MURRAY -v- MYDOMAINE PTY LTD [2016] WADC 109

Jurisdiction:	DISTRICT COURT OF WESTERN AUSTRALIA	Citation No:	[2016] WADC 109
Case No:	CIV:2874/2012	Heard:	1 - 4, 7 - 10 DECEMBER 2015
Coram:	LEVY DCJ	Delivered:	28/07/16
Location:	PERTH
No of pages:	92	Judgment Part:	1 of 2
Result:	Plaintiffs' claim allowed in part Damages allowed
Other Parts:	Pages 51 to 92
PDF Version

Parties:	DANIEL MURRAY LYNDA MURRAY MYDOMAINE PTY LTD SHELLEY MAE CLACK GREGORY RAYMOND CLACK BRADLEY RICHARD DENTON RAELENE JOY DENTON
Catchwords:	Negligent misrepresentation Fraudulent misrepresentation Breach of fiduciary duty Jurisdiction of the District Court of Western Australia Breach of contract Unconscionable conduct 'Similar fact' evidence Contributory negligence Damages Exemplary damages
Legislation:	Civil Liability Act 2002 (WA) s 5AK District Court of Western Australia Act 1969 s 50 Partnership Act 1895 s 7, s 8
Case References:	Ailakis v Olivero (No 2) (2014) 100ACSR 524 Banditt v The Queen [2005] HCA 80; (2005) 224 CLR 262 Barescape Pty Ltd v Bacchus Holdings Pty Ltd (No 9) [2012] NSWSC 984 Briginshaw v. Briginshaw [1938] HCA 34; (1938) 60 CLR 336 Brookfield Multiplex v Owners Corporation Strata Plan 61288 (2014) 254 CLR 185 Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 Casinos Austria International (Christmas Island) Pty Ltd v Christmas Island Resort Pty Ltd [1998] WASC 387 Cassell & Co Ltd v Broome (No 2) [1972] AC 1136 Commercial Developments Pty Ltd (t/as Don Rogers Motors Pty Ltd) v Mercantile Mutual Insurance (Workers' Compensation) Ltd (1991) 5 WAR 208 Derry v Peek (1889) 14 App Cas 337 Dominelli Ford (Hurstville) Pty Ltd v Karmot Auto Spares Pty Ltd [1992] FCA 550; (1992) 38 FCR 471 Duke Group Ltd (in liq) v Pilmer (1999) 153 FLR 1 Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95 Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89 Fazio v Fazio [2012] WASCA 72 Gjergja v Cooper [1987] VR 167 Gray v Motor Accident Commission (1998) 196 CLR 1 Harvela Investments Ltd v Royal Trust Co of Canada (CI) Ltd [1986] AC 207 Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 Huntsman Chemical Co Australia Pty Ltd v International Pools Australia Pty Ltd (1995) 36 NSWLR 242 Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563 Lawless v Mackendrick [No 4] [2013] WASC 272 Magill v Magill [2006] HCA 51; (2006) 226 CLR 551 Mutual Life & Citizens Assurance Co Ltd v Evatt (1968) 122 CLR 556 Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; (1992) 67 ALJR 170 Neilsen v Hempston Holdings Pty Ltd (1986) 65 ALR 302 Pappas v Soulac Pty Ltd (1983) 50 ALR 231 Phipps v Boardman [1967] 2 AC 46 San Sebastian Pty Ltd v Minister Administering Environmental Planning & Assessment Act 1979 (1986) 162 CLR 341 Shaddick v JDV Ltd [2012] WASC 120 Sternberg v The Queen (1953) 88 CLR 646 Sutton v A J Thompson Pty Ltd (In liq) (1987) 73 ALR 233 Tallenford Pty Ltd v Gilete G & B Civil Pty Ltd [2012] WASC 156 Taylor v Johnson (1983) 151 CLR 422 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 Vale v TMH Haulage Pty Ltd (1993) 31 NSWLR 702 Vantage Systems Pty Ltd v Priolo Corporation Pty Ltd [2015] WASCA 21 Watson v Foxman (1995) 49 NSWLR 315 Williams v Natural Life Health Foods Ltd [1998] 2 All ER 577 (HL)

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA

IN CIVIL

LOCATION : PERTH CITATION : MURRAY -v- MYDOMAINE PTY LTD [2016] WADC 109 CORAM : LEVY DCJ HEARD : 1 - 4, 7 - 10 DECEMBER 2015 DELIVERED : 28 JULY 2016 FILE NO/S : CIV 2874 of 2012 BETWEEN : DANIEL MURRAY

LYNDA MURRAY

Plaintiffs

AND

MYDOMAINE PTY LTD

First Defendant

SHELLEY MAE CLACK

Second Defendant

GREGORY RAYMOND CLACK

Third Defendant

BRADLEY RICHARD DENTON

Fourth Defendant

RAELENE JOY DENTON

Fifth Defendant

Catchwords:

Negligent misrepresentation - Fraudulent misrepresentation - Breach of fiduciary duty - Jurisdiction of the District Court of Western Australia - Breach of contract - Unconscionable conduct - 'Similar fact' evidence - Contributory negligence - Damages - Exemplary damages

Legislation:

Civil Liability Act 2002 (WA) s 5AK

District Court of Western Australia Act 1969 s 50
Partnership Act 1895 s 7, s 8

Result:

Plaintiffs' claim allowed in part

Damages allowed

Representation:

Counsel:

Plaintiffs : Mr T Offer

First Defendant : Dr E Heenen

Second Defendant : Dr E Heenen

Third Defendant : Dr E Heenen

Fourth Defendant : Mr N Landis

Fifth Defendant : Mr N Landis

Solicitors:

Plaintiffs : McAuliffe Legal

First Defendant : Austasia Legal Pty Ltd

Second Defendant : Austasia Legal Pty Ltd

Third Defendant : Austasia Legal Pty Ltd

Fourth Defendant : Classic Legal

Fifth Defendant : Classic Legal

Case(s) referred to in judgment(s):

