Lord Buddha Pty Ltd v Harpur
[2011] VSC 366
•9 August 2011
h
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. 7843 of 2008
| BETWEEN: | |
| LORD BUDDHA PTY LTD (ACN 117 265 988) | Plaintiff |
| and | |
| PAUL HARPUR | Defendant |
| By original proceeding | |
| AND BETWEEN: | |
| PAUL HARPUR | Plaintiff |
| and | |
| LORD BUDDHA PTY LTD | First Defendant |
| FORVALE PTY LTD (ACN 072 984 019) | Second Defendant |
| By counterclaim |
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JUDGE: | ROBSON J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 11 and 12 April 2011, 31 May, 1, 2, 3, 6, 7, 8, and 9 June | |
DATE OF JUDGMENT: | 9 August 2011 | |
CASE MAY BE CITED AS: | Lord Buddha Pty Ltd v Harpur | |
MEDIUM NEUTRAL CITATION: | [2011] VSC 366 | |
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MISLEADING OR DECEPTIVE CONDUCT – Plaintiff sold to defendant commercially zoned land at Portland – Purchaser allegedly induced to buy the land by misleading or deceptive conduct in breach of ss 52 and 53A(2) of the Trade Practices Act 1974 and s 11 of the Fair Trading Act 1999 (Vic) – Purchaser allegedly informed by vendor’s real estate agent that various well known retailers intended to take tenancies at the site – Some of the representations made out – Vendor liable for misleading or deceptive conduct – Allegation that agent also engaged in misleading or deceptive conduct – Claim not made out – Agent found to be mere conduit – Purchaser did not establish that the agent endorsed or adopted the representations as to the interested tenants.
AMADIO DEFENCE – Purchaser allegedly suffering from disabilities – Pleaded Amadio defence – Disabilities not made out – If disabilities existed, vendor not aware nor should have been aware - Defence not made out.
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APPEARANCES: | Counsel | Solicitors |
| For the plaintiff on the claim and the first defendant on the cross claim | Mr R S Hay Mr J J Oswald-Jacobs | O’Donnell Salzano Lawyers |
| For the defendant on the claim and plaintiff on the cross claim | Ms S Marks SC Mr M Albert | Mills Oakley Lawyers |
| For the second defendant on cross claim | Mr P Little | Michael Benjamin & Associates |
TABLE OF CONTENTS
INTRODUCTION.............................................................................................................................. 4
BACKGROUND................................................................................................................................. 5
SUMMARY OF FINDINGS............................................................................................................. 9
THE PEOPLE INVOLVED............................................................................................................. 10
Michael Barrett............................................................................................................................ 10
Charles Gaucci............................................................................................................................. 10
David Gibbs................................................................................................................................. 10
Erdan Hassan............................................................................................................................... 11
Paul Harpur................................................................................................................................. 11
Ronald Hutchins......................................................................................................................... 11
Bronwyn Paltaguou.................................................................................................................... 12
Michael Ramsen.......................................................................................................................... 12
David Rodden.............................................................................................................................. 12
Gordon Turner............................................................................................................................. 12
Kenneth Tunbridge..................................................................................................................... 12
Peter von Stiegler........................................................................................................................ 13
Darren Winjam............................................................................................................................ 13
MR PAUL HENRY HARPUR........................................................................................................ 13
Compound Property Investments............................................................................................ 14
Mr Harpur’s medical condition................................................................................................ 15
Mr Tunbridge’s observations on Mr Harpur’s abilities........................................................ 18
Mr Harpur’s trip to Corio with Mr Hutchins......................................................................... 19
Dr Peter McArdle’s opinion on Mr Harpur’s medical condition........................................ 20
THE ALLEGED REPRESENTATIONS....................................................................................... 21
CHRONOLOGY OF EVENTS....................................................................................................... 23
The Portland land............................................................................................................................ 23
David Gibbs’ acquisition and plans for the Portland land..................................................... 24
The presentation to the Glenelg Council................................................................................. 25
The retirement village................................................................................................................ 26
Mr Gibbs’ approaches to potential tenants............................................................................. 27
Mr Barrett’s and Mr Gaucci’s attempts to attract tenants and buyers................................ 28
Aldi........................................................................................................................................... 29
Betta Electrical......................................................................................................................... 29
Bunnings.................................................................................................................................. 29
Cheap as Chips......................................................................................................................... 30
Coles......................................................................................................................................... 30
Mitre 10................................................................................................................................... 31
Scotts Petroleum...................................................................................................................... 32
Mr Gibbs’ retainer of Mr Turner to sell the Portland land................................................... 32
Mr Harpur’s introduction to Forvale............................................................................................ 34
Health discussions between Mr Turner and Mr Harpur......................................................... 35
The 3 December 2007 sale authority............................................................................................. 37
Mr Harpur’s introduction to the Portland land.......................................................................... 38
The alleged misleading and deceptive conduct......................................................................... 38
The promotional brochure......................................................................................................... 39
Documents shown to Mr Harpur by Mr Turner.................................................................... 39
Cross-examination of Mr Harpur on representations........................................................... 42
Re-examination of Mr Harpur................................................................................................... 42
The option.................................................................................................................................... 42
Another purchaser for the land................................................................................................. 42
Mr Harpur’s reliance on Mr Turner......................................................................................... 42
Signing the contract.................................................................................................................... 42
The 11 December 2007 meeting and the signing of the contract............................................ 42
The 12 December 2007 meeting..................................................................................................... 42
Mr Tunbridge’s recollection of the 12 December 2007 meeting........................................... 42
Mr Hutchins’ evidence of Mr Turner’s negotiations with Mr Harpur.................................. 42
Mr Turner tells Mr Hutchins about the Portland land............................................................. 42
THE POST CONTRACT MEETINGS......................................................................................... 42
The 3 January 2008 meeting........................................................................................................... 42
The CPI meeting on 9 January 2008.............................................................................................. 42
Mr Harpur’s version of the CPI meeting on 9 January 2008................................................ 42
The late January 2008 Glasshouse Café meeting....................................................................... 42
Mr Gibbs’ evidence on the Glasshouse Café meeting........................................................... 42
Mr Hutchins’ evidence on the Glasshouse Café meeting..................................................... 42
Mr Harpur’s evidence of the Glasshouse Café meeting........................................................ 42
Mr Tunbridge’s evidence of the Glasshouse Café meeting.................................................. 42
The 25 January 2008 deposit payment is missed........................................................................ 42
The deed of variation meeting on 1 February 2008................................................................... 42
Mr Hutchins’ version of the variation meeting...................................................................... 42
Mr Harpur’s version of the variation meeting........................................................................ 42
Mr Gibbs’ version of the variation meeting............................................................................ 42
Mr Tunbridge’s version of the variation meeting.................................................................. 42
The deed of variation...................................................................................................................... 42
The 6 February 2008 deposit.......................................................................................................... 42
Meeting at Glassworks on approximately 20 February 2008................................................... 42
The 3 March 2008 deposit............................................................................................................... 42
The 17 March 2008 deposit............................................................................................................. 42
The Vine Hotel meeting on 30 April 2008................................................................................... 42
Mr Hutchin’s evidence of the Vine Hotel meeting................................................................ 42
Mr Gaucci’s evidence of the meeting at the Vine Hotel........................................................ 42
Mr Harpur’s evidence on the Vine Hotel meeting................................................................. 42
Mr Gibbs’ evidence of the meeting at the Vine Hotel............................................................ 42
The 19 May 2008 meeting............................................................................................................... 42
Cross-examination of Mr Harpur on 19 May 2008 meeting................................................. 42
Meeting at the Richmond Seafood Tavern................................................................................. 42
Cross-examination of Mr Harpur on Richmond Seafood Tavern meeting........................ 42
Cross-examination of Mr Gibbs on the post contract meetings............................................. 42
Rescission of the contract............................................................................................................... 42
Attempted sale of the Portland land............................................................................................ 42
Other transactions............................................................................................................................ 42
Advisers that Mr Harpur had access to at the time................................................................... 42
FINDINGS ON MISLEADING OR DECEPTIVE CONDUCT CLAIM............................... 42
Findings........................................................................................................................................ 42
Conclusion on representations.................................................................................................. 42
THE TRADE PRACTICES ACT 1974 and the FAIR TRADING ACT 1999 (VIC).................. 42
Did the representation constitute misleading or deceptive conduct?................................. 42
Did Mr Harpur rely on the representations?.......................................................................... 42
LIABILITY FOR THE MISLEADING AND DECEPTIVE REPRESENTATIONS MADE BY MR TURNER............................................................................................................................................ 42
Is Forvale liable for the representations of Mr Turner?......................................................... 42
Accessorial liability..................................................................................................................... 42
AMADIO DEFENCE....................................................................................................................... 42
Facts relied on in Amadio defence........................................................................................... 42
Does Mr Harpur have an Amadio defence?........................................................................... 42
ALLEGED BREACH BY LORD BUDDHA OF THE SALE OF LAND ACT 1962................ 42
ORDERS SOUGHT......................................................................................................................... 42
ORDERS............................................................................................................................................ 42
ANNEXURE A.................................................................................................................................. 42
ANNEXURE B................................................................................................................................... 42
APCO and United....................................................................................................................... 42
Barnes Furniture.......................................................................................................................... 42
BCF................................................................................................................................................ 42
Brydens’ Tyres............................................................................................................................. 42
Harris Scarfe................................................................................................................................. 42
Harvey Norman.......................................................................................................................... 42
IGA................................................................................................................................................ 42
Jackie Crockett............................................................................................................................. 42
Local pharmacist......................................................................................................................... 42
Metcash......................................................................................................................................... 42
NQR.............................................................................................................................................. 42
McDonalds................................................................................................................................... 42
National Auto Parts Retailer..................................................................................................... 42
Red Rooster.................................................................................................................................. 42
Shell............................................................................................................................................... 42
Supercheap................................................................................................................................... 42
Whitehead Timber...................................................................................................................... 42
Baptist Church............................................................................................................................. 42
HIS HONOUR:
INTRODUCTION
In December 2007, Lord Buddha agreed to sell to Mr Paul Harpur seven hectares of undeveloped land at Portland. Mr Harpur paid part of the deposit and then refused to proceed with the purchase. The sale was affected by Mr Gordon Turner a sub-agent of Forvale Pty Ltd, real estate agents. Lord Buddha is controlled by Mr David Gibbs, a property developer. Mr Harpur is a solicitor and property developer.
Lord Buddha rescinded the contract and sues Mr Harpur for damages.[1] In his defence, Mr Harpur claims that he validly terminated the contract of sale, or alternatively the contract was void or voidable and can be set aside on three grounds.
[1]Amended statement of claim of 23 October 2008, Courtbook 32.
First, Mr Harpur alleges that certain statutory requirements of the Sale of Land Act 1962 were not observed in the contract and that he validly rescinded and terminated the contract or the contract is void or voidable. If the statutory breaches are made out, the relevant statutory law permits the Court to excuse the failure to observe the statutory requirements. If the breaches are made out, Lord Buddha seeks to be so excused.
