Ipswich Interstate Transport Terminal Pty Ltd v Walker and Mulgowie Nominees Pty Ltd

[1996] QCA 261

[1996] QCA 261

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND	Appeal No. 38 of 1995
Brisbane
[Ipswich Interstate Transport Terminal v. Walker & anor.]
BETWEEN:

IPSWICH INTERSTATE TRANSPORT TERMINAL

PTY LTD

(First Plaintiff) Appellant

AND:

JAMES BRIDSON WALKER

(First Defendant) First Respondent

AND:

MULGOWIE NOMINEES PTY LTD

(Second Defendant) Second Respondent

FITZGERALD P.
WILLIAMS J.

MACKENZIE J.

Judgment delivered 06/08/1996

REASONS FOR JUDGMENT - THE COURT

Appeal and cross-appeal dismissed.
Appellant is ordered to pay four-fifths of the respondents’ costs of the proceedings
in this Court.

standing relationship between appellant and respondents - common
interest in a number of commercial ventures.
DAMAGES - whether an appropriate measure of damages was
awarded.

COSTS - appropriate costs order to be awarded.

Gates v. The City Mutual Life Assurance Society Ltd (1986) 160
C.L.R. 1
L. Shaddock & Associates Pty Ltd v. The Council of the City of
Parramatta [No. 1] (1981) 150 C.L.R. 225
State of South Australia v. Johnson (1982) 42 A.L.R. 161

Vadasz v. Pioneer Concrete (S.A.) Pty Ltd (1995) 130 A.L.R. 570

Common Law Practice Act 1867, s.72

Counsel:	J. Sullivan for the Appellant K. Fleming Q.C. for the Respondents
Solicitors:	Biggs & Biggs for the Appellant James Walker Solicitor for the Respondents
Date(s) of Hearing:	18 September 1995

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND	Appeal No. 38 of 1995
Brisbane
Before	Fitzgerald P. Williams J. Mackenzie J.

[Ipswich Interstate Transport Terminal v. Walker & anor.]

BETWEEN:

IPSWICH INTERSTATE TRANSPORT TERMINAL

PTY LTD

(First Plaintiff) Appellant

AND:

JAMES BRIDSON WALKER

(First Defendant) First Respondent

AND:

MULGOWIE NOMINEES PTY LTD

(Second Defendant) Second Respondent

REASONS FOR JUDGMENT - THE COURT

Judgment delivered 06/08/1996

This proceeding involves an appeal and a belated application to cross-appeal in respect of a judgment delivered in the Trial Division on 1 March 1995, by which both respondents were ordered to pay the appellant, Ipswich Interstate Transport Terminal Pty Ltd, the sum of $185,000 with costs of the trial (limited to three days) and reserved costs (if any) to be taxed.

The appellant seeks an increase in the sum awarded to $237,503.54, together with interest at the rate of 10% per annum from 1 July 1988 to the date of the judgment below, which has been calculated as a total amount as at that date of $395,839.22. The appellant also seeks the costs of the appeal and cross-appeal. Further, it contends that the trial judge’s order limiting the costs of the trial to three days was occasioned by his wrongful dismissal of the appellant’s allegation of breach of fiduciary duty, and that, accordingly, the limit on the number of days’ costs of the trial allowed to the appellant should be deleted from the judgment below. The respondents seek to have the judgment below set aside and the appellant ordered to pay the costs of the action; alternatively, they seek to have the judgment against the first respondent, Walker, set aside, with an order that the appellant pay Walker’s costs of the action; in the further alternative, they ask that the appellant’s judgment against the second respondent, Mulgowie Nominees Pty Ltd (“Mulgowie”), be set aside and damages assessed on the basis of a loss of rental income for a period of two years. The respondents also seek the costs of the appeal and cross-appeal.

