty Ltd (1987) 78 ALR 193
Frank Davies Pty Ltd v Container Haulage Group Pty Ltd (No 1) (1989) 98 FLR 289
Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1
Gebauer Nominees Pty Ltd v Cole [No 2] [2008] WASCA 41
Gould v Vaggelas (1985) 157 CLR 215
Grincelis v House (2000) 201 CLR 321
Hatt v Magro [2007] WASCA 124; (2007) 34 WAR 256
Henville v Walker [2001] HCA 52; (2001) 206 CLR 459
Houghton v Arms (2006) 225 CLR 553
Humphries v The Queen (1987) 73 ALR 31
Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563
Lamb v Cotogno (1987) 164 CLR 1
Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494
McMahon v Pomeray Pty Ltd [1991] ATPR 52,851
Neilsen v Hempston Holdings Pty Ltd (1986) 65 ALR 302
O'Neill v Medical Benefits Fund of Australia (2002) 122 FCR 455
Pappas v Soulac Pty Ltd (1983) 50 ALR 231
Pine River Pty Ltd v Scorda [2001] WASC 105
Pollack v Volpato [1973] 1 NSWLR 653
Potts v Miller (1940) 64 CLR 282
Pownall v Conlan Management Pty Ltd (1995) 12 WAR 370
Rio Tinto Exploration Pty Ltd v Graphite Holdings Pty Ltd [2007] WASCA 276
Sanders v Glev Franchises Pty Ltd [2002] FCA 1332
Sellars v Adelaide Petroleum NL (1994) 179 CLR 332
Townsend v Roussety & Co (WA) Pty Ltd [2007] WASCA 40; (2007) 33 WAR 321
Wakka v Brewer and Banning, Inquiry No 17 of 2002, REBA, 31 December 2004, 26 April 2005
Wardley Australia Ltd v Western Australia (1972) 175 CLR 514
Whitfeld v De Lauret & Co Ltd (1920) 29 CLR 71
XL Petroleum (NSW) Pty Ltd v Caltex Oil (Australia) Pty Ltd (1985) 155 CLR 448
York v Rowe (Unreported, WASC (Franklyn J), Library No 1865, 12 February 1991)
Yorke v Lucas (1983) 49 ALR 672

SIMMONDS J:

Introduction

This is the trial of an action for damages.
The proceedings (in their current form, in this court) are an action for damages (including aggravated and exemplary damages) in respect of economic loss or damage.
The loss or damage is pleaded to be by conduct in contravention of Trade Practices Act 1974 (Cth) s 52 (TP Act) or Fair Trading Act 1987 (WA) s 10 (FT Act). Those provisions as is well known proscribe engaging in 'conduct' that is 'in trade or commerce … that is misleading or deceptive or is likely to mislead or deceive'. No issue arises in this case as to the satisfaction of the requirements for the possible application of both provisions to the conduct in question.
The loss or damage is also pleaded to be by reason of misrepresentations whose maker was aware or was reckless as to whether or not they were misrepresentations or ought to have been aware they were misrepresentations. These are claims at common law for deceit and negligent misstatement.
The conduct and misrepresentations pleaded are representations by the first defendant for which the second defendant, who was its sole director and secretary, was the maker or in which he was involved (the representations).
The loss or damage pleaded was on the plaintiff's purchase in reliance on the representations of a property in Armadale (the Armadale property) of which the first defendant was the registered proprietor and which at the time of acquisition was leased for a service station and an automotive workshop.
I begin with a description of the proceedings in this court, and outline the basic matters of fact in this case. I briefly review the course of the trial. I then turn to identify the issues between the parties and my findings on each.

The proceedings in this court

These proceedings have their origin in proceedings in the Local Court (the Local Court proceedings). Those proceedings were No 17065 of 2003, commenced by summons 17 September 2003. Those proceedings were a claim by the plaintiff against the defendants for 'loss incurred in the purchase of [the Armadale property] as a result of misleading or deceptive conduct'. The plaintiff was not represented by solicitors at that time. Substituted particulars of claim and amended substituted particulars of claim prepared by solicitors subsequently engaged by the plaintiff were later filed in those proceedings.
By order of 14 November 2005, the proceedings, by then in the Perth Magistrates Court as the relevant Local Court had by then become, were transferred into the District Court. The District Court proceedings were initially CIV 332 of 2004 but became CIV 2797 of 2005. A statement of claim was filed in those proceedings.
Still later, by order made by consent on 17 November 2006, following an unsuccessful attempt to have the proceedings transferred into the Federal Court, the District Court proceedings were transferred into this court, to become CIV 2265 of 2006 (the present proceedings).
The pleadings in the present proceedings comprise a further further re‑amended statement of claim filed on 7 November 2007 was the result of leave to amend that was granted on the second day of the trial (the statement of claim), further amended defence to further re‑amended statement of claim (the defence), and the plaintiff's amended substituted reply, which was the result of leave to substitute granted on the seventh day of the trial (the reply).
The trial was conducted over 12 days, including the final day which was given over to closing submissions. Evidence was given by a number of witnesses over the period 2 November 2007 to 10 December 2007, of whom the principal ones were the following:
•The two directors of the plaintiff who acted for it throughout the events in question in this case: one is Angela Cecilia Theresa Frigger (Mrs Frigger), an accountant by profession and also a registered tax agent, who among other activities between 1984 and 1986 worked for an accounting firm as an insolvency accountant and auditor and between 1986 and 1989 as a small business advisor, and who is currently the secretary and the only accountant employed by the plaintiff and has about 400 clients in her accounting business; the other director of the plaintiff is Hartmut Hubert Josef Frigger (Mr Frigger), a process and commissioning engineer by profession who has worked as an engineer since 1981, and who consults to the plaintiff as a process and commissioning engineer; Mr and Mrs Frigger collectively (the Friggers) have since 1980 owned and rented out a number of residential properties and since 2001 through the plaintiff 'owned' two commercial investment properties, including the property the subject of the present proceedings;
•Martin Paul Banning (Mr Banning or the second defendant), who is the sole director of the first defendant, has been actively involved in the purchase, sale and running of various service station properties, including the property the subject of these proceedings since its acquisition in 2000 until the completion of its sale through the first defendant;
•Cassandra Carina Marklew (Ms Marklew), who worked in the office of the second defendant at times material to these proceedings;
•Mark Edward Penrose (Mr Penrose), who is a qualified motor mechanic and who between 2002 and 2004 conducted a business, Penrose Automotive using a workshop bay at the property the subject of the present proceedings under a lease entered into with the first defendant; and
•Three valuers, all called for the plaintiff (there were no valuers called by the defendants): David Stewart Liggins (Mr Liggins), Jeffrey Allen Spencer (Mr Spencer) and Richard Leigh Holmes (Mr Holmes) who is also an auctioneer.

The initial stage: the advertising of the Armadale property

At all material times the plaintiff was a company duly incorporated and registered in Western Australia under the Corporations Act 2001 (Cth) (Corporations Act). The plaintiff was also at least at some times material to these proceedings the corporate trustee of a superannuation fund for the Friggers. This fund is the Frigger Super Fund.
At all material times the first defendant was a trading or financial corporation or both a trading and a financial corporation incorporated and registered in Western Australia pursuant to the Corporations Act. At all material times the first defendant was the registered proprietor of certain land situated at and known as 269 South Western Highway, Armadale together with certain improvements on that land (the Armadale property). This was the state of affairs until the transfer of the Armadale property to the plaintiff. The land forming part of the Armadale property is Lot 12 on Diagram 73423 being the whole of the land comprised in Certificate of Title Volume 1913 Folio 146.
On or about mid‑February 2003 the first defendant placed advertisements in the 'For Sale' section of The West Australian newspaper for the sale of the Armadale property. Advertisements appeared in issues on 15 February 2003 and 22 February 2003.
A copy of one of the advertisements, in the issue of 22 February 2003, is in evidence (as part of Exhibit 1) and read as follows:
INVESTMENT $695,000

5,000sqm prime hwy posn SOR 50% leased, returning $64,000 pa net, 50% vacant land. 92279481
The Friggers had been searching a suitable investment property for some nine months prior to the time this advertisement appearing. As a result of either first or the second advertisement they contacted the second defendant.
As a result of that contact, on 24 February 2003 the first and second defendants faxed to the plaintiff a document headed 'For Sale Cnr South West Hwy & Dickens Place, Armadale Brief Details' (Exhibit 1, annexure 'ACTF2') (the brief details document) the document reading as follows under that heading:
A modern privately leased BP Service Station/Roadhouse and workshops occupy half the 4,843 sqm corner site with 2 secure leases in place. Both commenced on the 01/07/2001, one for 10 years with a 10 year option with the commencing rental of $40,000.00 pa + GST + outgoings and the other for 5 years with a 5 year option with the commencing rental of $20,000.00 pa + GST + outgoings, both businesses are extremely successful.
The remainder of the site is vacant and the present owners have been advised that the City of Armadale may support a Liquor Store application, although a number of other uses could be considered.
The asking price is extremely reasonable at $695,000.00.
After seeing this advertisement, the Friggers had a number of conversations with the second defendant. The plaintiff says that certain representations were made by the second defendant, some of which repeated elements of the brief details document, and some of which went beyond those elements. One set of those oral representations the plaintiff says was made by the second defendant to Mr Frigger during this period, was that
•the lessees were always punctual with their payment of rent and outgoings;
•all payments were up to date; and
•the Service Station was making a profit on the sale of fuel of $0.08 per litre.
The defendants deny or do not admit any such representations or any of the others the plaintiff relies upon were in fact made.
At the end of February 2003 the Friggers visited the Armadale property to look at it.

The leases of the Armadale property

On or about 10 March 2003 following a conversation between the second defendant and Mr Frigger, the former delivered copies of the leases of the BP Service Station/Roadhouse and of the automotive workshop to the home of the Friggers.
The lease of the BP Service Station/Roadhouse (Exhibit 99 annexure 'HHJF3') named the first defendant as lessor, Northdown Enterprises Pty Ltd (Northdown) as lessee and Mr Rodney William Strid (Mr Strid) and Mrs Mary Helen Strid (Mrs Strid) as guarantors, and had as its date of commencement 1 July 2001. This lease (the Northdown lease) included that:
•the term was 10 years from the date of commencement with an option to renew for 10 years thereafter (the first Northdown option period), and two further options to renew for the same period each (the second Northdown option period and the third Northdown option period);
•monthly rental of $3,333 with provision for increase by 2 1/2% on each anniversary of the date of commencement and with payment of 50% of all variable outgoings including council rates and land tax; and
•the use and occupation of the premises was to be 'only' for the purpose of conducting the business of 'Service Station/Convenience Store/Food'.
The lease of the workshop (Exhibit 99 annexure HHJF4) named the first defendant as lessor and Mr Penrose as lessee and had as its date of commencement 1 July 2001. This lease (the Penrose lease) included that:
•the term was five years from the date of commencement with an option to renew for a period of five years (the first Penrose option period), and two further options to renew for the same period each (the second Penrose option period and the third Penrose option period);
•monthly rental of $1,666.66 with provision for increase by way of rent review to CPI increases on each anniversary of the date of commencement and with payment of 50% of all variable outgoings includings council rates and land tax; and
•the use and occupation of the premises was to be 'only' for the purpose of conducting the business of 'Automotive Repairs'.
On or about 12 March 2003 the plaintiff says that in a telephone conversation between the second defendant and Mr Frigger the former confirmed to the latter that the tenants were up to date with rental and outgoings and punctual with payments. The defendants deny any such confirmation was provided. At a meeting on 13 March 2003 between the second defendant and the Friggers at the Friggers' home at which the former provided contracts for the sale of the Armadale property the second defendant said among other things that the tenants were up to date. On 21 March 2003 the Friggers inspected certain documents relating to the Armadale property at the office of the second defendant, where the plaintiff says the second defendant told them the tenants had paid everything on time and there were no monies outstanding by the tenants. The defendants deny any such representations were made on any of these occasions and refer to conversations on these dates in different terms.

