Coz Equipment Pty Ltd v Buck - [2007] SASC 461

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
COZ EQUIPMENT PTY LTD & ANOR v BUCK & ORS
[2007] SASC 461
Judgment of The Honourable Justice Duggan
21 December 2007
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - DISCHARGE, BREACH AND DEFENCES TO ACTION FOR BREACH
Action for specific performance of obligations under a deed entered into in settlement of a previous action ('the first action') between the parties - in the first action plaintiff sought an order for specific performance of obligations arising under original agreement for development of land following refusal by first defendant to transfer to a company jointly owned with a co-adventurer the land and associated water licences to be used in the development - deed of settlement provided that the land and water licences would be transferred by the first defendant - continued refusal by first defendant to transfer water licences after execution of deed. Counterclaim by first defendant seeking declaration that original agreement void by reason of misrepresentation, conspiracy to defraud and unconscionable conduct by co-adventurer and first defendant's accountant.
Held: plaintiff entitled to order for specific performance of obligation of first defendant under deed to transfer water licences.

TORTS - NEGLIGENCE - ESSENTIALS OF ACTION FOR NEGLIGENCE - WHERE ECONOMIC OR FINANCIAL LOSS - CARELESS ADVICE, STATEMENTS AND NON-DISCLOSURE - PARTICULAR PERSONS AND SITUATIONS - PROFESSIONAL ADVISERS
Action by first defendant against accountant acting for him in negotiations with co-adventurer in development proposal - first defendant seeking damages for breach of contractual duty and breach of duty of care - whether accountant under duty to advise on business efficacy of development proposal.
Held: Action for breach of contractual duty and breach of duty of care dismissed.
Trade Practices Act 1974 (Cth) s 51A, s 52; Fair Trading Act 1987 (SA) s 54, s 56, referred to.
Blomley v Ryan (1956) 99 CLR 362; Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447, applied.

COZ EQUIPMENT PTY LTD & ANOR v BUCK & ORS
[2007] SASC 461
Civil

DUGGAN J. The claim and counterclaim in this matter relate to a dispute over transactions associated with the development of land for the purpose of growing olives.
The property at the centre of the dispute is situated at Halidon near Karoonda. It comprises 640 hectares of arable land and a further area of scrub which is of no commercial value. The property was purchased by the first defendant Philip Gregory Buck (Buck) in 1997.
In 2000 Buck operated a scrap metal business owned by Scrap Metal Management Pty Ltd (Scrap Metal Management), a company which he controlled. Buck used equipment and facilities from time to time at premises owned by Ian Hainsworth Kirkman (Kirkman) who conducted a trucking business owned by the second plaintiff Melkilt Pty Ltd (“Melkilt”) which he controlled.
In due course, the two men discussed entering into a joint venture to develop an olive tree plantation on the property at Halidon. Buck was in considerable financial difficulty at this time and Kirkman agreed to assist in the development.
At the time of these discussions Kirkman was a director and shareholder of the first plaintiff, Coz Equipment Pty Ltd (“Coz”). Buck and Kirkman agreed that the property would be transferred to Coz and that Buck would become a shareholder of Coz. Coz would then become the corporate entity to own and operate the business to be conducted by the joint venture.
The discussions between Buck and Kirkman resulted in three agreements which they entered into on 5 October 2001.
The first agreement was a contract for the sale and purchase of the Halidon property. The purchaser was Kirkman or his nominee. It was intended that Coz would be the registered proprietor of the land and this was subsequently effected. The purchase price was $132,000 including GST.
The second agreement was for the transfer of two water licences which had been granted in respect of the property. They were to be transferred from Buck to Coz for the sum of $15,000. Under the agreement Coz was required to pay outstanding levies on the licences.
The third agreement was entitled “Preliminary management agreement between Phillip G Buck and Ian H Kirkman in respect of Halidon property olive development” (“the management agreement”). It provided that Kirkman was to become the sole director of Coz and that Buck and Coz would each hold 42.5 per cent of the share capital of that company. The management agreement provided that Buck’s share would be held in trust for him by Kirkman. It provided that the remaining 15 per cent of the share capital would be allotted to two men, Ali Paz and Gus Scheer who had assisted with preparatory work in relation to the growing of olive trees on the property. This allotment of 15 per cent did not convey voting rights.
By letter dated 21 January 2002 Buck advised Kirkman that he wished to “pull back on the original deal” and he suggested significant changes to the agreed relationship, including a proposal that, in the short term, Kirkman would become a financier of the project and not a shareholder. Kirkman rejected this proposal.
At about this time, Buck contacted the Water Licensing Branch of the Department for Water Resources (the department) and requested that the department not proceed with the transfer of the water licences.
Subsequently, by application to the department signed by Buck on 12 March 2002, he requested that the water licences be transferred to his brother and sister. On the same date Coz and Kirkman issued proceedings in this court against Buck (“the first action”) seeking specific performance of the contract for the sale and purchase of the property dated 5 October 2001 and an order directing Buck to complete the transfer of the water licences. On 14 March 2002 the court made an interim order restraining Buck from dealing with the water licences. Despite the injunction, Buck made a further application to the department on 20 March 2002 for the transfer of the licences to his brother and sister. The department took no action on the application.
After extensive negotiations an agreement was reached between Melkilt, Kirkman and Buck on a settlement of the first action and, on 25 July 2002, they entered into a Deed of Settlement (“the deed”).
The following provisions are included in the deed:
·Buck was required to transfer the water licences to Coz within seven days of the date of the deed.
·The consideration of $15,000 for the transfer of the water licences was to be applied to discharge outstanding amounts due to the Department in respect of the licences.
·Buck was required to produce a duly executed Memorandum of Transfer of the land for registration within seven days of the date of the deed.
·Coz was required to discharge the mortgages on the Halidon property on the settlement of the transfer of the land.
·Coz was required to pay a list of outstanding accounts listed in schedule 1 of the deed. The list included debts incurred by Buck in preparing the property for the development. The amounts were to be paid within seven days of settlement of the transfers of the land and the water licences.
·In consideration of, and subject to, the completion by Buck of obligations imposed upon him under the deed, Buck was granted an option to purchase Kirkman’s interest in the share capital of Coz within 15 months of the date of the deed.
It is also provided in the deed that Coz and Kirkman will discontinue the first action against Buck on completion of the transfer of the land and water rights to Coz.
Clause 8 of the deed provides as follows:
8 Project Manager/Development
Until the Option [Buck’s option to purchase Kirkman’s interest in Coz] is exercised or lapses:
8.1Coz will permit Buck to continue in the role which he presently carries out as Project Manager of the Land;
8.2Neither Buck on the one hand nor Coz nor Kirkman on the other will cause any development or improvement of the Land to be carried out without the prior consent of the other and each agrees to consult fully with the other regarding any proposed development or improvement;
8.3Neither Buck on the one hand nor Coz nor Kirkman on the other will cause there to be any substantial departure from the way in which the Land is presently maintained without the prior consent of the other and each agrees to consult fully with the other regarding any proposed development or improvement.
On 30 August 2002 Coz paid to Buck the agreed purchase price for the land and the transfer was effected. On the same day Coz paid the sum of $20,592.15 due to the department in respect of the outstanding balance on the accounts for the water licences and requested the department to proceed with the transfer of the licences to Coz.
On 18 November 2002 solicitors for Buck wrote to the department to advise that their client had instructed them that the transfers of the licences should not be processed until further notice. The department acted on that request and the licences remain in Buck’s name. The present proceedings were commenced on 8 April 2003.
The plaintiffs claim that Buck has breached his obligation under the deed to transfer the water licences to Coz. The principal relief sought by the plaintiffs is an order requiring Buck to perform his obligations relating to the transfer of the water licences under the deed. It is also pleaded that Buck’s conduct in not transferring the water licences is unconscionable and that he has been unjustly enriched by payment made to him as compensation for the transfers. It is pleaded that the circumstances give rise to an estoppel preventing Buck from resiling from his obligations under the deed. It is alleged that Buck’s conduct was misleading and deceptive. It is further alleged that he fraudulently misrepresented to Coz that the water licences were unencumbered. There is a claim for damages for loss to the plaintiffs in various respects.
During the trial the plaintiffs confined their attention to pursuing the rights which they claimed pursuant to the deed and the claim for damages in relation to certain aspects of ancillary relief. The case as it was finally presented did not rely on unconscionability or misleading and deceptive conduct by Buck.