Secondly, Mr Harpur claims that Lord Buddha and the real estate agent, Forvale, engaged in misleading or deceptive conduct[2] by making misleading or deceptive representations about the Portland land, that Mr Harpur relied on to enter into the sale agreement. These representations include that Lord Buddha had “lined up” a number of tenants for the property.[3] As a result, Mr Harpur claims that he rescinded the contract or that he is entitled to do so. He claims that he is thereby entitled to the return of the deposit.
[2]In breach of ss 52 and 53A(2) of the Trade Practices Act1974 and s 11 of the Fair Trading Act1999 (Vic).
[3]Mr Harpur’s amended defence to further amended statement of claim and amended counterclaim, 15 April 2011, [17], [21].
Finally, Mr Harpur contends that when he was dealing with Lord Buddha he was at a special disadvantage or disability flowing from a stroke he had in the late 1990s that was known to Forvale as the estate agent for Lord Buddha.[4] He says that Lord Buddha has unfairly or unconscientiously taken advantage of his special disadvantage in procuring the contract to buy the Portland land. He says that as a result Lord Buddha is not entitled to retain the benefit of the contract.
[4]Mr Harpur’s amended defence to further amended statement of claim and amended counterclaim, 15 April 2011, [34]-[35].
Mr Harpur makes a counterclaim against Lord Buddha and Forvale. In his counterclaim he pleads causes of action relying on the matters raised in his defences that the contract breached the Sale of Land Act 1962 and the alleged misleading or deceptive conduct. As a result, he claims that he is entitled to have the contract of sale set aside and he claims the repayment of the deposit he paid of $425,000. He also claims loss and damages of $425,000 and further damages for the loss of use of that sum. Finally, he claims each of Lord Buddha and Forvale aided and abetted each other in the misleading or deceptive conduct and are therefore liable for the misleading or deceptive conduct of each other.
Lord Buddha admits that Forvale was retained as its agent on 3 December 2007.[5] Forvale admits it acted as estate agent for Lord Buddha to sell the land to Mr Harpur.[6]
[5]Lord Buddha’s third amended reply and amended defence, 18 May 2011, [20].
[6]Forvale’s defence to amended defence and counterclaim of the second defendant by counterclaim of 16 January 2009, Courtbook 93, [2].
BACKGROUND
The Portland land lies on the Henty Highway, being the main road that enters Portland for traffic travelling west along the Henty Highway from Hamilton and Heywood, and for traffic travelling west along the Princes Highway from Warrnambool and Port Fairy. The property is zoned business four (B4). That zoning entitles the land, with a permit from the council, to be used for the sale of bulky goods. A business such as Bunnings, Mitre 10 or a bedding store could be operated on the site as bulky goods businesses.
Lord Buddha[7] purchased the Portland land for $1.21 million in March 2007. After Lord Buddha took possession of the Portland land in March 2007, Mr Gibbs and his associates set about investigating the possibility of developing the land. They came up with a preliminary concept plan that divided the land into several uses.[8] Under the concept plan, part of the land would be used for a bulky goods store such as Bunnings, another part would be used for a supermarket and ancillary shops which would require rezoning to business one (B1), another part would be used for a petrol station, and another part might be used for a retirement village that would require rezoning to residential. Adjoining the southern side of the Portland land was land owned by the council that was zoned residential. Mr Gibbs and his associates investigated whether that land could be acquired from the council and used with part of the Portland land to develop a retirement village.
[7]Lord Buddha is part of the IPC Property & Investment Group that is controlled by Mr Gibbs: transcript, 40.
[8]The concept plan is annexed as annexure 2.
In the second half of 2007, Mr Gibbs approached Mr Turner, a sub-agent engaged by Forvale, to assist him to sell the Portland land. Forvale was established in about August 2007 by Mr Ronald Hutchins, an estate agent from Shepparton. Mr Turner and Mr Hutchins agreed to work together for shared commissions. Mr Turner had a sub-agent’s licence. Mr Gibbs told Mr Turner that he wanted $5 million for the property and that if Mr Turner could sell the property for any more the surplus could be commission.
On 3 December 2007, Mr Turner obtained an authority from Mr Gibbs to sell the Portland land for $6.5 million. Mr Turner offered the land to Mr Harpur for that sum and he agreed to buy it without seeking to bargain it down. Mr Turner had been dealing with Mr Harpur on other property developments. A contract of sale was signed on 11 December 2007 and discharged on 12 December 2007 when a part deposit was paid by Mr Harpur.
Mr Harpur alleges that Mr Turner gave him a coloured concept plan and other documents relating to the Portland land. He alleges that Mr Turner made certain verbal representations in his negotiations with Mr Harpur that were misleading or deceptive.[9] Mr Harpur says that he relied on these misleading or deceptive representations to enter into the contract.
[9]The particulars rely on the preliminary site development plan (exhibit D5); a document showing calculations and projections made by Mr Turner (this could not be found and was not tendered); and a note on Sahid Jaya Hotel note paper (exhibit D8). During the trial Mr Harpur also relied on a coloured concept plan (exhibit D6) and a brochure (exhibit D7). Mr Harpur said that he was given the coloured concept plan (exhibit D6) at the same time as he was given the development plan (exhibit D5) in early December (Transcript 226 lines 4-8). Mr Harpur says he was given the development plan (exhibit D5) in early December (Transcript 215 lines 10-16; 218 lines 18-19; 219 lines 16-19).
Mr Harpur had a stroke in about 1999. He claims that the stroke has left him with certain disabilities; including that he is too trusting and that he is not able to judge other people, to his disadvantage. Mr Harpur alleges that he told Mr Turner and Mr Hutchins about his disabilities and that unconscientiously they, as agents for Lord Buddha, took advantage of him in procuring him to enter into the contract.[10]
[10]Mr Harpur’s amended defence to further amended statement of claim and amended counterclaim, 15 April 2011, [34].
After the contract was signed, in January 2008, several meetings took place between Mr Harpur and Mr Turner about the Portland land. Sadly, Mr Turner unexpectedly died at the end of January. Before he died, however, on 25 January 2008 Mr Harpur defaulted in the payment of part of the deposit. His reasons for doing so included that he could no longer offer the property to his overseas partner Mr Peter von Stiegler (and through him to wealthy Indonesian investors), and a source of money he expected from another project was not available.
In February 2008, an extension of time to pay the deposit was negotiated with Mr Gibbs. Further deposit moneys were paid; but ultimately Mr Harpur defaulted. Lord Buddha rescinded the contract. Mr Harpur alleged that he had been misled.
Mr Harpur was an active property developer. At the time of the purchase, he was involved in several projects. One project involved issuing shares in a company called Compound Property Investment Pty Ltd (CPI), to raise money from wealthy investors to invest in property. In November 2007, before Mr Harpur agreed to buy the Portland land, he sought to raise some $20 million by a share issue by CPI to invest in property. To that end he prepared an information memorandum to be shown to investors and financial planners. Under the proposal, Mr Harpur would manage the investments. The proposed investments of CPI included land that lay within a “zone of growth”, as the Portland land did. The role of CPI in the purchase of the Portland land is one of the issues in contention in this case.
As mentioned above, there are three aspects of the contract as varied which it is alleged do not comply with the Sale of Land Act 1962. The effect of these breaches is that the contract is unenforceable unless the Court excuses the breaches.
If Lord Buddha has validly rescinded the contract and Mr Harpur has no entitlement to damages, the parties are agreed on the damages to be paid by Mr Harpur for breach of the contract of sale.
Accordingly, in general terms the case involves the following issues.
(a) Did Lord Buddha and Forvale engage in misleading or deceptive conduct contrary to the Trade Practices Act 1974 and the Fair Trading Act1999 (Vic)?
(b) If so, did Mr Harpur suffer any loss or damage by the misleading or deceptive conduct?
(c) If so, did Forvale aid and abet Lord Buddha in the misleading or deceptive conduct?
(d) Was Mr Harper labouring under a special disadvantage or disability that if known to Lord Buddha and unconscientiously taken advantage of by Lord Buddha, would entitle him at equity to avoid the contract to buy the Portland land?
(e) If so, did Lord Buddha know of the disability?
(f) If so did Lord Buddha unconscientiously take advantage of its knowledge?
(g) If so, would that entitle Mr Harpur to avoid the contract?
(h) Did Lord Buddha breach the Sale of Land Act 1962 in respect of the contract or the s 32 certificate?
(i) If so, should Lord Buddha be excused?
(j) If not, is the contract avoided?
SUMMARY OF FINDINGS
I am satisfied that Lord Buddha did engage in misleading or deceptive conduct towards Mr Harpur in breach of s 52 of the Trade Practices Act 1974 and s 11 of the Fair TradingAct 1999. In particular, I am satisfied that Lord Buddha did falsely represent to Mr Harpur that:
(a) Coles and Aldi were available, and wanted to go there [to the Portland land], as tenants;
(b) Cheap as Chips, Mitre 10 and Bunnings wanted to go there to take a lease for a bulky goods store in the project;
(c) Lord Buddha had a number of tenants lined up for the site; and
(d) Lord Buddha had some land ready for development at Portland.
Representation (c) is supported and made out by representations (a) and (b). Representation (d) is also supported by and made out by representations (a), (b) and (c).
Mr Harpur has not satisfied me on the balance of probabilities that the other representations were made by Lord Buddha.
Mr Harpur has not satisfied me that Forvale engaged in misleading or deceptive conduct in breach of the relevant sections. Mr Harpur has not satisfied me that Forvale is liable for aiding and abetting, counselling, procuring, inducing or being in any way directly or indirectly knowingly concerned or a party to, or has conspired with others to affect, the contraventions.
I find that by reason of the misleading or deceptive conduct, Mr Harpur paid the deposit and has lost the use of that money.
Mr Harpur has not satisfied me that he was suffering under a special disadvantage or disability. If Mr Harpur was suffering under a special disadvantage or disability, Mr Harpur has not satisfied me that Mr Turner and Mr Hutchins knew about or ought to have known about it.
In the circumstances, I have not found it necessary to deal with the alleged breaches of the Sale of Land Act 1962.
THE PEOPLE INVOLVED
Michael Barrett
Mr Barrett is a real estate agent employed by Coastal Real Estate of Portland who acted for Lord Buddha in seeking to obtain tenants for the Portland land and in dealing with the Glenelg Shire Council over rezoning issues. He gave evidence. I accept Mr Barrett’s evidence.
Charles Gaucci
Mr Gaucci is a director of Lord Buddha.[11] Mr Gaucci carries on business as a real estate agent in Richmond under the name Lease Link.[12] He introduced Mr Gibbs to the Portland land and arranged for him to buy the interest of another investor in the land. He held an interest in the land at Portland through Lord Buddha, but no longer does so.[13] Mr Gaucci was involved in seeking to find prospective tenants for the Portland land. Mr Gaucci gave evidence. I accept Mr Gaucci’s evidence
[11]Transcript 96.
[12]Transcript 60.
[13]Transcript 58.
David Gibbs
Mr Gibbs is the managing director of Lord Buddha and through his companies has a majority interest in the Portland land. He is also a director of ICR Property & Investment Group which is the acting manager for the Portland land. His occupation is property developer. He asked Forvale to find a buyer for the Portland land and other properties he owns in Gipps Street, Collingwood and at Greensborough. He did not give Forvale an authority to sell the land until Forvale had a potential purchaser. Mr Gibbs gave evidence. I found Mr Gibbs’ evidence to be unreliable. His recollection was poor. I did not find him to be dishonest.