Walker, who was at all material times a director and authorised agent of Mulgowie, was formerly a close friend of one John Ronald Roles, who was at all material times a director, principal shareholder and authorised agent of the appellant. Walker does not dispute the trial judge’s findings that he made negligent misstatements to Roles, acting on behalf of the appellant, and that he was at the time acting as Mulgowie’s agent. However, Walker seeks to argue that the appellant did not sue him for negligent misstatement, but only for deceit and breach of fiduciary duty; the claim in negligence was made only against Mulgowie. We would not give leave to appeal on that ground, which was first raised almost six months after judgment was given against Walker, who is a solicitor. Nor would we give the respondents leave to argue that “proximity” and “reliance” were not established. As will be seen, the trial judge’s findings, based on ample evidence, are clearly against the respondent on those issues, and the respondents’ argument is pedantically related to the appellant’s pleading and one or two passages taken out of their context in the trial judge’s lengthy judgment. We will postpone consideration of the respondents’ application for leave to appeal against the amount of the appellant’s damages; it is necessary to consider the amount of the damages awarded for negligent misstatement because the appellant included a subsidiary claim that its recoverable loss on that basis included an item which the trial judge omitted.

While it is convenient to leave to one side at this point the detail concerning how the amount claimed by the appellant is arrived at, its primary claim is that a greater amount is recoverable on the basis of breach of fiduciary duty than the amount recoverable for negligent misstatement.

Except in the one comparatively minor respect referred to above, the appellant does not argue that the loss caused by its reliance upon the respondents’ negligent misstatements exceeded the amount of its judgment; its principal contention is that, because the respondent Walker breached his fiduciary duty, it is entitled to a different, more favourable measure of compensation.[1] The trial judge found it unnecessary to decide this question because he held that there was no breach of fiduciary duty, but considered that “there must be some doubt” as to the ambit of the appellant’s claim if, contrary to his opinion, there had been a breach of fiduciary duty. Regrettably, his Honour did not go on to assess quantum, or make findings necessary for such an assessment, if Walker did breach fiduciary obligations which he owed to the appellant. We will return to these questions below. At this point, however, it should also be noted that the trial occupied four days (22-25 November 1994), so that the appellant was deprived of only one day’s costs. Further, costs were limited to three days not only because the appellant was unsuccessful in its breach of fiduciary duty claim but because it was also unsuccessful in its claim based on deceit and because of “unnecessary delays”. Irrespective of whether the appellant needs leave to appeal against the costs order below, we would not interfere with the trial judge’s discretion by removing the limitation which he imposed on the costs of trial recoverable by the appellant.

[1]             The respondents did not submit that Mulgowie is not also liable for any compensation recoverable by the appellant against Walker for breach of fiduciary duty.

Despite the complexity with which it was surrounded, this appeal is therefore confined to the question whether the amount awarded to the appellant against the respondents should be increased or reduced.

While in private practice, Walker had been retained by Roles and various of his companies, including the appellant, to act as their solicitor. Further, prior to the transaction which gave rise to the present dispute, Roles and Walker and/or their respective companies engaged in a number of commercial ventures, including a joint purchase and exploitation of commercial and residential property. The appellant and Mulgowie were also the beneficiaries under a trust of which the trustee was Brisbane Market Freight Brokers Pty Ltd (“BMFB”), which carried on business as a refrigerated haulage contractor. In about May 1986, Walker left his legal practice, became a director of BMFB, and thereafter attended to its legal work and various administrative functions.

In July 1986, the appellant was to receive about $400,000.00 from the sale of a caravan park. Walker was attending to the conveyancing aspects of the transaction on the appellant’s behalf. Following misstatements by Walker in discussions with Roles at that time, in the following month the appellant used most of the proceeds which it received from the sale of the caravan park, a sum of $365,000.00, to purchase a half-interest in a building at Ipswich owned by Mulgowie. The trial judge found that “as a substantial result of Mr Walker’s negligent misstatements upon which Mr Roles relied, he had [the appellant] purchase the asset which, if he had been properly informed, it would not have purchased at that price”. The trial judge also found that “the property was worth $520,000.00 at the time”, and later that the appellant “paid $365,000.00 for an asset worth only $265,000.00, that is, it suffered a loss of $100,000.00". Finally, his Honour said:

“It follows, therefore, that in order to restore [the appellant] to the position it would have been in at the time but for the negligent representation, it should therefore be compensated in the sum of $100,000 which, with the asset which it received would have provided it with total assets of the value which it would have had if it had not entered into the purchase.

