Murray v Duddy

[2006] NSWSC 761

CITATION:	Murray v Duddy [2006] NSWSC 761
HEARING DATE(S):	3, 4, 5 , 6, 7, 10, 11, 12 & 13 April 2006
JUDGMENT DATE :	2 August 2006
JURISDICTION:	Common Law Division
JUDGMENT OF:	Associate Justice Harrison
DECISION:	The Court orders that; (1) There be a verdict and judgment for the defendant; (2) The plaintiff is to pay the defendant's costs as agreed or assessed.
CATCHWORDS:	Principal/agency, breach of contract, deceit
LEGISLATION CITED:	Conveyancing Act 1919 (NSW) - s 54A
CASES CITED:	Bridges v MacPhail 3 BPR 97189, 7 April 1977 Carpenter & Anor v McGrath & Anor (1996) 40 NSWLR 39; [1997] ANZ ConvR 8; (1996) NSW ConvR 55-788 Duddy v Westpac Banking Corporation (NSWSC, Santow J, 2361/97) HTW Valuers (Central QLD) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640; (2004) 211 ALR 79; (2004) 79 ALJR 190; (2005) ASAL 55-131; (2004) ATPR 42-030; (2005) Q ConvR 54-611; [2004] HCA 54 Johnson v Perez (1988) 166 CLR 351 Thacker v Hardy 91878) 4 QBD 685 Paterson v McCallum [1921] NSLR 869 Rankin v Palmer (1912) 16 CLR 285 Re Parker (1882) 21 Ch D 405
PARTIES:	Wendy Jill Murray - Plaintiff Eric Keith Duddy - Defendant
FILE NUMBER(S):	SC 12555/2001
COUNSEL:	Mr J R Wilson SC with Miss K E Poulos - Plaintiff Mr S J Burchett - Defendant
SOLICITORS:	McKells Solicitors - Plaintiff MacLean & Curtis - Defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

ASSOCIATE JUSTICE HARRISON

WEDNESDAY, 2 AUGUST 2006

12555/2001 - WENDY JILL MURRAY v
ERIC KEITH DUDDY – No 3
JUDGMENT (Principal/agency, breach of contract,
deceit)

1 HER HONOUR: The plaintiff alleges that she successfully bid at auction for two properties “West Garawan” and “Square Bush” on behalf of her Uncle Eric, the defendant. The plaintiff alleges that he breached the agreement, made misrepresentations and deceived her. This is the second trial in these proceedings.

2 This litigation has brought about an unfortunate state of affairs. It has caused a rift within a wealthy, well respected family of landowners. The plaintiff’s grandfather owned about 12,000 acres of property known as Rossmar Park upon which is located the heritage homestead “Rossmar”. The properties, the subject of this claim, are located on the Liverpool Plains in the Gunnedah/Quirindi area in north western New South Wales. The plaintiff is Wendy Jill Murray. Her father was Ross Duddy. Ross Duddy was one of three brothers, his brothers being Clive Duddy and Eric Duddy. Eric is the plaintiff’s uncle and the defendant in these proceedings. In this judgment I have usually referred to the plaintiff as Wendy or Wendy Murray and the defendant as Uncle Eric or Eric Duddy.

3 For the first nine years of her life Wendy Murray lived with her family at the Rossmar homestead and then together with her family moved to reside at the property known as West Garawan. In 1967 she married Robert Murray (Bob Murray) and moved to Western Australia. They have been involved in the management of farming properties throughout most of their marriage. In 1991 Wendy Murray inherited “Boala” a dryland farming property situated on the Breeza Plains. Boala was formerly part of “Breeza Station”. In about 1991 Wendy and Bob Murray moved from Western Australia to Boala.

4 Wendy and Bob Murray returned to Breeza Plains. By then Wendy had inherited a dryland farm situated on the Breeza Plains called “Boala”. Boala was formerly a part of “Breeza Station”. At the time of the auction Wendy and Bob Murray were involved in the farming and management of Boala in a partnership arrangement.

5 On 30 September 1996 Westpac Banking Corporation (Westpac) obtained against Eric Duddy judgment for possession of “West Garawan” and “Square Bush”. Westpac also obtained judgment against Mr Duddy in the sum of $3,256,255.20. The bank was proceeding to sell both properties at auction. I have referred to “properties” which up until 1998 included West Garawan and Square Bush. Square Bush played little role in subsequent events and was sold six months after the auction (November 1997) for $132,000. The subsequent events revolve around the property West Garawan.

6 Before I continue, it is appropriate that I record my observations of the plaintiff’s demeanour and the defendant’s evidentiary position. The plaintiff was cross examined over four days and during that time I carefully observed her. At times she became an advocate for her case. She did not feel constrained to merely answering the question but rather volunteered information that she thought would bolster her case.

7 In about May 2001 Wendy Murray wrote her version of what occurred at the auction and the aftermath. It was referred to during the trial as “the story document” (Ex E). This version is more elaborate and not entirely consistent with her evidence given at trial. She expressed a consistent theme in both the story document and in court and this was that she was endeavouring to stand up for her rights and for what she believes is correct (t 205.5). I have come to the view that Wendy Murray has tailored her evidence to portray herself in the best light possible. It is for this reason that where there are contemporaneous notes or other documentation in existence and their contents conflict with Wendy Murray’s evidence, I prefer that evidence contained in the written documentation.

8 Mr Duddy is now aged 79 years. He gave evidence at the first trial. Unfortunately, due to the effluxion of time, was no longer competent to give evidence at this trial. It was the view of Dr Sid Williams psychiatrist (report 27/3/2006) that Mr Duddy would be unable to assist the Court and that he would not be competent to give evidence about the facts relating to events which occurred in 1997. Dr Williams was right. As the Court being faced with determining between two competing versions of oral conversations, it was anxious to ascertain whether Mr Duddy could give reliable evidence and whether any observations as to demeanour would be of assistance. Mr Duddy was sworn and asked some basic questions. Mr Duddy ruminated over each question before answered. Eventually, when he did respond, it amounted to only a few words. I formed the definite view that Mr Duddy did not have any useful recollection of the events that occurred on the day of the auction nor could he give any cogent evidence. Consequently this Court was not able to make any findings about Mr Duddy’s demeanour or credit. The best that can be done now is to make use of the transcript of the evidence Mr Duddy gave in the previous trial together with his affidavit evidence (see Ex 5).

9 Mrs Jill Duddy (Wendy Murray’s mother and Uncle Eric’s sister-in-law) had furnished an affidavit and was cross examined during the first trial. Mrs Duddy was to give evidence at this trial but regrettably her husband (Wendy’s father) died a few days before this trial commenced. His funeral took place on the second day of the trial. Understandably Mrs Duddy was grieving and unable to come to Sydney to give evidence at this trial. Her affidavit and cross examination at the first trial is in evidence (Ex 9). As with Uncle Eric, I did not have the benefit of observing her demeanour in Court. Her evidence is of short compass but is nevertheless important in that it is consistent with Uncle Eric’s recollection of a conversation with Wendy. Mrs Duddy also gave evidence of a conversation between her and Wendy which goes directly to the issue of whether Wendy intended to retain the property for herself.

10 While I am on the topic of witness, mention should also be made of Wendy Murray’s actions in the sending of faxes to two potential witnesses, namely Mr Douglas Anderson and Mr Wayne Leece. Doug Anderson was the director of Ashe Morgan Winthrop. Wayne Danvers Leece was Uncle Eric’s accountant. The Court regards the faxes dated 12 April 2002 and 15 April 2004 as most inappropriate and worthy of rebuke (Ex 3). When the faxes were sent these proceedings had been on foot for seven months (S/C filed 15/08/2001). Mr Leece gave evidence at both trials and was cross examined. He was not intimidated by Wendy Murray’s behaviour. However, the same cannot be said for Mr Anderson. Wendy Murray wrote to Mr Anderson telling him:

“…My instincts tell me that neither of you [Mr Anderson and Mr Leece] were willing participants in the fraud that has clearly been perpetrated. As a result of Eric’s determination to have his own way at any cost, you are now both about to find yourself in very serious trouble indeed. In your case, Michael Hayter intends to amend my action against Kyabram to include a joint action against you as well.”