Erdan Hassan
Mr Hassan is a real estate agent. He was involved in several projects with Mr Harpur. He advised Mr Turner to introduce Mr Harpur to the Portland land. Mr Hassan wanted one third of the commission if this introduction eventuated in a sale. Under the original authority for the sale of the property Mr Hassan was to receive a third of the $1.5 million commission. Mr Hassan did not give evidence.
Paul Harpur
Mr Harpur‘s circumstances are set out below. I found Mr Harpur to be an unreliable witness.
Ronald Hutchins
Mr Hutchins is a director and controller of the estate agent Forvale. He holds a real estate agent’s licence. Mr Hutchins has a real estate agency in Shepparton known as Shepparton Real Estate. In mid 2007, Mr Hutchins decided to act as a real estate agent in Melbourne. He established Forvale. At this stage he met Mr Turner, who held a sub-agent’s licence. Mr Turner agreed to join Mr Hutchins in Forvale on the basis of sharing commissions from vendors he introduced to Forvale. They commenced to work together in about August 2007. As discussed below, Mr Turner managed to secure the sale of the Portland land. It was the first sale made by Forvale. Mr Hutchins gave evidence. I found Mr Hutchins to be an honest and reliable witness. He readily gave evidence against his own interests.
Bronwyn Paltaguou
Ms Paltaguou travelled to Lakes Entrance with Mr Turner and Mr Harpur at the end of January 2008, just before Mr Turner died. Mr Harpur alleges that he discussed his health with Mr Turner on this trip or a previous trip to Lakes Entrance. Ms Paltaguou was introduced to Mr Harpur by Mr Turner as a possible manager of the service apartments in the Lakes Entrance project. Ms Paltaguou did not give evidence.
Michael Ramsen
Mr Ramsen is the managing director of Terrain Capital. Mr Ramsen was introduced to Mr Harpur to see whether he could assist with the development of Mr Harpur’s project CPI. He and Mr Gibbs signed a confidentiality agreement on 19 May 2008[14] when he met with Mr Harpur so that they could discuss CPI. He did not give evidence.
[14]Exhibit P12.
David Rodden
Mr Rodden has an interest in the land at Portland through Lord Buddha, with Mr Gibbs. He did not give evidence.
Gordon Turner
Mr Turner worked with Mr Hutchins for Forvale. He held a sub-agents licence and had an arrangement that he would share certain commissions with Forvale. He secured the sale of the Portland land to Mr Harpur. Sadly, Mr Turner died on 27 January 2008, soon after the contract was signed.
Kenneth Tunbridge
Mr Tunbridge is Mr Harpur’s accountant and business assistant. He also acts as a director of most of Mr Harpur’s companies. He sees himself as a nominal director. Mr Tunbridge is a Certified Practising Accountant and at one stage was a Chartered Accountant. He has been self employed since 1978.[15] Mr Tunbridge now lives at Darlimurla. At the time of the purchase of the Portland land he lived at Mirboo North which is more than two hours from Melbourne. He gave evidence. I found his evidence of little use. He had no real recollection of the events.
[15]Transcript 483.
Peter von Stiegler
Mr von Stiegler was described by Mr Harpur as an overseas partner who he had done a lot of business with in Indonesia. Mr Harpur intended to obtain, through Mr von Stiegler, wealthy Indonesian investors to invest in the Portland land. Mr von Stiegler did not give evidence.
Darren Winjam
Mr Winjam is a qualified valuer. He works in Mr Gibbs’ office.[16] He prepared the brochure regarding the Portland land that was given to Mr Harpur. He was present at the variation meeting on 1 February 2008 for part of the time. He did not give evidence.
[16]Transcript 67.
MR PAUL HENRY HARPUR
Mr Harpur, the first defendant and plaintiff by counterclaim, resides in St Kilda Road, Melbourne. He is a solicitor and an experienced property investor. In 1972 he was admitted as a barrister and solicitor in the Supreme Court of Victoria. Since that time, he has practised law specialising in tax and estate planning under the name Harpur & Co. He ceased to actively practise in about 1990; but has retained his practice and acts for himself in his own legal affairs. He held a practising certificate until June 2008 and renewed it in 2010.[17] He now runs his private companies including a company, Industrial Process Controls Limited, that he has had for 20-30 years designing and selling equipment for testing various types of road materials.[18] He is chairman of the company. It has a general manager who has been with Mr Harpur for 30 years.
[17]Transcript 257.
[18]Transcript 201.
Mr Harpur is the purchaser of the Portland land. He has carried out multiple property developments and at the time of his purchase of the Portland was involved in several other major property developments, including one at Corio that he soon thereafter sold for $6 million.
Mr Harpur’s involvement in property can be described in his own words from the CPI information memorandum issued in about September - November 2007:
Mr Harpur has a long record of successfully creating businesses and a proven ability to make businesses and projects profitable in a global economy.
Since 1980, Mr Harpur has been involved in property development and investment as a consultant, investor, lawyer and developer and owner of industrial and business parks, shopping centres, mixed use developments, showrooms, offices, factories and warehouse premises.
Mr Harpur has extensive experience in acquisition, rezoning, government and authority negotiations, development, leasing and sale of property.[19]
[19]Exhibit P11.
Compound Property Investments
CPI was among the several projects Mr Harpur was involved in at the time he agreed to purchase the Portland land. In about September - November 2007, Mr Harpur launched CPI. Mr Harpur produced an “information memorandum,” similar to a prospectus, dated November 2007[20] whereby CPI sought to raise $20 million consisting of 2,000 shares at $10,000 each. The minimum application was $500,000 and the minimum subscription was $20 million.
[20]Exhibit D2-4.
The prospectus was addressed to “sophisticated investors.” CPI stated in the information memorandum that “property investments will only be acquired if they fall squarely within the category of property with a significant likelihood of achieving an above average long term increase in value (“The Zone of Growth”)”.[21]
[21]Exhibit D2-4, p 9.
The manager of CPI was to be a company controlled by Mr Harpur. Mr Harpur and his accountant Mr Tunbridge were the sole directors of CPI although another director was envisaged. Of the $20 million to be raised; $800,000 was to be paid to Mr Harpur as commission, and a management fee of $700,000 was also to be paid to Mr Harpur.[22]
[22]Exhibit D2-4, p 21.
The CPI information memorandum stated that one of the investment properties that CPI would seek to emulate was Southlink Business Park, a property investment transformed by Mr Harpur from paddocks to a large modern business park.[23] During his cross examination it was put to Mr Harpur that the Portland land was precisely the type of investment that CPI would be interested in. Mr Harpur initially denied that, but eventually conceded it would be “ideal”.[24]
[23]Exhibit D2-4, p 11.
[24]Transcript 274.
CPI did not raise the $20 million in subscriptions. Mr Harpur agreed that a factor in CPI not getting off the ground was the difficulty in getting investors in the face of the global financial crisis.[25]
[25]Transcript 286.
As discussed below, Mr Harpur sought to obtain investors in CPI through Mr Hutchins and Mr Turner as well as Mr Gibbs and Mr Ramsen. The CPI information memorandum of November 2007 was amended in February 2008[26] to seek to raise $100 million.[27]
[26]Showed to Mr Gibbs and Mr Ramsen.
[27]Exhibit P11.
Prior to the Portland purchase, all save one of Mr Harpur’s property transactions had been done through companies including Transpacific Holdings, Consolidated Ventures, Southlink Holdings Pty Ltd, Pasco West Pty Ltd, and Battle Heights Pty Ltd.[28]
[28]Transcript 202.
Mr Harpur’s medical condition
Mr Harpur suffered a stroke on Mother’s Day 1999. He was in critical care at the Epworth Hospital for about six weeks and then hospitalised for another couple of months. He continued to receive treatment after he was discharged.
Mr Harpur says that early on the stroke affected him greatly. He says that he was in a distressed state for quite a while; but there was a significant and gradual improvement in various functions to the point where he was once again able to function in business, “albeit with looking after certain deficits that remained.”[29]
[29]Transcript 203.
Mr Harpur says that he has no trouble in writing or in conceptual thinking. He says that the major defects that he was left with are a memory problem which he says has resulted in some embarrassing matters in terms of appointments and such like; a dependence on people which he had never had before; “and a general inability to pick people in the way I had before.”[30]
[30]Transcript 203.
Mr Hay, counsel for Lord Buddha, asked Mr Harpur whether he explained his incapacities to people he gave the CPI information memorandum to. Mr Harpur said that he did not. It was put to him that he didn’t do so because his incapacities weren’t a major difficulty or problem for him. Mr Harpur replied:
Well, I didn't perceive it was at that stage, I do now. That's for sure.[31]
[31]Transcript 372-373.
In re-examination, Mrs Marks SC asked Mr Harpur at what point did he realise that one of the difficulties he had arising from the stroke was the fact that he was not reading people. Mr Harpur replied:
When these problems festered, or came up - -
Which problems, Mr Harpur?
---I'm sorry. The problem in relation to this contract ---[32]
[32]Transcript 427.
Mr Harpur was cross-examined by Mr Little, counsel for Forvale, about his promoting of CPI without informing those he approached of his incapacities. He readily admitted that he did not inform people of his incapacities, but added that although he had been forewarned about his deficiencies as a result of the stroke he thought he had overcome them.[33] Mr Little also asked Mr Harpur about his application for a practising certificate and, in doing so, his declaring in the application that he was a fit and proper person. Mr Harpur said that he did not consider that he had any major mental impairment.[34]
[33]Transcript 374.
[34]Transcript 375.
Mr Harpur says that in relation to financial issues or mental arithmetic, his faculties suffered quite substantially; but he overcame that by being careful in doing numbers and checking them and also passing them past his accountant, Mr Tunbridge, who has been with him for about 30 years.[35]
[35]Transcript 203.
Mr Harpur says that Mr Tunbridge accompanies him to most business meetings and he also drives him to a lot of those appointments. He says that if he is going to do something he will review it together with Mr Tunbridge so he does not make any silly mistakes.[36] He plans his days with Mr Tunbridge. Mr Harpur says that he usually passes his business letters through Mr Tunbridge. Mr Harpur says that Mr Tunbridge always discusses tax matters with him. He says that Mr Tunbridge is a combination of accountant and to some extent a PA as well.[37]
[36]Transcript 204.
[37]Transcript 204.
Mr Harpur says that so far as his property development business is concerned, Mr Tunbridge is involved. He makes sure that Mr Harpur does not forget anything and does the numbers after discussing with Mr Harpur what might be achieved or what he might do with a particular development.[38] Mr Harpur says that Mr Tunbridge gets involved in feasibility studies and things of that nature. He says that Mr Tunbridge is normally involved in making decisions about properties to purchase or invest in, but not always.[39]
[38]Transcript 204.
[39]Transcript 204.
Mr Hay asked Mr Harpur about his involvement in the South Link Business Park where he managed all the design and plans. Mr Harpur also managed the construction of the subdivision. Mr Harpur has developed the Arndale Civic Shopping Centre, the Templestowe Shopping Centre, the Noble Park Business Park, the South Link Business Park, the Springvale Shopping Centre and Geelong Gate.