It should have interest on that loss, fixed at an average rate of ten percent over the whole intervening period. As an average, that rate would have been reasonably and securely available on a cash sum of that amount. That comes out at a round figure of $85,000.

As there would have been some investment by [the appellant] in real estate in any case if this transaction had not been undertaken, there should be no allowance for duties and conveyancing costs on the transaction. Another reason is that these expenses were caused by the negligence.” [This sentence seems to be incomplete.]

“Costs of the trial should be limited to three days having regard to those claims and issues on which the plaintiffs were unsuccessful, and to unnecessary delays.

There is therefore judgment for the first plaintiff against both defendants in the sum of $185,000 and costs (limited to three days) and reserved costs (if any) to be taxed.”

The appellant’s contention that, even on its negligent misstatement claim, it should have been awarded $11,250.00, being the stamp duty paid on its purchase of a half-share of the Ipswich property, should obviously be rejected. No basis was established for disagreement with the trial judge’s rejection of this claim on the footing that the appellant would otherwise have purchased another property and incurred a similar outlay.

The primary foundation of the appellant’s claim that Walker owed it a fiduciary duty was that a relationship of solicitor and client existed, although the appellant also referred to the long- standing friendship, joint dealings and mutual trust and confidence between Walker and Roles. Walker was acting as the solicitor for the appellant in relation to the sale of the caravan park when he made his misstatements, and he acted for it (and Mulgowie) in the sale by Mulgowie to the appellant of a half interest in the Ipswich property. However, his role was limited to the conveyancing; he did not act in an advisory capacity, and the sale by Mulgowie to the appellant was negotiated between Walker and Roles as directors of the respective companies. The appellant’s essential contention is that Walker nonetheless breached his fiduciary duty to it, not only by making negligence misstatements but by failing to advise the appellant to seek independent advice. It is unnecessary to record the appellant’s elaboration on this contention, at least at this point.

It is possible to elaborate upon the events prior to the appellant’s purchase of a half share in the Ipswich property by reference to the trial judge’s findings. His Honour found that Walker stated that “the total annual rental from the lease of the subject premises was a sum in excess of $77,000, that rates and taxes were in excess of $8,000 and that the net income was a sum in excess of $69,000", and that “the actual rental was no more than $67,784 per annum, the expenses $6,875 per annum and the net return $60,999 per annum” or perhaps less. It was held that these misstatements were negligent, and that has not been contested.

It was also found that Walker expressed the further opinion that “the present value of the premises was between $750,000 and $780,000", or perhaps “in excess of $800,000”, which was what Walker believed. Walker said that “he would accept half of $760,000" for a half share in the property, and “after negotiations”, the price of $365,000 was agreed. His Honour further found that Walker’s opinion of the property’s current value, and his forecast that it “would be worth between $1 million and $1.5 million in five years” were again erroneous, and that his prediction that “he could not see any of the tenants leaving in the short term, and that they would all sign up again for renewals when their leases expired” proved incorrect. However, all such mistakes (other than the misstatements concerning income from the property) were held not to be negligent.

His Honour then went on:

“On this subject, the real point of criticism which is advanced is that Mr Walker, advising Mr Roles as his solicitor, should have recommended suitable enquiries to discover the true situation and, if that were unsuccessful, to advise Mr Roles of the danger apparent from any refusal by the bank [the major tenant in the Ipswich property at the time of the sale from Mulgowie to the appellant] to declare its intentions. It is argued that he should have been aware of Mr Roles’ reliance on him on the point and, if he were not prepared to undertake suitable verification himself, he should have insisted that Mr Roles obtain independent advice. He denies that he was Mr Roles’ solicitor at that time, but even if he is right their relationship was such, and Mr Roles’ reliance on him on this point was such, that he should have had him obtain independent advice. ...”