Buck has filed a defence and counterclaim. The defendants by counterclaim are Coz, Kirkman, Melkilt, Bell Strategic Business Solutions Pty Ltd (“BSBS”) and Geoffrey Bell (“Bell”).
It is admitted in the defence that Buck entered into the agreements on 5 October 2001 for the sale and purchase of the land and the transfer of the water licences. It is also admitted that he has at all times refused to transfer the water licences to Coz. However, it is claimed that the original agreements for the sale and purchase of the land and the transfer of the licences are liable to be set aside on various grounds set out in the counterclaim.
The execution of the deed is admitted by Buck in the defence, but it is pleaded that the deed is also unenforceable by reason of matters set out in the counterclaim.
Bell is a chartered accountant. He practises under the business name of Bell and Associates which is owned by BSBS. In order to appreciate the nature of the claims made by Buck in the defence and counterclaim it is necessary to provide a brief summary of Bell’s involvement in the negotiations which led to the signing of the three agreements on 5 October 2001.
Bell first met Buck on 3 July 2001 when Buck consulted him about his financial situation. At about this time, Buck was being pressured by creditors. Buck told Bell about the property at Halidon and the fact that, previously, Buck had negotiated with a Mr Quinn with a view to forming a joint venture to grow olive trees there. However, Buck said there had been a falling out with Quinn.
It is not in dispute that, at the time of these discussions with Bell, Buck was in a precarious financial position and that he approached Bell for advice about his finances. The Halidon property was mortgaged to the National Australia Bank in order to provide security for a loan of approximately $120,000. Buck told Bell that he had not paid interest on the loan since November 2000.
Buck owned three properties at Kilkenny and was required to service a loan of approximately $200,000 in respect of them. He was having difficulty servicing that loan and the lender was threatening repossession. Buck was also having difficulty paying other creditors and his scrap metal business was not generating income.
The most urgent task for Bell after he became involved was to attempt to negotiate a refinancing arrangement with the National Australia Bank.
There was a further meeting between Bell and Buck on 30 July 2001 which was followed by a discussion on 1 August 2001. On the latter occasion Buck mentioned the name of Kirkman for the first time in their discussions. He said that Kirkman was interested in a joint venture with Buck to grow olives on the Halidon property. Buck said that Kirkman wanted some information about Buck’s financial position and it was agreed that Bell would contact Kirkman by telephone to discuss this with him.
Eventually, Bell prepared documents to be signed by Buck and Kirkman which were intended to put into effect the agreement between them. In doing so, he took part in the negotiations which resulted in the signing of those documents and so had contact with Kirkman.
The counterclaim is divided into two parts. The first is concerned with the agreements entered into on 5 October 2001. Buck claims that he is entitled to an order that the land agreement and the water licences agreement be set aside ab initio. There is an alternative claim that Buck has suffered loss and damage by reason of the matters put forward in support of the claim that the agreements be set aside.
The second part of the counterclaim seeks an order that the deed of 25 July 2002 be set aside ab initio or, alternatively, an order that Buck be compensated for loss and damage as a result of the conduct relied upon to support the application that the deed be set aside.
There is an immediate practical difficulty in relation to that part of the counterclaim which seeks an order that the agreements of 5 October 2001 be set aside. The first action commenced by Coz and Kirkman against Buck sought specific performance of those agreements. It was settled on the terms set out in the deed. The deed states that the parties had agreed to resolve all matters in dispute between them and to do so on the terms contained in the deed.
The plaintiffs do not seek to enforce the earlier agreements. Their claim is based on the deed. If the deed is enforceable, the relevance of the earlier agreements in so far as Coz and Kirkman are concerned is, for the most part, confined to providing the background which led to the execution of the deed.
The events which culminated in the signing of the agreements on 5 October 2001 are of more direct relevance to the claim by Buck against Bell and BSBS. In dealing with these events, I will discuss Buck’s claim that the agreements should be set aside, but I repeat that the claim by the plaintiffs is not based on the earlier agreements.
It should be pointed out that, although the pleadings in the defence and counterclaim were prepared by a legal practitioner, Buck was unrepresented at the trial of this action.
The most detailed account of the negotiations which led to the agreements of 5 October 2001 was given by Bell. He kept notes of the relevant discussions and events and I find that he accurately reported the events in which he was involved.
On 3 August 2001 Bell attended a meeting with Buck and Kirkman at the latter’s premises at Ferryden Park. This was arranged to discuss Kirkman’s possible involvement in the development at Halidon. Bell said in evidence that the discussion was in quite general terms.
There was a further meeting between Buck and Bell on 7 August 2001. At this meeting there was a discussion about a proposal to put to Kirkman. Included in the discussion was the proposal for Kirkman and Buck to each have a 42.5 per cent share in the company to be used as the vehicle for the development. It was also noted that Paz would receive a 10 per cent share and Scheer would be allotted 5 per cent of the shareholding. According to the evidence of Bell, he was told that these details had been discussed between Buck and Kirkman before Bell became involved.
Bell gave evidence that Buck told him Kirkman would put in $120,000 which would be used to pay off the National Australia Bank. In his contemporaneous note of the meeting Bell wrote “Ian [Kirkman] doesn’t have money – prepared to commit in $”. Bell said that this reflected what Buck told him, namely, that Kirkman did not have the cash, but was prepared to commit himself to borrowing the money.
Bell referred to a note he made at the time of this conference which reads “$150,000 cash needed!!!”. He said this note was made as a result of Buck telling him that $150,000 was needed to proceed with the development.
On the day after this meeting Bell sent Buck a document entitled “Draft Heads of Agreement” (D 11). The contents of this document, which was prepared by Bell, was intended to reflect what Buck had explained to him on the previous day. The draft was accompanied by a note from Bell to Buck which read:
The attached is a start
You need to concentrate on $$$$’s X 42.5%
I will concentrate on getting the facts right.
Bell said in evidence that the dollar signs refer to the dollar value of 42.5%.
Bell denied that he was asked to check Kirkman’s credit rating.
On 11 September 2001 Bell spoke to an insolvency officer from KPMG who told him that the National Australia Bank had sent Buck’s file to him and that the bank was ready to take action for recovery.
On 26 September 2001 Bell, Buck and Kirkman went to see Mr Tony Floreani, a solicitor, to discuss the documents necessary to transfer the land and the water licences to Coz.
On 4 October 2001 Bell wrote to Buck clarifying his role (D 18). In view of the importance of the letter it is appropriate to set it out in full. Bell wrote:
Dear Phil,
RE: ABILITY TO ACT FOR YOU
I am writing to clarify matters in relation to my role in acting for you.
You have appointed me to act as Accountant and advisor for yourself and your company, Scrap Metal Management Pty Ltd. Your personal affairs also include any business activities in your personal name, which include activities aligned to those of Scrap Metal Management Pty Ltd.
In recent months I have also had the opportunity to become more involved in your affairs, which include the olive project at Halidon.
You have been under considerable financial pressure and have sought my support in dealing with the issues and you have also introduced me to Ian Kirkman with whom you and I have now had many meetings. A deal has now been struck with Ian in respect of the on-sale of various assets to entities introduced into the dealings by Ian.
All three of us are now working together to ensure an orderly sale of assets to the new entity (or other similar entities) on the understanding that you and Ian will work together to build the projects (i.e. olives and salvage) back to their full potential.
I have been asked by both of you to become involved in a management capacity, particularly to provide a “balanced opinion” in the dealings between you and Ian.
Therefore, I am now acting for you in a personal and business capacity and for you and Ian in a business capacity.
It is not unusual for an advisor to act for what I will call the “new venture” and continue to act for the original client, i.e. yourself.
Ian, of course, maintains his “personal affairs” with his Accountant, Bruce Adam (and for that matter his other business affairs).
I, of course, then as the new venture Accountant/Advisor, can liaise with Bruce Adam on matters which relate to Ian’s involvement and, as Ian has made clear on a number of occasions, he is keen for me to be part of the management team and has no problem with me continuing to act for you personally. He does, in fact, see it as a good thing for the reason that your personal success, including the “resurrection” of the scrap metal business, has a direct bearing on your role and ability to make a valuable contribution to the new venture, which is considered essential.
At the same time I have taken a “negotiation” position between you and Ian in respect of your dealings on the new venture and you have instructed me to deal with KPMG on your behalf, and you and Ian have instructed me to arrange with Bonnins Solicitors to prepare Commercial Agreements for the sale of assets from you to the new venture company, COZ Equipment Pty Ltd.