The conclusion of negotiations for the sale and purchase of the Armadale property

Following negotiations between the parties, a price of $665,000 for the Armadale property was arrived at, to be apportioned between the land and improvements. Two contracts were entered into accordingly, both on the form of the Real Institute of Western Australia 'Contract for Sale of Land or Strata Title by Offer and Acceptance' that incorporated the '2000 Joint Form of General Conditions for the Sale of Land'. These contracts were written by the second defendant and on 13 March 2003 he brought them to the home of the Friggers for execution.
By one form of offer and acceptance (Exhibit 1, annexure ACTF3), bearing the signature of Mrs Frigger dated 13 March 2003 and the signature of the second defendant also so dated, 'Computer Accounting and Tax Pty Ltd 29 Gairloch St Applecross' as 'the Purchaser' offered to purchase the 'land situated at and known as BP Service Station and Land', and 'Professional Services of Australia Pty Ltd 9 Lacey Street Perth' as 'the Vendor' accepted the offer to purchase (the land contract). The 'Purchase Price' was stated as $365,000.
By the other form of offer and acceptance (Exhibit 1, annexure ACTF4), bearing the signature of Mrs Frigger dated 13 March 2003 and the signature of the second defendant also so dated, 'Computer Accounting and Tax Pty Ltd 29 Gairloch St Applecross' as 'the Purchaser' offered to purchase the 'land situated at and known as Plant and Equipment Fixtures and Fittings only', and 'Professional Services of Australia Pty Ltd 9 Lacey Street Perth' as 'the Vendor' accepted the offer to purchase (the improvement contract). The 'Purchase Price' was stated as $300,000.
Both the land contract and the improvements contract contained a condition in the following terms:
Vendor to provide all available documentation to purchaser including building & tanks prior to settlement.

The inspection of documents

On 21 March 2003, following a request made by the Friggers of the second defendant to inspect files relating to the Armadale property including the tenants' files, the Friggers inspected a file provided to them at the office of the second defendant. The plaintiffs say that certain documents were not included in that file. Those documents were a letter dated 2 August 2002 from Northdown to the first defendant concerning payment of outstanding water rates and telling the first defendant that Penrose did not have the money to pay his share of those rates; a letter dated 19 February 2003 from the first defendant to Northdown telling it and Penrose of impending legal action against both for unpaid overdue current rates and taxes; a fax dated 24 February 2003 from the first defendant to Northdown calling for payment of 50% of outstanding council rates and charges; and a fax dated 25 February 2003 from Mr Penrose to the first defendant disputing that the rates were payable by him and requesting copies of documents, and annotated by the second defendant to the effect that copies had already been provided and no further time for payment would be allowed. The defendant says all of those documents were in fact provided as part of the file at the inspection, a file which was in fact a quite substantial bundle of documents.

The settlement of the sale of the Armadale property

By a fax sent 2 April 2003 from the first defendant to the plaintiff, the former transmitted a notice that the contracts dated 13 March 2003 were by then unconditional and asked the plaintiff to sign the notice. By a fax sent the same day to the first defendant Mrs Frigger transmitted a signed copy of the notice.

Settlement did not in fact occur until 1 May 2003. Prior to settlement Mrs Frigger sought to arrange through the defendants a meeting with the tenants of the Armadale property and to inspect the fixtures but was unsuccessful. A visit to the site appears to have occurred not long before settlement involving one or both of the Friggers in which there was some exchange with the tenants. There is no common ground as to what occurred in that exchange.
Mrs Frigger acted in the settlement, as part of which she ascertained there were amounts owing to the City of Armadale for unpaid rates on the Armadale property and to the State Revenue for unpaid land taxes, at least.
On 1 May 2003 the second defendant made a request in writing to Mr Penrose that he pay his portion of outstanding rates and land taxes pursuant to the Penrose lease.
On 2 May 2003 the second defendant commenced proceedings in the Local Court against Northdown for payment of its portion of outstanding rates and land taxes pursuant to the Northdown lease.
On 6 May 2003 the plaintiff by a facsimile to the second defendant called for a $20,000 reduction of the purchase price for the acquisition of the Armadale property alleging that prior to settlement the first defendant was in dispute with Northdown in respect of outstanding rates and land tax and alleging also that Mr Penrose had had discussions with the second defendant in April 2003 regarding what he had called the high rent he was paying under the Penrose lease by comparison with the rents payable under comparable leases and the turnover of Penrose Automotive. On the same day the first defendant by a facsimile to Mrs Frigger denied the allegations and among other things referred to an inspection at the company's office at which apart from certain documentation relating to tanks, plans and drawings 'all other information' had been provided in a file made available to the Friggers.
On or about 25 June 2003 the Friggers received a letter from Mr Penrose in which he asked for a reduction in rent and time to pay the July rent.
On 15 July 2003 Mr Frigger by facsimile to Mr Penrose agreed to reduced the rental under the Penrose lease to $1,200 monthly until further notice.
By letter dated 16 July 2003 Mrs Frigger gave Northdown notice of default for not keeping its business open from 10 July 2003.
Following a number of exchanges between the plaintiff and Northdown, by letter dated 31 July 2003 Mrs Frigger gave Northdown notice of repossession and termination of the Northdown lease for failure to remedy the default the subject of the notice of default of 16 July 2003.
By a facsimile of 6 August 2003 Mr Frigger informed Mr Penrose that the reduction of rent under the Penrose lease no longer applied.
By deed of lease dated 15 September 2003 (the Goad lease) the plaintiff 'as trustee for the Frigger Super Fund' granted Goad Resources Pty Ltd a lease of the BP Service Station on the Armadale property. The Goad lease included that
•the term was five years from 15 September 2003 with two options to renew of five years each;
•a monthly rental of $3,700 per calendar month or $44,400 per annum, plus GST with provision for rent review in accordance with CPI increases each year of the lease and by market value in the option year renewals, plus 67% of all variable outgoings including council rates and land taxes; and
•the premises be used solely as a BP service station/convenience shop/lunch bar.
On 15 September 2004 by document headed 'Final Notice' from 'H & A Frigger', payment of rent for October 2004, interest on outstanding amounts, water rates for two quarters, Armadale council rates for one quarter and rent increase for July and August were demanded from Mr Penrose.
On 2 October 2004 the plaintiff issued a notice of recovery of possession to Mr Penrose and commenced an action in the Local Court.
On 2 June 2006, following the repossession of the workshop where Mr Penrose had conducted his business and efforts to re‑lease them, those premises were leased to a Mr Domenic Palumbo trading as Nick Palumbo Auto Repairs. The lease was for a term of seven months from that date with an option to renew for 36 months from 1 January 2007. The rental was $1,110 per month including GST (the Palumbo lease). The Palumbo lease was not renewed. Subsequent efforts to lease the workshop have not been successful.

The issues in this trial

The substantive issues in this trial go to whether there were representations that were false or conduct that was misleading as pleaded, whether there was negligence or fraud for the purposes of liability at common law in negligent misstatement or deceit, who was liable for the conduct in question, was there reliance on that conduct, what loss or damage was suffered thereby, whether aggravated or exemplary damages are recoverable, and whether interest should be awarded as claimed.
Before reaching those issues, I deal with issues of credibility and a preliminary issue having to do with the capacity in which the plaintiff brought these proceedings.

