Maisey, G.W. v Mudgeeraba Village Estates Pty Ltd

Re: GLENN WAYNE MAISEY and JACQUELINE ANNETTE MAISEY
And: MUDGEERABA VILLAGE ESTATES PTY. LIMITED; ZOLENE ELIZABETH PERRY; FIRST
COAST PTY. LIMITED; SURETY INVESTMENTS PTY. LIMITED and DAVID WHITE
Re: ELIZABETH SMEDLEY
And: MUDGEERABA VILLAGE ESTATES PTY. LIMITED; ZOLENE ELIZABETH PERRY; FIRST
COAST PTY. LIMITED; SURETY INVESTMENTS PTY. LIMITED and DAVID WHITE
Re: NICK JAMES PTY. LIMITED
And: MUDGEERABA VILLAGE ESTATES PTY. LIMITED; ZOLENE ELIZABETH PERRY; FIRST
COAST PTY. LIMITED; SURETY INVESTMENTS PTY. LIMITED and DAVID WHITE
Nos. G 109, G 110 and G 112
Trade Practices
(1985) ATPR para 40 - 569

COURT

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
Neaves J.

CATCHWORDS

Trade Practices - consumer protection - Misleading or deceptive conduct - Investment in limited partnership and purchase of unit in high rise residential development project - False representations made by employee of corporation carrying on business as real estate agent - Whether conduct engaged in "on behalf of" corporation - Damages - Whether director and manager of corporation knowingly concerned in, or party to, the contraventions - Whether employee in breach of contract of employment - Claim by corporation for indemnity against developer - Whether corporation entitled to judgment by default against developer based on admissions upon the pleadings.

Trade Practices Act 1974 (Cth), ss.52, 75B, 82 and 84

Mercantile Act of 1867 (Qld)

Federal Court Rules, Order 11, rule 13 and Order 18, rule 4

HEARING

SYDNEY
#DATE 22:5:1985

ORDER

There be judgment for the applicant against the third respondent in the sum of $77,420.
The third respondent pay the applicant's costs of the application, including reserved costs.
The application in so far as it seeks relief against the fourth respondent be dismissed.
The cross-claims by the first cross-claimant and the second cross-claimant against the third cross-respondent be dismissed.
The first cross-claimant pay the third cross-respondent's costs of the proceedings, including reserved costs.
The applications by the first cross-claimant and the second cross-claimant for judgment by default against the first cross-respondent and the second cross-respondent be dismissed.

Note: Settlement and entry of orders is dealt with in

Order 36 of the Federal Court Rules.

There be judgment for the applicant against the third respondent in the sum of $77,420.
The third respondent pay the applicant's costs of the application, including reserved costs.
The application in so far as it seeks relief against the fourth respondent be dismissed.
The cross-claims by the first cross-claimant and the second cross-claimant against the third cross-respondent be dismissed.
The first cross-claimant pay the third cross-respondent's costs of the proceedings, including reserved costs.
The applications by the first cross-claimant and the second cross-claimant for judgment by default against the first cross-respondent and the second cross-respondent be dismissed.

Note: Settlement and entry of orders is dealt with in

Order 36 of the Federal Court Rules.

There be judgment for the applicants against the third respondent in the sum of $77,044.
The third respondent pay the applicants' costs of the application, including reserved costs.
The application in so far as it seeks relief against the fourth respondent be dismissed.
The cross-claims by the first cross-claimant and the second cross-claimant against the third cross-respondent be dismissed.
The first cross-claimant pay the third cross-respondent's costs of the proceedings, including reserved costs.
The applications by the first cross-claimant and the second cross-claimant for judgment by default against the first cross-respondent and the second cross-respondent be dismissed.

Note: Settlement and entry of orders is dealt with in

Order 36 of the Federal Court Rules.

JUDGE1

To visit Camelot, the legendary capital of King Arthur's Kingdom, was reputed to be a joyful and rewarding experience and to be conducive, in the lyrics of the well-known musical, to "happily ever-aftering". The association which the applicants in the present proceedings had with Camelot in the guise of Camelot Real Estate at Broadbeach on the Gold Coast of Queensland led to no such experience. On the contrary, that association has for them resulted only in concern, worry and financial loss. Their Mordred was one John Patrick Ord (known as Patrick Ord) and, unfortunately for them, there was no Merlin on whom they could call to retrieve the situation in which they found themselves.

The consequence is that I have before me three proceedings which, by consent, were heard together. In the first proceeding the applicants are Glenn Wayne Maisey and Jacqueline Annette Maisey. The applicant in the second proceeding is Elizabeth Smedley and in the third proceeding Nick James Pty. Limited. In each proceeding the respondents are Mudgeeraba Village Estates Pty. Limited ("Mudgeeraba"), a company carrying on a real estate business under the business name "Camelot Real Estate", and Zolene Elizabeth Perry. When each proceeding was commenced three other parties were joined as respondents but the applicants in each case subsequently discontinued the proceeding as against two of those parties and the Court, in interlocutory proceedings, entered judgment in favour of the other. The remaining respondents, Mudgeeraba and Mrs Perry, have in each proceeding cross claimed against First Coast Pty. Limited ("First Coast"), Surety Investments Pty. Limited ("Surety Investments") and David White.
The proceedings arise out of transactions which resulted in the applicants investing moneys by way of capital contribution in a limited partnership styled "First Coast Pty. Ltd. and Others" formed under the Mercantile Act of 1867 of the State of Queensland and entering into contracts for the purchase of residential units in a high rise building to be erected at Broadbeach, Queensland and to be known as "The Lodge". The applicants allege that they were induced to enter into those transactions by representations, which were false, made to them by David White, the third cross respondent, then a real estate salesman employed by Mudgeeraba. In the proceeding brought by Mr and Mrs Maisey and that brought by Mrs Smedley damages are sought for breach of section 52 of the Trade Practices Act 1974, for fraudulent misrepresentation and for negligent mis-statement. In the proceeding brought by Nick James Pty. Limited the claim is based on breach of section 52 of the Trade Practices Act 1974 and fraudulent misrepresentation.

The Limited Partnership
The Mercantile Act of 1867 of the State of Queensland provides for the formation of limited partnerships for the transaction of any business, other than banking or insurance, by any number of persons upon the terms and subject to the conditions and liabilities set out in the statute (section 53). Every such partnership may consist of general partners who are to be jointly and severally responsible as general partners are by law and of persons to be called special partners who are to contribute to the common stock specific sums in money as capital beyond which they are not to be responsible for any debt of the partnership except in the cases provided for in the statute (section 54).
The general partners only are to transact the business of the partnership (section 56). All the persons forming the partnership are, before commencing business, to sign a certificate containing the style of the firm under which the partnership is to be conducted, the names and places of residence of all the partners distinguishing the general from the special partners, the amount of capital which each special partner contributes and of the amount contributed by the general partners to the common stock, the general nature of the business to be transacted, the principal place of business and the time when the partnership is to commence and when it is to terminate (section 55). No such partnership is to be deemed formed until the certificate has been acknowledged by each partner before a justice of the peace and registered in the office of the registry of deeds in Brisbane (section 57). No such partnership may be entered into for a longer period than seven years but a partnership may be renewed provided a fresh certificate is signed, acknowledged and registered (section 59).
By deed made 19 June 1981 between First Coast as the general partner and First Coast and Surety Investments as the special partners the parties agreed to form a limited partnership under the Mercantile Act of 1867 to carry on the business of real property development under the name "First Coast Pty. Ltd and Others". The partnership was to begin on the date of registration in the office of the registry of deeds in Brisbane of the certificate required by section 55 of the Act and, subject to the provisions for dissolution contained in the deed, was to continue for 7 years (clause 1.3). The commencing date was, in fact, 19 June 1981. The partnership business was to be carried on from 10 Short Street, Southport, Queensland and at such other place or places as the partners might agree (clause 1.4) and was to be carried on and managed by the general partner alone (clauses 1.6 and 3.1). The general partner was to contribute as its agreed capital to the partnership $5,000 (clause 2.1). Each of the special partners was to contribute to the partnership as its agreed capital contribution the sum of $5,000 per capital share unit (clause 2.2). The numbers of capital share units to be held by First Coast and Surety Investments were 60 and 945 respectively (clause 2.3 and the Second Schedule). Each special partner was entitled, subject to the provisions of the deed, to transfer, assign and convey his interest in the partnership in whole or in part (clause 2.5). One of the conditions to which this power was subject was that the assignee agree to be bound by the terms of the deed as a special partner. The general partner was to receive a management fee for its services being a sum calculated at 1.75 per centum of the capital of the partnership per annum payable quarterly in advance and a further sum on termination of the partnership (clause 3.3). Provision was made for bank accounts to be opened and maintained (clause 3.5) and for the partnership to indemnify the general partner (clause 3.6). There was to be a committee of management (clause 4.1) which was for the first six months to consist of John Patrick Ord solely and thereafter to comprise 3, 5 or 7 members as might be decided from time to time by a majority vote of the special partners (clause 4.2). Provision was made for the allocation and distribution of profits and losses as between the partners (clause 7).
Special partners were to be entitled to receive an allocation of profits equal on a cumulative basis to 10.5 per centum per annum on their respective agreed capital contributions subscribed in cash to the capital of the partnership. All profits remaining after the payment of the management fee to the general partner and the amounts above mentioned to the special partners were to be divided in proportion to the respective capital contributions subscribed in cash to the capital of the partnership. Losses were to be borne by the general and special partners in proportion to their respective capital contributions subscribed in cash.
First Coast and Surety Investments were incorporated in Queensland by Mr Ord apparently for the purpose of carrying out the development project which he had in contemplation. The development project required the acquisition of a suitable site and the erection thereon of a high rise building containing residential units. Neither of the companies had substantial assets and, in order to finance the project, the limited partnership to which reference has already been made was formed. Investors were to be invited to join the limited partnership as special partners, contributing for one or more of the capital share units of $5,000. I shall, for convenience, refer to the capital share units as shares in the limited partnership. An investor who contributed for 10 shares, that is to say, invested $50,000 in the project, was to be entitled to select a residential unit in the high rise building to be constructed and to enter into a contract to purchase that unit at the current list price as published by the partnership, paying a deposit of 2.5 per centum of that price on signing the contract. The balance was payable on settlement following completion of the building which was represented as occurring in approximately 2 years after the project was launched.
The limited partnership having been formed, First Coast, at the end of July and the beginning of August 1981, entered into contracts to purchase 6 adjoining blocks of land, 4 fronting Victoria Avenue and the remaining 2 fronting Albert Avenue, Broadbeach. The total purchase price was $2,432,750 and deposits totalling $243,275 were paid. The evidence does not identify the source of the moneys used for that purpose. Under each of those contracts the stipulated settlement date was 6 November 1981. It is convenient to mention here, although out of chronological sequence, that First Coast failed to pay the balance of the purchase moneys and the deposits were forfeited. The contracts were re-negotiated, involving the payment of further moneys totalling $50,500 by First Coast to the vendors with settlement to take place in February 1982. Again, First Coast defaulted and the additional moneys were also forfeited.
A brochure and a booklet were prepared by or on behalf of First Coast and Surety Investments extolling the virtues of "The Lodge" project and the advantages of carrying out that project by medium of a limited partnership. According to the brochure that kind of partnership offered "maximum advantage in capital gain consistent with minimum initial investment". The brochure continued:

"The Directors of First Coast Pty. Ltd. are confident of returning a minimum of 23 per cent per annum capital gain to owners; after all, that's what some markedly inferior units in other high-rise developments are achieving. However the accompanying booklet shows that early partners could enjoy benefits considerably above that figure. Benefits exclusive to 'The Lodge'."

The booklet stated:

"First Coast Pty. Ltd. is constructing a 25 storey, 95 Unit, building upon a site of almost one acre directly opposite the Broadbeach International Hotel in Victoria Avenue, Broadbeach, Gold Coast, Queensland.

The building will contain 46 two-bedroom Units, 47 one-bedroom Units, and 2 Penthouses of 3 bedrooms each ..."

After referring to the limited partnership and the proposal to issue 1,005 shares at $5,000 per share, the booklet continued:

"Shares will attract profits at an expected rate of over 23% per annum. A rate of 10.5% per annum is guaranteed in the Deed of Partnership. However, the profitability of the project is such that a rate in excess of 23% per annum is expected. This statement is based upon the profitability of comparable projects in this area.

Repayment of principal amounts and accumulated interest will be on settlement of the sales of Units and at the termination of the Partnership. This is expected to be within a period of 24 months from 19th June, 1981, the date of registration of the Partnership.

Investors will be invited to exchange contracts for sale on one Unit for each 10 shares taken up. Deposit will be 2.5% of Contract Price. Contract Price will be according to the latest dated Sales List ..."

The booklet described First Coast as the vendor and Surety Investments as a licensed real estate agent appointed by the vendor as selling agent for "The Lodge".

An investor was required to complete an application form for shares in the partnership and, where applicable, a further application form in respect of a residential unit and send the same, with a cheque in favour of Surety Investments for the amount to be invested, to First Coast. A contract of sale in respect of a residential unit was then to be sent to the investor for signature. The contract was to be returned to First Coast with a cheque for a deposit of 2.5 per cent of the purchase price of the unit, such cheque to be in favour of Surety Investments Pty. Ltd. No.1 Trust Account. The investor would then receive a copy of the contract executed by the vendor and a transfer note for his partnership shares. Upon completion and return of the transfer notes the investor was to be sent numbered investment certificates as evidence of his ownership of the partnership shares transferred to him.
There are statements in the booklet which are clearly not in accordance with the facts. One example is the statement that First Coast "is constructing" the building. At the time the booklet was prepared the company had not acquired the land let alone commenced to construct the building. Another example is the statement that profit at the rate of 10.5% per annum was guaranteed in the deed of partnership. This mis-stated what was in the deed. A third example is the statement that at registration of the partnership on 19 June 1981 all the available special partner shares were owned by Surety Investments. Two comments may be made. First, the statement is inconsistent with the deed which provided for the shares to be held as to 60 by First Coast and as to 945 by Surety Investments. Secondly, no capital contributions were subscribed in cash by First Coast or Surety Investments in their capacity as special partners.

Camelot's Involvement with "The Lodge"
As has already been mentioned Mudgeeraba carried on the business of a real estate agent under the business name Camelot Real Estate ("Camelot"). The directors of the company were Mrs Perry, her husband John Perry, Donald Totty and his wife Beatrice Totty. The business was carried on from, amongst other places, an office at 23 Victoria Avenue, Broadbeach, an address which was only a very short distance from the land on which "The Lodge" was to be constructed. Mrs Perry was the manageress of the Broadbeach office and had the day to day control of that office and of the staff, including the sales staff, employed there. She appears to have spent part of her time at other offices of Mudgeeraba in the Gold Coast area. In June, July and August 1981 the sales staff employed at the Broadbeach office included Mr White, the third cross respondent, and one Roy Donald (Tony) Sellick.
Sometime in June 1981 Mr Ord approached Camelot through Mr Sellick with a request for assistance in locating suitable office premises to rent. Mr Ord also asked Mr Sellick to see if an option to purchase certain land in Albert Avenue, Broadbeach could be obtained. It may be mentioned that that land was not the land on which "The Lodge" was to be erected. Mr Ord interested Mr Sellick in "The Lodge" project and he, in turn, discussed it with Mrs Perry. At Mrs Perry's suggestion (or, as she would say, insistence) a meeting was held at the Broadbeach office of Camelot on 4 August 1981 for the purpose of discussing the project. Mr Ord and Miss (Maartze Adriana) Adma Bakker (variously described in the documentation as Secretary of First Coast and Surety Investments and as the Marketing Manager of the project) attended the meeting as did representatives of Camelot including Mrs Perry, Mr Totty, Mr White and Mr Sellick. There was a general discussion concerning the project. Mr Ord's obvious purpose was to have Camelot list the project and endeavour to attract investors. For those representing Camelot the purpose of the meeting was to ascertain as much detail as possible about the project, including an understanding of the limited partnership structure which was a new phenomenon to them, with a view to deciding whether it was a project with which Camelot should be associated.
Arrangements were made to take a tape recording of what was said at the meeting. The whole of the meeting was not recorded and much that is on the tape cannot be transcribed due, at least in part, to more than one person speaking at the same time. A transcript of those parts of the tape that can be transcribed is in evidence. From that transcript and the evidence of those who were present at the meeting I am satisfied that at the meeting Mr Ord, amongst many other things, said that -

. The cost of the project would be of the order of $11.5m. of which $5m. was to be subscribed by investors and the balance was to be raised by way of loan.

. In order to be able to borrow $6.5m. to finance the construction of the building it was essential that the subject land be unencumbered.

. Although contracts for the purchase of the land had been entered into and deposits paid, it was necessary that 40 investors each investing $50,000 be found in order that First Coast might complete the purchase of the land and obtain an unencumbered title.

. Settlement in respect of the purchase of the land was to take place on or before 6 November 1981 so that sales of the units had to take place quickly.

. Seven units had already been sold.

. He had no background in building or in real estate development, his area being the raising of finance.

At the conclusion of the meeting Mrs Perry informed Mr Ord that she would look further into the project and obtain opinions on it but that she was not prepared to investigate the matter or do business with him unless Camelot was given an authority to sell.
On 7 August 1981 Surety Investments sent to Camelot a document entitled "Authority to Sell", the operative part of which read as follows -

"We hereby engage and appoint you to act as a Real Estate Agent for the purpose of selling the property hereinafter described and agree to pay you commission at the rate of 100% (one hundred per cent) of REIQ Scale if you find a Purchaser/s who enters into a valid and enforceable Contract of Sale confirmed by us for such property and:-

(a) who completes such sale; or

(b) if such Purchaser/s do not complete such sale and deposit paid or some part thereof is forfeited; or the Vendor and Purchaser/s mutually agree to rescind the Contract of Sale.

FULL NAME/S OF VENDOR/S: First Coast Pty Ltd

ADDRESS OF VENDOR/S: 10 Short Street, SOUTHPORT 4215 PHONE: 328.333

ADDRESS OF PROPERTY: The Lodge, Victoria Avenue, BROADBEACH

R.P.D.: Building Units to be constructed at Site;

Deed of Grant

Vol Folio County Parish Town Description

5863 165 Ward Gilston Broadbeach Allotment 20 of Section 23 5505 246 Ward Gilston Broadbeach Allotment 21 of Section 23 3952 39 Ward Gilston Broadbeach Allotment 22 of Section 23 4558 89 Ward Gilston Broadbeach Allotment 19 of Section 23 6044 242 Ward Gilston Broadbeach Allotment 8 of Section 23 (Deed not Ward Gilston Broadbeach Allotment 7 of Section 23 yet issued)

FURTHER TO THE AFORESAID one half of such commission shall be paid to you upon payment of a deposit of 2.5% (two and one half per cent) of the Purchase Price and payment also of a sum of $50,000 or more for the purchase of shares in the First Coast Pty Ltd and Others Limited Liability Partnership by the Purchaser. The balance of such commission shall be paid at settlement.

In the event that for any reason whatsoever the aforesaid deposit has to be refunded to the Purchaser then an amount equal to the commission already paid to the Agent shall be repaid to the Purchaser by the Agent."