It is in this position as “negotiator” that there may be a conflict of interest. I consider that at all times I am acting in your best interests and you have made it very clear to me that you have been happy to do business with Ian Kirkman in this way.
If you have any doubts about the role I am taking in respect of the sale of assets to COZ Equipment Pty Ltd and/or dealings with Ian Kirkman, then I strongly suggest you seek independent advice on any commercial matters being proposed between you and Ian Kirkman acting on behalf of COZ Equipment Pty Ltd.
I shall provide a copy of this letter to Ian Kirkman as the “promoter” of the new venture company COZ Equipment Pty Ltd which, as stated earlier, is the company for which I have also been asked to act for by both you and Ian.
I also confirm that I have no vested interest in either your’s or Ian’s affairs other than a retainer on a time rendered basis.
To date I have billed you for services rendered to Friday 21^st September, 2001 and from Monday 24^th September, 2001 will separately bill COZ Equipment Pty Ltd for work done on its behalf and continue to bill Scrap Metal Management Pty Ltd for work done on its behalf, including for the time being matters to do with Arthur and Robert Dyna. Ian is aware of these arrangements.
Please note that these dates are significant because it was on Wednesday 26^th September, 2001 that we had our first serious meeting on the olive project with you, Ian, me and the Solicitor, Tony Floreani from Bonnins Solicitors.
Could you please acknowledge receipt of this letter by signing the “Acknowledgement Copy” section on the attached copy.
Should you have any queries, please contact me.

Buck acknowledged receipt of the letter and confirmed in writing that he had read and understood its contents.
Reference has been made to the management agreement which was one of the three agreements signed on 5 October 2001. It provided that Kirkman was to become the sole director of Coz and that he and Buck were each to hold 42.5 per cent of the share capital. It stated that Buck’s shares were to be held in trust for him because of the risk of him being bankrupted. The management agreement continued:
Ian Kirkman will have a position of authority in respect of most areas of day-to-day management and will involve Geoff Bell as part of the management team in respect of day-to-day financial, planning, accounting and general management issues. Geoff Bell will also represent Philip Buck [sic] interests in all dealings of this nature.
Philip Buck will have a position of authority in respect of most areas of the day-to-day operations at Halidon and will involve Ian Kirkman in respect of those day-to-day operations.
It is agreed between the parties that a more extensive list of roles and responsibilities of each party named herein will be determined at a later stage and will be influenced by the extent to which COZ Equipment Pty Ltd takes on the responsibility for any other projects involving Philip Buck and/or Scrap Metal Management Pty Ltd.
In the meantime, the purpose of this agreement is to ally any concerns that either party may have in respect of control of the activities of COZ Equipment Pty Ltd once it embarks upon the olive development project.
It is understood between the parties that a management team including Ian Kirkman, Philip Buck and Geoff Bell will be accountable and responsible for the future success of the olive development project and that at all times open lines of communication will be maintained in respect of the day-to-day running of the business.
The property was valued on 14 December 2001. The valuation was required for the purpose of obtaining a loan in connection with the development.
The valuation was undertaken by Mr John Dawes. His valuation was as follows:
133 ha. irrigable @ $ 250 per ha.  $ 33,250.00
507 ha. arable @ $ 150 per ha.   76,050.00
207.2 ha. I.E. @ $1,500 per ha. (the irrigation rights)               310,800.00
Two equipped bores @ $7,500 per bore   15,000.00
Improvements     25,000.00
Total  $460,100.00
Rounded  $460,000.00
Mr Dawes was called to give evidence and his valuation was not challenged, although he admitted that he was not an expert valuer with respect to water licences.
After the signing of the agreements Buck continued to work on the property, generally preparing it for the development. This included a pilot planting of trees. Equipment was purchased for this purpose. However, it is clear that there was a gradual deterioration in the relationship between Kirkman and Buck and a lack of adequate communication between the two. At the trial, Buck complained that he was not receiving appropriate financial support from Kirkman. He also said he was not paid wages for working on the property. Kirkman complained that he was not being consulted about the purchases being made by Buck.
In January 2002 Bell was instructed by Buck to draw up a further agreement between Buck and Kirkman. Bell followed these instructions and prepared a draft which was presented to Kirkman in late January 2002 (D52). However, before the draft was forwarded to Kirkman, Buck instructed Bell to prepare a letter which Buck was to send to Kirkman. In the letter which was dated 21 January 2002 (P10) Buck stated that they should “pull back on the original deal, without throwing away anything between us because of the time, effort and money which has gone into getting this far”. Buck proposed that he would “retain control at least for the next 12 months”. He suggested that Kirkman become a financier rather than a shareholder in the project for 12 months for which he would be paid commercial rates of interest on all borrowings. There was a further proposal that Kirkman would be given an option to take up a five per cent equity in the project.
It is unnecessary to consider the terms of the draft agreement (D52) as it was not agreed to by Kirkman. Furthermore, Kirkman rejected the proposal put forward in the letter of 21 January 2002.
On 23 January 2002 the National Australia Bank wrote to Buck advising that the bank was losing patience as a result of Buck’s facilities with the bank falling into arrears. It was noted in the letter that Buck had advised the bank that he did not intend to proceed with the contract for the sale of the Halidon property. Buck agreed in cross-examination that, by that time, he had decided not to abide by the agreements made on 5 October 2001.
By this time Buck owed Bell over $18,000 for fees and, on 23 January 2002, Bell wrote to Buck expressing concern that the accounts had not been paid. Subsequently Bell took legal action to recover the fees.
Reference has been made to the fact that the first action was commenced on 12 March 2002 and the Deed of Settlement in relation to that action was executed on 25 July 2002.
The attack on the agreements of 5 October 2001
The application to set aside the agreements of 5 October 2001 is based on the following allegations in the counterclaim:
(1)Misrepresentations by Bell, Kirkman and Coz that Coz and Kirkman were willing and able to access adequate capital for the development of the land (para12.2.1) and that, by receiving a beneficial entitlement to 42.5 per cent of Coz, Buck was receiving adequate compensation for the land and the water licences (para 12.2.2).
(2)A conspiracy between Coz, Kirkman, BSBS and Bell to defraud Buck (para 19).
(3) Unconscionable conduct by Bell and Kirkman (para 14.7).
The alleged misrepresentations
It is pleaded in the counterclaim that the misrepresentations referred to in para (1) above were made in trade for commerce and that they were misleading or deceptive.
It is convenient when dealing with the first allegation that Coz and Kirkman represented that they were willing and able to access adequate capital for the development of the land, to comment also on an assertion by Buck that Bell was asked by Buck to investigate whether Kirkman was willing and able in this respect.
It is admitted by Kirkman on the pleadings and it was the effect of his evidence that the representation pleaded in para 12.2.1 of the counterclaim was made by him. However, it has not been established that it was a misrepresentation. The evidence is to the contrary. Kirkman appears to have been willing to take part in the venture and he was prepared to and did make arrangements for the financing of the development to the stage at which it reached prior to the commencement of these proceedings.
As to the conduct attributed to Bell, Buck said in his evidence that Bell was asked to determine whether Kirkman and Coz were willing and able to fund the proposed development. He did not refer to a particular occasion or occasions on which this topic was raised, but he said that when Kirkman displayed an interest in the development:-
A… I asked Mr Bell to come into the situation and determine whether Mr Kirkman was a suitable candidate for the olive project.
QSuitable in what sense?
AThat he was able to provide the capital for the project, Mr Kirkman had said to me that he didn’t have cash but he had the ability to meet payments.
In cross-examination, Buck referred to two other occasions on which he said he had discussed other business arrangements with Kirkman and he added:
And because of the nature of the dealings that had been occurring with us, the dealings over the canopy, the concrete slabs, and the fact that he said to me that he didn’t have large sums of cash but that he could borrow money, I asked Mr Bell to assess Mr Kirkman as a suitable joint venturer. And so I hadn’t offered to Ian, at this point, a percentage in the deal.
In the course of his cross-examination by Mr Robertson for Bell, Buck gave the following evidence:
QYou knew that he was – that is Mr Kirkman – willing to go into the olive development, didn’t you?
AYes.
QYou knew that, to be able to fund the development, he would have to raise finance; that’s right?
AThat’s right.
QYou did not engage Mr Bell to determine whether Mr Kirkman was willing to enter into the development, did you?
ANo.
QYou didn’t engage Mr Bell to determine whether Mr Kirkman would need to raise finance for the development, did you?
AI engaged Mr Bell to determine if Mr Kirkman was a suitable person for the venture.