Credibility issues: Mrs Frigger

The credibility of the principal witness for the plaintiff, Mrs Frigger, was strongly contested in the closing submissions for the defendants. Similarly, the credibility of the principal witness for the defendants, Mr Banning, was contested in the closing submissions for the plaintiff. It is necessary at this point that I review and make determinations on those submissions, beginning with the credibility of Mrs Frigger.
With respect to her, there was reliance on five matters. One was what were said to be inconsistencies in evidence she had given by affidavit to this court in these proceedings having to do with the capacity in which the plaintiff brought these proceedings. Another was what was said to be false evidence given under oath to the District Court in CIV 1305 of 2005, being in an affidavit in support of an application to obtain orders for the release of all the documents held by previous solicitors of Mrs Frigger's which related to what became the current proceedings, as well as what was said to be a false application to that court to remit fees, in proceedings that became these ones in this court. Another was what said to be the lodgement by her with the Commissioner for State Taxation of incomplete documentation in connection with the acquisition of the Armadale property thereby attracting, initially, lower stamp duty in respect of that acquisition. Another was what was said to be a failure to discover highly material documents obtained from a solicitor who had previously acted for the plaintiff. And the final one was said to be an application to the bank for funds for the acquisition that was false in material particulars.
I deal with each of these separately, before assessing them in combination together with other matters going to the credibility of Mrs Frigger.
The inconsistency principally relied upon is that between an affidavit sworn 10 April 2007 (Exhibit 68) and that sworn 24 April 2007 (Exhibit 73), both in the present proceedings in opposition to an application for security for costs. In cross‑examination Mrs Frigger's attention was drawn to [14] of the former and [12] of the latter, in relation to which she also referred to [11] of the same affidavit.
Exhibit 68, [14] reads:
The Armadale Property was purchased by the Plaintiff in its own right and not as trustee for the Frigger Super Fund. There was a point in time when the Plaintiff had considered transferring the Armadale Property to the Frigger Super Fund but that transaction did not eventuate. In the preparation of the witness statements of myself and my husband Hartmut Frigger (who is also a director of the Plaintiff) in these and in separate proceedings prior to me engaging solicitors to act on behalf of the Plaintiff, I assumed that the transfer of the Armadale Property to the Frigger Super Fund would still take place and they were prepared on that basis. But no such transfer took place and the Armadale Property is owned by the Plaintiff in its own right as it always has been.
Exhibit 73, [11] and [12] read:
The Armadale Property was initially purchased by the plaintiff in its capacity as trustee for the Super Fund. However, following advice that my husband and I received, in November 2005, it was resolved that the Armadale Property be transferred from the Super Fund to the plaintiff in its own right by way of an undeducted contribution and this was attended to. Consequently, the Armadale Property is no longer owned by the Super Fund but by the plaintiff in its own right. Annexed hereto marked 'ACF6' is a copy of the balance sheet of the Super Fund as at 30 June 2006 which confirms that the Armadale Property is no longer an asset of the Super Fund. Annexed hereto marked 'ACF7' is a copy of the profit and loss statement of the Super Fund for June 2006 which shows that no rental income was earned by the Super Fund in this period.
I crave leave to refer to paragraph 14 of my affidavit in these proceedings sworn 10 April 2007 prepared by my solicitors Bowen Buchbinder Vilensky. In that affidavit it was stated that the Armadale Property was purchased by the plaintiff in its own right and not as trustee for the Super Fund. Due to a misunderstanding that paragraph was prepared by my solicitor contrary to my instructions and is factually incorrect. Due to a lack of time, I read my affidavit sworn 10 April 2007 in a hurry and inadvertently did not notice the error in paragraph 14 in relation to the capacity in which the Armadale Property was purchased by the plaintiff.
Mrs Frigger testified that it was in fact the information in the two paragraphs of the later affidavit that was incorrect. She stated that those paragraphs came about as a result of the pressures she was under at the time arising from the death of her father and the present litigation, and the difficulties for her working with new solicitors (cross‑examination, 7 November 2007, ts 719).
There was other testimony of Mrs Frigger and other evidence as to the capacity in which the plaintiff had acquired the Armadale property. That evidence and other testimony was that the plaintiff had done so as trustee for the Frigger Super Fund or was to a similar effect. I turn to those matters now.
There was evidence given in the action by the plaintiff against Mr Penrose that the plaintiff was claiming as trustee of the Frigger Super Fund (cross‑examination of Mrs Frigger, 7 November 2007, ts 703; 746 ‑ 748 and Exhibit 74).
There was an affidavit of Mrs Frigger, sworn 7 July 2005 and filed in the action by Mrs Frigger against her former solicitor Mr Nigam (Exhibit 54), in which she deposes that the Armadale property 'was purchased in the name of the Company as trustee for the Frigger Super Fund' and annexes the transfer of land form lodged with the Department of Land Administration (ACTF 36 part of Exhibit 1). That transfer shows what appears to be the handwritten addition to the transfer of the words 'as Trustee for Frigger Super Fund', words which are also crossed out. It is common ground the crossing out was at the instance of the Department, on the basis that trusts could not be shown on the transfer. There is another annexure to the affidavit of 7 July 2005, in the form of a letter by Mrs Frigger to the directors of the plaintiff dated 1 September 2003 (Exhibit 54, [3(f)] and attachment 5), where she stated she intended to commence an action against the defendants. This was an action which she said had to be in the company's name as 'the title to the property remains in the Company's name, although the beneficial owner of the property is the Frigger Super Fund and the trustees of the Fund since 1 July 2003 are [the Friggers]'.
There was also the stamp duty assessment in respect of the acquisition of the Armadale property dated 17 June 2003 (Exhibit 1, ACTF 35) on which the 'Parties to Instrument' are shown as the first defendant and 'Frigger Super Fund'.
There were also particulars of claim of 8 November 2004 (Exhibit 65) and amended particulars of claim (Exhibit 67) in Local Court action 16079 of 2004 being the action by Mrs Frigger against Mr Penrose. In those particulars (Exhibit 65, [6] unchanged in Exhibit 67, the latter which was lodged it would seem in relation to the substitution of the plaintiff for Mrs Frigger as plaintiff in that action) there is a statement that the plaintiff 'as trustee of the Frigger Super Fund purchased the [Armadale property] on 1 May 2003 from [the first defendant]'. There was a letter dated 4 October 2004 from Mrs Frigger to Mr Penrose (Exhibit 59) to do with the termination of the Penrose lease, which was signed by Mrs Frigger as 'Trustee of the Frigger Super Fund Owner of [the Armadale property]'.
The Goad lease showed the plaintiff 'as trustee for the Frigger Super Fund' (ACTF 54 to Exhibit 1).
And the proposal for business insurance signed on 13 June 2003 in respect of the Armadale property (Exhibit 76) was put in the name 'Computer Accounting & Tax Pty Ltd as Trustee for Frigger Super Fund'.
There was also evidence from Mrs Frigger in cross‑examination (7 November 2007, ts 663) that she might have told the valuer Mr Spencer, apparently at the time of instructing him to prepare what became the valuation report for the Armadale property dated 31 March 2005 (Exhibit 104), that 'the property was a good super fund investment'. In the document 'Plaintiffs' Submissions on Law' dated 23 April 2004 in the Local Court proceedings in No 017065 of 2003 which eventually became the present proceedings, submissions Mrs Frigger agreed she had made (cross‑examination, 5 November 2007, ts 505), she said:
The Plaintiffs were looking to invest superannuation funds in a safe commercial property that would pay a reliable income in the long term.
The 'Plaintiffs' at that time were the plaintiff and the Friggers.
Apart from the affidavit of Mrs Frigger of 10 April 2007, the principal evidence that the plaintiff acquired the Armadale property in its own right appears to be evidence from Mrs Frigger as to the restriction on borrowing by superannuation funds and evidence of the financial statements of the Frigger Super Fund at the time and following the acquisition of the Armadale property.
As to the matter of borrowing, the funds for the acquisition of the Armadale property had been borrowed by the Friggers from BankWest. Those funds had in turn been lent by them to the plaintiff. With respect to that on-lending, I note the following from the cross‑examination of Mrs Frigger (5 November 2007, ts 492 ‑ 493):
In paragraph 25 of your witness statement you say, and this is exhibit 1, in the first sentence:
We intended to purchase the property in a similar way to the purchase of the Edward Street property, to take advantage of substantial tax benefits for small businesses, especially capital gains tax discounts on property purchases. This was the main reason why the Armadale property was purchased by CAT in its own right?
---That's correct.
What tax benefits?---Capital gains tax do you mean or normal?
What tax benefits was this purchase going to generate for you?---The interest on the loan was a tax deduction, the depreciation on the buildings was a tax deduction and if we sold the properties, then there's certain ways that you can discount total capital gains if you reinvest the money in another property or another investment or if you roll over the capital gain into a superannuation fund, so those are the kinds of tax benefits I was talking about.
In fact, you go on to say that this was the main reason why the Armadale property was purchased by CAT in its own right?---Correct.
What were the other reasons?---There was no other reason why CAT purchased it in its own right. It was for tax reasons basically, yes, and, sorry, we also wanted to be paid back the money that we had borrowed, so we wanted CAT to pay us back the money.
Do you mean to say in that paragraph that it would not have been as advantageous for the property to have been purchased by Computer Accounting and Tax in its capacity as trustee of the Frigger Super Fund?---No, they are similar types of benefits; for instance, deductions for depreciation, certainly capital gains tax benefits in a superannuation fund, so the benefits between the two are very similar. The main reason for purchasing it specifically in CAT was to get the interest in the deduction which you don't get in the Frigger Super Fund because the super fund is not allowed to borrow.
As to the financial statements of the Frigger Super Fund for the relevant periods, I note the following cross‑examination of Mrs Frigger in which she was asked to confirm she had argued in the past that the transfer of land form for the Armadale property showed the plaintiff had acquired the property in its capacity as trustee (6 November 2007 ts 669 ‑ 670):
It's a very difficult question for me because this has been a huge job, as I say, almost from the day of settlement. I can only say, when I look back now at the last four and a half years, what our intentions were when we bought it. We bought it in the name of the company for those reasons I have already said. We could get the interest as a tax deduction and then the loan would be repaid to us - when I say "us", my husband and I - and then we were going to transfer it as an (indistinct) transfer to the Frigger Super Fund. All along that has always been our position, until about the end 2005 when eventually I had what I would consider to be adequate legal representation, and that's the time when I sat down with my solicitor - am I allowed to continue?
SIMMONDS J: You can continue to answer the question, yes?---I understood then the significance of the capacity et cetera, et cetera and at that stage is when I decided I'm not going to get the Frigger Super Fund involved at all in this matter. It started in the company's name; it's going to stay in the company's name. Then when I looked back to see how I had treated the transaction in the financial records I had done everything in the name of the company and so I said, "Well, I don't even have to do anything as far as that is concerned because it has been declared." The income had been declared as the company's income, the depreciation was in the company's tax return. Rates and taxes, any kinds of expenses that I had incurred had all been in the company and so by luck or I don't know what it is, it just had not happened as an asset of the Frigger Super Fund and I actually didn't have to do anything, to reverse any transactions or do anything of the sort. Looking back now it is very easy for me to see a very clear picture of it but during those months from 2003, 2004, 2005 it was very hard.
The financial statements are for the periods 1 July to 30 June in each of 2002/2003, 2003/2004 and 2004/2005. For the Frigger Super Fund they form parts of the audited fund income tax and regulatory return and computer generated fund income tax and regulatory returns for those periods (Exhibits 85 ‑ 87). For the plaintiff they form parts of its tax returns returned from the Australian Taxation Office and the plaintiff's copies (Exhibits 89 ‑ 91).
Much was made in the cross‑examination of Mrs Frigger about missing pages from the audited returns compared with the computer generated documents in respect of the Frigger Super Fund (7 November 2007, ts 765 773) as well as different numbers shown in at least some of them. Her explanation was that the computer generated documents' pages included pages for calculations not part of the audited return. It was not made clear to me how these differences meant these statements should not be taken at face value. Rather, the explanation for the differences appears to me to be one that was both plausible and not shaken.
There are no entries in the balance sheets for the Frigger Super Fund corresponding to the Armadale property. However, there are entries in the balance sheets for the plaintiff of 'BP Service Station Armadale'. This of course is consistent with the testimony of Mrs Frigger last quoted.