11 Elsewhere in her letter, she referred to being extremely fortunate to have Michael Hayter acting for her because as well as being a partner in the ninth most successful law firm in Australia and being an impressive man, he had the previous year personally won a $50 million fraudulent misrepresentation case. However, as it turned out Mr Hayter did not act for Wendy Murray at this trial. He had filed a Notice of Ceasing to Act [27/08/2002].

12 Wendy Murray’s letter to Mr Anderson concluded:

“Please think this over carefully. Bob and I have both the capacity and intention to pursue these actions until such time as what we consider to be a fair and just outcome is achieved. I personally will go to any lengths that I have to, to ensure that justice is not only done, but is seen to be done.”

13 Mr Anderson had prepared a draft affidavit and deleted a significant portion of that draft. Obviously deletions did not appear in his affidavit sworn 6 November 2003. At the first trial Mr Anderson departed from some evidence contained in his sworn affidavit, and in effect adopted the crossed out evidence in his draft affidavit. While Mr Anderson gave evidence and was cross examined at the first trial he could not be located to give evidence at this trial. Mr Anderson’s letter dated 9 September 2005 to Wendy Murray’s solicitor demonstrated his reluctance to be located (on the admissibility of Doug Anderson’s evidence and attempts to locate him - see separate judgment). Mr Anderson’s affidavit, draft affidavit and portion of the first trial transcript were admitted into evidence (Ex F).

Events prior to the auction

14 On 7 May 1997 Wendy Murray and Robert Murray went to West Garawan to ascertain if there was any items of plant and equipment located on the property that belonged to the family. According to Wendy, Uncle Eric told them that he had been able to secure the finance to pay out Westpac but was short $300,000. Uncle Eric told them that he had approached other people and that George Clift (a neighbour) had offered to lend him $100,000. Uncle Eric asked the Murrays if they would be able to lend him $100,000 because if he was not able to gather up all the money he could lose the property.

15 Later that day, Wendy Murray says that she telephoned Chris Newbiggen of Avern McIntryre solicitors. Mr Newbiggen had acted for the Duddy family in the past. She enquired “Is his [Uncle Eric’s] finance in order?” and Mr Newbiggen replied, “Yes, I have already checked that. He has also asked your mother to lend him money.” Jill Duddy did lend Uncle Eric money. Wendy Murray then asked if they were to lent Uncle Eric any money if they would be provided with any security. He replied that it would be extremely unlikely.

16 Wendy Murray also recounted other telephone calls she made to Chris Newbiggen about stopping the auction. Although she considered Mr Newbiggen to be out of his depth an of very little help, she did remember one thing he said which was that he did not know why Westpac had refused the payout because if Eric’s funds had not been in order then the action in Court in Sydney would have been thrown out before it started (story document).

17 There is much common ground between Wendy Murray and Uncle Eric as to what occurred at the auction. There are two main areas of dispute. Firstly, whether Uncle Eric believed he had the finance available; and secondly, what was Wendy Murray’s intention as to the ownership of the property after the auction took place.

The day of the auction - 9 May 1997

18 On the morning of the 9 May 1997 Uncle Eric’s attention was focussed elsewhere. His legal representatives were in this Court seeking an injunction to prevent the auction taking place. In Duddy v Westpac Banking Corporation (NSWSC, Santow J, 2361/97) Eric Duddy sought to stop the auction on the grounds that firstly, the mortgagee had contracted not to exercise the power of sale in the circumstances that now prevailed; and secondly, estoppel. On 13 March 1997 Westpac wrote to Uncle Eric stating “If the settlement sum of $2 million is forthcoming prior to the auction date then we are prepared to abort the auction.” Santow J made a finding that the sum of $2 million could not in fact be handed over to Westpac. The action failed (Ex B(1) – Tab 16).

19 Early on the morning of the auction Wendy Murray accompanied her brother Peter Duddy to Gunnedah Golf Club the venue where the auction was to take place. Peter, who has since died (September 1998) owned “Garawan” the adjoining property to West Garawan. Wendy Murray engaged in lengthy discussions on Peter’s behalf with the Westpac Regional Manager over the ownership bores and whether the main bore was situated on Crown land or on Garawan.

20 Just prior to the auction commencing Wendy Murray made an announcement to those present (which included the potential bidders):

“I am acting on behalf of my brother Peter who owns the adjoining land. Peter believes that the main bore is in fact on his property and Westpac have been trying to get him to sign a document to transfer it to them. He has refused to sign that document and there is uncertainty as to the actual boundaries of the property and also the ownership of the bore.”

21 A more fulsome version of her announcement to the potential bidders is contained in her story document. Wendy Murray intended to impress upon the audience that she was making this announcement because she “had a very strong sense of what is right and wrong.”

22 Prior to the auction taking place Wendy Murray was aware that two offers had been made to Westpac for West Garawan and Square Bush, one in the sum of $2.1 million and the other in the sum of $2.4 million (t 38.1-15). Both Wendy and Bob Murray gave evidence that prior to the auction they had no idea as to the market value of West Garawan. I find this assertion to be unlikely. Wendy had spent her formative years living on that particular property. She had returned to the area four years earlier and owned her own property. It seems more likely than not that Wendy and Bob Murray would have been familiar with the current market values of properties in the area.

23 Bruce Gunning the valuer who had provided a valuation of West Garawan prior to the auction gave evidence on two aspects of this case; namely the valuation of West Garawan and what occurred at the auction. He was present at the auction in order to bid on behalf of a potential buyer. I found him to be an impressive, truthful witness who had an intimate knowledge of the value of the properties and in particular the value of West Garawan’s water entitlements. This was an issue that loomed large at this time. I accept and prefer his valuation of West Garawan and Square Bush to those of Patrick James Wood and Robert J Patfield of Patfield & Company because of his more detailed local knowledge. I accept his evidence generally. At the commencement of the auction he recalled Wendy Murray her saying to those present “We’re not really happy with this. We do not agree with what you are trying to do.”

24 Eric Duddy arrived at the auction at about 2.00pm just before it commenced. When Uncle Eric arrived he approached Wendy Murray, Leon Cupples and Peter and said words to the effect “I’ve got $2 million but Westpac won’t knock it down to me if I bid at the auction. Peter will you bid for me and then we can transfer the property back to me?” Peter said “No”. It is common ground that prior to asking Wendy to bid, Uncle Eric asked Peter to bid and Peter had said “No.”

25 Wendy Murray’s version is that Uncle Eric then turned to her and said “Can you bid for me? I’ve got the money. You can transfer it back to me next week.” Wendy replied, “I will do it.” In the story document, this conversation is similarly recorded. The story document added some extra information, namely that it was Wendy Murray’s intention that when purchasing the properties she would gain the opportunity to straighten out once and for all the ownership of the bores before she transferred it back to Eric.

26 Uncle Eric’s evidence is that he said to Peter and Wendy “I’ve got $2 million dollars organised.” Or alternatively he said “I’ve got access to $2 million dollars.” Uncle Eric continued “but the Bank won’t allow me to bid for the properties – can you buy them back for me?” Wendy Murray replied “Yes I will do it for you.”

27 There is no dispute that Wendy Murray agreed to bid for the properties on Eric’s behalf. But as to what was actually said, I find it is more likely than not, that on the balance of probabilities, Uncle Eric said to Wendy “I’ve got access to $2 million and the bank won’t allow me to bid for the properties. Can you bid for me? “ Wendy said “Yes, I will do it.” In cross examination Eric Duddy agreed that he said the words “I have got the money or organising the money, something like that.” (AB 257.4-7).