QCan you answer my question: you didn’t engage Mr Bell to determine that Mr Kirkman needed to raise finance?
ANo.
QYou didn’t engage Mr Bell to determine what a fair price was for sale of the land, did you?
ANo.
HIS HONOUR
QWhen you say that you engaged Mr Bell to determine whether Mr Kirkman was a suitable person, in what respect, what did you expect him to do?
ABecause of the transactions that had taken place earlier; namely, the matter of the shed awning and the concrete slabs and the statements that Mr Kirkman didn’t have big sums of cash, but that he could make payments, I asked Mr Bell to determine whether Mr Kirkman was suitable to do this project, because Mr Kirkman had indicated he would like to do something with the olives. They were his words. On two or three occasions, within the space of a week or two between them, it just came up from time to time.
QYou knew about the matters, the shed and the concrete, you were involved in those transactions?
AI did.
QWhat could Mr Bell do beyond what you already knew?
AHe could determine whether or not in fact Mr Kirkman was able to raise the money required for this project.
QHe did, didn’t he, in the end he did raise money?
AHe raised money, albeit, only on my asset of land and water and none of the money was available when it was required, when we tried to plant trees in December ’01.
QDo you say that you expected Mr Bell to undertake an examination of Mr Kirkman’s financial affairs to see how sound he was, with a view to whether he would be an appropriate partner in business?
AYes.
QDid you ask Mr Bell the result of his inquiries, in due course?
AMr Bell was introduced to Mr Kirkman to perform the duties we just outlined; that is to determine Mr Kirkman’s suitability, and it began to progress so quickly, with so many meetings, that I never specifically asked Mr Bell if he had determined the facts of the engagement.
QYou considered it was important enough to ask him to undertake that procedure?
AYes.
QAnd you wouldn’t have done that unless it was an important matter in your mind?
ANo.
QDo you say as events took place you just didn’t bother to ask him as to the result of any inquiries he might have made?
AAs events took place it seemed to be concluded that Mr Kirkman could – so documents were beginning to be prepared and requests were being made of me of costs of establishing the project, like posts and labour and trellising and these sorts of things, and these were submitted and acknowledged that they could be provided.
QSubmitted to whom?
ASubmitted to Mr Bell and Mr Kirkman.
QDid you get a report back from Mr Bell, as to whether he thought that Mr Kirkman could arrange finance to cover those expenses?
ANo. I got told regularly that the finance was all approved and not to worry, that we’d have lots of money. I was told that very regularly.
Bell denied that he was asked to assess Kirkman’s suitability in these respects. However, he did say that Kirkman’s ability to raise finance became evident. He gave the following evidence when cross-examined by Buck:
QIsn’t it the case that I had introduced you to Mr Kirkman with the view to establishing his suitability as a joint venturer and his ability, his suitability related to his ability to raise finances?
AAs to suitability, it was never an issue. As to ability to raise finance, we’d established that early in the piece, that Mr Kirkman had that ability.
QHow did you establish that Mr Kirkman had that ability?
ABy talking with his financier, and with the approvals that had been put into place.
QDid those approvals that were put in place initially end up being inadequate?
HIS HONOUR: What do you mean by that?
MR BUCK:The initial finance obtained from Murray Mortgage Brokers, Murray Mortgage –
HIS HONOUR: Was inadequate for the purposes of the project?
MR BUCK:Yes your Honour.
AIn respect of the initial proposal to acquire the land, I believe that approval had been obtained via Murray Finance, and then I understand that between you and Mr Kirkman, both of you had agreed that you would want to go and buy more equipment, and therefore that you would both go back and arrange for additional financing.
Bell did not record in his extensive notes of the earlier discussions between him and Buck that it was his position to investigate whether Kirkman was willing and able to assess adequate capital for the development. It was not mentioned in any correspondence between Buck and Bell.
I find that Bell was not asked by Buck to undertake this assessment. Buck gave evidence that, although he requested Bell to do this, he (Buck) did not ask any questions in order to follow up enquiries which might have been made about Kirkman’s suitability.
In any event, I find that Kirkman was able to organise sufficient funding and that this funding was used to finance the development up to the time when the relationship between Buck and Kirkman broke down. Furthermore, the breakdown of the relationship was not due to lack of adequate funding.
In summary, I find that Bell did not make a representation along these lines to Buck. I accept that he was not asked to investigate Kirkman’s willingness and ability to access adequate capital for the development.
The next matter which is alleged in para 12 of the counterclaim is that Kirkman and Bell represented to Buck that, by receiving a beneficial entitlement of 42.5 per cent of Coz, Buck was receiving adequate compensation for the land and water licences.
There is no evidence that Kirkman made a representation in these terms to Buck. In any event, I accept Kirkman’s denial that this was not said. It would appear that Buck had these percentages in mind when negotiating with other parties before the discussions with Kirkman. He mentioned the percentages to Bell when he was explaining the result of his discussions with Kirkman.
According to Buck’s evidence, Bell commented on the adequacy of the share which Buck was to receive. Buck’s evidence is as follows:
AIt was represented to me, as I previously testified, on I think at least two occasions at the Days Road premises, by Mr Bell in particular, that 42.5% of Coz was adequate compensation to me for these arrangements. There were two distinct times that was mentioned to me.
QWhen were they?
AAround the time when – just prior or the signing of the October 5 document, with the share transfer and the trust deed, etc.
QBefore or after the signing of that document?
ABefore. I don’t believe it was mentioned particularly to me by Mr Kirkman.
Bell denied these allegations in the following passage of his evidence:
QI wish to draw your attention to 5 October 2001 when the documents were signed in Mr Kirkman’s office and I put it to you that on that occasion you indicated to me twice that 42.5% in Coz was adequate compensation for the signing of these documents.
ANo.
QI put it to you Mr Bell that you did on two occasions at that time, on 5 October, say to me that 42.5% of Coz was adequate compensation for what we had just signed?
ANo.
I found Bell to be a more reliable witness than Buck and I accept his denials. They are consistent with his note to Buck on 8 August 2001 (D11) that the “dollars” aspect of the deal was for Buck. The probabilities are that Bell left the financial appropriateness of the deal to Buck but provided advice as to how it might be effected. I do not accept that, at this late stage in the steps leading up to the signing of the agreements, Bell referred to the adequacy of the compensation Buck was to receive.
Conspiracy
In para 19 of the counterclaim it is pleaded that Coz, Kirkman, BSBS and Bell conspired to defraud and injure Buck. The particulars pleaded in support of this claim are that Bell and Kirkman:
19.3.1arranged for a solicitor to prepare and for Buck to sign an agreement for Buck to sell the land to Kirkman and/or nominee for $120,000.00 in circumstances where Kirkman, Coz through Kirkman, Bell and BSBS through Bell must have been aware that the value of the Land was substantially in excess of that figure. In making that assertion regarding awareness of the value of the Land Buck relies upon the fact that Bell and Kirkman procured John Dawes a valuer to value the land and in a written valuation dated 4^th January 2002 he valued the Land (on the basis that it had the water rights) at $460,000.00.
19.3.2caused to be prepared and Kirkman signed a transfer of shares to transfer to Buck 4,250 shares in Coz.
19.3.3on a date unknown to Buck caused to be prepared heads of agreement in favour of Kirkman pursuant to which Kirkman and/or nominee could buy the Land from Buck for $250,000.00.
19.3.4procured on or about 23^rd November 2001 that Buck’s company Scrap Metal Management Pty Ltd should invoice to Kirkman or Coz (the invoice is unclear) plant for a total for $330,000.00 including GST.
19.3.5caused to be prepared on or about 5^th October 2001 applications for Buck to transfer the Water Licences to Coz.
19.3.6on or about 5^th October 2001 prepared a “letter of confirmation” which was signed by Kirkman pursuant to which Kirkman:-
19.3.6.1confirmed execution of a contract for the sale of the land
19.3.6.2confirmed the intention to allot to Buck shares so that he would have 42.5% of Coz.
19.3.7on or about 5^th October 2001 caused to be prepared a declaration of trust which Kirkman signed in relation to 42.5% of the shares in Coz.
19.3.8on or about 5^th October 2001 prepared a preliminary management agreement between Buck and Kirkman which Buck and Kirkman signed pursuant to which amongst other things:-
19.3.8.1Kirkman would have a position of authority in respect of most areas of day to day management (of the Land) and would involve Bell as part of the management team
19.3.8.2Bell would also represent Buck’s interests in certain dealings
(at the trial Buck will refer to the agreement for its full terms and effect).