It was put to me that the financial statements, which were prepared by Mrs Frigger, should not be taken at face value. The submission to me was that she had shown a capacity to prepare financial records 'to suit a purpose'. Reliance was placed on two matters.
One matter was a balance sheet prepared for the plaintiff as at 30 June 2005 a copy of which was annexed to an affidavit of Mrs Frigger sworn 27 June 2005 in District Court No 1305 of 2005 (Exhibit 54), the action by Mrs Frigger against Mr Nigam. The purpose of this affidavit was apparently to show why Mrs Frigger, who was representing herself, had begun the action relating to the acquisition of the Armadale property in her own name when the Armadale property had been acquired in the name of the plaintiff. Part of that reason was that, as the balance sheet was meant to show, the plaintiff was 'technically insolvent' and under the Corporations Act 2001 (WA) a company might 'not incur debts', presumably such as debts in bringing litigation, while it was 'insolvent' (Exhibit 54, [3(e)]).
A copy of the same balance sheet was also attached to a letter dated 30 June 2005 to 'The Registrar' of the District Court (Exhibit 72) from Mrs Frigger in which she applied to remit fees in District Court CIV 332 of 2004, the action which ultimately became the present proceedings. This balance sheet showed as the only significant asset of the plaintiff '269 S W H'wy Armadale'. The purpose of attaching the balance sheet was to show that the application should be granted as the plaintiff had incurred losses 'from the claims in this matter' and 'the balance sheet of the company shows negative equity … resulting from this matter'.
Mrs Frigger acknowledged in cross‑examination (7 November 2007, ts 726), when asked to compare that balance sheet with a copy of the balance sheet forming part of Exhibit 91, that the latter had 'a great deal more in it' including a further holding of real estate at Edward Street, Perth, but going beyond that holding. She earlier testified in cross‑examination (7 November 2007, ts 671) that
Is that a correct statement of the financial affairs of the company as of June 2005?---Well, it doesn't include the property at 140 Edward Street, Perth so it does not state the full picture. It is part of the picture.
Why doesn't it include a major asset, namely, the Edward Street property?‑‑‑At the time, as I said, I was unrepresented and I believed that I was showing a picture of the company only in regard to this property that was the subject of this dispute. Looking back now, I can see that that was probably not the right thing to do but at the time I thought that was the whole issue of the argument, that was where the company was at with this particular asset and that's how I showed it. I have no explanation for it. When I look back now I know that was not the correct thing to do but when I did it I thought it was correct.
She further acknowledged in cross‑examination (7 November 2007 ts 673) that when in her affidavit (Exhibit 54, [3(e)]) she stated the plaintiff 'is technically insolvent based on the valuations of the subject property by Stuart Paterson and Jeff Spencer' she had meant to refer not to the 'entire company' but to the Armadale property. She added that the District Court judge before whom she appeared indicated to her he did not understand her to mean what the words 'technically insolvent' said.
She further acknowledged in cross‑examination (7 November 2007, ts 728) that in the application to remit fees (Exhibit 72, Form 2) she had included that the balance sheet showed 'negative equity'. She added that the words 'resulting from this matter' also appeared in that passage.
I find it difficult to understand how an accountant such as Mrs Frigger, who has been a Certified Public Accountant since 1985 and who acknowledged having at the time of the trial an accounting practice with 400 clients, would present balance sheets like those annexed to the affidavit and attached to the application (cross‑examination, 7 November 2007, ts 673), in that form for any purpose. At the same time I note her further testimony about those documents when she acknowledged her understanding at the time of the purposes for the descriptions of the financial position of the plaintiff she provided.
In my view, the balance sheets annexed to her affidavit and attached to her application do not, when that testimony is considered with the manner of its presentation before me, show me that I should conclude she prepared the balance sheets for the Frigger Super Fund and the plaintiff forming part of Exhibits 85 ‑ 91 so as to conceal the fact that the plaintiff had acquired the Armadale property as trustee for the Frigger Super Fund rather than in its own right. The only purpose for such concealment that might be suggested on the evidence before me would be to claim a deduction for interest on borrowed funds by way of evasion of the limitation that a superannuation fund is 'not allowed to borrow' to finance the acquisition of fund assets. Such a purpose was not put to Mrs Frigger. In any event her testimony is clear and plausible in explaining that the Friggers had structured the acquisition of the Armadale property as one by the plaintiff in its own right so as to permit the deduction of interest, but on the basis that the property would subsequently be transferred into the Frigger Super Fund. The reason given by Mrs Frigger in her testimony before me for the description of the effect of the transaction in the affidavit of 24 April 2007, in terms of her confusion between what was done and what was ultimately to be done, is in my view a believable one when account is taken of that explanation. It is one that on all the evidence I believe.
This takes me to the matters of false evidence under oath to the District Court in CIV 1305 of 2005, being in an affidavit in support of an application to obtain orders for the release of all the documents held by previous solicitors of Mrs Frigger's which related to the current proceedings, as well as what was said to be a false application to that court to remit fees, in proceedings that became these ones in this court. I have already dealt with these matters.
I turn then to the matter of the lodgement by Mrs Frigger with the Commissioner for State Taxation of incomplete documentation in connection with the acquisition of the Armadale property. For the defendants there was reliance on the later re‑assessment to stamp duty with a penalty of both the land contract and the improvements contract. That penalty was subsequently reduced. The re‑assessment itself was after only the land contract had been assessed to stamp duty. I was referred to a document obtained under cover of a letter dated 11 July 2007 in a notice of decision under the Freedom of Information Act 1992 (WA) also dated 11 July 2007 in which it was stated only the land contract was lodged for stamping at the Office of State Revenue (Exhibit 139, supplementary witness statement of Mr Banning dated 27 November 2007, 'MPB27' and 'MPB28', 1).
However, Mrs Frigger gave evidence she had provided both documents to the Office of State Revenue for assessment to stamp duty in June 2003 (Exhibit 1, [107]; cross‑examination, 7 November 2007, ts 659). The notice of decision was not put to her, notwithstanding the date on which it was sent to the second defendant; however, in cross‑examination it was put to her she had only provided the land contract for assessment (7 November 2007, ts 659), a proposition she rejected. I also note the condition on both the land contract and the improvements contract indicating that each was subject to the simultaneous and successful settlement of what on the evidence before me was the other contract (see cross‑examination of Mrs Frigger, 7 November 2007, ts 660, 662) 'annexed hereto'. She testified that officers of the 'State Revenue Department' who had visited her to show her the two contracts had said that such a clause was never used for two contracts forming parts of the same transaction. However, it was not put to her she had attempted thereby to mislead those responsible for the assessment to stamp duty in respect of the transaction. In view of the evidence as to the terms of the condition, I am unable to conclude that Mrs Frigger's credibility is called into question by what she did, or did not, lodge for assessment of stamp duty.
I turn now to the matter of what for the defendants was put to me as the failure to discover highly material documents obtained from a solicitor who had previously acted for the plaintiff under subpoena. These were documents obtained from the firm of the solicitor a Mr Nigam who had previously acted for the plaintiff in relation to proceedings (District Court CIV 1305 of 2005) that became the present proceedings. It was put to me there was no explanation proffered for this omission.
However, as I understand the cross‑examination of Mrs Frigger, when it was put to her she had failed to produce all of her documents to her solicitors for them to make a decision and advise her on what she had to discover in the present proceedings, and reference was made to the affidavit in her proceedings against Mr Nigam of 27 June 2005, she provided an explanation. She said (7 November 2007, ts 666):
I genuinely didn't believe that anything that happened between Mr Nigam and I had anything to do with these matters.
While it is not altogether clear from that passage that she is providing an explanation as to all of the documents held by Mr Nigam obtained from him under subpoena for the purposes of these proceedings, I consider the question would have led her to understand that was what she was being asked to deal with. Thus, I do not consider she has failed to provide an explanation. Nor do I consider that the explanation she has provided is so implausible as to go to her credibility.
I turn now to the final matter put to me for the defendants as to the credibility of Mrs Frigger. That was the matter of an application to BankWest for finance for the acquisition of the Armadale property. That application (Exhibit 50) showed the purpose of the finance to be refinancing and home improvements and listed as an asset held by the Friggers the Armadale property while also showing them deriving rental income from it. There was also what appeared to be correspondence, signed by Mrs Frigger from 2002 and referring to rent from the Armadale property, on the file from BankWest concerning the finance which was ultimately provided (Exhibit 52).
In her cross‑examination Mrs Frigger acknowledged having signed the loan application (Exhibit 50 and 7 November 2007 ts 641) and that the information was provided by the Friggers. However, I note the date of the application (19 March 2003) was after the date of the land contract and the improvement contract, and the matters of the relevance of that fact, and of whether or not any part of the finance was intended by her to be used for housing purposes, was not explored with her in cross‑examination. She also denied telling the bank the Armadale property was owned by the plaintiff (6 November 2007, ts 655). Further, her evidence that she did not recognise the 2002 documents (6 November 2007 ts 653) was not explored with her.
On that evidence, I do not consider I should conclude on that account that Mrs Frigger's credibility on other matters should be doubted.
I have asked myself whether or not, considering the previous matters in combination, I should conclude that I should doubt the credibility of Mrs Frigger, at least on matters material to me where there is a difference in the evidence between hers and that opposed to hers. I have concluded I should not. This does not mean I should believe her evidence in each such case, however. I consider that depends on an evaluation of the evidence in each case.
However, it is appropriate I indicate my conclusion on the capacity in which the plaintiff acquired the Armadale property. That is because in my view the submissions on the credibility of Mrs Frigger required me to evaluate all of the evidence put to me on that issue.
I have concluded that the plaintiff acquired the Armadale property in its own right and not in its capacity as trustee for the Frigger Super Fund. While there is undoubtedly conflict in the evidence in relation to that matter, including the evidence from Mrs Frigger herself, I consider that the weight of the evidence supports the conclusion I have reached. I particularly rely on the explanation for having the plaintiff acquire the property in its own right in terms of the borrowing considerations, and the potential for confusion engendered by the intention not long after that acquisition to have the plaintiff transfer the property into the Frigger Super Fund. It is common ground that no such intention was ever fulfilled.

Credibility issues: Mr Banning

With respect to Mr Banning, it was put to me for the plaintiffs I should take account of five matters. One was findings by the Real Estate and Business Agents Supervisory Board, and both the District Court and this court, that (as it was put to me) were adverse to his credibility in matters such as these. Another was what appears to have been put to me as a misstatement on a matter not otherwise material in these proceedings, one that Mr Banning had in effect admitted he had made. Another matter was what was put to me as indications by Mr Banning in his cross‑examination that he suffered from selective memory loss. Still another matter was inconsistencies in his evidence on material issues. And the final matter was what was said to be the inconsistency between his evidence at least at material points with most of the contemporaneous documentation in evidence before me.
I believe I can defer consideration of the last two matters. They go to issues with respect to which I make findings below.
As to the first matter, Mr Banning was cross‑examined on whether he recalled findings in two sets of proceedings (5 December 2007, ts 1162 ‑ 1174). One was before the Real Estate and Business Agents Supervisory Board, Wakka v Brewer and Banning, Inquiry No 17 of 2002, REBA, 31 December 2004, 26 April 2005, appeal dismissed except as to penalty sub nom Banning v Wakka [2007] WADC 17. The other was York v Rowe (Unreported, WASC (Franklyn J), Library No 1865, 12 February 1991). The findings in the first which Mr Banning in my view admitted he recalled having been made but also said were under appeal in this court were of being dishonestly a party to the re‑documenting of certain sale transactions in at least one respect. Findings in the second which were put to Mr Banning were that he had been a party to the giving of certain evidence in the proceedings that was untruthful. Mr Banning testified he did not recall that evidence.
I permitted this line of questioning over the objection of counsel for the defendants, on the basis I would rule on the admissibility of the evidence at the conclusion of the proceedings. I also permitted the two decisions of the Board to be given an MFI number (171) so that their admissibility could be considered at the same time.
I incline to the view, on Humphries v The Queen (1987) 73 ALR 31, 35 - 36 (Fox J), 36 (Forster J) (although see 45 (Kelly J)), and Heydon J D, Cross on Evidence (7th Aust ed, 2004) [19015] and [19030], that the questions should not have been asked, and thus the answers were inadmissible. In any event, I am of the view the answers should have no or no significant weight in my deliberations. They do not represent frequent findings that evidence of Mr Banning, whether in proceedings such as these, or more generally, has been disbelieved by courts or tribunals. They represent at most findings for two occasions only. Further, it is not clear to me that the full context of the findings was put to Mr Banning: see Humphries 45 (Kelly J). Finally, the findings by the Board are the subject of appeal in this court.
It follows in my view that no assistance is to be gained from MFI171, whether as an exhibit (which I would not be inclined to allow it to be), or (as the plaintiff put it to me) a public document. The same would apply to York. The matter in both is entitled to no or no significant weight in my deliberations.
This takes me to the matter of what was put to me as a misstatement on a matter not otherwise material in these proceedings that Mr Banning had in effect admitted he had made to the Friggers.
The matter was put to me in this way. After the delivery to the Friggers on 10 March 2003 of the Northdown Lease and the Penrose Lease Mr Frigger had telephoned Mr Banning to inquire if an offer for the Armadale property at $650,000 was acceptable. Mr Banning had responded that he could not accept the offer until he had discussed it 'with his partners' (Exhibit 1, witness statement of Mrs Frigger, [43]). In his cross‑examination, Mr Banning had acknowledged he was the sole director of the first defendant at least at the time of discussing with the Strids, the owners of Northdown, the adding of a room for café facilities at the service station on the Armadale property (3 December 2007, ts 1006). It was put to me as I understood this submission that, when he admitted the reference to 'we' in his testimony 'we will go ahead with the room providing you do such-and-such' was to the company, he was conceding he had no partners.
However, I do not find any such concession clearly made. Nor was I directed to any other testimony in which the matter was squarely put to Mr Banning. The matter of whether or not Mr Banning had others involved in the business of the first defendant whom he might have considered his 'partners' was simply not in evidence before me other than in the passage from the witness statement of Mrs Frigger I have referred to. While I consider that evidence sufficiently establishes an identification between the second defendant and the business of the first defendant, to the extent at least of showing his actual authority to act in that business as he did, I consider the present submission fails at the outset.
This takes me to the matter of what were put to me as indications by Mr Banning in his cross‑examination that he suffered from selective memory loss. Two examples were put to me.
One related to his testimony as to the contents of the file or folder of documents relating to the Armadale property that was provided to the Friggers for their inspection on 21 March 2003. I will consider that testimony later in these reasons, in relation to the issue of reliance on the representations and other conduct in this case.
The other related to what he could remember of the decision in York. He admitted in cross‑examination that, while he could not remember the references in the reasons of Franklyn J to untruths he had been responsible for and to his deliberate collusion with another he could remember other parts of the judgment. What he could remember was not explored in cross‑examination.
The judgment had been delivered about 16 years previously. Mr Banning had earlier testified he had not read the judgment.
In those circumstances, I do not consider the evidence of partial recollection of the contents of the judgment has a significant bearing on Mr Banning's credibility.