The auction

28 When the auction then commenced Wendy Murray was standing next to Uncle Eric. After five minutes Bruce Gunning placed a bid on behalf of a client for $1.2 million. Wendy Murray commenced to bid against him. Uncle Eric said to Wendy “The Westpac reserve is $1.7 million.” As the bidding was continuing Uncle Eric told Wendy “You can go up to $2 million.” On four or five occasions Wendy Murray bid against Bruce Gunning increasing the bid each time. On those occasions Eric said to Wendy “Keep going you have to get it.”

29 Bruce Gunning confirmed that he made a number of bids on behalf of a potential buyer but he withdrew from bidding when he was instructed by his principal to do so. The reason for withdrawal was because the principal became aware that he or she was bidding against Eric Duddy’s niece and did not want to get involved “in this” (t 274.29). Finally Wendy Murray made a successful bid for $1.8 million. West Garawan was knocked down to her.

30 According to Wendy, Uncle Eric then grabbed her by the arm and said words to the effect “You’ve also got to buy Square Bush because it is tied up with my finance arrangement.” Square Bush was a smaller property located in the area. When the bidding for Square Bush was a bit over $100,000 Uncle Eric said to Wendy “Keep going we need the two blocks to cover the finance”. Square Bush was knocked down to the plaintiff for $135,000. The total of the two bids was $1.935 million. I accept that Uncle Eric told Wendy to keep bidding and she could bid up to $2 million. I also accepted that Uncle Eric told Wendy to bid for Square Bush as it was either tied up with Uncle Eric’s finance agreement or the two blocks were needed to cover the finance.

31 At the time of the auction Wendy Murray says that it was her belief that the finance Uncle Eric had obtained would pay for the properties and that those properties could be transferred back to him in one week. Uncle Eric knew that he was not be able to get the titles back into his name until the figures were worked out and a final figure could be agreed on With Westpac under the settlement agreement. Uncle Eric denied he told Wendy that she could transfer the properties back to him within one week. On Wendy’s own evidence she was intending to sort out Peter’s boundary issues before transferring the property back to Uncle Eric. Hence I find it unlikely that Uncle Eric said to Wendy that she could transfer the property back to him the next week.

32 I make a finding that there was an agreement between Wendy Murray and Uncle Eric. I find that Wendy Murray was to bid at the auction and purchase the properties on Uncle Eric behalf and that Uncle Eric’s finance would be used for the purchase of the properties and that the properties would be transferred back to him with one week. The first part of the agreement, namely that Wendy would bid at the auction and purchase the properties, was fulfilled.

33 Wendy Murray recorded at the conclusion of the auction when she went to sign the documents, the Westpac Regional Manager looked very pale and appeared to be in a state of shock. According to Wendy Murray at this time Warren Thibault, Westpac’s solicitor said “I take my hat off to you, that was the fanciest bit of footwork I have ever seen I knew what you were up to but I couldn’t stop you.” (the story document). Wendy Murray signed the contract in her own name. At this stage Wendy Murray was aware that as there had been pre-auction offers of $2.1 and $2.4 million the price paid for the properties was a very good one indeed.

34 It is from this point that the evidence diverges. After the contract was signed, Wendy Murray recounted that she had a conversation with Uncle Eric’s accountant Wayne Leece of Clout Brackenbury & Stewart in Quirindi whereby she told Wayne, “West Garrawan has been knocked down to me.” Mr Leece replied “You little beauty.” Prior to the auction Wayne Leece was involved in obtaining finance for Uncle Eric. He had been trying to negotiate a settlement between Uncle Eric and Westpac. Wendy Murray’s version is that she then said to Wayne Leece “OK now what to I do about the deposit? Eric seems to have disappeared.” Wayne Leece said “You will have to go to Quirindi and get your mother to withdraw some of the money she also put into Andrew Kay’s Trust Account and use that for the deposit.” Mr Leece does not recall this conversation nor did he refer to it in his affidavit nor does he deny that it occurred (t 381.10). Mr Leece says that he also received a telephone call from Uncle Eric where Uncle Eric said “Wendy’s bought the property for me.”

35 Shortly after Wendy Murray signed the contract she also telephoned her solicitor Mr Newbiggen. Mr Newbiggen’s file note reads:

“2.15-2.20 Telephone call to Wendy Murray. Noting that she had purchased property on behalf of Eric Duddy for $1.8 million. No written authority had been given to the Agent. Has been told his finance is in order. Cheque for deposit being arranged through Andrew Kay at Quirindi.”

36 During cross examination Wendy Murray denied that she discussed finance with Mr Newbiggen. It is unlikely that the solicitor would have initially, as claimed by Wendy Murray, told her that Eric’s finances were in order and then proceeded to make a later file note to himself that “[she] has been told his [Uncle Eric’s] finance is in order.” It is my view that Wendy Murray told Mr Newbiggen that Eric’s finances were in order not the other way around.

37 At about 2.30pm Eric Duddy telephoned his solicitor, Mr Andrew Kay of Thomas Hayne at Quirindi. Mr Kay’s file note recorded “1.8m bought on his [Eric’s] behalf.” After the auction Uncle Eric was certain that Wendy had bought the properties on his behalf.

38 Mr Newbiggen recorded a further telephone call made to him that afternoon by Wendy Murray. His file note reads:

“3.10-3.15 Telephone attendance on Wendy Murray. Advising she had not heard from Andrew Kay. At this stage she is to head to Quirindi to collect the cheque. Noting that she wants some control over the property to try and prevent Eric Duddy getting into future difficulties. To contact us when she get to Quirindi.”

39 So by 3.15pm on the afternoon of the auction, Wendy Murray had articulated to Mr Newbiggen her intention to gain some control over the property so as to prevent Uncle Eric getting into future difficulties. Sometime that same afternoon Mr Newbiggen drafted a deed of trust.

40 Next in time is a letter by Mr Newbiggen faxed to Mr Andrew Kay (Uncle Eric’s solicitor) which relevantly says:

“We have been advised by our client that she has agreed to purchase the property “West Garawan” Breeza for the sum of 1.8 million dollars from Westpac Bank at the Auction held at Gunnedah today.
We are instructed that our client agreed to do this at the request of your client and on the basis that your client would be providing the funds to enable our client to complete the purchase.
We understand that our client is travelling to your office to collect the necessary cheque to pay the 10% deposit for the Contract. At this stage, we understand that the Contract has not been signed.
In order to record that arrangement, we enclose Declaration of Trust for signature by our client and your client, Mr Eric Keith Duddy. We would ask that the Declaration of Trust be signed before our client enters into the Contract with Westpac Bank.”

41 However, by the time this letter was faxed, Wendy Murray had already signed the contract with Westpac. The trust deed accompanied this fax. Wendy Murray denied that Mr Newbiggen mentioned any declaration of trust to her. However, in cross examination she conceded that this deed reflected the agreement between herself and her uncle (t 78.57).

42 Between 4.20pm and 4.35pm there was a conversation between Wendy Murray and Uncle Eric’s. Mr Newbiggen spoke to Mr Kay. Mr Newbiggen’s file note of this conversation recorded:

“Telephone attendance on Andrew Kay. Outlining present position. Noting that he had $300,000.00 in his trust account of which $200,000.00 was cleared funds. Not sure of the exact source of the funds but may be from Peter Duddy and George Clift. Borrowings were coming from M and S Financial Services (indecipherable) and Sawyers Solicitors of Kyabram).
There was an offer of loan for $1.35 million and a further $350,000.00. Did not know the exact status of that loan or the position concerning making the loan available for the purchase by our client. Advising of declaration of trust and indemnity being passed to his office. Asking that he arrange for funding Murray to contact our office.”

