Expectation Pty Ltd v PRD Realty Pty Ltd - [2004] FCAFC 189

FEDERAL COURT OF AUSTRALIA
Expectation Pty Ltd v PRD Realty Pty Ltd [2004] FCAFC 189
COURTS AND JUDICIAL SYSTEM – appeal – judgment at first instance delivered 22 months after appellant’s witnesses gave evidence – judgment reserved for 17 months –excessive delay – duty of trial judge in those circumstances to give more comprehensive reasons – obligation to show that delay had not affected decision – appellate court required to take delay into account when reviewing findings – primary judge’s reasons inadequate in several material respects – no findings in relation to alternative causes of action – re-trial ordered.
Trade Practices Act 1974 (Cth), ss 82, 87
Fair Trading Act 1989 (Qld) ss 99, 100
Fox v Percy (2003) 197 ALR 201 applied
Boodhoo v Attorney-General of Trinidad and Tobago [2004] 1 WLR 1689 referred to
State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in liq) (1999) 73 ALJR 306 referred to
Bartlem Pty Ltd Cox Industries (Australia) Pty Ltd [2002] FCAFC 224 referred to
Hadid v Redpath [2001] NSWCA 416 applied
R v Maxwell (unreported, New South Wales Court of Criminal Appeal, Spigelman CJ, Sperling and Hidden JJ, 23 December 1998) applied
Mount Lawley Pty Ltd v Western Australian Planning Commission [2004] WASCA 149 referred to
NAIS v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 1 referred to
Goose v Wilson Sandford & Co (unreported, England and Wales Court of Appeal (Civil Division), Gibson, Brooke, Mummery LJ, 13 February 1998) applied
Eckersley v Binnie (1988) 18 ConLR 1 applied
Flannery v Halifax Estate Agencies Ltd [2000] 1 WLR 377 applied
Customs and Excise Commissioner v A [2003] 2 All ER 736 referred to
Digi-Tech (Australia) Ltd v Brand [2004] NSWCA 58 referred to
Beale v Government Insurance Office of New South Wales (1997) 48 NSWLR 430 referred to
Mifsud v Campbell (1991) 21 NSWLR 725 referred to
Whisprun Pty Ltd v Dixon (2003) 77 ALJR 1598 referred to
Federal Commissioner of Taxation v St Helens Farm (ACT) Pty Ltd (1980-1981) 146 CLR 336 referred to
Housing Commission of NSW v Tatmar Pastoral Co Pty Ltd [1983] 3 NSWLR 378 referred to
Laminex (Australia) Pty Ltd v Smeeth [1999] NSWCA 462 referred to
Cordelia Holdings Pty Ltd v Newkey Investments Pty Ltd [2004] FCAFC 48 referred to
Henville v Walker (2001) 206 CLR 459 referred to
I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109 referred to
John G Glass Real Estate Pty Ltd v Karawi Constructions Pty Ltd (1993) ATPR 41-249 referred to
Bowler v Hilda Pty Ltd (1998) 80 FCR 191 referred to
Heydon v NRMA Ltd (2000) 51 NSWLR 1 referred to
Breen v Williams (1995-1996) 186 CLR 71 referred to
Pilmer v Duke Group Ltd (in Liq) (2001) 207 CLR 165
Hospital Products Ltd v Unites States Surgical Corporation (1984) 156 CLR 41 referred to
Maguire v Makaronis (1996-1997) 188 CLR 449 referred to
Daly v Sydney Stock Exchange Ltd (1985-1986) 160 CLR 371 referred to
McKenzie v McDonald [1927] VLR 134 referred to
Mallesons Stephen Jaques v KPMG Peat Marwick (1990) 4 WAR 357 referred to
Commonwealth Bank of Australia v Smith (1991) 42 FCR 390 referred to
Blackwell v Barroile Pty Ltd (1994) 51 FCR 348 referred to
Layton v Stewart [1994] ANZ Convenience R 283 referred to
Australian Breeders Co-operative Society Ltd v Jones (1997) 150 ALR 488 referred to
Clark Boyce v Mouat [1994] 1 AC 428 referred to
Farrington v Rowe McBride & Partners [1985] 1 NZLR 83 referred to
Bristol and West Building Society v Mothew (C.A.) [1998] Ch 1 referred to
Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484 referred to
Spincode Pty Ltd v Look Software Pty Ltd (2001) 4 VR 501 referred to
Brickenden v London Loan & Savings Co [1934] 3 DLR 465 referred to
Holmes v Jones (1907) 4 CLR 1692 referred to
Potts v Miller (1940) 64 CLR 282 referred to
Toteff v Antonas (1952) 87 CLR 647 referred to
Gould v Vaggelas (1983-1985) 157 CLR 215 referred to
Marks v GIO Australia Holdings (1998) 196 CLR 494 referred to
Gates v City Mutual Life Assurance Society Ltd (1985-1986) 160 CLR 1 referred to
Kizbeau Pty Ltd v W G & B Pty Ltd (1985) 184 CLR 281 referred to
Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514 referred to
Murphy v Overton Investments Pty Ltd (2004) 204 ALR 26 referred to
Manwelland Pty Ltd v Dames & Moore Pty Ltd (2001) ATPR 41-845 distinguished
Flemington Properties Pty Ltd v Raine & Horne Commercial Pty Ltd (1997) 148 ALR 271 doubted
EXPECTATIONS PTY LTD v PRD REALTY PTY LTD and GORDON DOUGLAS
Q164 of 2003
CARR, EMMETT & GYLES JJ
28 JULY 2004
PERTH (Heard in Brisbane)

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY

Q164 OF 2003

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:

EXPECTATION PTY LTD (ACN 009 030 102)
APPLICANT

AND:

PRD REALTY PTY LTD (ACN 009 954 956)
FIRST RESPONDENT

GORDON DOUGLAS
SECOND RESPONDENT

JUDGES:

CARR, EMMETT & GYLES JJ

DATE OF ORDER:

28 JULY 2004

WHERE MADE:

BRISBANE

THE COURT ORDERS THAT:
1. The appeal be allowed in part.
2.Orders 1 and 2 made on 9 October 2003 be set aside and in lieu thereof there be substituted the following orders:
‘1The proceeding be dismissed so far as concerns:
(a)all claims for relief as against the third respondent, and
(b)all claims for relief as against the first and second respondents related to the purchase by the applicant of the shopping centre property known as ‘Broadway on the Mall’.

2The applicant pay the first and second respondents’ costs of the part of the proceeding referred to in paragraph 1(b), save and except the costs of the first and second respondents in relation to the issue of an agreement of compromise, on a party and party basis.’

3.There be a new trial of the remaining issues in the proceeding before a different judge.
4.The question of the costs of the trial of the balance of the proceeding at first instance await the outcome of the new trial and be reserved for decision by the judge hearing that trial.
5.The first and second respondents pay 60 per cent of the appellant’s costs of the appeal.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY

Q164 OF 2003

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:

EXPECTATION PTY LTD (ACN 009 030 102)
APPLICANT

AND:

PRD REALTY PTY LTD (ACN 009 954 956)
FIRST RESPONDENT

GORDON DOUGLAS
SECOND RESPONDENT

JUDGES:

CARR, EMMETT & GYLES JJ

DATE:

28 JULY 2004

PLACE:

BRISBANE

REASONS FOR JUDGMENT

THE COURT 2

INTRODUCTION 2

FACTUAL BACKGROUND 4

THE BENOWA CENTRE 6

THE BROADWAY CENTRE 8

EXPECTATION’S PLEADED CLAIMS 8

THE RELATIONSHIP BETWEEN PRD AND EXPECTATION 8

Contract Terms 8

Common Law Duty Of Care 9

BREACH OF DUTY OF CARE AND BREACH OF CONTRACT (BENOWA) 10

MISLEADING AND DECEPTIVE CONDUCT (BENOWA) 13

BREACH OF FIDUCIARY DUTY (BENOWA) 13

THE BROADWAY CENTRE 14

THE DECISION OF THE PRIMARY JUDGE 16

THE BENOWA CENTRE 16

THE BROADWAY CENTRE 17

THE ISSUES ON APPEAL 18

DELAY IN HEARING AND DETERMINING EXPECTATION’S CLAIMS 18

EXPECTATION’S COMPLAINTS 18

APPLICABLE PRINCIPLES 20

ISSUES CONCERNING THE BENOWA CENTRE 25

FINDING OF NO LOSS 26

THE 8 PER CENT GROWTH REPRESENTATION 29

THE URGENCY REPRESENTATIONS 47

THE SPECIALTY RENT REPRESENTATIONS 51

FAILURE TO DISCLOSE RELEVANT FACTS 55

CONTRACT AND TORT CLAIMS 58

BREACH OF FIDUCIARY DUTY 61

DAMAGES 80

MR DOUGLAS 85

CONCLUSION AS TO BENOWA CENTRE 85

ISSUES CONCERNING THE BROADWAY CENTRE 85

THE FINDINGS OF THE PRIMARY JUDGE 86

THE EVIDENCE 88

WAS THERE MISLEADING CONDUCT? 104

NEGLIGENCE AND BREACH OF THE CONTRACT TERMS 108

CONCLUSION AS TO BROADWAY CENTRE 108

DISPOSITION OF THE APPEAL 109
THE COURT:
INTRODUCTION
1  The first respondent, PRD Realty Pty Limited (‘PRD’), was at relevant times a real estate agent carrying on business in and around Brisbane and the Gold Coast in Queensland. In 1992, the appellant, Expectation Pty Limited (‘Expectation’), retained PRD to advise it and act on its behalf in connection with proposed investments in real estate. The retainer occurred as a consequence of discussions between the second respondent, Mr Gordon Douglas, who is a director of PRD, and Mr Daniel Martin Hill, a director of Expectation.
2 In a proceeding commenced in the Court, Expectation claimed damages pursuant to s 82 of the Trade Practices Act 1974 and s 99 of the Fair Trading Act 1989 (Qld) (together ‘the Consumer Legislation’), together with orders pursuant to s 87 of the Trade Practices Act and s 100 of the Fair Trading Act. Alternatively, Expectation claimed damages for negligence, breach of fiduciary duty and breach of contract. Its claims were made against PRD and Mr Douglas in relation to agreements entered into by Expectation for the purchase by Expectation of the Benowa Gardens Shopping Centre, situated on the corner of Ashmore Road and Benowa Road, the Gold Coast (‘the Benowa Centre’) and the Broadway on the Mall Shopping Complex, situated in Queen Street, Brisbane (‘the Broadway Centre’).
3  Expectation made separate and independent claims in respect of the Benowa Centre and the Broadway Centre. However, both claims were founded upon the relationship that existed between Expectation and PRD. Thus, Expectation and PRD were parties to an agreement that was entered into in 1992 and varied in 1993. By that agreement, PRD agreed to act for Expectation in locating investments, investigating and evaluating those investments and then making recommendations as to purchase of such investments. Expectation also asserted that, by reason of various facts, PRD and Mr Douglas were in a relationship of proximity to Expectation, such that each of them was under a duty to Expectation to take reasonable care in proffering advice to Expectation.
4  In addition, Expectation alleged that, in connection with the entry by Expectation into the agreement to buy the Benowa Centre, PRD and Mr Douglas engaged in conduct that was misleading or deceptive or likely to mislead or deceive, in contravention of the Consumer Legislation. Expectation also asserted that, by that conduct, it acted in breach of the agreement between them and in breach of the duty to take reasonable care in proffering advice in connection with the proposed purchase. Finally, Expectation asserted that the relationship between it and PRD was such as to give rise to fiduciary duties on the part of PRD and that PRD acted in breach of those duties in connection with the purchase of the Benowa Centre.
5  Expectation also asserted that, in relation to its entry into the agreement to buy the Broadway Centre, PRD engaged in conduct in contravention of the Consumer Legislation and acted in breach of its obligations under the agreement between them and of its duty to take reasonable care in the proffering of advice in connection with the proposed purchase.
6  On 9 October 2003, a judge of the Court ordered that the proceeding be dismissed and ordered Expectation to pay the costs of PRD and Mr Douglas. His Honour ordered Expectation to pay those costs after 19 September 1999 on the basis that all costs of PRD and Mr Douglas be paid by Expectation except in so far as they were of an unreasonable amount or were unreasonably incurred so that, subject to such exceptions, PRD and Mr Douglas would be completely indemnified by Expectation for their costs after that date (Expectation Pty Ltd v PRD Realty Pty Ltd [2003] FCA 175; Expectation Pty Ltd v PRD Realty Pty Ltd [2003] FCA 1086).
7  Expectation now appeals from those orders.
8  There is no need, for the purposes of this appeal, to refer to the proceeding at first instance between Expectation and a Mr John Hammond. Mr Hammond was joined as third respondent because, in their defence, PRD and Mr Douglas pleaded a compromise agreement in which Mr Hammond was involved. The appeal is not concerned with that aspect of the proceeding.
FACTUAL BACKGROUND
9  The central representative of Expectation was Mr Hill. Mr Hill lives in Monaco. The events with which this proceeding is concerned took place over ten years ago, starting in late 1992.
10  Mr Hill, who had previously lived in Australia, returned to this country, in particular to Queensland, on 15 December 1992. He became re-acquainted with Mr Douglas who took him on a tour of Gold Coast properties over a number of days. Mr Douglas told Mr Hill that real estate was ‘the way to go’. Mr Hill became very interested in engaging in property development through Mr Douglas and PRD as a result of his conversations with Mr Douglas and the tour which he had been given of the Gold Coast property market.
11  PRD, through Mr Douglas, agreed with Expectation, through Mr Hill, that PRD would act for Expectation in locating investments, investigating and evaluating those investments and then making recommendations whether to purchase. The arrangement was that, if Expectation decided to accept any particular recommendation, then PRD and Mr Douglas would be involved in the negotiations for those purchases.
12  Mr Hill left Australia on 13 January 1993.
13  In March 1993, Mr Douglas recommended to Mr Hill that Expectation should purchase a broad acre subdivision known as Chancellor Park. Shortly before Mr Douglas’ recommendation about Chancellor Park, he had referred Mr Hill to Mr Anthony William Hickey, a Gold Coast solicitor. In response to Mr Douglas’ recommendation, Mr Hill told him that he wanted Mr Anderson, an accountant in whom Mr Hill had confidence, to carry out due diligence inquiries on that project and that he wanted Mr Hickey to do all the legal work.
14  On 24 May 1993, Expectation entered into a joint venture agreement whereby it acquired a two-thirds interest in the Chancellor Park project. PRD was the vendor’s agent in that transaction. The purchase was settled on 11 June 1993 and PRD was paid commission of $100,450 by the vendor. Mr Douglas and Mr Hickey were appointed by Expectation to represent it at management committee meetings of the joint venturers. PRD was appointed as project manager and selling agent.
15  At about the same time, Mr Douglas recommended to Mr Hill that he purchase a further property, known as Canterbury Downs. That was also a broad acre subdivision. Expectation purchased Canterbury Downs for a price of $3.5 million, with settlement taking place on 1 July 1993. The vendor paid PRD commission on the purchase. Expectation subsequently appointed PRD as the sales agent for the Canterbury Downs estate and PRD earned commissions from the subsequent sales of allotments in a subdivision of the property.
16  In July 1993, Mr Douglas recommended to Mr Hill the purchase of a house block at Mermaid Beach for approximately $1 million. Mr Hill purchased the block.
17  During this time, Mr Hill kept in telephone contact with Mr Douglas and also with Mr John Langford. Mr Langford was employed by PRD in relation to commercial and retail property transactions. He was general manager of PRD’s Gold Coast office. Through Mr Langford, PRD set about finding, investigating and evaluating further commercial property investments for Expectation. Properties considered included the Optus Centre in Sydney and an Australian Taxation Office building in Brisbane.
18  In one telephone conversation, Mr Hill told Mr Douglas that his former wife, Ms Daisy Hill had about $7 million, which needed to be invested in a stable, well-yielding, commercial investment. He said that she would lend the money to Expectation to enable it to make the purchase on trust for the Daisy Hill Family Trust (‘the Trust’) and Expectation would need to borrow the remainder. On 27 July 1993, Mr Douglas informed Mr Langford that Mr Hill was seeking a commercial property for Daisy Hill at a price of between $10 million and $13 million.
THE BENOWA CENTRE
19  The Benowa Centre had opened for trading on 30 September 1992. PRD acted as the leasing agent for the Benowa Centre and also acted as centre manager from the date of the opening.
20  On 21 June 1993, Benoco Pty Limited (‘Benoco’), the owner of the Benowa Centre, decided to put the Benowa Centre on the market, initially by way of inviting expressions of interest. Benoco appointed PRD as agent for the sale of the Benowa Centre. Benowa was granted a sole agency for a limited period expiring initially on 31 December 1993, which was extended to 15 February 1994. The individual agent handling the transaction on behalf of PRD was Mr Bradley Johnston.
21  On 22 November 1993, Mr Hill returned to Queensland. On Friday, 26 November 1993, he inspected the Benowa Centre with Mr Douglas and Mr Kenneth Cooney, who was in charge of PRD’s shopping centre management activities. Mr Cooney was very experienced in retail shopping centres, having previously been the manager of a large and successful shopping centre on the Gold Coast.
22  Part of Expectation’s case was that during the inspection of the Benowa Centre, Mr Cooney, with the agreement of Mr Douglas, orally represented to Mr Hill that:

the rentals that could be demanded from tenants of specialty shops at the Benowa Centre had good growth prospects, and this would result in at least an 8 per cent growth in net income from the Benowa Centre per year;

the tenants of specialty shops in the Benowa Centre were paying not more than an appropriate market rent; and

the value of the Benowa Centre was at least $15 million.

23  Expectation also claimed that on a number of occasions at or around this time, Mr Douglas represented to Mr Hill that there was an urgent need for Expectation to make an offer in view of the fact that:
·    there were other interested purchasers who were in a position to make, or who had made, an offer for the Benowa Centre;
·    Benoco would not consider any form of conditional contract; and
·    Expectation would have to offer $15 million cash to secure the purchase of the Benowa Centre.

24  At some time after 26 November 1993, Mr Hill instructed Mr Hickey to convey to Benoco an expression of interest on Expectation’s part in Benowa Gardens at $14.1 million. Mr Hickey did that and, on 3 December 1993, Expectation executed a contract to purchase the Benowa Centre for $15 million, with a deposit of $100,000. Benoco executed the contract of sale on 8 December 1993.
25  On 15 December 1993, Expectation, through Mr Hickey, applied for finance from Australia and New Zealand Banking Group Limited (‘ANZ Bank’) in respect of the Benowa Centre purchase. On the same day Mr Hickey retained a valuer, Mr Lloyd Parsons, of HTW Valuers (Gold Coast) Pty Limited (‘HTW’), to value the Benowa Centre. Mr Parsons valued the Benowa Centre at $15 million.
26  On 25 January 1994, ANZ Bank retained Richard Ellis (Queensland) Holdings Pty Limited (‘Richard Ellis’), real estate agents, to value the Benowa Centre. On 27 January 1994, Mr Brian Cox of Richard Ellis provided a valuation of the Benowa Centre in the sum of $12.5 million.
27  On 28 January 1994, Mr Parsons sent a report to Mr Hickey about the Richard Ellis valuation. In that report he described the capitalisation rate of 13 per cent adopted by Richard Ellis as ‘unrealistic’. On the same day Mr Cooney sent Mr Hickey his written comments, which were also highly critical of the Richard Ellis valuation.
28  Settlement of the contract for the purchase of the Benowa Centre took place on 7 February 1994. Subsequently, in December 1997 Expectation sold the Benowa Centre for $13.6 million, being $1.4 million less than it had paid for it.

THE BROADWAY CENTRE
29  Mr Richard Barber of Price Waterhouse (‘the Receiver’), who was the receiver and manager of Queen Street Mall Limited, the owner of the Broadway Centre (‘the Broadway Vendor’), sent to Mr Colin Peet of PRD a letter dated 6 January 1994 (‘the Covering Letter’). Enclosed with the Covering Letter were nine pages of schedules consisting of budgets and forecasts in relation to the Broadway Centre (‘the Schedules’). The Covering Letter stated that the contents of the Schedules were not audited and that Price Waterhouse took no responsibility for, nor warranted the accuracy or reliability of, the Schedules.
30  On 9 January 1994, Mr Hill inspected the Broadway Centre with Messrs Douglas and Cooney. In the course of the inspection there were discussions concerning the income from the Broadway Centre. A copy of the Schedules was given to Mr Hill. Expectation claimed that, by giving Mr Hill the Schedules and by certain statements made in the course of the inspection, PRD and Mr Douglas represented to Mr Hill that the income of the Broadway Centre was $2.45 million. Expectation claimed that, in reliance on that representation, it agreed to buy the Broadway Centre for $31.5 million and paid a non-refundable deposit of $100,000 and thereafter incurred expenses in investigation of the Broadway Centre. That investigation showed that the income was substantially less than $2.45 million and, accordingly, Expectation terminated the contract and the deposit of $100,000 was forfeited and the investigation expenses were lost.
EXPECTATION’S PLEADED CLAIMS
THE RELATIONSHIP BETWEEN PRD AND EXPECTATION
Contract Terms
31  Expectation asserted, in its second further amended statement of claim (‘the Statement of Claim’), that, as from 16 July 1993, there was an agreement in force between Expectation and PRD that PRD would act as Expectation’s purchasing agent in respect of commercial properties (‘the 1993 Appointment’). Expectation asserted that the terms of the 1993 Appointment included the following (‘the Contract Terms’):
(i)PRD would act as exclusive purchasing agent for Expectation, would locate properties for investment, would investigate each such investment opportunity and would make recommendations to Expectation as to the purchase or otherwise of the property.
(ii)When instructed to do so, PRD would negotiate the purchase of the identified property as the agent of Expectation.
(iii)PRD would be remunerated by the payment of a commission. In circumstances where PRD did not have the listing for the commercial property, Expectation would pay to PRD a commission of 2.5 per cent calculated on the purchase price.
(iv)PRD would exercise due care and skill in the performance of the obligations stated above.
(v)PRD would act honestly and in the best interests of Expectation.

Common Law Duty Of Care
32 Expectation also asserted in the Statement of Claim that PRD and Mr Douglas were in a relationship of proximity to Expectation arising from the following facts:
(i)In about November 1992 Expectation appointed PRD to advise Expectation in relation to possible real estate investments and to act as the agent for Expectation in relation to the investigation, negotiations for, and purchase of such real estate investments.
(ii)Pursuant to that appointment, PRD, by and through Mr Douglas, located, recommended and negotiated the purchase of a number of parcels of land for Expectation in May 1993 (Chancellor Park) and July 1993 (Canterbury Downs) and for Mr Hill in July 1993 (Mermaid Beach).
(iii)On or about 16 July 1993 Expectation and PRD entered into the 1993 Appointment.
(iv)Between July and November 1993 Expectation advised PRD that it wished PRD to investigate and recommend to Expectation the purchase of a retail shopping centre suitable for investment by Expectation.
(v)Mr Douglas knew that Mr Hill and Expectation relied on him for advice in relation to land purchases in general and that Expectation was likely to follow, and act on, that advice.
(vi)The knowledge of Mr Douglas was the knowledge of PRD.

33 Expectation claimed in substance that, by reason of that relationship of proximity, each of PRD and Mr Douglas was under a duty to Expectation to take reasonable care in proffering advice in relation to the proposed purchase of any shopping centre.
BREACH OF DUTY OF CARE AND BREACH OF CONTRACT (BENOWA)
34 Expectation made the following allegations in relation to the Benowa Centre:
(i)In November and December 1993 PRD was acting as managing agent of the Benowa Centre.
(ii)Between 22 November and 2 December 1993 PRD recommended to Expectation that it make an unconditional offer to purchase the Benowa Centre for $15 million and informed Expectation that Benoco would not, in Mr Douglas’s view, accept anything less than an unconditional offer at the asking price of $15 million (‘the Recommendation’).
(iii)By making the Recommendation, PRD impliedly made the following representations (‘the Implied Representations’):
(a)the Benowa Centre had a value of at least $15 million;
(b)PRD and Mr Douglas had reasonable grounds for holding and expressing the opinion that the value of the Benowa Centre was $15 million;
(c)PRD and Mr Douglas had valid and honest grounds for holding the stated view that Benoco would not accept anything less than an unconditional offer at $15 million.

(iv)Between 22 November and 2 December 1993 PRD made the following representations (‘the Express Representations’) to Expectation:
(a)the rentals that could be demanded from tenants of specialty shops in the Benowa Centre had good ‘prospects’ and this would result in at least an 8 per cent growth in net income from the Benowa Centre per year (‘the 8 per cent Growth Representation’).
(b)there was an urgent need for Expectation to make an offer (‘the Urgency Representation’);
(c)the tenants of specialty shops in the Benowa Centre were paying not more than an appropriate market rent (‘the Specialty Rent Representation’);
(d)Benoco would not consider any form of conditional contract;
(e)Expectation would have to offer $15 million cash to secure the purchase of the Benowa Centre.
(f)the value of the Benowa Centre was at least $15 million;

35 There is a degree of overlap between the Implied Representations and the Express Representations. Thus, representations (iii)(a) and (iv)(f) are to the same effect. Representation (iii)(b) is clearly related to those representations. It is convenient to refer to all three as ‘the Value Representations’. Further, representation (iii)(c) clearly overlaps with representations (iv)(d) and (iv)(e). It is convenient to refer to those as ‘the Unconditional Price Representations’.
36 Thus, the representations alleged, both express and implied, may be summarised as follows:

the 8 per cent Growth Representation;

the Urgency Representation;

the Specialty Rent Representation;

the Value Representations;

the Unconditional Price Representations.