(It is not clear whether the last sentence involves a finding of the trial judge or is a continuation
of his record of the appellant’s argument.) A little later his Honour went on:

“Apart from the claims of misrepresentation and negligence based on the allegations as to the amount of income represented in the discussion and the consequences of the advice concerning renewal of the leases, the only real issue arising from all this relates to fiduciary relationship. As to this question, while there are certainly other factors to be explored, the conversation itself had nothing about its style or content, according to either version, that would imply more than negotiations at arm’s length, albeit between business associates and friends. There was certainly nothing said which was in itself suggestive of quasi- professional advice as between solicitor and client.

It is agreed that bargaining took place, with an offer and counter-offer as indicated above; that the price was agreed upon the further offer of Mr Roles of the intermediate figure; and that to Mr Roles’ question, “Will you do the legals?”, which meant attend to the conveyancing, Mr Walker agreed, and in the course of time performed that work. This was the first appearance on that occasion of the re-creation of the solicitor-client relationship in respect of that transaction, though while these negotiations were taking place, Mr Walker was still in the course of performing the conveyancing work for [the appellant] on the [caravan park] sale.

At the time he was not in private practice but was the employed solicitor of [BMFB], the trustee of the business for [the appellant] and Mulgowie; and he denies that he was the solicitor for ... [the appellant] at any relevant time. He was not paid any specific fee for his conveyancing work on either transaction and probably undertook all that work as part of his duties with BMFB, because of the identity between the beneficiaries of the BMFB trust and the parties to the conveyance. Though not in private practice nor receiving any fee, he was undoubtedly acting as [the appellant’s] solicitor in these transactions, but in both cases his instructions were confined to the performance of the conveyancing work. He was not engaged for the [appellant] for the purpose, direct or implied, of advising on relevant matters. He had no practical influence on the discussions other than as part of the general personal relationship between the parties, and Mr Roles really did not suggest the contrary.

His engagement to execute the conveyancing work on the relevant transaction did not take place until agreement was reached. The specific request to this effect by Mr Roles is consistent with that gentleman’s own view that the antecedent discussion had not been on a solicitor/client basis. There was no vague general engagement as solicitor for all purposes, and in any case neither regarded any such engagement as operative in respect of the negotiations.

Where Mr Walker knew that reliance was placed on his statement and opinions, that was not in respect of any role as the solicitor for [the appellant]. Consequently his negligence related simply to his general responsibility while giving advice, and not to any breach of duty as a solicitor. It is true that had Mr Roles been referred to independent legal advice, [the appellant] would certainly not have made the purchase; but the failure to refer has not been pleaded as a feature of negligence. As it turn out, the result is the same.

...

It is necessary now to go back in time in order to study [Walker’s] position in relation to Mr Roles as it bore upon the negotiations that are in issue here. He had been Mr Roles’ solicitor for many years and as such had been consulted many times in relation to that gentleman’s personal business and that of [the appellant]. Although not highly educated, Mr Roles was an experienced businessman and a skilled negotiator. Further, though he had no formal legal education, he had engaged in many commercial transactions including the purchase of real estate; but despite his broad knowledge of legal matters so far as they touched on these affairs, he usually referred any serious legal issue to Mr Walker. His principal talents and experience were associated with the operating side of his various substantial business interests.

In addition, through their respective family companies he and Mr Walker had acquired some common property, including a farm which was bought as a business, and a holiday house at Stradbroke Island which had, until then, been owned by Mr Walker. Their respective companies also owned equal shares in the unit trust company which carried on the business of BMFB. This was a growing business which continued to acquire assets and was managed by Mr Roles. In the first half of 1986, because he had difficulty in coping with its expanding affairs, he invited Mr Walker to work in the business because he had expressed a desire to leave his legal practice. This was accepted and Mr Walker then performed the administrative and day-to-day legal work of the business.

