Evans v Collica [No 2]
[2015] WADC 96
•14 AUGUST 2015
EVANS -v- COLLICA [No 2] [2015] WADC 96
| DISTRICT COURT OF WESTERN AUSTRALIA | Citation No: | [2015] WADC 96 | |
| Case No: | CIV:1183/2013 | 9 - 12 DECEMBER 2014 & 12 MAY 2015 | |
| Coram: | LEVY DCJ | 14/08/15 | |
| PERTH | |||
| 52 | Judgment Part: | 1 of 1 | |
| Result: | Judgment for the plaintiff in the sum of $200,000 plus interest | ||
| PDF Version |
| Parties: | JOSEPHINE EVANS ELENA MARIA COLLICA |
Catchwords: | Misleading and deceptive conduct Duty of care Breach of fiduciary duty Precision required to prove oral representations Whether representations made in the course of trade or commerce Agency |
Legislation: | Australian Consumer Law s 4, s 18(1) Fair Trading Act 2010 (WA) s 18 |
Case References: | Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 592 G Lowe & Sze Tu Holdings Pty Ltd v Cudal Nominees Pty Ltd [1991] FCA 277 Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41 Micarone v Perpetual Trustees [1999] SASC 265 Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd [2010] HCA 31; (2010) 241 CLR 357 Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; (1992) 67 ALJR 170 Schipp v Cameron [1998] NSWSC 997 Shaddick v JDV Ltd [2012] WASC 120 Watson v Foxman (1995) 49 NSWLR 315 Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515 |
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
ELENA MARIA COLLICA
Defendant
Catchwords:
Misleading and deceptive conduct - Duty of care - Breach of fiduciary duty - Precision required to prove oral representations - Whether representations made in the course of trade or commerce - Agency
Legislation:
Australian Consumer Law s 4, s 18(1)
Fair Trading Act 2010 (WA) s 18
Result:
Judgment for the plaintiff in the sum of $200,000 plus interest
Representation:
Counsel:
Plaintiff : Mr P G McGowan
Defendant : Mr M F Rynne
Solicitors:
Plaintiff : John Benari & Associates
Defendant : Balmoral Legal
Case(s) referred to in judgment(s):
Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 592
G Lowe & Sze Tu Holdings Pty Ltd v Cudal Nominees Pty Ltd [1991] FCA 277
Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41
Micarone v Perpetual Trustees [1999] SASC 265
Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd [2010] HCA 31; (2010) 241 CLR 357
Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; (1992) 67 ALJR 170
Schipp v Cameron [1998] NSWSC 997
Shaddick v JDV Ltd [2012] WASC 120
Watson v Foxman (1995) 49 NSWLR 315
Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515
- LEVY DCJ:
The case in overview
1 In the period between February and March 2012 the plaintiff Ms Josephine Evans advanced the sum of $200,000 by way of loans to a mortgage broking firm called Carrington National Financial Group Pty Ltd. The director of Carrington National was Mr Biagio 'Gino' Marra.
2 In the period between March 2012 and February 2013 Carrington National made some interest payments on the loan money provided by the plaintiff (a total of $13,241.66), but ultimately defaulted on the loan.
3 The plaintiff claims that she made the money available to Mr Marra and Carrington National on the advice given, and representations made to her by the defendant Ms Elena Maria Collica in January and March 2012. The defendant was then an employee of Carrington National.
4 The plaintiff claims that the representations and advice were to the effect that investing the money with Mr Marra and Carrington National was a safe and good investment. It clearly was neither.
5 The plaintiff says that when the defendant gave the advice and made the representations to her, the defendant well knew that there was a substantial risk associated with lending money to Mr Marra given that:
(a) Mr Marra then owed the defendant a substantial amount of money;
(b) Mr Marra was unable to repay the defendant; and
(c) Mr Marra was in serious financial trouble.
6 The plaintiff claims that the defendant's representations, which she alleges induced her to lend the money to Mr Marra, were misleading and deceptive.
7 The plaintiff claims that the defendant owed her a duty of care which she breached.
8 The plaintiff claims that the real reason the defendant persuaded her to lend the money to Mr Marra was so that the defendant could recover money that Mr Marra owed the defendant. Furthermore, the plaintiff claims that there was a fiduciary relationship between her and the defendant and that the defendant's actions breached that duty.
9 The defendant denies each and every one of the claims made by the plaintiff and asserts that any assistance that she gave to the plaintiff was in the capacity as a friend providing support, rather than in any professional capacity. Furthermore, the defendant asserts that, contrary to the plaintiff's claim, she not only did not make the representations alleged by the plaintiff, but positively warned the plaintiff not to invest the monies with Mr Marra. The defendant asserted that ultimately the plaintiff's loan to Mr Marra was not a matter that involved her. According to the defendant, the defendant and the plaintiff communicated directly in relation to the loan.
10 Consequently, there are a number of fundamental issues. They are:
1. The representations
(a) Were the relevant representations made by the defendant to the plaintiff?
(b) If they were made, were they misleading and deceptive and did they induce the plaintiff to lend the money to Mr Marra?
(c) If they were made, were the representations made in the course of trade or commerce (s 18 Fair Trading Act 2010 (WA))?
2. Duty of care
(a) Was there a duty of care owed by the defendant to the plaintiff?
(b) If there was a duty of care, was it breached by the defendant?
3. Fiduciary duty
(a) Did a fiduciary relationship exist as between the plaintiff and the defendant?
(b) If a fiduciary relationship existed, was it breached by the defendant?
12 The credibility of both the plaintiff and the defendant lay at the heart of the issues to be determined.
The Plaintiff
13 The plaintiff, who was 55 years old at the relevant time, was born in Belfast, in Northern Ireland. She had little formal education and left school at the age of 15. Her only other formal education was six months of an interior design course when she was aged about 16 or 17.
14 The plaintiff met John Truesdale in Belfast when she was 17 years old. They lived together for nine years before marrying in 1982. The plaintiff took her husband's surname after marrying him. During the course of their marriage, Mr Truesdale owned and operated various businesses.
15 In 1985, the plaintiff gave birth to their son, Karl. She did not work again until 1992.
16 In 1987 the plaintiff and Mr Truesdale migrated to Australia. After returning to Belfast for a brief period to live, the couple returned to Perth and purchased a liquor store which was operated by the plaintiff and Mr Truesdale until she sold her interest in it to him in 2012.
17 Whilst the plaintiff had for a number of years assisted her husband in running liquor stores in both Northern Ireland and Western Australia, she could properly be described as unsophisticated in the ways of business and finance. It is clear that she relied upon Mr Truesdale to take care of their financial affairs.
18 In 2010, the plaintiff and Mr Truesdale ceased living together. On 5 June 2010, on the plaintiff's application, the marriage was dissolved. Mr Truesdale died on 18 July 2014.
19 At around the time of their divorce in 2010, the plaintiff and Mr Truesdale discussed a property settlement and agreed on an equal division of their assets. The relationship between the plaintiff and Mr Truesdale did not remain amicable.
20 The plaintiff instructed Julia Johnstone to act as her solicitor. Proceedings in the Family Court were commenced. Ultimately consent orders were made in the Family Court on 21 December 2010 (exhibits L4 and L42). The terms of the orders included that:
(a) Mr Truesdale was to pay the plaintiff the sum of $1,105,000 within 60 days;
(b) both the plaintiff and Mr Truesdale were to transfer various properties to each other; and
(c) upon settlement, both the plaintiff and Mr Truesdale were to refinance or otherwise discharge loans secured by mortgages registered against various properties.
21 In about May 2011 the plaintiff was having difficulty implementing the Family Court orders that had been made by consent in relation to the financial settlement of the plaintiff and Mr Truesdale's assets. Mr Truesdale had failed to pay the plaintiff the $1,105,000 within the required time frame. At that time Mr Truesdale was trying to borrow money in order to pay out the plaintiff. The plaintiff agreed to allow him more time to raise the money in order to pay her out.
22 A person that the plaintiff believed at the time to be an accountant, advised the plaintiff that she needed to seek advice from a finance broker to assist her with implementing the Family Court orders. The 'accountant' suggested that she could introduce her to such a person. The plaintiff was introduced to the defendant. This occurred in or about May 2011.
23 It is not disputed by either party that the plaintiff and the defendant became friends. They commonly referred to each other as 'Jo' and 'Elle'.
24 It should be noted that many of the documents tendered in evidence bore the plaintiff's married name, Josephine Truesdale.
The defendant
25 The defendant was a single mother of two children. She ran the canteen at Christ the King School. This occupied three or four days a week.
26 The defendant had a long history of employment in banking and finance. She also had also been professionally associated with Mr Marra for a number of years. At the time of signing her witness statement on 5 December 2014 the defendant described herself as a 'Broker Support Officer' employed by 'Ballast in Jandakot' (exhibit H).
27 Between 2003 and 2006 the defendant worked at Link Mortgages. Thereafter she became the business development manager for Mr Marra in Perth. This period of employment was short-lived.
28 In 2006 she took up a position with the Commonwealth Bank.
29 The defendant had worked in the home loan section of various banks as 'a provider or manager of home loans'. Mr Marra dealt with many of these banks (ts 198, cross-examination of Mr Marra, 10 December 2014).
30 In 2009 she re-established her working relationship with Mr Marra who would refer Commonwealth Bank 'deals' via her.
31 In 2010 she resigned from the Commonwealth Bank and joined Westpac Bank. In August 2010 she continued to be employed by Westpac.
32 In around mid-2011 she resigned from Westpac to become a broker and commenced working for Mr Marra at this time.
33 The defendant claimed that Mr Marra never actually completed all the relevant paperwork for her to act properly in her role. To that end, the defendant claimed that the necessary paperwork, which would have enabled her to act as a credit representative of one of the finance companies, AFG, was never completed by Mr Marra. Consequently, she said that any work that was done by her came on instructions from Mr Marra and was done under his ACL licence. The defendant said she subsequently became a credit representative for AFG, but not until April 2013.
34 The defendant's evidence on this point, like a large portion of her evidence generally, was contradicted by the evidence of Mr Marra. In his witness statement dated 24 September 2014 (exhibit B), he said that 'by 2011 Elena Collica was working as a finance broker in Western Australia in association with the Carrington National Financial Group'. Carrington National Financial Group was his business. His evidence (pars 19 and 20 of exhibit B) was that when the defendant had a client seeking a loan, she would complete an application, assemble supporting documents and send the papers either to him in Sydney or directly to the lender. She was a representative of Carrington National Financial Group and submitted somewhere around nine loan applications and arranged for about six loans in total. She was, according to him, remunerated on a commission only basis for her work.
35 Mr Marra's evidence is supported by the document entitled 'Carrington National, mortgage company, introducer agreement' (exhibit C).
36 At page 2 of that agreement, the parties to the agreement included Carrington National Financial Group Pty Ltd and Elena Collica who is referred to as the 'introducer'. The recitals to the agreement include:
B. The introducer is a provider of mortgage broking services.
37 Page 2 of the agreement, under the heading of 'Introducer Commission', sets out the manner in which the defendant (as introducer) was to be remunerated by way of commissions.
