Modern Merchandising P/L v Brown

`IN THE SUPREME COURT

OF QUEENSLAND
No. 27 of 1995
Brisbane

Before the Hon. Justice White

[Modern Merchandising P/L v. Brown & Anor]

BETWEEN:

MODERN MERCHANDISING PTY LTD
(ACN 000 556 329)
Plaintiff

AND:

GARRY LYNN BROWN
First Defendant
AND:

KATHY CARLENE SMITH (also known as
KATHY CARLENE BROWN)
Second Defendant
AND:

HEDGE PARK PTY LTD
(ACN 053 214 681)
Third Defendant
AND:

DES MITCHELL
Fourth Defendant

REASONS FOR JUDGMENT - WHITE J
Judgment delivered 24th day of April 1998

CATCHWORDS: CONTRACT - Joint Ventures for Trucking Partnership - Disagreement as to terms- Receipt of monies - Misleading and deceptive conduct - Costs - Against Bankrupt.

Counsel:Mr C Francis for Plaintiff
Mr G Brown for himself as First Defendant

Solicitors:Roy Gordon & Gordon, Solicitors as town agents for
G T Down Solicitor for the Plaintiff.
Mr G Brown for himself as First Defendant
No appearances for Second, Third and Fourth Defendants

Hearing Dates: 23, 24, 25, 26, 27, 30, 31 March 1998

REASONS FOR JUDGMENT - WHITE J

Judgment delivered 24/ 04/ 1998

The plaintiff, Modern Merchandising Pty Ltd (“MM”) seeks the sum of $251,425.70 from the first and second defendants as damages for breach of contract or on other bases, declarations as to ownership of certain vehicles and other orders. It seeks declaratory and injunctive relief against the third and fourth defendants in respect of two motor vehicles, alternatively damages for conversion of those vehicles.
The action arises out of three (two on the first and second defendants’ case) joint ventures entered into in 1993 between the plaintiff and the first and second defendants.

Procedural Chronology

It is useful before embarking on a consideration of the facts to give a brief overview of the main procedural steps which have occurred. MM issued Writ no.227 of 1995, the present proceeding, against the first and second defendants on 15 February 1995 and delivered a statement of claim therewith. Defences were delivered and discovery of documents took place during 1995.
MM issued Writ no.156 of 1996 against the third and fourth defendants on 5 January 1996. On 5 January Fryberg J granted ex parte injunctive relief against the defendants in both actions restraining them from disposing of a Kenworth prime mover, a Hockney tanker and a Fruehauf semi-trailer, vehicles concerned in the joint ventures the subject of this action. The third defendant had obtained a bill of sale over the Kenworth prime mover and the Hockney tanker as security for a loan of $30,000 to the first defendant in 1994 on his assertion that he was the owner of the unencumbered vehicles. The fourth defendant was a director of the third defendant and concerned in the removal of the vehicles from MM’s custody exercising the third defendant’s alleged rights under the bill of sale. The order of 5 January 1996 was extended by consent on 11 January 1996 but discharged as against the second defendant. Both actions were ordered to be consolidated in the present action and directions were given.
On 12 February 1996 MM delivered a consolidated statement of claim and on 22 March the first and second defendants delivered a defence. On 28 March 1996 the third and fourth defendants delivered their defence. Further disclosure and inspection of documents took place.
In January and March 1997 MM delivered a signed certificate of readiness for trial which the defendants failed to sign and return. On 11 April 1997 MM filed a summons seeking an order for dispensation with the certificate of readiness for trial and on 2 June 1997, a summons seeking an order for certification for speedy trial. The first defendant delivered an amended defence and counterclaim on 6 June 1997 and the second defendant delivered a separate amended defence which admitted formal matters and otherwise denied or did not plead to the allegations in the statement of claim. The summonses were heard in the first instance on 10 June 1997 and again on 24 June 1997. On the latter date the first and second defendants signed and returned to MM’s solicitor the certificate of readiness for trial. Ambrose J ordered inter alia that all parties participate in case appraisal and made certain directions about the payment of the costs associated with it.
The case appraiser held preliminary conferences on 10 July and 3 September 1997. At those conferences the first and second defendants were represented by counsel and their then solicitors. The case appraiser gave certain directions and in accordance with those directions MM delivered to the first and second defendants’ solicitors (it being apparent that the third and fourth defendants would not participate in the case appraisal; their defence asserted the entitlement of the first and second defendants to the vehicles the subject of the bill of sale) proofs of evidence of all witnesses upon whose evidence it was intended to rely at the case appraisal together with copies of all relevant documents. At the preliminary conference held on 3 September 1997 by consent the case appraiser directed that each defendant deliver to MM by 26 September 1997 a copy of the proof of evidence of any witness upon whose evidence the defendant intended to rely in defence of MM’s claim or in support of any counter-claim or cross-claim and any supporting documents. The defendants were directed to respond to MM’s Scott schedule and provide a Scott schedule of each item of damage or monetary sum in respect of the counter-claim. MM was directed to deliver to each defendant by 6 October 1997 any evidence in reply. The case appraisal was to take place at 9.00 a.m. on 20 October 1997.
MM complied with the directions but the first and second defendants did not deliver any material upon which they intended to rely. The first and second defendants’ solicitors indicated to MM’s solicitor that they no longer acted. MM’s solicitor wrote that the first and second defendants were expected to be in attendance at the case appraisal. It seems that counsel for the first and second defendants, immediately prior to the case appraisal, contacted MM’s counsel and sought to have the case appraisal deferred until the afternoon to which request MM did not accede. The case appraisal proceeded in the absence of any of the defendants or anyone appearing on their behalf and the case appraiser’s certificate and decision were filed on 11 December 1997.
Rex Walter Dallimore, a director of MM and the principal witness for MM, died on 3 November 1997. He made an extensive statement with supporting documents dated 29 August 1997 which had been given to the first and second defendants’ solicitors pursuant to the directions of the case appraiser.
On 18 February 1998 Lee J extended the time for the first defendant to elect to go to trial and ordered that the action be placed on the callover of civil trials for 20 February 1998. It was set down for trial for 6 days.
The first defendant (“Mr Brown”) appeared at the trial and acted on his own behalf. The second defendant is Mr Brown’s former wife. She was made bankrupt on 3 October 1997. The Official Receiver indicated that she did not intend to defend the action. The fourth defendant is a bankrupt and was the manager of the third defendant. He informed Mr G. Down, the plaintiff’s solicitor, on 17 March 1998 that the directors of the third defendant were bankrupt, that the third defendant had no assets and would be dissolved for failure to lodge returns and that neither he nor the third defendant intended to defend these proceedings.
No particulars of Mr Brown’s counter-claim apart from a lump sum claim of $568,311.68 have ever been given by Mr Brown to MM. Mr Brown was advised in the course of the trial that this was essential if the matter were to proceed to hearing. At the end of the sixth day of the hearing Mr Brown gave to counsel for MM and his instructing solicitor a document prepared by Mr Brown’s accountants which purported to be the substance of the counter-claim. This had allegedly been obtained by the accountants from an analysis of Mr Brown’s books of account, ledgers and receipts. The trial had been set down for 6 days and it was apparent that not only were these particulars inadequate for MM to meet the counter-claim but were far too late to be dealt with on this hearing. Since there was a real likelihood that a finding in favour of the terms of the joint ventures contended for by MM would extinguish any counter-claim by Mr Brown, I ordered that the issue of the counter-claim be adjourned until judgment and reasons were delivered in MM’s action. This did not preclude any further submissions that might be made by MM that the counter-claim ought to be struck out or forever stayed on other bases, such as failure to participate in the case appraisal and in the event submissions were made by counsel for MM to that effect.

Overview of the Action

Rex Walter Dallimore (“Mr Dallimore”) and David Ian Green (“Mr Green”) were at the relevant time directors of MM. As has been mentioned, Mr Dallimore died on 3 November 1997. He was aged 70 years and without immediate family. He and Mr Green had been friends for 40 years. Mr Dallimore conducted most of the negotiations with Mr Brown. Mr Green was and is a businessman who operates a motel at Spring Hill and has other interests but did have a number of discussions with Mr Brown. The dispute between MM and the first and second defendants is in relation to enterprises entered into between them in 1993.
The first joint venture, known as the “lead train joint venture” was entered into about April/May 1993. MM alleges that Lecthead Pty Ltd (“Lecthead”) and Lowhead Pty Ltd (“Lowhead”), two companies of which the first and second defendants were directors, (Lecthead was trustee of the Garry Brown Family Trust) would operate two road trains carrying lead ingots from Port Pirie in South Australia to Toowoomba and Brisbane in Queensland. MM and Lecthead would each supply to the joint venture a road train consisting of a prime mover, two 40 foot trailers and one dolly. MM would advance money to Lecthead or the first and second defendants for the purchase of such a road train which MM would own. The first defendant would use his expertise in the trucking industry to purchase appropriate vehicles and to assist in the operation of the venture on behalf of MM. Lowhead would operate the venture and pay to each of MM and Lecthead a rental of $1,000 per week for the use of the road trains and would pay one half of the annual profits of the joint venture to each of MM and Lecthead. Lowhead would pay all the operating costs and expenses of the lead train joint venture. MM alleges that it was induced to enter into this arrangement by misleading and deceptive conduct on the part of Mr Brown and the second defendant.
The second joint venture, known as the “fuel train joint venture” was entered into in or about August 1993. The material terms of that agreement as alleged by MM were that a tanker fuel train would be established to carry fuel from a wellhead in Queensland to various customers in remote rural centres. MM was to advance money to Lecthead and or the first and second defendants to purchase a prime mover and tanker which would be owned by MM. The fuel train was to be operated by Lowhead which would charge MM and Lecthead for its services at cost. Two-thirds of the operating expenses for the fuel train were to be paid by MM and one third by Lecthead and were to be paid to Lowhead. In return for providing the capital for the fuel train, MM contends that it was to receive two thirds of the net annual profits of the operation and Lecthead one third, but that MM would retain the whole of the profits until it had been reimbursed for Lecthead’s one third share in the capital expended in acquiring the fuel train. The first defendant was to use his expertise in the trucking industry to purchase the appropriate joint venture vehicles on behalf of MM and to operate the joint venture.
The first defendant contends for entirely different contractual arrangements with MM. He admits that the agreement was to carry lead ingots from Port Pirie to Brisbane (MM pleads Toowoomba but the final destination is of no importance). Mr Brown admits that MM was to and did provide funds to the joint venture to purchase a prime mover, two trailers and a dolly. He pleads that he himself was to supply one prime mover to the venture to the extent that it was not required by his own business, which operated under the name “G L Brown Transport”, two trailers and one dolly. He contends that the agreement was that he would advance on behalf of the joint venture all operating expenses and that as security for those outgoings all of the equipment of the joint venture, including the road train the purchase monies for which were to be provided by MM, would be owned by him. The explanation pleaded and maintained in evidence for this somewhat surprising arrangement as to ownership was to avoid scrutiny of MM’s and Mr Dallimore’s taxation and social security affairs and as security for the expenses to be paid by him. Mr Brown contends that the agreement provided that receipts from the lead train joint venture would be applied first to reimburse his operating expenses, then to MM in respect of the first road train and to himself in respect of the second road train. He pleads that he was to transfer ownership of the first road train to MM at a time to be agreed subsequent to the venture becoming profitable and that it was to be implied that the parties would account to each other for their respective contributions to the joint venture for the purpose of ascertaining the profit or loss of the venture.
The first defendant admits that he entered into the fuel train joint venture in August 1993 but contends that he was to own all the equipment of the venture to be purchased by him from funds provided by MM. He maintains that MM would supply the fuel, arrange the customers and pay him 8 cents per litre for the fuel transported. He would outlay operating expenses which would be recouped in the charges and provide his expertise and skill in arranging the purchase of the equipment and driving the vehicle.
MM advanced or caused to be advanced to Mr Brown and/or the second defendant with whom it is contended he was in a partnership relationship as far as the ventures were concerned, the sum of $264,974 for the purchase of certain vehicles and other expenses associated with the joint ventures. Mr Brown has admitted receipt of these sums of money. Mr Brown purchased 7 vehicles with this money:

One Kenworth prime mover registration no. 522-BTQ (“the Kenworth”);
One 42 foot Fruehauf flat top trailer registration no. 889-QBH (“the 42 foot trailer”)(green);
One 40 foot Fruehauf flat top trailer registration no. 989 QBE (“the 40 foot trailer”) (white);
One dolly;
One Highgate 32,000 litre tanker trailer chassis no. TA 3927 (“the Highgate tanker”);
One Western Star prime mover registration no. 680-BLA (“the Western Star”); and
One Hockney 37,000 litre tanker trailer (“the Hockney tanker”).
The third joint venture is alleged by MM to have been entered into in December 1993 for the purchase of land at Wecker Road, Mansfield as a trucking station. MM alleges that Mr Brown told Mr Dallimore that land was required for parking the joint venture vehicles and that land at Wecker Road, which was for sale at $175,000 of which the deposit was $30,000, was suitable for those purposes. MM alleges that Mr Brown required payment to him of $15,000 being one half of the deposit on the understanding that MM and Lecthead would be co-owners of the land which MM advanced. The purchase of the land did not proceed. MM alleges that Mr Brown failed to agree to the terms for vendor finance. The $15,000 was not returned to MM.
Mr Brown denies that there was a third joint venture and alleges that the $15,000 advanced to him by Mr Dallimore allegedly on behalf of MM was a personal loan to him and that at no time had there been any joint venture proposal to purchase the land in conjunction with MM. He admits that he has not accounted for the $15,000 but says that he was entitled to keep it and set off his expenditure on the lead train joint venture.
On 24 June 1993 Lecthead and Lowhead were dissolved for failure to lodge annual returns. This was not made known to Mr Dallimore or Mr Green.
On 7 June 1994 Mr Brown signed “receipts” that he had purchased the 7 vehicles and received other moneys from MM in the sum of $269,974.
On 12 October 1994 Mr Brown signed a document entitled “Acknowledgement of Agency” acknowledging that he acted as agent for MM when he purchased the vehicles and that MM advanced the monies for such purchases.
On 10 November 1994 Mr Brown purported to give a bill of sale in favour of the third defendant, Hedge Park Pty Ltd, over the Kenworth prime mover and the Hockney tanker.
MM has made repeated demands, particularly through Mr Dallimore, for the return of the joint venture vehicles or for the repayment of monies advanced for their purchase or for the payment of rent for the use of the vehicles and a proper accounting by Mr Brown and the second defendant for the monies advanced in the joint ventures but without result. Mr Brown contends that since he owned the joint venture vehicles he was entitled to deal with them as he saw fit. He sold all but 3 of the joint venture vehicles and kept the proceeds. Those 3 vehicles are subject to the injunction and one is held by way of a lien for work ordered by Mr Brown to be done. He maintains that MM is indebted to him for expenses associated with the joint ventures which exceeds the value of the vehicles should MM establish its ownership. He contends that at all times the books of the joint ventures were available to Mr Dallimore for his perusal and examination. Mr Brown or the second defendant had paid $18,548.30 to MM and/or Mr Dallimore and Mr Green in various amounts but say they were not obliged to do so. The balance of $251,425.70 is claimed by MM. The vehicles remaining have been valued at approximately $28,500 and should they be returned to MM, MM accepts that the amount claimed will accordingly be reduced.

The Evidence

It was unfortunate that Mr Dallimore was unable to give his evidence in chief in person and be subjected to cross-examination. He was the principal negotiator for MM in its dealings with the first and second defendants. The terms of the joint ventures contended for by MM and those contended for by the defendants are quite irreconcilable in material respects. Nonetheless Mr Dallimore maintained extensive contemporaneous notes of his conversations with Mr Brown, many of which he states he gave to Mr Brown for his confirmation. Many of these documents have been overwritten with comment subsequently by Mr Dallimore apparently preparing for the litigation. This is immediately apparent when looking at the original but initially gave rise to some misunderstandings with the photocopied document. Mr Brown described Mr Dallimore as intelligent, pedantic and irritating. The latter particularly seems to have been because he constantly visited Mr Brown at his home and telephoned him many many times about the joint ventures and was generally inquisitive. This persistence on Mr Dallimore’s part was confirmed by Constable Crone when Mr Dallimore reported stolen joint venture vehicles to him.
In order to counter Mr Dallimore’s contemporaneous records of their dealings, Mr Brown said that Mr Dallimore was confused and had been unable to understand what he, Brown, was saying, particularly concerning the first joint venture (t/s 422). Mr Francis, who appeared for MM, put Mr Dallimore’s statement to Mr Brown with some particularity. It was generally not contradicted except, not surprisingly, in respect of certain material aspects of the joint ventures. Mr Green was cross examined at length by Mr Brown on both Mr Dallimore’s statement and his own which had been provided to Mr Brown pursuant to the directions of the case appraiser. Mr Brown had a significant advantage over MM in that he had had since September 1997 virtually all the evidence which MM intended adducing in the action, while MM had only his amended defence and counter claim since he had never complied with the case appraiser’s directions.

Mr Brown appeared intelligent, well organised and familiar with all the material. He was able to give his own evidence in a coherent fashion and called other witnesses in support of his defence. However he did not depart from his amended defence and “flesh out” his evidence of what he had done on behalf of the lead train joint venture. He did not put all of the evidence in his case to Mr Green or to some of MM’s other witnesses, but Mr Green gave brief rebuttal evidence. At the outset of the trial Mr Brown was inclined to seek to amend his defence to allege that in 1994 he signed documents acknowledging receipt of monies on behalf of MM under duress. This had been pleaded in his original defence but not maintained in the amended pleading delivered in June 1997. He elected not to pursue the matter and nothing in the evidence came remotely close to suggesting legal or any other form of duress.
Mr Brown said that he kept no diaries or contemporaneous notes of his dealings with Mr Dallimore and Mr Green, rarely put anything in writing to them and had difficulty recalling specific conversations after so many years. My impression was that Mr Brown attempted to answer the many questions in cross-examination which began “Did you tell Mr Dallimore ...” by reference to facts which might suggest to him that he would not have done so, rather than from any memory of not doing so. Whilst for some witnesses this may lend verisimilitude to their recollection it was not the case with Mr Brown. His recollection of the terms of the joint ventures was in complete contradiction to Mr Dallimore’s contemporaneous notes prepared prior to the commencement of the lead train joint venture and subsequently before relations between Mr Brown, Mr Dallimore and Mr Green became strained. Some, at least, of these notes were seen by Mr Brown as they appeared in his list of disclosed documents and others he did not deny seeing at the time. I did not find Mr Brown a witness whose recollection of past events could be relied upon except where supported by other reliable evidence. I did not find the evidence of Mr Emmanuel Bellas, called by Mr Brown, reliable as to the terms of the lead train joint venture contended for by Mr Brown. The whole thrust of the evidence adduced by MM is in favour of MM’s allegations of fact and against Mr Brown’s. It is cogent and well documented. I found Mr Green a reliable witness. Even if matters contended for by Mr Dallimore were not objectively the case I accept that Mr Brown made the statements and representations attributed to him by Mr Dallimore and Mr Green.