19.3.9On or about 5^th October 2001 prepared an agreement which was executed by Buck and Coz by Kirkman pursuant to which Buck agreed to transfer the Water Licences for $15,000.00 to be paid by paying arrears due to Department for Water Resources under the Water Licences
The relief sought under this heading is a declaration that the agreements entered into on 5 October 2001 are void ab initio.
Reliance is placed on various overt acts. The assertion in para 19.3.1 must be considered in the context of all the relevant circumstances. The land was not valued until after the agreements made been entered into on 5 October 2001. The broad terms of the agreement had been discussed between Kirkman and Buck before Bell became involved. The facts relied upon in para 19.3.1 do not, when considered alone or in conjunction with the other facts pleaded under this heading, provide any support for the contention that there was a conspiracy between Bell and Kirkman to defraud Buck.

The act pleaded in para 19.3.2 does not support the suggestion of fraud. The circumstance raised in para 19.3.3 appears to have been inserted in error. The consideration of $250,000.00 was lent on other properties owned by Buck and has no relevance to the Halidon property. Para 19.3.4 refers to an event after the initial agreements were signed and has no relevance to the allegation of a conspiracy to defraud in relation to those agreements. Paras 19.3.5 and 19.3.6 relate to matters which Buck and Kirkman had discussed and agreed upon in principle before Bell became involved. Para 19.3.7 refers to the declaration of trust which, I am satisfied, was prepared to protect Buck’s shareholding against the consequences of his possible bankruptcy. The preliminary management agreement referred to in para 19.3.8 and the aspect of the agreement referred to in para 19.3.9 appear to reflect the wishes of Buck and Kirkman at the relevant time.
Most of the overt acts alleged were not in dispute, although the assertions in paras 19.3.1 and 19.3.4 were not proved. However, the proved facts do not establish a conspiracy to defraud Buck.
Unconscionable conduct
One of the bases relied upon for the setting aside of the agreements of 5 October 2001 is alleged unconscionable conduct by Bell and Kirkman.
The particulars upon which this pleading is based are set out in para 14.7 of the counterclaim as follows:
Buck was at all times at a special disadvantage in dealing with Bell and Kirkman because of Buck’s:-
14.7.1ignorance and inexperience about financial matters
14.7.2ignorance and inexperience about accounting matters
14.7.3ignorance and inexperience about company matters
14.7.4financial need and in particular his lack of funds to develop the land (which in turn placed financial pressure on his ability to keep up payments required in connection with the finance and other expenses of the Land).
14.7.5lack of appropriate and adequate assistance from Bell
14.7.6lack of appropriate and adequate explanation from Bell.
Bell was in a stronger position than Buck because of Bell’s:-
14.7.7business knowledge and experience
14.7.8accounting knowledge and experience
and the fact that he was not under financial pressure.
Kirkman was in a stronger position than Buck because of Kirkman’s:-
14.7.9business knowledge and experience
14.7.10the fact that he was not under financial pressure.
In those circumstances there was an absence of any reasonable degree of equality between Buck on the one hand and Bell and Kirkman on the other hand and those facts were evident to Bell and Kirkman who took advantage of the situation to Buck’s disadvantage in having Buck enter into the Land Agreement and the Water Licences Agreement. Buck’s will was overborne by Bell and Kirkman. Alternatively Buck was unable to make worthwhile judgments as to what was in his best interests.
I have borne in mind the explanation of the concept of unconscionable conduct given by Kitto J in Blomley v Ryan[1]:
It applies whenever one party to a transaction is at a special disadvantage in dealing with the other party because illness, ignorance, inexperience, impaired faculties, financial need or other circumstances affect his ability to conserve his own interests, and the other party unconscientiously takes advantage of the opportunity thus placed in his hands.
[1] (1956) 99 CLR 362 at 415.
Mason J commented on the judgments of Fullagar and Kitto JJ in Bromley v Ryan in his judgment in Commercial Bank of Australia Ltd v Amadio[2]:
It is made plain enough, especially by Fullagar J, that the situations mentioned are no more than particular exemplifications of an underlying general principle which may be invoked whenever one party by reason of some condition or circumstance is placed at a special disadvantage vis-à-vis another and unfair or unconscientious advantage is then taken of the opportunity thereby created. I qualify the word “disadvantage” by the adjective “special” in order to disavow any suggestion that the principle applies whenever there is some difference in the bargaining power of the parties and in order to emphasize that the disabling condition or circumstance is one which seriously affects the ability of the innocent party to make a judgment as to his own best interests, when the other party knows or ought to know of the existence of that condition or circumstance and of its effect on the innocent party.
[2] (1983) 151 CLR 447 at 462.
There is an underlying suggestion in the pleadings that Bell and Kirkman co-operated in causing Buck to act to his detriment. The evidence provides no support for this suggestion.
However, that consideration aside, there is little to suggest that Buck was placed at a special disadvantage by reason of a lack of knowledge of financial and related matters. He said he left school during Year 12. Subsequently he completed a two year bible course at the Adelaide Bible Institute. He operated his own business for some time and employed others. He purchased various properties and he has entered into loan transactions. He conducted his own case and, although he does not possess any legal or accounting skills, he demonstrated an ability to understand business and financial concepts.
As has been pointed out, he was under financial pressure at the time of these transactions. However, that is insufficient by itself to attract this doctrine. There must be some special disability and a taking advantage of that disability by another in circumstances which render the relevant transaction unfair.
Lack of understanding of the nature of the transaction may be a relevant factor and, in the pleadings in the present case, there is a complaint of lack of advice in relation to the agreement with Kirkman. However, it would appear that Buck did understand the nature of the transaction and its implications. The dissatisfaction with the agreement when it did arise resulted from an inability by Kirkman and Buck to work together on the project.
If it were relevant to reach a decision on whether the agreements of 5 October 2001 should be set aside by reason of unconscionable conduct, I would not be prepared to make such a ruling. However, for reasons which I have explained, it does not appear necessary to decide this issue.
The claim of breach of contract by BSBS
It is pleaded in the counterclaim that:
9.2Buck orally engaged BSBS as his accountant and business advisor to determine whether Kirkman and/or Coz were willing and able to fund the development of the Land into an olive grove in exchange for an appropriate interest in the Land.
Paragraph 14.8 of the counterclaim alleges a breach of the contract as described in para 9.2 by reason of the following:
The engagement was to determine whether Kirkman and/or Coz were willing and able to fund the development of the Land into an olive grove in exchange for an appropriate interest in the land. An accountant and business adviser acting in a proper and professional manner in those circumstances would have determined from Kirkman and Coz:-
14.8.1what specific development they or either of them were or was prepared to develop
14.8.2how the development would take place
14.8.3how much would be spent on the development
14.8.4where the funds therefore would come from
14.8.5when the funds would be paid
BSBS did none of these things.
Further an accountant and business adviser acting in a proper and professional manner would have ensured that the transactions between Buck and Kirkman and/or Coz were so structured that Kirkman and/or Coz received in exchange for the total funded and to be funded in connection with the development of or otherwise in connection with the Land, no more than a proportional interest in the land corresponding with the ratio between the amount to be funded and the value of the land. Instead, the Land Agreement and the Water Licences Agreement provided for a purchase price of the Land and Water Licences collectively of $135,000.00. The value of the Land and the Water Licences collectively was $460,000.00. That was an immediate loss to Buck of $325,000.00. By receiving a 42.5% shareholding in Coz that loss could be reduced to $186,875.00 as long as Buck received and retained the shareholding and as long as the capital of Coz was not depleted. Any development funds expended by Kirkman and/or Coz on the land would not and did not go to reduce Buck’s loss because Coz and/or Kirkman always intended and it was later the case that those development funds were by way of a loan to Coz.
I have stated my finding that neither Bell nor BSBS were engaged to determine whether Kirkman and Coz were willing and able to fund the development.
Before dealing with the further matters pleaded in para 14.8 of the counterclaim it is appropriate to set out the discussions between Bell and Buck in more detail.
It is clear that Buck consulted Bell originally to obtain assistance with his financial affairs generally. Advice was required because of the serious financial position in which Buck found himself.
However, after the first few meetings it became evident that Buck was anxious to pursue the discussions which he had commenced with Kirkman in relation to the growing of olive trees on the Halidon property.