38 Mr Marra denied the defendant's suggestion that he had never completed all the paperwork for her to be established as a credit representative of AFG. He said that he had completed it and sent it to her twice, the first being in 2011 and the second in 2012 (ts 198, 10 December 2012).
39 Whether the necessary paperwork was completed or not, it was not in dispute that pursuant to the agreement between Carrington National and the defendant (exhibit C), the defendant did, as 'introducer', send applications through to Carrington National and liaised with clients to produce whatever documents were necessary to support the loan. (Evidence of Mr Marra, ts 198, 10 December 2014).
40 In addition to working for Mr Marra, the defendant had also registered her own financial advisory business called Mad Finance Pty Ltd.
41 Throughout the course of these proceedings and relevant to the plaintiff's claim, the defendant was referred to as holding different employment titles including 'Provider of broking services' (exhibit C) and 'lending manager for Carrington National' (ts 386; defendant's evidence, cross-examination, 12 December 2014).
42 Ultimately, despite the defendant's considerable effort to obfuscate and portray herself as something other than a 'broker', it was not disputed by the defendant that she did in fact provide broking services (ts 454, closing submission of counsel for the defendant Mr Rynne, 12 May 2015). This was one of only many areas of the defendant's evidence which lacked credibility.
43 Whatever her proper title, it is clear that the defendant was involved for a significant period of time in relation to arranging finance and loans on behalf of clients.
44 Ultimately the defendant conceded that she gave financial advice to the plaintiff in the period leading up to December 2014. This, on her case, was done under instructions from Mr Marra. What is clearly disputed by the defendant is that she continued to provide broking services at the time that the alleged representations were made.
Mr Marra's debt to the defendant and his subsequent bankruptcy
45 The plaintiff asserts that the defendant orchestrated the loan to Mr Marra as a mechanism by which the defendant could recover money that she had lent to Mr Marra at an earlier time. Whilst it is not strictly necessary for the plaintiff to prove such a motive, the issue relating to the loan made by the defendant to Mr Marra is relevant to my assessment of the credibility of both Mr Marra and the defendant.
46 The fact that Mr Marra had borrowed money from the defendant at an earlier time was not in dispute between the parties. Nor was it in dispute that Mr Marra owed the defendant money at the relevant time and that shortly before the plaintiff lent money to Mr Marra, the defendant was having difficulty recovering her money from Mr Marra. The amount of the loan between Mr Marra and the defendant was disputed.
47 The plaintiff relied upon the evidence of Mr Marra (exhibit B, par 25) as well as documentary evidence (exhibits L6, L7, L8, L9 and L10) to support the claim that the defendant had loaned him $85,868.07. Nothing was put to him in cross-examination by the defendant's counsel about the amount of the loan being more than the sum of $85,868.07.
48 The defendant's contention about the amount of the loan was unclear. She did not discover nor produce any documents to prove that she loaned Mr Marra more than $85,868.07. The defendant's position changed from time to time:
• In par 1.6 of the defendant's answers to the plaintiff's request for further and better particulars the defendant pleaded that the debt was approximately $150,000.
• In the defendant's evidence she claimed that the money lent by her to Mr Marra was '$100,000-odd' or 'over $120,000' (ts 343).
• In the defendant's supplementary written submissions dated 24 February 2015 (par 3) the defendant submitted that 'approximately $140,000 was lent to Mr Marra'.
49 The overwhelming evidence supports the fact that by the end of December 2011 the defendant was well aware of Mr Marra's financial difficulties. Mr Marra's evidence was that he had informed the defendant in June 2012 that he was going to apply for bankruptcy. There were a number of conversations between Mr Marra and the defendant about this in June and July 2012. The defendant said that she actually found out that Mr Marra was bankrupt in December 2012.
50 Much was made by the defendant about the fact that a Statement of Claim and Proxy Form (exhibit 71), made under the Bankruptcy Act 1966, which contained the defendant's details and claim that Mr Marra owed her $85,868.07, was not in her handwriting and had not been completed by her nor signed by her.
51 I note that the defendant did not raise any issue disputing this document before the trial. The significance of the document is that it tends to support Mr Marra's evidence that the amount he owed the defendant in relation to the money she lent him was in fact $85,868.07, and not some greater amount.
52 Having carefully looked at the writing on the document and compared it to documents with handwriting identified to be that of the defendant's, I have little difficulty concluding that the handwriting on the Statement of Claim and Proxy Form (exhibit 71) is not hers. I also accept that the signature was not hers. However, during the trial the defendant confirmed that she had in fact attached that document (exhibit 71) to an email which she said was sent to Mr Marra on 3 January 2012 wherein she said as follows:
I've done nothing to you but help you and you just drop me for nothing I have said nothing about you to AFG – Attached is copies of the paperwork for the bankruptcy not my writing nor my signature I don't want it to get to this I just want my money and we need to talk about it.
Elena Collica
53 Implicit in the document and confirmed by the defendant in evidence (see ts 424, 12 December 2014) is the fact that the defendant did not at that time take issue with Mr Marra that the amount of the debt which was referred to in that document was $85,868.07.
54 In the end, the fact that it was neither her handwriting nor signature on the document is irrelevant. As at 3 January 2013 (the date of the email being exhibit 70), the defendant did not dispute the debt, being the loan of $85,868.07. That is not to say that the defendant was not owed money by Marra for other reasons at various times. The defendant was clearly working for Mr Marra as a mortgage broker or similar for some period. There is clear evidence that she also claimed commission payments from Mr Marra at various times.
55 It was not necessary for me to come to any final view as to how much was actually lent by the defendant to Mr Marra, although I preferred his evidence to that of the defendant's. On one view, if I did accept the defendant's evidence that more than $85,868.07 was lent to Mr Marra, that fact would not have helped her case. A higher debt could serve to create a greater desire to recover it. What was clear from the defendant's evidence on this point was that it was unreliable at best.
56 What is not in dispute is that by January 2012 the defendant was having difficulties recovering the monies lent to Mr Marra. This fact is relevant as it puts in proper context the circumstances that gave rise to the plaintiff making the money available to Mr Marra.
The development of the relationship between the plaintiff and the defendant
57 As already noted above, in about May 2011, when the plaintiff was introduced to the defendant, the plaintiff was having difficulty with implementing certain Family Court orders that had been made in relation to her property settlement with Mr Truesdale. At this time it was obvious that Mr Truesdale needed a loan to enable him to pay out the plaintiff and thus comply with the Family Court orders. The plaintiff facilitated the introduction of Mr Truesdale to the defendant. This was done for the purposes of assisting him to obtain a loan in order to pay her out.
58 As early as 6 July 2011 the defendant sent an email (exhibit 12) to Julia Johnston, who was then the plaintiff's solicitor, in the following terms:
Hi Julia
Thank you for allowing me to meet with you andJo [sic] yesterday.
Regarding Jo what the bank is wanting is a letter signed by Jo that the funds of the bank is able to borrow [sic] John is enough to satisfy what need to be done [sic] to formalise the consent orders for the time being.
We need to make sure that if the evaluation comes in low this letter won't stop things.
I was thinking something like …
59 The above email demonstrates that although the defendant was then ostensibly attempting to assist Mr Truesdale in obtaining finance, she was already taking steps to assist the plaintiff. This is evidenced by the fact that she had:
• attended an appointment with the plaintiff and her solicitor; and
• was seeking to assist Mr Truesdale to raise the necessary funds which would then have benefited the plaintiff by enabling him to pay the plaintiff.
The defendant did not ultimately obtain a loan for Mr Truesdale.
60 By August 2011, the defendant ceased trying to obtain a loan for Mr Truesdale. Instead, the defendant commenced working for the plaintiff with a view to assisting her to get a loan to buy out Mr Truesdale (exhibit A, par 36).
61 By early September 2011, the defendant had already assisted the plaintiff by attempting to secure finance for her through AFG (exhibit I, par 16). Not only did the defendant facilitate the application on behalf of the plaintiff, but also completed most of the paperwork necessary because the plaintiff was having difficulty doing so (exhibits 14 and 18). At the time the plaintiff made the application for a loan with AFG with the defendant's assistance, Mr Marra owed the defendant money in relation to loans she had made to him.
62 The plaintiff and the defendant had by this stage become friends. The friendship developed to the point that the plaintiff assisted the defendant, on a voluntary basis, running the school canteen at Christ the King school. The plaintiff also got to know the defendant's family socially (see exhibit A, pars 37 - 38).
63 The defendant was also involved in assisting the plaintiff in her Family Court proceedings. To this end, the defendant:
• attended meetings with the plaintiff and her lawyer on 5 July and 18 October 2011 (ts 389);
• drafted letters on behalf of the plaintiff relating to Family Court proceedings (exhibit 27); and
• assisted the plaintiff to complete forms required in the Family Court proceedings.
64 As already noted above, the 'Carrington National, mortgage company, introducer agreement' (exhibit C) clearly demonstrates that in relation to the application for the loans with AFG, the defendant was characterised as being 'an introducer who provided financial services'. It is implicit in the evidence that the defendant was acting in a professional capacity in attempting to secure a loan on behalf of the plaintiff. The defendant's signature appears on the AFG home loan application (exhibit 14) on the first page as the introducer. She was acting in her capacity as a provider of broking services and the plaintiff was her client. Had the application been successful, the defendant stood to receive a significant commission.
The AFG loan document
65 The plaintiff claimed that the defendant effectively took over all her finances and facilitated the completion of all relevant documents. Indeed, the plaintiff said that '[she] would never [have] been able to complete that form on my own' (Form 11 that was required to be completed by Julia Johnston, solicitor). It was the plaintiff's evidence that she had difficulty completing the form (ts 167, 10 December 2014). That form contained details of the plaintiff's assets and liabilities.
66 It was the plaintiff's evidence that from time to time the defendant would simply ask her to sign blank documents (see ts 154, 10 December 2014; exhibit A, par 39). On 5 September 2011 the defendant handed her an application for a loan with AFG. She signed it. She did not read the document before signing it because she simply assumed that the defendant had completed the document correctly (see exhibit A, par 39).
67 The AFG Home Loan Application Checklist and accompanying loan application form were tendered in evidence (exhibit 14). The handwriting on the document is extremely difficult to work out. Nonetheless, there are a number of things that are not in issue about this document. They include:
1. The defendant's signature appears on the first page and the last page as the 'introducer's' signature and the declaration by the introducer. The date is 5 September 2011.
2. Some of the handwriting on this document is confirmed to be that of the defendant.
68 The email from the defendant to the plaintiff on 9 September 2011 (exhibit 18) tends to support that the document was substantially completed by the defendant. It will be considered in the context of the use of the word 'client' below.