The document was signed on behalf of Camelot Real Estate by Mrs Perry and Mr Totty on 7 August 1981 and returned immediately to Surety Investments. On the following day the document was signed by Mr Ord on behalf of First Coast as vendor.

Shortly thereafter a sign was erected on the land on which "The Lodge" was to be erected advertising the project and containing the names of the real estate agents authorised to sell units in the proposed building. The names included that of Camelot.
Subsequent to the meeting on 4 August 1981 inquiries were made by Mrs Perry of the solicitor for Camelot, Mr Stephen John Davoren, and its accountant, Mr David Alexander Thompson. Both expressed to her views unfavourable to the project as one involving a high degree of risk for the investor. Mrs Perry also mentioned the matter to local real estate agents (who expressed views favourable to the project) and casually to other business acquaintances who were not identified in evidence but whose views were said to be unfavourable. Certain other inquiries were made by Mr Totty and Mr Sellick. Mr Totty inquired of the Corporate Affairs Commission in Brisbane and of persons with whom he had business associations but was unable to obtain any information concerning the project or Mr Ord. Mr Sellick made inquiries of the police in New Zealand where, it was understood, Mr Ord had been associated with a company that had failed. Those inquiries elicited that Mr Ord had no criminal record.
At the end of August 1981 Mrs Perry wrote to three persons whom she described as valued customers or clients in relation to the project. One of those letters is in evidence and it reads simply -

"The enclosed brochure and information will be of interest to you.

I shall be very interested to hear your opinion."

Mrs Perry, in evidence, agreed that the reference in the letter to the project being of interest to the recipient was badly phrased and misleading. She said that she had intended telephoning the recipients to explain that what she was seeking was their guidance as to the suitability of the project as an investment. She did not do so, however, and received no response to two of the letters. She said she had a discussion with the other recipient in a car travelling from Brisbane to inspect a site and the view expressed by that recipient was unfavourable.

Notwithstanding that inquiries were being made into the project and Mr Ord, display material advertising "The Lodge" project, which had been prepared by Mrs Perry and Mr Sellick to put before Mr Ord at the meeting on 4 August 1981, was placed in the window of Camelot's premises at Broadbeach. There was conflicting evidence as to the period during which this advertising material remained in the window but I am satisfied, and I so find, that it remained there until at least some time in October 1981. I accept the evidence of Mr Maisey that the advertisement for "The Lodge" was in the window of Camelot's Broadbeach office on his first visit (late August or early September 1981) and that of Mr Peter Francis Hill that it remained there for a time after he became an employee of Camelot on 30 September 1981. I reject the evidence to the contrary by Mrs Perry and Mr Totty. "The Lodge" project was also from time to time advertised on a chalk board on the footpath outside Camelot's Broadbeach office.
Towards the end of August 1981 Camelot received further copies of the brochure and booklet relating to "The Lodge" project to which reference has already been made and other promotional material. From this material kits were prepared for supply to prospective investors.
At about this time a circular letter was prepared as part of the material to be supplied to prospective investors. Copies were made on the letterhead of Camelot. Mr Sellick gave evidence that Mrs Perry and himself were the authors of the document. Mrs Perry denied that she had any part in the preparation of the document. However that may be, I am satisfied that Mrs Perry was aware of the existence of the document and that it was being included in the kits for prospective investors. The circular letter contains statements which can only be described as untrue and misleading.
At about the same time new business cards were printed for Mr Sellick and Mr White describing them as "Investment consultants". The cards also bore the name and logo of Camelot. Mrs Perry denied that Camelot had arranged for these cards to be printed: she suggested that that had been done by Mr Sellick or by Mr Ord. I am satisfied that the cards were printed on the instructions of Camelot. I am also satisfied that Mrs Perry was aware of the existence of the cards at the time and that the cards described Mr Sellick and Mr White as "Investment consultants".
Mr White travelled to Sydney on 15 September 1981 and returned approximately one week later. Before going to Sydney he had a meeting with Mr and Mrs Maisey. While in Sydney he saw Mrs Smedley and one Nicholas James.
It will be necessary to return, in greater detail, to some of the matters already mentioned but before doing so it is convenient to refer to the three transactions which are the subject of these proceedings.

The Maisey Transaction
Mr Maisey was a farmer and part-time teacher who, with his wife, moved from Sydney to Blue Knob via Nimbin, New South Wales in 1977. In August 1981 Mr and Mrs Maisey had funds available to them which they wished to invest. Mr White's mother was a friend of Mrs Maisey and, during a visit Mr and Mrs Maisey made to Sydney, Mrs White informed them that her son was working in real estate on the Gold Coast. Mr Maisey, who had known Mr White in Sydney, telephoned Mr White and arranged an appointment to see him at the office of Camelot at Broadbeach.
A meeting subsequently took place between Mr and Mrs Maisey and Mr White at the offices of Camelot when they sought advice concerning the investment of their funds. This meeting took place at the end of August or in the early part of September 1981. Mr Maisey saw the display in the window of the Camelot offices advertising "The Lodge". He did not take particular notice of it when he arrived but after the meeting with Mr White he spent some time looking at it. Mr White spent most of the meeting, which lasted for some two hours, talking about "The Lodge" explaining "how it was set up, how it worked". According to Mr Maisey, Mr White said that in his opinion "The Lodge" was the best investment he had for them. Also, according to Mr Maisey, Mr White produced a price list of the units in "The Lodge" on which 30 units had been marked off. Mr White explained that this meant that 30 investors had committed themselves to the project: that the best units had thus been taken and that there were only a couple of the better units left. Mr White further said that, by virtue of the "sale" of the 30 units, the purchase price of the land on which the units were to be built was covered and that there was minimal risk because the investors became part owners of that land which, if the project did not proceed, could be re-sold, possibly at an enhanced price, with a return to the investors of the amount they had invested in the project. Mr Maisey also said that Mr White informed his wife and himself that the project and Mr Ord had been investigated fully by Camelot; that inquiries made in New Zealand had disclosed that Mr Ord had no criminal record; that Mr Ord had been engaged in the business of merchant banking; and that he had been successful in projects similar to "The Lodge". Mr White gave to Mr Maisey a copy of the brochure and the booklet to which reference has been made together with other material relating to "The Lodge" project.
After the above conversation Mr White took Mr and Mrs Maisey to inspect other investments that were available. Mr and Mrs Maisey then returned home. There were subsequent telephone conversations between Mr Maisey and Mr White and, about a week or a little more after the meeting at Broadbeach, Mr Maisey informed Mr White that he and his wife proposed to proceed with the investment.
Mr Maisey and his wife again came to Broadbeach on 23 September 1981, about 2 weeks after the original meeting, and saw Mr White who took them to the office of Mr Stephen English, solicitor. Mr English had been recommended to them by Mr White as a legal adviser in relation to the appropriateness of the documents they were asked to sign. At Mr English's office Mr and Mrs Maisey signed an application to be registered as a special partner for 4 shares in the partnership and a form of transfer of shares from Surety Investments to themselves, completed a document nominating unit 18B as the unit to be purchased and signed a form of contract for the purchase of that unit. Mr Maisey handed to Mr English 2 cheques, one for $20,000 and the other for $4,000.
On the same day, 23 September 1981, First Coast executed under its common seal 4 investment certificates each recording that Mr and Mrs Maisey were the registered holders of 1 share in the limited partnership. On the next day First Coast forwarded to Mr English the 4 investment certificates, a trust account receipt (Surety Investments Pty. Limited No.1 Trust Account) for $4,000, a receipt (First Coast) for $20,000 and the transfer of shares form duly executed by Surety Investments.
On 23 October 1981 Mr Maisey again went to the Gold Coast and saw Mr English. He gave Mr English signed documents relating to the taking up of a further 6 shares in the partnership and handed to Mr English a cheque for $30,000. On the same day First Coast executed 6 investment certificates in favour of Mr and Mrs Maisey and a receipt for the sum of $30,000. Surety Investments also executed the transfer of shares document which had already been signed by Mr and Mrs Maisey.
By letter dated 15 December 1981 Mr and Mrs Maisey were informed by Mr English that First Coast had failed to complete the purchase of part of the land at Broadbeach on which "The Lodge" was to be built. By letter dated 21 December 1981 Mr English forwarded to Mr and Mrs Maisey a copy of a letter of even date received by him from First Coast confirming that settlement for all the parcels of land had not taken place on 6 November 1981 because the necessary finance was not available. There was subsequent correspondence from Mr English culminating in a letter dated 5 February 1982 informing them that First Coast had failed to settle under the re-negotiated contracts which had been rescinded.

The Smedley Transaction
Mrs Smedley gave evidence that she was a friend of Mr White's mother. In the course of conversation with her, Mrs Smedley expressed a desire to return to Queensland to live and as a result Mrs White arranged for her to see her son. Subsequently a meeting took place between Mrs Smedley and Mr White at Mrs White's home in Sydney. Mrs Smedley expressed interest in purchasing a small cottage or land on which to build but was assured by Mr White that nothing of that kind was on the market for the money she had available. He then introduced her to "The Lodge" project giving her a folder of documents and pointing out how good an investment it was. Mrs Smedley said that at that meeting Mr White informed her that she "could not lose anything else but the initial deposit; that was two and a half per cent." He also informed her, according to Mrs Smedley, that the land for the project had been bought by which she understood him to mean that the purchase price had been paid.
A second meeting took place between Mrs Smedley and Mr White a few days later, apparently on 21 September 1981. Mrs Smedley gave evidence that, in further discussing the project, she asked Mr White whether Mr Ord had been investigated and Mr White replied: "Yes, Camelot have investigated and they have found everything above board." He also said that about 30 units had been sold and that the unit she had selected was not available. He also said that no risk was involved.
At the second meeting Mrs Smedley decided to invest. She then signed documents put before her by Mr White and gave Mr White a cheque or cheques for $25,000 and the amount of the deposit on the unit namely $3,925. Mr White handed over the cheque or cheques to Surety Investments on 23 September 1981. Mrs Smedley subsequently signed a form of contract sent to her by Mr English who was, with her concurrence, engaged to act as her solicitor by Mr White.
A cheque for $25,000 representing the balance of the investment was sent by Mrs Smedley to Mr White care of Camelot. Mr White had by that time left the employ of Mudgeeraba and the letter was opened by Mr Sellick on 15 October 1981. The cheque was delivered by him to Surety Investments on 16 October 1981.
Mrs Smedley subsequently received correspondence from Mr English, similar to that received by Mr Maisey, concerning the failure of First Coast to complete the purchase of the land.