The identity of the plaintiff

The factual issue and legal significance of the capacity in which the plaintiff acted in the acquisition of the Armadale property was strongly contested during these proceedings. The resolution of the issue for which the defendants contended was put to me by their counsel as being fatal to the present proceedings.
The plaintiff contended that the evidence established it acquired the Armadale property in its own right. However, on the second day of the trial, 5 November 2007, the plaintiff sought and I granted (for the reasons appearing in 5 November 2007, ts 441 - 443) leave to amend the statement of claim to refer to it suing in its own capacity 'or, alternatively, in its capacity as trustee of the Frigger Superannuation Fund'. This followed amendments to the defence by leave granted in October 2007 to plead that the plaintiff had acted in the acquisition as trustee for the Frigger Super Fund.

The defendants contended that the evidence established that the plaintiff's action in the acquisition of the Armadale property was not in its own right but in its capacity as trustee for the Frigger Super Fund, and that subsequently but before the commencement of the present proceedings the plaintiff ceased to be a trustee for the Frigger Super Fund, being replaced as trustee by the Friggers. On 17 September 2003 the present proceedings had been commenced in the then Local Court of Western Australia showing as plaintiffs the present plaintiff and the Friggers. On 9 July 2004 an order was made in the Local Court granting leave for the Friggers to have themselves removed as plaintiffs in the proceedings. In November 2005 they ceased to be trustees of the Frigger Super Fund being replaced by the plaintiff, it having been intended that the plaintiff was 'reinstated retrospectively' to 1 July 2003 (cross‑examination of Mrs Frigger, 7 November 2007, ts 725).
The legal significance of the earlier cessation, the defendants said, was that the plaintiff could not thereafter bring an action in its own right because it held the Armadale property in trust as trustee and suffered no loss, while (in any event, it would seem) it could not sue as trustee because of that cessation. I took it that the defendants further submitted the later cessation with intended retrospective effect could not overcome this latter problem.
Nor, the defendants contended, could the Friggers, as the replacement trustees, be substituted as plaintiffs, as the relevant limitation period for liability under the state statute at least (three years after the date the cause of action accrued: FT Act s 79(2)) had expired. I note, however, that no application for substitution or re-instatement of the Friggers as plaintiffs was ever made to me. Also, it was not clear to me why there could be the same objection to any such application as regards the other causes of action, at common law (six years after the cause of action accrued: Limitation Act 1935 (WA) s 38(1)(c)) at least. As regards the federal statute, in closing submissions the defendants contended that the plaintiff had 'not pleaded the [TP Act] for specific reasons' (for which the limitation period is also 6 years after the cause of action accrued: TP Act s 82(2)). However, not only had the plaintiff pleaded the TP Act (see further further re‑amended statement of claim, prayer for relief, b)), but the passage in the opening submissions of counsel for the plaintiff on which the defendant relied (2 November 2007, ts 361 ‑ 362) in my view offers no support for any contention that the plaintiff was making no such claim, or abandoning one previously made, against both defendants.
More fundamentally, however, I consider that, even if the defendant's factual contentions were upheld (and I have already indicated the reasons for my conclusion that they should not be upheld), the capacity in which the plaintiff acquired the Armadale property, whether in its own right or as trustee for the Frigger Super Fund, is not a matter which affects any right to relief which it otherwise has in the present proceedings as against the defendants. That is because trustees are not at common law recognised as having separate legal personality from themselves in a personal capacity: Elders Trustee & Executor Co Ltd v E G Reeves Pty Ltd (1987) 78 ALR 193, 253 (Gummow J) and authorities there cited, aff'd (1988) 84 ALR 734.
Elders Trustee & Executor Co Ltd was recently applied in this court in Gebauer Nominees Pty Ltd v Cole [No 2] [2008] WASCA 41, [50] (Steytler P, McLure JA and Newnes AJA). In Gebauer the claimant in an arbitration was initially described as 'The Hotrox Charcoal Unit Trust', which early in the arbitration was amended to 'Hotrox Charcoal Company'. The claim was for loss caused by breaches of obligations in a lease which named 'Hot Rox [sic] Charcoal Company' ([48]) as lessee and which was signed for the lessee by two individuals, a Mr Cole and a Mr Mullally, in whose names 'The Hotrox Charcoal Company' was registered as a business name. After making a determination as to liability, and as part of an interim award, the arbitrator gave leave to amend the name of the claimant to 'Gerhard Joseph Cole as trustee for The Hotrox Charcoal Unit Trust trading as Hotrox Charcoal Company'. An affidavit of Mr Cole had been provided to the arbitrator in which Mr Cole deposed that Mr Mullally had resigned as a trustee, leaving Mr Cole as sole trustee. The arbitrator also refused an application by the respondent Gebauer to add Mr Mullally as a party. On an application to this court for leave to appeal against the interim award on a question of law the primary judge ordered (Steytler P, McLure JA and Newnes AJA)
so far as relevant for present purposes, that the interim award amending the name of the claimant in the arbitration proceedings be set aside and the issue of the identity of the claimant and the costs of the application to amend the name of the claimant be remitted to the arbitrator for further consideration and determination [27].
Relevantly for my purposes the Court of Appeal determined that the primary judge had erred
in concluding that in order to determine the application to amend the description of the claimant it was first necessary for the arbitrator to find whether the lessee was Messrs Cole and Mullally or The Hotrox Charcoal Unit Trust. The Trust is not an available alternative because, not being a separate legal entity, it cannot be a party to a contract [55].
The basis for this conclusion appears from the judgment of the court as follows ([49] ‑ [52]) where, after referring to the description of the lessee, the signature of the lease by Messrs Cole and Mullally and the registration of the name 'The Hotrox Charcoal Company' in their names, the court went on:
Mr Cole, however, says that the business name was owned by himself and Mr Mullally as trustees for The Hotrox Charcoal Unit Trust. That is immaterial. It is clear that a trust is not a separate legal entity, so a trustee cannot contract as agent for a trust. As it is not a separate legal entity, The Hotrox Charcoal Unit Trust could not be a party to the lease.
It is also immaterial whether or not Messrs Cole and Mullally entered into the lease as trustees. Trustees are not distinct legal persons in a representative capacity, separate from themselves in a personal capacity. As Gummow J explained in Elders Trustee & Executor … 253, it is fundamental that the common law does not recognise a trustee as having assumed an additional or qualified legal personality.
This means that in the ordinary course the personal liability of a trustee in respect of contracts he or she enters into in the course of the performance of the trust is not limited or qualified: Octavo Investments Pty Ltd v Knight(1979) 144 CLR 360, 367, Re Johnson (1880) 15 Ch D 548, 552.
Of course, while a trustee is personally liable on any contract which he or she enters into as trustee, the law does permit a trustee to contract with a third party on the basis that the trustee's personal liability is limited - for example, to the extent of their right to indemnity from the trust funds - but clear words are necessary to limit what is prima facie the unlimited personal liability of a trustee. A trustee's liability will not be limited to his or her right to indemnity from the trust funds simply because the other contracting party knew the person was a trustee; nor will a statement that a person contracts 'as trustee' be sufficient to exclude full personal liability: Helvetic Investment Corporation Pty Ltd v Knight (1984) 9 ACLR 773. There must be evident a clear intention of the parties that the liability of the trustee is to be limited: see Ford & Lee, Principles of the Law of Trusts (3rd ed, 1996) [14010].
I should note that, as in Gebauer, no question of the last kind arises in this case.
The court then went on to deal with a further matter, as follows ([56]) (emphasis added):
There is a further matter that arose on the hearing of the appeal. The respondent accepts that the arbitrator erred in ordering that Mr Cole as trustee for The Hotrox Charcoal Unit Trust be substituted as the claimant. Gebauer accepts that the proper claimants are Messrs Cole and Mullally. The respondent [the claimant in the arbitration] also accepts that the proper claimants are Messrs Cole and Mullally but wants the matter referred back to the arbitrator for him to determine whether the proper claimant is those gentlemen in their capacity as trustees of The Hotrox Charcoal Unit Trust. A technical difficulty for the respondent is that there was no relevant amendment application before the arbitrator or the primary judge. A more significant consideration is the potential for the parties to waste further time and money arguing about whether the proper claimants are Messrs Cole and Mullally or Messrs Cole and Mullally as trustees of The Hotrox Charcoal Unit Trust. That would be a sterile debate. The absence of any reference to the lessee's capacity as trustee in the name of the party would not prevent the respondent (claimant) from proving in the damages claim that the lease was trust property as would be the damages flowing from the breach.
In the face of these authorities I am of the view that it matters not for my purposes whether the plaintiff acted in the acquisition of the Armadale property, and brings the present proceedings, in its own right, or as trustee for the Frigger Super Fund. Further, if the plaintiff did so act in the latter capacity, it does not matter whether or not the plaintiff ceased to be the trustee for the Frigger Super Fund at the date referred to. That is apart from the fact there is no evidence title to the Armadale property was ever transferred from the plaintiff to any one else, and there is no contention by the defendants that it had been. That is because, if the plaintiff acted in the purchase, including on the subsequent representations as pleaded by the plaintiff, as the trustee of the Frigger Super Fund, it seems to me, on Gebauer, any resultant causes of action would be held by the plaintiff for the benefit of the Frigger Super Fund.
These views are subject to a further point I reach at the end of this section of my reasons.
I consider that the two authorities on which the defendants relied for a different conclusion do not in fact lead to such a conclusion. Indeed I read the first as supporting the conclusion I have reached.
Bride v Australian Bank (Unreported, WASCA, Library No 960565, 25 September 1996) concerned an appeal against the refusal by a master of leave to amend statements of claim, which pleaded claims by the plaintiffs in their capacities as trustees for a business, to plead in the alternative that the plaintiffs claimed as the partners in that business. The claims arose out of the enforcement of security agreements entered into by the plaintiffs. The appeal failed.
However, the court disagreed with the master who had concluded that the amendment was one to introduce a new party and thus one to which Rules of the Supreme Court O 18 r 6 applied. Rather the amendment was one to alter the capacity in which the plaintiffs sued: 7, (Heenan J, with whose judgment Wallwork and Franklyn JJ agreed). This was an amendment to which O 21 r 5(4) read with r 5(2) applied. The former is for amendments to alter the capacity in which the plaintiff sues 'if the capacity in which, if the amendment is made, the party will sue is one in which at the date of issue of the writ or the making of the counterclaim, as the case may be, he might have sued'. The latter states:
Where an application to the Court for leave to make the amendment mentioned in paragraph (3), (4) or (5) is made after any relevant period of limitation current at the date of issue of the writ has expired, the Court may nevertheless grant such leave in the circumstances mentioned in that paragraph if it thinks it just to do so.
The court concluded that the appeal should be dismissed on the basis that the plaintiffs were bankrupt as at the date of the issue of the writ, with the effect under Bankruptcy Act 1966 (Cth) s 58 that the relevant causes of action had vested in their trustee in bankruptcy and remained so notwithstanding their subsequent discharge from bankruptcy. There had been an assignment of those causes of action to the plaintiffs in January 1995; however, it was not contended the assignment had retrospective effect. Thus the plaintiffs could not have sued in their personal capacity at the earlier date (9).
The plaintiff in this case was not in an equivalent position. Indeed I note the following, from the judgment of Heenan J (10 – 11):
In general terms, it is highly desirable that the Court make orders to ensure, as is stated in O18 r6(2)(b) that all matters in dispute in the cause or matter may be effectually and completely determined. If the respondents or any of them have been guilty of misconduct such as that alleged in the statements of claim, it is in the interests of justice that they be made to account for such conduct. To that end, the precise identity of the plaintiffs and of the capacity in which they sue is irrelevant. However, the plain fact is that when they issued the writ the appellants were not entitled to sue in their personal capacity. Their obtaining of the deed of assignment in January 1995 has not cured that fundamental defect. The question as to whether it is just to grant the leave sought does not arise in this case.
The last matter does not arise at this point in the case in any event. Counsel for the defendants put the argument on the present issue in the terms I have previously indicated. However, in relation to those terms, I have already dealt with the matter of whether or not a trustee who as trustee enters into a contract can be said to suffer loss from such entry, and whether or not any change in trustee affected the claim the plaintiff might make.
The other authority cited by the defendant is Henville v Walker [2001] HCA 52; (2001) 206 CLR 459 [6] (Gleeson CJ). There the action the subject of the appeal in that case, which included a claim for damages under TP Act s 82 for a contravention of s 52 of that Act, was brought by Mr Henville for himself and as trustee for the Henville Property Trust, as first and second plaintiffs, who became in the subsequent proceedings first and second respondents and first and second appellants, respectively. His Honour noted that throughout the trial and appeal proceedings the difference between the two such parties had been treated by all concerned as 'immaterial', which treatment he referred to as follows ([6], footnote omitted):
This, no doubt, was convenient. I will do the same. But it might have masked a possible issue that was never litigated. There was no claim for contribution by the respondents against the first appellant, upon the basis he owed a duty to the trust, and was therefore under a coordinate liability. I express no opinion as to whether such a claim would have been available. The possibility was not the subject of argument in this court.
There was no question raised in this case of any claim for contribution between the defendants and the plaintiff in any capacity.
I agree that the quoted passage is a strong indication that a difference in the capacity in which the plaintiff sues might be material. However, I do not consider it is material in the respects the defendants contend in this case to be fatal to the present action.
However, it seems to me that the matter of the capacity in which the plaintiff acted in the acquisition of the Armadale property is at least potentially relevant in these proceedings in two other respects.
One is evidentiary, as going to the credibility of Mrs Frigger. I have rehearsed that evidentiary relevance above.
The other is the bearing of the capacity in which the plaintiff so acted on the losses it claims. It is not in question that the plaintiff borrowed the funds required for the purchase of the Armadale property, nor that superannuation funds are not permitted to borrow to acquire fund assets. I have already considered those matters in connection with my determinations as to credibility. However, I note that the plaintiff has pleaded losses arising out of the loss of an opportunity to make alternative investments. If in fact at all material times it was unable to make those latter investments because of the restriction just described, no such losses could be recovered, as I will explain in the context of a similar point below. However, as I have determined that the plaintiff did not acquire the Armadale property in its capacity as trustee, I do not consider the question arises in this case.