69 In relation to the AFG documents, the plaintiff's evidence in cross-examination was that the defendant had completed the document and that it was her writing (see ts 167, 10 December 2014). I note that the cross-examination seemed to proceed on the basis that it was an accepted fact that the defendant had completed the document and that the plaintiff had simply signed it (ts 173, 10 December 2014). What appeared to be disputed by the defendant was not who had completed the document, but rather whether the plaintiff was accurate in her recollection that the signing of the document had taken place at the defendant's office in Bibra Lake on 5 September 2011. This address was asserted by the defendant to be her business office as opposed to her home office.
70 The plaintiff accepted in her evidence that by 8 November 2011 she and the defendant had become friends (ts 187, 10 December 2014). This can be seen in the nature of some of the emails between them, an example being exhibit 34. The language of that email ends with the plaintiff saying to the defendant 'Miss you xxx'.
71 The plaintiff was cross-examined about other emails. In relation to one (exhibit 38), the plaintiff said it related to the defendant's attempts to obtain a loan for the plaintiff from various other financial institutions including the ANZ Bank. The language of this email is consistent with communications between friends who also have a business relationship.
The use of the word 'client'
72 The numerous emails tendered in evidence support the fact that the plaintiff was the defendant's client. The email from the defendant to the plaintiff forwarding the AFG low doc declaration dated 9 September 2011 confirms that the defendant was completing the documents on behalf of the plaintiff. The body of the email, which was addressed to the plaintiff, reads (exhibit 18):
Please just sign application and the rest is me.
73 The language of some of the emails clearly demonstrates that the relationship between the plaintiff and defendant existed on two levels: professionally and personally.
74 The series of emails (exhibits 19, 20, 21, 23, 24, 27 – 31, 33, and 38) between the defendant and others relating to the plaintiff's AFG loan application and ongoing Family Court proceedings in the period between 7 October 2011 and 14 December 2011 unequivocally demonstrates that the defendant considered the plaintiff to be her client. Examples include:
(Exhibit 23 – Email from the defendant to Craig Stuart, Tuesday 18 October 2011):
Subject: Truesdale
Hi Craig
Client came with these statements – advised her we require an original an (sic) missing one statement she is getting this for me asap attached is the declaration from client and accountant.
Thanks
Elena Collica
(emphasis and underlining added)
(Exhibit 28 – Email from defendant to plaintiff's solicitors Calverly Johnston, Friday 28 October 2011):
Subject: Re: Truesdale
Sorry to bug you again on Part I John has signed and it requires to be witnessed is it ok (sic) for me to witness the signature or would you prefer me not to sign as a witness because Jo is my client.
(emphasis and underlining added)
76 In assisting the plaintiff with her with Family Court proceedings, email communications between the defendant and employees of the plaintiff's solicitor, made it clear she was assisting the plaintiff with court documents – 'Form 11' (exhibits 31 and 32).
77 The defendant asserts that she was doing no more than assisting a friend to complete documents. Whilst that may have been partly true, it is also obvious that the defendant's role in this exercise included a professional one. In an email from an employee of Calverley Johnston he confirmed that the defendant is 'Jo's financial advisor' (exhibit 33). Whilst that email was obviously not written by the defendant, she did not then seek to disavow this interpretation of her role.
78 On 15 November 2011 the defendant again attended a meeting with the plaintiff and Ms Julia Johnston the plaintiff's solicitor (ts 389).
79 In another email from the defendant to the plaintiff on 14 December 2011, which attached an email chain involving communications between the defendant and an employee of the ANZ Bank, the defendant requested that the plaintiff 'print off the pages and then call [her] and that she would then 'run through them' with the plaintiff who she described as 'my beautiful friend' (exhibit 38).
80 The language of the email clearly demonstrates that the relationship between the plaintiff and defendant as at that date was that of close friends, albeit the defendant was clearly acting as the plaintiff's financial advisor and/or mortgage broker.
81 I do not accept the defendant's evidence that in the second half of 2011 the plaintiff was only her friend and not her client (ts 356). To suggest that this was the situation would be to ignore the overwhelming evidence to the contrary. The defendant's evidence on this point, like some of her other evidence, was simply untrue. The defendant did then, and for the period thereafter, consider the plaintiff to be her 'client'.
82 In my view, although she may have become a friend to the plaintiff', she was also at all relevant times acting in the capacity as a financial advisor to the plaintiff. The fact that she did not receive payment or a commission in relation to her advice and work did not absolve the defendant from responsibility.
83 On the whole, and for reasons that I will expand upon, I did not find the defendant to be a witness of truth.
Did Mr Marra and the plaintiff communicate directly before he defaulted on the loan?
84 As already noted above, the defendant asserted that the plaintiff's decision to lend Mr Marra the money was a matter between the plaintiff and Mr Marra and did not necessarily involve her. Indeed, the defendant's contention was that from very early on, Mr Marra was communicating directly with the plaintiff.
85 On the other hand, the plaintiff claims that prior to Mr Marra defaulting on the loan, she only communicated indirectly with Mr Marra via the defendant. It is therefore necessary to consider the nature of the communications.
86 The plaintiff said that that she was at the defendant's office in about September 2011 when the defendant telephoned Mr Marra. After that telephone call, the defendant said to her 'I have to send your documents to Gino in Sydney' (exhibit A, par 41). She thereafter became conscious of the defendant speaking with Mr Marra on a number of occasions. She did not speak with Mr Marra apart from a few occasions when she was with the defendant and the defendant was speaking to Mr Marra. The plaintiff's evidence was that she would not say anything more than 'Hello Gino'.
87 She had no other communications with Mr Marra until after the money had been lent to him and the interest had not been paid (exhibit A, par 41). It was not put to her in cross-examination that she had any more detailed conversations than that which she had deposed in her statement.
88 In an email from Gino Marra to the defendant dated 1 November 2011 (exhibit 29), Mr Marra requested that the defendant obtain from the plaintiff various documents in order to expedite the loan application. At the end of the email he says:
I will formally write to her if the above is not received and advise it has been withdrawn due to it being a suspected fraudulent loan.
89 The defendant relies upon this as a suggestion that Mr Marra at all relevant times was communicating directly with the plaintiff and obtaining instructions directly from her. In reality, this ignores the objective evidence to the contrary.
90 In terms of whether Mr Marra ever spoke to the plaintiff directly, his evidence was that at the relevant time his mobile telephone number was 0414 998 468. The plaintiff tendered her telephone records (exhibit 80). The records do not show any communication between the plaintiff and Mr Marra on that telephone number.
91 Nothing said by Mr Marra in either his witness statement (exhibit B) or during the course of cross-examination of him in any way contradicted that position.
Was the defendant involved in arranging the loan between Mr Marra and the plaintiff?
92 Central to the plaintiff's case was the contention that the loan was effectively brokered by the defendant and that the plaintiff and Mr Marra communicated indirectly through the defendant who facilitated the loan.
93 The plaintiff relies upon her evidence (exhibit A, pars 62 - 74) and that of Mr Marra (exhibit B, pars 31 - 46) to support her contention that Mr Marra dealt exclusively with the defendant in arranging the loan from the plaintiff to him. Neither the plaintiff nor Mr Marra's evidence on this issue was shaken in cross-examination. They both positively maintained that the arrangements for the loan were put in place by the defendant directly and separately communicating with Mr Marra and the plaintiff respectively. Mr Marra and the plaintiff did not communicate directly before the loan was put in place.
94 Furthermore, the plaintiff's position was that everything to do with the loan was arranged by the defendant and that she was neither properly informed about the arrangements nor provided with relevant documents, including the loan documents drawn up in relation to the loan with Mr Marra.
95 The plaintiff denied receiving a relevant email from Mr Marra to the defendant sent on 1 February 2012 which forwarded an earlier email from a solicitor at Galilee Solicitors together with the various related loan documents (exhibit 43). Neither the email nor its contents were communicated to her. Furthermore, her evidence was that she had heard nothing more about the proposed investment until about 4 or 5 February 2012 when the defendant had said to her that Mr Marra had been on the phone again and was asking if it was going to happen. When the plaintiff enquired about the documents, she was told by the defendant that 'the loan documents have been received. My lawyer and accountant have looked them over and it is all fine. You trust me don't you?' To this the plaintiff said she replied 'yes of course' (see exhibit A, par 62).
96 It was put to her that because of the fact that she had received so many documents that her memory was hazy about it. The plaintiff was however adamant that she had never received the relevant loan documents (ts 260, 11 December 2014).
97 The defendant's position, as put to Mr Marra in cross-examination, was that it was Mr Marra who had made representations to the plaintiff (as opposed to the defendant having made any representations). It was put to him that at the time 'he knew his financial circumstances were completely powerless and he made whatever representations possible in order to secure some money'. That proposition was rejected by Mr Marra (ts 223, 10 December 2014). He positively re-affirmed that he did not speak to the plaintiff about her loan to him before it was made.
98 The defendant went further than merely asserting that she had not been involved in negotiating the loan between the plaintiff and Mr Marra. The defendant asserted that she had positively warned the plaintiff against lending money to Mr Marra. In support of this proposition the defendant relied upon an email that she claimed had been sent to the plaintiff on 30 December 2011 (exhibit J). By this contention the defendant accepts that if the representations alleged to have been made by her are made out, then it follows that they must have been false and misleading.
99 As already noted, prior to being introduced to the plaintiff, the defendant had lent Mr Marra a significant amount of money and that by January 2012 the defendant was having difficulties recovering the money lent to Mr Marra.
100 In or around December 2011, the defendant asked Mr Marra to repay some of the monies she had loaned him. Mr Marra paid her the sum of $10,000 by way of cheque. The cheque was not honoured and the defendant was advised of that fact by a letter from the ANZ Bank dated 20 December 2011 (exhibit E).
101 At about this time in December 2011, the plaintiff received the sum of $265,000 from Mr Truesdale as part of their Family Court settlement. The plaintiff and defendant discussed lending the money to Mr Marra. The precise circumstances relating to the loan of the money to Mr Marra are in dispute. What is not in dispute is that Mr Marra promised a 10% return on money if it were loaned to him. Ultimately the plaintiff lent the total amount of $200,000 to Mr Marra. The money was lent by way of two separate payments of $150,000 and $50,000 in February and March 2012 respectively.
102 On or about 7 February 2012 $70,000 was deposited into the defendant's bank account by Mr Marra. This was not a fact that was disputed by the defendant. The defendant's contention was that this money had not come from the funds provided by the plaintiff to Mr Marra.
103 Mr Marra made some payments on the loan, but ultimately defaulted.
The defendant's email of 30 December 2011
104 At par 46 of the defendant's statement (exhibit I) the defendant deposed as follows:
In an email of 30 December 2011, I sent Jo an email warning her not to lend Gino the money.
105 The existence or otherwise of the email claimed to have been sent by the defendant to the plaintiff on 30 December 2011 is relevant for a number of reasons. The email was purportedly sent by the defendant from her yahoo.com.au email account. The body of the email reads as follows:
From:[email protected]
Subject: Fw: Your loan
To: Jo Evans [email protected]
Received: Friday, 30 December, 2011, 11:58 AM
Jo
I am so glad that Jackie introduced us its [sic] been fun getting to know you and I am happy to help you any way that I can even when it comes to Carl, but I am concerned that you are thinking of getting involved with Gino I know your [sic] desperate to avoid paying your taxes and in a way hiding funds from the tax department and getting a 10% return seems great but the risk is to [sic] high.