Ailakis v Olivero (No 2) (2014) 100ACSR 524
Banditt v The Queen [2005] HCA 80; (2005) 224 CLR 262
Barescape Pty Ltd v Bacchus Holdings Pty Ltd (No 9) [2012] NSWSC 984
Briginshaw v. Briginshaw [1938] HCA 34; (1938) 60 CLR 336
Brookfield Multiplex v Owners Corporation Strata Plan 61288 (2014) 254 CLR 185
Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592
Casinos Austria International (Christmas Island) Pty Ltd v Christmas Island Resort Pty Ltd [1998] WASC 387
Cassell & Co Ltd v Broome (No 2) [1972] AC 1136
Commercial Developments Pty Ltd (t/as Don Rogers Motors Pty Ltd) v Mercantile Mutual Insurance (Workers' Compensation) Ltd (1991) 5 WAR 208
Derry v Peek (1889) 14 App Cas 337
Dominelli Ford (Hurstville) Pty Ltd v Karmot Auto Spares Pty Ltd [1992] FCA 550; (1992) 38 FCR 471
Duke Group Ltd (in liq) v Pilmer (1999) 153 FLR 1
Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95
Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89
Fazio v Fazio [2012] WASCA 72
Gjergja v Cooper [1987] VR 167
Gray v Motor Accident Commission (1998) 196 CLR 1
Harvela Investments Ltd v Royal Trust Co of Canada (CI) Ltd [1986] AC 207
Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41
Huntsman Chemical Co Australia Pty Ltd v International Pools Australia Pty Ltd (1995) 36 NSWLR 242
Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563
Lawless v Mackendrick [No 4] [2013] WASC 272
Magill v Magill [2006] HCA 51; (2006) 226 CLR 551
Mutual Life & Citizens Assurance Co Ltd v Evatt (1968) 122 CLR 556
Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; (1992) 67 ALJR 170
Neilsen v Hempston Holdings Pty Ltd (1986) 65 ALR 302
Pappas v Soulac Pty Ltd (1983) 50 ALR 231
Phipps v Boardman [1967] 2 AC 46
San Sebastian Pty Ltd v Minister Administering Environmental Planning & Assessment Act 1979 (1986) 162 CLR 341
Shaddick v JDV Ltd [2012] WASC 120
Sternberg v The Queen (1953) 88 CLR 646
Sutton v A J Thompson Pty Ltd (In liq) (1987) 73 ALR 233
Tallenford Pty Ltd v Gilete G & B Civil Pty Ltd [2012] WASC 156
Taylor v Johnson (1983) 151 CLR 422
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165
Vale v TMH Haulage Pty Ltd (1993) 31 NSWLR 702
Vantage Systems Pty Ltd v Priolo Corporation Pty Ltd [2015] WASCA 21
Watson v Foxman (1995) 49 NSWLR 315
Williams v Natural Life Health Foods Ltd [1998] 2 All ER 577 (HL)

LEVY DCJ

Introduction

1 In or about early 2009 Mrs Lynda Murray (first plaintiff) heard a radio advertisement promoting a business called MyPortfolio. The advertisement represented that MyPortfolio could help clients to create wealth by purchasing investment properties.

2 In March 2009, in response to the radio promotion, Mrs Murray telephoned the number provided for the business known as MyPortfolio. She spoke with Mrs Shelley Mae Clack (second defendant). Arrangements were made between Mrs Murray and Mrs Clack for Mr Bradley Richard Denton (fourth defendant) and his wife, Mrs Raelene Joy Denton (fifth defendant) to meet with Mrs Murray and her husband Mr Daniel Murray (first plaintiff) to discuss the services of MyPortfolio. Mr and Mrs Denton were to attend as representatives of MyPortfolio.

3 On or about 16 March 2009 Mr and Mrs Denton attended the home of Mr and Mrs Murray in Safety Bay. During the course of the meeting, Mr and Mrs Denton recommended two properties to Mr and Mrs Murray for the purposes of investing. One of those properties was an apartment within the Cowrie complex in Palm Cove, North Queensland (the Cowrie Apartments). The Dentons also produced documents relating to investing in property.

4 The plaintiffs claim that during the first telephone call between Mrs Murray and Mrs Clack in March 2009, a contract was formed between them whereby the first defendant agreed to provide services to the plaintiffs through the business known as MyPortfolio. The plaintiffs claim that the first defendant breached that contract.

5 Furthermore, the plaintiffs claim that, in reliance upon the various representations made to them by the first to fifth defendants, they subsequently entered into a contract for the purchase of Apartment 216 being Lot 53 at Cowrie Apartments, Coral Coast Drive, Palm Cove, North Queensland ('Cowrie Apartment 216') for the sum of $365,000 with a $15,000 rebate from the vendor at settlement. The plaintiffs claim that the true market value of Cowrie Apartment 216 at the relevant time was $220,000 and that the first to fifth defendant's well knew that it was not worth $365,000.

Plaintiffs' Claims

6 The plaintiffs claim against the first defendant for:

(a) breach of contract;

(b) breach of fiduciary duty;

(d) fraudulent misrepresentation.

7 The plaintiffs claim against the second, third, fourth and fifth defendants for:

(a) breach of fiduciary duty;

(b) negligence; and

The Trial of the Matter

8 The hearing of the matter was listed to commence before me on 1 December 2015. On the plaintiffs' application, the matter was adjourned to the following day.

9 On 2 December 2015 the plaintiffs made an application to amend their statement of claim. I note that an earlier application to amend their statement of claim had been brought before Her Honour Judge Wager in this Court on 23 November 2015. On 25 November 2015 Wager DCJ had allowed the application to amend the statement of claim. The further application to amend the plaintiffs' statement of claim was effectively brought on the second listed day of trial. The application to amend the statement of claim was partly opposed by the defendants.

10 Ultimately, I allowed the amendments but it necessitated the plaintiffs providing further particulars to the defendants. The defendants were necessarily required to consider their defence and file an amended defence.