The Lead Train Joint Venture

Mr Dallimore met Mr Brown some months before March 1993 through a mutual business acquaintance. They met regularly thereafter at Mr Brown’s and the second defendant’s home and discussed business ventures. Mr Brown apparently exhibited signs of material success. He was then engaged with Mr Emmanuel Bellas as a consultant to overseas investors in a Gold Coast property development. Mr Dallimore was present at many of their discussions at Mr Brown’s home. Mr Brown attributed much of his financial success to Mr Dallimore to the many contacts made arising out of importing and selling American aircraft in Australia, as well as some 15 years in the trucking transport business. He said that he was something of a pioneer in road train transportation systems prior to 1993 (t/s 315). There was some discussion about Mr Dallimore investing in a transport business venture with Mr Brown prior to Mr Brown driving a truck to Western Australia and back through Whyalla and Port Pirie to Brisbane in about February 1993. When he returned Mr Brown agreed that he discussed a possible venture with Mr Dallimore. Mr Dallimore’s evidence was that on 10 March 1993 Mr Brown telephoned him to say that he had an excellent investment available in trucking and that he should consider investing in a road train as it was very profitable. He indicated to Mr Dallimore that he himself had netted an annual income of approximately $130,000 with his Transtar prime mover and trailers. Mr Brown told Mr Dallimore that Mr Bob Rogers of Brambles in South Australia had asked him to subcontract for the cartage of lead ingots from the BHP smelter at Port Pirie to Century Batteries and Brambles Depots in Brisbane. He told Mr Dallimore that he needed a joint venture partner to put in approximately $100,000 capital to buy a road train to match his, consisting of a prime mover capable of pulling 2 x 44 foot trailers as his own did. Mr Dallimore asked Mr Brown to send him some material.
On 17 March 1993 Mr Brown faxed a document on the letterhead “G L Brown Transport” setting out certain matters which Mr Dallimore described as a business plan (Exhibit 6). Mr Dallimore states that Mr Brown telephoned him immediately following his receipt of the document and went through it with him. Mr Brown explained to Mr Dallimore that the first line “Tonnage rate = $72 ton x 100 p/trip = $7,200" was calculated using two road trains comprising two prime movers and 4 trailers to carry 100 tonnes of lead ingots from Port Pirie at $7,200 a trip. Mr Brown told Mr Dallimore that he calculated an annual gross income of $576,000 over a 10 month period. The document sets out the expenses associated with the venture per month which included allowances for tyres, fuel, wages, registration and insurance and major repairs. The net income for Mr Dallimore set out in the document and confirmed orally by Mr Brown to Mr Dallimore was that he could earn $8,000 per month and Mr Brown $8,754 for an outlay by Mr Dallimore of $100,000. Mr Brown told Mr Dallimore that he needed another road train operator to join him to gain the 25% saving that was possible through piggy-backing one road train on top of another road train outbound to collect the load, which resulted in a 50% saving in fuel costs or an overall 25% saving for the two road train operators if they worked together. He told Mr Brown that he held a special road train permit and mentioned his company Lowhead. Mr Dallimore understood Mr Brown to say that Lowhead held the special road train permit, but I accept that this was incorrect and it was the vehicle itself which held the permit. Mr Brown emphasised that this saving would eventually give Mr Dallimore a 100% return on his capital investment. Mr Brown said that if Mr Dallimore was interested in a joint venture of this kind he would use his expertise to buy an excellent road train which he had already sourced for about $100,000, consisting of a prime mover for about $60,000 from Ernie Holt at Toowoomba, 2 x 44 foot flat top trailers from Les Deen for about $30,000 and a dolly for some $10,000. Although Mr Brown doubted that he then knew of MM, it seems likely that Mr Dallimore had told him that it was a company of which Mr Dallimore and Mr Green were directors and that it would be the vehicle for Mr Dallimore’s involvement in the venture.
Mr Dallimore understood Mr Brown to say that Lecthead owned the road train which Mr Brown operated and that another company, Lowhead, would operate both road trains and be responsible for negotiating the contract with Brambles, hire a driver for MM’s road train, receive the projected annual income of $576,000, pay the expenses and ensure that MM’s road train was kept at peak performance. He understood from Mr Brown that Lowhead would pay $1,000 weekly rentals when each train was in use and all profits at the end of the financial year would be split 50/50 after the expenses for each road train had been deducted to arrive at a net figure. The second defendant was said by Mr Brown to be an excellent bookkeeper who would run the office and every month would prepare a financial report and a monthly vehicle status report setting out the income, expenses and gross profit for the investment. Mr Dallimore took notes as Mr Brown spoke to him on the telephone. He did this in respect of their subsequent conversations. There is no mention on the notes (RWD 3) of either Lowhead or Lecthead, but Mr Dallimore’s knowledge of those companies could only have come from Mr Brown. Mr Brown is adamant that at no time were either of those companies involved or to be involved in any joint venture and that if he mentioned them to Mr Dallimore it was only by way of example as to how he could arrange his affairs. Both of those companies were dissolved on 24 June 1993 for failure to lodge necessary reports with the Australian Securities Commission and this was almost certainly in train when Mr Brown was having discussion with Mr Dallimore. Nonetheless I accept that those companies were mentioned by Mr Brown to Mr Dallimore as being involved in the joint venture. They were clearly mentioned in the meeting with the accountant, Mr Greening (see p.19 below). They play no part in the action inasmuch as there is no allegation that both or either company entered into the joint venture with MM or that any losses flow from their non-participation in the arrangements. The agreements were with Mr Brown and the second defendant.
Mr Dallimore made it clear to Mr Brown that he himself did not have the funds to finance such an enterprise but that his co-director in MM, Mr Green, would advance the funds through the company. Mr Dallimore gave a copy of the fax of 17 March 1993 from Mr Brown to Mr Green. On 24 March Mr Dallimore visited Mr Brown and the second defendant at their home and discussed the project. Mr Brown has denied that he said to Mr Dallimore that he would make a trial run to fine tune his estimates, particularly the turn around time at the BHP loading terminal at Port Pirie. He said that there would have been no need for him to do that because he was quite familiar with the run. Even if that were the case I accept that that was what he told Mr Dallimore. The second defendant told Mr Dallimore what an excellent business Mr Brown had in trucking and that he should take this “wonderful opportunity” before someone else did.
On 15 April 1993 Mr Brown telephoned Mr Dallimore to say that he had successfully carried some 54 tonnes of lead ingots in a 36 hour turn around trip and that the road train could easily do two trips per week and eight trips per month. He said that the calculations he had earlier provided had been demonstrated and each of them could earn $8,000 per month or $80,000 a year when combining the two road trains and four trailers. He said that by using the piggy-back technique they could achieve a $100,000 profit each in 1993/94. Mr Dallimore took notes during the course of this conversation. Mr Brown denied parts of the notes taken by Mr Dallimore on the grounds that he did not speak in kilometres when he was assessing distances or costings and that if Mr Dallimore used such measurement then those were not his calculations. He also said that it was fanciful to suppose that he would have done a test run because he had been doing the run for 14 years and, further, that the time of 36 hours was quite impossible. However, Mr Brown did accept that the dollar figures set out by Mr Dallimore were likely to be figures which he had mentioned when discussing the possibilities of the venture. He denies that he would have suggested a 100% return on investment and also contends that the kinds of profitability that he accepts he may have spoken of to Mr Dallimore depended entirely upon what transpired throughout the year in relation to costs and general maintenance. But on the notes sent to Mr Dallimore (Exhibit 6) he had made allowances for these expenses.
The following day, 16 April 1993, Mr Brown telephoned Mr Dallimore to say that the rate had been increased by Brambles from $72 to $80 per tonne since they were to be dedicated road train carriers and accordingly their net earnings would be increased. Mr Dallimore took notes of that conversation. On 17 April Mr Brown telephoned Mr Dallimore and gave him details as to how the two road trains would operate, including his fuel calculations, freight quotes, replacement costs for parts and the loading procedure at Port Pirie, together with the down loading procedure from Toowoomba to Century Batteries at Wacol. Mr Brown denied that he would have had such a detailed conversation with Mr Dallimore, but concedes that he had various discussions with him with respect to income and expenditure.
There were other conversations in April and in one of them Mr Brown told Mr Dallimore that he had been offered work carting to Broome. Mr Dallimore understood that it was to be the first trip in the joint venture and that two road trains would be used. Mr Brown said that there was only to be one road train used, but that if Mr Dallimore purchased the vehicles and equipment it would be a good opportunity to test run that plant and equipment.
On 24 April Mr Brown told Mr Dallimore that he had identified a suitable prime mover from Ernie Holt in Toowoomba and that it had been fully reconditioned with a rebuilt engine, a new gear box, good rubberised tyres and registration and was an excellent buy at approximately $70,000. He also said that there were two 40 foot trailers available through Les Deen for about $13,000 each, that one had 90% rubber on its tyres and the other 60%, but that they would need about $1,000 spent on them to bring them up to standard and that they were complete with all the necessary gates, tarpaulins, dogs and chains and were a good buy. He said he could buy a dolly for $8,000 in South Australia so that a complete road train was available for $110,000. Mr Dallimore took notes of this conversation. Mr Brown, in his evidence, tended to play down his recommendation of the vehicles which in light of the alleged pitiful performance by the Kenworth prime mover was not unexpected. Mr Dallimore contended that Mr Brown had suggested that Mr Green needed a schematic drawing to understand how the lead train concept would operate since he was to be the lender of funds to MM. Mr Dallimore states that he drew up such a sketch (RWD 9, Exhibit 8) from Mr Brown’s instructions to him over the telephone which he then faxed to Mr Brown for his comment. Mr Brown thought this was a document which was drawn up subsequently when he and Mr Dallimore consulted with Mr Mac Greening, an accountant. He suggested that it was unlikely to have been approved by him since it referred to his family trust company being involved, which was not to be the case and that it tended to show that he was giving away profits which he already earned. Mr Brown said that it may have represented what Mr Dallimore wanted but would not have been acceptable to him and doubted that he would have approved it for any purpose (t/s 489). Mr Dallimore stated that Mr Brown telephoned him and said that the drawing was a clear picture of his and the second defendant’s intentions that Lowhead would pay a rental of $1,000 to MM and Lecthead, that Lowhead would pay all the operating expenses and that Lowhead would distribute the profits 50/50 to MM and Lecthead. He stated that Mr Brown suggested that he show the sketch to Mr Green and that if Mr Dallimore would like professional advice on the proposed joint venture he would take him to his accountant at Harts, to which Mr Dallimore agreed.
Mr Dallimore stated that Mr Brown telephoned him on 29 April and discussed with him the basis upon which the joint venture would succeed and why this joint venture would be different from that of other trucking enterprises which did not. Mr Dallimore says that he jotted these things down as Mr Brown was speaking. Mr Dallimore’s notes read consistently with the way in which Mr Brown expresses himself, which I had an opportunity to note over some 7 days. The ideas are couched in very optimistic terms. Mr Dallimore recalled that Mr Brown said that he would drive one of the road trains for 3 to 6 months to develop highly skilled drivers capable of piggy-backing the road trains and to gain the 25% savings, that he would guarantee reliability and ensure planned clockwork delivery of the lead ingots. Mr Dallimore states that he produced a 7 page summary from their conversation for Mr Green’s benefit at Mr Brown’s suggestion and showed it to Mr Brown on the day following their meeting with the accountant (RWD 11, Exhibit 36). Mr Brown did not recall seeing this document. It is consistent with notes made previously by Mr Dallimore.
On 30 April Mr Dallimore and Mr Brown attended at the accountant’s office and met a Mr Mac Greening. Although the firm was used by Mr Brown, he had not previously had dealings with Mr Greening. Mr Greening gave evidence at the trial and identified his own notes taken as the proposed lead train venture was explained to him (RWD 12, Exhibit 7). There is other writing on the document probably placed there later by Mr Dallimore. Mr Greening recalled that both Mr Brown and Mr Dallimore participated in the discussion. He noted that the truck purchase price was to be $120,000 with the funds being borrowed at 10% per annum. He wrote “renting truck to Lowhead P/L $1,000 p.w.”. He distinctly recalled that Lowhead was to pay $1,000 per week to rent the particular truck. Other figures set out in his writing on the page include an amount for interest of $12,000, depreciation of the truck at 22½%, an item identified as “salary Rex $43 p.w.” and an after tax profit of $31,758. The modest salary of $43 p.w. to be paid to Mr Dallimore by MM was the maximum permissible under the Department of Social Security Regulations for a full pensioner which Mr Dallimore was. On page 2 of the notes Mr Greening wrote: “Mr Brown’s example for May 1993 detailing the dates on which Lowhead would pay the $1,000 weekly rentals.” This rental was to ensure that MM would have a $4,000 gross monthly income in order to pay the $1,000 monthly interest due on the borrowings of $120,000.
Mr Brown’s cross-examination of Mr Greening was somewhat curious. He did not suggest to him that there was some other proposal discussed or that Mr Greening’s notes were not an accurate summary of the discussion, nor that Lowhead was never mentioned. He asked some convoluted questions as to what the figures might mean. It is Mr Brown’s contention that one of the reasons why the terms of the joint venture were as he has contended is that Mr Dallimore did not wish to own anything in his name so that his age pension would not be jeopardised. It seemed to be his suggestion in cross-examination, although it was not entirely clear, that a great deal of the meeting with Mr Greening was devoted to this topic and the issue of company tax avoidance for MM. Mr Greening did not have that recollection at all.
In early May 1993 Mr Brown sent Mr Dallimore a copy of the terms and conditions of the rental agreement between MM and Lowhead in respect of MM’s plant and equipment. A number of copies of that document have gone into evidence (Exhibit 9). There are some small variations between the various versions. Mr Brown sought to make something of this but they are not important. What is important is that the rental agreement provided by Mr Brown states quite clearly that “Modern Merchandising Pty Ltd agrees to rent to Lowhead Pty Ltd” one Kenworth prime mover, one Haulmark trailer 41', one Fruehauf trailer 40', and one McGrath dolly and in consideration Lowhead was to pay a rental fee of $1,000 per week for each week that the equipment was in work. Lowhead agreed to operate the equipment in conjunction with Lowhead’s “current plan to deliver lead ignots [sic]” (I noted during the course of the trial that Mr Brown tended to describe these objects in that way) “to Century Batteries, Wacol, Brisbane from BHP Smelter, located in Port Pirie, South Australia on behalf of Brambles Transport South Australia. Back-up loading will consist of steel ex Whyalla.” “Lowhead Pty Ltd on behalf of Modern Merchandising agrees to;

A.Arrangement/negotiation of all works and contracts.
B.Arrangement of Quoting for Loading, ensuring payment in full, is received.
C.Complying with all necessary Government Department regulations and financial duties.
D.Pay all debts incurred in relation to repairs, fuel, tyres, wages and “day to day” expenses.
E.Servicing equipment to be in roadworthy condition.
F.Arrangement of Log Books for [the plant and equipment].”

Lowhead undertook to present monthly financial statements showing the income received and expenses incurred on a monthly basis.