I have had funds with Gino for over 2 years and have not seen a cent even though he keeps promising that he will pay he never does.
I know I work for him but I don't trust him I am hanging around to get my funds even Clara from AGF is aware of this. I really think you need to seriously discuss this with your son Carl you say his [sic] and expert with investments and has worked with major banks in London he maybe [sic] able to assist you with safer investment options. I know you don't want him to know to [sic] much about your finances because you say he will beg and plead till he takes it all (to [sic] funny) but serious [sic] really think about this, I don't do investments so can't help much.
I leave for my holiday in Melbourne/Queensland in a few days which I can't wait for be good [sic] just to get away I need a break so badly and will [sic] be great to see my nephew Anthony God I love that kid :)
Talk soon and have a fabulous new year!!!!!!!!
Elena Collica
0434 354 689
106 If the above email was sent, then it supports the defendant's case that she did not make any of the representations the plaintiff alleges were made by the defendant to induce her to lend the money to Mr Marra. The wording, taken at face value, makes it clear that the defendant considered any loan to Mr Marra would be a high risk.
107 The email (exhibit J) was the subject of some controversy during the trial. Both the plaintiff and defendant called expert witnesses in relation to the email. In short, the plaintiff says that the email is nothing more than a fabrication. The plaintiff says that it was never sent to her and in fact was a concoction created by the defendant.
108 In support of the plaintiff's case that the email was concocted for the purpose of these proceedings, the plaintiff points to a number of matters. Perhaps the strongest of these is that when the defendant's computer was interrogated on 9 October 2014 by a computer expert (Mr John Dickons) on behalf of the plaintiff, an email identical to that claimed to have been sent by the defendant was found in the 'drafts' folder of the defendant's email account. However the date of the draft email was 4 April 2013. When opened, it contained the identical email to the one the defendant alleges she sent to the plaintiff on 30 December 2011 save for the fact that its header (reproduced below) had a different date, namely 28 December, 2011, instead of 30 December 2011:
From:[email protected]
Subject: Fw: Your loan
To: Jo Evans [email protected]
Received: Friday, 28 December, 2011, 11:58 AM
109 Furthermore, the subject email was not found in any other part of the defendant's email account. It was not in the 'sent' section. There was no trace of the email having been sent by the defendant to the plaintiff.
110 The defendant called her own expert, Dr Richard Adams. His evidence confirmed that there was no independent evidence to support the defendant's evidence that she had sent the email.
111 The evidence about whether or not the email was actually sent by the defendant to the plaintiff, or whether if it was sent it was received by the plaintiff, was limited to what the defendant asserted in her witness statement, namely that she sent the email to the plaintiff on 30 December 2011.
112 In cross-examination of the plaintiff, counsel for the defendant put to her 'then on 30 December 2011 Ms Collica's case is, of course, that she forwarded you that email saying that you shouldn't invest. You are aware of that?' The plaintiff's answer was simply 'I'm aware she said that '. It was not positively put to her that she had received the email.
113 The plaintiff asserts that the defendant's claim that she had sent the email is simply a lie and that the email itself was created from an earlier email sent by the plaintiff to the defendant.
114 The plaintiff also pointed to the fact that the email's existence, although of some considerable significance, was not raised by the defendant until very late in the proceedings. On 5 June 2014 the defendant filed an amended defence (the original was filed on 27 May 2013). In the amended defence the defendant pleaded that 'at all material times [she had] disclosed to the plaintiff all information concerning the debt owed to the defendant by [Mr Marra]. The defendant did not raise the existence of this email until she filed further and better particulars to the amended defence on 4 July 2014. The plaintiff subsequently filed a notice disputing the email.
115 During the course of the defendant's evidence I asked her if she was the author of the email. She said that she was.
116 In addition to the issues raised by the plaintiff and considered above, I note that there are other aspects of the email that give rise to some disquiet.
117 The email found in the 'drafts' section of the defendant's account is dated Friday 28 December 2011 which is strange, to say the least, since a check of the calendar reveals that 28 December 2011 was in fact a Wednesday. No explanation was ever given in the course of the hearing to explain the different dates or why the email was located in the 'drafts' folder.
118 The language employed in the email also raises suspicion that it is in fact a self-serving document created by, or for, the defendant for the purposes of these proceedings.
119 Noting that as at 30 December 2011 the defendant had known the plaintiff for about seven months and was obviously a close friend of the plaintiff's, some of the strange aspects of the email include: the defendant misspells the plaintiff's son's name; the defendant writes in the email – 'I am so glad that Jackie introduced us its [sic] been fun getting to know you …'; and despite having been involved with AFG as either a representative or by way of forwarding loan applications to them, she refers to them as AGF.
120 The combination of all the factors leads me to the conclusion that I am comfortably satisfied thatnot only was the email never sent by the defendant to the plaintiff, but that the defendant positively and deliberately attempted to mislead the court that she had sent it: see Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; (1992) 67 ALJR 170.
The representations relied upon
121 The plaintiff's evidence in chief in relation to the representations she alleges were made to her by the defendant is found in her witness statement (exhibit A) in the trial. In particular, the relevant representations are set out at pars 58 - 60 of that statement being the 'first representations' and 'second implied representations', and par 76 being the 'third representations'. The relevant parts are set out below.
The 'First Representations'
122 According to the plaintiff's evidence (par 54, exhibit A) on or about 28 November she received $265,000 by bank cheque from Bankwest. The payment had been made by her ex-husband by Mr Truesdale. At this stage the plaintiff says that she was going to simply rely on the defendant's recommendations as to what she was to do with the money. She was at that stage 'hoping that she could invest in another property' (ts 247, 11 December 2014).
123 It was the plaintiff's understanding that the defendant was a mortgage broker (ts 247, 11 December 2014). At around that time the plaintiff had discussed with the defendant applying for a loan with the ANZ Bank (see exhibit 38). There had been calls between them relating to the loan application (four calls made to the defendant's mobile telephone between 10.51 am and 4.20 pm on 14 December 2011 - ts 246, 11 December 2014). The plaintiff ultimately did obtain finance from the ANZ Bank.
124 In about 'late' January 2012 (par 58 of the plaintiff's statement was amended from 'early' January 2012 to 'late' January 2012 on the first day of the hearing of the matter, 9 December 2014) the plaintiff was with the defendant at the defendant's office in Bibra Lake. The defendant said to the plaintiff:
We need to invest that money and get it out of Julia's trust account before the tax office takes it or Karl will drain it from you.
125 The plaintiff said she agreed with that proposition. There was no further discussion about any particular investment at that time.
126 The plaintiff says that about a week after that first discussion, she was again at the defendant's office in Bibra Lake. On this occasion a further discussion took place as follows:
Defendant: That money Julia's trust account [sic]. I've got a really good investment for you. Carrington National is looking to raise between $300,000 and $400,000 to use as building blocks to enhance its capacity to deal with banks. I'm putting in $150,000. My brother Tony wanted to put money in but he does not have the cash available. Carrington will pay 10% interest. You could not get a better investment. I wanted to lend $200,000 but I've only got $150,000 available. If I had $200,000 I would lend it all. You should put in $150,000 for now.
Plaintiff: How safe will it be?
Defendant: I wouldn't be recommending this if it wasn't safe. The money will be secured by a caveat over a property owned by Gino who owns a number of properties. The property to secure your investment is his home and its worth about $3 million and secures a bank debt for about $1 million. I will make sure that the legal documents are prepared and I will have my lawyer and accountant review them.
Plaintiff: Can both our names be on a caveat?
Defendant: Yes.
Plaintiff: So we would have both our names on the caveat.
Defendant: Yes.
Plaintiff: I've been thinking about buying another property with that money.
Defendant: Not a good idea at this point. 10% Jo. If you put it in the bank you will get 5% or 6%. This will give you a better return. I know where my money is going.
Plaintiff: I will think about it.
(Paragraph 59)
127 The plaintiff says that a few days later the defendant asked her:
Have you made a decision about what you are going to do with that money in Julia's account. Gino's been on the phone wanting to know if you've made a decision. I know where I'm putting my money. This is too good to pass up. My accountant agrees.
128 The plaintiff said that she responded by telling the defendant that she would do it. The defendant then said that she would tell Mr Marra to 'get the paperwork prepared' (par 60).
'Second (implied) Representations'
129 The plaintiff says that implicit in the first representations were implied representations to the following effect:
(a) that the defendant was recommending to the plaintiff that she should make a loan to Carrington National in the sum of $150,000;
(b) that the defendant's advice to the plaintiff was prudent because
i. the defendant was intending to make the same loan with the same security; and
ii. both the defendant and her brother would be making similar loans if they had the money to do so;
(c) Carrington had the financial capacity to repay the loans and interest on the proposed loans;
(d) the plaintiff's loan to Carrington was a safe investment because it was secured and that the defendant would not put her own funds at risk; and
(e) that the defendant would ensure that her own lawyer and accountant reviewed the documentation ensuring that the plaintiff's interests were protected.
130 I am of the view that if the first representations were made, their plain meaning in the circumstances would give effect to the second or implied representations.
131 The plaintiff says that, in reliance upon the first and second representations, she verbally informed the defendant that she would make a loan in the sum of $150,000 to Carrington National.
132 It is not in dispute that on or about 6 February 2012, the plaintiff, on the recommendation of the defendant, instructed her solicitors Calverley Johnston to pay from their trust account the sum of $150,000 to Carrington National and $40,000 to the defendant.
133 On the same day that the plaintiff deposited $150,000 into Carrington National's bank account, Mr Marra transferred $70,000 from that account into the defendant's Bankwest account. His evidence was that the money that he transferred to the defendant had come from the plaintiff. He had transferred the money at the request of the defendant. Mr Marra's evidence was that the defendant was the person that had arranged the loan between the plaintiff and Carrington National. Furthermore, the defendant had put pressure on him to transfer the sum of $70,000 (see exhibit B, pars 29 - 41).
134 The plaintiff says that she was not aware of the arrangement that had been put in place between the defendant, Carrington National and Mr Marra. The importance of Mr Marra's evidence is discussed below.
'The Third Representations'
135 The plaintiff says that at some time between 9 March 2012 and 15 March 2012 she was again in the defendant's office. The defendant said:
We need to decide where to put that other $50,000, get it out of the bank and get you a better rate. Gino's [sic] still needs more money, maybe another $200,000. I really wish that I had the money but I don't have it. I feel sorry for Tony. He really wishes he had the money to invest. Do you want to put another $50,000 with Gino [sic]. It will give you $1,650 per month all up. I know what I would be doing. What are you getting from the bank [sic].
136 The plaintiff says that she agreed with the defendant's suggestion, but told the defendant that she did not know how to do it.