37 Expectation claimed that in proffering advice in relation to the proposed purchase of the Benowa Centre, PRD and Mr Douglas were under a duty to take care, before PRD and Mr Douglas advised the purchase of the Benowa Centre, that:
(i)adequate enquiry was made into the value of the Benowa Centre;
(ii)disclosure of all relevant information affecting the value of the Benowa Centre was made;
(iii)adequate inquiry and disclosure of all relevant information was made as to the market rent of the specialty shops and the likely or sustainable rate of income growth of the Benowa Centre.

Expectation asserted that PRD and Mr Douglas made the Recommendation, the Express Representations and the Implied Representations in breach of that duty to take care, in that the Recommendation, the Express Representations and the Implied Representations were made without:
(i)making any or any adequate enquiry as to the value of the Benowa Centre;
(ii)making any or any adequate enquiry or assessment as to the market rent of the specialty shops in the Benowa Centre;
(iii)making any or any adequate enquiry as to the likely rate of income growth from the Benowa Centre in ensuing years;
(iv)having any or any adequate regard to the interests of Expectation;
(v)taking any adequate steps to disclose all relevant information affecting the value of the Benowa Centre prior to advising its purchase.

38 Expectation asserted that, on or about 8 December 1993, in reliance upon the Recommendation, the Implied Representations and the Express Representations, Expectation entered into an unconditional contract in writing to purchase the Benowa Centre for $15 million and on or about 7 February 1994 settled that contract and paid the purchase price of $15 million to Benoco. Expectation claimed that it suffered loss and damage in consequence, in that Expectation purchased the Benowa Centre for $15 million when its true value was $12.05 million or thereabouts.
39 Expectation also asserted that PRD acted in breach of the Contract Terms by:
(i)making the Recommendation, the Express Representations and the Implied Representations negligently;

(ii) failing to disclose to Expectation the following facts (‘the Relevant Facts’):
(a)on or about 29 July 1993 PRD and Benoco agreed a sliding scale of commission;
(b)in August 1993 PRD sought a sole agency in respect of the sale of the Benowa Centre;
(c)on 25 October 1993 PRD was formally appointed as Benoco’s sole agent for the sale of the Benowa Centre;
(d)Benoco directed PRD to keep marketing information confidential from prospective purchasers;
(e)no other person had expressed an interest in the Benowa Centre at $15 million;
(f)the opinion of PRD and Mr Douglas was that the asking price for the Benowa Centre of $15 million was a disadvantage to its sale;
(g)the value of the Benowa Centre was no more than $12.05 million;
(h)rents payable by tenants of specialty shops in the Benowa Centre were significantly higher than the appropriate market rent;
(i)Benoco was prepared to consider a contract that was not unconditional and at a price less than $15 million;
(j)none of the other persons who had expressed any interest in the Benowa Centre was in a position to make or had made an offer for the Benowa Centre that was capable of acceptance;

(iii)Mr Douglas’s stating, in or about November 1993, that he agreed with a statement made in or about November 1993 by Mr Cooney to Mr Hill (‘the 8 Per Cent Statement’) that an 8 per cent growth in net income per annum would be achieved from the Benowa Centre.

40  Expectation claimed that it suffered loss and damage as a consequence of that breach in that it purchased the Benowa Centre for $15 million when its true value was $12.05 million or thereabouts.
MISLEADING AND DECEPTIVE CONDUCT (BENOWA)
41  Expectation also alleged that, by making the Implied Representations and the Express Representations and by failing to disclose the Relevant Facts, PRD and Mr Douglas engaged in conduct in contravention of the Consumer Legislation. It asserted that, in reliance upon that conduct, it entered into the agreement to buy the Benowa Centre for $15 million on or about 8 December 1993 and settled that agreement and paid the purchase price of $15 million to Benoco on or about 7 February 1994. It claimed that it has suffered loss and damage by the conduct in that the true value of the Benowa Centre was $12.05 million or thereabouts.
BREACH OF FIDUCIARY DUTY (BENOWA)
42  Finally, Expectation asserted in relation to the Benowa Centre that, since:

at all material times PRD acted as managing agent of the Benowa Centre,

Expectation and PRD were parties to the 1993 Appointment containing the Contract Terms, and
·pursuant to the earlier arrangement between them, PRD had located, recommended and negotiated the purchase of the land at Chancellor Park and at Canterbury Downs for Expectation and at Mermaid Beach for Mr Hill,

PRD and Mr Douglas at all material times owed to Expectation a duty not to allow:
(a)their personal interests to come into conflict with their duty to act in the interests of Expectation;
(b)their duty to any other person to come into conflict with their duty to act in the interests of Expectation.

43  Expectation asserted that the conduct of PRD and Mr Douglas, in making the Recommendation, in making the Implied Representations and the Express Representations and in failing to disclose the Relevant Facts, was in breach of that duty, which was characterised in the Statement of Claim as a ‘fiduciary duty’.
44  Expectation then claimed that, in reliance on the conduct of PRD and Mr Douglas that was in breach of that fiduciary duty, it entered into the contract to buy the Benowa Centre and settled that contract and thereby suffered the loss and damage in that it paid $15 million when the true value was $12.05 million or thereabouts.
THE BROADWAY CENTRE
45  Expectation alleged in the Statement of Claim that, on or about 9 January 1994, Mr Douglas made the following statements to Mr Hill (‘the Broadway Statements’):
(i)        the net income of the Broadway Centre was in the order of $2.45 million;
(ii)PRD had received the Schedules containing information about the income and outgoings of the Broadway Centre prepared on behalf of the Broadway Vendor;
(iii)the Schedules contained a statement that net income of the Broadway Centre from rental was in the order of $2.45 million;
(iv)PRD had checked out the net income with the management of the Broadway Centre and verified it as $2.45 million.

Expectation complained that, at that time, Mr Douglas gave a copy of the Schedules to Mr Hill but did not disclose to Mr Hill that a copy of the Covering Letter was in PRD’s possession and did not disclose to Mr Hill the contents of the Covering Letter.
46 Expectation asserted that, by making the Broadway Statements and giving a copy of the Schedules to Mr Hill without making that disclosure, PRD and Mr Douglas impliedly represented that:
(i)the Schedules contained an accurate statement of the net income of the Broadway Centre;
(ii)the figures in the Schedules had been verified;
(iii)the Schedules contained figures for the net income of the Broadway Centre verified by Price Waterhouse;

(‘the Broadway Representations’).
47 The Statement of Claim then alleged that, in contravention of the Consumer Legislation, the conduct on the part of Mr Douglas and PRD alleged above, that is: making the Broadway Statements, giving a copy of the Schedules to Mr Hill without the disclosure and making the Broadway Representations, was misleading and deceptive or likely to mislead and deceive in that:
(i)the net income of the Broadway Centre was in the order of $1.8 million and was not $2.45 million;
(ii)the Schedules:
(a)contained only a budget summary of the income and expenditure for the year ended 30 June 1994;
(b)contained figures that were unaudited;
(c)did not contain the net income of the Broadway Centre;
(d)did not contain figures verified by Price Waterhouse;

(iii)the Schedules, considered without the Covering Letter, were likely to create a misleading impression of the accuracy of, and the reliance that might reasonably be placed on, their contents.

48  The Statement of Claim then alleged that, by reason of the conduct on the part of PRD and Mr Douglas alleged above, Mr Hill caused Expectation to enter into a contract to buy the Broadway Centre on 18 January 1994 (‘the Broadway Contract’), to pay $100,000 as a non-refundable deposit to the Broadway Vendor and to pay professional fees to conduct a due diligence investigation into the proposed purchase of the Broadway Centre.
49  During the course of that due diligence investigation, Expectation learned that the true net income of the Broadway Centre was in the order of $1.8 million. As a consequence of that discovery, Expectation declined to proceed further with the proposed purchase and lost the non-refundable deposit of $100,000 and the professional fees that it paid out.
50  Expectation also asserted that in acting as alleged above Mr Douglas, for himself and on behalf of PRD, acted negligently in that he knew, or ought to have known, that to inform Mr Hill of the contents of the Schedules without reference to the contents of the Covering Letter created a misleading impression of the reliance that Mr Hill and Expectation could reasonably place on the net income stated in the Schedules.
51  Finally, Expectation also alleged in the Statement of Claim that, by the conduct alleged, PRD acted in breach of the Contract Terms, namely, that PRD would exercise due care and skill in the performance of its obligations under the 1993 Appointment and would act honestly and in the best interests of Expectation.
52  Expectation claimed the same damages for negligence and for breach of contract as is claimed in respect of the alleged contravention of the Consumer Legislation.
THE DECISION OF THE PRIMARY JUDGE
THE BENOWA CENTRE
53  The primary judge accepted that Mr Douglas recommended to Mr Hill that Expectation make an unconditional offer to purchase the Benowa Centre for $15 million. His Honour also accepted that Mr Douglas said that, in his opinion, Benoco would accept nothing less than an unconditional offer of $15 million. His Honour accepted that Mr Douglas and the other representatives of PRD believed, in late November 1993, that Benoco would accept an offer of $15 million or thereabouts and that Expectation would have to make an unconditional offer of around $15 million in order to buy the Benowa Centre. His Honour accepted that that belief was based on reasonable grounds.
54  His Honour was satisfied that there were reasonable grounds for the Implied Representations. His Honour found that the Express Representations were not made and that Mr Cooney did not say that the value of the Benowa Centre was at least $15 million. His Honour also concluded that, while there was a representation that the tenants of specialty shops in the Benowa Centre were paying not more than an appropriate market rent, that was an honest and reasonably based opinion of Mr Cooney and involved no misrepresentation.
55  However, his Honour did not accept that Mr Cooney made the 8 Per Cent Statement. Further, his Honour concluded that, even if there had been an assurance that there would be 8 per cent growth per year, Expectation was not misled by any such assurance. His Honour did not accept that Expectation was induced by, or relied on, any representation made by PRD about the Benowa Centre.
56  In any event, his Honour concluded that, at the time the contract to buy the Benowa Centre was entered into by Expectation, the value of the Benowa Centre was approximately $15 million. Accordingly, Expectation suffered no loss or damage by reason of its purchase of the Benowa Centre.
57  His Honour did not make determinations about Expectation’s claims to be entitled to damages in respect of some of the Consumer Legislation claims and for breach of the Contract Terms, negligence or breach of fiduciary duty in connection with the purchase of the Benowa Centre. Nevertheless, his Honour dismissed the application in so far as it related to the purchase by Expectation of the Benowa Centre.
THE BROADWAY CENTRE
58  In relation to the claims arising out of the contract to buy the Broadway Centre, the primary judge was satisfied that Mr Douglas did not tell Mr Hill that PRD had checked out the net income with the management of the Broadway Centre and verified it at $2.45 million. In any event, his Honour concluded that Expectation did not enter into the contract to buy the Broadway Centre in reliance on the representations pleaded. His Honour therefore dismissed the application in so far as it related to the agreement to buy the Broadway Centre. His Honour made no specific determinations in relation to the causes of action alleged concerning contravention of the Consumer Legislation, breach of the Contract Terms and negligence. However, since each of the causes of action relied on by Expectation depended upon the same factual assertions, having concluded that much of the impugned conduct had not occurred and that, in any event, there was no reliance on any relevant conduct, it was unnecessary for his Honour to make any specific determination in relation to any particular cause of action.