The James Transaction
Mr James gave evidence that he had known Mr White since their school days and that they had met together from time to time. He was by occupation a roofing contractor, the business being conducted as a family business through a company, Nick James Pty. Limited, of which he and his wife were the only shareholders and directors. At one of his meetings with Mr White he had mentioned that he had some moneys available for investment and he would be interested to consider an investment in real estate on the Gold Coast.
Mr James said that he first learned about "The Lodge" project on 18 September 1981 when Mr White came to Sydney to see him about it. He produced a brochure, a booklet, an architect's impression of the proposed building, a price list and other relevant documents. The meeting lasted some 2 hours and at its conclusion a decision was made to invest in the project.
According to Mr James, Mr White referred to the meeting that Mr Ord had had at the offices of Camelot when there was a long and detailed discussion of the project and said that after that meeting "we checked it all out ourselves and we checked out Ord ... We've done our homework on this". Mr James said Mr White told him that Mrs Perry, through years of experience in the real estate business, had her own internal connections for finding out about projects and people, and that Mr Sellick had made enquiries of the New Zealand police and that, although those enquiries had disclosed a minor irregularity about Mr Ord, "it was nothing".
Mr James said that Mr White spent about a third of the time discussing how safe the investment was, a third of the time explaining what a unique and special project it was and a third of the time speaking of the financial rewards to the investor. According to Mr James, Mr White explained that deposits had been paid on the 6 parcels of land from, he believed, Mr Ord's own money and that at least thirty units had been sold including a penthouse for $400,000. Mr James' evidence included the following answer -

"Well, it somehow came out that there had to be a lot of money - as at least 30 units had been sold, there had to be a lot of money invested in it which - including my money - was to be used to purchase the land, and what was left over would be used towards building the building. And Mr White said - he then went back to discuss the safety aspect of it, and he told me, well, if say, for instance now - words to the effect, say, Patrick Ord were to be run over by a street car tomorrow, he said this is the only time you could lose anything on this project. He said, 'You would possibly lose $1000 or $1500 for the advertising and marketing expenses and all of the rest of your money would be given back to you and the whole project would stop right then and there and Patrick Ord's deposits would be forfeited, but not your money'. It was in a different aspect of the partnership agreement. So he said - he said there was almost no - he said there was no chance of Patrick Ord getting run over by a street car and the whole project stopping tomorrow, so if - that was the only risky part about the whole thing. He said once we had acquired the land, he said we had a very valuable parcel of land together with the plans that were going through the council, or had gone through the council, or were in the throes of - I think - the plans were going through the council or had been passed by the council, and they were special plans because they enabled whoever had the six parcels of land and these plans to put up an extra 10 or 15 units on the site. If Patrick Ord could not raise the finance, David said, the project right then and there - he had to stop the project and he had to sell the whole thing, you had Patrick Ord's valuable plans and these six parcels of land. His plans were unique because David said they had changed the zoning regulations up there and if someone else wanted to put up a high rise in the same block, they would have to get a new set of plans which would have less units in them. So consequently there would be less profit in it. So that any developer who had these special plans, plus the valuable six parcels of land, would - well, they would just - you would be killed in the rush to take over the whole - that is what happened. They are so valuable that you would have people coming in, wanting to buy the whole parcel. You could sell the thing on, so to speak, to a development."

According to Mr James, Mr White described Mr Ord as "an entrepreneurial-type businessman with merchant banking experience. The sort of man who could handle money in this field". In cross-examination he said that Mr White used words to the effect that Camelot was satisfied that Mr Ord was a developer of substance; that he (White) and Camelot had investigated the project and found it to be sound and involving minimal risk.
At Mr James' suggestion, Mr White telephoned Surety Investments and sought a reduction in the price of the unit to be purchased. That reduction was granted conditionally upon the deposit on the unit and one half of the moneys to be invested in the partnership being paid that day.
The investment was made in the name of Nick James Pty. Limited. A telegraphic transfer of $28,750 ($25,000 for shares in the partnership and a deposit of $3,750 on the unit) was made by the company to First Coast or Surety Investments.
Mr White also suggested that Mr English be engaged as the company's solicitor in respect of the transaction and this was agreed. Subsequently, on or about 25 September 1981, Mr English sent the necessary documentation to Mr James for execution. The documents bear date 21 September 1981 but they were not executed by the company and returned to Mr English until some weeks later.
A cheque for $25,000, being the balance of the investment, was forwarded to Mr White by the company on 6 November 1981 and shortly thereafter delivered by him to Surety Investments.
Mr James subsequently received correspondence from Mr English similar in content to that received by Mr Maisey and referred to above.

Other Relevant Events
Mention has already been made of the fact that Mr White ceased to be employed by Mudgeeraba prior to the receipt of the cheques drawn by Mrs Smedley and Nick James Pty. Limited for the second instalments of $25,000 payable by them. Mr White's employment ceased on 8 October 1981 when he was asked to leave following a request by him to Mrs Perry that he be paid a greater proportion of the commission resulting from sales made by him in the course of his employment.
Mr Sellick's employment with Mudgeeraba was terminated by Mr Totty on 17 October 1981.
Early in October 1981 a Mr Helmut Traubner had approached Mr Sellick with a view to investment in "The Lodge", having seen the sign on the subject land which, as I have said, included Camelot's name as a selling agent. Mr Traubner consulted Mr Phillip Halliday, solicitor, whose office was only two doors away from that of Camelot. In due course Mr Traubner decided to invest in the project and there is in evidence before me a letter dated 27 October 1981 from Mr Halliday to the Manager, Camelot Real Estate enclosing the relevant documents duly executed by Mr and Mrs Traubner and requesting that the share transfer form and the contract of sale of the unit be returned to him after execution by First Coast. At the date of that letter Mr Sellick was no longer employed at Camelot.
On 6 November 1981 Mrs Perry became aware that First Coast had failed to settle under the contracts for the purchase of the subject land. She telephoned Miss Bakker concerning the matter and during the course of the conversation Miss Bakker terminated Camelot's authority to sell in respect of "The Lodge" project.
On 11 November 1981 Mrs Perry on behalf of Camelot signed and sent a letter addressed to the Manager, Surety Investments Pty. Limited reading as follows -

" ACCOUNT SALES

Re sale: FIRST COAST PTY. LTD. - VENDOR "The Lodge" Victoria Avenue Broadbeach - Property

Purchaser Unit Nos. Purchase Price Deposit Commission Traubner 16A $164,000.00 Nil $ 4,350.00 James N. P/L 16B $150,000.00 Nil $ 4,000.00 Smedley 17B $157,000.00 Nil $ 4,175.00 Maisey 18B $160,000.00 Nil $ 4,250.00 COMMISSION PAYABLE TO CAMELOT REAL ESTATE $16,775.00"

Mr Ord left Australia on 6 May 1982 and travelled by air to the United States of America. Evidence given by Detective Sergeant Michael Robert Palmer of the Fraud Squad, Criminal Investigation Branch of the Queensland Police Force established that in May 1982 the premises at 10 Short Street, Southport, being the address from which First Coast and Surety Investments had operated, were unoccupied and that $31,000 of the moneys subscribed by investors in "The Lodge" project had been used to purchase for Mr Ord a return air ticket to the United States of America and American Express travellers cheques.
Detective Sergeant Palmer also gave evidence that subsequent inquiries had disclosed that Mr Ord was in Los Angeles but that he was unaware of his present whereabouts. He was also not aware of any substantial assets of First Coast or Surety Investments or the limited partnership.
Detective Sergeant Palmer's inquiries also established that only 95 investment certificates in the partnership had been issued by First Coast. Of the 11 investors to whom those certificates were issued, 10 had subscribed $425,000. One investor did not pay his subscription. The 10 investors also paid $48,425 by way of deposits on units in "The Lodge".
An examination of the various bank accounts operated by First Coast, Surety Investments and the limited partnership disclosed that only one of those accounts had been substantially in credit since June 1982, that account having a credit balance of a little under $4,000.
On 24 January 1983 Mrs Perry and Mr Totty were interviewed by Gary Reginald Gillard, an inspector employed in the office of the Registrar of Auctioneers and Agents. This interview was tape recorded. The tape and a transcript of what is recorded on it are in evidence. The tape is perhaps more eloquent in indicating what was not said to Mr Gillard than in recording what was. I shall refer to it in more detail later in these reasons.

Findings as to the Representations Alleged
Mr White gave evidence of the conversations he had with Mr and Mrs Maisey, Mrs Smedley and Mr James. Apart from some differences in detail and emphasis, there is no substantial conflict between the evidence of Mr White and that of the applicants except in relation to the matters I will later mention.
I am satisfied that Mr White informed Mr and Mrs Maisey, Mrs Smedley and Mr James -

(a) that a 25 storey building consisting of 95 residential units was to be constructed by First Coast on land opposite the Broadbeach International Hotel in Victoria Avenue, Broadbeach;

(b) that full deposits had been paid by Mr Ord under contracts for the purchase by First Coast of the subject land;

(c) that in respect of approximately 30 of the units investors had paid deposits and had subscribed for the requisite number of shares in the partnership;

(d) that, in consequence, there was sufficient money in hand to complete the purchase of the subject land;

(e) that the purchase of the land would be completed in a few weeks;

(f) that if the project did not proceed the land, being an asset of the partnership, could be re-sold with a full return to the investors of the moneys paid for shares in the partnership subject to the deduction of advertising and similar outgoings; and

(g) that the project was sound and one where there was little risk involved, the words used being that the project was one of minimal or negligible risk for investors or one that was virtually risk free.