137 The very next day she went with the defendant to a branch of the ANZ bank in Murray Street Perth. There the defendant facilitated the transfer of a further $50,000 loan to Carrington National.
138 The plaintiff says that she was unaware of the conversations between Mr Marra and the defendant that Mr Marra says took place in the period between 6 February 2012 and 15 March 2012. The plaintiff says that she subsequently became aware, by the production of emails made available by Mr Marra, that the defendant had independently discussed with Mr Marra the facilitation by the plaintiff of the additional $50,000 loan to Carrington National (see exhibits 50 and 51).
139 The plaintiff says that implicit in these third representations were implied representations to the effect that:
(a) that the defendant was recommending the additional loan to the plaintiff;
(b) that the plaintiff could continue to rely upon the first and second representations;
(c) that nothing had changed between the first advance and the second advance; and
(d) that the additional advance of $50,000 was secured by a caveat on the property as was the first advance.
140 I am of the view that if the third representations were made, their plain meaning in the circumstances would give effect to the implied representations set out at par 36 of the plaintiff's amended statement of claim.
The first representations alleged to have been made by the defendant
141 The plaintiff pleads that the first representations were made at the defendant's office in Bibra Lake in late January 2012. The defendant says that they were not made at all.
142 In support of her defence, the defendant says that:
(a) she was on the Gold Coast between 2 January 2012 and 22 January 2012 and thereafter, when she returned to Perth, she was busy arranging the children's school uniforms and other matter which prevented her from seeing the Plaintiff in that period;
(b) she did not have a business office in Bibra Lake at that time; and
(c) she only had one conversation with the plaintiff around about late January 2012 and that was unrelated to the plaintiff's loan to Mr Marra and Carrington National.
143 As I noted at the outset, if the plaintiff fails to prove that the representations were made, then despite my findings on other issues, the case against the defendant could not succeed.
The plaintiff's credibility
144 It is important to note that the plaintiff's witness statement was not made until approximately 2 years and 8 months after the alleged conversations are said to have taken place. In this regard, counsel for the defendant quite properly raised the issue of the fallibility of human memory.
145 The defendant quite simply says that she never made the representations claimed by the plaintiff. Furthermore, the defendant goes further and asserts that in the period between late January 2012 and early February 2012 there was only one conversation between her and the plaintiff and it took place in early February 2012 and did not relate to the money lent to Carrington National (ts 417, 12 December 2012, re-examination of defendant). The relevance of this assertion by the defendant is discussed further below in relation to the defendant's reliability.
146 It is the case that the plaintiff's witness statement was tendered as her evidence-in-chief. Notwithstanding that fact, I am not bound to accept the witness statement as being accurate. One of the early propositions put to the plaintiff in cross-examination was that she had told the story 'to a number of people'. Counsel for the defendant asserted that in doing so she ultimately came to believe her own recollections (see ts 81 of the hearing 9 December 2014).
147 Counsel for the defendant quite properly raised the issue of the plaintiff's psychological condition at the relevant time. The evidence in that regard was that at that period of time i.e. in January 2012 she was suffering from 'anxiety, low mood and generally a depressed state'. She had been prescribed medication by her GP. She was prescribed antidepressants. However, other than proving that the plaintiff was suffering from some psychological ailments and was on medication, there was no further evidence led to demonstrate that these conditions, either alone or in conjunction with medication, caused any impairment of memory.
148 The plaintiff's memory was exhaustively tested in cross-examination in relation to a wide range of issues and facts. It is fair to say that the plaintiff had little or no memory in relation to some matters, and an apparently good memory in relation to other matters. This was unsurprising. Some of the matters she was asked about were as follows.
First introduction to the defendant
149 The plaintiff was asked by counsel for the defendant about her first introduction to the defendant. She said that introduction had been facilitated by Jacquie her accountant friend. After initial introductions, the defendant told her that she had 'worked for major banks in senior positions in finance and she had just left Westpac to start up her own business called Mad Finance' (ts 114, 9 December 2014). At the time of initially being introduced to the defendant, the introduction was on the basis that the defendant's intended role was to help Mr Truesdale her ex-husband to raise finance in order to buy the plaintiff out. The plaintiff's evidence in cross-examination on this point was entirely consistent with her witness statement (exhibit A, par 30).
150 In cross-examination the plaintiff's sworn evidence was that she had met the defendant in Ardross in May 2011(see ts 119, 9 December 2014, cross-examination). It was pointed out to her that her statement of claim said that she had met the defendant in July or August 2011 (par 9).
Telephone conversations between the plaintiff and defendant
151 The plaintiff was cross-examined at length in relation to her Optus telephone records and associated calls. I note that the cross-examination proceeded on the basis that:
1. the telephone records were the plaintiff's records and therefore she made all the phone calls recorded therein; and
2. if the call records indicated a particular place as being the origin of the call, it was therefore a fact that the call emanated from that particular place. (The defendant's counsel went even further suggesting that, for example, if the telephone records indicated that the call emanated from a tower on or near the Kwinana Freeway, therefore the plaintiff must have:
(a) made the call;
(b) had been in that area; and
(c) was driving at the time.
153 Much of the cross-examination of the plaintiff related to telephone calls that took place in the period between May 2011and February 2011. Some of the calls were obviously months prior to the conversations which formed the basis of the representations relied upon by the plaintiff. As it turned out, the plaintiff had no recollection of many of the conversations put to her including ones that she apparently had with the defendant. Her Optus telephone records were ultimately tendered in evidence (exhibit 80).
154 The defendant's counsel cross-examined the plaintiff about numerous telephone calls recorded on the Optus records apparently between her and the defendant. They included:
A. Date Plaintiff's evidence
10 June 2011 (3 calls) – couldn't remember 3 calls specifically, but remembered asking about how her ex-husband's loan was progressing;
13 June 2011 'I don't recall'.
15 June 2011 (1 minute) - could not recall generally but 'they were always about my ex-husband's loan' (ts 121, 9 December 2014).
22 June 2011 at 1.49 pm (15 mins) - could not remember what they were about other than they were about her ex-husband's loan and that she had asked how her ex-husband's loan was progressing; she had asked 'how this loan was progressing and Elena told her that he hadn't produced documents that she had required' (ts 122, 9 December 2014); had also talked about her depression and how she was not coping she said that they, that is her and the defendant, 'always talked about it' (ts 122, 9 December 2014); she could particularly remember the 15 minute call because she was in South Perth in a car park crying. She agreed that she could not remember word for word what she said and that she was 'distressed' (ts 124 – 125).
22 June 2011 at 2.08 pm could not remember what that call was about.
5 & 8 July 2011 could not remember.
8 August 2011 at 3.56 pm (1 minute) - did not recall the content of the conversation (ts 127, 9 December 2014), 9, 10, 12, 15, 16, 18, 19, 24, 29, 30 August 2011- could not recall the conversations.
1, 2, 3 & 5 September 2011 - could not remember (see ts 128 – 129, 9 December 2014).
9, 13& 21 September 2011 - she had no recollection of the conversations. (ts 159 – 160, 10 December 2014).
14 December 2011(four calls made to the defendant's mobile telephone between 10.51 am and 4.20 pm) - related to an email (Exhibit 38) regarding her application for finance with the ANZ Bank (ts 246, 11 December 2014).
30 January 2012 at 3.51 pm and 5.11 pm – could not recall.
31 January 2012 at 3.31 pm – could not recall.
3 February 2012 at 2.52 pm & 3.05 pm (one 5 minutes) – could not recall.
3 February 2012 at 4.04 pm – could not recall
7 February 2012 at 3.30 pm - could not recall
9 February2012 (no time put) – could not recall
12 February at 12.01 pm and 12.21 pm - could not recall
B. Date Plaintiff's evidence
30 & 31 December 2011 (series of phone calls, one being for 22 minutes) - the plaintiff did not remember these conversations specifically but did say that she would 'call her most days. … she is my best friend' (ts 253, 11 December 2014).
22 January 2012 at 9.01 am (13 minutes) – could not recall
23 January 2012 at 6.54 pm (25 minutes) - could not recall
25 January 2012 at 8.15 (13 minutes) the plaintiff identified as being her girlfriend in Sydney, but otherwise could not recall
25 January 2012 (15 minutes) - could not recall
157 When cross-examined about this conversation, the plaintiff said that it had taken place at the defendant's office, although she had no idea of what time of day it was (ts 130, 9 December 2014). She could not remember precisely what was said on either side of this conversation.
158 It was not suggested to the plaintiff by the defendant's counsel that this conversation did not take place, but rather that it was just a conversation between friends wherein the plaintiff and defendant 'were just articulating various thoughts (see ts 131, cross-examination 9 December 2014). The plaintiff did not agree with this proposition.
The defendant's business address in Bibra Lake
159 The plaintiff claimed that the relevant conversations and representations (first, second and third representations) took place in late January and March 2012 at the defendant's business office at Bibra Lake. The address of the defendant's 'business premises' was pleaded in the amended statement of claim as '12/8 Cascara Corner, Bibra Lake' (par 17 of Amended Statement of Claim).
160 The defendant's Amended Defence filed 5 June in relation to par 17 of the Amended Statement of Claim and the pleaded business premises, reads as follows:
The defendant denies each and every allegation contained in paragraph 17 of the plaintiff's amended statement of claim and says further that at all material times the defendant was interstate and not present at the defendant's business premises, as alleged or at all.
- (See par 10 of the Amended Defence).
161 Nothing was raised by the defendant in the Amended Defence which disputed the pleaded address of the 'business premises'. The plain meaning of the words pleaded in the Amended Defence was that:
(a) the defendant disputed that the representations were made; and
(b) the defendant was interstate at the relevant time.
162 Despite not raising the issue before trial, in cross examination, counsel for the defendant put to the plaintiff that the conversations could not have occurred as alleged, because the defendant was not operating out of her Bibra Lake office until March 2012 (ts 283 - 284, 11 December 2014). Counsel for the defendant put as follows:
Mr Rynne: No. Thank you. Now, ma'am, you say that everything - all of these important conversations in December and - in the December, January and February period happened at Elena's office at Bibra Lake, don't you?
Plaintiff: That's correct.
Mr Rynne: You're absolutely convinced of that, aren't you?
Plaintiff: Yes, I am.
Mr Rynne: Ma'am, if I was to suggest to you this; that that couldn't have possibly happened because I'm instructed that Elena wasn't operating out of her Bibra Lake office until March 2012?
Plaintiff: Elena was operating from her office.
Mr Rynne: Well - and that - that not one of these important meetings happened at her Bibra Lake office, not a one that you refer to, what would you say?
Plaintiff: I would say that it happened at her office.
Mr Rynne: Right. So if she can do something to convince you that you weren't at the Bibra Lake office, she couldn't have been at the Bibra Lake office, you'd concede that all of this couldn't have happened, is that right?
Plaintiff: If she could convince me but I'm convinced it was at her office.