In June 2007, Mr Harpur through South Link Holdings agreed to buy a property development at Lakes Entrance for $4.2 million. South Link Holdings has now taken proceedings against the vendor making similar allegations against its agent Mr Erden Hussein as now made against Mr Turner.[40] Mr Harpur agrees that he entered into that transaction without a solicitor acting for him.[41]
[40]Transcript 262-263, exhibit P24 (statement of claim re Lakes Entrance purchase).
[41]Exhibit P23.
Mr Harpur agreed that in the CPI information memorandum he held himself out as a highly competent person able to make business decisions on behalf of the investors.[42]
[42]Transcript 260.
Mr Tunbridge’s observations on Mr Harpur’s abilities
Mr Tunbridge provides Mr Harpur with accounting services including bookkeeping, looking after payment of accounts and tax returns.[43] He also helps Mr Harpur with research work. The research involves company searches and internet research. Mr Tunbridge discusses and advises Mr Harpur on business matters that arise on a day to day basis. Mr Tunbridge says that Mr Harpur has a network of people in various fields that he looks to for advice.[44] Mr Tunbridge sees Mr Harpur on average once a week.[45]
[43]Transcript 485.
[44]Transcript 487.
[45]Transcript 487.
After Mr Harpur had his stroke, Mr Tunbridge became far more involved in his day to day business affairs.[46] He acts more as a personal assistant than he did before his stroke. He makes sure Mr Harpur keeps his appointments and that he keeps his affairs under control. Mr Tunbridge ensures Mr Harpur’s accounts are paid. He accompanies him to business meetings at times, and looks after cheque books and the records of his companies. Mr Tunbridge draws cheques and makes electronic payments.
[46]Transcript 486.
Mr Tunbridge says that Mr Harpur has become far more reliant on other people on a day to day basis. He says Mr Harpur has become less confident in himself. He tends to rely on his advisers in far more depth. Mr Tunbridge says that at times Mr Harpur is not as sharp as he was before the stroke.
Mr Harpur’s trip to Corio with Mr Hutchins
It was put to Mr Harpur that the first time he told Mr Hutchins of his stroke and his related disabilities was in a trip he made with Mr Hutchins to his Corio development in late May 2008. Mr Harpur claimed he had told Mr Hutchins earlier although he could not identify any specific conversation.[47]
[47]Transcript 392.
Mr Hutchins gave detailed evidence about what Mr Harpur told him. His evidence was as follows.[48]
[48]Transcript 619.
Mr Hutchins drove Mr Harpur to Geelong in late May 2008. Mr Hutchins asked Mr Harpur if he drove. Mr Harpur explained he did not drive at all as back in 1999 he had had a stroke and he had taken it on himself that he did not want to drive anymore. Mr Harpur said “because you don’t know when you’re having the stroke and you don’t know if you’re going to have the next one.” He said that he had made his own decision that he would not drive.
Mr Harpur told Mr Hutchins that his stroke had affected his short term memory, and that he sometimes did not pick up points as quickly as he would have before the stroke.[49]
[49]Transcript 620.
Mr Hutchins said he was fairly surprised to hear this. He said that in all the dealings he had had with Mr Harpur from the time he met Mr Harpur till then, Mr Harpur had never shown any real signs of forgetting anything with him. Mr Harpur was always very much on the ball in conversations they were having and Mr Hutchins was a bit surprised that it had affected his health that much.[50] Mr Hutchins did not know anything about Mr Harpur’s disabilities prior to the trip to Corio.
[50]Transcript 620.
Mr Hutchins said that previously Mr Harpur may have said he had had a stroke. He said that may have come up when they were talking about treatment Mr Hutchins was getting at a Melbourne hospital.
Mr Hutchins says that Mr Turner did not ever tell him about any illness Mr Harpur may have had.[51]
[51]Transcript 621.
Dr Peter McArdle’s opinion on Mr Harpur’s medical condition
Dr Peter McArdle, consultant psychiatrist, gave evidence of Mr Harpur’s medical condition. Dr McArdle was asked to give a report for this case. His written report was tendered in evidence.[52] Dr McArdle first saw Mr Harpur in 1999 when, following his stroke, Mr Harpur was referred to Dr McArdle for an assessment of depression.
[52]Exhibit D10.
For the purpose of giving his report, Dr McArdle saw Mr Harpur once on 1 March 2011. When Dr McArdle saw Mr Harpur for the purposes of preparing a report for this hearing, Dr McArdle had not seen Mr Harpur since the early 2000s. On 1 March 2011, Dr McArdle carried out on Mr Harpur a number of cognitive tests. He noted that Mr Harpur had impairments in short term recall and mild impairments in orientation. He said other areas of difficulty were in drawing complex diagrams but Mr Harpur could follow a series of commands and only had some mild inaccuracies on complex commands.
Dr McArdle says that tests of abstract reasoning such as understanding proverbs were all normal. On reviewing his notes, he said:
…it would appear Mr Harpur’s cognitive function in some areas improved slightly from 2003 but has probably remained much the same overall. He still has a very significant impairment in short term recall and memory and to a lesser degree in language function.
Mr Harpur told Dr McArdle that, in regard to the issues in this case, he was not capable of doing the level of due diligence about transactions that he had in the past and that he trusts people who help him more than he might have in the past.
Dr McArdle says that Mr Harpur informed him that “this was a factor in him misjudging the people he was dealing with and that he came under the [sic] influence or undue influence in this particular matter.”[53] Dr McArdle did not carry out any tests to confirm whether or not what Mr Harpur was telling him was indeed the case. Dr McArdle said, however, that this was “consistent” with Mr Harpur’s cognitive impairment and the need to rely on others to successfully continue work.[54]
[53]Exhibit D10, 2.
[54]Transcript 441.
Dr McArdle said that:
I believe that Mr Harpur’s ability to make judgments as to his own best interests, has been impaired over the period since his stroke. I think there is ample evidence that he would rely on others including his wife, family and those around him, to assist him in maintaining his business and to make decisions. It is my opinion that anyone with the cognitive impairments Mr Harpur has coped with would need to rely on others to successfully continue to work, as they would support him in areas he struggles with such as recall, memory, organisation and dealing with the detail.[55]
[55]Exhibit P11, 4.
Under cross-examination, Dr McArdle agreed that due to Mr Harpur’s impaired short term recall he may not accurately recall what Forvale said to him in relation to the Portland land.
THE ALLEGED REPRESENTATIONS
Before dealing with the relevant facts, it is useful to set out the precise representations that Mr Harper alleges were made which he claims were false or misleading. During final addresses, four of the alleged representations were withdrawn. Those representations alleged and withdrawn are as follows.
Lord Buddha represented that:
(1) [Lord Buddha] had a magnificent opportunity to buy some land ready for development at Portland;
(2)[the plan entitled “Preliminary Site Development Plan” showed the sorts of uses the property could be put;] not pursued;
(3)the Plaintiff and its principal David Gibbs held an option over the land directly to the south of the property which was owned by the local council which land could be purchased by him as well;
(4)there were other people who were interested in purchasing the property including Mark Casey;
(5)[the property could be used for:
(i)a bulky goods store;
(ii)a shopping centre;
(iii)a residential development, including an aged care village and assisted care facility;] not pursued;
(6)the Plaintiff had a number of tenants lined up for the site including “restricted retail tenants”;
(7)Coles and Aldi were available, and wanted to go there, as tenants;
(8)Cheap as Chips, Mitre 10 and Bunnings wanted to go there to take a lease for a bulky goods store in the project;
(9)there were other prospective purchasers who were interested or keen to buy the property at a price of $6.5 million;
(10)there was a valuation in existence which valued the property at $6.5 million;
(11)[there were buyers for a retirement village at the other end of the property;] not pursued;
(12)[the Defendant could sell the retirement village to Mark Casey;] not pursued;
(13)[the local council were prepared to rezone the property to allow development of a shopping centre.] not pursued.
The representations are alleged to be partly in writing, partly oral and partly to be implied.
Insofar as they are in writing, they were contained in:
(a) the Preliminary Site Development Plan that was handed to Mr Harpur by Mr Turner at the offices of Forvale in or about early December 2007;[56]
[56]Exhibit D5.
(b) a document showing calculations and projections made by Mr Turner in respect of the property and its developments;
(c) a note made by Mr Harpur on Sahid Jaya Hotel paper.[57]
[57]Exhibit D8.
The calculation document was not tendered. It has been lost. Mr Harpur gave evidence of its contents. During the case Mr Harpur also relied on the promotional brochure[58] and the concept plan that is annexure A.[59]
[58]Exhibit D7.
[59]Exhibit D6.
CHRONOLOGY OF EVENTS
The Portland land
In March 2006, Lord Buddha Pty Ltd agreed to purchase a block of land at the corner of the Henty Highway and New Street Portland for $1.1 million plus GST making a total price of $1,210,000.[60] The Portland land is approximately 7.6 hectares (18 acres) in size and consists of five separate titles. The negotiations were conducted between Mr Gaucci for Lord Buddha and the agent for the vendor, Michael Barrett, an estate agent employed by Coastal Real Estate that has offices in Portland.[61]
[60]Transcript 157.
[61]Transcript 141.
Lord Buddha acts as the trustee of a unit trust. The Portland land is the only land Lord Buddha owns. Initially, Mr Larry Dimarzie owned units in the trust along with Mr Charles Gaucci. Now, however, Mr Gibbs and Mr Rodden are the sole unit holders.
Power, telephone, water, sewerage and gas were close by but had not been connected to the property. At the time the land was offered to Mr Harpur it remained an undeveloped paddock.[62]
[62]Transcript 157.
The Portland land is zoned B4 which means that retail premises selling bulky goods could be built on the land but not retail premises such as a supermarket. To build retail premises for non bulky goods on the land a part of it would have to be rezoned to B1. The Portland land is situated on a ring road that carries heavy traffic around the outskirts of the Portland Township to the Port of Portland. Portland has a shopping centre in the centre of the town (the CBD) and the development of the Portland land for retail use would compete with the shops in the town centre.
David Gibbs’ acquisition and plans for the Portland land.
Some time in 2007, Mr Gibbs was approached by Mr Gaucci to acquire the interest of Mr Dimarzie in the Portland land. Mr Gibbs agreed to do so.[63] Mr Gibbs paid Mr Dimarzie a premium of $150,000 over the purchase price of the Portland land.[64] At that time, the other unit holders were Mr Gaucci and Mr Rodden.[65] As noted, Mr Gibbs and Mr Rodden are now the sole unit holders.
[63]Transcript 59.
[64]Transcript 59.
[65]Transcript 58.
Initially, the purchase of the Portland land was to settle in January 2007, but the settlement was extended to March 2007.[66] Prior to settlement, Mr Gibbs took his interest in the unit trust. His interest is the majority interest.[67] The purchase was settled on 15 March 2007.[68] On 24 March 2007, Lord Buddha mortgaged the land to the Bendigo Bank.[69]
[66]Transcript 111.
[67]Transcript 59.
[68]Courtbook 2329 - 2331.
[69]Courtbook 272.