11 The trial proper commenced on 2 December 2015. A Minute of Further Re-Amended Statement of Claim was not ultimately finalised until after the trial commenced. Understandably, the defendants did not file further amended defences until well into the trial. The first to third defendants filed a minute of their further amended proposed defence on 9 December 2015. The fourth and fifth defendants filed their further amended defence on 8 December 2015.

12 The trial ultimately ran for seven hearing days. The plaintiffs gave evidence and called a further four witnesses including Mr Craig Rodney Myers, a property valuer. Mr Myers gave expert opinion evidence. The second, fourth and fifth defendants gave evidence in their own defence. The third defendant did not give evidence.

13 At the conclusion of the trial, due to the court's concern as to the likely costs of these proceedings to the parties, I invited counsel to file written closing submissions and to dispense with oral closing submissions. That proposal was adopted by all parties.

14 The court subsequently received detailed and comprehensive written closing submissions from all parties. Consequently, where necessary I have referred to those closing submissions in these reasons.

The Parties

The Plaintiffs

15 In 2009 Mr Murray and Mrs Murray were relatively unsophisticated investors. Apart from limited share investments, they had little knowledge or experience as investors.

16 The plaintiffs were both in their mid-thirties and had two very young children. Mrs Murray completed school to Year 12. Thereafter, she worked for a number of employers in various clerical roles, including accounts and bookkeeping. In the course of her work she completed a number of certificates in bookkeeping and accounting. Mr Murray was a waterside worker.

17 By March 2009 the Murrays owned a home in Safety Bay which was subject to a mortgage of about $200,000. Although of relatively modest means, the Murrays had built up equity in their property and were considering investing in either shares or real estate. To that end, they had arranged a line of credit but had not used it for the purposes of investing. Although Mrs Murray had read a number of books on the subject of investing, she lacked the confidence to take the next step of actually entering the investment market.

18 Mrs Murray lost her job in December 2008. Consequently, the Murrays rented out their home in Safety Bay and moved into cheaper accommodation. As at March 2009, Mrs Murray believed that her home in Safety Bay was worth about $470,000.

The First, Second and Third Defendants

19 MyDomaine Pty Ltd, the first defendant, is a company which was formed by Mrs Clack and her husband Mr Clack. The company operated under the business name MyPortfolio. Collectively, the first defendant and MyPortfolio were referred to as the 'Mydomaine Property Group'. The first defendant, under the name MyPortfolio, traded as a property investment and portfolio management service company.

20 Mr and Mrs Clack owned 49% of My Domaine Pty Ltd. According to Mrs Clack, MyPortfolio had been created because she and Mr Clack wanted to 'help clients invest in property' (ts 453).

21 Mrs Clack was also a licensed real estate agent and also traded under the name Mydomaine Prestige Property. Mrs Clack had worked as a licensed real estate agent in her own right, as well as having previously worked under other licensed real estate agents. According to Mrs Clack, the entity known as MyDomaine Prestige Property was the business entity through which she sold properties as an agent on behalf of vendors.

First to third defendants agreement with Indigo Real Estate Pty Ltd to market and promote the Cowrie Apartments

22 In 2007, Mr and Mrs Clack were approached by a Queensland property developer, Mr. Peter Marshall, to see whether they would be interested in marketing and promoting in Western Australia, apartments that had been redeveloped in Palm Cove, Far North Queensland. The re-development had been undertaken by a group of companies called the 'Indigo Group' which included Indigo Real Estate Pty Ltd. The apartments that had been redeveloped were within a complex known as the Cowrie Apartments. The Cowrie Apartments comprised four separate apartment blocks named Cowrie Spindle, Cowrie Tiger, Cowrie White and Cowrie Red. All four blocks had been built in the 1980s. The apartments that had been redeveloped by the Indigo Group were within the Cowrie Spindle apartment block. These apartments had been refurbished with modern fit-outs. This ultimately included Cowrie Apartment 216.

23 In relation to these refurbished apartments, the Indigo Group had entered into leases with Novotel Hotel. These apartments were to be sold subject to these leases. The legal arrangement was that the apartments were owned by a company called Palm Cove Apartments Pty Ltd which was part of the Indigo Group. Palm Cove Apartments Pty Ltd then leased them to Drift Palm Cove (Management) Pty Ltd, another company within the Indigo Group, which in turn sublet the apartments to Novotel.

24 On 17 April 2008 MyDomaine Pty Ltd entered into a commercial arrangement with Indigo Real Estate Pty Ltd to market specific Queensland properties, including apartments at the Cowrie complex in Palm Cove, North Queensland to prospective purchasers (see exhibit 74).

25 Mrs Clack and MyDomaine subsequently sold a number of the Indigo Group's properties in the latter half of 2008. The Indigo Group set the asking price at $360,000 for these properties. Each property was sold at or over that price.

26 In about August 2008 the Clacks were asked by Cameron Price Lawyers if they could assist a client of theirs to sell some other apartments in the Cowrie Tiger block (next door to Cowrie Spindle). Mrs Clack contacted the vendor Mr Mike Kubblins who told her that he had 10 apartments to sell. They were all in original condition from the early 1990s. In January 2009 Mrs Clack sold one of those apartments on behalf of Mr Kubblins for $260,000.

The Clacks working agreement with the Dentons

27 Towards the end of 2008 the Clacks were introduced to Mr and Mrs Denton. In about January or February 2009 the Dentons began working with MyDomaine. The Clacks trained the Dentons in the business.

28 In the period between February and April of 2009 the Dentons and the Clacks travelled to Palm Cove, Far North Queensland. They met with Mike Kubblins and inspected the Cowrie Spindle and Cowrie Tiger apartments (the evidence relating to this travel is explored later and is directly relevant to the reliability and credibility of the second, fourth and fifth defendants).

29 At about this time, the Dentons decided to buy some of the Cowrie Tiger apartments which were being sold by Mr Mike Kubblins. The apartments were un-renovated. The apartments were owned by a company associated with Mr Kubblins, namely QES-HW.COM Pty Ltd. The Dentons intended on renovating the apartments and selling them at a profit. The Dentons purchased six apartments through their company called RJR Investments (see separate table of purchases and sales by RJR – Table 1 at pages 80 - 82). The Dentons paid $220,000 for each apartment.