163 I note that although the plaintiff agreed with the question, it was not the plaintiff's case that the representations relied upon had occurred in December 2011or February 2012, although it was possible that some conversations had occurred in February 2012.
164 In light of the importance of this issue, I had cause to review the trial transcript, the relevant documents and the exhibits. In addition to that part of the trial transcript referred to above, there are many other references to the defendant's office.
165 In the plaintiff's statement (exhibit A) she deposed that she met the defendant at the defendant's office sometime around August 2011 (see pars 36 and 37). She described it as the defendant's 'office in Bibra Lake'. The plaintiff refers to attending the defendant's 'office' in her statement as follows:
par. 39 'office';
par 58 'office in Bibra Lake' (first representation as amended “in about late January 2012);
par 59 'about a week or so later (after first representation) I was again at Elena's office in Bibra Lake';
par 76 between 9 March and 15 March (second representation) 'in Elena's office'.
166 In the plaintiff's evidence given during cross examination she referred to the following:
167 She was at the defendant's 'office in Bibra Lake' when the defendant gave her the advice to have Patti Chong draw up an amended Family Court order (ts 103; 9 December 2014).
168 In about August 2011 she arranged to meet with the defendant at her office at Bibra Lake. The defendant worked from home and she also had a 'Bibra Lake office' (ts 151, 10 December 2014).
169 She was at 'her office' (the defendant's office) in September 2011 when the defendant telephoned Mr Marra (ts 161, 10 December 2014).
170 She could not remember the correct address of the defendant's office, but it was in Bibra Lake. It was not her home office, but rather her business office
171 (ts 173, 10 December 2014).
172 On or about 28 October 2011 she was with the defendant at her office at Bibra Lake (completing a Family Court form 11). She could not recall 'the exact address of her office' (ts 176 - 177; 10 December 2014).
173 In relation to the email from the plaintiff to the defendant dated 8 November 2011 (exhibit 34), it included:
I had to go down to her office and drop in the contract you and I made out last week as they didn't receive that email you sent; don't know why. I was there in your office when you typed it up and sent. Never mind, they have it now.
(My emphasis and underling)
174 The plaintiff said in evidence that she had 'prepared it at Elena's office' (ts 188; 10 December 2014).
175 She remembered being at the defendant's office in Bibra Lake in late January (ts 231; 10 December 2014).
176 She was definitely in the Bibra Lake office when the defendant made the first representations (ts 233; 10 December 2014).
177 A short time later (in late January 2012) she was again at the defendant's office in Bibra Lake when the defendant brought up the subject of lending money to Carrington National. She had a mental picture of sitting there in the Bibra Lake office and she remembered the defendant's words without any doubt (ts 233 - 235, 10 December 2014).
178 The defendant said that in the period between 2 January 2012 and 23 January 2012 she was either interstate or busy arranging school matters for her children (exhibit I, pars 47 – 51). The defendant did not raise the issue of her business address in her oral evidence in chief or in her witness statement which was tendered (exhibit I). She was not asked about the business address in cross-examination.
179 In re-examination the defendant was asked about her home and business addresses. Her evidence was that in the period between December 2011and February 2012 her business was located at her home, being 13 Joshua Close, Bibra Lake (see ts 417 and 418, 12 December 2014). She then went on to say that she only fully moved into the Bibra Lake office in late March or early April 2012. That address was 8/12 Cascara Corner, Bibra Lake (see ts 422, 12 December 2014).
180 The inference I was asked to draw from this evidence was that because the defendant did not have a Bibra Lake business office (as opposed to a Bibra Lake home office) until late March 2012, I should reject the plaintiff's evidence about the conversations and representations. I have difficulty accepting this proposition for a number of reasons.
181 Leaving aside the defendant's complete failure to properly raise the address as an issue prior to trial, in the end neither the address of the defendant's home office in Bibra Lake nor that of the defendant's business office in Bibra Lake was ever put to the plaintiff. The plaintiff made it plain during the course of her cross examination that she did not know the address of the business premises.
182 In addition, the plaintiff's description of the office in which she alleged the conversations took place was neither challenged nor disputed (ts 173, 10 December 2014). Consequently, I am unable to conclude whether she was describing the home office or the business office. I am left with her evidence that the relevant conversations took place at the defendant's office in Bibra Lake. Consequently, this issue did not affect the plaintiff's credibility. If anything, her ability to describe the office gave weight to her credibility.
The defendant's evidence about conversations with the plaintiff in late January 2012 and her reliability
183 During the course of re-examination, the defendant said that she only had one conversation with the plaintiff in the period around late January 2012. According to the defendant, that conversation took place in early February and did not have anything to do with the subject matter of the trial. The conversation, according to the defendant, had taken place while she was driving to Christ the King school. She said that she was 'talking to [the plaintiff] and I would have been on the phone, it would have been early February' and the plaintiff 'was meeting me at the school because I worked for the school at the time' (ts 417, 12 December 2014). None of this evidence was disclosed by the defendant prior to the trial.
184 Noting the defendant's position to be that she was interstate between 2 January and 22 January 2012, I reviewed the plaintiff's telephone records (exhibit 80). In the period between 24 January 2012 and 3 February 2012 there are no less than 10 telephone calls recorded between the plaintiff's mobile telephone and the defendant's mobile telephone. Since the case proceeded on the basis that where these telephone numbers were recorded it was assumed that the calls involved the plaintiff and defendant, I am compelled to reject the defendant's evidence that there was only one conversation with the plaintiff in the relevant period being late January 2012 or early February 2012. There were no less than six telephone calls in the period between 24 January 2012 and 31 January 2012. At the very least, I conclude that the defendant's memory about the calls is unreliable since she has no memory of any call other than the one in early February 2012 that she gave evidence about.
Other evidence that supports the fact that representations were made in and around late January
185 Whether it was as a result of the representations made by the defendant to the plaintiff, or arrangements made between the plaintiff and Mr Marra, it is clear that the arrangements were in place before 6 February 2012. It was not disputed by the parties that on 6 February 2012 they both attended the Fremantle Branch of Bankwest to open Bank accounts. The plaintiff asserts this was done because the defendant had told her that 'we should each open an account for Gino Marra to pay interest to' (exhibit A, par 67).
186 The plaintiff asserts that the day before this occurred, the defendant had informed her that she needed to arrange the $150,000 payment to Mr Marra and had told her that she, the defendant, had already done it (i.e. paid $150,000 to Mr Marra) about a week earlier (exhibit A, par 65).
187 The defendant does not dispute opening an account at the same time as the plaintiff, but says that this was done so that she could 'receive payment of the defendant's commissions' (Amended Defence filed 5 June 2014).
188 In my view, the opening of the bank accounts had nothing to do with receiving commission payments. Rather, the exercise was one calculated by the defendant to persuade the plaintiff to provide the money to Mr Marra by convincing the plaintiff that she too had recently invested money with Mr Marra.
The emails between Mr Marra and the defendant in the period between 3 February 2012 and 6 February 2012 (exhibits L45 and L47)
189 Towards the end of December 2011 the defendant was putting pressure on Mr Marra to repay the money that she had lent him. Mr Marra had given her a cheque in the sum of $10,000 as part repayment, but the cheque had been dishonoured (exhibit E). According to Mr Marra, the defendant told him that she would speak to the plaintiff in effort to see whether she could lend Mr Marra money (exhibit B, par 30). Thereafter, Mr Marra communicated with the defendant about the arrangements for the loan. He was initially informed that the plaintiff would lend him $250,000 (exhibit B, par 32), but was later told that the plaintiff would lend him $150,000 now and $50,000 later (exhibit B, par 35).
190 According to Mr Marra, he agreed to pay the defendant the sum of $50,000 towards his debt of $86,000 when he received the loan moneys from the plaintiff (exhibit B, par 34).
191 On 3 February 2012 Mr Marra sent an email to the defendant outlining what his proposed disbursements would be once he received the $150,000 from the plaintiff (exhibit L45). The proposed disbursements included the sum of $50,000 to be paid to the defendant. It is the plaintiff's case that she never saw this email. The plaintiff asserts that she was not aware that any of the money was to be paid to the defendant. According to the plaintiff, she was told by the defendant that the money was to be used by Carrington National 'as building blocks to enhance its capacity to deal with banks' (exhibit A, par 63).
192 Later on 3 February 2012, Mr Marra says that he spoke with the defendant who said that she now wanted to be paid '… $70,000, not $50,000. If you don't agree I'll tell Jo to can the loan'. He consequently agreed to pay her $70,000 from the $150,000 he received from the plaintiff (exhibit B, par 40).
193 On the morning of 6 February 2012 the defendant and Mr Marra communicated via email. The communication included:
Email from the defendant to Mr Marra at 9.46 am:
They are doing a tt should be done this morning know that is 150 what spiky are we doing.
Commission has not gone through really need it and the funds trf to me today Westpac and bro are giving me grief really bad.
195 Even if that is true, it still indicates that she had knowledge that the plaintiff had at that time transferred the $150,000 and that the defendant was enquiring what the split was going to be.
196 The defendant, in cross examination, asserted that what she was enquiring about was how much commission she was going to receive, and that the word commission was interchangeable with the word 'split' (ts 379, 12 December 2014).
197 I do not accept her evidence on this. It is clear that her email has two separate and distinct topics. They are:
(a) the 'tt' of '150' being done that morning; and
(b) the commission.
198 It is clear that in the second part of the email she is asking about commissions due to her. However, the commission is clearly something separate. In my opinion she speaks to both the 'commission' which Mr Marra owed her separately to the subject of 'the fundstrf to me today'. The funds transfer is something separate to the commission.
199 It is also relevant to note that the email from the defendant to Mr Marra was sent at 09:46 am on 6 February 2012. It was sent in response to Mr Marra's earlier email which was sent at 6.25 am to her on the same day. In her responsive email the defendant said:
I have a meeting with my bank at 3pm. Whats [sic] that thing called a 'warrent' [sic] so that I can put the funds from Jo in there.
(emphasis added)
200 Theses emails were only three days after the email from Mr Marra to the defendant wherein he had told her what the disbursements were going to be, including – '$50,000 you[the defendant]' and '$2,000 Galilee costs' being a reference to the solicitors instructed to draw up the loan papers (exhibit L45).
201 It is not disputed that on 7 February 2012, the day after the plaintiff transferred $150,000 to Carrington National, the sum of $70,000 was transferred by Mr Marra into the defendant's newly opened Bankwest account.
202 I have no hesitation in finding that the sum of $70,000 paid by Mr Marra to the defendant was the amount demanded by the defendant and that the source of the money was the plaintiff. I also find that the defendant:
(a) made the loan arrangements directly with Mr Marra on behalf of the plaintiff; and
(b) never informed the plaintiff that she intended to, and did, secure payment in the sum of $70,000 from Mr Marra as result of the loan being made by the plaintiff.
The third representations alleged to have been made by the defendant
203 There was no dispute that the plaintiff, after receiving $265,000 in December 2011 and putting it into the Calverley Johnston trust account, had on or about 5 February 2012 made arrangements for $40,000 to be transferred to the defendant's bank account and the sum of $150,000 to be transferred, pursuant to the loan agreement, to Carrington National's bank account.