This document, although never executed, emanated from Mr Brown and makes reference to Lowhead and “The Garry Brown Family Trust” as well as referring to “km’s” an expression of measurement which Mr Brown said he did not use and generally reflects the terms of the agreement contended for by MM. Mr Brown was always too busy to sign it but told Mr Dallimore that it constituted their agreement.
Further conversations took place between Mr Dallimore and Mr Brown over the next couple of days. Mr Dallimore took down extensive notes of the telephone conversations (RWD 14, Exhibit 37 and RWD 15, Exhibit 38). These documents reflected thoughts for the future. The notes taken on 2 May (RWD 15) were, according to Mr Dallimore, written for Mr Green’s benefit and faxed to Mr Brown for him to check. Mr Brown conceded that p.1 contained figures that were being discussed but thought that he had not seen the document previously. He seemed to say this because the document makes reference to eight trailers and at no time were eight trailers contemplated for the venture. However it is clear from reading the document that it relates to future possibilities. Even if the document is confined to p.1, it is reflective of figures that appeared on other earlier documents. Mr Green saw these notes and the notes made by Mr Greening. He regarded them as a comprehensive overview of how to run a road train operation through to operating costs and profits. Other documents relied on by Mr Green were the first fax from Mr Brown (RWD 2, Exhibit 6), the schematic drawing (RWD 9, Exhibit 8) and the rental agreement (RWD 13, Exhibit 9). Mr Green agreed to lend MM $120,000 at 10% per annum interest which was to be repaid by Mr Dallimore whose home unit at Spring Hill was the security.
Mr Brown accepts that Mr Dallimore contacted him on 2 May and told him that MM agreed to enter into the joint venture and that Mr Green had authorised the funding of $120,000 for the purchase of the vehicles. Mr Brown said he could not recall that Mr Dallimore had told him that the loan was to be secured against his residence and that it was essential that the monthly interest bill of $1,000 be met out of the weekly rental payments to MM. Mr Dallimore states that he asserted MM’s ownership of its road train. He states that Mr Brown said to him that the rental agreement was a guarantee that MM would receive a $1,000 rental each week that the road train was in use and that they should look to the rental agreement as their contract. Mr Brown doubted that any conversation occurred in which the $1,000 rental per week was mentioned.
On 4 May Mr Brown telephoned Mr Dallimore to tell him that Endeen Pty Ltd, a company which owned the two 40' trailers which had been discussed as being suitable for MM’s road train, were at risk of being sold to others. Mr Brown urged Mr Dallimore to secure these trailers. Similarly he implied that the Kenworth prime mover might become unavailable. Later that day Mr Brown telephoned Mr Dallimore and asked for $40,550 in cash to be transferred to his Commonwealth bank account at Rocklea to purchase the two trailers and one dolly. Mr Dallimore suggested a bank cheque, but that was not to Mr Brown’s liking and $40,550 was electronically transferred to Mr Brown’s account. Mr Brown does not deny that he received this money. Mr Brown purchased two trailers from Endeen Pty Ltd for $20,000. The invoice shows the sale to G.L. Brown Transport. Mr Les Deen gave evidence that he had received in addition to the $20,000 by bank cheque from Mr Brown $5,000 in cash from him for the equipment on the trailers which was never recorded although the invoice for the purchase stated that the $20,000 covered all the extra equipment.
Mr Brown telephoned Mr Dallimore on 5 May 1993 asking for two cheques to buy the Kenworth prime mover from Holt Transport Pty Ltd in Toowoomba. The first cheque was to be a bank cheque for $65,000 made out to Holt Transport Pty Ltd and the second was to be a bank cheque for $10,000 made out to cash. Mr Holt in his statement (Exhibit 27) states that the cost of the prime mover was $65,000 and at Mr Brown’s direction the invoice was made out to G.L. Brown Transport Pty Ltd. Mr Holt states that no other moneys over and above the purchase price of $65,000 were paid to him or to his company. His statement was received into evidence pursuant to s.92(2) of the Evidence Act (Qld) 1977 without Mr Brown requiring him for cross-examination. Later in the trial Mr Brown sought to call him for cross-examination on the basis that he had subsequently spoken to Mr Holt in the Northern Territory and that Mr Holt would say that he was not wearing his spectacles at the time he signed his statement and had misread $65,000 for $75,000. Mr Holt would not have been available for cross-examination until some later date after the conclusion of the trial. I did not permit him to be called. The contemporaneous invoice from Mr Holt’s company was clearly for $65,000. In two places in the statement, he asserts that amount as well as stating that Mr Brown paid him by bank cheque and that no other moneys were paid to him or to Holt Transport Pty Ltd in respect of the vehicle.
Mr Dallimore states that on 6 May 1993 Mr Brown telephoned him to say that savings could be made by bulk-buying fuel which would quickly repay the capital cost of the storage tanker which could be purchased and which would be sited at Toowoomba. He said that he needed $10,000 to put with his equal amount of money to purchase a Matilda storage tanker for $10,750. The balance, $9,250, would be used to purchase the bulk diesel fuel. Mr Hall from Matilda Fuel Supplies gave evidence that he sold one 32,000 litre Highgate Tanker to Mr Brown on 8 May 1993 for $6,500 in cash. The invoice is made out to G.L. Brown Transport.
On 12 May, Mr Brown told Mr Dallimore that he had purchased a dolly from Merv Hold Truck and Machinery Sales in Toowoomba for $10,000 for MM. The receipt (RWD 21) shows that Mr Brown paid $6,500 for the dolly. Mr Brown said that he sold the dolly for about $6,000 after the present dispute had arisen and had retained the money.
Mr Brown telephoned Mr Dallimore from North Queensland asking for $3,000 in cash to be transferred to his Commonwealth bank account urgently in order to pay $1,000 in wages for the driver of the Kenworth prime mover and $2,000 to replace tyres on the trailers. Mr Brown recalled having a conversation about drivers’ wages at about this time with Mr Dallimore and he did not deny that Mr Dallimore said to him that it was Lowhead’s responsibility to pay all the operational expenses. He said it was unlikely that he would have given as an excuse that the second defendant was sick and was unable to send the money and that it was merely a loan.
About a week later on 19 May Mr Brown asked Mr Dallimore for $5,000 in cash for operating expenses. Whilst Mr Brown said that he could not recall the conversation he acknowledges that $5,000 was deposited into his personal account. He said that the road train was blowing a lot of tyres at the time but doubts that he added to Mr Dallimore that if he did not send the $5,000 immediately he would put MM’s driver into his truck and drive away leaving the road train in the bush. He could also not recall that Mr Dallimore said that he wanted the whole of the $8,000 advanced to Mr Brown’s account to be accounted to him from the profits of the trip or that the operating expenses were the responsibility of Lowhead. According to Mr Dallimore, Mr Brown agreed to repay the amounts from the moneys earned on the trip. Mr Brown was unable to recall that assurance. Mr Dallimore borrowed the $5,000 from Mr Green and sent it to Mr Brown’s account on 19 May. It was not repaid out of the profits from the trip.
In early June Mr Brown told Mr Dallimore that he was ready to start the trips for the lead ingots by piggybacking one road train on top of the other. He said that income would soon be generated and would pay the $4,000 rental that was by that stage due to MM. Mr Brown denied that he made any reference to rentals to Mr Dallimore as, he said, there was never any obligation to pay rental. In mid-July Mr Brown told Mr Dallimore that although he had received the $28,000 from Brambles and some other cheques, because of the big repair bills for the Kenworth prime mover there was no money available to pay him. Mr Dallimore remonstrated with Mr Brown about huge repair bills for Kenworth when he had been assured that it was a good buy with a rebuilt engine, a new gearbox and a fully overhauled differential. According to Mr Dallimore, Mr Brown responded that the truck’s engine was using huge amounts of fuel and was in and out of Detroit Diesel’s workshops after each trip. Mr Brown was unable to say whether or not these conversations occurred.
By the end of July 1993 when Mr Brown returned from a trip, Mr Dallimore asked him what was going on as three months after the joint venture had commenced MM had not received the moneys which had been advanced for running expenses and there was now $18,000 owing in outstanding rental. Mr Brown continued with his explanation that the Kenworth prime mover was incurring very high running costs but that Mr Dallimore should not be unduly concerned as he expected that the enterprise would make a profit of at least $80,000 for each of them by June 1994. Mr Brown could not recall that figure being mentioned, but he did not deny that he might have been talking to Mr Dallimore in terms of anticipation of a reasonable profit. Mr Dallimore was not content to be fobbed off on this occasion and asked to see the books, the journal and the receipts for the two road trains to make a comparison of how much each was costing. He was concerned to make the interest repayments to Mr Green and at that stage believed that the only way he could do so was to sell his residence.
Mr Dallimore and Mr Green state that at no time were they ever afforded access to the books of the joint ventures. Mr Brown denies this and says that at any time Mr Dallimore could have looked at the books at his residence. Mr Dallimore states at the end of July Mr Brown told him that the bookkeeping was in disarray because of his pending marriage to the second defendant on 15 August and that by mid-September everything would be normal and they could do an in-depth analysis of the two road trains’ costings. Mr Dallimore’s statement indicates that he had often expressed the wish to do the books as his contribution to the joint venture. On this occasion Mr Brown said to him that he wanted the second defendant to do the accounting because she was available daily to handle payments, mail and telephone calls. In cross-examination he conceded that he may have said or it may have been the case that the books were behind because of the pending marriage.