Counsel for Mr White submitted that I should not accept Mr Maisey's evidence that Mr White informed him that he, Mr White, and Camelot had made extensive enquiries into the project and Mr Ord and that "everything came up clear and looked good - looked like a good investment" and that Mr Ord was a reputable man who had previously undertaken successfully similar development projects and was honest and trustworthy. Counsel pointed to the following answer given by Mr Maisey in cross-examination by counsel for Mudgeeraba and Mrs Perry -

"Q. Did he (Mr White) say anything about whether inquiries had established that Mr Ord was honest and trustworthy, as opposed to that inquiries had come up negative? In other words do you see the difference, that on the one hand you can examine the background of a person and find positive evidence that he is honest and trustworthy; on the other hand you could examine the background of the person and find nothing against him?

A. I see the difference now; in retrospect though, I saw it as the same thing."

Counsel submitted that in the light of Mr White's evidence I should be satisfied that all that Mr Maisey was told as to Mr Ord's trustworthiness was that Mr White personally considered him to be an honest person and that such inquiries as had been made had shown only that nothing was known about Mr Ord.

Immediately following the question and answer set out above Mr Maisey was asked -

"Well, in terms of the representations that were made to you by Mr White, was he saying that they had looked into the fellow and he was honest, or they had found he was honest and trustworthy?"

He answered -

"Words to that effect".

I accept Mr Maisey and Mr White as honest witnesses attempting to give their best recollections of what was said. Because Mr White had been involved in conversations concerning the project with each of the applicants and with other persons including other prospective investors, it is to be expected that he would have greater difficulty than any of the applicants in recollecting what was said in particular conversations. Taking that into account and considering the whole of Mr Maisey's evidence I think it is more probable than not that Mr White did make statements to Mr Maisey to the effect that extensive enquiries had been made by Mr White and Camelot into the project and Mr Ord had been found to be a reputable man, honest and trustworthy and I so find.
I also find that Mr White represented to Mrs Smedley and Mr James that he and Camelot had made extensive enquiries into the project and Mr Ord and were satisfied that the project was sound and that Mr Ord had been found to be a reputable man, honest and trustworthy with appropriate expertise to carry the project to fruition.
I am also satisfied that each of the applicants relied upon the representations made, and advice given, to them by Mr White and that those representations and that advice induced them to enter into the transactions the subject of these proceedings.
It is clear from Mr White's own evidence that he appreciated that the project involved risks for investors. He knew that the amounts payable for shares in the partnership were unsecured and that those moneys could be at risk if the project was not completed successfully. He knew that, according to Mr Ord, 40 units had to be sold to enable the purchase of the land to be completed. He realised that the expenses of the project could rapidly approach hundreds of thousands of dollars and he knew that Mr Ord had no experience as a developer.
In acting as he did Mr White, in my opinion, engaged in conduct, in trade or commerce, that was misleading or deceptive within the meaning of that expression in section 52 of the Trade Practices Act 1974. He was also, in my opinion, negligent in giving advice to each of the applicants, knowing that they were relying upon his expertise in the field in which he was tendering such advice.
There is no doubt that much of what Mr White said to the applicants was untrue. It was not true that 30 investors had paid deposits on units and had subscribed for the requisite number of shares in the partnership thus providing sufficient funds to complete the purchase of the land. In any event, even if 30 investors had subscribed, the moneys invested by them would not have been sufficient to enable the purchase of the subject land to be completed. It was also not true to say that the project involved little, or minimal, or negligible risk for investors or that they would obtain a full return of their moneys (subject to the deduction of advertising and similar expenditure) in the event that the project did not proceed. Nor was it true to say that he (Mr White) and Camelot had made extensive inquiries into the project and Mr Ord and that those enquiries had shown that the project was sound and that Mr Ord was a reputable man, honest and trustworthy with the appropriate expertise to carry the project to a successful conclusion.

Liability of Mudgeeraba
There is no doubt that at the time the representations were made to the applicants Mr White was an employee of Mudgeeraba employed to find purchasers for the projects that Camelot had on its books. But it was submitted on behalf of Mudgeeraba that Mr White's conduct in relation to "The Lodge" project was not within the scope of his employment and was not "on behalf of" Mudgeeraba within the meaning of that expression in sub-section 84(2) of the Trade Practices Act 1974.
In support of that submission counsel for Mudgeeraba contended that Mr White, in selling units and shares in "The Lodge" project was acting contrary to an instruction given to him by Mrs Perry and reinforced by Mr Totty prohibiting him from so doing. Counsel also relied upon the following factors or indicators, namely -

. That Mr White engaged Mr English and not Mr Davoren as solicitor for the applicants although Mr Davoren had a close relationship with Mrs Perry and was the solicitor to whom Camelot referred clients who did not have a solicitor acting for them.

. That the paper work relevant to the transactions was not dealt with in the usual way: the documents were not typed or completed within the Broadbeach office of Camelot and there was no opportunity for them to be vetted by Mrs Perry.

. That the deposits on the units were not paid to Camelot but were paid to Surety Investments either directly or through Mr English.

. That Mr White and not the applicants paid Mr English's legal fees.

. That certain of the promotional material for "The Lodge" project which was typed on paper with the letterhead and logo of Camelot was not typed within the Camelot office.

It was submitted that those factors or indicators, which represented departures from the usual practice within the office, demonstrated that Mr White was acting on his own behalf and on behalf of First Coast and Mr Ord and not on behalf of Camelot.

The principal witness for the respondents was Mrs Perry and much depends on the view one takes of her evidence. I can only say that I found her to be a most unsatisfactory witness and there is much of her evidence that I am unable to accept.
Mrs Perry gave evidence that the meeting on 4 August 1981 was held at her insistence because she was concerned that Mr Sellick was spending too much unproductive time on Mr Ord's project and because she was annoyed that Mr Ord had dealt only with Mr Sellick and had not approached her, as a principal of Camelot, in relation to such a large development project. This setting of the scene in which the meeting took place, taken with her evidence concerning the impressions she formed of Mr Ord at the meeting, may, no doubt, be seen as a factor tending to make it more probable that the staff of Camelot, including Mr White, were subsequently given instructions that they were not to sell units in "The Lodge". But it is, I think, of some significance that Mrs Perry gave a very different account of the reasons for seeking the meeting in the course of the interview she and Mr Totty had with Mr Gillard. In that interview she said:

"Over a couple of weeks with him coming and going from the office, we listened to what he had to offer, it sounded interesting and we decided that we'd hold a meeting within the office one afternoon so that we could - I put all of my salesmen at that point of time together, of which there were about 8, into one room and so that they could query this Mr Patrick Ord and just see how strong the project would be or whether it was marketable and whether it was a Real Estate Agent's job to sell them ... sell the article he was offering and this is initially how we became involved."

In her evidence before me Mrs Perry sought to convey the impression that she had not met Mr Ord before the meeting on 4 August 1981 and that at that meeting she had formed a strong feeling adverse to him. In her evidence in chief Mrs Perry described Mr Ord as a slick, smooth-talking man to whom she took an instant dislike: she said she did not trust him. In cross-examination she said she formed the opinion he was a confidence man. She reiterated that right from the beginning she did not trust him: she thought him the kind of man who "could have walked away with millions of dollars had that project proceeded and got, say, half-way out of the ground". Yet at the interview with Mr Gillard she said that, while she did not like Mr Ord, it was not until about November 1981 that she became very suspicious of him.
I have already referred to the conclusion which Mrs Perry reached at the meeting that further inquiries should be made into the project and Mr Ord and that she required that Camelot receive an authority to sell in respect of the project. She said in evidence that she desired the authority to sell because "without an authority to sell I have no protection". She agreed, however, that the only significance of having such an authority was that, without it, there was no right to receive commission on any sale that might be made.
Mrs Perry said that, following the meeting, she told the sales staff of Camelot to await the results of the inquiries she proposed to make into the project and Mr Ord before starting work on marketing it. She said she subsequently discussed the project with a number of people including Mr Davoren and Mr Thompson. Her inquiries, and those made by Mr Totty and by Mr Sellick of the New Zealand police, were, she said, completed within 2 to 3 weeks after 4 August 1981 and, as a result, a decision was taken by Mr Totty and herself that Camelot should not be involved in marketing the project.
According to Mrs Perry, Mr Davoren expressed the view that the investment was one of high risk because an investor could lose the whole of his investment and the man involved in the development was unknown. That advice, which she said she received by telephone, was said to have been discussed by her with the staff of Camelot including Mr White. According to her there was a subsequent occasion when Mr Davoren visited the Broadbeach office of Camelot and discussed "The Lodge" project, Mr Perry, Mr Sellick, Mr White, a secretary and herself being present.
Mr Davoren, in his evidence, confirmed that he had given Mrs Perry advice unfavourable to the project. He said that the advice was given not over the telephone but in Mrs Perry's private office some three weeks after Mrs Perry had first telephoned him about "The Lodge" following the meeting with Mr Ord on 4 August 1981. He said that Mrs Perry and Mr White were there but he could not recall anybody else being present. He did not recall ever having met Mr Sellick. According to Mr Davoren, Mr White made no contribution to the discussion nor any comment upon his advice. He had no diary entries in relation to the matter or any written record of the request for advice or the advice given.
Mrs Perry said that Mr Thompson expressed the view that the project was only as good as its weakest partner and the risk was extremely high. He had also said that, unless the quality of Mr Ord could be proved, Camelot should not be involved.
Mr Thompson gave evidence. He said that he attended at the Broadbeach office of Camelot on 9 September 1981 and had a meeting lasting 3 or 4 hours with Mr Totty and Mrs Perry discussing matters relevant to the preparation of the annual returns and financial statements of Mudgeeraba for the last financial year. He said that when the meeting broke for lunch he walked out of Mrs Perry's private office and spoke to Mr White who produced a pamphlet on "The Lodge" and asked for his opinion on it. Mr Thompson said he asked Mr White whether the project involved a partnership under the Mercantile Act. On being informed that it did, Mr Thompson said: "I would be very circumspect about that particular matter". Asked why, he said:

"Well, generally speaking, in relation to those matters, the people that go into them are liable for the whole amount that they put in, and unless you know who is running it and who is operating it, it can be suspect. And it is only as strong as the weakest member of that partnership."