Mr Gibbs bought the land with the intention of developing it or reselling the land with an improved zoning. Mr Gibbs began the process of seeking to have the land or part of it rezoned B1 to allow small commercial premises to be built and operated. After the contract of sale was signed, Mr Gaucci asked Mr Barrett to seek out potential buyers for some of the lots, or possible tenants. Mr Barrett was told of Lord Buddha’s plans including building a homemaker’s centre and establishing a large fuel outlet on the corner. Mr Barrett says that his agency put up a sign on the property that attracted some interest.
A concept plan for the Portland land was prepared.[70] The concept plan showed possible zonings and uses for the land. Mr Gibbs arranged for it to be included in a promotional brochure given to potential buyers or tenants.
[70]The plan is annexed as annexure A.
The presentation to the Glenelg Council
On 9 October 2007, Mr Gibbs made a power point presentation to a Councillor’s Workshop of the Glenelg Council, including the council management team and the CEO of the council,[71] for a possible rezoning of the site and a proposed redevelopment.[72] Darren Winjam, who works for ICR Property & Investment Group, prepared the power point presentation which included the concept plan.[73] A hard copy of the presentation was prepared.[74]
[71]See Mr Barrett’s email of 29 August 2007, exhibit P18.
[72]Transcript 41; exhibit P1.
[73]Transcript 74.
[74]Exhibit P1.
Mr Gibbs’ presentation took about half an hour.[75] There were some questions at the end which “indicated strong interest in it.” Mr Barrett spoke to Mr Hornby, one of the senior officers of the council, the next day. Mr Barrett says that Mr Hornby informed him the council were “very, very interested in the proposal and generally speaking supported it fully, so it was a very favourable response.”[76] Mr Barrett also says that he was told by Mr Hornby that the council would do whatever they could to help Lord Buddha in their preparation process to put the project forward and go through the necessary council processes.[77] Under cross-examination Mr Barrett said that Mr Hornby indicated that in general all of the councillors were supportive and he saw no reason why it could not go ahead.[78]
[75]Mr Barrett gave detailed evidence of how the presentation was conducted.
[76]Transcript 156.
[77]Transcript 156.
[78]Transcript 163.
Mr Gibbs was cross-examined by Mrs Marks SC, senior counsel for Mr Harpur, about representations he made in the presentation. In particular he was taken to the statement that strong interest had been received from supermarket operators and that “other traditional homemaker tenants have indicated their commitment to the site should we secure a supermarket for the site.”[79] He was asked whether that was the interest expressed by Safeway mentioned below.[80] He said: “no, also I think at that time we had Aldi, um, at which Charles [Gaucci] (indistinct), um, we were also talking about another IGA supermarket.”[81] Mr Gibbs said that he did not believe they had been “knocked back” by Aldi and IGA, as was put to him by Mrs Marks SC.[82]
[79]Exhibit P1 at 2469.
[80]See paragraph 96 of this judgment.
[81]Transcript 75.
[82]Transcript 76.
After the presentation Mr Gibbs spoke to Mr Stuart Burbank, the development manager or “head guy” from the council.[83] Mr Gibbs said that Mr Burbank told him that if they came up with some tenancies that were new to the town, that they [the Council] would review things at that time, and the council were not sure whether to go ahead with the rezoning.[84] Mr Gibbs explained to the Court that the council were concerned about the reaction of the existing retail community in the city area of Portland to a shopping development on the outskirts of town.
[83]Transcript 42.
[84]Transcript 43.
The retirement village
Mr Barrett says that on 6 July 2007 he met with Mr Gibbs in Portland. Mr Gibbs told Mr Barrett that Lord Buddha was looking to build a retirement village on the western end of the Portland land. Mr Barrett was asked about the land immediately to the south. He advised Mr Gibbs that it was owned by the council. Mr Barrett was instructed by Mr Gibbs to find out if the council would be prepared to sell the land to the south. Mr Barrett approached Mr Hornby. Mr Hornby told Mr Barrett that the council were very open to the idea subject to normal council processes for selling a property.[85]
[85]Transcript 148.
Under cross-examination, Mr Gibbs said that the council were very keen to see something happen about a retirement village as the council had recently lost some [aged care] beds.[86] Mr Gibbs said that the proposed aged care facility and retirement village was to be built partly on the Portland land and partly on adjacent land owned by the City of Glenelg. Mr Gibbs said that he had Mr Barrett approach the council.
[86]Transcript 90.
Mr Barrett indicated to Mr Gibbs that the council would sell the adjacent land to him for $350,000 approximately. “They wanted to see it happen….I mean he [Michael Barrett] said you can have an option, but it was an informal option, it was never formalised, it was never signed off or anything along those lines.”[87] Mr Gibbs agreed that he had an informal option.[88] He agreed that he told Mr Turner that.[89] He said “[y]es I indicated that council would look at selling the land and rezone potentially part of it to a retirement village in the future, absolutely.”[90] He said that they had enough information from the council that the council wanted to talk further about the proposal.[91] Mr Gibbs denied telling Mr Turner he had an option to purchase the land.[92] Mr Gibbs said that “we potentially could get an option over the land was the way it was described to him, as it always is.”[93]
Mr Gibbs’ approaches to potential tenants
[87]Transcript 90-91.
[88]Transcript 91.
[89]Transcript 91.
[90]Transcript 91.
[91]Transcript 45.
[92]Transcript 92.
[93]Transcript 92.
After acquiring his interest in the Portland land, Mr Gibbs approached two potential tenants. He spoke to Mr Martin Lion and Mr Matt or Tim McMillan of Woolworths [Safeway].[94] He was told that it was probably three to five years before Woolworths would actually look further at the property.[95] Mr Gibbs said he also spoke to Nick and Paul Adrankos of Milemaker Petroleum.[96] Mr Gibbs said he handed over these discussions to Mr Gaucci.[97] Mr Gibbs said that Mr Gaucci was the agent on the property and the person who approached potential tenants.[98]
[94]Transcript 60.
[95]Transcript 42.
[96]Transcript 61.
[97]Transcript 61.
[98]Transcript 60.
Mr Gibbs explained that the promotional brochure headed ICR Property Investment Group “The Gateway”[99] was provided to Mr Gaucci to show to potential tenants. Mr Gibbs said that they had interest from several tenants but they would not commit unless they had an anchor tenant. He said that they were still dealing with Bunnings, “even to this day,” but Bunnings was putting a decision off for another year or two.[100]
[99]Exhibit P2.
[100]Transcript 43.
Mr Gibbs said that the proposed development he had in mind is described in the promotional brochure.[101] He agreed that the proposed supermarket and speciality shops would require a rezoning to B1.
[101]Exhibit P2, 28.
Mr Barrett’s and Mr Gaucci’s attempts to attract tenants and buyers
Mr Barrett says that he was retained by Mr Gaucci to find tenants and buyers for the Portland land.
Most of the discussions Mr Gaucci had with potential tenants were between April and August 2006. At that time the Portland land was under contract, but settlement with Lord Buddha did not take place until the following March.[102] Mr Gaucci kept a diary entry of his contact with the potential tenants that he referred to during his evidence.[103]
[102]Transcript 111.
[103]Exhibit P16.
Mr Gaucci conceded under cross-examination that the bulk of his activity in pursuing tenants was before settlement. He said that after Mr Gibbs became the major partner in the project he “pulled back” a little in actively canvassing tenants.[104]
[104]Transcript 112.
Mr Gaucci says he predominantly spent his time seeking businesses suitable for B4 zoned land, such as bulky good, fast food, factories and showrooms.[105]
[105]Transcript 96-97.
I will only deal with the prospective tenants that were mentioned by Mr Harpur in his evidence or referred to by him in his amended counterclaim. There were many other potential tenants approached. None of them committed to the project.[106]
[106]These are referred to in annexure B.
Aldi
Mr Gaucci had discussions with Mernique Ivokovic of Aldi.[107] Mr Gaucci said that Aldi were looking to get into Portland and they subsequently developed a site in the centre of town.[108] Mr Barrett says he never offered the site to Aldi as he helped secure land for it in the CBD where they built a supermarket.[109]
[107]Transcript 101.
[108]Transcript 102.
[109]Transcript 160.
Betta Electrical
Mr Barrett approached the owner of Betta Electrical, Tony Fleming. His current store was too small, but he was concerned that the minimum requirement for a B4 site was about a thousand square metres.[110] I infer that he did not commit to the site.
[110]Transcript 150.
Bunnings
Mr Gaucci said “we” spoke to Tim Schaeffer of Bunnings.[111] Mr Gaucci said that he was the state property manager or the acquisition manager. Mr Gaucci said that “we” provided Mr Schaeffer with a concept plan for the site that demonstrated how “we” saw the site being developed.[112] He was asked how he left the situation with Bunnings. Mr Gaucci said “…ultimately, and we’re still in discussion with Bunnings to this day, at that point in time it was too soon for Bunnings.”[113]
[111]Transcript 98.
[112]Transcript 98.
[113]Transcript 98.
Mr Gaucci was asked why that was and he said:
Bunnings, with a town the size of Portland, they probably had greater priorities and, ah, just the demographics et cetera for their model and also with Bunnings they have a standard format large box of about eight to 10,000 metres, they were in the process of finding a smaller model and they hadn't refined that smaller model for regional areas such as Portland and towns of that size and demographic mix.[114]
[114]Transcript 98.
Cheap as Chips
Mr Gaucci’s diary referred to Paula Allard from Cheap as Chips. He said that their requirements would mean the site would need to be rezoned. Mr Gaucci said that Lord Buddha did not take that to the next level and apply for a rezone to see if they could secure them. Mr Gaucci said “[a]gain we were more interested in a supermarket or Bunnings, but we felt that that sort of user could come in time if we’d gone to the next stage.”[115]
[115]Transcript 106.
Coles
Mr Gaucci said that if they could rezone part of the land, they would have ideally liked a supermarket. He said “we” had discussions with Jeff Tampling of Coles.[116] Mr Gaucci said that Coles’ preference was to go into the CBD but there were limited opportunities. He said that Coles were interested in the Portland land and, similar to Bunnings, asked for plans but it never went any further than that.[117]
[116]Transcript 101.
[117]Transcript 102.
Mr Barrett had direct dealings with representatives of Coles. On 20 March 2007 he met with two directors of Jacque - a company which scouts for properties - Richard Cabricki and Geoff Andrews, who were acting for Coles Supermarkets and looking for a site in Portland. Mr Barrett prepared details on five potential sites including the Portland land.[118] Mr Garry Perrin, the economic development manager for the Council, also attended the meeting.[119] The supermarket would have required the Portland land to be rezoned. Mr Barrett said that Mr Perrin advised the meeting that he thought the rezoning was “doable.”[120] A couple of months later, Mr Barrett was advised that Coles wished to proceed to seek land to commence building a supermarket in Portland. Subsequently, Wesfarmers purchased Coles. Mr Barrett was then told that Wesfarmers wanted land for a Bunnings store. At that stage, Mr Barrett had met Mr Gibbs and Mr Barrett discussed with Mr Gaucci and Mr Gibbs the Bunnings proposal.[121]
[118]Exhibit P17.
[119]Transcript 143.
[120]Transcript 144.
[121]Transcript 146.