Were representations made or was there conduct capable of being misleading or deceptive?

I begin by noting that as to a number of the representations and forms of conduct below it was put to me by the defendants that they, or the meaning of them contended for, were not sufficiently pleaded. I disagree. All of those representations and forms of conduct, and meanings, were in my view sufficiently (if not always elegantly) pleaded: see further further re‑amended statement of claim [6] - [10A] and 16, read with [30] - [39] and [41] - [44].
I also note that the case as fought before me and as put to me by both sides in their closing submissions appeared to me to be on the basis that representations were made or conduct engaged in which did or did not lead the Friggers to enter into the land contract and the improvements contract on 13 March 2003. My focus in this section will accordingly be on evidence as to representations or other conduct engaged in occurring before that date. However, I will in subsequent sections of these reasons address later conduct, including some alleged repetition of representations or conduct engaged in, for its relevance to the issue of causation through reliance.
I consider first the representation that each tenant, Northdown and Mr Penrose, conducted a business from the premises they leased that was 'extremely successful'.
There can be no dispute words to this effect were used in the brief details document from the first defendant to the Friggers. Further, in cross‑examination Mr‑Banning said (3 December 2007, ts 1048) this:
I put it [the words in the brief details document 'both businesses are extremely successful'] in to attract a purchaser on the basis of extremely successfully, and as far as I was concerned the businesses were extremely successful or successful.
Below I will consider whether or not the representation was false, misleading or deceptive. At this point I need to consider the submission of the defendant that a representation to the effect of this one was incapable of being a false representation, or of being misleading or deceptive conduct, as the representation was a mere puff. For this purpose, I put to one side the possibility that a statement may not be a representation under the general law, because it is not one understood to be or intended to be a false statement of fact but nonetheless may be misleading or deceptive conduct under the TP Act and the FT Act: see on that possibility Lockhart C, The Law of Misleading or Deceptive Conduct (2nd ed, 2003) [4.14]. No argument was directed to me on this point. I consider that the defendants' submission must be approached as meant to be dispositive for both common law liability and liability under the statutes.
There is support for the defendants' submission with respect to liability under the statutes in Sanders v Glev Franchises Pty Ltd [2002] FCA 1332 and the authority to which it referred of Pappas v Soulac Pty Ltd (1983) 50 ALR 231 234 – 235 (Fisher J), a passage also referred to, with apparent approval, in Bembridge v Just Spectacles Pty Ltd [2006] WASC 185 [32] (Murray J). In Sanders [271] ‑ [273] Kenny J said this:
In Pappas …, Fisher J held that a number of the statements made by the vendor's agent (a Mr Spencer) to the purchasers of a shopping centre were of this kind. His Honour said, at 234‑235:
'It is important to appreciate that many of the statements alleged or admittedly made by Mr Spencer were wholly or in part statements of opinion, not capable of being objectively proved to be true or false. They were also essentially the type of introductory comments, in the nature of puffery, made at the start of negotiations for the purpose of attracting the interest of a possible purchaser.
As such they became irrelevant or of little, if any significance when detailed information is subsequently given a fortiori, to a potential purchaser with commercial experience To the extent that they are essentially puffery, it is proper to be reluctant to elevate them to the status of potentially misleading conduct.'
His Honour held, at 238, that a statement by Mr Spencer that the shopping centre was a good investment was 'the type of puffing which would normally fall from a selling agent and which was incapable of being proved to be correct or incorrect'. See also Hanave Pty Ltd v LFOT Pty Ltd [1998] FCA 1051 (31 August 1998) per Moore J and Kaytonruby Pty Ltd v Glev Franchises Pty Ltd [1998] FCA 650, at p 29. In Kaytonruby, Ryan J held that a representation to the effect that Pizza Haven was a success story was in the nature of puffery.
In the present case, the representations pleaded in pars 7(1)(a), 7(1)(i) and 7(2)(a) of the statement of claim (that Pizza Haven was extremely successful; that a Pizza Haven franchise was an attractive investment; and that the first respondent would organize an aggressive marketing campaign) were in the nature of puffery. They were the kind of puffing that one might ordinarily expect to be made at the commencement of negotiations on behalf of a franchisor seeking to sell franchises.
In the case of the representations pleaded in pars 7(1)(a) [that Pizza Haven chain was extremely successful with a proven track record of profitability] and 7(1)(i) [that Pizza Haven franchise was an attractive investment]; their significance for the applicants' decision faded away when the applicants received more detailed financial information of the kind contained in the Disclosure Document. In any event, I doubt that the applicants would have placed any reliance upon these representations, if they were present to their minds when they signed the Ormond franchise agreement. It may be recalled that there was no evidence that the applicants were ever made aware of the contents of the letter of 5 September 1990 sent by Reyes to Taylor, referring to 'a proven track record of profitability'; and any representation as to Pizza Haven's success was, practically speaking, overtaken by the details in the Disclosure Document. Furthermore, the applicants had by then taken Hughes' advice on the suitability of a franchise as an investment for them. They made up their minds on this matter based on Hughes' advice (which took into account information in the Disclosure Document, the Brighton figures and the trading figures for the Victorian stores), Taylor's experience, and the availability and experience of Skilling (see below).

I turn now to the next special costs order sought.