He also said that Mr Totty came out of Mrs Perry's office while he was speaking to Mr White and in somewhat coarse language said words to the effect that he should forget about "The Lodge" and sell something worthwhile.

In cross-examination he said that the conversation with Mr White was the first occasion on which he had been asked about "The Lodge". He said that he had previously had a telephone conversation with Mrs Perry but that had been a general inquiry by her as to what was involved in a limited partnership under the Mercantile Act.
I was less than impressed by Mr Thompson as a witness. He was obviously well disposed towards Mr Totty and Mrs Perry and in cross-examination sought to introduce material which he thought was favourable to the case of Mudgeeraba and Mrs Perry, material that was not responsive to the questions addressed to him.
Mr Totty said in evidence that on two occasions he had expressed himself to Mr White in terms which should have conveyed to him that he should not be involved in selling units in "The Lodge". The first of these occasions was said to have been immediately after a meeting he had sometime in August 1981 with two business acquaintances whose company had been named as having agreed to manage the units in "The Lodge" for absent owners. The second was on 9 September 1981 on the occasion involving Mr Thompson. I do not accept any part of Mr Totty's evidence.
Mrs Perry said that within the 2 to 3 week period after the meeting on 4 August 1981 there were daily conversations between herself and Mr White concerning "The Lodge" and that in the course of those discussions she relayed to Mr White the advice she had received from Mr Davoren and Mr Thompson. She sought to convey the impression that before that period had expired a firm decision had been made by Mr Totty and herself that Camelot should not be involved as a selling agent for the project and that this attitude was conveyed to Mr White and to Mr Sellick. Her evidence was that on a number of occasions she had said to Mr White words to the effect: "Forget it, leave it alone and get on with something else".
According to Mrs Perry, she believed at the time that all activity in relation to "The Lodge" project had ceased at the Broadbeach office of Camelot by the end of August 1981. There are, however, matters involving her own knowledge or participation that make it impossible to accept that that was her belief. First, there is the receipt by Camelot at the end of August 1981 of a supply of the brochures, booklets and other materials relating to "The Lodge". Mrs Perry was aware of their arrival - indeed she said she was embarrassed by their late arrival as she had needed them to send to her valued customers or clients for their opinion on the project as she had undertaken to Mr Ord to do so. Secondly, she was well aware that material relating to "The Lodge" was being photocopied by Mr Sellick. She complained that he was a prolific user of the photocopying machine and was wasting resources. Thirdly, if the conversation that she alleges took place between Mr Thompson and Mr White on 9 September 1981 did in fact occur, that must have indicated to her that Mr White was still actively involved in "The Lodge" project. Fourthly, she was aware that it had been represented to Camelot that 30 units had been sold - information which came to hand some time later than the meeting of 4 August 1981: at that meeting it was said that 7 had been sold. Fifthly, she herself had at least one conversation with Miss Bakker when she was informed that the contribution for shares in the partnership could be paid in two instalments spread over a period. One such conversation took place on 3 September 1981.
Mrs Perry would have the Court believe that Mr White and Mr Sellick were spending substantial periods of their working time on "The Lodge" project not only quite unbeknown to her but also in defiance of her and Mr Totty's instructions that they were to leave the project alone. I am satisfied both from the evidence of those who worked in the office and from my observation of Mrs Perry in the witness box that she had a tight control over the staff and their activities. It is, to my mind, inconceivable that Mrs Perry was not aware of what Mr White and Mr Sellick were doing in respect of "The Lodge" by way of sending out brochures and other material and endeavouring to interest possible investors in the project. Both Mr White and Mr Sellick asserted that they kept Mrs Perry informed of their activities and that they received no instruction forbidding them from promoting sales of units in "The Lodge" and I accept their evidence.
When Mr White returned from Sydney about 23 September 1981 and announced that he had sold units in "The Lodge", Mrs Perry, according to her evidence, spoke to him by telephone and said to him:

"David, why on earth "The Lodge"; why not something else - another project. We have got some good properties that we are marketing at the moment, and "The Lodge" we have not proven yet. Why on earth "The Lodge"? Who did you sell them to?"

On being informed that he had sold them to his friends Mrs Perry said:

"Why on earth sell that sort of thing to your friends?"

That evidence is, I think, illuminating. There is not a hint that in selling the units Mr White was acting otherwise than in the course of his employment or that he was acting in defiance of an instruction not to do so. I am satisfied that if Mrs Perry had thought that that was the position she would have taken steps immediately to disassociate Camelot from the transactions and would have dismissed Mr White from his employment. Yet she took none of those steps. It is true that Mr White's employment was terminated some two weeks later but, even on Mrs Perry's evidence, the reason for doing so was unrelated to the sale of units in "The Lodge". The reason was because Mr White wished to re-negotiate his terms of employment so as to increase his share of the commission payable to Camelot on any sales of property for which he was responsible.
While I am prepared to accept that Mrs Perry had reservations about the desirability of being associated with "The Lodge" project arising from her lack of understanding of what the limited partnership structure involved and her lack of information concerning Mr Ord, I am satisfied that she was not prepared, at any time before the transactions in question were entered into, to sever all connection between Camelot and the project. She was astute enough to realise that, despite her reservations, the project might prove attractive to investors and she was not prepared to forfeit the opportunity for Camelot to earn commission on sales of units in the development.
Indicators which support this view are -

. Her insistence that Camelot be given an authority to sell before any further work was done on the project.

. The fact that no step was taken at any stage to inform Mr Ord, First Coast or Surety Investments that Camelot did not intend to market "The Lodge" or that Camelot no longer wished to have authority to sell units in that project: the authority was terminated by Miss Bakker on behalf of First Coast but not until 6 November 1981.

. The fact that no step was taken to have Camelot's name as one of the selling agents of "The Lodge" removed from the sign on the land.

. The fact that Camelot continued to advertise "The Lodge" by a display in its window at least from early August until the end of September 1981 and from time to time during that period on a chalkboard outside its Broadbeach office.

. The fact that Mr Peter Francis Hill, who was re-employed by Camelot in its Broadbeach office at the end of September 1981, was briefed on "The Lodge" project by Mr Sellick at Mrs Perry's direction.

I also find that Mrs Perry's explanation for sending the letter dated 11 November 1981 to the Manager, Surety Investments Pty. Limited claiming commission in respect of the Maisey, Smedley, James and Traubner transactions quite unacceptable. Mrs Perry said that, although she took the firm stand that Camelot had no entitlement to commission, the letter was sent because Mr White had told her that Mr Ord had suggested that, if there were concern as to his reputability, standing and honesty, an account for commission on the sales made should be sent and it would be paid. Mrs Perry asked the Court to accept that she sent the account simply to prove to Mr White that the account would not be paid. She added that, if the commission was paid she "intended giving every penny of it back to his people", meaning the applicants in the present proceedings and, presumably, Mr and Mrs Traubner. The inference is, I think, clearly open that, having discovered that First Coast had failed to settle under the contracts for the purchase of the land, Mrs Perry considered it prudent to send an account for commission in respect of the sales that she then accepted as being sales effected by Mr White and Mr Sellick on behalf of Camelot.
I am unable to accept the submission put on behalf of Mudgeeraba that Mr White acted otherwise than on behalf of Camelot in bringing the transactions in question to fruition. I have dealt at some length with the submission that Mr White had been instructed not to sell units in "The Lodge". As to the other indicators on which counsel relied, I need say no more than that they are not, in my view, sufficient to show that Mr White was acting not on behalf of Camelot but on his own behalf or on behalf of Mr Ord or his companies. I should, perhaps, add that I do not regard the evidence as establishing that Mr White agreed to pay the applicants' legal costs or part thereof.
I find that Mr White had actual authority from Mudgeeraba to sell the units and shares in "The Lodge" project and that, in so doing, he was acting within the scope of his employment and "on behalf of" the company within the meaning of sub-section 84(2) of the Trade Practices Act 1974. In the light of that finding it is unnecessary to deal with the alternative submission put by counsel for the applicants that they were entitled to judgment against Mudgeeraba on the basis that Mr White had apparent or ostensible authority to sell units and shares in "The Lodge" project.