THE ISSUES ON APPEAL
59  In its notice of appeal, Expectation complains about delay on the part of the primary judge in deciding the proceeding. Expectation also challenges many adverse findings made by the primary judge. In addition, it complains of the failure by the primary judge to determine any causes of action pleaded other than some of those based on contravention of the Consumer Legislation.
60  It is necessary to consider the grounds of appeal under a number of heads, which may be summarised as follows:
(a)       Delay in Hearing and Determining Expectation’s Claims
(b)       Issues Concerning The Benowa Centre
Finding of No Loss
8 per cent Growth Representation
Urgency Representation
Specialty Rent Representation
Failure to Disclose the Relevant Facts
Contract and Tort Claims
Fiduciary Duty Claims

(c)Issues Concerning the Broadway Centre
Was there Misleading Conduct?
Negligence and Breach of the Contract Terms

DELAY IN HEARING AND DETERMINING EXPECTATION’S CLAIMS
EXPECTATION’S COMPLAINTS
61  Expectation complains about the delay between the completion of final addresses on behalf of the parties and the publishing of the reasons of the primary judge for the findings made and the conclusions reached by him. Expectation contends that the delay was inordinate and gave rise to errors on the part of the primary judge in his assessment of the evidence and in the findings made and conclusions reached by him. Specifically, Expectation suggests that that delay may explain the failure of the primary judge to make a determination about certain of the causes of action relied on by Expectation. Expectation also suggests that the delay may explain the failure of the primary judge to make findings with respect to critical evidence.
62  The events that are the subject of Expectation’s claims occurred in late 1993 and early 1994. The proceeding was commenced on 5 December 1996. The trial was originally fixed to commence on 13 December 1999. However, on that day, the hearing was vacated as a consequence of an application made by PRD and Mr Douglas to amend their defence.
63  The trial actually commenced on 8 May 2001 and proceeded over eleven days before it was adjourned for further hearing on 24 May 2001. The evidence of Expectation witnesses, including Mr Hill, was given on 9, 10, 11, 14, 15, 16 and 17 May 2001. Because of the unavailability of the primary judge on 24 May 2001, the trial did not resume until 6 August 2001. The trial then proceeded over a further three days when it was adjourned to 15 October 2001. Final addresses concluded on 16 October 2001.
64  However, it was not until 11 March 2003 that the primary judge published his reasons for concluding that Expectation’s claims against both PRD and Mr Douglas should be dismissed. No orders were made at that stage, his Honour indicating that he would hear the parties as to the orders that should be made to give effect to those reasons and on the question of costs. Following receipt of written submissions from the parties on the question of costs, his Honour finally made orders on 9 October 2003.
65  The specific complaints made by Expectation concerning the reasons of the primary judge may be summarised as follows:

His Honour failed to give full and comprehensive reasons dealing with all significant evidence and issues.

His Honour treated Expectation’s case as being unsupported by any contemporaneous documents or corroboration when, in fact, its case was amply supported in both respects.

His Honour wrongly held that the contentions advanced on behalf of PRD and Mr Douglas were supported by the evidence.

His Honour either ignored or misconstrued significant contemporaneous documents.

Any advantage that his Honour would have had through seeing and hearing the witnesses was lost. Specifically, critical findings based on the demeanour of the witnesses Messrs Hill and McLernon (directors of Expectation) were suspect, since they were made almost two years after those witnesses gave their evidence.

His Honour overlooked a great deal of the evidence adduced at the trial.

Certain of the causes of action asserted by Expectation were not considered or made the subject of express determination in his Honour’s reasons.

APPLICABLE PRINCIPLES
66  At the best of times, the mere fact that a trial judge necessarily reaches a conclusion favouring the witnesses of one party over those of another does not, and cannot, prevent the performance by an appellate court of the functions imposed upon it by statute. In particular cases, incontrovertible facts or uncontested testimony may demonstrate that the trial judge’s conclusions are erroneous, even when they appear to be, or are stated to be, based on credibility findings (Fox v Percy (2003) 197 ALR 201 at [28]).
67  Appellate judges have long given, as a reason for appellate deference to the decision of a trial judge, the assessment of the appearance of witnesses as they give their testimony that is possible at trial and normally impossible for an appellate court. On the other hand, for almost as long, appellate judges have cautioned against the dangers of too readily drawing conclusions about truthfulness and reliability solely or mainly from the appearance of witnesses (Fox v Percy at [30]). In any event, it is appropriate to have some doubt about the ability of judges, or anyone else, to tell truth from falsehood accurately on the basis of the appearance of witnesses. Such considerations should encourage trial judges and appellate judges to limit their reliance on the appearance of witnesses and to reach conclusions, as far as possible, on the basis of contemporary materials, objectively established facts and the apparent logic of events (Fox v Percy at [31]).
68  Where there are relevant contemporaneous materials, such as file notes and correspondence, and there is significant delay between the hearing of evidence and the giving of reasons for conclusions, being reasons that do not advert to the contemporaneous materials and do not give specific reasoning for accepting or rejecting the evidence of particular witnesses, the conclusions reached should be given careful scrutiny and consideration by an appellate court where the findings are challenged on appeal.
69  Delay between the taking of evidence and the making of a decision is not, of itself, a ground of appeal, unless the judge could no longer produce a proper judgment or the parties are unable to obtain from the decision the benefit which they should (cf Boodhoo v Attorney-General of Trinidad and Tobago [2004] 1 WLR 1689 at [11]–[12]). Nor does such delay of itself indicate that a trial has miscarried or that a verdict is in any manner unsafe. However, where there is significant delay in giving judgment, it is incumbent upon an appellate court to look with special care at any finding of fact challenged on appeal. In ordinary circumstances, where there is a conflict of evidence, the trial judge who has seen and heard the witnesses, has an advantage.
70  That advantage includes seeing the oral and documentary evidence unfold in a coherent manner, which cannot be replicated on appeal (State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in liq) (1999) 73 ALJR 306, 160 ALR 588 per Kirby J at [90]; Bartlem Pty Ltd v Cox Industries (Australia) Pty Ltd [2002] FCAFC 224, 55 IPR 449 at [87]).That advantage will ordinarily prove decisive on appeal unless it can be shown that the trial judge failed to use or misused such an advantage. The mere fact of a long delay itself weakens a trial judge’s advantage. Thus, delay must be taken into account when reviewing findings made by a trial judge after a significant delay from the time when the relevant evidence was given.
71  In the normal course, statements made by a trial judge of a general assertive character can be accepted as encompassing a detailed consideration of the evidence. However, where there is significant delay, such statements should be treated with some reserve. After a significant delay, a more comprehensive statement of the relevant evidence than would normally be required should be provided by the trial judge in order to make manifest, to the parties and the public, that the delay has not affected the decision.
72  In cases not affected by delay, an appellate court is entitled to assume that the mere failure to refer to evidence does not mean that it has been overlooked or that other forms of error have occurred. However, where there is significant delay, no favourable assumptions can be made. In such circumstances, it is up to the trial judge to put beyond question any suggestion that he or she has lost an understanding of the issues. Where there is significant delay, it is incumbent upon a trial judge to inform the parties of the reasons why the evidence of a particular witness has been rejected. It is necessary for the trial judge to say why he or she prefers the evidence of one witness over the evidence of other witnesses (Hadid v Redpath [2001] NSWCA 416 at [34] and [53]).
73  Of course, where the trial judge, notwithstanding significant delay, demonstrates by his or her reasons that full consideration has been given to all of the evidence, the parties and the public may be satisfied that the delay has not affected the decision. More specifically, if the reasons demonstrate that the delay has not weakened the trial judge’s advantage, confidence will be maintained in the decision. For example, it would be open to a trial judge to explain in the course of giving reasons that contemporaneous notes were made of impressions formed as evidence was given by witnesses of importance (see R v Maxwell (unreported, New South Wales Court of Criminal Appeal, Spigelman CJ, Sperling and Hidden JJ, 23 December 1998)).
74  The problem is not restricted to fading memory. A judge who comes to make an inordinately delayed decision will inevitably be subjected to great pressure to complete and publish the judgment. A conscientious judge could not but feel that pressure. It is almost inevitable that there will also be some form of external pressure – whether from the parties, the management of the Court, the press or parliamentarians. That pressure could well unconsciously affect the process of decision-making and the process of giving reasons for decision. The decision that is easiest to make and express will have great psychological attraction. As was recently said by the Western Australian Court of Appeal in Mount Lawley Pty Ltd v Western Australian Planning Commission [2004] WASCA 149, in the course of a valuable review of the significance of delay in the delivery of judgments:
‘…a long delay can give rise to disquiet … because of the suspicion, on the part of the losing party, that the task may have become too much for the trial Judge and that he or she had been unable, in the end, to grapple adequately with the issues.’ ([31]).

75  As mentioned above, almost seventeen months expired between the time when his Honour reserved judgment (16 October 2001) and 11 March 2003, the date upon which he delivered his first set of reasons and more than 21 months between the completion of evidence and the first set of reasons. The latter period was regarded as the most cogent by Hill J in NAIS v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 1 at [17]. This delay was grossly inordinate. In Hadid v Redpath [2001] NSWCA 416 it was submitted that, at some point, the passing of time from the moment when judgment is reserved causes a delay to arise that alters the normal approach of an appellate court.
76  Counsel for the appellant described this type of delay as ‘operative delay’. Although the Court of Appeal in Hadid did not have to decide whether the point on which the appeal succeeded in that matter was the result of delay, Heydon JA, at [33]-[38] set out the appellant’s submissions in some detail, without any apparent disapproval. We think that the expression ‘operative delay’ is a useful one as a description of the type of delay which has the consequences (both for a primary judge and an appellate court), discussed in the relevant authorities referred to below.
77  The leading case in this area appears to be the decision of the English Court of Appeal in Goose v Wilson Sandford & Co (unreported, England and Wales Court of Appeal (Civil Division), Gibson, Brooke, Mummery LJ, 13 February 1998). The approach taken by the Court of Appeal in that matter has been adopted by the New South Wales Court of Criminal Appeal in R v Maxwell, was cited with apparent approval in Hadid v Redpath (at [29]) and more recently by Finkelstein J in NAIS v Minister for Immigration & Multicultural & Indigenous Affairs [2004] FCAFC 1 at [53].
78  In Goose the delay was approximately 21 months. Their Lordships said this (at [113]):
‘Because of the delay in giving judgment, it has been incumbent on us to look with especial care at any finding of fact which is now challenged. In ordinary circumstances where there is a conflict of evidence a judge who has seen and heard the witnesses has an advantage, denied to an appellate court, which is likely to prove decisive on an appeal unless it can be shown that he failed to use, or misused, this advantage. We do not lose sight of the fact that the judge had transcripts of the evidence, as well as very extensive written submissions from counsel. But the very fact of the huge delay in itself weakened the judge’s advantage, and this consideration had to be taken into account when we reviewed the material which was before the judge. In a case as complex as this, it is not uncommon for a judge to form an initial impression of the likely result at the end of the evidence, but when he has come to study the evidence (both oral and written) and the submissions he has received with greater care, he will then go back to consider the effect the witnesses made on him when they gave evidence about the matters that are now troubling him. At a distance of 20 months, Harman J. denied himself the opportunity of making this further check in any meaningful way.’

79 In R v Maxwell, the New South Wales Court of Criminal Appeal, having adopted the approach of the English Court of Appeal in Goose made the following observations (at [25]):
‘Considerations such as these have informed this Court in its review of the reasons for judgment given by his Honour, specifically the statements made by his Honour in his judgment of a general assertive character, which in the normal course would be accepted as encompassing a detailed consideration of the evidence before him, have been treated by us with reserve. Indeed, a delay of the order of ten months is, of itself, such as to require a more comprehensive statement of the relevant evidence than would normally be required, in order to manifest, for the parties and the public, that the delay has not affected the decision.’

80 The delay in the present case went beyond the minimum period of ‘operative delay’. In those circumstances, in his reasons for judgment his Honour was required to carry out a detailed consideration i.e. a more comprehensive statement of the relevant evidence (to use the words of the Court of Criminal Appeal in Maxwell) than would normally be required. The purpose of doing so would have been to demonstrate to all concerned that the delay had not affected his decision. This is not a case in which, sitting as an appellate court, it can be assumed that the mere failure to refer to evidence did not mean that it had been overlooked.
81 In the absence of some special circumstances, where his Honour rejected the evidence of the witness on grounds of lack of credit, one would expect him to explain how, despite the delay, he was well able to recollect the oral testimony. Also, as a general rule, if part of that rejection depended upon contemporary documents, or the lack of such contemporary documents, his Honour should in his reasons have gone to those documents and (in the latter case) stated with requisite satisfaction that there were no such contemporaneous documents. As the Court of Criminal Appeal said in Maxwell, at [46]:
‘The Appellant had a right to expect that the arguments put on his behalf would be dealt with in such a way that he could be satisfied that they had been understood and, either accepted, or, if rejected, that the rejection was based on a clear and rational process of reasoning.’