43 At about 4.25pm on that same day Mr Kay received the faxed trust deed.

44 At about 5.00pm, there was a meeting in Mr Kay’s office. Those in attendance were Jill Duddy, Wendy Duddy, Peter Duddy and Uncle Eric. Eric says that he arrived after the others. Wendy denies that Uncle Eric attended this meeting at all. I accept that Uncle Eric may have arrived late, but was present during the meeting. This accords with Mr Kay’s recollection which is that while Eric may have arrived late, he did not arrive after Wendy Murray had left.

45 During a conversation at this meeting Mr Kay was told that Wendy Murray had purchased Eric’s property. Jill Duddy asked Mr Kay to draw cheques on his trust account against the bank cheque, which had been deposited in her name on the previous day. Mr Kay advised the parties present that he had received a fax (which should have included the trust deed) from Avern McIntyre. He placed the fax on the table in the room where the meeting took place. It is Mr Kay’s recollection that the contents of the declaration of trust were not discussed in detail. The reason for this was that Mr Kay considered that while he had prior instructions to act for Eric Duddy in relation to the injunction proceedings he did not have instructions to act for him in relation to the trust deed. Uncle Eric agreed with this view. According to Mr Kay, one member of the group took the fax but he does not recall whom it was. Interestingly, both Wendy Murray and Uncle Eric say that neither of them saw this trust deed document until much later, but nothing turns on this.

46 During this meeting in Mr Kay’s office, Uncle Eric says that Wendy said to him “I wouldn’t mind retaining a small interest in the property.” Eric replied “I don’t see a problem with that.” More importantly, Jill Duddy (aff 21/12/2001) confirmed that at this meeting her daughter (Wendy) said to Uncle Eric either “I want an interest in it” or “I want a small interest in it” and Uncle Eric replied “I can’t see any reason not.” Wendy Murray that this conversation took place. I find that it did. Wendy’s request for an interest in the property is consistent with what she told Mr Newbiggen a few hours earlier (at about 3.15pm). Hence at 5.30pm on the day of the auction Wendy Murray told Uncle Eric she wanted an interest in the property and he agreed to this proposition.

47 Between 5.10pm to 5.20pm Mr Newbiggen recorded on that afternoon he had a further telephone conversation with Wendy Murray. Mr Newbiggen’s file noted reads:

“Telephone attendance on Wendy Murray. Noting that she has already signed the Contract. Advising her about Declaration of Trust and that there would be double stamp duty payable if property transferred to Eric Duddy. Advising her position in relation to finance. At this stage will need to contact M and S Financial Services to clarify position on finance. She will arrange to send contract to our office. She is to decide what interest that she will retain in the property. Advising her that [she] would be in difficulty if finance not approved.” (Ex B(1) – Tab 19)

48 Initially, Wendy Murray did not recall ever having told Mr Newbiggen about what interest she would retain. She then answered that she had never made that statement and it was confusing to her as to why he had made those file entries (t 69). Mr Newbiggen’s file notes are internally consistent and are also consistent with other witnesses’ evidence. I accept that his file notes are accurate.

49 Nevertheless, if there was any doubt about Wendy Murray’s intention to retain some interest in the property, this file note shows that at about 5.20pm Wendy Murray expressed her intention for the third time that afternoon that she was deciding on what interest she would retain in the property. At this stage Uncle Eric was agreeable to Wendy retaining an interest in the property. The file note also shows that by 5.20pm Wendy Murray was contemplating the use of the finance that Uncle Eric had previously obtained for the purchase of the properties. In summary, at about 5.20pm on the day of the auction Wendy Murray had bought the properties on behalf of Uncle Eric, she was intending to retain some interest and/or control over the property and she would make enquiries as to whether Uncle Eric’s loan approval could be a source of funds for her.

50 At the conclusion of the meeting Peter Duddy drove his mother and sister (Jill Duddy and Wendy Murray) back to Gunnedah arriving at about 8.00pm. Wendy Murray then handed over the cheque being the 10% deposit to the vendor’s agent Mr Pollock. They then continued on to the home of Jill Duddy’s brother, Donald Taylor Clift. Bob Murray was staying on Mr Clift’s property in a caravan while he was carrying out some farming work on Boala. As they got out of the car at Mr Clift’s house Wendy Murray turned to her mother and said “Mum I bought that block of Eric’s – Bob doesn’t know.” According to Jill, Wendy placed emphasis on the pronoun “I”. Mrs Duddy gave evidence that when her daughter said that “it was a real shock to me really” (first trial - t 271.46). She had naturally thought that Wendy had bought the property for Eric. Jill Duddy says that she replied “Wendy you stand a chance of being divorced.” Wendy Murray said “He knows that I wouldn’t do anything that I couldn’t handle.”

51 If Mrs Duddy’s evidence of this conversation is accepted, Wendy Murray now considered that she had purchased the properties for herself, not Uncle Eric. It was her name that was on the contract. While I did not have the benefit to observing Mrs Duddy in the witness box I have no reason to doubt her evidence.

52 After this conversation concluded they walked into Mr Clift’s house. Jill Duddy, Donald Clift and Bob Murray were present. According to Mrs Duddy Bob had already been told by Mr Clift and his wife when they came back from the auction that Wendy Murray had bought the property. Bob had asked the arriving party whether that was right. Jill Duddy cannot now remember precisely what it was that Wendy said to Bob Murray but was to the effect that she had bought the property (Aff, 21/12/2001 – [49]-[52]). Wendy Murray categorically denied “the innuendo” that those paragraphs are meant to convey (Aff 25/03/2003 - [28]). At the first trial Mrs Duddy was cross examined on this conversation and she did not depart from being told by Wendy “I bought it for myself.” (t 261-263).

53 It is my view that by that evening Wendy Murray had resolved to purchase the property for herself. While she may have purchased the properties at auction on behalf of Uncle Eric, she no longer intended to abide by that term of the agreement. She no longer intended to be Uncle Eric’s agent but rather she was to become the principal. If she had told Uncle Eric that instead of wanting a small interest, she now considered the whole interest as her, the contract and/or agency agreement was breached and Uncle Eric no longer had an obligation to finance the agreement. But she did not tell Uncle Eric of her change of mind.

54 Later that evening Robert Murray says he had a conversation with his wife in which she said “I’ve purchased the property for Eric. We have paid the deposit using Mum’s money.” He replied “Where’s the money to pay for the property?” She answered “Chris Newbiggen told me a day or two ago that the money was in place for Eric.” (Aff 26 June 2002). I have already recorded that it is my view that Mr Newbiggen did not make such a statement to Wendy.

55 Robert Murray has a longstanding practice of writing up his farm diary each evening. This diary (Ex 7) has been a useful evidentiary tool in recounting the events that occurred after the auction. His diary entry for 9 May 1997 reads:

“Wifey went to auction in Gunnedah & BOUGHT Eric’s block! There was a dispute about the bore on Peter’s block which she brought up at the auction & put off a few would be buyers.
She is now at Cyaisca tonight with me after much shenanigans. Westpac refused to accept Eric’s money when he came up with it yesterday & this is what has got our backs up.
Talk about the heart ruling the head!”

56 By writing “heart ruling the head” Mr Murray intended to convey two things firstly, that his wife went ahead with purchasing West Garawan without making sure that finance was in place; and secondly, that it was a spur of the moment decision. According to Bob the weekend was uneventful because they thought that Uncle Eric had the money in place.

Monday, 12 May 1997

57 A lot of activity occurred on 12 May 1997. The most important event being the telephone call between Wendy Murray and Uncle Eric’s accountant Wayne Leece.

58 On 12 May 1997 Mr Newbiggen’s file note recorded:

“Telephone attendance on Wendy Murray. Discussion with her concerning matter. Noting that appeared that she may have organised alternate finance. At this stage she will hang on to the Contract until the end of the week.”