Damages
On behalf of Mr White (though not on behalf of the respondents) it was contended that there was not sufficient proof of loss or damage suffered by the applicants. Counsel submitted that it was incumbent upon the applicants to prove that there were insufficient funds available in First Coast or Surety Investments to return to them the amounts they had invested for shares in the limited partnership or paid by way of deposit on the units and that they had failed to do so.
Counsel referred to the evidence of Detective Sergeant Palmer. That evidence, he said, was directed to giving a satisfactory account for approximately $500,000 received by First Coast and Surety Investments but it fell short of doing so. He said that there was a substantial amount not accounted for, this submission being based primarily on the assertion that the initial deposits paid under the contracts for the purchase of the subject land and which were forfeited (totalling some $247,000) had been paid from sources other than the funds contributed to the partnership. This was established, he submitted, by the statement of Mr Ian Edward Campbell, a director of First Coast at the relevant time, and the evidence of Mr Anthony Reginald Roberts, solicitor, whose firm acted for First Coast in connection with the purchase of the land. Counsel also argued that, although evidence had been given that there was only a little more than $4,000 standing to the credit of certain bank accounts of First Coast and Surety Investments, it had not been shown that they were the only bank accounts of those companies. Further, the books of the company from which the destination of the moneys received might have been determined were not in evidence.
It must be conceded that the evidence does not exclude the possibility that there may be as yet undiscovered assets of First Coast or Surety Investments. However, a consideration of the evidence as a whole warrants, in my judgment, the inference being drawn that that possibility is remote - so remote that it does not justify the conclusion that the applicants have failed in their proof of loss or damage resulting from the events the subject of these proceedings. I am prepared to draw that inference and I do so. In reaching that conclusion I have relied particularly on the evidence of Mr Campbell, who had himself lost substantial sums by reason of loans made and a guarantee given in connection with "The Lodge" project, that he was not aware of any assets held by First Coast, Surety Investments or the limited partnership, the evidence given by Detective Sergeant Palmer as to the inquiries he made and the fact that Mr Ord had fled the country.
The applicants are entitled to be placed, so far as it is possible to do so, in the position they would have been in had they not entered into the transactions. Each is entitled to recover the sum of $50,000 paid for shares in the partnership and the amount paid by way of deposit under the contract for the purchase of a residential unit in "The Lodge". Those amounts are, in the case of Mr and Mrs Maisey $4,000, in the case of Mrs Smedley $3,925, and in the case of Nick James Pty. Limited $3,750. The applicants are also entitled, as a component of their damages, to an amount representing the loss of the use of the money paid over in consequence of the actionable conduct of Mudgeeraba. Under this head I propose to allow to each applicant interest on the sums paid at the rate of 12 per centum per annum from the respective date of each payment until judgment.
The damages to which the applicants are entitled are, therefore -

Mr and Mrs Maisey $77,420 Mrs Smedley $77,420 Nick James Pty. Limited $77,044

Mrs Perry's Liability

Mrs Perry's liability to the applicants must arise, if it arises at all, by virtue of the provisions of sections 82 and 75B of the Trade Practices Act 1974, sections contained in Part VI of the Act. Sub-section 82(1) entitles a person who suffers loss or damage by conduct of another person that was done in contravention of a provision of Part IV or V to recover the amount of the loss or damage by action against that other person or against any person "involved in the contravention". Section 52, which is the section of the Act contravened in this case, is contained in Part V. Section 75B provides -

"75B. A reference in this Part to a person involved in a contravention of a provision of Part IV or V shall be read as a reference to a person who -

(a) has aided, abetted, counselled or procured the contravention;

(b) has induced, whether by threats or promises or otherwise, the contravention;

(c) has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention; or

(d) has conspired with others to effect the contravention."

Counsel for the applicants submitted that the evidence established that Mrs Perry was, directly or indirectly, knowingly concerned in, or party to, the contraventions of section 52 constituted by the conduct of Mr White on behalf of Mudgeeraba.
It is established by Yorke v. Lucas (1983) 49 ALR 672, a decision of a Full Court of this Court, that to be a "party to" a contravention of section 52 within the meaning of section 75B(c) involves participating in, or taking part in, or being concerned in the contravention and requires a mental element on the part of the person sought to be made liable. After referring to various provisions in section 75B their Honours said (at pp.682-3):

"We can discern no reason why Parliament would have intended that a section which renders natural persons liable for a contravention by a corporation should require some mental element or absence of innocence in every case to which it refers except one which itself requires in its first limb that the person was 'knowingly' concerned in the contravention. This is especially so when the word 'party' is found in accessory provisions of criminal legislation such as s.5 of the Crimes Act 1914.

The words 'party to the contravention' necessarily connote, in our view, that a person assents to or concurs in the conduct which constitutes the contravention. He must therefore know or be aware of the essential facts or matters which must be proved to establish the contravention. We do not think that the word 'knowingly' should literally be read as qualifying both the phrases 'concerned in' and 'party to' in s.75B(c). Two considerations lead us to this view. First, it would be unnecessary to precede the phrase 'party to' with the word 'knowingly', as the requisite element of knowledge is inherent in the concept of being a 'party to' a contravention. Secondly, the placement of the commas in s.75B(c) is indicative of the draftsman's intentions.

In Fencott v. Muller ((1983) 46 ALR 41) Gibbs CJ said at 48: 'By the combined provisions of ss.75B and 82, the Parliament has made natural persons liable in damages for a contravention by the corporation only if they have been involved in the manner described by s.75B, which, in my opinion, refers to a close rather than a remote involvement in the contravention. In the most general words of s.75B, those of para (c), the word "knowingly" significantly confines the operation of the provision.'

In our opinion, the words 'party to the contravention' refer to a person who participates in, or assents to the contravention in question. To be regarded as participating in or assenting, such a person must actually or constructively be aware of the elements constituting the contravention. To our minds, it is not sufficient to render an individual liable if he is shown to be aware of some only of those elements. Where the contravention in question relates to engaging in trade or commerce in conduct that is misleading, one of the elements involved is that the conduct is misleading. If a person sued under s.82 for damages as a person involved in the contravention is unaware of the essential facts and matters constituting the contravention, then he lacks knowledge of an essential element of the contravention. He cannot, in our view, in those circumstances, be regarded as a party to the contravention (cf Guthrie v. Doyle Dane & Bernbach Pty. Ltd. (1977) 16 ALR 241 at 244, but see Taperell, Vermeesch & Harland: Trade Practices and Consumer Protection 2nd ed, at p.604)."

Counsel for the applicants submitted that it was not necessary that every factual detail of the conduct constituting the contravention of section 52 was known to Mrs Perry. All that was required to establish liability was that Mrs Perry knew that Mr White would be engaging in conduct that amounted to such contravention and knew the kind of conduct in which he would be engaged. It was not necessary to show that she knew the precise representations that Mr White would be making.
Counsel submitted that not only was Mrs Perry in a position to control Mr White's actions but it was established that she in fact exercised control to a marked degree over all aspects of the work carried out from the Broadbeach office of Camelot. He referred to the fact that Camelot had authority to sell units in "The Lodge", that that authority had been procured by Mrs Perry and that Mrs Perry had reservations about the project and was of the view that it represented a high risk investment. He submitted that Mrs Perry knew that on his visit to Sydney Mr White proposed to endeavour to sell units in "The Lodge", that she was actively interested in him doing so, that she knew he would be using the promotional material which Camelot had in relation to the project, material which was itself false and misleading in a number of respects, that she knew Mr White was representing himself as an investment consultant and she knew that Mr White would be extolling the virtues of "The Lodge" and not pointing to any disadvantages that might flow from investment in the project unless he could say something in relation to those disadvantages which would make the prospective investor put them out of his mind. He drew particular attention to Mrs Perry's evidence that Mr White would have been concerned to point out the merits of the transaction and would not have referred to the demerits, that a person reading the limited partnership agreement would have to be a fool not to realise that an investment in the partnership would be at risk and that it would be silly to think that a prospective investor told of the risks involved would enter into the transaction.

Counsel also relied on Mrs Perry's conduct subsequent to her being informed by Mr White on or about 23 September 1981 that he had sold units in "The Lodge" project to the applicants. It was submitted that, notwithstanding that Mrs Perry was aware from her telephone conversation with Miss Bakker on 3 September 1981 that the investment moneys might be payable in two instalments and must, therefore, have realised that the applicants might not have paid the investment moneys in full, she took no steps to ascertain that that was the position and to warn the applicants against making the further payments.
Counsel for Mrs Perry submitted that the argument put on behalf of the applicants involved the paradox that the Court was being asked to accept on the one hand that Mrs Perry thought that "The Lodge" was so obviously such a high risk project that no-one would invest and on the other that Mrs Perry not only permitted but encouraged its promotion. He further submitted that much of the applicants' argument depended upon the Court accepting the evidence of Mr White and Mr Sellick and that the Court should not accept that evidence. He also submitted that in so far as the applicants' argument relied on false and misleading statements in the promotional material relating to "The Lodge", such statements were not those relied upon by the applicants: the applicants relied solely upon the oral representations alleged to have been made by Mr White. Finally, counsel submitted that the Court should not draw the inference that because Mrs Perry knew that salesmen exaggerate and paint a rosy picture of a property they are selling, she must have had knowledge of the essential ingredients of the alleged contravention of section 52, namely the precise representations upon which the applicants rely.
I substantially accept the factual basis of the submission made by counsel for the applicants. In particular, I accept that Mrs Perry was well aware -

. that Mr Sellick and Mr White were actively engaged in endeavouring to interest potential investors in "The Lodge" project;

. that the brochure and other material, including the circular letter on the letterhead of Camelot, were being used for promotional purposes;

. that Mr White, while on his visit to Sydney, intended to try to sell units in the project;

. that Mr Sellick and Mr White were representing themselves as investment consultants; and

. that, in speaking with potential investors the virtues rather than the disadvantages and risks would be highlighted.

I also accept that Mrs Perry was prepared to have all this take place notwithstanding her lack of understanding of how the limited partnership concept would operate in practice and her reservations about the project itself and its promoter, Mr Ord. Further, I accept that Mrs Perry took no steps to alert the applicants to the risks once she became aware that the transactions had been entered into and before the second instalments of investment moneys were paid.