...
... Mr Walker learned of the dispute for the first time only shortly before the writ
was issued in August 1991, that is, five years after the event. There had been no
complaint in the meantime which would have directed his attention to the
matter when his recollection might have been more accurate. From these
circumstances it might also be inferred that Mr Roles too did not reflect on the
conversation for at least a few years, ...”

After referring to Walker’s “manifest carelessness in not ensuring that Mr Roles had independent advice”, the “probability that the gross and net income from the property were overstated, though not necessarily to the extent alleged by Mr Roles”, and Walker’s “knowledge that Mr Roles was placing some reliance upon the information”, the trial judge continued:

“More difficult is the question as to the nature and extent of that reliance. Mr Roles does not claim that these representations as to income enabled him to make his own expert evaluation of the capital worth of the premises. Rather, he said that he had trust in Mr Walker because of their relationship without specifically identifying the subject matter of that trust. Except as to the accuracy of the income figures and the prospect that all lessees would renew their leases, their reliance is overstated, but it may be inferred that he regarded the figures as a broad justification of the asking price. He probably also had some respect for Mr Walker’s opinion as to the value of the asset, and believed in his honesty in expressing that opinion.

If all of this is taken together, although he does not expressly claim to have been influenced specifically by the figures relating to annual rental or net returns, it is probable that in a broad sense they were of general significance to him as supporting a range of value of which Mr Walker’s figure was at the higher end.

It would fail to recognise the reality of the situation and to accord proper significance to his enquiries to say that the income return on his investment was not also an important consideration to him. He relied on Mr Walker’s opinion as to the prospects of renewal of the leases as fortifying his expectations of the security of that return. He was prepared to pay the price he did in order to acquire a property that would produce the stated income, and he would probably not have paid it or any figure like it if he had known the true figure. It would have represented a return of less than nine percentum per annum on capital, which at that time was too low, even allowing for some possibility of capital gain.

The prospect of capital gain would have been one serious focus of his attention, but he would have known that Mr Walker was only expressing an opinion on matters on which he himself would have been as competent to exercise his own opinion. As he knew, the prospects were speculative in that factual situation. Conversely this factor was not the only reason for his interest. While it cannot be invoked in support of the [appellant’s] case, the other features in respect of which there was reliance are sufficiently strong to provide that necessary element of this claim.

In summary, as a substantial result of Mr Walker’s negligent misstatements upon which Mr Roles relied, he had [the appellant] purchase the asset which, if he had been properly informed, it would not have purchased at that price. ...”

After stating that that completed “the review of the basis of [the respondents’] liability for negligence”, his Honour turned to the appellant’s allegation of breach of fiduciary duty. Before pursuing that issue, it is convenient to deal with the remainder of the cross-appeal. The trial judge’s view was that the appellant’s loss from Walker’s negligence “lay in the difference between purchase price and value and not merely the difference between the expected and actual income received”; as noted earlier, the respondents submitted that the appellant’s only recoverable loss was limited to the difference between the net income received by the appellant in the two years in which it and Mulgowie owned the property and the net income which the appellant would have received in that period if Walker’s negligent misstatements had been correct. The respondents’ contention is perhaps a version of a proposition that the appellant’s loss should be measured by the difference between the amount it paid for the property and the value of the property if the negligent misstatements had been true, while his Honour awarded the appellant the difference between what it paid for the property and its true value at that time.

As has been noted, the trial judge held that the appellant would not have agreed to purchase a half interest in the Ipswich property from Mulgowie but for Walker’s negligent misstatement concerning the income. The test which he applied to determine the appellant’s loss was clearly correct: L. Shaddock & Associates Pty Ltd v. The Council of the City of Parramatta [No. 1] (1981) 150 C.L.R. 225; State of South Australia v. Johnson (1982) 42 A.L.R. 161; Gates v. The City Mutual Life Assurance Society Ltd (1986) 160 C.L.R. 1.

Except as earlier noted with respect to the stamp duty it paid on its purchase, none of the further amounts which the appellant contends for as compensation for Walker’s alleged breach of fiduciary duty are asserted to be recoverable as damages for his negligence on the footing that they were foreseeable consequential losses flowing directly from its purchase: see Gates at p. 12.