59 Mr Wayne Leece had been the Duddy family accountant for many years and acted for Uncle Eric. It was Mr Leece who had had numerous dealings with Westpac on behalf of Uncle Eric and had been trying settle the dispute with Westpac prior to the auction taking place. He had also been involved with the injunction proceedings in this Court prior to the auction. It is not Mr Leece’s practice to make file notes. His evidence is that while he did not have a good recall of the details leading up to the auction, he did have a very good recollection of the week before and the week after the auction. Mr Leece confined the content of his affidavit to only those events for which he has a good recollection. Mr Leece gave evidence at both trials. His evidence is important, particularly as it conflicts with the evidence given by Wendy Murray’s solicitor John Lyons. John Lyons was not called to give evidence at the first trial but did so at this trial. Wendy Murray says that she had two conversations with Wayne Leece. One on the day of the auction and one on 12 May 1997. The first conversation has already been referred to in this judgment. In short, Mr Leece did not recall the conversation but did not deny that it may have occurred.

60 On Monday 12 May 1997 Wendy Murray says that Wayne Leece telephoned her and volunteered information about his client, Uncle Eric. According to Wendy Murray, Wayne Leece asked her whether she was aware that Eric did not have the money to buy West Garawan back. She replied “Why didn’t you tell me when I rang you from Gunnedah.” His answer was that he thought she had bought it on behalf of her family. Wendy Murray replied “No I did not. Eric asked me to bid on his behalf. I did it because Chris Newbiggen told me Eric’s finance was in order.”

61 According to Wendy Murray, Wayne Leece then elaborated “The arrangement was that the money Eric had obtained was to pay out the debt to Westpac up until the day before the auction, but that it was not to be used to repurchase the property. Eric knew this several days before the auction.” She said “How do you know Eric knew that?” He said “I was at the meeting where Doug Anderson told him.” She said “Why was there a separate condition on the finance?” He said “I’ve told you I’ve said too much already. Eric will kill me. Don’t tell him I have been speaking to you.” She said “How the hell am I going to find the money to complete the purchase. I have no details of the property, I have nothing.” He said “All of the information you need is in a document that Doug Anderson has in Maitland.” Mr Leece’s view was that Eric’s finance was still available at the time of the auction so Wendy Murray’s account of the conversation would mean that he said something contrary to his belief.

62 Mr Leece agreed that a telephone conversation took place but recounts it somewhat differently. His version is that Wendy Murray telephoned him and said words to the effect “I need the telephone number of the loans broker in Maitland.” Mr Leece has a clear recollection of his reply. That being “Why, I thought you had bid at the auction on Eric’s behalf and you were buying for him.” Wendy Murray replied “Why should I give it back to the old bugger – he’ll only lose it again in 12 months time.” Mr Leece when giving evidence stressed that he will never forget this statement because it was then that he realised Wendy was buying the property for herself and not for Uncle Eric. Mr Leece described his reaction to this news as being “floored” and feeling like a “stunned mullet” because during the week prior to the auction he had expended considerable time and effort trying to raise money so that Uncle Eric could hold onto West Garawan.

63 I prefer the evidence of Mr Leece who recounted that when Wendy phoned him she said “Why should I give it back to the old bugger – he’ll only lose it again in 12 months time.” In my view the reference to “old bugger” is significant. Wendy Murray’s husband has also referred to Eric as “the old bugger” – see diary entry dated 16 June 1997. Wendy had (on the day of the auction) told Mr Newbiggen that she wanted some control over the properties to prevent Eric from getting into future difficulties. It would seem that either at the auction or shortly after the auction taking place Wendy Murray strongly held the view that Uncle Eric would not be able to properly manage his finances so as to retain the property. Further Wayne Leece would not tell Wendy Murray that Uncle Eric did not have the money when it was contrary to his actual belief.

The alleged telephone call to Uncle Eric on 12 May 1997

64 As a response to the information provided by Mr Leece, Wendy Murray said that she telephoned Uncle Eric and directly asked him “Do you have the money to purchase West Garawan from me?” He said “Of course I do.” She said “I have heard that the money was only available to pay out the debt to Westpac but not to repurchase the place at auction.” He laughed and said “I got you didn’t I. Now you will have to go into partnership with me.” She said “How dare you. We were just about to help our daughter buy a house in Brisbane because they are wasting money renting.” He said “That doesn’t matter, they are young, it won’t hurt them to wait.” She said “Eric I demand that you find the money immediately to take this place back.” Wendy Murray also recounts the conversation with Uncle Eric in these terms “I immediately confronted Eric, who denied that he didn’t have the money & demanded that I give him the place back. Then he turned around & laughed & said that he knew that if he got me to buy West Garawan I wouldn’t be able to handle it & we would have to go into partnership with him.” This story account omitted the sentence “I demand that you find the money immediately to take this place back.”

65 The conversation as recounted in the story document suggested that Wendy Murray confronted Uncle Eric face to face. How else would she have known that he “turned around”? In cross examination when asked to explain this inconsistency she said that “I may have used the wrong terminology there. It was definitely a phone call.” (t 191.5-17). The inconsistency cannot be explained as wrong terminology.

66 Uncle Eric denied this conversation with Wendy Murray ever took place. Wendy says she reported the conversation back to Bob (Aff, 08/08/2002 [34]). Robert Murray’s diary entry for 12 May 1997 does not make any mention of conversations with either Wayne Leece or Uncle Eric. Wendy Murray’s evidence is inconsistent as to whether she had this purported conversation with Uncle Eric face to face or by means of the telephone. This would have been a critical conversation for Wendy Murray. If this conversation did take place it is expected that Wendy Murray would have had a clear recollection as to whether it was face to face of by telephone. It is my view that it is more likely than not that this conversation did not in fact take place.

67 Wendy Murray instructed her new solicitor John Lyons to act for her. Wendy says that prior to the first consultation she spoke to Mr Lyons by telephone and in that conversation told him that she had bought the property on behalf of her uncle. Her reason for a change of solicitor was because Mr Lyons’s office was in closer proximity to her residence.

The plaintiff’s first consultation with her new solicitor,
Mr John Lyons on 13 May 1997

68 Wendy Murray consulted Mr John Lyons on Monday 12 or Tuesday 13 May 1997. The 13 May 1997 is more likely as this accords with Bob’s contemporaneous diary entry. On 13 May 1997 Bob also recorded “Wifey saw John Lyons this morning and he has agreed to help us.” John Lyons was cross-examined. His evidence conflicts with that of Mr Leece in one critical aspect. Mr Lyons prepared a file note for two reasons. Firstly, he had formed the view that Wendy Murray’s purchase of West Garawan and Square Bush was out of the ordinary; and secondly, as he was going on leave he needed to update his partner who would have carriage of the file during his absence.

69 John Lyons’s evidence was that he considered the transaction out of the ordinary because he was told that Wendy Murray had bought property for $1.8 million for Uncle Eric when neither she nor her uncle had any funds. Mr Lyons’s file note is dated 14 May 1997. Mr Lyons said that the file note may have included information which had been relayed to him by Wendy Murray on the previous days, being Monday 12 May and Tuesday 13 May 1997. However it is important to observe that nowhere in this file note does Mr Lyons record that Wendy bought the property on trust for Uncle Eric but rather it recorded that Wendy Murray bought the property.

70 The file note reads:

“Wendy Murray came to see me concerning the purchase of a property at Breeza. It seems this property was owned by her uncle, Eric Duddy. He had had a long ongoing problem with the Westpac Bank and the Bank had decided to sell him up. There was some effort to arrange re-finance. There was allegedly some agreement that the Bank would take a certain amount of money by way of re-financing to get rid of it. Whether they reneged on that or whether Erica (sic) was not able to come up with the right amount of money at the end I don’t know but in any event there was an Application for an Injunction on Friday 9 May 1997. The property was advertised for sale at 12.00 noon that day. The sale was delayed until the outcome of the injunction was known. When the outcome of the injunction was known at 1.00pm, it went against Mr Duddy and Westpac then auctioned the property.