30 The Dentons and the Clacks then entered into an agreement for MyDomaine to market the apartments purchased by RJR Investments after they had been renovated. The agreement was that if any apartment marketed by MyDomaine was sold, the Clacks would receive 40% of the profit from each sale. The Dentons would receive 60% of the profit. Pursuant to their agreement, the Clacks also contributed some money to the Dentons for the purposes of renovating the apartments.

MyDomaine and MyPortfolio

31 As already noted above, the Clacks were involved in the running of the business called MyPortfolio operated through the first defendant. This is evidenced by facts including that both Mr and Mrs Clack:

(a) were involved in discussions, negotiations and meetings with Mr Peter Marshall on behalf of the Indigo Group which resulted in the agreement between the first defendant and Indigo (exhibit 74);

(b) created the Gold Document (exhibit 2);

(d) trained Mr and Mrs Denton in the business (ts 622).

32 The Clacks were, for all intents and purposes, the controlling minds of MyDomaine and the business MyPortfolio. In her evidence at trial, Mrs Clack did not draw any real distinction between her actions and that of her husband as individuals on the one hand, as distinct from the actions of the company. At times Mrs Clack struggled to explain the differences between the various business names used by the first to third defendants (see for example ts 551 in relation to the reference to MyDomaine Property Group). Ultimately, it was apparent that MyDomaine was part of the corporate structure through which the Clacks chose to operate their business.

The Fourth and Fifth Defendants

33 As noted at [27] above, in early 2009 Mr and Mrs Denton began working with Mr and Mrs Clack.

34 The Dentons characterised themselves as servants or agents of the first defendant. The first to third defendants accept that, at all material times, Mr and Mrs Denton were providing services to the first defendant as consultants and that MyDomaine was vicariously liable for the acts or omissions of Mr and Mrs Denton in their dealings with Mr and Mrs Murray.

Were the second to fifth defendants in partnership?

35 A question arose as to whether Mr and Mrs Denton were in partnership with Mr and Mrs Clack. The plaintiffs say they were. Mr and Mrs Denton deny the claim and submitted that the nature of the relationship did not 'satisfy the requirements prescribed by section 8 of the Partnership Act 1895'.

36 The starting point for consideration of this issue is s 7(1) and s 7(2) of the Partnership Act 1895 which defines a partnership as 'the relationship which subsists between persons carrying on in business in common with a view of profit'. Section 7(2) requires a court, in deciding whether a partnership does or does not exist in any particular case, to 'have regard to the true contract and intention of the partners as appearing from the whole facts of the case'.

37 In Fazio v Fazio [2012] WASCA 72 [53] Murphy JA summarised the law of partnership in the following terms:

Partnership is the

relation

which exists between persons carrying on business in common with a view to profit: s 7(1) of the

Partnership Act 1895

(WA). Partnership is a relation springing from agreement, express or implied:

Booth v Booth

[1935] HCA 15; (1935) 53 CLR 1, 27. Under the general law, the agreement may be inferred from the circumstances proved in evidence:

Peacock v Peacock

[1809] EngR 130; (1809) 2 Camp. 45; the court may impute to the parties a tacit agreement to operate a business as partners:

Booth v Booth

(27). The general law principle is reflected, in this State, in s 7(2) of the

Partnership Act

, which provides that in deciding whether a partnership does or does not exist, the court may have regard to the contract and intention of the parties as appearing from the whole of the facts of the case. See also s 29 of the

Partnership Act

, which provides that the mutual rights and duties of partners, whether ascertained by agreement or defined by the statute, may be varied by the consent of all the partners, and such consent may be either express or inferred from a course of dealing.

38 The plaintiffs submit that the partnership that existed between the second to fifth defendants can be inferred from the circumstances. It is submitted that the fourth and fifth defendants held themselves out as being partners in the business with the consent of the second and third defendants as evidenced by the fact that:

(a) the Dentons gave Mrs Murray a business card which included the term 'partner' and held themselves out to the Murrays as being 'partners' in the business of MyPortfolio;

(b) the Dentons sent emails using the term 'partner';

(c) the Dentons contributed to the expenses incurred by the business through their company Denton Trading Pty Ltd as Trustee of the Bunbury Unit Trust trading as Westview Business Consulting; and

(d) the Dentons participated in the profits of the business through their company Denton Trading Pty Ltd as Trustee of the Bunbury Unit Trust trading as Westview Business Consulting.

39 Mrs Clack, in her evidence, was vague about the nature of the relationship as between the second to fifth defendants. For example, in evidence-in-chief she could not recall whether there were discussions 'about the financial arrangements as between [the first to third defendants] and the Dentons on the other' (ts 474). During cross-examination, whilst not conceding that the Dentons were partners, she accepted that they were more than agents and suggested that they were 'more consultants' (ts 531).

40 Mr Denton's evidence was that, despite referring to himself as a 'partner' on the business card, he was not actually a partner in the business.

41 None of the above facts, either alone or in combination, would necessarily lead to the conclusion that a partnership existed between the second to fifth defendants. The fact that parties used the title 'partner' does not prove that a partnership in fact existed (Duke Group Ltd (in liq) v Pilmer (1999) 153 FLR 1 [402].

42 As has already been noted above, the Clacks were the controlling minds of the first defendant. They trained the Dentons and arranged for them to attend upon Mrs Murray.

43 The evidence from both Mr and Mrs Denton was that the commercial arrangements by which the Dentons provided their services to the first defendant was through Denton Trading Pty Ltd trading as Westview Business Consulting. It was Denton Trading Pty Ltd who contributed to the expenses of MyDomaine and to whom income was paid.

44 Significantly, the fee payable and applicable to the Murrays' purchase of the Cowrie Property was paid pursuant to an invoice issued by Denton Trading Pty Ltd trading as Westview Business Consulting (exhibit 87). Denton Trading Pty Ltd trading as Westview Business Consulting was not a party to these proceedings.