82 Nothing turns on the fact that Maxwell was a criminal case. None of the authorities suggests that a different appellate approach applies in a civil case to that which should be adopted in a criminal appeal. In relation to the primary judge’s rejection of the appellant’s expert evidence about value, in so rejecting that evidence his Honour was obliged to provide what Bingham LJ described in Eckersley v Binnie (1988) 18 ConLR 1 at 77-78 as ‘a coherent reasoned rebuttal’ of a ‘coherent reasoned opinion’ unless that opinion could be discounted for other reasons. That observation was referred to by Henry LJ in Flannery v Halifax Estate Agencies Ltd [2000] 1 WLR 377 at 381-2 where his Lordship said:
‘…where the dispute involves something in the nature of an intellectual exchange, with reasons and analysis advanced on either side, the judge must enter into the issues canvassed before him and explain why he prefers one case over the other. This is likely to apply particularly in litigation where as here there is disputed expert evidence…’

83  Nothing we have said should be taken to encourage over lengthy judgments in the usual case, the undesirability of which has been commented upon recently in Customs and Excise Commissioners v A [2003] 2 All ER 736 at 753–754 and Digi-Tech (Australia) Ltd v Brand [2004] NSWCA 58 at [287]–[290] (see also Beale v Government Insurance Office of New South Wales (1997) 48 NSWLR 430 per Meagher JA at 443; Mifsud v Campbell (1991) 21 NSWLR 725 per Samuels JA at 728; and Whisprun Pty Ltd v Dixon (2003) 77 ALJR 1598 at [62]).
ISSUES CONCERNING THE BENOWA CENTRE
84  The primary judge held that Expectation sustained no loss by reason of its purchase of Benowa Gardens because the value of the Benowa Centre as at December 1993 was approximately (presumably no less than) $15 million. This was a crucial finding as, if correct, it was a complete answer to Expectation’s case as presented. This is the way in which the case for damages was put at trial on behalf of Expectation. The damages were claimed on the same basis for each cause of action – the difference between the price paid and the real value of the Centre. The significance of the finding is consistent with Expectation not having asked the Judge after delivery of his reasons and before formal orders were made to deal with those issues which were not canvassed by him. There was no point in doing so as it had been found that no loss had been established. If the finding is upheld, it is a complete answer to the grounds of appeal. Correspondingly, if it is not upheld, the consequence is that a new trial necessarily follows in relation to issues not determined at trial unless those issues are without substance. It is therefore logical to deal with this finding first.
FINDING OF NO LOSS
85  There were two contemporaneous professional valuations. The first, dated 20 December 1993, was by Mr Parsons of HTW. It was commissioned by Expectation after the contract to purchase had been entered into, for the purpose of submitting to financiers. Mr Parsons noted the purchase price of $15 million and took it into account as evidence of an arm’s length transaction. Not surprisingly, Mr Parsons arrived at a value of $15 million, having applied a capitalisation rate of 11% to the estimated rentals. The second valuation, dated 27 January 1994, was by Mr Cox of Richard Ellis. It had been commissioned by the ANZ Bank, which was considering providing finance for the purchase. Mr Cox arrived at a valuation of $12.5 million, having applied a capitalisation rate of 13% to a roughly equivalent estimated rental income to that used by Mr Parsons. Each valuer was called to give evidence and each was subject to detailed cross-examination as to a number of relevant issues. Each of Messrs Cox and Parsons was respectively supported by an ex post facto valuation by another qualified valuer. There was a body of evidence that related to the correctness of the factual assumptions made by the valuers, including post purchase experience, and as to transactions said to be comparable.

86 Each party made detailed submissions at trial as to the valuation of the Benowa Centre, including analyses of the evidence of the competing valuers and of the other evidence that related to the valuers’ opinions. The reasons for judgment do not include an adequate account of the competing cases on valuation or reveal a reasoned choice between them. Rather, a capitalisation rate of 11% was chosen with very sparse justification and without expressly adopting the reasoning of any valuer. Valuation is a matter of estimation and judgment and the decision of a trial judge is not lightly set aside (Federal Commissioner of Taxation v St Helens Farm (ACT) Pty Ltd (1980–1981) 146 CLR 336 per Mason J at 381) and a trial judge is normally entitled to accept the opinion of an expert on valuation without giving elaborate reasons (Housing Commission of NSW v Tatmar Pastoral Co Pty Ltd [1983] 3 NSWLR 378 at 381F, 386F–387C). However, the delay in delivering judgment meant that more than that was required in this case. In any event, the difference between the valuers in this case largely depended upon a view as to whether the claimed level of rental income was truly maintainable into the future and as to the prospects for growth of rental income in the future. There was a body of evidence on those issues that was not adequately analysed in the reasons for judgment (cf Laminex (Australia) Pty Ltd v Smeeth [1999] NSWCA 462 at [8]–[9], [26]–[29]).
87 Furthermore, the fact that Mr Parsons took the contract price into account in his valuation required that his opinion be scrutinised with particular care. The issue to be decided was whether that price did in fact reflect true value. The approach of the primary judge reveals a similar problem. After indicating his view as to the net annual income and the appropriate capitalisation rate and so arriving at a valuation of approximately $15 million, the primary judge said at [80]:
‘That valuation is consistent with … the evidence of Mr Fraser as to the minimum amount which an astute, informed and not anxious vendor was prepared to sell the centre for in December 1993: see Spencer v The Commonwealth (1907) 5 CLR 418 at 432. Mr Fraser’s evidence in this regard was not affected by any interest in the outcome of the proceedings and was not the subject of cross-examination.’
(emphasis added)

88 Later, in dealing with the evidence of the valuers relied upon by Expectation, the primary judge said at [83]:
‘Moreover, it seems to me that the valuations of Mr Cox and also of Mr McRae are quite inconsistent with the uncontradicted evidence of Mr Fraser that Benoco Pty Ltd, an astute, informed and not anxious vendor, was not prepared to sell the centre for less than $15 million in December 1993.’ (emphasis added)

89  Allan Fraser did not give that evidence. He was not in a position to give that evidence. He was not the decision maker. Benoco was a subsidiary of the Lion Nathan Group. Mr Fraser’s primary role was as an employee of the Magellan Group (Qld) Limited (Magellan). Mr Geoffrey Laurence of the Lion Nathan Group was the person with whom Mr Fraser liaised and from whom he took instructions. Mr Fraser did not give evidence that he actually knew at any time what Benoco would accept until the only unconditional offer was made and accepted. Mr Fraser did give evidence that Benoco regarded the property as worth $15 million. Even if Mr Fraser were in a position to give ex post facto evidence as to Benoco’s opinion of value, its effect is not as described by the primary judge. His actual evidence was irrelevant to the issue at hand, which was market value.
90  A vendor’s subjective opinion as to worth is of no relevance to that question. Even if Mr Fraser were able to give the evidence attributed to him (and had done so) it would still have been irrelevant or of virtually no weight on the issue of market value. A vendor’s uncommunicated decision not to sell simply does not establish or even verify a market valuation. It might be based upon quite erroneous or idiosyncratic views. It has not been put to the test. A vendor’s open offer to sell at a particular price might be of some relevance to market value in the same way that an actual unconditional open offer by a purchaser with the means to effect the purchase might have some relevance to market value. A vendor’s offer might set the top limit and a prospective purchaser’s offer the bottom limit. (The discussion of the authorities in the Full Court in Cordelia Holdings Pty Ltd v Newkey Investments Pty Ltd [2004] FCAFC 48 at [121]–[129] exemplifies the difficulties inherent in evidence of this kind.)
91  The primary judge also fell into error when he said that the value of approximately $15 million was ‘consistent with the actual market responses to the marketing of the Centre in late 1993’ (par [80]). This in turn is linked with the use by Mr Parsons of the contract price of $15 million in issue in the present case in forming his opinion as to market price. That circumstance was relied upon by him both in the contemporaneous valuation and in a later report justifying his position. He assumed that that contract price had been arrived at after a marketing campaign, which had attracted a great deal of response. Mr Parsons could not be criticised for attributing considerable significance to that fact upon the assumption that he made. An arm’s length contract arrived at after a wide marketing campaign would be the best evidence of market value. It would not have been unreasonable for Mr Parsons to assume that this was an arm’s length transaction of that nature. However, the primary judge had before him a significant amount of evidence to the contrary of that assumption.
92  It is sufficient for present purposes to note that after several months of a marketing campaign during which more than 100 information packages were distributed to potential purchasers, Expectation made the only offer to purchase. The only other prospective unconditional purchaser at the end of the process had not indicated any interest beyond $14 million. The offer of $15 million by Expectation was based upon the recommendation from PRD that is impugned in this case. That offer cannot be relied upon as establishing or confirming true market value for the purpose of defending the recommendation that is impugned. The primary judge’s reliance upon the sale of the Benowa Centre two years later at $13.6 million to support the sale price of $15 million was also misplaced. It follows that his Honour’s finding should not stand. We shall return later to consider an alternative contention of no loss.
93  As the finding of no loss made by the primary judge cannot stand, it becomes necessary to consider the balance of the issues relating to the Benowa Centre. We shall first consider the issue that was decided, and then consider those that were not.
THE 8 PER CENT GROWTH REPRESENTATION
94  The primary judge did not accept that Mr Cooney made the 8 Per Cent Growth Representation as alleged in the Statement of Claim. That is to say, his Honour did not accept that Mr Cooney stated that there would be an 8 per cent growth in net income from the Benowa Centre per year. His Honour was satisfied that there was no express representation by Mr Cooney that there would be an 8 per cent growth in net income from the Benowa Centre per year.
95  Evidence by Mr Hill as to the alleged representation that there would be an 8 per cent growth in rental income from the Benowa Centre was given both in writing and orally. The primary judge dealt with the evidence given by Mr Hill as follows:
‘59.     I simply do not accept that Mr Hill asked Mr Douglas what sort of growth was in the centre and that after Mr Douglas had left and on his return said to Mr Hill: “The growth in the centre would be 8%”. I do not believe that Mr Hill said to Mr Douglas:
“I’m relying on you and I’m relying on your staff and your interpretation of their ability. I don’t want something with hassles and secondly, it really has to – the income has to be secure income with no problems associated with it. The centre has to be very good value in this climate and we’ve got to be assured that the growth is there.”

60. I do not accept that Mr Hill told Mr Douglas:
“The rents had to be at market value. They has to be secure and naturally if it was a gem you had to have growth, an 8% growth. He indicated that his people had informed him and it was his opinion that the centre would have 8% growth and that the income of 1.69 was very secure.”

61. I further reject the account by Mr Hill in his oral evidence that at the conclusion of the walk through he said to Ken Cooney in the presence of Mr Douglas:
“‘I’m going to ask you some questions in front of Gordie, and I’m going to take these as if they come out of your mouth, Gordie, or on your head,’ combination of both or whatever. And I said, ‘Ken, the income of 1.69: is that the real income of this centre? What we are receiving in money, what it’s receiving in real money?’ He said, ‘Yes.’ I said, ‘Are all the tenancies at fair market rent?’ ‘Yes.’ I said, ‘Are any of the tenants being supported?’ ‘No,’ he said, and I said, ‘One of the most important factors, Ken, is Gordon has informed me that he’s told me that you told him that this centre will have 8 per cent growth in the rentals,’ and he said, ‘Yes.’ His words I think were, ‘Absolutely.’ And he said, ‘But there is trouble with the Fruit Barn.’ I said … ‘What’s the possibilities of re-letting the Fruit Barn?’ He said I believe it would be re-let in a few days because the centre has got [the demand] … but I’m – I went down the centre the other day and some bits came back a bit better.”

62. In his affidavit of 14 January 1999 at par 106, Mr Hill says he stood Mr Cooney to one side and said to Mr Douglas words to the effect of:
“Gordon, I am going to ask Ken a number of questions in front of you. Now remember what I have already told you. He is your man, and I will be relying on what he says as though it is coming from your mouth.”

According to the affidavit, Mr Hill proceeded to address Mr Cooney as follows:
“I asked him what was the position with the net rental. Cooney answered it was secure and would go at 8% per annum.
I asked him were all the shops rented at a fair market rent. Cooney answered ‘Absolutely’.
I asked him if the 8% growth per year was something he was totally confident of. Cooney said he was, and that it he had the money, he would personally guarantee it.
I asked what was the net rent. Cooney said ‘$1.69 million’.
I asked him whether the Fruit Barn’s area could be easily re-let. Cooney said it could be re-let in a matter of days.
I asked him if any of the tenants were getting any assistance. In reply Cooney said ‘Absolutely not’.”

According to his affidavit, Mr Hill then spoke to Mr Douglas:
“I then said to Gordon words to the effect that as Cooney worked for Gordon, it is on Gordon’s head as to what Cooney had said; and that they were matters that were important to me.
Gordon said words to the effect that Cooney had worked at Pacific Fair and he was the best in the business, and that Gordon stood by everything he had said.”’