Apparently in the course of these things it became known that the bore, which provided significant water to this property, “West Garawan”, was in fact on the adjoining property, “Garawan” owned by Peter Duddy. There had been some agreement to transfer a piece of land on which this bore was but that had not been finalised and the documentation required, I take it the DP and Transfer, had not been signed. Peter Duddy didn’t sign them and when the property was being auctioned. Wendy Murray raised the problem about the water and indicated that she would sue anyone who bid on the property. Warren Thibault who was there representing Westpac indicated that any purchaser would have to deal with Peter Duddy on the water and that apparently scared most of them off.

The end result was that Wendy Murray bought the property for $1.8 million. Her Accountant, George Paul, now sees that she has got a capital gains tax problem and that the property should have been bought in the partnership name. The deposit was paid by her mother, $180,000.00, through Andrew Kay’s trust account.”

71 As far as it goes, it is a fairly accurate summation of events. Wendy Murray asserted that this file note refers to an amalgam of events some of which took place later than 14 May 1997. She does not understand why he wrote that, as it does not reflect what was discussed (t 19). But I do not think this is so. I accept the solicitor’s evidence that the events recorded in the file note occurred between 12 and 14 May 1997 but not thereafter. As previously stated nowhere in the file note is there a reference to Wendy buying the properties on behalf of Uncle Eric. An objective reading of this file note would lead to the conclusion that Wendy Murray had bought the property on her own behalf.

72 However, John Lyons gave evidence that his recollection was that “Wendy told him that she had bought property for $1,800,000 for Uncle Eric when neither she nor her uncle had any funds. ”Nevertheless, it is very odd indeed that the most critical piece of information did not make its way into the contemporaneous file note.

73 When asked about the intention of the file note, Mr Lyons gave evidence that Wendy Murray told him that she had bought the property on behalf of Eric and that Eric could not settle. According to the solicitor, this meant that Wendy Murray had two options either to proceed with the contract or forfeit the deposit which would leave her other assets at risk. If she were to proceed with the purchase, her accountant advised that it should be bought on behalf of the partnership. Wendy Murray says that at this consultation with Mr Lyons she did not discuss capital gains tax problems. Mr Lyons said it was possible that he had spoken with George Paul, Wendy’s accountant. I accept Wendy’s explanation that Mr Lyons probably spoke with Mr Paul about capital gains tax problems.

74 It is difficult to reconcile Mr Lyons’s evidence that he was told by Wendy Murray on 12 or 13 May 1997 that she had bought the property for Uncle Eric and neither she nor her uncle had any funds. Mr Leece’s evidence is that on 12 May 1997 when he said to Wendy “I though that you had bid on Eric’s behalf and you were buying it for him?” She replied “Why should I give it back to the old bugger he’ll only lose it again in 12 months time?” In order to reconcile these two statements I find that Wendy did make “the old bugger” statement to Wayne Leece and that she also told John Lyons she had bought the property for Uncle Eric but Uncle Eric had no funds. This meant that so far as John Lyons was concerned, Uncle Eric had no money and Wendy Murray would have to either complete the contract or forfeit the deposit (being her mother’s money) and put her other assets at risk. If I am wrong and it was not Wendy Murray’s intention to keep the properties for herself by the evening of the auction it is my view that by 12 May 1997 at the latest she had decided that she and her husband would keep West Garawan and Square Bush for themselves. By this time Wendy Murray had also told both her mother and Mr Leece that she intended to keep the property for herself.

75 Meanwhile on 13 May 1997 Jill Duddy and Peter Duddy went to see Wayne Leece at his office. Wayne Leece observed Jill Duddy to be distressed, angry and agitated. They had a wide ranging discussion and although Mr Leece cannot recall everything that Jill Duddy said, he does remember that she said “I have been hoodwinked by Wendy. She’s conned the $200,000 I lent to Eric out of me to use as the deposit – she’s buying if for herself. It became clear to me over the weekend. The whole family has been trying to save the place for Eric. We have been conned by Wendy.” Peter Duddy also was not pleased. Mr Leece recalled Peter saying “She conned me out of half my water licences. She’s on a committee in Tamworth and talked me into signing over half my licences on the basis it would be better to spread them around when allocations are cut. It’s the last thing she’s going to get out of us.” (Aff, 11/07/2002 – [22] – [30]).

76 The events that occurred after 13 May 1997, which I have subsequently detailed, do not really assist with the determination of the issues in dispute. Much effort was expended obtaining finance and finding a suitable lessee for West Garawan. These tasks largely fell to Bob Murray. Other than an entry on 17 August 1997 where Bob recorded “Eric denied any knowledge of money not available to purchase at auction” nowhere does he record Eric saying he did not have any funds. [Bob Murray’s emphasis]. Even from Bob Murray’s diary entries, Eric’s actions are consistent with his belief that the Murrays were seeking out finance and trying to sort out some arrangement with him. Eric Had by this time already agreed to Wendy having some interest in the property. Uncle Eric arranged for the Murrays to be provided with his valuations and financial records. Uncle Eric continued to phone his loans broker Doug Anderson and ask “Doug why can’t I get the money.”

Mr Carrigan – Uncle Eric’s former lessee of West Garawan

77 Mr John Peter Carrigan lives at “Nagirrac”, (Carrigan spelt backwards) Boggabri. He is a farmer and works in partnership with his sons. He gave evidence and was cross examined. He is 80 years of age. Mr Carrigan deposed (aff 31/10/2005) that he had a long term acquaintance with Wendy Murray’s father. He was first introduced to Eric Duddy in the mid 1990’s in relation to prospective share farming of irrigation lands on West Garawan. Shortly after he had entered into a share farming partnership arrangement with Eric Duddy. It was during this time that he met the Wendy Murray. By May 1997 the partnership had completed share farming operations for the season. On 9 May 1997 Mr Carrigan attended the auction and was present when West Garawan and Square Bush were knocked down to the Wendy Murray.

78 On 12 May 1997 Mr Carrigan says that he received a telephone call from Wendy Murray who said words to the effect “Can you come over to Tamworth to talk to my husband and I.” Mr Carrigan cannot recall if a proposition was put to him about leasing or share farming. He recalled that there was some discussion about how to get there and that Wendy Murray sent him the directions by fax.

79 On 13 May 1997 Mr Carrigan drove from Boggabri and met with the Murrays. He remembered having some difficulty finding the property and that when he arrived he parked his car in what turned out later to be in an inappropriate spot in that a truck arrived delivering gas bottles. After this meeting Mr Carrigan discussed with his sons the further involvement in farming operations on West Garawan. This meeting with the Murrays on 13 May 1997 accords with Bob’s diary entry “This pm, John Carrigan told us that he would prefer to sharefarm the irrigation country up to 1000 acres on a 1/3 to 2/3 basis.”

80 On 20 May 1997 John Carrigan says he rang Wendy Murray. Mr Carrigan’s diary note for that date confirmed this. He recorded that he told Wendy Murray that he and his sons would not lease at Breeza. However, Mr Murray’s diary entry for 19 May 1997 (not 20 May 1997) recorded that John Carrigan wanted “lease only.”

81 In cross examination Mr Carrigan denied that after the auction he contacted the Murrays to advise them that he still wanted access to West Garawan (t 400.8-11; 401.44-47). He also denied that he contacted the Murrays to ask them about share farming the property for the next season. Apart from taking their machinery off the property as far as he was concerned West Garawan had a new owner and that was the finish (t 402.1-17). Both Wendy and Bob Murray gave evidence that John Carrigan approached them about leasing West Garawan. I prefer and accept Mr Carrigan’s evidence. This means that on Monday, 12 May 1997 Wendy Murray had started taking steps to find someone to lease or sharefarm West Garawan.