Under cross-examination Mr Barrett added that Mr Perrin said that while he could not give a definite commitment, the rezoning was possible subject to normal processes.[122] On 6 July 2007, Mr Gibbs came to Portland and instructed Mr Barrett to offer Jaques one of the five titles of about 20,000 square metres for Bunnings.
[122]Transcript 161.
Under cross-examination, Mr Barrett agreed that by June 2007 Coles had made it clear they were not going to proceed with the site.[123] He also agreed that Coles did not wish to proceed with a Coles Express outlet on the Portland land.[124]
[123]Transcript 160.
[124]Transcript 160.
Mitre 10
Mr Gaucci says he met with Kent Barker, the local Mitre 10 operator. Mr Gaucci says that Mr Barker expressed strong interest in the site.[125] Mr Gaucci said “at the end of the day we declined to take that any further because we just didn’t think that was the right user to create the drawcard for the development.”
[125]Transcript 103.
Mr Barrett said that:
… around… July 2007, we… got quite serious about looking for tenants and I spoke to, ah, Kent Barker of the local Mitre 10 franchise. He was looking to expand his business… he had a CBD site which was very small, his lease was coming up for rent - for review, I should say, and he was looking for a larger site and,… I spoke to him about the proposed development and he was very interested in… being part of this homemaker centre. And his requirements were about eight to 10,000 square metres, which was quite a large site and he was… interested in the idea that Mr Gibbs may build this new building for him… to put his Mitre 10… retail outlet in, which would have been hardware and timber and… garden supplies. And… he was interested in possibly… he would lease that property back with possibly an option to buy… so he was very interested in that proposal and wanted to be kept informed because he… didn't have enough land in his current site in the middle of the CBD.
So how did he leave it - with Mr Barker…?
… well I… conveyed that to Mr Gibbs and he certainly… said to me that he was very keen on supporting any proposal with Mr Barker and Mr Barker continued to deliberate about that, but it didn't… proceed any further at that time.
And why was that?
… I think he was content to stay where he was,… and also I think the timeframe of the new development might have been against him a little,… he had to sign a lease where he was and he sort of needed to make a decision one way or the other, so he decided to stay where he was. But he wanted to be kept informed about the development down the track because … he felt that he may be able to keep his CBD site as well as perhaps developing an external site. I mean, everybody in Portland knew that this - if this gateway development came off, it would be… a very big thing and people wanted to be part of it. It was going to be an important development for Portland.[126]
[126]Transcript 149.
It appears from this evidence that by the time the land was offered to Mr Harpur, Mr Barker had re-signed his lease in the Portland CBD and merely wished to be kept informed about the development down the track.
Scotts Petroleum
Mr Gaucci said that “we” had a meeting with Jeremy Scott of Scotts Petroleum on the site around 2006 or thereabouts. He said that Scotts were looking to buy a portion of the site as the pulp mill was to go ahead at that time. He said that did not go anywhere.[127]
[127]Transcript 104.
As can be seen from this evidence, by December 2007 no prospective bulky goods tenant had expressed an intention to be part of the development nor had a B1 tenant.
Mr Gibbs’ retainer of Mr Turner to sell the Portland land
In about September 2007, Mr Gibbs approached Mr Turner to sell the Portland land.[128] Mr Gibbs said that he had several conversations with Mr Turner about the Portland land. He said that those conversations were on the basis that it was B4 land; but part of the land had potential to be rezoned B1. He also told Mr Turner that the site had potential down the track for a possible retirement village.
[128]Transcript 45.
Mr Gibb said that Mr Turner told him that he may have a few interested party because Mr Turner had been involved in that type of area before, and had sold quite a number of regional properties.[129]
[129]Transcript 45-46; 79.
Mr Gibbs was asked whether a price was discussed. Mr Gibbs said that at that stage he was happy with $5 million clear. He said that anything over $5 million Mr Turner could keep.[130] Mrs Marks SC cross-examined Mr Gibbs about the price he wanted. Mr Gibbs said that there was a valuation of $3.5 million by Les Speed of Western District Valuation when they purchased the Portland land.[131] Mr Gibbs said that there was also a valuation done by John McAnn at some stage around the $5 million mark. He then admitted that this valuation was done on 23 March 2009, after the sale of the land to Mr Harpur.[132] He said that he thought the property was worth $5 million and “it could have been up to six.”[133] Under cross-examination by Mrs Marks SC, Mr Gibbs conceded that he might have agreed with Mr Turner that the asking price would be $6.5 million. He said that he did not remember.[134]
[130]Transcript 46.
[131]Transcript 80.
[132]Transcript 81.
[133]Transcript 81.
[134]Transcript 82.
Mr Gibbs said that he first learnt of Mr Harpur’s interest in the land when he met with Mr Turner at his home at Mount Martha to sign the sale authority at about 10.30am on 3 December 2007.[135] Mr Gibbs said that Mr Turner told him that Mr Harpur was a very experienced developer; that he had been around for approximately 20 years; that he had done numerous projects in regional areas as well as the city; and, was a very seasoned developer.[136]
[135]Transcript 46.
[136]Transcript 46.
Mr Gibbs said that there was another potential buyer mentioned by Mr Turner, Mark Casey, but his interest might have lay in the retirement village only.[137] Mr Gibbs said “that was also put on hold later on.”[138]
[137]Transcript 45-46.
[138]Transcript 46, see also cross-examination at 79-80.
Mr Harpur’s introduction to Forvale
As mentioned above, in the second half of 2007 Mr Harpur was involved in a development at Lakes Entrance where a hotel style building was to be constructed. He met Mr Turner and Mr Hutchins when he visited a builder, Maxcon, in Flinders Lane to obtain building costs for the Lakes Entrance project. Forvale was located in a small office on the same floor as Maxcon.
Mr Hutchins said that he first met Mr Harpur in early October 2007 at Forvale’s office in Flinders Lane.[139] Mr Harpur was visiting Mr Turner. Mr Harpur was seeking Mr Turner’s help in finding a person to manage some 90 apartments at the Lakes Entrance development.[140] The Lakes Entrance project included serviced apartments that required a manager to manage the units. Mr Turner introduced Mr Harpur to a Bronwyn Paltaguou who was experienced in conducting serviced apartments. Mr Harpur discussed with her taking a head lease at the Lakes Entrance development. Mr Hutchins said that Mr Harpur visited Forvale’s office a number of times to see Mr Turner.
[139]Transcript 574.
[140]Transcript 575.
At their first meeting, Mr Hutchins said Mr Harpur told him that he was a lawyer specialising in tax minimisation and that he developed properties. He offered to help Mr Hutchins in that area.[141] Mr Harpur told Mr Hutchins about property he had developed at Corio and in Dandenong. Mr Harpur says that he liked Mr Turner and Mr Hutchins.
[141]Transcript 576.
Mr Turner sought to sell to Mr Harpur a project in Flemington for the construction of residential apartments. Mr Turner showed Mr Harpur the certified plans and permits prepared and obtained for the redevelopment. Mr Harpur spoke glowingly of Mr Turner’s thoroughness in presenting him with all the relevant documents. At one stage, Mr Harpur implied that these documents were prepared by Mr Turner himself.[142] In cross-examination he conceded that they were prepared by others.
[142]Transcript 206, line 29.
Mr Turner prepared for Mr Harpur a marketing report setting out estimated realisable prices for each of the apartments in the Flemington project. Mr Harpur and Mr Turner met with Macquarie Bank to inquire about their interest in financing the project. Mr Turner prepared some costings that he provided to Macquarie Bank who decided not to proceed with the project.[143]
[143]Transcript 207.
Mr Harpur tendered some calculations of sale prices prepared by Mr Turner for the Lakes Entrance project, set out on a sheet of paper.[144] Mr Harpur said that he used the costings to do feasibilities on the project and to provide information to potential financiers.[145]
[144]Exhibit D4, transcript 208.
[145]Transcript 211.
I took this evidence to be relevant to Mr Harpur’s reliance on Mr Turner’s abilities to calculate the feasibility of a development project. It also tended to show that if there were relevant documents for a property development project that Mr Turner was able to get them together to show to Mr Harpur.
Over a period of about three months, Mr Harpur met with Mr Turner weekly about the Lakes Entrance project. Mr Turner drove Mr Harpur to the Flemington project and the Lakes Entrance project, perhaps twice, where on one occasion they stayed overnight.[146]
[146]Transcript 212.
Health discussions between Mr Turner and Mr Harpur
Mr Harpur says that when they were at Lakes Entrance they discussed their health quite extensively. He said that Mr Turner had problems with his heart and “I guess my reciprocation was the problem I’d had when I was at the Epworth Hospital, so Gordon knew all about it.”[147]
[147]Transcript 212.
Mr Harpur was asked what he told Mr Turner. He said he could not remember specifically. He said he was accurate about what had happened,
… so I would have told him that I'd had the stroke, I'd been in hospital for an extended period of time. I would have told him how bad it was in the beginning and how relieved I was that things had improved substantially. I would have told him that the reason I didn't drive was that not only had I had the stroke, but I had a couple of seizures and when they happened, I went on medication for that. But the potential to have something go wrong with a seizure was just something I wasn't prepared to take any risk of.[148]
[148]Transcript 212-213.
(c) offer gifts, prizes or other free items with the intention of not providing them or of not providing them
…
At the relevant time, s 11 of the FairTrading Act 1999 (Vic) provided:
11 Misleading conduct in relation to services
A person must not, in trade or commerce, engage in conduct that is liable to mislead the public as to the nature, the characteristics, the suitability for their purpose or the quantity of any services.
Did the representation constitute misleading or deceptive conduct?
As outlined above, I have found that the representations were misleading and deceptive.
For conduct to be misleading or deceptive, it is not necessary that it convey an express or implied representation.[414] It is sufficient that the conduct leads or is likely to lead another party into error.[415] In this case, however, Mr Harpur has relied on precise representations. Whether or not conduct amounts to a representation is a question of fact to be decided by considering what was said and done against the background of all surrounding circumstances.[416] In order for conduct to contravene s 52, it is not necessary for the conduct to be the sole cause of a person being misled or deceived.[417] Recovery under s 52 is
‘...founded by the applicant’s actual reliance upon the misleading or deceptive conduct of the respondent although that conduct was not the only factor in the applicant’s decision to enter a particular agreement, and although the applicant did not seek to verify the representation or did so inadequately and so failed to discover their falsity.’[418]
[414]Butcher v Lachlan Elder Realty Pty Ltd (Butcher) (2004) 218 CLR 592, 603 [32], per Gleeson CJ, Hayne and Heydon JJ; Miller v BMW (Miller) (2010) 241 CLR 357, 368 [15], per French CJ and Kiefel J.
[415]Johnson Tiles Pty Ltd v Esso Australia Ltd (2000) 104 FCR 564, 589 [63], per French J (with whom Beaumont and Finkelstein JJ agreed); Miller, 368 [15].
[416]Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 at 202 (Deane and Fitzgerald JJ) cited with approval by the High Court of Australia in Campomar v Nike International (2000) 202 CLR 45, [100] (Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ).
[417]Butcher, 638 [150] (McHugh, J).
[418]Henjo Investments Pty Ltd v Collins (1988) 39 FCR 546, 558–559.