96 His Honour did not give reasons for not accepting Mr Hill’s evidence and for rejecting the account given by him. Rather, having recounted Mr Hill’s evidence, his Honour simply stated that he accepted the ‘evidence of Mr Cooney on this aspect’. His Honour then set out Mr Cooney’s evidence as follows:
‘I met Gordon Douglas and Danny Hill in the car park of the centre. It was later in an afternoon. We walked towards the entrance of the mall and this was the newsagent entrance which is on the right-hand side. We entered the mall, the three of us, and proceeded to walk down it making – I made general overview about trading of various speciality shops, who was trading well, who was not trading so well. Comments like, ‘This is a good performer,’ or ‘This retailer is not performing so well,’ for various reasons. There were four retailers specifically that weren’t trading well. They were the South American Food called La Casina, a hardware store, Cooneys Handbags, which is no relation to myself or my family, and also one of the Leyland Brothers had a fashion store and that wasn’t trading too well. During this inspection, and it was a general overview, there was nothing asked of any depth in terms of lease conditions or terms. It was constantly interrupted by Hill referring to various female shoppers in the centre and walked over towards Bi-Lo and I made a comment about Bi-Lo trading well and it being a Coles-Myer covenant, just in general terms. We then proceeded to the other side of the mall and out through doors that – on the right-hand side was fruit and veg store. This store was a large tenancy of 500 square metres and it was a concern to me and I explained to Hill that this tenant was not going to survive. He had trading problems. It was a large tenancy. We would have to come up with a strategy of either finding another fruit and veg operator or subdividing the shop into smaller shops.
…
We then walked over towards the icecream shop, which was directly opposite. This shop was run by a husband and wife team, mainly by the wife. This tenancy also was going to fold and not – cease to exist much longer. I explained that to Hill that that tenancy wouldn’t last. We then walked under the concourse towards the Bank of Queensland and Hill stopped us and he asked the question, ‘Is this a good centre?’ I said it was – ‘It was a neighbourhood centre that dominated its trade area and it was performing well.’ He then asked, would he get an 8 per cent return on his investment and I indicated that as the majority of speciality shops are on 8 per cent, notwithstanding the fruit and vegie shop’s problems, I was confident he would get an 8 per cent return on his investment. He then asked the question about market rent – were the retailers paying market rent and I indicated that, yes, they were paying market rent and that approximately the net rent was 1.5 million. We then stepped off the pavement and walked up the hill to the carpark towards KFC and Gordon Douglas starting making comments about growth potential for this centre. He indicated to the vacant land towards KFC and beyond and around saying that there was a lot of potential – future potential, in terms of subdivisions, more housing and more customers. With that, the meeting finished, they said goodbye and Gordon and Mr Hill drove off.’

97  His Honour found that the first allegation of a representation that the Benowa Centre could achieve 8 per cent growth was not made by Mr Hill until October 1994. His Honour considered that it was significant that, at meetings concerning two valuations of the Benowa Centre that were received by Expectation, neither Mr Douglas nor Mr Cooney stated that the Benowa Centre would achieve 8 per cent growth. His Honour observed that Mr Hill did not at that time assert that there had previously been such a representation. Nor did Mr Hill point out that the view that the Benowa Centre would achieve 8 per cent growth was contrary to one of the valuations.
98  Expectation complains that the primary judge advanced no reason as to why his Honour preferred Mr Cooney’s version of the discussion during the ‘walk through’ inspection of the Benowa Centre rather than Mr Hill’s versions. For example, it might have been possible to point to inconsistencies in Mr Hill’s oral and written versions of the discussion. His Honour did not attempt to do so.
99  Ordinarily, one would assume that a trial judge, having rejected the evidence of one witness and having accepted the contrary evidence of another witness, had had regard to and relied upon the advantage that a trial judge has of seeing witnesses give evidence in the witness box. Where judgment is delivered soon after the evidence is given, that assumption can be readily made even though the trial judge does not say expressly that reliance has been placed upon demeanour and the advantage of seeing the witnesses in the witness box. Even then, however, where there is contemporaneous objective material that has a bearing on the matters that are the subject of the evidence of witnesses, reliance on that material will be more reliable than reliance upon observations of the demeanour of witnesses in the witness box.
100  Having regard to the extensive delay between the time when Messrs Hill and Cooney gave evidence and the time when the primary judge published reasons for his conclusions, it was incumbent upon his Honour to give specific reasons for rejecting the evidence of Mr Hill and accepting the evidence of Mr Cooney. Specifically, it was incumbent upon his Honour to deal with the submissions made to him concerning the relevance of contemporaneous objective material, such as correspondence and file notes in relation to that matter. It is unfortunate that his Honour failed to do so.
101  It is common ground that the expression ‘8 per cent’ was mentioned in the context of the discussion concerning the Benowa Centre. It is also common ground that Mr Hill asked questions about whether the lessees were paying market rent. The essential difference between Mr Hill’s version and Mr Cooney’s version is that Mr Hill said that he asked about rental growth whereas Mr Cooney said that Mr Hill asked about return on investment.
102  It is inherently more likely that, in the context of the expression ‘8 per cent’, Mr Hill would have spoken of rental growth rather than return on investment. Within weeks, the question arose as to whether the return or yield was likely to be between 11 per cent and 13 per cent. At no stage was there any suggestion that Mr Hill was interested in a return or yield of 8 per cent. However, the absence of any reasoning by the primary judge does not enable the reader of his Honour’s reasons to discern whether his Honour considered it inherently more likely, in the circumstances, that there was a discussion about return or yield rather than growth, in the context of the mention of the expression ‘8 per cent’.
103  Mr Hickey was Expectation’s solicitor. His Honour observed that, if there had been a representation to Mr Hill of at least 8 per cent growth in net income from the Benowa Centre per year, it was remarkable that Mr Hill did not inform Mr Hickey of that point and that Mr Hickey made no record of the matter when he commenced his inspection of the leases on 30 November 1993. However, his Honour did not, in dealing with the allegations by Mr Hill that a representation concerning 8 per cent growth had been made, refer to contemporaneous diary notes made by Mr Hickey and admissions made by Mr Cooney. One of the complaints made on behalf of Expectation is that his Honour failed to have regard to Mr Hickey’s diary notes that record that Mr Hill informed him of the 8 per cent growth representation. Expectation contends that, having regard to the delay, there is a real risk that the primary judge overlooked those matters.
104  His Honour purported to consider the contents of diary notes made by Mr Hickey in relation to certain issues. However, his Honour failed to make any reference to those diary notes when dealing with the question of whether a representation as to 8 per cent growth had been made by Mr Cooney or had been confirmed by Mr Douglas. It is necessary to examine the diary notes in some detail.
105  A diary note of 30 November 1993 made by Mr Hickey records a meeting involving Messrs Hickey, Douglas, Langford and Hill. Mr Hickey originally mistakenly asserted in his written evidence that Mr Hill had made mention of the 8 per cent growth representation at that meeting. However, Mr Hickey corrected that assertion during his oral evidence in chief. His Honour characterised this matter as a ‘serious misstatement’. In any event, the diary note of 30 November 1993 refers to ‘yield 10.6 per cent on passing’. That is a reference to the rent payable under the leases as producing an expected yield of 10.6 per cent. Such a note is inconsistent with the proposition that statements made by PRD related to an 8 per cent return rather than 8 per cent growth.

Leases;

Correspondence with tenants;

Arrears summary;

Maintenance reports for the Broadway Centre.

298 Mr Hickey said that he then set about organising a ‘due diligence team’ to investigate the Broadway Centre. The team consisted of:

Mr Hickey’s firm to inspect the leases and other documentation associated with the Broadway Centre;

KPMG Gold Coast to investigate the accounts of the Broadway Centre;

Napier & Blakeley Pty Ltd, quantity surveyors and engineers, to:

inspect the premises;

work with Brisbane City Council to investigate easements; and

analyse the minimum and maximum allowable depreciation;

Richard Ellis, Brisbane, to undertake a valuation of the Broadway Centre.

299  Thereafter, Mr Hickey negotiated with Feez Ruthning, the solicitors for the Broadway Vendor, concerning the terms of the Broadway Contract, which he executed on behalf of Expectation on 18 January 1994 at the offices of Feez Ruthning. On 19 January 1994, Mr Hickey wrote to KPMG and Richard Ellis giving them formal instructions to commence their work in connection with the due diligence.
300  On 25 January 1994, KPMG wrote to Mr Hickey reporting on their review of various financial aspects of the proposed purchase of the Broadway Centre. On the same day, Mr Hickey spoke to Mr Jones of KPMG and asked for clarification of the reports. Mr Jones told Mr Hickey that the actual annual income for the Broadway Centre was not $2.4 million per annum but around $1.8 million.
301  On 28 January 1994, Mr Hickey was informed orally by Mr Weir of Richard Ellis that the Broadway Centre was worth $28 million. He wrote to Mr Hill on the same day informing him of that valuation.
302  On 31 January 1994, Mr Hickey received a further letter from KPMG addressing the questions that he had raised with Mr Jones following receipt of their report of 25 January 1994. That letter confirmed that the ‘amended budgeted cash surplus for the year ended 30 June 1994’ was $1,790,024. On the same day, Mr Hickey wrote to Mr McLernon, with a copy to Mr Hill, drawing attention to the difference between the figure shown in the Schedules and the figure reported by KPMG. Mr Hill also drew attention to the report from Richard Ellis giving a value for the Broadway Centre of $28 million.
303  In his written evidence Mr Hickey said that on 1 February 1994 he spoke to Mr Hill on the telephone. Mr Hickey said that they discussed the discrepancy between the ‘representation’ that the Broadway Centre was earning $2.4 million and what it was actually earning. He said that Mr Hill confirmed ‘that he had been told by PRD’ that the Receiver had told them that the actual income from the Broadway Centre was $2.4 million. Mr Hickey said that Mr Hill then instructed him to sue the Receiver for misrepresentation. Mr Hickey told Mr Hill that he would first investigate the facts and would then advise him who was responsible.
304  Mr Hickey made a file note of the conversation which relevantly contains the following:
‘Current income $2.4M.
It was represented to him on Sunday that was actual.
…
Left Langford to verify this with Dennis Lee and noted actuals as well as
Consider they could not have said what actuals is to 94 but could never be 2.4M.’

305 Mr Hickey also made a note of a telephone conversation with Mr McLernon on 1 February 1994 as follows:
‘- G. Douglas putting balls on line.
- Valuation.
- Discuss matter.’

Mr Hickey said that that note records a statement by Mr McLernon in the following terms:
‘If there was a misrepresentation, Douglas had “put his balls on the line.”’

306 Mr Hickey said that he met Mr Peet on 1 February 1994 in order ‘to determine precisely what representations had been made by the Receiver’. Mr Hickey said that Mr Peet told him words to the following effect:

Mr Peet had been very sceptical about $2.4 million being the actual income;

Mr Peet claimed he could not remember Mr Hill asking whether the figure of $2.4 million was actual income;

Mr Peet clearly understood that the discussions at the Broadway Centre on 9 January 1994 were to identify the actual cash flow, not accrued income;

Mr Lee had accepted the figure of $2.4 million as actual income;

Mr Peet had received the Schedules from the Receiver on Friday, 7 January 1994;

Mr Peet acknowledged that he knew the due diligence investigation had been designed to verify that $2.4 million was the actual income.

307 Mr Hickey’s handwritten diary note of his meeting with Mr Peet records the following:
‘Spoke to Jim Eldridge at CTB early Jan.1994.: Week before, 9/1/94. Receiver was instructed to provide tenancy schedules details of outgoings. Got some info. When he looked info. Had meeting 7/1/94. With Dennis Lee. Told him what is current cash flow. Not interested what has gone before. Knew there has been problems. Said what is each tenant paying. So that we would know what cash flow we could rely on.
But he would assume that July to Nov were actuals but he didn’t rely on this. Wanted calculation of that > date. But now he is annoyed that he can justify.
Historically very sceptical of actual rent or cause of s’fall.
9/1/93. Meeting. Sheets were presented and discussed.
Went thru floor by floor.
Can’t recall Danny asking if 2.4M. was actual.
It is clear that discussion was to identify real cash flow not income 2.4M. D. Lee confirmed this would be case.
Document was relied on + figures he worked on, prior Friday.
The whole exercise to establish what real cash flow was. He (Lee) accepted figures as they were.’

308 Mr Hickey said in his written evidence that Mr Peet went on to tell him that, during November 1993, Phil Evenden of the Commonwealth Bank, who was in charge of the Broadway Centre, had sought from him an opinion on what could be done with the Broadway Centre. He said that thereafter:

he and Mr Cooney met with Wemberley Anderson Nash, who had leased up to 70 per cent of the Broadway Centre for its opening in 1991;

he ascertained that when the Broadway Centre opened in 1991 it came on at the bottom of the market and had a poor tenancy mix;

he and Mr Cooney met with Mr Evenden at the end of December 1993;

he spoke with Mr Jim Eldridge of the Commonwealth Bank during the week preceding the meeting at the Broadway Centre, on 9 January 1994, from which the Receiver had been instructed to provide him with:

tenancy schedule; and

details of outgoings;

he had met with Mr Lee on 7 January 1994, when he was told $2.4 million was ‘current cash flow’;

Mr Peet told him that, in undertaking his preliminary investigation before the 9 January 1994 meeting, he had not been interested in what had occurred before but wanted to know what each tenant was paying so that he could be certain of and rely upon the present cash flow.