Events on and after 14 May 1997

82 On 14 May 1997 Wendy Murray informed Mr Newbiggen that she was going to instruct John Lyons to act on the purchase of the properties. Mr Newbiggen’s file noted recorded:

“Telephone attendance on Wendy Murray. Noting that had now decided to use John Lyons of Lyons Barnett Kennedy to act on the purchase in view of possible difficulties. Nothing had been sorted out in relation to finance. Brief discussion concerning the possible selling of property and going through procedure there. Would get in touch if anything further required.” [my emphasis added]

83 There was no explanation of what those “possible difficulties” were. Mr Newbiggen was not called to give evidence.

84 On 14 May 1997 Uncle Eric says that he went to Boala and in the course of conversation he said to Wendy and Bob “We’ll have to work out this deal.” Wendy Murray replied “We have a good relationship with a guy in Western Australia and access to cheaper money. He said that if ever we need it we could get it cheaper than anywhere else.” Uncle Eric said “Good, investigate it and see what sort of a deal they will offer.” After that conversation Uncle Eric was in contact with the Murrays by telephone. Uncle Eric says that he recalled that on one occasion Bob Murray said “We need the valuations.” Uncle Eric told him that Doug Anderson had them in Maitland and that he would ring Mr Anderson and get him to make them available to him (Bob Murray). After that discussion Uncle Eric recalled saying to the Murrays “We’ve got to get together to sort this out.”

85 On 14 May 1997 (the same day that the Murrays had discussions with Uncle Eric) they made enquiries about finance. Bob Murray’s diary recorded “We contacted the Mortgage Bureau [at Maitland] – we await their response.” By 14 May 1997, the Murrays were taking steps to arrange finance for them to purchase West Garawan and Square Bush and to lease or sharefarm West Garawan.

86 On Friday 16 May 1997 Bob Murray recorded that he “Went to Maitland & picked up submissions at a place next door to the Maitland branch of the Mortgage Bureau” and “The Mortgage Bureau’s Harry Ryder rang to say that they will help us as best they can.” A perusal of the Ashe Morgan Winthrop (finance brokers) file shows that it contained numerous financial documents pertaining to Eric Duddy. These documents included cash flow projections and assets and liabilities statements. The document headed “Investments as at 1 July 1996” listed investments which totalled approximately $1,500,000 (Schedule 2). Eric Duddy’s consolidated position (Schedule 8) showed assets of $5,615,845.09, liabilities of $2,411,224.00, which left a surplus of $3,204,621.09. However Eric Duddy’s assets were recorded as including Square Bush (101 ha) valued at $175,000 and West Garawan (857 ha) valued at $3,042,000, these properties totalled $3,217,000. It is puzzling that even though Uncle Eric had “left them [the Murrays] high and dry” aside from the valuations neither of them looked at the other documents which detailed Uncle Eric’s financial position. The two valuations of West Garawan were by Patrick James Wood and Robert J Patfield of Patfield & Company dated 5 May 1997. Each valuations was close to $3,000,000 being $3,042,000 and $2,296,000 respectively.

87 During this period there was some discussion between Uncle Eric and the Murrays about leasing West Garawan. Uncle Eric recalled Wendy saying to him that the bank would not finance it unless they had a lease. He told Wendy to work out what sort of a lease it would be and that he would have a look at it. Sometime shortly after this discussion Uncle Eric went to see Wendy’s solicitor John Lyons at his office. Uncle Eric said to Mr Lyons that it would be better if the lease was in his name until he could sort things out with the bank and that he had all the plant and equipment to work it and to do the earthworks as well. Mr Lyons replied that when it was sorted out that they would have a look at it. Uncle Eric then received a telephone call from Bob Murray who said that they were having problems getting the finance and “What about we use that other money that you arranged?” Uncle Eric replied that he could not see any problem and to get onto Doug Anderson as he had it all organised and that the money was sitting there waiting to be collected. Uncle Eric drove to the Murrays to speak to them about the money and Bob Murray said “We didn’t plan on you being a part of it.” Sometime later Uncle Eric received a letter from Lyons Barnett Kennedy, solicitors. This letter dated 19 June 1997 informed Eric Duddy that if he had a proposal for a lease he should put the proposal in writing and once he had the proposal he should seek instructions from the Murrays (Ex 10).

88 On 16 May 1997 Bob Murray collected Eric Duddy’s finance application from the office of Ashe Morgan Winthrop at Narrabri (B(1) - Tab 4). For the Murrays to have obtained this file Uncle Eric must have authorised that course of action. This is consistent with Uncle Eric’s versions of events. It was a 2½ hour trip to Narrabri.

89 Wendy Murray deposed that on numerous occasions during the four week period after the auction Uncle Eric would arrive unannounced at their house. He would demand that they give him back his place. Wendy says that she told Uncle Eric that as soon as he came up with the money for it he could have it back because she did not want it. Uncle Eric said that he did not have the money at the time and that he needed her to go into partnership with him. Wendy says that she told Uncle Eric that they would not go into partnership with him and asked how were they supposed to pay for the property. Uncle Eric said “It’s your problem, you signed the contract.” Uncle Eric denied that these conversations took place (Aff [34] – [35]).

90 Bob Murray explanation as to why he never told Eric to leave them alone was because in one of his meetings with them Uncle Eric said “I felt like taking a rifle to someone at Westpac” and this straight away told him that Uncle Eric was on edge, very nervous and he should be treated with kid gloves (t 427.52-60).

91 The next day (17 May 1997) the Murrays explained the situation to Peter and Ian “more facts wanted – the Mortgage Bureau checked out.” On 19 May 1997 Bob Murray’s diary recorded there was much activity. Bob Murray was taking active steps to obtain finance and lease West Garawan.

92 The diary entry says:

“What a day!
Spoke to John Lyons
- Mortgage Bureau
- Enforceability Contract
- Westpac & Peter’s land
- Access to land
Brian Elliott - financing
Jane Leake – here Wednesday
John Carrigan – we want lease only
Ross Pollock – lease rates
Peter Sanson – opportunity to quote
Neville Hamblin – as above
Retorque – new rota v’s doing up 2nd hand
David Tudgey – meet 1PM tomorrow
Ross Clymo – finance with 35% equity”

93 On 21 May 1997 Bob Murray was still working on obtaining finance and leasing out West Garawan. His diary entry recorded “Jane Leake came today & we developed cash flows for 97/98 & 98/99 on Garawan. Peter Sanson came & said that he would pay $30/acre to lease the dryland country…”

94 On 22 May 1997 Bob Murray’s diary entry recorded that when he went to West Garawan and did moisture probes and nut grass inspections he spoke to Ian at the shed. That same day John Lyons had written to the Murrays requesting the sum of $84,490 for stamp duty. John Lyons was instructed to carry out a land title Register of Causes Writs and Orders, Bankruptcies and Insolvency searches in relation to Eric Duddy. An advertisement seeking expressions of interest in leasing 1,000 acres at West Garawan appeared in “the Land”.

173 The major items included in Mr Laughton’s calculation of damages are firstly, the principal loan and the costs of purchasing West Garawan and Square Bush; and secondly, the interest payments on the loans. The Murrays borrowed $2.35 million yet the purchase price of West Garawan and Square Bush was less than this amount being the sum of $1.935 million. I accept that the Murrays would have needed to borrow moneys to pay for the obtaining of the loans and the conveyancing costs which are referred to as costs and disbursements. This amounted to $138,531.85. The Murrays would have been obliged to borrow $2,073,531.80. The Murrays actually borrowed a sum greater than this, namely $2.35 million, which was $276,468.20 more than was required. Of the $276,468.20, $230,500 was used to pay out the Murrays’ existing loan with the National Australia Bank.