I find that the misleading or deceptive representations did constitute misleading or deceptive conduct contrary to s 52 and s 11.
Did Mr Harpur rely on the representations?
In Civoken v Madden Grove,[419] Whelan J set out the principles which apply where it is alleged that misleading representations induced a particular course of conduct. Whelan J was quoting from McHugh J in Butcher[420] when he said the following principles apply:
(1) The complainant must rely on the representation or conduct.
(2) If a material representation is made … which is calculated to induce the complainant to enter into a contract and that person in fact enters into the contract, an inference arises that the person was induced to do so by the representation or the conduct.
(3) The inference may be rebutted by showing, for example, that the complainant, before entering into the contract, had actual knowledge of the true facts and knew them to be true or that the complainant did not rely on the representation or the conduct.
(4) The representation or conduct need not be the sole inducement. It is sufficient that it played some part, even if only a minor part, in contributing to the formation of the contract.
[419](Civoken) [2006] VSC 283 [522].
[420]Butcher, 638 [150].
In his submissions, Mr Little, on behalf of Forvale, stated that Mr Harpur must establish as a threshold consideration that he held a mistaken belief as a result of something said to him.[421]
[421]Steutel & Anor v Kimple Pty Ltd [2005] VSCA 312 [32] and [47] per Chernov JA.
I find the misleading representations made by Lord Buddha, as referred to above, were made to induce Mr Harpur to enter into the contract for the sale of the Portland land. I find that Mr Harpur relied on these representations and I infer that he did enter the contract based on these inducements. I find that Mr Harpur did not have actual knowledge of the true facts in relation to the above representations and therefore the inference has not been rebutted.
I find that the representations were not the sole inducement. I find, however, that they played some part in contributing to Mr Harpur’s decision to buy the property.
LIABILITY FOR THE MISLEADING AND DECEPTIVE REPRESENTATIONS MADE BY MR TURNER
Under s 84 of the Trade Practices Act 1974, conduct engaged in by an agent of a body corporate is deemed to have also been engaged in by the body corporate. Section 84 provides:
84 Conduct by directors, servants or agents
(1) Where, in a proceeding under this Part in respect of conduct engaged in by a body corporate, being conduct in relation to which section 46 or 46A or Part IVA, IVB, V, VB or VC applies, it is necessary to establish the state of mind of the body corporate, it is sufficient to show that a director, servant or agent of the body corporate, being a director, servant or agent by whom the conduct was engaged in within the scope of the person’s actual or apparent authority, had that state of mind.
(2) Any conduct engaged in on behalf of a body corporate:
(a) by a director, servant or agent of the body corporate within the scope of the person’s actual or apparent authority; or
(b) by any other person at the direction or with the consent or agreement (whether express or implied) of a director, servant or agent of the body corporate, where the giving of the direction, consent or agreement is within the scope of the actual or apparent authority of the director, servant or agent;
shall be deemed, for the purposes of this Act, to have been engaged in also by the body corporate.
…
Mr Turner was acting as an agent for Forvale. He had a sub-agent’s licence and made representations about the Portland land based on information given to him by Mr Gibbs. On 3 December 2007, Mr Turner, on behalf of Forvale, obtained an authority from Lord Buddha to sell the Portland land for $6.5 million. Thus, clearly, Forvale was acting as an agent for Lord Buddha. I find that Lord Buddha is deemed to have engaged in the misleading and deceptive conduct of Mr Turner.[422]
[422]Section 84 of the Trade Practices Act 1974.
Is Forvale liable for the representations of Mr Turner?
Mr Harpur also alleges that Forvale engaged in the misleading and deceptive conduct as alleged against Lord Buddha.
Forvale contends that it did not, by the conduct of Mr Turner, engage in misleading or deceptive conduct. It relies on a line of authorities that distinguishes between the liability of the agent and the agent’s principal where the agent merely passes on information provided by the principal.
In Butcher the purchasers of waterfront land brought an action for misleading or deceptive conduct against a real estate agent who had produced a brochure to promote a forthcoming auction of land that incorrectly showed a swimming pool to be within the property being sold at auction. The successful bidders contended that the brochure was misleading or deceptive and that the agent that produced it and provided it to them was liable to them for misleading or deceptive conduct. The agent contended that he had not engaged in misleading or deceptive conduct as he merely passed on information provided to him by the vendors, and this was known to the purchasers.
The High Court of Australia held that the agent was not liable. The central principle was explained by the majority Gleeson CJ, Hayne and Heyden JJ as follows:
The relevant principles. In Yorke v Lucas, Mason ACJ, Wilson, Deane and Dawson JJ said that a corporation could contravene s 52 even though it acted honestly and reasonably:
"That does not, however, mean that a corporation which purports to do no more than pass on information supplied by another must nevertheless be engaging in misleading or deceptive conduct if the information turns out to be false. If the circumstances are such as to make it apparent that the corporation is not the source of the information and that it expressly or impliedly disclaims any belief in its truth or falsity, merely passing it on for what it is worth, we very much doubt that the corporation can properly be said to be itself engaging in conduct that is misleading or deceptive."
In applying those principles, it is important that the agent's conduct be viewed as a whole. It is not right to characterise the problem as one of analysing the effect of its "conduct" divorced from "disclaimers" about that "conduct" and divorced from other circumstances which might qualify its character. Everything relevant the agent did up to the time when the purchasers contracted to buy the Rednal land must be taken into account. It is also important to remember that the relevant question must not be reduced to a crude inquiry: "Did the agent realise the purchasers were relying on the diagram?" To do that would be impermissibly to dilute the strict liability which s 52 imposes.
For the following reasons, the agent did not engage in conduct towards the purchasers which was misleading. Whatever representation the vendor made to the purchasers by authorising the agent to issue the brochure, it was not made by the agent to the purchasers. The agent did no more than communicate what the vendor was representing, without adopting it or endorsing it. That conclusion flows from the nature of the parties, the character of the transaction contemplated, and the contents of the brochure itself. [423]
….. [the court considered, the nature of the parties, the character of the transaction and the contents of the brochure]
….
Hence it would have been plain to a reasonable purchaser that the agent was not the source of the information which was said to be misleading. The agent did not purport to do anything more than pass on information supplied by another or others. It both expressly and implicitly disclaimed any belief in the truth or falsity of that information. It did no more than state a belief in the reliability of the sources.[424]
[423]Butcher, [38]-[40].
[424]Butcher, [51].
Mr Little argued that if the information communicated by Mr Turner to Mr Harpur was incorrect, then the Court should find that Mr Turner was merely passing on to Mr Harpur information provided by the vendor, Lord Buddha, and that Mr Harpur was aware that the information emanated from Lord Buddha. Accordingly, the Court should not find Forvale was liable for Mr Turner’s representations. Mr Little again relied on Whelan J in Civoken for this submission. In Civoken Whelan J referred to and relied on the High Court decision in Butcher.
In Civoken Whelan J stated that the judgments in Butcher did not differ in relation to the principles to be applied. In particular, he said that all of the judgments proceeded
‘on the basis that conduct which amounts to no more than communicating or passing on representations made, or information provided, by another, without endorsing or adopting it, is not misleading conduct by the person acting for these purpose as the “conduit”, because the information is incorrect or the representation is untrue’.[425]
[425]Civoken [490].
Whelan J went on to say
‘...the issue is accurate characterisation of the conduct. If a person makes it clear that all they are doing is repeating what someone else has said, then the representation that person makes is not misleading unless in fact the other person did not say it’.[426]
[426]Civoken [491].
Mr Little argued that it would have been obvious from the context of the conversations that Mr Turner’s representations were not derived from personal knowledge of the land and prospective tenants but rather from what he had been told by Lord Buddha.[427] Mr Little contends that Mr Turner was a mere conduit passing on the information provided by Lord Buddha.
[427]Transcript 791.
I agree that it would have been obvious to Mr Harpur that Mr Turner had not spoken to the potential tenants. Mr Harpur has not satisfied me that Mr Turner was endorsing the accuracy of what he had been informed by Lord Buddha and passed on to Mr Harpur. Whelan J said “the issue is accurate characterisation of the conduct.” The relevant conduct is the conduct of Mr Turner in making the statements that are the basis for the representations I have found made out. The relevant conduct has to be characterised as “a whole” taking into account his conduct up until the contract was made, as the High Court said in Butcher.
The conduct of Mr Turner includes giving Mr Harpur the brochure, on 12 December 2007, that clearly came from the vendor. The relevant circumstances also include Mr Harpur’s acknowledgment at the meeting on 12 December 2007 that he was told by Mr Turner that Mr Gibbs had files on his dealings with tenants and that Mr Gibbs was prepared to be very helpful in relation to the project with these files.[428] I infer from that evidence that Mr Harpur was aware that the source of the information on the tenants was Mr Gibbs of Lord Buddha, the vendor. Mr Little also pointed to the preliminary site development plan and the coloured map of Portland that were given to Mr Harpur by Mr Turner as being documents that were not produced by Forvale.[429]
[428]Transcript 418.
[429]Transcript 793.
Mr Little’s submissions are also supported by events after the contract was signed. Mr Harpur first met Mr Gibbs at the Glasshouse Café in January before Mr Turner died. Mr Hutchins said that the meeting was initiated by Mr Turner so that Mr Harpur could meet with Mr Gibbs and discuss anything quoted by Mr Turner to Mr Harpur regarding the rezoning and other issues.[430] I took Mr Hutchins’ reference to “quoted” to mean that Mr Turner wanted Mr Harpur to meet Mr Gibbs to discuss information given to Mr Turner by Mr Gibbs about prospective tenants that Mr Turner had in turn quoted to Mr Harpur. Mr Hutchins says that Mr Turner spoke at the meeting about things he wanted Mr Gibbs to clarify in relation to rezoning and potential tenants.
[430]Transcript 603
It must be kept in mind that the communications I am addressing are only the communications that support the alleged representations that I have found Mr Harpur has made out.
I find that the accurate characterisation of Mr Turner’s conduct is that he merely acted as a conduit for representations being made by the vendor Lord Buddha. I find that the relevant information that Mr Turner conveyed to Mr Harpur to make out those representations was information that he obtained from Mr Gibbs. Further, I am satisfied that Mr Harpur understood that the relevant information that was being conveyed to him by Mr Turner was information that emanated from Mr Gibbs and Lord Buddha and that Mr Turner had no independent knowledge as to the accuracy or otherwise of the information he was passing on to Mr Harpur from the vendor Lord Buddha. Mr Harpur has not satisfied me that Mr Turner or Forvale endorsed or adopted the relevant representations. I am not satisfied that Forvale engaged in misleading or deceptive conduct. I therefore dismiss Mr Harpur’s claim against Forvale on this ground.
Accessorial liability
Mr Harpur alleges[431] that Forvale was a person involved in the contravention of ss 52 and 53A(2) of the Trade Practices Act 1974 and/or s 11 of the Fair Trading Act 1999 (Vic) by Mr Turner, as Forvale is a person who:
[431]Amended defence to further amended statement of claim and amended counterclaim of 15 April 2011.