The Fuel Train Venture

Mr Dallimore states that in late April 1993 Mr Brown telephoned him to say that he had found a source of diesel fuel at 50¢ per litre which would be a saving of some 16% on fuel costs, which was the biggest direct cost in the operation of the lead train venture. He said that he knew of a source of diesel fuel near Thargomindah at 23¢ per litre which should be investigated as it could be distributed through his network of contacts and his extensive knowledge of the needs of the more remote areas in which he often worked his road train. He suggested that this might be a venture in which Mr Green would be interested. Mr Brown could not recall that the first conversation was as early as this, but he does recall having conversations with Mr Dallimore about a fuel train. He recalls subsequently having a conversation with Mr Dallimore about the acquisition of fuel from the well head at Nockatunga.
On or about 1 May Mr Brown telephoned Mr Dallimore and said that he had some figures for him to show Mr Green. Mr Dallimore made notes of the conversation with Mr Brown (RWD 51, Exhibit 1). The net profit Mr Brown predicted was $16,000 weekly for a single tanker and $30,000 weekly for a double tanker. Mr Brown told Mr Dallimore that he was familiar with the Northern Territory and its requirements for diesel fuel as the people who lived there operated diesel generators. He told Mr Dallimore that a prime mover costing about $50,000, two 36,000 litre tankers at $40,000 and one dolly at $10,000 were needed for the enterprise. This would allow them to run double tankers. To effect maximum efficiency three 36,000 litre tankers could be towed. The net profit, he said, would then be $30,000 per week and on a 40 week year, the profit would be $1,200,000 net, to be shared between himself, Mr Dallimore and Mr Green. He told Mr Dallimore that he would check his figures when he passed through the Northern Territory on the way to Broome in the middle of May.
The following day Mr Brown telephoned Mr Dallimore and told him that he had recalculated the cost together with a more profitable route servicing outlets to Whyalla. Mr Dallimore took notes of that conversation (part of Exhibit 15). On 10 May Mr Brown contacted Mr Dallimore identifying the well head as Nockatunga no.1 near Thargomindah. Mr Brown asked Mr Dallimore to trace the operators which he did. The owner was identified as Minora Resources N L, a Perth based company. Mr Dallimore had a number of conversations with Mr Baker of Minora Resources about MM’s capacity to finance the 120,000 litre minimum purchase monthly for a 12 month contract. When Mr Brown returned from his Broome trip he told Mr Dallimore that he had had discussions with the president of the Road Houses Owners Association in the Northern Territory who had told him that all the diesel that could be delivered at 72¢ per litre could be sold immediately. Mr Brown told Mr Dallimore that his calculations gave approximately $17,000 net weekly profit. Mr Dallimore took notes of this conversation. On about 1 July Mr Brown and Mr Dallimore again spoke by telephone and Mr Brown gave Mr Dallimore some figures for him to show Mr Green whom he hoped would invest in the venture. The fuel would cost 34¢ a litre at the well head and did not need refining. It was proposed that the diesel would be carted in the joint venture’s own tankers and be sold to independent service stations, trucking companies, opal miners, earth moving contractors and to remote areas. The notes taken by Mr Dallimore were faxed to Mr Brown. Mr Brown telephoned Mr Dallimore in the evening and made some changes. Mr Brown could not recall seeing the document but did not deny that he had done so.
Mr Green said that Mr Brown telephoned him in mid July 1993 to tell him that he had developed his previous calculations into a budget on sales that he could achieve from speaking to the potential outlets that he had visited over the past week while driving the lead ingot road trains. He told Mr Green that he had pre sold millions of litres and that they could double their money every trip. Mr Brown doubts that this conversation could have occurred since he said that Mr Dallimore was to find the clients. Minora Resources was prepared to allow one trial shipment of 32,000 litres at 34¢ per litre payable 14 days in advance. Mr Green had another conversation with Mr Brown in which Mr Brown suggested that the $120,000 outlay for the fuel train could be paid off in 3 months as he had pre-sold the fuel and that Mr Green should thus fund the enterprise. On 23 July 1993 Mr Green agreed to invest in the joint venture.
An agreement was entered into between Minora Resources and MM dated 9 August 1993 relating to a single buy of 32,000 litres of diesel fuel. Mr Dallimore rang Mr Brown and told him that Mr Green would advance $120,000 to the joint venture on terms that the money was to purchase the vehicles which would be lent through MM to Lowhead and that the vehicles were to be registered to MM as the owner for the security of Mr Green’s loan. MM was to purchase all shipments of fuel, it would carry out all accounting, 25¢ per litre was to be charged by Mr Brown’s interests to cart the fuel and Mr Dallimore and Mr Brown were each to have a third interest, but were not entitled to any profits until they had repaid $40,000 each to MM. Mr Brown does not agree that this conversation occurred, or if it occurred, that those were its terms. It was his evidence that the fuel venture was established to provide fuel for their own vehicles. He said Mr Green told him that he had some “black money” from the income of his motel and wished to use it for this venture, which was the reason together with tax and pension matters why everything was to be owned by Mr Brown. The allegation of “black money” did not find its way into the amended defence and counterclaim and was never put by Mr Brown to Mr Green in cross-examination. In rebuttal evidence Mr Green denied that he ever dealt in “black money” or had said anything to Mr Brown to suggest that he did. On 24 August 1993 MM paid $11,424 to Minora Resources for 32,000 litres of diesel. Minora Resources refunded an amount of $762 on 15 June 1994 in respect of an overpayment.
Mr Dallimore had discussions with Mr Brown on 28 August about the fuel train. Mr Dallimore took notes in the course of the conversation. An agreement was to be drawn up in which the three men were to be equal partners and that Lowhead would insure, register, administer and maintain and be responsible for running the fuel train operation and arranging its profit potential and opportunities. On 30 August Mr Brown telephoned Mr Green and told him that he had found an excellent prime mover, a Western Star at Denmac Ford which he had negotiated to buy for MM at $62,000. He required a bank cheque for $55,000 and cash for $7,000 to complete the contract. When he collected the cheque and money from Mr Green at his office at Spring Hill he signed a note prepared by Mr Green: “On behalf of David Green, 31-8-93 for truck purchases - Western Star prime mover - ex Denmac Ford received from David Green the sum of $62,000". Mr J Grossman, the truck sales manager at Denmac Ford gave evidence that the truck cost $42,000 and that Mr Brown asked him to deposit the balance of $13,000 of the bank cheque for $55,000 into the second defendant’s mastercard account. Mr Brown said that he used the second defendant’s account as his general business account because it enabled him to keep track of his expenditure through the detailed statements.
On 3 September Mr Brown spoke to Mr Dallimore and said that he had found a 37,000 litre tanker ideal for the fuel train at O’Phee Trailers and that it would cost $28,000 to purchase and $10,000 for necessary modifications including calibration and fuel inspection standards. Mr Dallimore told Mr Green and on the afternoon of the 6 September, Mr Brown came to Mr Green’s office and collected a cheque for $28,000 to purchase the tanker and $10,000 in cash for the modifications. Mr Dallimore was also present. Mr Green had Mr Brown sign his cheque butt that he had received the two sums. Mr Brown said that the $10,000 would cover everything needed to bring the tanker up to road train and fuel standard specifications.
Mr M O’Phee gave evidence that the cost of the Hockney fuel tanker with new registration was $22,800. There was some cross-examination from Mr Brown which tended to suggest that there was something puzzling about the invoice and receipt but nothing came of it. The receipt for the purchase of the tanker was made out to G L Brown.

On 14 September Mr Brown told Mr Dallimore that he needed a further $7,000 to pay for the addition of a sleeper cabin to the Western Star prime mover and for flame proofing regulatory requirements. On 14 September Mr Green gave Mr Brown a cheque for $7,000 made out to G L Brown. The work was completed on the Hockney tanker on 21 September and the Hockney Pty Ltd invoice shows that an amount of $7,300 was charged for repairing tank leaks, refurbishing the outlets, testing and calibrating the tank and fitting signs. The owner was shown as G L Brown Transport. On that day Mr Brown spoke to Mr Dallimore and said that he required an additional $3,000 which had to be in cash to pay for calibrating the 5 compartments in the Hockney tanker. Mr Brown picked up the $3,000 in cash from Mr Green in his office and said that this would pay for the required calibration and he could now make some real money. The cost of calibrating had been included in the invoice for $7,300.
On 25 September 1993 Mr Brown picked up the 32,000 litres of diesel fuel and brought the tanker back to Brisbane. In early October Mr Brown told Mr Dallimore that he would have to move the tanker of fuel since the neighbours were complaining. Mr Dallimore questioned why it had not been delivered to those to whom he had pre-sold it, to which Mr Brown replied that he would trial the fuel with some “truckie friends” and would use some in the road train. None of the 32,000 litres of fuel was sold and, except for small samples, it was all used by Mr Brown in his own vehicles. On 30 June 1994 he paid $5,000 to MM in part payment for the fuel. From about 30 September 1994 Mr Green telephoned Mr Brown repeatedly for payment of the balance. On 12 October 1995 Mr Brown came to Mr Green’s office and gave him$5,662 being the balance for the fuel collected on 25 September 1993.
In November 1993 Mr Brown had an axle and wheels removed from the Hockney tanker and transferred to the 42 foot trailer. On 12 December 1993, unknown to Mr Dallimore or Mr Green, Mr Brown sent the Western Star prime mover to Port Pirie to cart lead ingots. On the way to Wilcannia in New South Wales it was wrecked. It was uninsured. The prime mover was thereafter stored at American Truck Spares yard at Coopers Plains. Mr Brown did not tell Mr Dallimore or Mr Green about this accident. On 23 December Mr Dallimore visited Mr Brown’s residence and asked why the Western Star prime mover and the tanker were not being used. Mr Brown said that he was “waiting for things to click into place” (Exhibit 4, paras 1-8). Mr Brown said that since Mr Dallimore had not renewed the contract with Minora Resources there was nothing for the vehicles to do. He did not tell Mr Dallimore that parts had been taken from the Hockney tanker. Mr Brown subsequently sold the Western Star as a wreck for $20,000 and put its engine in the Kenworth after its engine blew up.

The Further Progress of the Two Joint Ventures

Throughout the months following August 1993 Mr Dallimore complained to Mr Brown that he had received no rental, for which he was then owed about $25,000 and wished to look at the books to see what was the problem with the Kenworth prime mover. In early November Mr Brown told Mr Dallimore that he was carrying nearly $50,000 as a debt for the Kenworth prime mover. Mr Dallimore expressed incredulity that this could be so. Mr Brown indicated that a bookkeeper might be necessary because the second defendant was ill and the accounts had not been done. Mr Dallimore offered to do the books of the joint venture but Mr Brown declined the offer. Mr Dallimore spoke of dissolving the joint venture. Mr Brown maintained that Mr Dallimore always had access to the books at his home had he wished to consult them and denied that he would have accepted Mr Dallimore’s statement that there were rental moneys owing to MM because there was no such agreement.
At the beginning of March 1994 Mr Brown proposed to Mr Dallimore that the lead train should include trips to Perth picking up lead ingots at Port Pirie on the way back. Mr Dallimore wrote in his note of the conversation that Mr Brown had calculated $12,800 gross per week for this variation of the venture whilst Mr Brown in cross-examination thought that using his own earnings as a guide he would not have predicted more than $15,000 per fortnight. A few days later Mr Brown telephoned Mr Dallimore and discussed the income of the joint venture to date. Mr Brown had no recollection of this conversation. Mr Dallimore noted that Mr Brown told him that there was a net income of about $77,000 each but that he, Brown, had had to expend about $90,000 on the Kenworth prime mover for various mechanical problems and that the shortfall for MM was about $12,000. Undeterred Mr Brown estimated that by mid-June 1994 there would be a net profit of $80,000 which would be shared between the entities to the joint venture. Mr Dallimore again complained about the lack of rental money being received by MM and that the projected profits were only one quarter of the original profits proposed by Mr Brown before the venture was entered into ten months previously.
Mr Brown agreed that in early March he discussed with Mr Dallimore a proposal from Brambles to cart steel from Brisbane to Adelaide at a particular rate. Mr Dallimore made a contemporaneous note of the conversation. On that day Mr Dallimore wrote to Mr Brown outlining his thoughts on the proposal from Brambles which had been the subject of their telephone discussions earlier in the day. In the letter he makes reference to some earlier discussions at the commencement of the joint venture consistent with MM’s case and again expressed a desire to have access to the Kenworth prime mover’s figures to decide whether the equipment should be retained. He asked Mr Brown to get the books and papers from his accountant. Mr Brown told Mr Dallimore that his accountant, Les Baird, had all the books and was preparing for a tax audit on 1 April 1994 so that it was impossible for Mr Dallimore to view the books for two months or so. Mr Green was concerned at the lack of financial return for the venture as Mr Dallimore had been unable to meet the interest repayments on the loan of $120,000 and telephoned Mr Brown in late March 1994. He was told by Mr Brown that all the books of the joint venture were with his accountant because there was to be a tax audit at the beginning of April, but that he and Mr Dallimore had about $40,000 of profits due to them for the first year’s trading.
On 15 April 1994 Mr Dallimore obtained historical company extracts for Lowhead and Lecthead. He then learned that those companies were de-registered and dissolved on 24 June 1993 after failure to lodge annual returns from 1990. In cross-examination Mr Brown conceded that at no time had he told Mr Dallimore or Mr Green that those companies had been dissolved, stating that it was of no concern to MM. He said that the companies were dissolved because “we never lodged a tax return for that year” (t/s 509). The following day Mr Dallimore attended at Mr Brown’s home for a meeting which lasted some hours. He took notes of what was said. They discussed the lead train’s future and the alternative routes suggested by Mr Brown. Mr Dallimore notes that Mr Brown had not then told him that he had lost the lead ingot subcontract with Brambles at the end of March 1994. Mr Dallimore’s notes indicate that Mr Brown said he was unhappy with Brambles and Century Batteries because of poor cooperation and that it had proved costly to the joint venture in turnaround time. This lack of cooperation, he said, had brought about the difference between profit and loss, particularly where

two drivers who were being paid wages were involved. Mr Brown accepted that the conversation with Mr Dallimore did involve discussions of alternative projects.