45 When regard is had to the arrangement in place between the second to fifth defendants and to the true intention of the parties as appearing from the whole of the facts of the case, it is clear that the Dentons were servants or agents of the first defendant providing services to the first defendant as consultants.

The plaintiffs' introduction to MyPortfolio

46 Following the agreement made between the first defendant and Indigo Real Estate Pty Ltd to market specific Queensland properties, including apartments at the Cowrie complex in Palm Cove, MyPortfolio commenced to promote the Cowrie apartments to potential investors in Western Australia.

47 Further to the marketing agreement, the first defendant broadcast advertisements on commercial radio in Perth. In or about early 2009 Mrs Murray heard one of the radio advertisements promoting MyPortfolio. There is no dispute that these advertisements represented that:

1. MyPortfolio could help clients create wealth through investment property;

2. MyPortfolio would help clients source a property for investment; and

3. MyPortfolio would help clients utilise equity within the client's existing properties for wealth creation.

48 Nothing was said nor implied by the content of the radio advertisements that would lead a prospective investor to believe that MyPortfolio was acting on behalf of any vendors of property.

49 On or about 5 March 2009, in response to the radio promotion, Mrs Murray telephoned the number provided for MyPortfolio and spoke with Mrs Clack. Arrangements were made between Mrs Murray and Mrs Clack for Mr Denton and Mrs Denton to meet with Mrs Murray and her husband Mr Murray to discuss the services of MyPortfolio. Mr and Mrs Denton were to attend as representatives of MyPortfolio.

50 Prior to meeting with the Dentons, the plaintiffs provided to MyPortfolio brief details as to their financial circumstances. Prior to the Dentons attending upon the Murrays, they had some understanding of the Murrays' financial position. In addition, Mrs Denton, if not Mr Denton, had conferred with Mrs Clack and agreed that two properties to be presented to the Murrays as being suitable would be an apartment in Melbourne (the Merriview apartment) and a renovated Cowrie apartment listed for sale at $365,000 (Mrs Denton's evidence at ts 658).

51 On or about 16 March 2009 Mr and Mrs Denton attended the home of Mr and Mrs Murray in Safety Bay. During the course of the meeting Mr and Mrs Denton produced documents relating to investing in property. One document related generally to the services of MyPortfolio (the Gold Document). The other document related to the Cowrie Apartments which included Cowrie Apartment 216 (the Purple Document). The evidence and details relating to that meeting, specifically what representations may have been made by the Dentons to the plaintiffs, is set out at [106] - [126] below.

52 It is not in dispute that the Dentons, acting on behalf of MyDomaine Pty Ltd, recommended two properties to the plaintiffs and that one of those properties was Cowrie Apartment 216.

53 In recommending Cowrie Apartment 216 to the plaintiffs, the plaintiffs allege that the fourth and fifth defendants did not disclose:

(a) that MyPortfolio was acting for the vendors of the Cowrie apartments;

(b) that MyPortfolio had entered into a commercial arrangement to promote the Cowrie Apartments;

(d) that other apartments at the Cowrie complex had recently been sold and were regularly selling for significantly less than those promoted by MyPortfolio.

54 The plaintiffs claim that, in reliance upon the various representations made to them by the first to fifth defendants they subsequently entered into a contract for the purchase of Cowrie Apartment 216 for the sum of $365,000 with a $15,000 rebate from the vendor at settlement.

Claim for breach of contract by the first defendant

55 The plaintiffs' damages claim for breach of contract is advanced solely against the first defendant.

56 The plaintiffs claim that a binding legal contract between the plaintiffs and MyDomaine Pty Ltd was formed during a telephone conversation between Mrs Murray and Mrs Clack which occurred in March 2009, after Mrs Murray had heard the radio advertisement for MyPortfolio. On this occasion Mrs Clack arranged for the Dentons to attend upon the plaintiffs at a later date. The plaintiffs claim that the terms of the contract, referred to by the plaintiffs as the 'Engagement Contract', included express terms which are set out at par 12A of the plaintiffs Further Re-Amended Statement of Claim (the 'statement of claim'), namely that:

(a) The first defendant would provide services to the plaintiffs upon matters referred to in the radio promotion; and

(b) The first defendant would provide such and other services as would be agreed at or after further discussions between the parties when the Dentons attended upon the plaintiffs.

57 The plaintiffs further claim (par 45 of the statement of claim) that it was an implied term of the Engagement Contract that the first defendant would take reasonable care in provision of services to the plaintiffs to avoid loss and damage to them.

58 It is common ground that there was a telephone conversation between Mrs Clack and Mrs Murray on or about 5 March 2009 during which Mrs Clack told Mrs Murray that MyDomaine could provide property investment and portfolio management services. However, the first to third defendants deny that any legally binding contract was formed during that telephone conversation.

59 The question of whether a contract was formed during the telephone conversation, as pleaded, requires a determination as to whether there was an intention by the parties to create legal relations. This requires an objective assessment of the context of the discussion and actions and the surrounding circumstances known to the parties. In Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41, 120 Deane J said, in relation to statements made in earlier conversations:

… The test for determining whether any, and if so which, of those statements in fact constituted an express term of the contract is whether the proper inference is that the relevant statement or representation was, when viewed objectively and in context, offered and accepted as, or as part of, a contractual promise.

60 Since the express terms of the Engagement Contract are alleged to have arisen during the telephone conversation, the question of whether a contract was formed must be determined by an objective assessment of what was said by Mrs Clack and Mrs Murray during the conversation: Taylor v Johnson(1983) 151 CLR 422. Whilst the surrounding circumstances, including the dealings and communications between the parties over a period of time may be relevant to determining the intention of the parties (see Vantage Systems Pty Ltd v Priolo Corporation Pty Ltd [2015] WASCA 21 Buss JA with whom McLure P agreed [96] - [111]); subsequent events and statements by the parties directed to the performance of an erroneously assumed contractual obligation cannot be used to create a contract which did not previously exist: Harvela Investments Ltd v Royal Trust Co of Canada (CI) Ltd[1986] AC 207, 226, 234-235; Gjergja v Cooper[1987] VR 167, 213.