I am not, however, convinced that those facts are sufficient to warrant the conclusion that Mrs Perry was, directly or indirectly, knowingly concerned in, or party to, the contraventions of section 52 that occurred. She was not aware of the representations that Mr White was to make to each of the applicants and, although the conclusion is clearly open that she stood by knowing that the virtues of the project would be accentuated and the disadvantages minimised, that is not, in my view, sufficient to enable a positive finding to be made that she concurred in the conduct constituting the contraventions.
The claim against Mrs Perry in each of the proceedings, therefore, fails.

Mudgeeraba's Cross-claims Against Mr White
The cross-claims against Mr White are founded in contract. It is pleaded that it was an implied term of Mr White's engagement as a salesman by Mudgeeraba that, in the course of his duties as a salesman, he would -

(a) act honestly;

(b) exercise a reasonable degree of skill and care as a salesman;

(c) obey the lawful directions of Mudgeeraba concerning his duties.

That allegation was admitted on the pleadings.

For Mudgeeraba it was contended that Mr White had, in relation to each of the transactions, committed a breach of that implied term thereby giving rise to a right in it to be indemnified against the damages awarded to the applicants.
I need not here repeat what I have already said about the part Mrs Perry, as a director of Mudgeeraba and the person exercising the day to day management of the Broadbeach office of Camelot, played in the marketing of "The Lodge" project by Camelot. However, in the light of the findings I have made in that regard I am unable to conclude that Mr White, in acting as he did, was acting in breach of any obligation which he owed to his employer.
The cross-claims should, therefore, be dismissed.

Cross-claims against First Coast and Surety Investments
In each proceeding Mudgeeraba and Mrs Perry applied, pursuant to Order 18, rule 4 of the Federal Court Rules, for judgment by default against First Coast and Surety Investments. Judgment on admissions was sought to the extent necessary to give Mudgeeraba and Mrs Perry an indemnity in respect of any damages and costs awarded to the applicants against them and in respect of their own costs of the proceedings. In the light of my finding that Mrs Perry is not liable in damages to the applicants, I need not further consider her application.
Order 18, rule 4 of the Federal Court Rules provides -

"4.(1) Where admissions are made by a party, whether by his pleading or otherwise, the Court may, on the application of any other party, pronounce any judgment or make any order to which the applicant is entitled on the admissions.

(2) The Court may exercise its powers under sub-rule (1) notwithstanding that other questions in the proceeding have not been determined."

In support of his submission counsel for Mudgeeraba referred to orders made by Fitzgerald J. on 22 February and 7 March 1984 respectively authorising substituted service on First Coast and Surety Investments of the application and statement of claim of the applicants in each proceeding and of the cross-claims of Mudgeeraba and Mrs Perry. Counsel also referred to the several affidavits of Peter Joseph Crawford sworn 6 March 1984 and of Michael Fitzgibbon sworn 8 March 1984 as providing evidence of such substituted service. It may be noted that those affidavits do not establish that the orders for substituted service were fully complied with but from other affidavits, being affidavits sworn on behalf of the applicants, it appears that service in accordance with the orders made by Fitzgerald J. was effected.
An appearance has not been entered in the proceedings by First Coast or Surety Investments and no defences to the cross-claims have heen filed or served. In such circumstances Order 11, rule 13 of the Federal Court Rules provides that the allegations of fact made in the cross-claims are deemed to be admitted by First Coast and Surety Investments.
In the proceeding in which Mr and Mrs Maisey are the applicants the cross-claim, in the form which it took at the time of its service on First Coast and Surety Investments, contained the following relevant paragraphs -

"3. At all material times:-

(a) The First Cross Claimant, the First Cross Respondent and the Second Cross Respondent were duly incorporated companies;

(b) One Patrick Ord was a director of the First Cross Respondent;

(c) The said Ord was acting on behalf of the First and Second Cross Respondents;

(d) The Second Cross Claimant was a director of the First Cross Claimant.

4. In about June 1981, the said Ord sought to engage the Third Respondent to act for the First and Second Respondents in and about the sale of units in a limited partnership styled 'First Coast Pty. Ltd. and Ors' and in and about the sale of Lots or proposed Lots in a proposed Building Units Plan to be registered in respect of a building to be known as 'The Lodge' proposed to be constructed at Broadbeach in the State of Queensland.

5. At the said time, the said Ord made the following representations to the Second Cross Claimant and to Salesmen engaged by the First Cross Claimant including the Third Cross Respondent:-

(a) A 25 storey building consisting of 95 home units would be constructed by the First Respondent opposite the Broadbeach International Hotel in Victoria Avenue, Broadbeach on six parcels of land.

(b) Full deposits had been paid under the contracts for the purchase of each of the six parcels of land by one Patrick Ord;

(c) About 30 or approximately one third of the said units had already been sold and paid for;

(d) About 30 or approximately one third of the units had been sold and that there already was sufficient money available to complete the purchase of the six parcels of land.

6. If, as is alleged in the Applicant's Statement of Claim:-

(a) The Third Cross Claimant (sic) made the said representations to the Applicants;

(b) The Third Cross Respondent was then acting on behalf of the First and Second Cross Claimants;

(c) The First and/or Second Cross Claimants were acting on behalf of the First and Second Cross Respondents

then the said representations were made by the Third Cross Respondent with the authority of and at the implied request of the First and Second Cross Respondents."

The reference in paragraph 4 to "the First and Second Respondents" is a reference to First Coast and Surety Investments. Subsequently, paragraph 4 was amended to substitute "August 1981" for "June 1981" and sub-paragraph 6(a) was amended to substitute "Respondent" for "Claimant". The document as so amended was not served on First Coast or Surety Investments.
The cross-claims filed in the proceedings in which Mrs Smedley and Nick James Pty. Limited are respectively the applicants contained paragraphs to the same effect as paragraphs 3, 4 and 6. However, the representations alleged to have been made by Mr Ord differed in each case and from those alleged in the case of Mr and Mrs Maisey. In the proceeding in which Mrs Smedley is the applicant, paragraph 5 of the cross-claim alleged -

"5. At the said time, the said Ord made the following representations to the Second Cross Claimant and to Salesmen engaged by the First Cross Claimant including the Third Cross Respondent:-

(a) A 25 storey building consisting of 95 home units would be constructed by the First Respondent opposite the Broadbeach International Hotel in Victoria Avenue, Broadbeach on six parcels of land.

(b) a good number or about thirty of the said units had already been sold;

(c) the moneys invested by purchasers of the said units and shares in the said partnership would be put towards construction of the said building;

(d) the said Patrick Ord was a banker and a man of substance."

In the proceeding in which Nick James Pty. Limited is the applicant, paragraph 5 of the cross-claim read -

"5. At the said time, the said Ord made the following representations to the Second Cross Claimant and to Salesmen engaged by the First Cross Claimant including the Third Cross Respondent:-

(a) A 25 storey building consisting of 95 home units would be constructed by the First Respondent opposite the Broadbeach International Hotel in Victoria Avenue, Broadbeach on six parcels of land.

(b) Full deposits had been paid under the contract for the purchase of each of the six parcels of land by one Patrick Ord;

(c) About one third of the said units have already been sold and paid for;

(d) The moneys invested by purchasers of the said units and shares in the said partnership would, initially, be put towards payment of the balance of the purchase price for the said six parcels of land and then towards construction of the said building."

First Coast and Surety Investments were not given notice of the date of hearing of the proceedings and neither company was represented at, or took any part in, the hearing. The companies were given no notice that Mudgeeraba and Mrs Perry proposed to seek judgment by default on the basis of admissions upon the pleadings.
The power which a rule such as Order 18, rule 4 of the Federal Court Rules confers must be exercised with great caution though in a clear case a proper exercise of the power will obviate the delay involved in a hearing and will save unnecessary expense: Re Registered Trade Marks "Certina" and "Certina DS" (1970) 44 ALJR 191 per Barwick C.J. The power is clearly discretionary: see generally the discussion of similar provisions by the Court of Appeal in New South Wales (Hardie and Hope J.J.A. and Bowen C.J. in Eq.) in Termijtelen v. Van Arkel (1974) 1 NSWLR 525.
Having given the matter careful consideration I have concluded that I should refuse to act upon the admissions appearing upon the pleadings and should decline to make the orders sought. In reaching that conclusion I have had particular regard to the different way in which the representations are pleaded in each of the cross-claims, to the amendment of the date upon which the representations are said to have been made (an amendment of which no notice has been given to First Coast or Surety Investments) and to the circumstance that, on the evidence before the Court in the proceedings between the respective applicants and Mudgeeraba and Mrs Perry, Mr Ord did not himself make a representation that 30 units had been sold and paid for (the evidence is that he said 7 had been sold) or a representation that by reason of the sale of 30 units sufficient money was available to complete the purchase of the six parcels of land.

Summary
In the proceeding brought by Mr and Mrs Maisey (No. G 109 of 1983) there will be judgment for the applicants against Mudgeeraba in the sum of $77,420 with costs, including reserved costs.
In the proceeding in which Mrs Smedley is the applicant (No. G 110 of 1983) there will be judgment for the applicant against Mudgeeraba in the sum of $77,420 with costs, including reserved costs.
In the other proceeding, that in which Nick James Pty. Limited is the applicant, there will be judgment for the applicant against Mudgeeraba in the sum of $77,044 with costs, including reserved costs.
In each proceeding -

(a) the claim against Mrs Perry is dismissed;

(b) the cross-claims by Mudgeeraba and Mrs Perry against Mr White are dismissed, Mudgeeraba to pay Mr White's costs, including reserved costs.

(c) the applications by Mudgeeraba and Mrs Perry for judgment by default against First Coast and Surety Investments on admissions upon the pleadings are dismissed.

[1985] FCA 191

22 MAY 1985