On 20 April Mr Dallimore wrote to Mr Brown asking him to provide receipts to cover the payments which had been made to him by MM for the purchase of vehicles as well as the registration and insurance papers. Mr Brown said that he did not recall receiving the letter and Mr Dallimore notes that he received no response to it. Nonetheless Mr Brown accepts that he had seen the letter. Indeed, when Mr Francis put to him that he had not responded to that letter by writing back, his answer is illustrative. He said that he had never written anything to Mr Dallimore other than one or two items (t/s 510). Mr Dallimore’s document is headed as being sent by facsimile transmission to Mr Brown, with a copy to Mr Green, on 20 April 1994. It sets out the details of the payments paid by MM to Mr Brown, including the dates, and requested a receipt from either G.L. Brown or Lowhead to MM together with an acknowledgement that MM was the owner of the vehicles and a request for copies of their registration and insurance certificates together with acknowledgment of other payments for ancillary expenses. In the final line of the document Mr Dallimore asks how the last sums were entered in Lowhead’s books.
Mr Dallimore wrote again to Mr Brown on 11 May 1994. Mr Brown did not specifically remember receiving the document. It is an eight-page document setting out a summary of all Mr Dallimore’s concerns and frustrations that he and Mr Green had invested some $275,000 in a trucking business and a fuel business which had returned virtually nothing to MM and which had been established with such high hopes. He particularly complained that he had no documentation indicating ownership or registration or insurance. Mr Dallimore accepted that Mr Brown was busy with other interests but asked him to give some time to the joint ventures.
Since Mr Brown failed to respond Mr Dallimore wrote again in a letter dated 30 Mary 1994 as a matter of urgency asking him to provide receipts for the money for the purchased vehicles together with other moneys and the registration and insurance certificates. Annexed to the letter was a schedule of the form of the receipts required on G.L. Brown Transport letterhead including a notation that it not be on Lowhead Pty Ltd’s letterhead. Mr Dallimore commented in the letter that should Mr Brown be too busy that he could authorise Mr Dallimore and his accountant, Mr G. Hurwood, to contact Mr Brown’s accountant to arrange for the compilation of the data for the tax returns at 30 June together with information needed for Mr Dallimore’s will. He again pointed out that after a year there had been no rental paid for the lease of the road train which was now $50,000 in arrears. Mr Dallimore received no response to that letter either. Mr Dallimore kept Mr Green informed of what was happening and gave him copies of his letters of April and May.
On 7 June 1994 Mr Dallimore went to Mr Brown’s residence with acknowledgements of purchase which Mr Brown signed acknowledging the receipt of the sums of money from MM to purchase the lead train joint and fuel train venture vehicles. Mr Brown agreed that his signature appears on these documents and that he inserted the figures and writing not in Mr Dallimore’s handwriting such as engine numbers and registration numbers. A bundle of documents constitutes Exhibit 13 which are various copies of that acknowledgement. Curiously Mr Brown tended to want to question some aspects of the figures inserted by himself. These were small errors in registration numbers, for example. Mr Brown pointed out that although he acknowledged receipt of $40,550 to purchase two trailers from Endeen Pty Ltd, only one was purchased for MM’s road train. He said that he applied one to his own road train and sold to MM’s road train his own trailer. This had never been revealed to Mr Dallimore. The evidence suggests that Mr Brown did not have two trailers in operation when the lead train joint venture was canvassed and Mr Gardiner, the driver between August 1993 and March 1994, doubted that Mr Brown participated in the road train joint venture using his vehicles. Mr Brown acknowledged that he had received $10,000 from MM to purchase a 32,000 litre tanker in which to store bulk diesel fuel, $2,000 for tyres and loans for the fuel train joint venture for $20,000.
Mr Dallimore wrote to Mr Brown and the second defendant on 27 June 1994 which letter Mr Brown agrees he received. In it Mr Dallimore sought to review the joint ventures and suggested that if the return on the investment, which had been promised, could not be met they should be dissolved. There was no response.
On 27 June 1994 Mr Brown sold the Highgate fuel tanker which had been purchased in May 1993, less the tyres and rims, for $15,000 to True Blue Oil Recyling Pty Ltd without reference to Mr Dallimore. The cheque was made payable to Mr Brown and the second defendant and the receipt was signed by the second defendant.
Mr Dallimore commenced enquiries as to the whereabouts of MM’s fuel train vehicles and on 14 July 1994 he attended at Haulmark Trailers Pty Ltd at Darra and learned that the Hockney tanker had been in the yard partly filled with diesel fuel for many months. On 8 October he saw the Hockney tanker at Tieman Industries Pty Ltd’s yard at Richlands where it had been towed. Mr Brown had arranged for some repairs and 10 wheels belonging to the tanker were stored there. On 18 November Mr Brown authorised one month’s hire with an option to buy the Hockney tanker by Tiemans to Mour Transport in North Queensland. The tanker was subsequently held in Tiemans yard at Eagle Farm and at 21 August 1997 had an unpaid rental and repair bill of $12,348.33 and accruing rental of $100 per week.
On 12 October 1994 Mr Brown attended at Mr Green’s office in Spring Hill and signed an acknowledgement of agency in which he stated that he acted as agent for MM in the purchase of seven named vehicles the price of which had been advanced to him by MM. His signature was witnessed by one Joan Mason, an employee of Mr Green. Mr Francis indicated that Mrs Mason was available to give evidence should there be any challenge to Mr Brown’s signature or the circumstances surrounding its execution. Mr Brown tended to vacillate on this question, but finally did not dispute his signature or the witnessing of it. Mr Green asked Mr Brown the location of the fuel train vehicles. Mr Brown said that the Western Star prime mover was in Toowoomba in storage and the Hockney tanker was undergoing repairs at Tieman Industries. In fact the Western Star prime mover and a trailer, as mentioned, had been wrecked on 12 December 1993 whilst being used to cart lead ingots, contrary to the arrangement with Mr Dallimore. It had not been insured by Mr Brown and was sold five days after this meeting with Mr Green. Mr Brown paid Mr Green $5,662 relating to the balance of payment for fuel which by then was one year overdue. Mr Brown contended in cross-examination that by signing these acknowledgements he was not in fact agreeing that the vehicles belonged to MM but did agree that the vehicles were being held in trust by him for MM pending the outcome of the joint ventures.
On 17 October 1994 Mr Brown sold the Western Star prime mover less the Cummins engine (no. 23178199) for $20,000 to American Truck Spares which had stored it since it had crashed in December 1993. The sale document states that the Western Star was unencumbered and was signed by Mr Brown.
On 2 November 1994 Barns Towing Service collected the Kenworth prime mover from Rocklea and towed it to J.J. Mechanical Repairs at the request of Mr Brown. That bill for $220 was not paid. Mr Brown agreed that he requested them to remove the engine in the Kenworth prime mover and replace it with the Cummins engine from the Western Star prime mover. On 10 November within a month of signing the acknowledgement of agency Mr Brown gave a bill of sale over the Kenworth prime mover and trailer to the third defendant, Hedge Park Pty Ltd. The bill of sale was to secure a loan of $30,000 at 15% interest. The Kenworth prime mover had been registered to Mr Brown.
Mr Brown telephoned Mr Dallimore on 1 December 1994 to say that he was driving the Kenworth prime mover to Alice Springs. Some conversation took place about the overdue rental payments but Mr Brown said that the Kenworth owed him almost $100,000 and he was not proposing to pay any further monies to MM. Mr Dallimore instructed Mr Brown to return the Hockney tanker and the Western Star prime mover immediately. Mr Brown said he would telephone Mr Green but did not. On 13 December 1994 Mr Dallimore visited the second defendant at her home and protested that Mr Brown was selling vehicles which belonged to MM. She denied this, stating that Mr Green and Mr Dallimore had loaned she and her husband all the money interest free. The following day Mr Dallimore sent a letter to the second defendant in which he raised the possibility of an open and frank discussion about the investment and if not, that he and Mr Green would instruct their solicitor to commence an action.
Mr Dallimore paid for the repairs effected by J.J. Mechanical Repairs Pty Ltd to the Kenworth on 3 March 1995, gave an indemnity and had it towed to his rented storage area at Coombabah. It was then unregistered.
On 9 May 1995 Mr Brown acknowledged that he was in default under the bill of sale, that he did not have possession of the truck or trailer so secured, that he was incapable of remedying the default and that the third defendant was entitled to possession of the truck and trailer. On 11 May 1995 Mr Brown sold the 40 foot white Fruehauf trailer for $8,000. He signed a statutory declaration witnessed by the second defendant that it was unencumbered. Mr Brown caused the Kenworth prime mover to be removed from Mr Dallimore’s premises at Coombabah. The fourth defendant was implicated. Shortly afterwards Mr Brown was implicated in removing the 42 foot green Fruehauf trailer from its storage place at Wecker Road, Mansfield. Injunctions were obtained by MM on 5 January 1996. On or about 17 January 1996 Mr Brown delivered the Kenworth prime mover and the green Fruehauf trailer to the premises of Mr Barry Sherrin at Rochedale which had been agreed as a storage place. When Mr Dallimore inspected those vehicles he thought that the Kenworth prime mover and the Fruehauf trailer were in the same good condition as when stored at Coombabah and Mansfield with good tyres.
In March 1996 Mr Brown purported to sell a blue and red W 900 Kenworth prime mover with engine no. 23178199 to Western Truck Sales Pty Ltd in Western Australia operated by Mr and Mrs Vinci. That was the engine number of MM’s Kenworth prime mover and its distinctive colour. Mr Vinci gave a statement to the police and gave evidence in this trial by telephone link. He purchased the Kenworth prime mover from Mr Brown for $50,000 together with a dolly. The vehicle was sold to him as unencumbered. Mr Vinci had made other purchases which Mr Brown was to deliver to him in Western Australia. It appears that Mr Brown retained another driver to drive the vehicles for him. That driver telephoned Mr Vinci from Gilgandra in New South Wales to tell him that while he was sleeping in a motel in Gilgandra all the vehicles had been stolen. Mr Brown had purchased a wrecked Kenworth prime mover at about this time and there was some suggestion in the cross-examination by his counsel at the committal (Exhibit 60) that Mr Brown had sold Mr Vinci a “rebuilt” Kenworth. MM’s Kenworth had never left Brisbane. Mr Brown has been committed for trial in the District Court on a charge of false pretences. The stolen vehicles have never been recovered.
Mr Dallimore attended at Mr Sherrin’s property and noted that the Kenworth prime mover was still in the storage area and noted the wreck of a white Kenworth cab without engine or wheels. He believed that the good tyres had been removed from the Kenworth prime mover and replaced with bald non-roadworthy ones and that the airconditioning system, the compressor, the heater and all the radios had been removed. He noted that the 42 foot green Fruehauf trailer had its good wheels and tyres and wheel nuts removed and that the 14 wheels from the 37,000 litre tanker trailer stored in the shed were missing. Mr Brown denied strenuously in cross-examination that he or anyone on his behalf had removed those items except the tyres and wheels and fittings from the Fruehauf trailer which he had removed to prevent them being stolen and has since used them on his own vehicles.

The arrangement between MM and Mr Brown was that each would contribute equally to the cost of storage of the vehicles at Mr Sherrin’s yard. After investigating the matter with Mr Vinci in Western Australia the police impounded the Kenworth prime mover because of alleged over stamping of the engine and chassis numbers. From that time Mr Dallimore paid a reduced amount for the one vehicle stored by Mr Sherrin.