(a) has aided abetted, counselled or procured;
(b) has induced;
(c) has been in any way directly or indirectly knowingly concerned or party to; or
(d) has conspired with others to affect
the said contravention.[432]
[432]Pursuant to s 75B of the Trade Practice Act 1974 and s 145 of the Fair Trading Act 1999 (Vic).
In Yorke v Lucas,[433] Mason ACJ, Wilson, Deane and Dawson JJ held that for a person to be found to have aided, abetted, counselled or procured a contravention of the Act, they must have done so intentionally and with knowledge of the essential matters which make up the contravention.[434] Their Honours further held that, in relation to ‘being a party to a contravention’, a person must be an “intentional participant, the necessary intent being based upon knowledge of the essential elements of the contravention”.[435]
[433](Yorke) (1985) 158 CLR 661.
[434]Yorke, 667.
[435]Yorke, 670.
In Yorke, it was alleged that the individual whose company acted as the estate agent in the sale of a business was liable as an accessory for the misleading or deceptive conduct of the vendor of a business. The vendor gave to the individual agent false sales figures of the business. The individual did not know or suspect they were false. The High Court held that for the purchaser to succeed against the individual under the accessory provisions it would be necessary to prove that the individual knew the sales figures were false.
Mr Harpur has not satisfied me that Mr Turner had such knowledge. In his final submissions, Mr Harpur did not make any submissions to support this contention. I find this claim is not made out.
AMADIO DEFENCE
Mr Harpur argued that as he had a stroke which makes him forgetful and too trusting of others, and as Mr Turner knew about this, it would be unconscionable for the contract to be enforced against him. In Commercial Bank of Australia v Amadio,[436] Deane J set out the relevant test for unconscionability:
[436](Amadio) (1983) 151 CLR 447.
(a) that a party or person is under a ‘special disability’;
(b) the ‘special disability’ was so evident that it would be prima facie unfair for the other party to rely on acceptance to the terms of the contract; and
(c) the onus is on the stronger party to show that the transaction was fair.[437]
[437]Amadio, 474 per Deane J.
Facts relied on in Amadio defence
Mr Harpur claims that Mr Turner was aware of his disabilities as they had discussed their health quite extensively during a trip to Lakes Entrance. Mr Harpur could not remember exactly what he told Mr Turner about his health, but said that he ‘would’ have told him about the stroke.[438] Mr Harpur said that, as a result of the effects of his stroke, he asked Mr Turner to make notes of meetings where material matters were discussed.[439] No notes of this nature were introduced in evidence by Mr Harpur. There is no evidence that Mr Turner was aware of the effects of Mr Harpur’s stroke. Mr Hutchins says that Mr Turner did not ever tell him about any illness Mr Harpur may have had.[440]
[438]Transcript 212-213.
[439]Transcript 214.
[440]Transcript 621.
Mr Hutchins said that Mr Harpur told him about his stroke in late May 2008 and had outlined the ongoing effects including unwillingness to drive and the effect on his short term memory.[441] Mr Hutchins said he was surprised to hear about the stroke as up to that time Mr Harpur had shown no signs of his health being affected.[442]
[441]Transcript 620.
[442]Transcript 620.
As noted above, Mr Harpur’s evidence about his disabilities is at odds to the description he gave of his abilities in the CPI prospectus, and the fact that he was seeking to raise, firstly up to $20 million and then $100 million from investors. Again, as noted above it is difficult to accept that a solicitor would represent he had the skills that he did, when he knew he was labouring under the disabilities that he claims he was. I have already found that Mr Harpur exaggerated his disabilities.
Does Mr Harpur have an Amadio defence?
I find that Mr Harpur was not suffering from health issues so severe that they could be classed as a ‘special disability or disadvantage’. Even if he was so suffering, I find that Mr Turner and Mr Hutchins did not know about this disability or disadvantage. I find there has been no unconscionable conduct in relation to Mr Harpur in this matter.
ALLEGED BREACH BY LORD BUDDHA OF THE SALE OF LAND ACT 1962
Mr Harpur alleges that the contract between the parties was voidable because it did not comply with a number of requirements under the Sale of Land Act 1962 (Vic).
In particular, Mr Harpur claims that the contract did not comply with:
(a) requirements of a terms contract to disclose the existence of a mortgage and how it is to be dealt with at settlement set out in ss 6 and 14 of the Act;
(b) requirements of terms contracts and provisions governing deposit monies set out in Division 3 of Part 1 of the Act, particularly s 25; and
(c) certain provisions relating to vendor’s statements as set out in s 32 of the Act.
It is unnecessary for me to decide these intricate and time consuming issues as I have found in Mr Harpur’s favour on the misleading and deceptive claim. Accordingly, I will not undertake the fruitless task. As it was, very little time was spent on addressing these issues. I acknowledge that counsel provided me with very helpful written submissions on these issues.
ORDERS SOUGHT
Mr Harpur seeks the following:
(a) An order for payment of the sum of $425,000.00.
(b) Further or alternatively, damages.
(c) Further, or alternatively, equitable compensation.
(d) Further, or alternatively, damages pursuant to s 82 Trade Practices Act 1974; and/or s 159 Fair Trading Act1999 (Vic).
(e) Further, or alternatively, orders pursuant to s 87 Trade Practices Act1974; and/or s 158(2) Fair Trading Act 1999 (Vic).
(f) Interest pursuant to statute, or alternatively, compound interest.
(g) Costs.
(h) Such further or other order as the Court thinks fit.
ORDERS
I propose to order that:
(a) there be judgment for Mr Harpur on Lord Buddha’s claim against Mr Harpur;
(b) there be judgment for Mr Harpur on his counter claim against Lord Buddha;
(c) there be judgment for Forvale Pty Ltd on Mr Harpur’s counter claim against it;
(d) pursuant to s 82 Trade Practices Act 1974 and s 159 Fair Trading Act1999 (Vic) that Lord Buddha pay Mr Harpur the sum of $425,000.00 and damages in the nature of interest.
I will hear the parties on costs and the calculation of interest. I direct that Mr Harpur bring in short minutes for the consideration of the parties and the Court.
ANNEXURE A
ANNEXURE B
APCO and United
Mr Gaucci said that they had had discussions with several petroleum firms including APCO, AA Petroleum and United. Each of these involved an offer to sell a portion of the land. There was lukewarm interest from United and APCO.
Barnes Furniture
Mr Barrett spoke to Adrian Barnes of Barnes Furniture and Carpet Centre. He said that they thought they might combine with Betta Electrical all in one large store. He said they were very interested in the site and wanted to be kept informed about future developments.[443] Mr Barrett stated that they were discussing potential tenants and all were indicating a strong interest but it was dependant on when the development was likely to occur and what kind of costs were involved.[444]
[443]Transcript 150.
[444]Transcript 150.
BCF
Mr Gaucci said “we” also spoke to Hector at BCF (Boating, Camping and Fishing) (also owned by Supercheap). He said they had some interest in the site but their comment was that if the development could get Bunnings they would go there tomorrow.[445] He said they indicated they would come to the site if Bunnings was an anchor tenant.[446]
[445]Transcript 98.
[446]Transcript 101.
Brydens’ Tyres
Mr Barrett spoke to Brydens’ Tyres who were interested if there was a truck refuelling depot.[447]
[447]Transcript 152.
Harris Scarfe
Mr Gaucci spoke to Harris Scarfe.
Harvey Norman
Mr Gaucci said he spoke to Ryan Herd of Harvey Norman. He said they had some interest in the site but their comment was that if they could get Bunnings they would go there tomorrow.[448] Mr Gaucci was shown his diary/journal. It disclosed that he had had discussions with Harvey Norman on 7 July 2006. He said that although interested Harvey Norman did not commit.[449]
[448]Transcript 98.
[449]Transcript 100.
IGA
Mr Gaucci spoke to the local IGA operator.[450] Mr Gaucci said IGA was loath to do a second store given the demographics of Portland. He said IGA thought it was going to be a number of years before that part of the town needed a store or a second store.[451]
[450]Transcript 101.
[451]Transcript 102.
Mr Barrett said he spoke to the IGA operator, and he was involved in stores he had elsewhere and it was not quite the right time for him.[452]
[452]Transcript 151.
Jackie Crockett
Mr Barrett spoke to Ms Crockett in about August 2007. She was looking for a thousand square metres to create a child’s play centre within a supermarket complex.[453] That proposal did not transpire.[454] Mr Barrett refers to the inquiry in an email of 29 August 2007 to Mr Gibbs and Mr Gaucci.[455]
[453]Transcript 151.
[454]Transcript 152.
[455]Exhibit P18.
Local pharmacist
Mr Barrett also spoke to a local pharmacist.[456]
[456]Transcript 152.
Metcash
Mr Gaucci had discussions with Tony Riland from Metcash.[457] Mr Gaucci said that his diary record of 8 August 2006 records that Tony Riland from Metcash went and had a look at the site.[458]
[457]Transcript 101.
[458]Transcript 106.
NQR
Mr Gaucci spoke to Graham Holeman from NQR. Mr Holeman showed genuine interest and came to Portland to view the site. His store was too small to “kick this development off.”[459] Mr Gaucci was asked to explain what he meant by “interest.” He said it was one thing to get interest in the site and another to be signed up. He said the first thing is that they don’t slam the door in your face.[460]
[459]Transcript 103.
[460]Transcript 103.
McDonalds
Mr Gaucci said they spoke to Paul Upton of McDonalds. He said they preferred to go into the CBD and subsequently they have done so.[461]
[461]Transcript 104.
National Auto Parts Retailer
Mr Barrett also took an inquiry from a national auto parts dealer. He suspects it was someone like Supercheap auto. The inquiry went nowhere.[462]
[462]Transcript 152.
Red Rooster
Mr Gaucci said he spoke to Wayne Hancock of Red Rooster who expressed “some interest.”
Shell
Mr Gaucci spoke with Shell and Michelle O’Donoghue came to Portland to inspect the site.
Supercheap
Mr Gaucci said “we” also spoke to Supercheap Auto, Harvey Norman and BCF (also owned by Supercheap). He said they had some interest in the site but their comment was that if they could get Bunnings in the development they would go there tomorrow.[463]
[463]Transcript 98.
Whitehead Timber
Mr Barrett says he was approached by Whitehead Timber Sales which had a site nearby and were interested in acquiring one of the titles at the west end of the land for their business. The purchase did not proceed.[464]
[464]Transcript 142.
Baptist Church
Mr Barrett at his meeting in August with Mr Gibbs informed him that the Baptist Church had purchased land to the south of the Portland land requiring a large car park. The pastor was keen to meet Mr Gibbs to discuss a proposal about sharing a car park with the Portland land.[465] Subsequently, Mr Gibbs, Mr Gaucci, and Mr Simpson of the Baptist Church met. Mr Gibbs agreed to share the car park. Mr Gibbs also informed Mr Simpson about his proposal to build a retirement village at the Western end of the Portland land. Mr Simpson and Mr Gibbs agreed that the project had synergy with shops, a retirement village and a church.[466]
---
[465]Transcript 153.
[466]Transcript 154.
CERTIFICATE
I certify that this and the 80 preceding pages are a true copy of the reasons for Judgment of Robson of the Supreme Court of Victoria delivered on 9 August 2011.
DATED this ninth day of August 2011.
Associate
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