174 The Murrays first attempt to sell the properties occurred on 5 June 1997 just over three weeks after the auction. While it appears that Paspaley Pearl made an offer of $2.1 million prior to the auction, the managing director Peter Bracher does not refer to making an actual offer after the auction took place. The Murrays were looking to make a profit of $200,000 after expenses if Paspaley Pearl made an offer. It turned out that the Paspaley Pearl agent did not have the authority to make any offers. It is my view that there was no genuine offer made by Paspaley Pearl in June 1997. Hence, Wendy Murray could not have sold the properties to Paspaley Pearl at that time.

175 Between the end of 1997 until September 2001 Wendy Murray says that she and Bob attempted to sell Boala. Their attempts to sell Boala included auctioning the property in July 2000 (but there were no bidders), and preparing a brochure themselves and then circulating the brochure to people who had responded to advertisements with an enquiry. Wendy Murray’s evidence is that initially they tried to sell Boala by putting it on the market themselves and Bruce Gunning was aware that they were trying to sell it (t 139). Wendy Murray says that they never received an offer on the property, the main reason being because there was so much uncertainty within the local community as to the water rights attached to rural properties.

176 On 15 May 2000 Bruce Gunning prepared a proposal for the marketing of a combination of properties including West Garawan. If the properties were sold, West Garawan’s asking price was just over $3 million (t 270.26). Bruce Gunning also prepared a valuation of West Garawan as at March 2003 at $2.44 million. While in May 2000 West Garawan may have been valued at $3 million by March 2003 the value of the property had fallen to $2.44 million. The main reason for the decrease was the uncertainty as to groundwater entitlements. According to Mr Gunning the areas groundwater entitlements had been reduced by 70%.

177 The Murrays accepted in cross examination that they had met their commitments from 1997 to 2000. They had drawn more funds only because of flood damage to both properties. The flood damage meant that they had to carrying out extra earthworks. They agreed that they had held off selling Boala in the hope of obtaining more than its then value once it gained an irrigation licence. While the Murrays were meeting their commitments it was not necessary for them to actively market the sale of West Garawan. In May 2000 (three years after the auction) the Murray defaulted on the loans due to further floods and the lack of interest in Boala caused by government water reforms (t 18, 332, 352, 443). Ultimately Wendy Murray sold West Garawan for the sum of $2,915,532.51 which is substantially more than the price she paid for the property in 1997.

Damages for principal/agency claim

178 In agency, the principal’s duty to indemnify the agent encompasses all liabilities the agent incurs in performing the agency but not liabilities beyond the agency - see Re Parker (1882) 21 Ch D 405 and Rankin v Palmer (1912) 16 CLR 285.

179 The agent is to be indemnified for the costs of purchasing West Garawan and Square Bush and the costs in transferring the property back to Uncle Eric. The costs of purchasing West Garawan and Square Bush were incurred together with the costs and disbursements incurred which totalled $2,073,531.80. The property was never transferred back to Uncle Eric. That being so Uncle Eric would be obliged to indemnity Wendy Murray for the interest, penalty interest, charges and the subsequent costs for the sale. That amounts to the sum of $1,691,555.59.

Breach of contract

180 If Uncle Eric breached the contract, it occurred on 12 May 1997 when Wendy Murray made the purported telephone call to Uncle Eric and he told her that he did not have the $2 million. Likewise, if Uncle Eric repudiated the contract he did so around that date.

181 Damages are assessed at the date of the breach or when the cause of action arose – see Johnson v Perez (1988) 166 CLR 351.

182 In Carpenter and Another v McGrath and Another (1996) 40 NSWLR 39; [1997] ANZ ConvR 8; (1996) NSW ConvR 55-788, Sheller JA at 44 stated:

“The general rule at common law is that where a party sustains a loss by reason of a breach of contract, the party is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed: Robinson v Harman (1848) 1 Ex 850 at 855; 154 ER 563 at 365; Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 80, 98, 116, 134, 148 and 161. In Commonwealth v Amann Aviation (at 98), Brennan J said:

“… Where a contract is rescinded for breach, the innocent party loses the benefit of performance of the contract so far as the contract remains unperformed. And there may be other losses resulting from the breach. The rule in Hadley v Baxendale (1854) 9 Ex 341 at 354; 156 ER 145 at 151 prescribes the condition on which damages can be awarded in respect of a loss sustained by reason of a breach of contract:

‘Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either arising naturally, ie, according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it.’

Applying the rule in C Czarnikow Ltd v Koufos [1969] 1 AC 350 at 385, Lord Reid said that:

‘The crucial question is whether, on the information available to the defendant when the contract was made, he should, or the reasonable man in his position would, have realised that such loss was sufficiently likely to result from the breach of contract to make it proper to hold that the loss flowed naturally from the breach or that loss of that kind should have been within his contemplation.’”

183 The normal measure of damages is the contract price less the market price at the contractual time fixed for completion. If the market price at the time fixed for completion exceeds the contract price the vendor has not suffered any damage by the loss of the bargain.

184 In Bridges v MacPhail 3 BPR 97189, 7 April 1977 Needham J stated that it is not the general rule that the vendors’ damages for breach of contract by the purchaser should include interest payable on the vendors’ mortgage. Needham J said that the vendors were not entitled to wait until they received an offer higher than the valuation as at the date of the breach and then fix the purchaser with all the costs attendant upon such waiting. This principal supports the proposition that where there has been a breach of contract Wendy Murray is not entitled to wait until they receive an offer higher than the valuation.

185 Wendy Murray would have been entitled to the contract price less the market price as at 10 July 1997 (the settlement date). She would not have been entitled to damages flowing from her decision to wait until they received an offer higher than the contract price, nor is she entitled to interest on penalty rates. While there is no evidence as to the market price as at 10 July 1997, it is unlikely to have decreased. Wendy Murray would have been entitled to the costs incurred in obtaining the loans and the conveyancing costs relating to the purchase, being the sum of $138,531.85. She is not entitled to the other components of damages.

Misrepresentation

186 The law of tort governs the measure of damages for misrepresentation. The approach of subtracting value from price is commonly employed where the acquisition of land, chattels, businesses or shares is induced by deceit. One key qualification of the rule which prevents it from being inflexible is that the test depends not on the difference between price and ‘market value’, but price and ‘real value’. Additionally, although the court is entitled to take into account events after the date of acquisition, it must distinguish between causes of the decline in value ‘inherent in the thing itself…or ‘independent’, ‘extrinsic’, ‘supervening’, or ‘accidental’.”; in the former case its existence should be taken into account in arriving at the real value while in the latter case the additional loss is not the consequence of the inducement - see HTW Valuers (Central QLD) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640; (2004) 211 ALR 79; (2004) 79 ALJR 190; (2005) ASAL 55-131; (2004) ATPR 42-030; (2005) Q ConvR 54-611; [2004] HCA 54 at [35], [36] and [40].

187 If it is found that Wendy Murray acted to her detriment, what are the damages that she has suffered? If Mr Duffy said he had $2 million and he did not believe it, Wendy Murray was obliged to buy the properties and pay for obtaining the loan and the costs and disbursements which totals the sum of $138,531.85. There was ongoing uncertainty as to water rights which Wendy Murray was aware of prior to the purchase and the floods. But after taking these factors into account neither of the Gunning valuations put the property at less than the price paid for West Garawan. There was no difference in the real value.

Mitigation

188 It is noted that the defendant also submitted that the Murray have failed to mitigate any loss by proceeding with the purchase and then failing to take any step to on-sell the property for nine years, incurring further borrowings without reducing debt by selling any other available asset, expending further moneys and exposing herself (and if such expense were recoverable, exposing the defendant) to the inherent risks of farming operations, flood, plague and government interventions.

189 As previously stated there is a verdict and judgment in favour of the defendant.

190 Costs are discretionary. Costs usually follow the event. The plaintiff is to pay the defendant’s costs as agreed or assessed.

The Court orders that:

(1) There be a verdict and judgment for the defendant.

(2) The plaintiff is to pay the defendant’s costs as agreed or assessed.
**********