Mrs Murray's evidence about the telephone conversation with Mrs Clack

61 Mrs Murray had little recollection of precisely what was said during the telephone conversation but agreed that the conversation may have been about five minutes in duration. She agreed with questions put to her by counsel for the first to third defendants that it was likely that she told Mrs Clack about the equity available in her home and what her goals were in terms of where she wanted to live (ts 159).

62 Mrs Murray's evidence about the things discussed during the telephone conversation lacked any precision and provided little if any support for the pleaded Engagement Contract. The following evidence, given during her evidence-in-chief, illustrates her inability to recall the detail of the conversation (ts 120 – 121):

Mr Offer:

Okay, so you rang the office of what?

Mrs Murray: My Portfolio.

Mr Offer: And you spoke to Shelley. What did you discuss?

Mrs Murray: I don't recall the exact conversation but it was about being interested in what they had to offer.

Mr Offer: Did you have a discussion about what was being offered?

Mrs Murray: I don't recall. I just remember them saying they would send Brad and Raelene out to us because I couldn't go into the office. I had two small kids and I didn't have a carer.

Mr Offer: Okay. Before we get to that, did you have any discussion about how you came to be contacting My Portfolio?

Mrs Murray: I'd said it was through the ad, the advertisement.

Mr Offer: And did you have any discussion about the content of the ad?

Mrs Murray: I can't recall.

Mrs Clack's evidence about the telephone conversation with Mrs Murray

63 Mrs Clack's evidence of the telephone conversation, like that of Mrs Murray, lacked precision. Mrs Clack had some difficulty recalling what was discussed with Mrs Murray during the telephone conversation on 5 March 2009. Mrs Clack's evidence in chief relevantly included as follows (ts 480):

Dr Heenen:

Do you remember what day that was?

Mrs Clack: That was 5 March.

Dr Heenen: Do you remember what you said during that telephone conversation?

Mrs Clack: I thanked Lynda for her inquiry or her call and – and asked her how we could help with her inquiry.

Dr Heenen: Do you remember what she said?

Mrs Clack: No, I don't recall.

Dr Heenen: Do you remember if you said anything else?

Mrs Clack: I asked her general questions about the market value of her home. She said she didn't have a home at the time, they were renting and they had an investment property.

Dr Heenen: Did you ask her anything else?

Mrs Clack: Just what the market value was of the property, she said around 470, and how much - I asked her how much she owed on the property which she said around 200 and also what their incomes were. She only told me Daniel's income at the time which was about 80,000. I then asked her, does she have any - or do they have any other debts, credit cards, personal loans. I can't recall what she said on - on that. But I did ask her if she had children and she said two. And I also asked her how much her rental gave over for rent, and - but I can't recall how much that was.

Dr Heenen: And did you say anything else to her?

Mrs Clack: Not that I can recall.

Dr Heenen: Did she say anything else to you?

Mrs Clack: No.

Dr Heenen: And how is that - do you recall anything else about that telephone conversation?

Mrs Clack: I just let her know that I would have Brad and Rae give her a call - our consultants to give her a call to set up an appointment to meet with them.

Dr Heenen: And did she say anything in response to that?

Mrs Clack: I can't recall.

Dr Heenen: How long was that phone conversation?

Mrs Clack: Just a few minutes.

Dr Heenen: When you say a few minutes, are you able to quantify that?

Mrs Clack: Two or three minutes.

64 The first to third defendants admit that

[o]n or about 15 March 2009, on the occasion pleaded by the Plaintiffs at paragraph 11 of the claim, the Second Defendant orally advised the Second Plaintiff of the property investment and portfolio management services which the first defendant could provide to the Plaintiffs.

(See par 5.1 of the first to third defendants Third Amended Defence).

65 Whilst the defence refers to a date of 15 March 2009 and the evidence at trial suggested the conversation took place on 5 March 2009, nothing turns on that fact. Whatever the correct date is, it is clear that a conversation between Mrs Clack and Mrs Murray occurred in March 2009. The precise date is of no consequence.

66 In Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95 [24] Gaudron, McHugh, Hayne and Callinan JJ said:

It is of the essence of contract, regarded as a class of obligations, that there is a voluntary assumption of a legally enforceable duty,' (

Australian Woollen Mills Pty Ltd v The Commonwealth

(1954) 92 CLR 424 at 457, per Dixon CJ, Williams, Webb, Fullagar and Kitto JJ). To be a legally enforceable duty there must, of course, be identifiable parties to the arrangement,

the terms of the arrangement must be certain, and unless recorded as a deed, there must generally be real consideration for the agreement.

Yet '[t]he circumstances may show that [the parties] did not intend, or cannot be regarded as having intended, to subject their agreement to the adjudication of the courts' (

South Australia v The Commonwealth

(1962) 108 CLR 130 at 154, per Windeyer J).

(emphasis added)

67 The plaintiffs submit that given the context of the conversation as a whole, it is reasonable to infer that the discussion between Mrs Murray and Mrs Clack about the proposed meeting between the plaintiffs and the Dentons related to the provision of property investment and portfolio management services by MyPortfolio.

68 In Vantage Systems Pty Ltd v Priolo Corporation Pty Ltd [2015] WASCA 21 Buss JA said [99]:

… the search for an intention to create contractual relations is not a search for the uncommunicated subjective motives or intentions of the parties.

69 When the evidence of both Mrs Murray and Mrs Clack is objectively analysed, whilst the evidence of both witnesses is generally consistent, neither recalled much of the conversation. What each recalled was limited in detail and vague at best.

70 Despite the admissions made by the first to third defendants, on the available evidence, it would not be possible to conclude that their conversation was anything other than a preliminary inquiry by Mrs Murray to investigate whether MyDomaine might be able to assist the plaintiffs in finding suitable investment properties.