Special costs orders: getting up

The plaintiff's minute refers in cl 4(b) to 'Getting up Scale Item 16'. The amount provided for in the 2006 Determination item 16 is $36,300 calculated on the basis of 100 hours of a senior practitioner's time at the maximum hourly rate for a senior practitioner.
The plaintiff's submissions were, as I understood them, that there was unusual difficulty or complexity or importance which could be seen in the seven items listed in the submissions. However, I leave out the seventh item, 'the procedural requirement to tender documents under s 79 Evidence Act', $28,002, the significance of which was not made clear to me. The six remaining items were the substantial size of the witness statements, including the amended and supplementary ones, of the Friggers; the large number of documents in the trial bundle; the large number of documents under the 50 subpoenas issued in this case; the large number of documents in the evidence of one of the valuers, a Mr Jeff Spencer, whose evidence related to the loss of capital investment opportunity claim; the 'proofing' of experts required; and the production of three sets of papers for the judge.
Approaching the matter as EDWF Holdings 1, Heartlink and Verdell indicate I should, I consider I should allow the taxation to proceed without reference to the hours upper limit imposed by the relevant item in the 2006 Determination. However, I do not consider I have a basis for an uplift of the maximum applicable hourly rate.
The size of and detail in the witness statements of the Friggers, including their amendments and supplements, and the number of documents in the trial bundle, many of which became exhibits, together with the documents and complexity of the valuation evidence in my view reflected the matters of unusual difficulty and of complexity that produced a trial extending over a significantly longer period (11 days) than had at first been anticipated (six days). That trial had called for lengthy written closing submissions (returned to below) and one full day of oral closing submissions, and resulted in a trial judgment of the length of Computer Accounting & Tax (107 pages).
While none of these taken individually might be sufficient to show the relevant difficulty and the complexity for the purposes of the element, their combination in my view does so. It seems to me then that there is a fairly arguable case to put to the taxing officer that hours of work by a senior practitioner were spent on the six items referred to me by counsel for the plaintiff for which the allowance made by the 2006 Determination item 16 would be inadequate. However, I consider I do not have a basis for an uplift in the maximum hourly rate for a senior practitioner under the 2006 Determination in relation to that item. I have no evidence in that regard corresponding to the kind for counsel for the plaintiff which I reach in the next section of these reasons.
I have noted the defendants pressed on me I should disregard any allowance for 'proofing' experts, on the basis that experts are retained to produce reports for the court, not to provide 'partisan evidence'. In my view, whether or not 'proofing' should interpreted as going to the provision of 'partisan evidence', some dealings with the valuers prior to trial, given the significance of the evidence of the valuers in a case such as this one, arguably were properly required. Whether or not such dealings were properly part of the hours of work sought to be taxed out is in my view a matter for the taxing officer.

Special costs orders: the defendants' security for costs application heard April 2007

The plaintiff's minute refers in cl 4(c) to 'Defendants' security of [sic] costs application Scale Item 10(a)'.
It was common ground this related to an application by the defendants dated 12 March 2007 which was heard by Le Miere J on 20 and 26 April 2007 and dismissed by him on the latter date, with costs to the plaintiff in the cause. Consent orders had previously been made on 19 March 2007, but without a hearing.
The amount provided for in the 2006 Determination item 10(a) 'Proceeding in Chambers [other than originating summons, originating motion or originating application]' is $9,306, which is for two days preparation and one days hearing, by counsel, and which equates to three days at the maximum daily rate for counsel.
The plaintiff's submissions were as I understood them that there was unusual difficulty, or complexity, or importance, which could be seen in the number of affidavits filed for the proceedings (nine) and their total size (260 pages), the total duration of the hearings (six hours is referred to, although the record of the hearing on the court's database for 20 and 26 April 2007 shows a total of just under 4 1/2 hours), and the timing of the application, coming as late as it did after having been foreshadowed in 2003 and made in the period shortly before the listed first day of the trial when the plaintiff was preparing for the trial.
I put aside the plaintiff's reference to its view the application was a tactic to delay the trial. I am unable to see what that adds to the other factors listed. Nor on the length of the hearings or on my inspection of the transcript of them, and subject to what I say below, do I see any clear indication any such tactic was pursued into those hearings.
This last point illustrates a difficulty I have evaluating the case for the present special costs order. I was not the presiding judicial officer on the hearing of the application.
However, I have, as I have indicated, reviewed the transcript of the hearings. I have borne in mind the number of affidavits and their total page length, which in my view indicate the importance to the plaintiff of the application. I have also considered the total length of the hearings, of just under one hearing day, which might count against the making of a special costs order (if not strongly), when account is taken of the one day allowed for in the 2006 Determination item 10(a).
I have also reviewed the draft judgment of Le Miere J. That judgment deals with a wide range of issues, including whether or not the discretion to make the order for security for costs was enlivened, and the relevance of the defendants' delay in making their application to the exercise of his discretion. I note that his Honour refers to three matters of 'particular significance' in his determination that he should not make the order sought by the defendants. Two of the three related to the matter of delay in the defendants making their application.
In all of the circumstances, approaching the matter as EDWF Holdings 1, Heartlink and Verdell indicate I should, I consider I should allow the taxation to proceed without reference to the upper limit imposed by item 10(a) in the 2006 Determination. I consider I have a basis for an uplift of the maximum daily rate for counsel used to calculate the upper limit in item 10(a) as well as an uplift in the number of days provided for in that item. I so consider because I have evidence of an hourly rate used by counsel for the plaintiff to charge for the work which hourly rate is above the maximum hourly rate for counsel under the 2006 Determination; I also have the considerations I will shortly describe.
The hourly rate for counsel for the plaintiff is shown as $350 per hour before GST in his memo of counsel fees dated 30 April 2007 annexed to the affidavit of Mrs Frigger of 2 April 2009. That hourly rate inclusive of GST, on the basis of the amount charged by counsel, equated to $375.51. That compares with the maximum hourly rate of $286 inclusive of GST under the 2006 Determination. That memo contains items relating to the security for costs application.
The considerations of the importance of the application to the plaintiff, facing a possible need to provide security for costs in a very short period before trial, considered with the features of the application referred to in the submissions of the plaintiff, leads me to conclude it is fairly arguable that time of counsel was properly required in and for the hearing of the application for which the allowance by 2006 Determination item 10(a) would be inadequate.
I turn now to the next special costs order sought.

Special costs orders: first day of trial 7 May 2007 as well as 2 November 2007

The plaintiff's minute refers in cl 4(d) to 'Counsel fees for two "first day" of trial 7 May 2007 and 2 November 2007 Scale Item 19(a)'. Counsel for the plaintiff explained that this special costs order was to allow for the plaintiff's position that the trial had two first days, and that the fate of the application for the present special costs order depended in part on that of the application for the reserved costs of that day. I have already indicated why I consider no order as to costs in respect of the failure to have a first day of trial on 7 May 2007 is appropriate, except as to the costs of the return of the subpoenas as costs in the cause.
It follows I would not make the special costs order sought. I turn now to the next special costs order sought.

Special costs orders: directions hearing on 14 May 2007

The plaintiff's minute refers in cl 4(e) to 'Directions Hearing on 14 July 2007 Scale Item 10(a)'. The reference to '14 July' was on the plaintiff's oral submissions an error: 14 May was meant.
So understood, it may be briefly dealt with, as the fate of the present application depended in part on the fate of the application for the reserved costs of that day. I have already indicated why I consider no order as to the costs of that day is appropriate.
It follows I would not make the special costs order sought. I turn now to the next special costs order sought.

Special costs orders: trial

The plaintiff's minute refers in cl 4(f) to 'Trial Scale Item 19(a), (c), (e) ‑ (g)'. The amount allowable under the 2006 Determination is stated in the plaintiff's written submissions to be $50,787, which the plaintiff's minute would indicate to be the amount derivable from 2006 Determination item 19(a) (for the first day, including fee on brief) and item 19(c), (e) and (f) (for subsequent trial days). Counsel for the plaintiff at the hearing on 17 December 2008 told me the amount was arrived at by reference to counsel fees for items 19(a) and (c), which as I have already indicated set upper limits using the maximum daily rate for counsel; and to fees for a solicitor from the plaintiff's then firm of solicitors attending the trial, for item 19(e). Item 19(e) sets an upper limit by reference to the rate per hour of $363, which is the maximum hourly rate for a senior practitioner under the 2006 Determination. However, counsel for the plaintiff made no reference to a clerk or paralegal from the plaintiff's then firm of solicitors attending the trial for the purposes of item 19(f). That item sets an upper limit by reference to the rate per hour of $176 which is the maximum hourly rate for a clerk/paralegal under the 2006 Determination. It would appear then that the item references in the plaintiff's minute should be item 19(a), (c) and (e), as item 19(f) would not apply.
I have excluded the day for closing submissions as that day is on my understanding of the matter the subject of the next application for a special costs order, for closing submissions, below.
Finally, I note that the plaintiff's submissions did not as I understood them attempt to make a case for an uplift in respect of 2006 Determination item 19(g), referred to in the plaintiff's minute cl 4(f), which is for attendance on a reserved judgment. In any event, I see no case for such an uplift on the materials before me.
The plaintiff's submissions were, as I understood them, that there was unusual difficulty, complexity or importance which could be seen in the value of the judgment ($1,106,027); the duration of the relevant part of the trial (totalling from the records on the court's database approximately 49 hours, although the plaintiff's written submissions referred to the duration as 81 hours, which appears to include the final day of the trial); the number of documents in the trial bundle; the number of documents relevant to the capacity in which the plaintiff had acted at the material times that had to be discovered; the number of subpoenas (50); the lengthy cross‑examination of Mrs Frigger; the cross‑examination of the valuer Mr Spencer; and the late filing of the defendants' witness statements. There were also the orders of an 'interlocutory' kind made during the trial. All of these required more work after hours by the plaintiff's solicitors than normal.
It is undoubtedly the case that the number of documents that had to be discovered relevant to the capacity in which the plaintiff had acted became significant but only in the run up to the trial. That reflected the importance that was attached to the issue by the defendants and that only became evident during that period. That importance was reflected in the defence only when the defence was amended by leave granted in October 2007. There was in my view an element of unusual difficulty for the plaintiff's conduct of the trial produced by this relatively late change.
However, it is also undoubtedly the case, as counsel for the defendants put to me, that the number of days a trial involves cannot itself be a basis for concluding the present element is satisfied. Further, the number of witnesses involved in this case (19 witnesses) and the number of documentary exhibits (182 exhibits) are not out of the ordinary for trials of this length. Finally, the judgment sum is hardly out of the ordinary for a trial of the duration of this one in this court. All of these considerations go most directly to that part of the present element concerned with unusual difficulty, of course.
However, approaching the matter as EDWF Holdings 1, Heartlink and Verdell indicate I should, I consider I should allow the taxation to proceed without reference to the upper limits imposed by items 19(a) and 19(c) in the 2006 Determination. I consider I have a basis for an uplift of the maximum daily rate for counsel used to calculate those upper limits as well as for an uplift in the number and length of the days allowed for by those items. I so consider for two reasons. One is that I have evidence of a daily rate for counsel for the plaintiff used to charge for the work that is above the maximum daily rate for counsel under the 2006 Determination. The other reason is made up of the considerations I will shortly describe.
I have already referred to the plaintiff's evidence for the first to the sixth days of the trial. That evidence is in the memo of counsel fees dated 11 December 2007 attached to the affidavit of Mrs Frigger of 2 April 2009, that counsel charged fees for attendances at the court at the rate of $3,500 per day before GST. Using the total amount shown in that memo as charged after GST, that daily rate equates to $3,850 inclusive of GST. That compares with the maximum daily rate for counsel of $3,102 inclusive of GST under the 2006 Determination.
The matters referred to by the plaintiff I have not put aside, when considered in combination, reflect for me the matters of unusual difficulty and of complexity which I referred to in relation to the special costs order for getting up. It seems to me then that there is a fairly arguable case to put to the taxing officer that the fee on brief and the hours of work by counsel was properly required in and for the trial days 1 ‑ 10 for which the allowances made in the 2006 Determination items 19(a) and (c) would be inadequate.
Further, I consider I should, by reference to the considerations I have just described, allow the taxation to proceed without reference to the hours on trial days which the 2006 Determination 19(e) might otherwise set as the upper limit. However, I do not consider I have a basis for an uplift of the maximum hourly rate for a senior practitioner in relation to item 19(e). I have no evidence in that regard corresponding to that for counsel for the plaintiff.
I turn now to the next special costs order sought.