309  Mr Hickey said in his written statement that between 1 and 2 February 1994 he ‘investigated the accuracy of the cash flow statement and determined that the information was budgetted instead of actual’. His statement does not actually say what he did by way of investigation. On the face of his statement he simply looked at the Schedules and deduced from their terms that they represented a budget rather than a historical record.
310  Mr Hickey also said that Mr Peet told him that he, Mr Peet, had been given the Schedules by Mr Lee and in turn had then given them to Mr Langford. Mr Peet told Mr Hickey that he, Mr Peet, assumed that they contained actual income as opposed to accrued income, up to 30 November 1993.
311  Later on 1 February 1994, Mr Hickey met Messrs Douglas and Langford. He said that Messrs Douglas and Langford said words to the effect:

they thought the documents faxed to Mr Hickey on 7 January 1994 by Mr Langford had been given to Mr Peet by the Receiver;

they had not differentiated actual cash flows from budgets but would have expected them as a matter of course to have been differentiated between budgets and actuals and for the months passed to have been recorded as actual income;

the 9 January 1994 meeting had been organised by Mr Peet with Mr Lee;

Mr Lee had confirmed that the net income could be $2.4 million;

they remembered that Mr Hill had instructed that existing and projected rents should be verified and distinguished.

312 Mr Hickey made a contemporaneous diary note of the meeting with Mr Douglas and Mr Langford. The note records the following:
‘PRD docs given to Colin Peet think by Receiver - ?
He understood.
Budget for financial year. Cash flow.
He didn’t differentiate cash flow for months that had passed. Would have expected show actual cash flow.
Sun.meeting D.G. J.L. and C.D. K. Cooney and Dennis Lee, Gordon Anderson was there from original leasing. Wemberley Anderson Nash.
Meeting organised by Colin with CM.
Time around midday. Met at coffee shop talked for one hour. Walked around Centre.
Think referred to the sheets. Think $2.4M was discussed. Confirmed by Lee net income would be 2.4M.
Danny said go thru. Centre existing rent & projected rent.
Lee referred to his files and JL’ford wrote down figures.
eg. food on Q, he didn’t point out how far in arrears.’

313 Mr Hickey then spoke to Mr Hill and Mr Douglas. Mr Hickey said that Mr Douglas said to him words to the effect:

the purchase of Broadway was a ‘property play’;

we were not buying on yield but on the potential result which would flow from the reorganisation of the tenancies;

if we can lift the income to $4 million then the Broadway Centre would be worth $50 million.

314 Mr Hickey’s contemporaneous diary note of the discussion records the following:
‘It is a property play.
Wouldn’t buy it at yield.
Got to take risks on tenancy reshuffle.
If get income to $4M (food) then at 8% value $50M.
When built aiming for $7M rent.
* Not buying at yield *
* Valuer has shown his opinion what they can achieve.
NB If we want to proceed do we raise problem now and risk getting no extension.
Depends if we want it or not.
* Must have regard to V/n. Same basis as Benowa i.e. “sustainable net income”.
But here twist is valuer says Centre now below potential.
This is reason why buying it.’

315 On 2 February 1994, Mr Hickey was instructed by Mr Hill to speak to the Commonwealth Bank with a view to negotiating a favourable interest rate because of the perceived misrepresentations by the Receiver. Mr Hill also told Mr Hickey that he was sending out his team from Monaco to investigate the Broadway Centre and double check the information. He said that if Expectation did not proceed with the purchase he wanted the non-refundable deposit of $100,000 returned.
316 After further discussions, Mr Hickey wrote to Feez Ruthning on 3 February 1994, complaining about alleged misrepresentation on the part of the Receiver and asserting that Expectation had suffered substantial loss as a result of the alleged ‘false and misleading representations and conduct’. The letter said in part:
‘We refer to the Agreement dated 18^th January, 1994.
We advise that prior to our client entering into that Agreement our client was provided with certain documentation and certain representations were made to our client by your clients agents or employees.’

317  On 3 February 1994, Mr Hickey attended a meeting with the Receiver at his offices in Brisbane. In the course of that meeting, the Receiver told Mr Hickey that the Schedules, which had been given to Mr Peet and, thereafter, to Mr Hickey, were ‘budgets only which had not been verified by him and that this fact had been disclosed to Peet’. Subsequently, Mr Hickey met with Messrs Dan Young and Alan Millhouse of Feez Ruthning at their offices ‘to undertake due diligence’. They informed Mr Hickey that they would speak with the Receiver ‘and get instructions’.
318  On 3 February 1994, Mr Hickey wrote a further letter to Feez Ruthning putting forward a proposal that the due diligence period be extended for a further fourteen days from 8 February 1993, that the settlement date be confirmed as being forty days from the date of expiration of that extended due diligence period and that, if Expectation were not satisfied during the extended due diligence period, it would receive a refund of the deposit of $100,000 but would meet all of its own costs in respect of the due diligence enquiries. On 4 February 1994, Feez Ruthning replied to Mr Hickey’s letter rejecting the allegations of misrepresentation. Feez Ruthning drew attention to the Covering Letter, indicating that no warranty of accuracy or liability was being given by the Receiver.
319  On 7 February 1994, Mr Cooney wrote to Mr Hickey with comments concerning the Broadway Centre. Amongst other things, Mr Cooney said:
‘We now feel comfortable that the complex can achieve a net figure of $2.4 million and that under professional management the bottom line can be improved to the degree mentioned by John Langford to your client via telephone on Tuesday 1/2/94.’

320 On 6 February 1994, Mr Woollard arrived in Brisbane. On 7 February 1994, Mr Hickey wrote to Feez Ruthning telling them that Mr Woollard had just arrived from Monte Carlo and that he needed time to review the due diligence investigation. Mr Hickey requested an extension of the satisfaction date under the due diligence period to 5 pm on 11 February 1994. The letter confirmed that settlement date would then be 40 days from 11 February 1994. The letter said:
‘In the circumstances our client has shown that he is committed to this project. We believe that it would be a very important gesture from the vendor to agree to the small extension of time requested for completion of the due diligence process.’

321  On 8 February 1994, Mr Hickey spoke to Mr Peet. Mr Hickey told Mr Peet that he had received a letter from the Receiver’s lawyers saying that PRD were given a copy of the Covering Letter. Mr Peet replied that he received only a copy of the Schedules and was given nothing else by the centre manager. Later in the day, Mr Hickey received from Mr Peet a copy of the Covering Letter.
322  On 8 February 1994, Mr Hickey received a telephone call from Mr Millhouse saying that the Receiver had agreed to an extension of the due diligence period. Subsequently, Mr Hickey spoke to Mr Millhouse and said that Expectation needed an extension until midnight that day in order to make a decision whether they would accept the offer to extend the due diligence period until Friday, 11 February 1994. Later still, Mr Millhouse sent a facsimile to Mr Hickey indicating that the Receiver had instructed him that Expectation had until midnight 8 February 1994 to notify him whether it waives the benefit of clause 30 of the Purchase Contract, terminates the agreement or gives notice that it has satisfactorily completed its due diligence enquiries. Arrangements were finally put in place for an extension of the due diligence period until 12 noon, 11 February 1994.
323  Feez Ruthning then confirmed to Mr Hickey that they were instructed that the Receiver agreed to an extension of the due diligence period to 12 noon on Friday, 11 February 1994 subject to certain conditions, including:

the completion date was to be 21 March 1994;

the deposit of $100,000 was not to be refundable in any circumstances;

Expectation unconditionally and irrevocably withdraw all of its allegations of misrepresentation, negligence and misleading and deceptive conduct.

324 On 9 February 1994, Mr Hickey wrote to Feez Ruthning saying that the Covering Letter had only been brought to his attention on 8 February 1994 and that, based on its existence, the allegations made on 3 February 1994 were withdrawn.
325 On 10 February 1994, Mr Woollard sent a memorandum to Mr Hill dealing with the Broadway Centre. The memorandum contained the following:
‘The more you look at [the Broadway Centre] the more complex it becomes. It is a speculative asset, and is far from simple to run. If you buy it, you need to be sure that you have the right person to manage it. …
… My estimated minimum net income in the next year is $1,825,000. The problem with that is that a substantial proposition [sic] of the centre’s tenants are on leases that are well above sustainable current rents …
I think the odds are that the Centre can be turned around, in the hands of a good manager. Such a manager may be hard to find, but I am told by several people that they do exist.
If this can be done, the PRD’s projections are achievable, and the Centre will prove to have been as good a buy as [Douglas] says it is.
…
Provided you are happy to wear the risks, and knowing that [the Broadway centre] is going to require ‘active’ management, I think it is a good punt. The questions are: ‘Do you want to punt on something this size?’ and ‘Do you (or we) have the capacity to oversee such a centre?’
…’

326 Following further conversations with Mr Hill and Mr Woollard, Mr Hickey wrote to Feez Ruthning at 10.58 am on 11 February 1994 saying that:
‘…our client’s due diligence enquiries have disclosed that the acquisition of the sale property is not satisfactory to our client. Accordingly, our client hereby terminates the Contract.’

WAS THERE MISLEADING CONDUCT?
327  The first of the ten pages of the Schedule is, to a substantial extent, a summary of the following nine pages. It is expressed to be a ‘cash flow summary’ for the year ending 30 June 1994. Since it was compiled on 18 November 1993, it is clear that anything after October could not have reflected actual receipts. Further, there was a notation ‘amending the budget of 29.07.93’.
328  The detailed schedules that follow the first page summary are expressed to be a ‘forecast’ of ‘collections’ as well as being a ‘budget’ of recoverable and non-recoverable operating expenses. It has not been suggested that the Schedules are other than an accurate reflection of the rent payable under the leases in respect of premises in the Broadway Centre. It is perfectly clear upon the face of the Schedules that they were a budget. On their face, they are not summaries of actual receipts. The heading itself showed that they related to the period 93/94, which had not then expired. It did not need Price Waterhouse to make that obvious point, nor the obvious point that a budget would not be audited.
329  In any event, Mr Hill did not say that he relied upon the Schedules in any way. Further, the assertion that Mr Hill relied upon a statement by Mr Douglas that PRD had checked out the net income with the management of the Broadway Centre and verified it as $2.45 million also indicates that no reliance was placed upon the Schedules themselves. Thus, the failure to attach the Covering Letter did not operate to create a misleading impression of the accuracy of, and the reliance that might reasonably be placed on, the Schedules.
330  The discussions prior to Expectation entering into the Broadway Contract indicate that Mr Hill did not rely on a representation by Mr Douglas that the figures in the Schedules had been verified by PRD. All of the references indicate that Mr Langford and Mr Peet said that they had relied on Mr Lee for verification. That is the way in which the complaint was put to the Receiver in Mr Hickey’s letter alleging misrepresentation by the Receiver.
331  Expectation’s claim was that Mr Douglas informed Mr Hill at the meeting on 9 January 1994 that PRD had checked out the net income with the management of the Broadway Centre and verified it as $2.45 million. That claim was first made when it was introduced by way of an amendment to the then form of the Statement of Claim in December 1999, some three years after the proceeding was commenced.
332  It is significant that in Mr Hickey’s letter of complaint to Feez Ruthning of 3 February 1994 he said, inter alia:
‘We advise that prior to our client entering into that agreement our client was provided with certain documentation and certain representations were made to our client by your client’s agents or employees.’