The items claimed by the appellant as compensation for Walker’s breach of fiduciary duty, but not now claimed as damages for negligence, are:

(1) “Potential” earnings from the amount paid by the appellant for a half share in the property - calculated as interest at 12% on the amount paid to Mulgowie for the period from payment to the date when the property was sold

82,920.00

Less share of net income from the property in that

period 46,402.80 36,517.20

(2) Cost of purchase (including stamp duty)	376,250.00
Less share of net sale proceeds	177,147.88 199,102.82
Legal costs incurred on sale of property	1,883,57

$237,503.54

As earlier noted, the remainder of the amount sought by the appellant consists of interest on its compensation to the date of the judgment below. The respondents did not argue that such interest could not, or should not, be awarded under s. 72 of the Common Law Practice Act 1867.

As is apparent from what has been said, the property in which the appellant purchased a half interest from Mulgowie was later[2] sold at a considerable loss. More will be said of that later. First, we propose to deal with the appellant’s claim in relation to its “Potential Earnings” otherwise from investment of the amount paid for the property[3] and stamp duty. It has already been pointed out that the trial judge found that, had it not purchased a half interest in the Ipswich property from Mulgowie, it would have made some other “investment ... in real estate”. Indeed, the appellant pleaded as much. Paragraph 16 of the final version of the appellant’s statement of claim, so far as immediately material, was as follows:

[2]             According to the appellant, one year and 326 days after purchase.

[3]             If proved, such a loss would have been within the ambit of a damages claim for negligent misrepresentation: Gates at p. 13.

“16.

Further, as a consequence of investing the said sum of $365,000.00 in the

property, the Plaintiffs were deprived of the opportunity of making an

alternative profitable investment of that sum, as they would have done

by -

(a)	Investing the same on the short-term money market through the A.N.Z. Bank, until a suitable alternative real property investment became available; and
(b)	Thereupon investing the same in a suitable alternative real property investment.

...”

Accordingly, all other considerations aside, we would disallow the appellant’s claim for compensation related to lost “Potential Earnings” and stamp duty.

That effectively leaves the appellant’s breach of fiduciary duty claim as a contention that it is entitled to the difference between what it paid for a half interest in the Ipswich property which it purchased from Mulgowie and its net receipt from the sale of the property almost two years later at a figure considerably less than its value at the time when the appellant purchased its half interest. The circumstances leading up to and surrounding that sale can be briefly stated.

When the appellant purchased a half interest in the property from Mulgowie, it was subject to an unregistered mortgage in favour of the ANZ Bank, which secured all money owed to that bank by BMFB which, it will be remembered, was the trustee for a joint venture between the appellant and Mulgowie. The trial judge found that the appellant “knew well and approved of its being used as security to the bank, as with Mulgowie’s interest in it, and they both derived suitable benefits from that”. His Honour also found that the appellant “had control of the asset for some time”, by which we take it that he meant that the appellant became aware of the true income and outgoings of the property after it acquired its half interest. When the property was sold, it was what the trial judge described as a “forced sale”; hence the low sale price. The appellant attacked his Honour’s finding that it knew that the property was subject to an “all monies” mortgage; although implicitly accepting that it knew that the property was “being used as a security for the joint venture’s bank obligations”, it contended that it believed that the mortgage only secured “a particular debt”, a sum of $240,000.00 related to a farm at Rosewood owned by BMFB. In the circumstances, that is a somewhat extraordinary assertion, as will be seen in due course.

It is instructive to look a little more closely at the relationships between the protagonists, BMFB and the A.N.Z. Bank. By way of background, although he persisted in his claim that he believed that the Ipswich property in which the appellant purchased a half interest from Mulgowie was mortgaged only in respect of the debt owed to the bank in relation to BMFB’s Rosewood farm, Mr Roles asserted that the bank had security over all BMFB’s assets, and the following passage appears in his cross-examination:

“And you let Mr Walker do the mechanic work to get the money then after the decisions were made then?-- Mr Walker did all the approaches to the bank and the relevant documents and everything.