The meetings and discussions between Buck and Bell were recorded by Bell. At their first meeting on 3 July 2001 Bell took extensive notes of what he was told by Buck about the latter’s financial position. Although the Halidon property was mentioned and the previous attempts by Buck to reach agreement with third parties on the development of the land were explained to Bell, nothing was said about the Kirkman negotiations. The immediate concern was Buck’s precarious financial situation.
The emphasis of the discussion at their second meeting on 30 July 2001 was on Buck’s borrowings, although there was some reference to the early discussions with Quinn about a development proposal for the Halidon property.
In a telephone conversation on 1 August 2001 Buck gave further details about his finances and Kirkman was mentioned for the first time. Buck told Bell that Kirkman was a “transport person” who wanted some figures in relation to the proposal. Bell’s notes refer to “1/2 shares of the section to be developed”.
This was followed by a meeting between Buck, Bell and Kirkman on 3 August 2001 at Kirkman’s premises. Bell said in evidence that the meeting was to discuss Kirkman’s involvement in the olive grove. This was one occasion on which no notes were made of the actual discussion.
Then there was a meeting between Bell and Buck on 7 August 2001. Bell’s notes record the proposal that Buck would become a 42.5 per cent shareholder in a company in which Kirkman then had a 100 per cent shareholding. Kirkman would also have 42.5 per cent and the remaining shares would be divided between Scheer and Paz. Bell’s note states “Ian [Kirkman] is to put in $120,000 now to pay out NAB”. The note also states:
Ian’s $120,000 takes out the NAB for 42% [sic] interest. Subject to valuations, $300,000 land.
I accept Bell’s evidence that he was being told by Buck that this was what was being proposed by Buck and Kirkman.
Refreshing his memory from his notes which state “Ian doesn’t have money – prepared to commit in $ (Ian to match what spent)”, Bell gave evidence that this was part of Buck’s explanation of the proposal. The note goes on to detail how much of the property was to be planted and when.
I accept Bell’s evidence, supported as it is by his notes, that he had no input into the proposal at this stage and that the result of the discussions between Buck and Kirkman was being relayed to him.
It was at this stage that Bell prepared the draft heads of agreement (D 11) and reminded Buck that he would need to concentrate on the “dollars”.
I return then to the assertions in para 14.8 of the counterclaim where it is pleaded, as an implied term of the engagement of Bell, that Bell and BSBS were required to investigate the matters referred to in paras 14.8.1 to 14.8.5 inclusive.
It is apparent from the evidence that, up until the time of the signing of the agreements on 5 October 2001, Bell’s involvement as an adviser in relation to the development was confined to the structure of the joint venture. There is no evidence upon which to base a finding that, at this stage, the involvement extended to investigating the matters referred to in para 14.8 of the counterclaim which are concerned with the conduct of the proposed development. Bell’s letter to Buck of 4 October 2001 was directed to Bell’s possible involvement in the management of the development in the future. However, that was not to be the case. There is no suggestion that Bell was required to investigate the matters referred to in paras 14.8.1 to 14.8.5 of the counterclaim after the agreements had been signed.
The further duty alleged in para 14.8 of the counterclaim focuses on the purchase price of the land and water licences stipulated in the agreements of 5 October 2001 as compared with the subsequent valuation of the land including water licences. The pleading goes on to state that the loss which is claimed by Buck and which is evidenced by the valuation, was not reduced by funds spent by Coz and/or Kirkman in the development of the land because Coz and Kirkman “always intended and it was later the case that those development funds were by way of a loan to Coz”.
The pleading, although couched in specific terms, should be read as raising the wider question whether Bell was required to advise on the business efficacy or financial appropriateness of Buck entering into the transactions of 5 October 2001.
Again, it is relevant to have regard to the background to the engagement of Bell by Buck. Buck was determined to find a co-adventurer for a project which he was confident would be a financial success. Previous attempts to find such a person had ended in failure. The project was tied to the land which was mortgaged and Buck, who had not serviced the loan for some time, had no prospects of serving it in the future. The bank was about to foreclose. If he wished to retain an interest in the land and pursue the development, the amounts owing had to be repaid by way of refinancing or otherwise. In addition, further finance was necessary for the development. Kirkman’s assistance was essential in both respects.
It was in these circumstances that Bell prepared the draft heads of agreement and reminded Buck that he would need to concentrate on the “dollars”. It was not put to Bell in evidence that he should have recommended that the property be valued, and, in my view, that was not a necessary requirement of any duty which Bell owed to Buck, whether in contract or tort.
However, the reference to Kirkman raising the money for the development by way of a loan to Coz requires some comment.
I have recorded that, after Buck’s refusal to go ahead with the agreements of 5 October 2001, the first action against Buck was commenced on 12 March 2002. Later in these reasons, I refer to the involvement of Mr Randle, a solicitor, who commenced acting for Buck in this matter in March 2002.
As the negotiations between the parties conducted by their respective solicitors moved towards settlement and the eventual execution of the deed of settlement on 25 July 2002, Kirkman proceeded to put in place finance for the payment of the loan monies secured by the mortgage over the land, the payment of the arrears on the water licences and the monies needed to finance the early stages of the development. A loan of $257,600 which was sought from the Commonwealth Bank was approved on 21 May 2002. Under the terms of the loan which was entered into before settlement on the property on 20 August 2002, the funds were lent to Coz. The loan was secured by a charge on the assets of Coz, Melkilt (Kirkman’s company) and a personal guarantee from Kirkman.
This arrangement was advantageous to Kirkman to a certain extent in that the borrower was Coz and the assets of Coz were being used as part of the security. The amount which was borrowed included the amount due under the previous loan. It was not obtained by means of a separate loan to Kirkman. On the other hand, he and his interests incurred responsibilities in relation to the total loan and it could not have been obtained by Buck without Kirkman’s involvement in this respect.
There is little evidence as to the circumstances in which the loan was arranged. Mr Randle was apparently aware of what was proposed because he said in evidence that one of his original concerns was that Coz was not receiving money from outside and the property was being used to provide finance.
However, by this time it would appear that Bell was not playing a central role in the settlement of the action and there is no evidence upon which to base a finding that he breached the contract with Buck or was in breach of a duty of care in not providing advice to Buck on this issue.
I reject the argument that Bell breached the terms of his engagement in the manner pleaded.
In considering the terms of engagement of Bell I have taken into account the letter which he wrote to Buck on 4 October 2001 (D 18), the day before the three agreements were signed. The emphasis in the letter is on the role which Bell is to play in the proposed development after the agreements have been finalised. He refers to his role of negotiator in somewhat vague terms, but I assume he is referring to past as well as present actions. On the other hand, I do not think the contents of the letter support the assertions in the counterclaim that he was required to assess the appropriateness of Kirkman as a co-adventurer or that his duty to advise Buck extended to the business efficacy of the transaction.
The claim of breach of duty of care
The claim in tort that BSB and Bell breached their duty to Buck must fail for the same reasons. The breach of duty is based on the pleadings in para 14.8 of the counterclaim which are set out above. For the reasons which I have set out in the previous section on contractual liability, it is my view that it was not part of the duty of care of these defendants to undertake the responsibilities set out in that paragraph.
Conflict of interest
It is pleaded in para 11.1.2 of the counterclaim that BSBS and Bell owed a duty to Buck:
not to place themselves in a position with respect to Buck where the interests of BSBS and Bell respectively or those of another client of BSBS conflicted with Buck’s interests.
In para 14.9 of the counterclaim it is asserted that there was a breach by BSBS and Bell of the duties referred to in para 11.
The relevance claimed for conflict of interest seems to be in relation to the contractual and tortious duties owed by these defendants to the plaintiff.
I have referred to the statement in the management agreement to the effect that, when the development project came into operation, Kirkman, Buck and Bell would be accountable and responsible for the future success of the development.
I have also referred to the letter which Bell wrote to Buck on 4 October 2001 (D 18) in which Bell sought to clarify his role in acting for Buck. Apart from referring to his prospective role as part of the management team with the project, Bell observed that he had taken a “negotiation” position between Buck and Kirkman in respect of their dealings in the venture. The letter continued:
It is in this position as “negotiator” that there may be a conflict of interest. I consider that at all times I am acting in your best interests and you have made it very clear to me that you have been happy to do business with Ian Kirkman in this way.
If you have any doubts about the role I am taking in respect of the sale of assets to COZ Equipment Pty Ltd and/or dealings with Ian Kirkman, then I strongly suggest you seek independent advice on any commercial matters being proposed between you and Ian Kirkman acting on behalf of COZ Equipment Pty Ltd.