Special costs order: closing submissions

The plaintiff's minute refers in cl 4(g) to 'Closing submissions Scale Item 19(c) and (e)'. The plaintiff's written submissions state the maximum allowable under the 2006 Determination is $5,643, which the plaintiff's minute would indicate as derivable from 2006 Determination item 19(c) (for counsel) and (e) (for a senior practitioner), which I take to be applied to the last day of the trial, that on which closing submissions were presented.
While as counsel for the defendants reminded me, there is no separate item in the 2006 Determination for closing submissions, I consider that the work on such submissions is appropriately to be referred to 2006 Determination item 19(c) and (e), for the last day of the trial.
The plaintiff's submissions as I understood them were that there was unusual difficulty, complexity or importance which could be seen in the large number of tendered documents to be gone through, the length of the trial transcript (to which as I have indicated I had called for specific references in the closing submissions) and the length of the plaintiff's written closing submissions including supplementary material called for (184 pages) and of the defendants' written closing submissions also including such supplementary materials (182 pages). I should add that I had anticipated when I called for written closing submissions that I would receive ones in such detail, and I found the submissions prepared to be of considerable assistance.
Approaching the matter in the manner EDWF Holdings 1, Heartlink and Verdell indicate I should, I consider I should allow the taxation to proceed without reference to the upper limit imposed by item 19(c) in the 2006 Determination applied to 29 February 2008, the last day of the trial. I consider I have a basis for an uplift of the maximum daily rate for counsel used to calculate that upper limit as well as the time length of the day provided for in that item. I so consider for two reasons. One is that I have evidence of a daily rate and an hourly rate for counsel for the plaintiff used to charge for the work above the corresponding rates for counsel under the 2006 Determination. The other reason is made up of the considerations I will shortly describe.
The evidence is in the memo of counsel fees dated 4 March 2008 annexed to the affidavit of Mrs Frigger of 2 April 2009, which shows counsel charged fees for attendance at the court on 29 February 2008 at the rate of $3,500 per day and charged fees for other work relating to that day at the rate of $350 per hour, in both cases before GST. I have already compared those rates plus GST with the corresponding rates under the 2006 Determination.
The matters referred to by the plaintiff, in combination, indeed in my view reflected the matters of unusual difficulty and of complexity to which I referred in relation to the special costs order for getting up. It seems to me then that there is a fairly arguable case to put to the taxing officer that hours of work by counsel were properly required in and for the trial day of 29 February 2008 for which the allowance made in 2006 Determination item 19(c) would be inadequate.
Further, I consider I should, by reference to the considerations I have just described, allow the taxation to proceed without reference to the hours on that trial day which the 2006 Determination 19(e) might otherwise set as the upper limit. However, I do not consider I have a basis for an uplift of the maximum hourly rate for a senior practitioner in relation to item 19(e). I have no evidence in that regard corresponding to that for counsel for the plaintiff.
I turn now to the next special costs order sought.

Special costs orders: the freezing orders

The plaintiff's minute refers in cl 4(h) to 'Freezing Orders Scale Item 10(a)'. It is common ground that this related to an application by chamber summons by the plaintiff dated 8 January 2008. Following an ex parte hearing before me that day I granted the application. The orders I made were varied on 11 January 2008 by Hasluck J on the application of the defendants following a hearing before him that day. In both cases costs were reserved to the judge hearing the application on the return date. I have previously referred to the allowance by 2006 Determination item 10(a).
The plaintiff's submissions as I understood them were that there was unusual difficulty, complexity or importance which could be seen in the application having to be on very short notice because of the risk to the plaintiff; the long ex parte hearing before me (2 hours and 45 minutes); the second hearing, before Hasluck J; and the requirement to comply with the freezing orders including advising third parties, checking the asset schedule of the defendants, extensive correspondence between the parties concerning compliance, breaches of the orders and requests for further information.
I have no affidavit evidence as to those last six matters. However, I consider that the feature of the application they appear to me to go to, the complexity of the defendants' affairs, is sufficiently made out by the matters put to me at the hearing on 8 January 2008, and appears to have led to the application to Hasluck J.
In my view approaching the matter as EDWF Holdings 1, Heartlink and Verdell indicate I should, I consider I should allow the taxation to proceed without reference to the upper limit imposed by item 10(a) in the 2006 Determination. I consider I have a basis for an uplift of the maximum daily rate for counsel used to calculate the upper limit in item 10(a) as well as for an uplift of the number of days provided for in that item. I so consider for two reasons. One reason is that I have evidence of an hourly rate used by counsel for the plaintiff to charge for the work which hourly rate is above the maximum hourly rate for counsel under the 2006 Determination. The other reason is made up of the considerations I will shortly describe.
The hourly rate for counsel for the plaintiff is shown as $350 before GST in his memo of counsel fees dated 4 March 2008 annexed to the affidavit of Mrs Frigger of 2 April 2009. That hourly rate inclusive of GST, on the basis of the amount charged by counsel, equated to $375.51. That compares with the maximum hourly rate of $286 inclusive of GST under the 2006 Determination. That memo contains items relating to the freezing orders application and hearings.
The considerations of the complexity of the affairs of the defendants coupled with the history of the hearings in relation to the freezing orders lead me to conclude there is a fairly arguable case to be put before the taxing officer that the hours of work by counsel in and for the hearing would be such that the maximum allowance made in the 2006 Determination item 10(a) would be inadequate.
I turn now to the final special costs order sought.

Special costs orders: directions hearing of 29 October 2007

The plaintiff's minute cl 4(i) refers to 'Directions 29 October 2007 Scale Item 10(a)'. It is common ground this is a reference to a hearing on that date before me to consider what in substance were three applications, one by the plaintiff, and two by the defendants. The plaintiff's application was for leave to file and serve a further expert's report. The defendants' applications were for further specific discovery of certain documents (including a related application to uplift from the court's file a previous affidavit of discovery for the plaintiff) and for vacating the trial dates. It will be recalled the trial was to begin on 2 November 2007. Following a hearing that occupied five hours 25 minutes, I granted the plaintiff's application and dismissed those of the defendants, with costs in the cause.
I have previously referred to the allowance by the 2006 Determination item 10(a).
The plaintiff's submissions as I understood them were that there was unusual difficulty, or complexity or importance which could be seen in the length of the hearing before me, involving applications by both parties, with six affidavits representing a total of 239 pages and the other papers filed for the hearing, comprising a chamber summons, minute of proposed orders, and memorandum of conferral.
I should immediately state that there is nothing of an unusually difficult, complex or important character necessarily to be derived from the combination of the foregoing items.
However, I note that the bulk of the hearing was devoted to the application for discovery as it related to the capacity in which the plaintiff had acted at the material times and the plaintiff's claim for lost investment opportunity. Those matters were of major importance in the trial shortly to be held as indicated by the defendants' position that the fate of their application to vacate the trial dates turned on the fate of their application for discovery, and those matters were of some complexity, as is indicated in Computer Accounting & Tax.
Approaching the matter as EDWF Holdings 1, Heartlink and Verdell indicate I should, I consider I should allow the taxation to proceed without reference to the upper limit imposed by item 10(a) in the 2006 Determination. I consider I have a basis for an uplift of the maximum daily rate for counsel used to calculate the upper limit in item 10(a) as well as for an uplift of the number of days provided for in that item. I so consider for two reasons. One reason is that I have evidence of an hourly rate used by counsel for the plaintiff to charge for the work which hourly rate is above the maximum hourly rate for counsel under the 2006 Determination. The other reason is made up of the considerations I will shortly describe.
The evidence is in the memo of counsel fees of counsel for the plaintiff dated 16 November 2007, annexure '2' to the affidavit of Mrs Frigger of 4 March 2009 (that is, the fresh evidence). This evidence shows counsel charged fees for attendance at the directions hearing of 29 October 2007 at the rate of $3,500 per day, and charged fees for other work relating to that hearing at the rate of $350 per hour, in both cases before GST. I have already compared those rates plus GST with the corresponding rates under the 2006 Determination.
The matters referred to by the plaintiff, when considered with the further matters I have just referred to, familiar to me as the judge who presided at the hearing on 29 October 2007, did indeed reflect the importance of the hearing to the plaintiff and the complexity of the issues addressed at that hearing, and lead me to conclude there is a fairly arguable case to put to the taxing officer that work by counsel was properly required for which the allowance made in 2006 Determination item 10(a) would be inadequate.
I turn now to the matter of the costs of this application.

Costs of this application

The defendants' minute includes in cl 5 that 'there be no order as to the costs of this hearing'. No submissions were directed by either party to the matter, however.
I consider the general approach I should follow is that in Verdell [33] (Wheeler J) where her Honour said this:
So far as the costs of the application are concerned, I have made a number of special costs orders. The plaintiffs have been largely successful, and in particular, I have not accepted the defendant's submission that I should concern myself with questions of duplication arising out of changes of solicitor and the like. For reasons which I will come to later, I have also not accepted the defendant's submissions in relation to questions of extension of time. It therefore seems to me appropriate that the defendant pay the plaintiff's costs of this application to be taxed.
This approach is in my view an application of the general rule that a successful party is entitled to its costs.
In my view the plaintiff was largely successful in respect of the costs of the action, as successful as the defendants in relation to the application for the costs of the transcript, largely if not entirely unsuccessful as to reserved costs, and largely successful as to special costs. I leave out for this purpose the matter left over for further argument, as to the costs of the Magistrates Court proceedings, the costs reserved to the trial judge in the District Court.
My conclusion is that, assessing the likely financial significance of the items referred to as best I can, and the parties' relative success in the submissions put to me in relation to them, the appropriate order for the costs of the present application is that for the costs of the action which is costs in the cause. I exclude for this purpose the costs of this application in relation to the costs of the Magistrates Court proceedings, costs on which are reserved to await the outcome of the further hearing in relation to them.

Orders

I will hear from the parties as to the terms of the orders I should make to give effect to my conclusions, and as to the application with respect to the costs of the Magistrates Court proceedings.