The letter referred to two documents: a ‘Cashflow Summary FY93/94’, and a ‘Rent Collection Forecast FY 93/94’. The letter continued:

‘These documents were forwarded to our clients agent Mr Colin Peet of PRD Realty Pty Ltd under cover of a letter from the Receiver and Manager dated the 6^th January, 1994.
Mr Peet met with your client Centre Manager, Mr Dennis Lee, on the 9^th January, 1994 and tabled the enclosed documents. At that meeting a study was done of the tenancies and it was represented by Mr Lee to Mr Peet the actual net income which would be received in respect of the Centre for the financial year ending 30 June, 1994 would be in the order of $2,400,000.00 that is in accordance with the “Cashflow Summary” provided to Mr Peet by the Receiver and Manager.
On Sunday the 9^th January, 1994 our clients [sic] representative Mr Danny Hill and his agent, Mr Gordon Douglas, Mr Colin Peet, Mr John Langford and Mr Ken Cooney met with the Centre Manager Mr Lee at the Centre and the enclosed documents were once again tabled and discussed.
It has been confirmed that it was clearly represented again by Mr Lee that the actual cash net income which would be received in respect of the Centre for the year ending 30^th June, 1994 would be the sum of $2,400,000.00. Mr Langford remained after that meeting and had a further detailed discussion with Mr Lee in which each tenancy was considered and again it was represented by Mr Lee that the actual cash net income which would be received for the period was the sum of $2,400,000.00.
Our client relied on the enclosed documentation and on the representations that were made to our client and its agents that the actual net income which would be received in respect of the Centre for the financial year ending 30 June 1994 would be the sum of $2,400,000.00 on the basis of that reliance our client entered into the agreement dated the 18^th of January, 1994 an [sic] paid the sum of $100,000.00 for the due diligence period provided under the Contract.
…’ (emphasis added)

333  Mr Hill’s evidence was that Mr Douglas told him, in the course of the inspection on 9 January 1994, that PRD had checked out the turnover with centre management and had verified it at $2.45 million. While it was not correct to say that any verification had taken place at the time of inspection, the evidence of Mr Langford is that he stayed back after the inspection to speak with Mr Lee about the income and verified the income as being $2.45 million. In so far as there was a representation by PRD that it had checked out the net income with the centre management and verified it, that representation appears to have been true.
334  There is no basis for finding an implied representation by PRD or Mr Douglas that the Schedules were an accurate statement of the net income of the Broadway Centre and that they contained the Receiver’s verified figures for the net income. There was no suggestion that there was any verification by the Receiver. The most that could be said is that there was a statement that the figures had been checked with the centre management. Mr Lee was the centre manager and the figures were checked with him.
335  Mr Hickey’s complaint to Feez Ruthning is consistent with that position. Mr Hickey referred expressly to meeting with ‘your Centre Manager, Mr Dennis Lee’ and to representations by Mr Lee to Mr Peet that the actual net income that would be received in respect of the Broadway Centre would be in the order of $2,400,000 in accordance with the Schedules.
336  There is little question but that PRD advised Mr Hill that it was reasonably satisfied that the first year net income of operation after purchase would not be less than $2.467 million. The letter of 10 January 1994 from Mr Peet to the receiver says as much in terms. Further, the calculations that are recorded in that letter are consistent with notes made at the time, in which the estimated net income was the basis for calculating the yield on the investment.
337  A term of the offer of 10 January 1994 from Mr Hickey to the Receiver was that the contract was subject to satisfactory due diligence investigation within 30 days from the date of the contract with a part deposit of $100,000 (non-refundable). Upon confirmation that the due diligence was satisfactory the deposit was to be brought up to the normal 10 per cent of the purchase price. An undertaking was sought that there was exclusivity for that period of 30 days.
338  It is clear enough that the exercise that had been done up to the time of the submission of the offer was regarded by Mr Hill as inadequate to found a decision to invest approximately $30 million, but was deemed sufficient, in effect, to acquire an option to purchase for 30 days with the opportunity to do a proper due diligence exercise in the meantime. That effectively prevented the Broadway Vendor from placing the Broadway Centre on the market. Payment of an option fee of $100,000 in relation to a transaction of this size, to be counted as part of the deposit if the transaction went ahead, was hardly out of the ordinary.
339  Two things are clear from the sequence of events described above. The first is that much of the reasoning of the primary judge cannot be supported. Contrary to his Honour’s finding, by the time PRD gave advice to Mr Hill after the meeting at the Broadway Centre on Sunday 9 July 1994, it had done quite a bit of investigation as to the likely level of net income in the first year of operation after purchase. Also, there is no doubting that the advice tendered by PRD materially contributed to the decision by Mr Hill to cause Expectation to make the offer that it did on the terms that it did contrary to the (hypothetical) finding on reliance by the primary judge (Bristol & West Building Society v Mothew (C.A.) [1998] Ch 1 per Millett LJ at 10–13; Henville v Walker (2001) 206 CLR 459 per Gleeson CJ at 469 and McHugh J at 480–481; I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109 per Gleeson CJ at [33], Gaudron, Gummow and Hayne JJ at [57], McHugh J at [89]–[93], [102]–[104] and Callinan J at [210]). The second is that it cannot seriously be contended that PRD made any representation as to the net income of the Broadway Centre or of anything else in the sense used in the relevant pleading.
340  In this transaction PRD was unequivocally acting for Expectation alone. It was to receive commission from Expectation and not from the Broadway Vendor. The initial contact was by Mr Peet of the Brisbane office of PRD with the Commonwealth Bank of Australia, which was the real vendor. The Broadway Centre was not on the market and the Broadway Vendor had not arrived at the position where it could be put on the market with, for example, an information memorandum or the like. No agent for sale had been engaged. It was persuaded to allow PRD to introduce Mr Hill.
341  PRD was acting for Expectation and it was investigating figures that had been supplied to it by the Receiver without any warranty but with access to the manager of the Broadway Centre. The gist of what PRD did was to advise that the estimated net income for the first year was reasonable. On no view is that a representation as to a fact as pleaded. There is a significant difference between an agent expressing an opinion on the one hand and stating a fact on the other (Heydon v NRMA Ltd (2000) 51 NSWLR 1 per Malcolm A-JA at [307], McPherson A-JA at [431]–[432]). The pleaded case in relation to the Consumer Legislation has no chance of success. Although the reasons of the primary judge for rejecting the cause of action are not satisfactory, his Honour did come to the essence of the matter when he found that the evidence established that any representation as to the income for the Broadway Centre was made, if at all, by Mr Lee.
NEGLIGENCE AND BREACH OF THE CONTRACT TERMS
342  There is no material difference between the obligations of care and skill in contract and in tort. The letter from the receiver would have added nothing of significance to the information relevant to Expectation. The figures supplied were obviously a budget and it was never suggested that the figures were warranted. There is no evidence to suggest what further steps could reasonably have been taken by PRD to check the figures in the time available. The point of the arrangement made was to obtain a further period when adequate due diligence could take place.
343  As indicated above, the evidence does not support a finding that the representations alleged were made by PRD or by Mr Douglas. Since the claims in negligence and for breach of the Contract Terms depend in part upon establishing that PRD and Mr Douglas made representations as alleged, there would be no utility in any further consideration of those questions. There was no reasonable chance of success upon any case mounted in relation to the Broadway Centre. Accordingly, there is no utility in any further consideration of any of the causes of action with which his Honour failed to deal.
CONCLUSION AS TO BROADWAY CENTRE
344  The appeal should be dismissed in so far as it is based upon complaints as to the dismissal of the claims arising out of the Broadway Contract and the Broadway Centre.
DISPOSITION OF THE APPEAL
345  It follows from the conclusions expressed above that the appeal by Expectation should be upheld in part. The orders dismissing the proceeding as against PRD and Mr Douglas in relation to the Benowa Centre should be set aside and there should be a new trial of those issues before another judge. The orders for costs should also be set aside. Expectation should pay the trial costs of PRD and Mr Douglas of the claims in relation to the Broadway Centre. An order as to the balance of the costs of the trial should await the outcome of the new trial.
346  The primary judge, in dismissing the application, ordered the appellant to pay the first and second respondents’ costs on an indemnity basis. The order was that they ‘be completely indemnified by the applicant for their costs’, although at paragraph [33] of his Honour’s second set of reasons he foreshadowed the usual qualification excepting costs of an unreasonable amount or costs which were unreasonably incurred. It would appear that his Honour made the indemnity costs order because he accepted the submissions of PRD and Mr Douglas that this was an appropriate case for such an award.

347 The essence of those submissions was that:
·Expectation had brought and persisted in a claim which was based on assertions that Mr Hill knew to be false;
·the Court had found that Mr Hill had ‘manufactured evidence’ in the case of matters that he knew did not happen, for the purpose of advancing the Expectation’s prospects of success in the litigation;
·the Court had found that Mr Hill had given an unreliable and dishonest account of alleged representations and had deliberately reconstructed events to give verisimilitude to his allegations and had engaged in ‘deliberate falsehood calculated to create a climate of reliance where there was none’; and
·Expectation had refused offers of settlement of $100,000 plus costs in an offer to settle dated 16 September 1999 and an offer of settlement of $200,000 plus interest at 10% per annum from 17 January 1994, plus costs in a letter dated 19 November 1999.

348  The basis for such an order depends upon findings which have been set aside. There is no order for costs in relation to the Benowa Centre, and our reasoning in relation to Broadway Centre would not justify an order for the payment of indemnity costs.
349  Expectation has been only partially successful on the appeal. In principle, Expectation should bear the costs of the appeal in so far as it related to the Broadway Centre and PRD and Mr Douglas should bear the costs of the appeal in so far as they relate to the Benowa Centre. Issues in relation to the Benowa Centre were considerably more complex and have occupied much more time than those relating to the Broadway Centre. The issues in relation to the Broadway Centre have been finally determined in favour of PRD and Mr Douglas. On the other hand those in relation to Benowa Centre remain to be determined. However, PRD and Mr Douglas chose to defend comprehensively the judgment below in relation to the Benowa Centre. On balance, the appropriate order is for PRD and Mr Douglas to pay 60 per cent of Expectation’s costs of the appeal.

I certify that the preceding three hundred and forty-nine (349) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Court.

Associate:

Dated:             28 July 2004

Counsel for the Applicant: Mr W S Martin QC (with him Mr M J Burns)

Solicitors for the Applicant: Messrs Clewett Corser & Drummond

Counsel for the First and Respondents: Mr P A Keane QC (with him Mr P A T Applegarth SC and Mr A Pomerenke)

Solicitors for the Respondent: Messrs Thynne & Macartney

Date of Hearing: 27 February 2004

Date of Judgment: 28 July 2004

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	Q164 OF 2003

BETWEEN:	EXPECTATION PTY LTD (ACN 009 030 102) APPLICANT
AND:	PRD REALTY PTY LTD (ACN 009 954 956) FIRST RESPONDENT GORDON DOUGLAS SECOND RESPONDENT
JUDGES:	CARR, EMMETT & GYLES JJ
DATE OF ORDER:	28 JULY 2004
WHERE MADE:	BRISBANE

JUDGES:	CARR, EMMETT & GYLES JJ
DATE:	28 JULY 2004
PLACE:	BRISBANE

THE COURT	2
INTRODUCTION	2
FACTUAL BACKGROUND	4
THE BENOWA CENTRE	6
THE BROADWAY CENTRE	8
EXPECTATION’S PLEADED CLAIMS	8
THE RELATIONSHIP BETWEEN PRD AND EXPECTATION	8
Contract Terms	8
Common Law Duty Of Care	9
BREACH OF DUTY OF CARE AND BREACH OF CONTRACT (BENOWA)	10
MISLEADING AND DECEPTIVE CONDUCT (BENOWA)	13
BREACH OF FIDUCIARY DUTY (BENOWA)	13
THE BROADWAY CENTRE	14
THE DECISION OF THE PRIMARY JUDGE	16
THE BENOWA CENTRE	16
THE BROADWAY CENTRE	17
THE ISSUES ON APPEAL	18
DELAY IN HEARING AND DETERMINING EXPECTATION’S CLAIMS	18
EXPECTATION’S COMPLAINTS	18
APPLICABLE PRINCIPLES	20
ISSUES CONCERNING THE BENOWA CENTRE	25
FINDING OF NO LOSS	26
THE 8 PER CENT GROWTH REPRESENTATION	29
THE URGENCY REPRESENTATIONS	47
THE SPECIALTY RENT REPRESENTATIONS	51
FAILURE TO DISCLOSE RELEVANT FACTS	55
CONTRACT AND TORT CLAIMS	58
BREACH OF FIDUCIARY DUTY	61
DAMAGES	80
MR DOUGLAS	85
CONCLUSION AS TO BENOWA CENTRE	85
ISSUES CONCERNING THE BROADWAY CENTRE	85
THE FINDINGS OF THE PRIMARY JUDGE	86
THE EVIDENCE	88
WAS THERE MISLEADING CONDUCT?	104
NEGLIGENCE AND BREACH OF THE CONTRACT TERMS	108
CONCLUSION AS TO BROADWAY CENTRE	108
DISPOSITION OF THE APPEAL	109

Counsel for the Applicant:	Mr W S Martin QC (with him Mr M J Burns)
Solicitors for the Applicant:	Messrs Clewett Corser & Drummond
Counsel for the First and Respondents:	Mr P A Keane QC (with him Mr P A T Applegarth SC and Mr A Pomerenke)
Solicitors for the Respondent:	Messrs Thynne & Macartney
Date of Hearing:	27 February 2004
Date of Judgment:	28 July 2004