He didn’t borrow money without your knowing exactly how much and exactly on what terms and conditions did he?-- No, he would not, no.

You agreed on every occasion that money was borrowed, didn’t you, to the terms and conditions that the bank put down, didn’t you?-- You wouldn’t have got the money if you had not have done.

Exactly; you knew then on each occasion what the bank required to satisfy the borrowings didn’t you?-- Yes.”

According to Mr Roles, all the income from the property in which the appellant purchased a half interest from Mulgowie went into BMFB’s account with the bank “to give us a cash flow for our ever increasing liabilities”. The account was “[a]lways in overdraft”. Roles, Walker, the appellant and Mulgowie had given the bank personal guarantees in respect of BMFB’s debt. From about August 1986, “we started getting deeper and deeper into debt ...”, “primarily ... to ... A.N.Z. Bank”. In late 1986, the bank required them “to disperse some of our assets”. By about June 1987, they “were indebted to the A.N.Z. Bank for approximately $1 million”. In that month, the relationship deteriorated between Roles and Walker and Walker resigned as a director of BMFB the following month and “Mulgowie executed transfers of the units, etc.”. Negotiations were followed by litigation, including an application by Roles and the appellant to have trustees for sale appointed by the Court in respect of both the Ipswich property and the house on Stradbroke Island (referred to above in a passage quoted from the trial judge’s reasons) which was jointly owned by Roles and Walker and had also been mortgaged to the A.N.Z. Bank to secure BMFB’s debt. The trustees were required to sell the properties and pay the proceeds to the bank on account of BMFB’s indebtedness, which they did. In June 1988, the bank was still “certainly putting pressure on ...”, and BMFB’s farm at Rosewood, which was also mortgaged to the bank, was sold and the proceeds paid to the bank. Although it is not entirely clear, it seems that BMFB also sold a “produce section at the Rocklea markets”, elsewhere described as a “wholesale floor”, which it had purchased for “175 or 185,000" with money borrowed from the A.N.Z. Bank and which was also mortgaged to the bank, and that the proceeds of sale went to the bank. Again the matter could be clearer, it seems that, even after all BMFB’s assets were realised, there was an outstanding indebtedness to the bank.

Quite obviously, that indebtedness would have been greater if the Ipswich property in which the appellant had purchased a half interest from Mulgowie had not been sold - at the appellant’s instigation - and the proceeds paid to BMFB’s bank. Put at its lowest, if Mulgowie had been the sole owner of the Ipswich property and it had been sold, the proceeds used to satisfy part of the debt of the joint venture (represented by BMFB) and guaranteed by Roles, Walker, the appellant and Mulgowie, monetary adjustments in Mulgowie’s favour would have been called for in the interests of fairness. However, it is unnecessary and inappropriate to pursue that issue. The appellant had purchased with knowledge of the true net income position, retained its half interest in the Ipswich property, sought and obtained its sale to obtain money for the joint venture, and is compensated for the excess it paid for the property by the existing judgment in its favour against the respondents for damages for Walker’s negligent misstatement.

The claim which the appellant is now pursuing for additional compensation must be grounded in equity. According to the appellant, although it will have effectively been paid the true value of the half interest in the Ipswich property which it acquired from Mulgowie when its damages are deducted from the purchase price paid, because of the relationship between Walker and Roles it should also be compensated by the respondents for the loss sustained by both it and Mulgowie when the property was sold almost two years later, at a sale “forced” by the appellant, to pay part of the joint venture debt. The test whether such an order should be made is whether it would be “practically just” for both parties: see Vadasz v. Pioneer Concrete (S.A.) Pty Ltd (1995) 130 A.L.R. 570 at 575-578. In our opinion, the opposite would plainly be the case; in the circumstances, it would be most unjust to order the respondents to pay the appellant the extra amount which it claims.

In our opinion, therefore, the appeal, as well as the cross-appeal, should be dismissed. The appellant should be ordered to pay four-fifths of the respondents’ costs of the proceedings in this Court.