71 Furthermore, it is significant to note that no consideration for the alleged contract was pleaded by the plaintiffs. There was no evidence of anything promised by the plaintiffs during the conversation. The services to be provided by the first defendant, as pleaded (see statement of claim par 12A), is too vague to constitute consideration. In any event, there is no evidence that during the telephone conversation there was any certainty or discussion as to what services MyDomaine might provide at the time the contract was allegedly formed.

72 Without an exchange of promises no binding contract could be formed. Consequently, the only available conclusion is that no contract was formed between the plaintiffs and the first defendant during the telephone conversation.

73 In light of the conclusion that there was no contract, and since the plaintiffs do not raise any other allegation of formation of a contract, the alleged implied term of the Engagement Contract pleaded by the plaintiffs cannot be sustained.

Claim for breach of fiduciary duty against first to fifth defendants

74 The District Court's civil jurisdiction is derived from s 50 of the District Court of Western Australia Act 1969. That section, reproduced below, does not confer on the Court equitable jurisdiction. Section 50(1) reads:

Subject to section 51 the Court has the same jurisdiction to hear and determine and may exercise all the powers and authority that the Supreme Court has and may exercise from time to time, in relation to -

(a) all personal actions, other than those of the kind referred to in subsection (2), where the amount, value or damages sought to be recovered is not more than the jurisdictional limit, whether on the original claim or demand or a balance after allowing payment on account, or the amount of any set off admitted by the plaintiff.

75 Section 50(1) of the District Court of Western Australia Act 1969 was considered by the Full Court in Commercial Developments Pty Ltd (t/as Don Rogers Motors Pty Ltd) v Mercantile Mutual Insurance (Workers' Compensation) Ltd (1991) 5 WAR 208. Malcom CJ said (217):

In my opinion, the claim by the appellant against the respondent by the third party notice is an equitable claim for a declaration of an entitlement to an indemnity which should be regarded as a claim for principal relief. The question of the jurisdiction of the District Court should be determined in the same way as if it had been contained in a separate writ issued by the appellant. The District Court does have limited jurisdiction to grant equitable relief pursuant to the provisions of ss 55 and 57 of the Act and, in particular, by virtue of s 25 of the Supreme Court Act in relation to a matter which is within jurisdiction. Thus, the power to grant such equitable remedies is in the nature of an ancillary or auxiliary power to be exercised in the determination of claims otherwise within the jurisdiction of the court. … Apart from this provision and the provisions relating to partnerships in par (b) and deceased estates in s 50(1)(ba), claims for other equitable relief as principal relief in the District Court are beyond jurisdiction.

76 Later at (219), Malcolm CJ said:

An action on a contract of insurance claiming a declaration of entitlement to an indemnity by way of equitable relief is not a personal action of a kind described in s50(1)(a). Such an action is not one by which any amount is sought to be recovered.

77 The plaintiffs seek to distinguish the decision in Commercial Developments Pty Ltd v Mercantile Mutual (Workers' Compensation) Ltd ) on the basis that they arenot seeking a 'declaration', but are instead claiming damages for breach of fiduciary duty. Consequently, it is submitted on the plaintiffs' behalf that this is therefore a 'personal action' and that there is no jurisdictional impediment to the hearing and determination of this aspect of the claim. This submission ignores the words in s 50(1) (a) of The District Court of Western Australia Act which confer jurisdiction, namely 'all personal actions, other than those of the kind referred to in subsection (2)'.

78 Leaving aside the decision in Commercial Developments Pty Ltd v Mercantile Mutual (Workers' Compensation) Ltd, as the plaintiffs point out and acknowledge, the term 'personal action at law' was considered by the Court of Appeal of the Supreme Court of New South Wales in Vale v TMH Haulage Pty Ltd(1993) 31 NSWLR 702. The New South Wales Court of Appeal found that the phrase 'personal action at law' excluded proceedings in equity.

79 The case of Vale v TMH Haulage Pty Ltdinvolved a question as to whether the District Court of New South Wales had jurisdiction to entertain an action for recovery of a debt. The Court was there considering s 44(1) of the District Court Act 1973 which provided that that court had jurisdiction to hear and dispose of any 'personal action at law' where the amount claimed did not exceed $100,000. Prisetly JA, with reference to the phrase 'personal action at law' as it appeared in the District Court Act (NSW), said (707 - 708):

In my view, parliament must have intended in legislating in 1973 in regard to the District Court, whose jurisdiction had become steadily more important throughout this century, to describe its jurisdiction in the legal language of the present day; and, in my opinion the way the term 'personal action at law' was understood in 1973 in New South Wales was substantially that described in

The Oxford Companion to Law

, (Professor DM Walker, (1980)) as follows (at 949):

'Personal action. At common law in England, personal actions were distinguished from real actions (qv) and mixed actions (qv). They were claims against persons arising out of contracts or out of torts, the former comprising the actions of account, assumpsit, covenant, debt, and certain others, the latter comprising attaint, case, deceit, champerty, conspiracy, detinue, replevin, trespass, trover, and certain others. All these were abolished in the nineteenth century together with their individual original writs and distinct forms of procedure. The term is now frequently given to an action

in personam

, where the judgment of the court is a personal one, normally for payment of money, as contrasted with an action

in rem

, where the plaintiff seeks to make good a claim to or against certain property in respect of which, or in respect of damage done by which, he alleges that he has an actionable demand.'

On this approach the term would exclude proceedings for possession of land, in respect of which the court is given jurisdiction under s 133 of the District Court Act 1973, proceedings in equity, some jurisdiction in which is conferred upon the court by s 134 and the quasi equitable proceedings dealt with in s 134A, ss 134B and 135, but not the present proceedings.