204 The plaintiff's evidence in relation to the money paid to the defendant was that the defendant had suggested to her that she put the money into the defendant's account until the plaintiff was ready to use it for her tax. The plaintiff's evidence was that the defendant had said 'that it was safer in her account so that the tax department could not seize it from [the plaintiff's] account' (ts 251, 11 December 2014). It was not suggested by the plaintiff that the $40,000 paid into the defendant's account was for the defendant's benefit. The plaintiff's evidence on this was that the money was to sit in the account until the plaintiff was ready to use it for tax purposes.
205 Having arranged for the $150,000 to be transferred to Mr Marra and Carrington National on 5 February 2012, in the period between 9 March and 15 March 2012 the defendant started to pressure the plaintiff to make the remaining $50,000 available to Mr Marra. The defendant said things that encouraged her to invest the remaining $50,000 with Mr Marra.
206 The plaintiff claims the defendant had said to her, amongst other things: 'do you want to put another $50,000 with Gino. It would give you $1,650 per month all up. I know what I would be doing. What are getting from a bank?' (exhibit A, par 76). Two implications flow from these representations. Firstly, it amounts to a suggestion that it would be better to lend the money to Mr Marra because the plaintiff would get a better rate of interest from him than she would from a bank. Secondly, that it is something that the defendant would have done if she had the money to invest.
207 At about this time, the defendant suggested to the plaintiff that she should engage new solicitors and communicated that fact to the plaintiff's then solicitors, Calverley Johnston. The nominated new solicitor was Charles Monti in Sydney (see exhibit 55). The plaintiff denied having ever instructed Mr Charles Monti. She said that she had neither heard of him nor ever spoken to him (ts 260, 11 December 2014).
208 It is the plaintiff's case that by the time that the additional $50,000 was made available to Mr Marra (the second advance), the defendant had failed to inform her of any relevant reason as to why she should not be advancing the money. If anything, the further representations were to the effect that it was a good investment. The further $50,000 was transferred by the plaintiff to Carrington National on or about 15 March 2012.
209 The defendant accepts that a further amount of $50,000 was made available by the plaintiff to Mr Marra. In fact, on the defendant's own evidence she ‘even went with her to do that' (ts 389, 12 December 2014). The defendant claimed that she did not make any representations that caused the plaintiff to lend the additional $50,000 to Mr Marra and had no real involvement in it.
210 In addition to the plaintiff's evidence about the third representations and Mr Marra's evidence about the circumstances that led to the additional $50,000 being advanced to him (exhibit B, pars 42 - 45), the plaintiff points to the email sent by Mr Marra to the defendant on 2 March 2012 (exhibit L50), which read as follows:
Hi Elena,
Have you had a chance to talk to Jo about the other $50,000
211 The plaintiff said that she never saw this email nor discussed it with the defendant. The defendant agreed that she received this email and did not show it to the plaintiff, but says that she discussed it with the plaintiff.
212 I am satisfied that the defendant never discussed the email with the plaintiff. It is a further piece of evidence supporting the plaintiff's case that she never communicated directly with Mr Marra in relation to putting the loan arrangements in place.
Findings of fact – the key witnesses' credibility
213 I find that on the whole, although the plaintiff's memory was flawed in some areas, nonetheless she was a credible witness. Much of her account was supported by the evidence of Mr Marra and the documentary evidence.
214 In my view, Mr Marra was an impressive witness. He was unshaken in cross-examination and I accept his evidence in totality.
215 So far as the defendant is concerned, I find that not only was she unreliable in relation to many matters, but as I have already indicated, in relation to the 'email' of 30 December 2011 (exhibit J) I find that she positively lied to the court about it. This issue alone causes me to have considerable doubt about her evidence. The fact that she was prepared to attempt to mislead the court in the manner that she did causes me to conclude that she lacked credibility. Where there is a dispute in the evidence between the plaintiff and the defendant, or in the evidence between the defendant and Mr Marra, I accept the evidence of the plaintiff and that of Mr Marra over that of the defendant.
Misleading and deceptive conduct
Misleading and deceptive conduct - Findings
216 In carrying out my task, which includes assessing all of the relevant evidence as a whole, I have come to the view that the plaintiff has satisfied me that defendant pursued a course of conduct that was misleading and deceptive. The representations made by the defendant were calculated and deliberate. The defendant embarked upon a course to deliberately mislead and deceive the plaintiff into believing that lending money to Mr Marra and Carrington National was a safe and good investment at a time when she well knew that it was not.
217 I have adopted a three stage approach to considering the question of whether the defendant's conduct was misleading and deceptive. Firstly, I considered whether the representations were actually made. Secondly, to determine whether I was satisfied that, if they were made, they were misleading or deceptive. Thirdly, if any of the representations alleged satisfied steps one and two, whether they were made in the course of trade or commerce.
Step 1: were the representations made?
218 In Shaddick v JDV Ltd [2012] WASC 120 Allanson J, with reference to Watson v Foxman (1995) 49 NSWLR 315, 318 - 319, summarised the law relating to the level of precision required to be proved by a party where oral representations are alleged. His Honour said [39]:
… It is not necessary for the plaintiff to prove the precise words spoken on each occasion. The court needs to be satisfied that it is more probable than not that words were spoken that would reasonably have conveyed the representation alleged. I can reach that satisfaction if I am satisfied that the substance or effect of what was spoken conveyed the misleading representations: James Hardie Industries NV v Australian Securities and Investments Commission [2010] NSWCA 332 [269] …
219 As already noted, I find that the plaintiff was a credible witness. Whilst I do not accept that she could remember the various conversations with the precision suggested, nonetheless I am satisfied to the civil standard of proof on the evidence of the plaintiff that the representations alleged were, to a substantial degree, made as alleged by the plaintiff. I find that words spoken by the defendant substantially conveyed the representation alleged by the plaintiff. Consequently, I am satisfied on the balance of probabilities that the defendant did make each and every one of the representations set out at pars 17 (the first representations), 18 (the second representations), 34 and 36 (the third representations).
Step 2: were any of the representations misleading and deceptive? Did they induce the plaintiff to lend the money to Mr Marra?
220 I have already noted that I am satisfied on the civil standard of proof that the defendant made each and every one of the representations pleaded by the plaintiff at pars 17, 18, 34 and 36.
221 The mere making of a representation does not make it misleading and deceptive. In assessing whether a representation was in fact misleading and deceptive, my task is to consider whether it could be so characterised at the time the representation was made, and not whether, with the benefit of hindsight, it was. It is sufficient to amount to misleading or deceptive conduct if the representations lead, or are likely to lead into error: Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd [2010] HCA 31; (2010) 241 CLR 357 [15] (per French CJ and Kiefel J).
222 In Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 592, a case where purchasers of property claimed damages for misleading or deceptive conduct from the vendors, McHugh J said [109] (omitting references):
The question whether conduct is misleading or deceptive or is likely to mislead or deceive is a question of fact. In determining whether a contravention of s 52 has occurred, the task of the court is to examine the relevant course of conduct as a whole. It is determined by reference to the alleged conduct in the light of the relevant surrounding facts and circumstances. It is an objective question that the court must determine for itself. It invites error to look at isolated parts of the corporation's conduct. The effect of any relevant statements or actions or any silence or inaction occurring in the context of a single course of conduct must be deduced from the whole course of conduct. Thus, where the alleged contravention of s 52 relates primarily to a document, the effect of the document must be examined in the context of the evidence as a whole. The court is not confined to examining the document in isolation. It must have regard to all the conduct of the corporation in relation to the document including the preparation and distribution of the document and any statement, action, silence or inaction in connection with the document.
223 I am satisfied that the defendant did make each of the following alleged first representations pleaded in the plaintiff's amended statement of claim, namely pars 17.3, 17.6, 17.7, 17.8 and 17.15, and that they were misleading and deceptive. In relation to these representations I note as follows:
• as regards par 17.3 - the defendant was not making a loan of $150,000 to Carrington national;
• as regards par 17.6 - since the loan was a high risk one it could not have been the case that the plaintiff would not get a better investment;
• as regards pars 17.7 and 17.8 - the defendant did not wish to lend $200,000 to Carrington national nor did she only have $150,000 and did not wish to lend any amount to Carrington national and Mr Marra; and
• as regards par 17.15 Carrington national was not seeking to borrow money to use as 'building blocks' to enhance the capacity of Carrington national to deal with banks. Mr Marra was seeking to borrow the money to repay debts including money owed to the defendant.
224 In addition, I am also satisfied that the first representations pleaded in par 17.3, pars 17.6 - 17.15 inclusive were each as to a 'future matter' as defined in s 4 of the Australian Consumer Law and that the defendant did not, with particular reference to the evidence of Mr Marra, have reasonable grounds to make each and every one of these representations. In any event, since the defendant maintained that she did not make the representations, no evidence was adduced to the contrary: see s 4 of the Australian Consumer Law.
225 I am satisfied that the first and second representations induced the plaintiff to lend the sum of $150,000 to Mr Marra and Carrington National.
226 I am satisfied that the first and second representations, together with the third representations, induced the plaintiff to lend the further sum of $50,000 to Mr Marra and Carrington National.
Step 3: were the representations made in the course of trade or commerce?
227 It is not in dispute that the prohibited conduct must occur in the course of trade or commerce which includes any business or professional activity (whether or not carried on for profit). As the defendant points out in her Supplementary Submissions filed on 25 February 2015, s 18(1) of theAustralian Consumer Law is directed to 'conduct' not 'representations'. The term 'conduct' however is broader than the term 'representations'. Conduct can, in an appropriate case, include representations: see Butcher v Lachlan Elder Realty Pty Ltd [32] (per Gleeson CJ, Hayne & Heydon JJ, [103] per McHugh J & [179] per Kirby J).
228 Throughout the course of the trial the defendant steadfastly maintained that any advice and assistance that she may have given the plaintiff was as a friend and was not given in any professional capacity. I accept, as the defendant submits, that the mere fact that a person happens to be a finance broker does not mean that every time they gave financial advice or assistance to another it would automatically attract the obligations which may otherwise apply had they been ordinarily professionally retained.
229 In Schipp v Cameron[1998] NSWSC 997 (9 July 1998), Einstein J said [665]:
Let me immediately put to the side one proposition. I would not accept that the mere fact that a person who enters into a joint venture happens to be a solicitor, by itself imposes upon him any of the obligations which may be attracted had he been retained to use his professional ability or training for some purpose related to the joint venture. The point is well made in the following passage taken from Sheinkopf v Stone [1991] USCA11 36; 927 F 2d 1259 (1st Cir. 1991), a case in which a law firm was held not liable for the acts of a lawyer who solicited a 'non-client's investment in an outside business venture':
"Human beings routinely wear a multitude of hats. The fact that a person is a lawyer, or a physician, or a plumber, or a lion-tamer, does not mean that every relationship he undertakes is, or can reasonably be perceived as being, in his professional capacity. Lawyers/physicians/plumbers/lion-tamers sometimes act as husbands, or wives, or fathers, or daughters, or sports fans, or investors, or businessmen. The list is nearly infinite. To imply an attorney-client relationship, therefore, the law requires more than an individual's subjective, unspoken belief that the person with whom he is dealing, who happens to be a lawyer, has become his lawyer. If any such belief is to form a foundation for the implication of a relationship of trust and confidence, it must be objectively reasonable under the totality of the circumstances." [per Solya J ... at 1265].