Wecker Road Venture

Mr Brown agreed that towards the end of 1993 he discussed with Mr Dallimore that he had been looking at a 2½ acre site with sheds at the end of Wecker Road, Mansfield, which could be developed into a transport terminal. He told Mr Dallimore that associated with the land was a drum recycling business and modest residence which might interest him. Mr Dallimore had earlier sold his home unit to repay the loan and interest to Mr Green and lived in a caravan. Mr Brown said that pumps could be installed and the diesel from the well head could be sold from it. He mentioned a number of other uses for the land. Mr Dallimore contacted Mr Brown about a week later and suggested that the matter could proceed. Mr Brown told him that the deposit was $30,000 with vendor finance for a purchase price of $175,000. Mr Brown denied that this was the deposit or that he asked Mr Brown for $15,000 to cover half the deposit for a third joint venture. He could not remember what the purchase price was but the terms were vendor finance. On 11 December Mr Dallimore went to Mr Brown’s house and met with him and Mr Bellas, a real estate agent, who had previously been introduced to Mr Dallimore as his partner in real estate ventures. He had been involved in a minor way in the sale of Mr Dallimore’s unit. On 15 December Mr Dallimore told Mr Brown that he would go ahead with the land venture on terms that he would lend $15,000 to MM which would then advance the $15,000 to Lowhead as a 50% deposit for the Wecker Road land and that a half share in the property was to be purchased in MM’s name. Mr Brown would advance the other $15,000 deposit and the co-owner would be Lecthead. The fuel and lead trains would be operated from the land. On 17 December Mr Brown telephoned Mr Dallimore and said that he required the bank cheque in his name rather than Lowhead to ensure clearance. A bank cheque to G.L. Brown for $15,000 subsequently endorsed to the second defendant’s account was drawn on MM’s account. The contract for the purchase of the land is dated 22 December 1993. The purchaser is described as Garry Lynn Brown and he has signed the contract. The purchase price is described as $165,000 and the deposit as $5,000. The second defendant was a witness to Mr Brown’s signature on the contract as was Mr Bellas. Mr Dallimore was not told of the signing of the contract and was not invited to be a party to it. Mr Brown sought to suggest in his evidence that the contract was not concluded because Mr Dallimore had spoken to the vendor suggesting that he, Brown, was the possible perpetrator of a break and enter theft on the property. The documents produced from his solicitors and the solicitors for the vendor make it plain that the contract did not proceed and the deposit was returned to Mr Brown because Brown wanted variations to the mortgage documents which were unacceptable to the vendor.
Mr Bellas gave evidence at the trial which was quite unsatisfactory about this transaction. His recollection was not in accordance with the documents. When Mr Dallimore spoke to Mr Brown and the second defendant on 28 January 1994 at their home, they told him that there had been a hold up in the completion of the contract. On 1 February 1994 Mr Dallmore faxed a letter to Mr Brown mentioning the hold-up in the settlement of the Wecker Road contract and suggesting that the land may not be what they needed. He received no reply. On 11 February Mr Brown telephoned Mr Dallimore to say that the vendor had withdrawn from the Wecker Road land sale. Mr Dallimore asked for the return of his $15,000 but Mr Brown said that he did not have it available and that in any event the Kenworth prime mover still owed him in the vicinity of $80,000 and needed new tyres.
On 10 March 1994 Mr Dallimore states that Mr Brown telephoned him and said that he was putting the $15,000 into a unit venture in Toowong. This is not the subject of pleadings and was not put to Mr Brown in cross examination and is not the subject of any further loss to MM.
As with the other joint ventures, on 7 June 1994 Mr Dallimore obtained Mr Brown’s signature to an acknowledgement that he had received $15,000 “originally to be 50% of deposit for the purchase of 367 Wecker Road, Mansfield”. The document noted that this contract was cancelled in February 1994 and that the “money was then used as part of the deposit in a Real Estate transaction”.

The Conclusion of the Joint Ventures

From the middle of 1994 Mr Dallimore started making enquiries of various businesses as to the whereabouts of the vehicles which had been purchased by Mr Brown. On 14 December 1994 the second defendant telephoned Mr Green complaining that Mr Dallimore was asking questions about the vehicles and she regarded this as harassment. She told Mr Green that all 7 vehicles were in the possession of herself and Mr Brown, that none had been sold and that Mr Brown was doing his best for the venture. Mr Green suggested to her that some of the vehicles had been sold which she denied. Mr Green said he explained to her that the vehicles were owned by MM and complained that there had been no monthly reports, account books, statements, invoices or profit and loss results for 1993/1994. She denied that the business was of any interest to MM since all the money received had been a loan to her husband and herself and he was working hard to repay the loan. Eventually she told Mr Green that she would offer their house as security for the money. The second defendant was well aware that the Hockney tanker had been sold on 27 June 1994 to True Blue Recyclers since the receipt is made out in her handwriting. She also co-signed the invoice to American Truck Spares Pty Ltd relating to the Western Star prime mover as unencumbered. Numbers of the cheques paid by MM were placed in her bank account, and in particular cheques for $13,000 for the 30 August 1993, $28,000 of 6 September 1993 and $17,000 of 14 September 1993 together with the $15,000 for the deposit for the Wecker Road land on 17 December 1993.
Mr Brown maintained that in order for the lead train venture to be successful the Kenworth prime mover needed to have a good driver. He said that the Kenworth was dogged with bad luck and that Mr Gardiner was a very poor operator. He said that the Kenworth’s expenses greatly exceeded the very little income that it was able to earn. At no time has he accounted for any moneys received. His own vehicle, the Transtar, on the other hand, did particularly well during the early part of the venture. In an affidavit made by Mr Brown on 21 February 1996 seeking security for costs against MM, he claimed ownership of the vehicles and that the effect of the injunction was to prevent the operation of the vehicles carrying out lucrative contracts. In the 6 weeks since the injunction, in his opinion, the vehicles had lost the offer of lucrative business worth some $37,325 net. In paragraph 9 he said that “on the basis of the opportunities which the business has not been able to take up, it is likely that the damages would run in the order of $150,000 to $200,000 per year. Again, this figure is typical of the returns that could be generated after deduction of operating overheads for vehicles such as the Kenworth prime mover”.
An examination of Mr Brown’s “ledger” for March 1993 demonstrates a number of startling errors. The ledger was apparently kept on a simple basis of columns headed “Transtar” (Mr Brown’s vehicle) and “Kenworth” (MM’s vehicle) and debit and deposit columns for each. On 5 May 1993 Telstra accounts amounting to some $4,000 are attributable as a debit to the Kenworth. This was before any vehicles were purchased for the lead train. Mr Brown conceded that this was an error. The deposits of the sums from MM of $75,000 and $40,550 on 5 and 6 May 1993 respectively were placed into the Transtar deposit column rather than into the Kenworth column. Mr Brown agreed that this was an error. Further advances made by MM to the enterprise are not shown in the Kenworth deposit column.   Most expenses are shown as a debit against the Kenworth vehicle, very few against the Transtar and the deposits, apart from one item of $1,000 are shown to the Transtar’s account. The same is true with respect to the fuel train. Mr Brown said that when the Western Star prime mover was sold, the $20,000 was put into the Kenworth deposit column but it is shown in the Transtar deposit column. Mr Brown said that was an error. Although he asserted in his evidence that the $15,000 in respect of the Wecker Road land transaction was accounted for in the ledger, he has been unable to find it.
The ledger itself was the basis for the preparation of the counterclaim by Mr Brown’s accountants. It is relevant to this action in that it clearly demonstrates Mr Brown’s unreliability. Although MM no longer seeks an account, the first page of the ledger upon which Mr Brown was cross-examined suggests that the Kenworth, on those figures, may well have been profitable.
As has been mentioned, I did not find Mr Brown a credible witness. He was courteous and personable but his recollection was vague with respect to most conversations. He was hesitant about denying outright conversations with Mr Dallimore or Mr Green but suggested, at least with respect to Mr Dallimore, that he was muddled about what Mr Brown was agreeing to.   My impression was that he had glibly spun so many fanciful stories to Mr Dallimore and Mr Green about the prospects for the ventures and thereafter, that he could not recall what he had said. He tended to argue about trivial details on documents, for example, that an engine number or registration number inserted by him on the acknowledgement documents was incorrect and in some unexplained way suggested that this invalidated the whole document. He became fixed in his cross examination and in his submissions upon the identity of the original provider of cash to MM and thought that because MM did not source the funds it had no entitlement to recover those funds from the first and second defendants.
Although I was disadvantaged by not having Mr Dallimore subjected to cross examination, I accept that he kept contemporary records of his conversations and meetings with Mr Brown and the second defendant and that those reasonably accurately reflect the nature of those conversations. This is supported by Mr Green’s evidence which I accept. Mr Green was not the chief protagonist in the dealings with Mr Brown and, to a large extent, he relied upon Mr Dallimore and reading his notes at the time. However from time to time he was contacted by Mr Brown and had conversations and meetings with him and his recollection of those conversations and meetings supports the evidence contained in Mr Dallimore’s statement. Mr Brown’s submissions as to why his version of the arrangements between himself and MM should be preferred to a large extend depended upon Mr Dallimore’s alleged concern about his pension and MM’s concern about its taxation position. The evidence clearly shows that Mr Dallimore was keeping his accountant and the Department of Social Security informed of his plans (Exhibit 23). Mr Green denied that Mr Dallimore’s pension entitlement or the taxation implications for MM were a concern and there was no recollection of this being discussed by Mr Greening, the accountant. There was the further suggestion made for the first time in evidence, that Mr Green was seeking to “hide” some “black money” from his motel business. This allegation might say something about Mr Brown rather than Mr Green.   As a further explanation for the vehicles all being in his name, Mr Brown said that he required security for his expenses in running the lead train venture. This is not credible as he received all the cheques for carrying the lead ingots and could deduct the expenses before distributing the profits. There were no expenses incurred in the fuel train joint venture because, as Mr Brown well knew, there were no sales organised to any customers by him. It was quite inconsistent with Mr Green’s position as a businessman that he would lend money to Mr Brown through MM for the fuel train without any form of security and at no interest. He lent$120,000 to Mr Dallimore, an old friend, to invest through MM in the lead train, took security over his unit and charged 10% per annum interest and required repayment when Mr Dallimore’s home unit was sold some months later.
Mr Brown sought to maintain that the acknowledgement of receipt of the various sums of money in some way were not what they appeared to be on their face and were simply acknowledgement of receipts of money and not of the ownership of the vehicles by MM and seemed to suggest that his acknowledgement in writing that all vehicles were purchased on behalf of MM was to accommodate Mr Dallimore’s and Mr Green’s persistence.
Mr Brown asserted strenuously throughout his evidence that he provided the books and accounts to Mr Dallimore for his inspection at his home. This assertion cannot be maintained against the continued requests by Mr Dallimore to inspect the books and a request that he should be able to do the books when Mr Brown fobbed him off with stories of the second defendant’s illness. At no time is there any communication from Mr Brown that he could look at the books at his home.   Mr Dallimore and then Mr Green asked Mr Brown for receipts and accounts and some profit and loss statement for the vehicles continually during 1994. If the ledger which was produced by Mr Brown in court was in existence at the time when the joint ventures were operating, it is quite clear that the obvious and serious errors would have become apparent to Mr Dallimore.
Although Mr Francis invited me to draw an adverse inference from Mr Brown’s failure to subpoena the second defendant I am satisfied that there were family law matters which were of concern to him relating to access to his child which would preclude that inference being too readily drawn.
The conclusion must be that Mr Brown and the second defendant acting in conjunction with him, systematically persuaded Mr Dallimore and Mr Green to invest in ventures and on terms which they did not propose should operate in the way represented. Over the whole period Mr Brown managed to deceive both Mr Dallimore and Mr Green as to his capacity to deliver profits in the ventures and the continuation of those ventures. This was long after the vehicles had ceased to be operated by him or after he had sold those vehicles. On a consideration of the whole of the evidence the unavoidable conclusion is that Mr Brown and the second defendant were engaged in a systematic fraud and deception against MM through its principals, Mr Dallimore and Mr Green.
A schedule of moneys paid to Mr Brown, which is a modification of Exhibit 17, gives an overview of the payments and also includes the sums paid by Mr Brown.
SCHEDULE OF MONEYS PAID