I have pointed out that Buck acknowledged receipt of the letter and confirmed its contents in writing.
As Bell conceded in the letter, there may have been some potential for a conflict of interest when he undertook the negotiation role to which he referred. However, nothing emerges from the evidence which would give rise to concern that Buck was disadvantaged in some way as a result of a conflict of interest. There was also full disclosure of the possible conflict and a suggestion that Buck obtain independent advice if he had any doubts about the matter. It must be inferred from his actions that Buck gave an informed consent to the continuation of Bell’s role.
In my view the claim of conflict of interest does not assist Buck in advancing the causes of action pleaded by him.
The Deed
I now turn to the plaintiff’s principal claim for relief which is based on the deed entered into on 25 July 2002. It is appropriate to summarise the background to the execution of the deed.
Philip Buck’s brother, Stephen Buck, and his sister Merilyn Gossert, agreed to provide assistance and advice to their brother in about February 2002. Ms Gossert and Stephen Buck were called to give evidence by Philip Buck. Stephen Buck gave evidence that he runs a large transport business. Ms Gossert also said that she conducts a large business in Sydney.
At first, Stephen Buck and Merilyn Gossert were prepared to pay out the loans on the Halidon property on condition that it would be transferred into their names. It was envisaged that Philip Buck would then go ahead with the project, but on his own and, perhaps, on a part-time basis Ms Gossert told him that she and Stephen Buck would not finance the olive growing project. She understood that the water licences would be transferred to her and Stephen Buck at the time the land was transferred.
It appears that Ms Gossert was unaware of the full nature of the dealings between Philip Buck and Kirkman. When she was enquiring about the outstanding loans on the property she discovered that Kirkman had caused a caveat to be placed on the property. It was at this point that she decided not to become involved in assisting with finance. Stephen Buck continued on in the role of adviser to Philip Buck while Mr Randle assisted in the negotiations which led to the execution of the deed.
After the first action was commenced in March, 2002 Buck consulted Mr Randle, who is an experienced commercial lawyer. Mr Randle acted for him in relation to the matter until the deed was signed in July 2002.
As has been pointed out, the first action sought specific performance of the contract for the sale and purchase of the Halidon land dated 5 October 2001. It also sought an order directing Buck to do all things necessary to complete the transfer of the water licences to Coz.
There were extensive negotiations between Mr Randle and solicitors acting for Kirkman and Coz over this period. The issues presented by the first action were discussed between Mr Randle, Mr Stephen Buck and Mr Philip Buck.
Mr Randle was called to give evidence by Philip Buck. He said that when he took instructions he had some concerns about the transactions which had been entered into. He referred to the consideration which had been paid for the property by Coz as compared with the valuation which was obtained at the bank’s request after the parties had entered into the agreements. He also pointed out that Coz did not appear to be bringing in money from outside, but was using the land by mortgaging it to provide finance.
Mr Randle described the events which led up to the execution of the deed. Some of the provisions of the deed have been listed above. There was an agreement that Coz would pay for expenditure which had been incurred in the development of the property. These items were listed in a schedule to the deed. The deed also provided that Buck was to be given an option to purchase Kirkman’s interest in the share capital of Coz on terms set out in the deed. The option was to be exercised within 15 months of the date of the deed. As part of the exercise of the option Buck would be required to satisfy liabilities which had been incurred by Kirkman or Melkilt in relation to Coz and would be required to pay, in addition, 20 per cent of the repayment amount. As events turned out Buck did not exercise the option.
The case for the plaintiffs
The case for the plaintiffs is simply stated. Whatever might have occurred before the signing of the deed, it provides that the parties had agreed to resolve all matters in dispute between them on the terms set out in the deed. There is a recital of background facts which the deed states are accurate, and to the extent necessary, are to be incorporated in the deed. Included in its provisions is a requirement that Buck, within seven days of the date of the deed, do all things necessary to complete the transfer of the water licences to Coz.
The execution of the deed is admitted on the pleadings, but in para 10 of the defence Buck denies that it is enforceable and relies on the matters set out in the counterclaim.
It is pleaded in the counterclaim that there are grounds on which the deed should be set aside. The relevant pleading begins as follows:
24 By:-
24.1oral representation to Buck made on and/or shortly before 25^th July 2002
24.2written representation to Buck made on and/or shortly before 25^th July 2002 contained in the deed referred to below
Coz and Kirkman represented to Buck that in return for Buck specifically performing the Land Agreement and the Water Licences Agreement Coz would, and Kirkman would ensure that Coz did:-
24.3pay the outstanding accounts listed in schedule 1 of the deed within seven days of execution of the deed
24.4fund the cost of maintaining the Land during a period more specifically set out in the deed
24.5fund the cost of developing the Land
24.6carry out development of the Land with the approval and consent of Buck
24.7cause Coz’s accountant to provide to Buck at the end of each month amongst other things information concerning loans made by Coz in terms of the deed
24.8allow Buck to continue as project manager of the Land
25In fact Coz and Kirkman never had any intention that Coz would do any or all of the matters referred to in paragraph 24 above.
The pleading then sets out particulars to support the allegation that Coz and Kirkman had no intention to do any or all of the matters referred to in para 24. It is then pleaded that the representations referred to in para 24 were misleading or deceptive contrary to s 52 of the Trade Practices Act 1974 and s 56 of the Fair Trading Act 1987 or, in the case of future statements, that they came within s 51A of the Trade Practices Act 1974 and s 54 of the Fair Trading Act 1987. It is also pleaded that the misrepresentations constituted unconscionable conduct at law or in equity or contrary to s 51A of the Trade Practices Act 1974 (para 26.7).
In short, it is pleaded that Coz and Kirkman gave various undertakings in the deed which were not carried out. The fact that they were not carried out is said to reveal an intention on the part of Coz and Kirkman at the time the deed was executed not to fulfil the undertakings. It is argued that, as a consequence, the undertakings amounted to misrepresentations.
It is pleaded that the alleged misrepresentations induced Buck to enter into the deed and that, the deed should be set aside as a consequence.
It is necessary to consider each of the alleged misrepresentations.
Para 24.3 of the counterclaim refers to Schedule 1 of the deed. The schedule sets out the expenses which had been incurred on the development up to the time of the execution of the deed and which were required to be paid by Coz. The total amount is $85,213.48. Schedule 2 of the deed particularises items purchased for use in the development which had been paid for by Melkilt. They total $75,604.
The pleading refers to a representation that the amounts would be paid within seven days of the execution of the deed. This pleading discloses a misunderstanding of this provision in the deed. In fact, the deed provides in clause 4.1 that the amounts in Schedule 1 are to be paid within seven days of the date of settlement of the transfer of the land and water licences. As pointed out previously, Buck did not arrange for the transfer of the water licences and still has not done so. In any event, it is an agreed fact that all amounts set out in the Schedule have now been paid. It has not been established that there was a breach by Coz or Kirkman of the deed in this respect or that there was any misrepresentation by either in this respect.
Next, the counterclaim alleges that Coz failed to pay for items such as Buck’s motor vehicle expenses, electricity consumed on the property, maintenance work, fertiliser, telephone services, fence posts, lease instalments on equipment, rates and taxes and other development costs particularised in para 25.1.3 of the counterclaim. It is also alleged that Coz failed to pay wages to Buck and a worker resident on the property.
It is clear that the parties contemplated that Schedule 1 was to be exhaustive of Coz’s obligations in respect of the amounts due for expenses incurred up to the time of the execution of the deed.
Future expenses are also addressed in the deed. Clause 8.1 of the deed provides that Coz will permit Buck to continue as project manager of the land. Clause 8.2 provides as follows:
Neither Buck on the one hand nor Coz nor Kirkman on the other will cause any development or improvement of the Land to be carried out without the prior consent of the other and each agrees to consult fully with the other regarding any proposed development or improvement.
The deed provides that Mr Bruce Adam would be appointed as an “agreed accountant” to provide Buck with certain financial information at the end of each month.
As has been pointed out, it is Buck’s case, as pleaded in the counterclaim, that he incurred expenses in relation to the development which were not paid for by Coz or Kirkman and that this evidences an intention on the part of Coz and Kirkman not to comply with their obligations under the deed. According to the pleadings, Coz and Kirkman misrepresented their intention to Buck and this conduct contravened the Trade Practices Act 1974 and the Fair Trading Act 1987, thus providing a basis for an order that the deed be set aside.