231 It is important to note that the plaintiff and defendant were not friends from the outset. Their introduction to one another was made in a professional context, albeit that initially the defendant's role was to give professional financial assistance to the plaintiff's ex-husband. Thereafter, the defendant was retained in a professional sense to act for the plaintiff.
232 Although the plaintiff never paid the defendant directly, the defendant stood to gain by receiving a commission had the AFG home loan application been successful. The fact that she was not paid by the plaintiff, nor received any payment as a result of acting for the plaintiff does not mean that any financial advice or assistance she gave to the plaintiff was not done in a professional capacity.
233 The advice and assistance the defendant gave to the plaintiff in the period from January 2012 and thereafter may well have been partly driven by friendship, but the representations could not merely be limited to that characterisation. The plaintiff came to significantly rely upon the defendant's financial advice and assistance. The defendant's professional knowledge and skills underpinned the very nature of their relationship. It is precisely this circumstance that the defendant knew existed and ultimately exploited to her advantage.
234 I am satisfied that the representations set out above were made by the defendant at a time when she was:
(a) employed by Carrington national as a broker; and
(b) acting for the plaintiff in a professional capacity giving her financial advice.
235 The representations were made by the defendant to the plaintiff in the course of trade or commerce.
Duty of care
236 As I have already noted above, whilst it is clear that by the time the first representations were made by the defendant to the plaintiff, they were close friends, the defendant was also acting in the course of trade and commerce. It is the case that the defendant well knew that the plaintiff relied upon her knowledge and advice.
237 In Butcher v Lachlan Elder Realty Pty Ltd McHugh J said [100] (authorities omitted):
In determining whether the defendant owed a duty of care to the plaintiff, the ultimate issue is always whether the defendant in pursuing a course of conduct that caused injury to the plaintiff, or failing to pursue a course of conduct which would have prevented injury to the plaintiff, should have had the interest or interests of the plaintiff in contemplation before he or she pursued or failed to pursue that course of conduct. That issue applies whether the damage suffered is injury to person or tangible property or pure economic loss. If the defendant should have had those interests in mind, the law will impose a duty of care. If not, the law will not impose a duty.
238 In this case, the particular vulnerability of the plaintiff is relevant. The defendant well knew that the plaintiff was not only unsophisticated in financial matters, but had always relied upon her ex-husband in that area. The defendant even had to assist the plaintiff to complete relatively simple forms. The defendant knew that the plaintiff would not be able to adequately guard against the defendant's representations to her: see Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515 [23] – [24] (per Gleeson CJ, Gummow, Hayne & Heydon JJ).
Was there a duty of care owed by the defendant to the plaintiff?
239 I am satisfied that the defendant did owe the plaintiff a duty of care to advise the plaintiff and to act for the plaintiff with reasonable skill and diligence. That duty arose by reason of the following facts:
(a) the defendant was acting as a finance broker or agent;
(b) the defendant gave the plaintiff advice in relation to matters that were within the scope of her professional expertise;
(c) the defendant knew that the plaintiff was relying upon her advice;
(d) the plaintiff was vulnerable to a significant financial loss if the defendant acted carelessly; and
(e) the defendant had assumed the responsibility to ensure that the proposed loan was documented and secure.
Was the duty of care breached by the defendant?
240 On all the evidence the plaintiff has satisfied me that the defendant did breach her duty of care to the plaintiff with respect to the first advance of $150,000 in each and every one of the matters pleaded at par 46 of the plaintiff's Amended Statement of Claim filed 5 November 2013. In particular, a finance broker or agent, acting with reasonable skill care and diligence, would not have advised the plaintiff to make the first advance of $150,000 available to Mr Marra and Carrington National.
241 On all the evidence, the plaintiff has satisfied me that the defendant did breach her duty of care to the plaintiff with respect to the second advance of $50,000 in each and every one of the matters pleaded at par 49 of the plaintiff's Amended Statement of Claim filed 5 November 2013. In particular, a finance broker or agent, acting with reasonable skill care and diligence, would not have advised the plaintiff to make the second advance of $50,000 available to Mr Marra and Carrington National.
242 I am also satisfied that by reason of the defendant's breach of her duty of care to the plaintiff, the plaintiff suffered loss and damage in that the plaintiff:
(a) made the first and second advances totalling $200,000;
(b) from 19 December 2012 onwards was not paid interest; and
(c) lost the amount of the first and second advances totalling $200,000.
Fiduciary duty
Did a fiduciary relationship exist as between the plaintiff and the defendant?
243 In Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41, Deane J at (96), in considering the nature of fiduciary relationships, noted:
The critical feature of these relationships is that the fiduciary undertakes or agrees to act for or on behalf of or in the interests of another person in the exercise of a power or discretion which will affect the interests of that other person in a legal or practical sense. The relationship between the parties is therefore one which gives the fiduciary a special opportunity to exercise the power or discretion to the detriment of that other person who is accordingly vulnerable to abuse by the fiduciary of his position. The expressions 'for', 'on behalf of' and 'in the interests of' signify that the fiduciary acts in a 'representative' character in the exercise of his responsibility, to adopt an expression used by the Court of Appeal.
In deciding whether a fiduciary relationship existed between the plaintiff and the defendant in this case, the critical question in this case is whether the defendant undertook or agreed to act for on behalf of the defendant in relation to negotiating the loan with Mr Marra.
244 In Micarone v Perpetual Trustees [1999] SASC 265 Debelle and Wicks JJ noted at [625] that:
(a) generally there is no duty on a financier to provide a borrower or a third party with commercial advice, but if such advice is given, then the financier may assume a duty of care: Beneficial Finance Corporation v Karavas (1991) 23 NSWLR 256, 276 to 277 per Meagher J; and
(b) there is no general principle of law that a lender is in a fiduciary relationship with a borrower: Farrow Mortgage Services Pty Ltd v Trewhitt [1995] ANZ ConvR 127.
245 Applying the above principles to this case, it can be said that a financier such as the defendant generally owed no duty of care to the lender, being the plaintiff. However, if advice was given, then the nature and circumstances of the advice need to be considered in order to determine whether any fiduciary duty arose.
246 The evidence clearly establishes that in the period between January and March 2012 the following circumstances existed:
• The plaintiff relied significantly upon the defendant's financial advice and assistance;
• The defendant was anxious to recover the money that she had lent to Mr Marra;
• The defendant made misleading and deceptive representations to the plaintiff that induced her to lend the sum of $200,000 to Mr Marra and Carrington National;
• The defendant negotiated the arrangements for the loan between the plaintiff and Mr Marra;
• The defendant had attended meetings and participated in telephone conversations with the plaintiff and her solicitor;
• The defendant referred to the plaintiff as her 'client' in written communications with others; and
• The defendant did not disclose to the plaintiff the fact that Mr Marra owed her a significant amount of money and that he had failed to repay the money to her prior to February 2012.
247 On all of the evidence, although there was never any formal agency agreement between the plaintiff and the defendant, I am satisfied that the defendant at all material times acted as the plaintiff's implied agent in negotiating the loans with Mr Marra: G Lowe & Sze Tu Holdings Pty Ltd v Cudal Nominees Pty Ltd [1991] FCA 277. As the plaintiff's agent, the defendant owed the plaintiff a fiduciary duty.
248 I am satisfied that a fiduciary relationship existed between the plaintiff and the defendant.
Did the defendant breach her fiduciary duty to the plaintiff?
249 In the absence of informed consent, a fiduciary has a duty to ensure that their own personal interest is not promoted or pursued in circumstances where there is a conflict, or a substantial possibility of a conflict, between the fiduciary's interest and that of the person that they are obligated to protect under an obligation: see Hospital Products Ltd v United States Surgical Corporation.
250 By arranging the loan between the plaintiff and Mr Marra and Carrington National, the defendant ensured that she received repayment of $70,000 from Mr Marra. This was done despite the fact that the defendant must have known that there was a real and significant risk that Mr Marra would not be able to service the loan.
251 I note that the fact that the defendant insisted that $70,000 of the initial $150,000 lent by the plaintiff was going to be immediately transferred to her, meant that Mr Marra was left with only $80,000 of the loan money.
252 As the plaintiff's fiduciary, the defendant had a clear conflict of interest in arranging the loan to Mr Marra and Carrington National and then subsequently securing payment of the sum of $70,000 to herself. The conflict arose in circumstances where the defendant:
• Was employed by Mr Marra and Carrington National in the area of broking services; and
• Was owed a significant amount of money being at least $86,000.
253 I am satisfied that the defendant did breach her fiduciary duty to the plaintiff by:
• Failing to advise the plaintiff of her conflict of interest;
• Failing to inform the plaintiff that there was a high risk that Mr Marra and Carrington National would not be able to service the loan;
• Securing the first advance in the sum of $150,000 and the second advance of $50,0000 were paid to Mr Marra and Carrington National; and
• Failing to inform the plaintiff of her intention to secure payment to herself in the sum of $70,000was a high risk.
254 I am satisfied that, by reason of the defendant's breach of her fiduciary duty to the plaintiff, the plaintiff did suffer loss and damage in that the sum of $200,000 was paid to Mr Marra and Carrington National, of which $70,000 was thereafter transferred to the defendant.
Conclusion
255 It follows from the above that I am satisfied of the following:
(a) the defendant did, in the course of trade and commerce, make misleading and deceptive representations to the plaintiff and that those representations induced the plaintiff to lend the sum of $200,000 to Carrington National;
(b) the defendant owed the plaintiff a duty of care and breached that duty;
(c) a fiduciary relationship existed between the plaintiff and defendant and that the defendant breached her fiduciary duty to the plaintiff; and
(d) the plaintiff did suffer loss and damage.
Assessment of Damages and Orders
256 The damages sought by the plaintiff, whether as a result of the defendant's breach of duty of care, for equitable compensation or as a result of the defendant's misleading or deceptive conduct, is the same. Consequently, I order that the defendant pay the plaintiff the following damages, interest and costs:
(a) damages in the sum of $200,000; plus
(b) interest on $150,000 at 6% per annum from 6 February 2012 to the date of judgment, such amount to be reduced by the sum of $13,241.66 (being the interest payments made by Mr Marra to the plaintiff in the period between 9 March 2012 and 15 February 2013);
(c) interest on $50,000 at 6% from 15 March 2012 to the date of the judgment; and
(d) the defendant pay the plaintiff's costs to be agreed or taxed.
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