Date	Amount	Form of Payment	Description	Amount Actually Paid by Brown
LEAD TRAIN JOINT VENTURE
05.05.93	$40,550	Cash	To purchase from Endeen Pty Ltd., Brisbane 1 x 42 foot Fruehauf flat top trailer Regn. No. 889QBH green 1 x 40 foot Fruehauf flat top trailer Regn. No. 989QBE white 1 x dolly ex Merv. Hold Machinery Sales, Toowoomba, Regn. No. TCM421	$26,500 $ 5,000
06.05.93	$75,000 ($65,000 $10,000)	Cheque Cash	To purchase from Holt Transport Pty Ltd 1 x Kenworth prime mover W 900 Regn. No. 522BTQ red/blue	$65,000
06.05.93	$10,000 ($ 5,375 $ 4,625)	Cash	To purchase from Matilda Fuels, Brisbane 1 x 32,000 litre Highgate tanker unregistered To purchase diesel fuel	$ 6,500
12.05.93	$ 3,000 $ 1,000 $ 2,000	Cash	Driver’s wages and tyres en route to Broome, Western Australia
19.05.93	$ 5,000	Cash	Fuel on Nullarbor near Boulder, Western Australia
FUEL TRAIN JOINT VENTURE
24.08.93	$11,424	Cheque	To Minora Resources NL to purchase 32,000 litres of diesel fuel
31.08.93	$ 7,000	Cash	Deposit for purchase from Denmac Ford, Brisbane 1 x Western Star prime mover Regn. No. 680BLA	) ) $42,000
01.09.93	$55,000	Cheque	Balance purchase from Denmac Ford, Brisbane 1 x Western Star prime mover Regn. No. 680BLA	) )
06.09.93	$28,000	Cheque	To purchase from O’Phee Trailers, Brisbane 1 x 37,000 litre Hockney tanker	$22,800
06.09.93	$10,000	Cash	For repairs and modifications to 37,000 litre Hockney tanker	$ 7,300
14.09.93	$ 7,000	Cheque	To fit sleeper box to Western Star prime mover
21.09.93	$ 3,000	Cheque	For calibration of Hockney tanker’s tanks
WECKER ROAD LAND JOINT VENTURE
17.12.93	$15,000	Cheque	For purchase of ½ interest in 2½ acres land/sheds/drum business representing 50% deposit
TOTAL	$269,974	$175,100

SCHEDULE OF MONEYS REFUNDED

Date	Amount	Description
30.06.94	$5,000	Refund from first defendant
12.10.94	$5,662	Refund from first defendant
24.06.94	$762	Refund from Minora Resources NL
03.08.93 to 21.10.94	$7,124.30	Small amounts (details set out in para.24 of the statement of claim)
Total	$18,548.30
Balance	$251,425.70

I am satisfied that there were three oral agreements between MM and the first and second defendants, namely the lead train and fuel train joint ventures and the Wecker Road land joint venture and that the terms of each were substantially as pleaded by MM. I am also satisfied that the terms of those agreements were breached in the manner alleged by MM and in particular by providing receipts for false and increased amounts for the purchases as agent of MM of the lead train and fuel train joint venture vehicles and other expenses; by converting the balance of the moneys to their own use; by failing to provide for any title or interest of MM in the vehicles or land contract; by dealing without MM’s consent with certain of MM’s vehicles by sale or removal of parts of the vehicles or removing vehicles from MM’s custody (additionally in breach of the terms of the agreement alleged by him that he was a trustee of the vehicles) by not accounting for sale moneys or the value of the parts removed; by renting the Hockney tanker; and by giving a bill of sale over two of the vehicles.
From at least November 1994 MM sought the return of its vehicles from Mr Brown and the second defendant without success. When the Kenworth prime mover and the 42 foot trailer were recovered by Mr Dallimore they were subsequently removed on behalf of Mr Brown and/or the third defendant. Mr Brown and the second defendant agreed to provide a prime mover, two trailers and a dolly to the lead train joint venture. The evidence suggests that Mr Brown at no relevant time owned two trailers and that he rarely used his Transtar prime mover to cart lead ingots in conjunction with MM’s road train, as had been agreed. The fuel train joint venture never got going after the first trial run of diesel fuel which Mr Brown used in his own business.
Mr Brown had no intention of including MM in any purchase of the Wecker Road land and obtained the $15,000 by deception of Mr Dallimore and retained the money in breach of their agreement.

Relief Sought

Against the first and second defendants

If the three remaining vehicles, the Kenworth prime mover, the Hockney tanker and the 42 foot Fruehauf trailer are delivered up to MM, credit must be given for the present value of those vehicles. Mr Paul Zoeller, a qualified valuer, inspected the Kenworth prime mover and the Hockney tanker in October 1997 and valued them respectively at $15,000 and $7,000. Although Mr Brown sought to adduce from Mr Hall of Denmac Ford that such a Kenmore prime mover would be worth more Mr Zoeller had the advantage of inspecting the vehicle and I accept his valuation. Mr Dean estimated that the 42 foot Fruehauf trailer would be worth between $5,000 and $8,000. I would propose to fix a valuation of $6,500. Their collective value is $28,500 and should be offset against the damages recoverable. MM seeks an order that Mr Brown return the tyres, wheels and wheel nuts admittedly removed from the 42 foot trailer together with wheels and other equipment which he allegedly removed from the Hockney tanker and the Kenworth prime mover. Because the condition of the tanker and the Kenworth prime mover were not examined in detail with Mr Zoeller it is not clear whether any of the parts were then missing. I propose to order that the accoutrements of the vehicles, to the extent that they are available, be returned to MM.
The storage and other costs associated with the vehicles should be paid by the first defendant. Mr Dallimore paid $625 to Mr B. Sherrin consequent upon the order of Fryberg J which costs were reserved to the trial. Tieman Industries Pty Ltd retains a lien over the tanker which on 27 August 1997 amounted to $12,348.33 accruing at $100 per week. To judgment, which is approximately 35 weeks, gives an extra amount of $3,500 in rent and charges.
MM claims interest on the amount of damages at 10% per annum for four and a half years. Since all the payments were made in 1993 that should be allowed.
On 22 February 1996 Mr Dallimore and Mr Green were required to give personal undertakings as security for the injunction. They should now be released from those undertakings.

Relief against third and fourth defendants

MM claims against those defendants declarations that the bill of sale executed on 10 November 1994 between the first defendant as grantor and the third defendant as grantee is null and void and unenforceable against MM in respect of the vehicles the subject of the bill of sale. Since Mr Brown, as I have found, had no title to the vehicles the third defendant has no entitlement as against the owner, MM.

Counterclaim by First Defendant

The first defendant maintains the allegations in the defence in his counterclaim, namely that the terms of the joint ventures were such as to repose the ownership of all the vehicles purchased with money received from MM in himself and seeks declarations to that effect. He alleges that from May 1993 to November 1994 he paid the sum of $568,311.68 for and on behalf of MM and at its request through Mr Dallimore. This reflects the alleged terms of the agreement between the parties as asserted by the first defendant that the first defendant would advance on behalf of the joint venture all of the operating expenses of the lead train venture and there would be an accounting between them to ascertain the profits or losses of the venture. The first defendant alleges in the alternative that MM terminated the two joint ventures in breach of its obligations and the loss suffered by him is the amount owing pursuant to the contracts in respect of the expenses associated with MM’s road train. In the further alternative the first defendant seeks an account between the parties. He alleges that $2,000 was received by MM when Mr Dallimore sold the engine of the Kenworth prime mover to J.J. Mechanical Repairs for that sum and has failed to account for it.
A finding has been made in this action that at all material times MM was the owner of the seven vehicles. Mr Brown said that the amount of the counterclaim set out in the pleadings is much more than he actually claims. The terms of the lead train joint venture as I have found included that the expenses were to be borne by Mr Brown or his interests. There is therefore no basis for the counterclaim in light of these findings.
Mr Francis has submitted that a sanction ought to follow the failure by the defendants to participate in the ADR process. By s.103(1) of the Supreme Court of Queensland Act 1991 if a referring order is made to ADR the parties must attend before the ADR convenor appointed and must not impede the ADR convenor in conducting and finishing the process. If a party impedes the ADR process by sub-s.(2) the court may impose sanctions against the party, including an order that any claim for relief by the defaulting party be stayed until further order and to take that conduct into account when awarding costs in the proceeding between the parties. Order 99 r.9 of the Rules states that a party impedes an ADR process if the party fails to attend at or participate in the process. Mr Francis has submitted that a stay or adjournment of the counterclaim, if it is not to be dismissed, should be on terms that the first defendant obtain the leave of the court and give security for costs because he failed to attend the case appraisal ordered by the court. He submits that the counterclaim is fanciful, has not been particularised adequately and that the ledger upon which the counterclaim is based has been shown to be so unreliable as to be incapable of forming any basis for the counterclaim. I accept the force of those submissions.
Because the findings in this action have excluded the basis of Mr Brown’s counterclaim, it would be fruitless and expensive to allow it to proceed to ascertain the quantum should my findings be found erroneous. The counterclaim is in no way ready to be heard as to quantum. If adequately particularised with supporting documentation it would, I estimate, require about 3 days to be heard. I therefore would stay the further prosecution of the counter claim.

Costs

MM seeks costs against all defendants including reserved costs and the costs of the ADR to be taxed on a solicitor and client basis. The costs should be taxed on a party and party basis but I would add for the benefit of the taxing officer that MM’s case was well prepared without any apparent over-preparation and use was made of s.92 of the Evidence Act (Qld) 1977 to reduce costs.
The second and fourth defendants are bankrupt. No leave of the court has been obtained pursuant to s.58 (3)(b) of the Bankruptcy Act (Cth) 1966 to proceed against them and no relief is sought against the second and fourth defendants in respect of a provable debt. Costs are sought against those two defendants on the basis that they should be limited to the costs associated with the declarations as to ownership of the vehicles made against the second and fourth defendants. From a consideration of the authorities it appears to be the rule that if a judgment is not provable the costs of recovering the judgment are not, In re British Gold Fields of West Africa [1899] 2 Ch 7 per Lindley MR at pp11-12. See also In re a Debtor [1911] 2 KB 652 in respect of interlocutory orders as to costs made before the bankruptcy and In re Pitchford [1924] 2 Ch 260 per Jessel MR at p270. Accordingly, no costs may be ordered against those two defendants.
The status of the third defendant is not clear and the order will be that it pay costs subject to it not being in liquidation or otherwise struck from the register.

Orders

It is declared as against all defendants that the plaintiff is the true owner and entitled to possession of the vehicles set out hereunder complete with all tyres, wheels, equipment and other accessories:-

(a)One Kenworth prime mover registration no. 522-BTQ;
(b)One 37,000 litre Hockney tanker trailer serial no. 5907/437;
(c)One 42 foot Fruehauf flat-topped trailer registration no. 889-QBH.

It is declared as against all defendants that the plaintiff is and was until the respective dates upon which they were disposed of by the first and/or second defendants the true owner and entitled to possession of the vehicles set out below:-
(a)One Western Star prime mover registration no. 680-BLA;
(b)One 40 foot Fruehauf flat-topped trailer registration no. 989-QBE;
(c)One 32,000 litre Highgate tanker trailer;
(d)One dolly.

The first and second defendants forthwith deliver up to the plaintiff and the plaintiff recover the vehicles referred to in Order 1 hereof free from all encumbrances, charges and claims.

The plaintiff recover against the first defendant:-

(a)in the event that the vehicles referred to in Order 1 hereof are not forthwith delivered up in accordance with paragraph 3 the sum of $251,425.70 together with interest thereon at the rate of 10% per annum over four and one third years of $108,951.13;
(b)alternatively, in the event that the vehicles referred to in Order 1 hereof are forthwith delivered up in accordance with Order 3 hereof the sum of $222,925.70 together with interest at 10% per annum for four and one third years of $96,601.14.

The plaintiff further recover against the first defendant the sum of :-

(a) $1,375 being the amount paid to or payable to Barry Sherrin

and
(b) $15,848.33 paid to or payable to Tieman’s Industries Pty Ltd
in respect of the storage and/or repair of the vehicles referred to in Order 1 hereof.

It is declared as against all defendants that the bill of sale dated 10 November 1994 executed by the first defendant as grantor and the third defendant as grantee is null and void and otherwise unenforceable against the plaintiff in respect of the vehicles referred to in Order 1 (a) and (c) hereof.

It is ordered that the undertakings given by Rex Walter Dallimore and David Ian Green on or about the 22nd February 1996 in respect of the injunctions obtained by the plaintiff on the 5th and 11th of January 1996 be dissolved and they be otherwise released from their undertakings.

It is ordered that the first and third defendants ( subject to the third defendant not being in liquidation, dissolved or otherwise struck from the register of companies) pay the plaintiff’s costs of and incidental to the action including reserved costs and the costs of the case appraisal to be taxed.

It is ordered that the first defendant’s counterclaim be stayed.

[1998] QSC 69

24 April 1998