It became evident during the hearing that some of the expenses relied upon by Buck to support this case were incurred before the execution of the deed and were thus irrelevant for the purposes of this aspect of Buck’s case. Furthermore, it is apparent that other expenses relied upon by Buck were not brought to Kirkman’s attention because of the breakdown in communication between the parties.
An example which was referred to in Buck’s evidence relates to an amount for hay used to feed goats which had been placed on the property. The account was not paid. Buck gave the following evidence about a demand for payment for the hay made by an agent acting on behalf of the supplier:
QWhat was the hay for?
AFor feeding the goats.
QWas this document passed on for payment at all?
AI don’t believe so, there was virtually no communication between us and hay had been purchased from two or three places, and was being consumed at a great rate really, because there was no feed down there; very little. (T 431)
Kirkman stated throughout his evidence that Buck failed to provide complete details of financial expenditure. He said he had requested such details and tendered a facsimile transmission (P 35) dated 18 February 2003. The transmission stated in part:
You have failed to respond to all requests for financial, budgets and other information as reasonably requested and as required to be provided by you subject to the Deed.
Buck was cross-examined about the document:
QIt is the case, is it not, that between around about the middle of August 2002 and the date of this fax transmission of 18 February 2003, you had not been in communication with Mr Kirkman?
AThat’s correct.
QNor had you been in communication with Mr Adam, the accountant.
AThere may have been some communication with Mr Adam. I know I went down there – I’m not sure of the time frame, but I did visit the office on at least two occasions and made about three phone calls. I spoke with Mr Adam once, personally, in the office and I may have spoken with him once on the telephone, but, generally, he wasn’t in there and I wasn’t put through to him when I called.
QIs it fair to say, though, that you hadn’t provided any documentary material, by way of financial or other budget?
AThe documentary material required for the funding and commencement of the project was provided in the form of costs before December ’01, and this was the basis for proceeding.
QI’m just asking in the time frame between the middle of August 2002 and 18 February 2003?
AThe only document that I produced was the document which I took to the meeting after the deed, which meeting broke down, and there were not a great deal of entries as to costs on that document.
QApart from that one document, no other documents were provided by you?
ANo. (T 556-557)
A further allegation in the counterclaim is that Mr Adam, the accountant appointed under the deed as “the agreed accountant” did not supply financial information to Buck as required by the deed. There is also an assertion that he was the accountant for Coz and Kirkman and was “never likely to act in terms of the deed” (para 25.1.4).
The relevant provision in the deed is clause 5.4 which provides as follows:
Kirkman and Coz will cause the agreed accountant (as defined below) to provide to Buck at the end of each month during which the agreement is in place information regarding:-
5.4.1The amount outstanding under any loan to or obligation of Coz in respect of which either or both of Kirkman or Melkilt has provided a guarantee, indemnity or security; and
5.4.2The total amount outstanding by Coz to either Kirkman or Melkilt.
Mr Adam was called to give evidence. Buck had a brief meeting with him shortly after the deed was executed. Mr Adam attempted to obtain information about spending on the project from Buck, but was unsuccessful. He wrote to Mr Stephen Buck requesting the information, but without success. Mr Stephen Buck replied on 25 September 2002 that there had been a “stand-off” in the relationship between Mr Philip Buck and Kirkman (P 56).
It seems that the situation which had been reached with Mr Adam reflects the general breakdown in the relationship between Buck and Kirkman. However, that may be, the circumstances do not support the claim that Kirkman and Coz misrepresented their intentions prior to the execution of the deed.
A further misrepresentation pleaded by Buck concerns an alleged entitlement to weekly remuneration of $500.00 said to arise out of an oral agreement between Buck and Kirkman made around November or December 2001. According to the counterclaim, Buck made a number of requests for remuneration after this agreement, but the requests were ignored.
There was no provision for remuneration of this nature in the deed. I find that in January 2002 Bell prepared a document (D 52) on Buck’s instructions which was described as an “additional agreement” between Buck and Kirkman. It provided for remuneration for Buck at a salary of $500.00 per week. The document was signed by Buck on 21 January 2002, but it was not signed by Kirkman. Kirkman denied that he agreed to the contents of this document. The circumstances give rise to no more than a proposal by Buck which was not agreed to by Kirkman. I am not satisfied on the evidence that there was an agreement for remuneration in this amount or that the issue of remuneration could in some way give rise to a misrepresentation requiring a finding that the deed be declared void.
According to the counterclaim, Kirkman purported to terminate Buck’s position as project manager and exclude him from the property. It is the case that Kirkman faxed a notice to Buck on 16 April 2003 (P 39) which supports this claim. However, he stated in the fax that he had received no response to various communications sent to Buck and he added that Buck had not provided any information in relation to his activities on behalf of the company or his proposal and costing in relation to the future activities of the company. He gave this as the reason for his ultimatum. Again, a communication of this nature at a time when a dispute had arisen after the execution of the deed could provide no ground for declaring the deed void.
I return then to the pleadings in the counterclaim which set out the basis upon which it is claimed the deed should be set aside. It is pleaded that Coz and Kirkman made various representations that they would fund the cost of maintaining and developing the land and allow Buck to continue as project manager of the development.
It is argued that these representations were false in that Coz and Kirkman had no intention of doing that which they represented to Buck. According to the counterclaim, the proof of falsity is to be found in the fact that Coz and Kirkman failed to attend to the matters particularised in para 25 of the counterclaim.
It is clear from the evidence that the relationship between Kirkman and Buck broke down not long after the deed was executed. It is of particular significance that Buck failed to comply with the requirement to transfer the water licences to Coz. Most of the matters particularised in para 25 allege non-payment of development costs incurred in the project. I find that Buck did not communicate effectively with Kirkman so as to acquaint him with the expenditure which had been incurred. But, however the matter is viewed, what evidence there is in relation to the particularised complaints does not support the argument that action or inaction by Coz or Kirkman following the execution of the deed discloses a lack of intention by either of them prior to the execution of the deed to fulfil any undertakings which might have been given to Buck.
The argument that misrepresentations by Coz and Kirkman justify the setting aside of the deed under the Trade Practices Act 1974, the Fair Trading Act 1987 or as constituting unconscionable conduct must be rejected. For the same reasons the alternative claim for compensation for loss or damage which is also based on the alleged misrepresentations must be rejected.
I should add that Buck called three witnesses in addition to those to whom reference has been made. These witnesses, Mr Kruszewski, Mr Keller and Mr Sanderson gave evidence on peripheral matters and there is no need to refer to their evidence.
In my view, the plaintiffs Coz and Kirkman are entitled to an order that the first defendant perform his obligation under the deed to do all things necessary to complete the transfer to Coz of the water licences held in respect of the Halidon property.
The plaintiffs seek further relief.
Clause 9.1 of the deed provides as follows:
Buck agrees to pay to Melkilt the sum of $15,000.00 for his past use of the Days Road land and for his past storage of steel and equipment on the Days Road land, such payment to be made on the earlier of the date on which Buck exercises the Option or the Option expires pursuant to clause 5.
The option was not exercised by Buck and it is has now expired. It is admitted that the amount has not been paid. Melkilt is entitled to recover the sum of $15,000 claimed by it.
Evidence was given that Melkilt sold Buck a Bedford truck for $2,500. Buck paid a deposit, but he acknowledged in evidence that he has not paid the balance of $2,250. Melkilt is entitled to recover that amount.

There is evidence that Coz purchased some goats to be placed on the property. The purchase price of the goats was $5,005. The goats were subsequently sold by Buck for a reduced amount. Buck claims that he used the proceeds to pay for hay and electricity for the property. I accept this explanation. The consequence is that the proceeds were used for the benefit of Coz as the owner of the land and the claim for this amount is rejected.
Finally, evidence was given that sand filters supplied to Coz by Plasflo Irrigation were delivered to premises in Adelaide at Buck’s direction. I find that Buck has not accounted for them and that they remain under his control. Coz is entitled to an order that the filters be delivered to it.
In summary, I have reached the conclusion that the first plaintiff Coz is entitled to an order for specific performance of clause 3.1 of the deed requiring the first defendant to do all things necessary to complete the transfer of the water licences to Coz.
I have also found that Melkilt is entitled to recover from the first defendant the sum of $15,000 on account of his use of the Days Road land and a further sum of $2,250 being the balance of the deposit on the Bedford truck. I also find that Coz is entitled to an order for the delivery up of the sand filters supplied by Plasflo Irrigation.
The counterclaim by the first defendant against the defendants by counterclaim will be dismissed.