Put another way, I see no reason for reading the words 'at law' in s 44(1) of the District Court Act 1973 in a particular sense in which they were sometimes used in the Courts of Westminster immediately before the commencement of the Supreme Court of Judicature Act 1873 (UK). The present claims are founded upon a statute of the Victorian Parliament creating rights enforceable against persons resident in New South Wales, the enforcement of which, if the claims are upheld, will be expressed by a money judgment. They are not claims of an equitable kind, or claims in rem. This seems to me to be quite sufficient for them to be accurately regarded today as personal actions at law.

80 There is no basis in the present case to distinguish the reasons of the New South Wales Court of Appeal in Vale v TMH Haulage Pty Ltd on the basis that s 50(1) of theDistrict Court Act (WA)does not include the words 'at law'.

81 The District Court does not have jurisdiction to hear or determine the claim of breach of fiduciary duty. Nonetheless, many of the issues raised under the claim of breach of fiduciary duty are generally relevant to the circumstances surrounding the claims against the defendants in negligence where a relevant duty of care is pleaded. Those issues are addressed below.

Claim in negligence – first to fifth defendants

82 The plaintiffs advance four separate cases in negligence. They are:

• Negligent misstatement.

• The defendants' failure to advise the plaintiffs of the risks associated with property investment.

• The defendants' failure to provide any or any adequate advice to the plaintiffs to avoid loss and damage.

• The defendants' failure to make any or any adequate enquiries as to the true market value of the property.

First case in negligence - negligent misstatement (statement of claim par 49)

83 In San Sebastian Pty Ltd v Minister Administering Environmental Planning & Assessment Act 1979 (1986) 162 CLR 341, Gibbs CJ, Mason, Wilson and Dawson JJ at 357 [23], with reference to a number of American authorities said:

[W]here a statement is made for the purpose of inducing the plaintiff, or the members of a limited class including the plaintiff, to commit themselves financially upon the basis that the statement is true, and the plaintiff acts in reliance on the statement, the law will impose a duty of care on the maker of the statement.

84 In order to succeed in a claim for negligence, the plaintiffs are required to demonstrate a number of things. The plaintiffs must prove to the requisite standard that:

(a) the pleaded representations were made by the defendant or defendants; and

(b) that a relevant duty of care was owed to them by one or more of the defendants at the time of making the representations. If no duty of care exists, then they would fail to make good a claim in negligence: Brookfield Multiplex v Owners Corporation Strata Plan 61288 (2014) 254 CLR 185 [19]; and

(c) that the representations were made with an intention that they would be relied upon and that the maker of the representation was aware , or ought reasonably be aware that the recipient would rely upon the information or advice: Mutual Life & Citizens: Assurance Co Ltd v Evatt (1968) 122 CLR 556, 571 (per Barwick CJ); and

(d) the representations must have had a causative effect upon the recipient's decision making process. In this case, that it had a material effect on the plaintiffs' decision to purchase the property.

85 It is not sufficient for the plaintiffs to merely establish that representations which were made, were false. The plaintiffs must also establish that any misrepresentation established on the evidence was made negligently. In this regard it is important to note that the first defendant concedes that it is liable for the acts of the fourth and fifth defendants who were acting as its agents in their dealings with the plaintiffs (see First to Third Defendants' Submissions dated 7 December 2015 at par 3 and ts 410).

86 Whether any defendant has assumed a tortious duty of care in respect of any of the representations established on the evidence is to be determined objectively and all aspects of the dealing between the parties are relevant: Williams v Natural Life Health Foods Ltd[1998] 2 All ER 577 (HL), 582.

87 In assessing the circumstances to determine whether a duty of care exists, the objective context in which each alleged representation falls to be considered will include conclusions as to the existence and extent of any contractual or fiduciary relationship between the parties. This requires a careful analysis of all the relevant circumstances that existed as between the parties. In Mutual Life & Citizen; Assurance Co Ltd v Evatt Barwick CJ, in considering the question of whether the nature of the relationship imports in a law a duty of care on a party, noted that:

… it is this element of trust which the one has of the other which is at the heart of the relevant relationship. I should think that in general this element will arise out of an unequal position of the parties which the recipient reasonably believes to exist. The recipient will believe that the speaker has superior information, either in hand or at hand with respect to the subject matter or that the speaker has greater capacity or opportunity for judgment than the recipient. But I do not think it can be said that this must always be so, that inequality in these respects must necessarily in fact be present or be thought to be present if the special relationship is to exist.

88 The objective circumstances of the dealings between the plaintiffs and the defendants relevantly includes, but is not limited to such facts as:

(a) the level of property knowledge that the various parties held, particularly their experience in the areas of property investing;

(b) whether the plaintiffs had bought property previously and in what capacity;

• there is no evidence of any contact between the plaintiffs and the third defendant Mr Clack

• the only direct contact between the plaintiffs and Mrs Clack was during the first telephone conversation on about 5 March 2009 (ts, 481)

• there was direct contact between the plaintiffs and the second, fourth and fifth defendants;

(d) whether the plaintiffs obtained further assistance and advice from other sources, and whether the defendants expected they would. (Mrs Murray, in her evidence, admitted an expectation that the lending bank would be obtaining an independent valuation of Cowrie Apartment 216 before it would agree to provide finance);

(e) what the defendants, in particular Mrs Denton, expected the plaintiffs would do prior to purchasing any property, namely that an independent valuation would be performed at the behest of the plaintiffs' financier before the contract of sale became unconditional: (Mrs Denton's evidence at ts 638 - 639, ts 649);

(f) the effect of the statutory warning given to the plaintiffs by the defendants which was required by the Property Agents and Motor Dealers Act 2000 (Qld). The document warned them to obtain independent legal advice and an independent valuation of the property before proceeding with the purchase (exhibit 5); and

(g) whether the plaintiffs had independent legal advice.

89 In relation to the factors set out at par 88 above, it is of note that the plaintiffs were introduced to a mortgage broker by the fourth and fifth defendants. The mortgage broker, 'All About You Finance', was not only recommended by the fourth and fifth defendants, but clearly had an ongoing relationship with the first defendant and at least Mrs Clack. Indeed, the relevant disclosures made by Mrs Clack required by the Property Agents and Motor Dealers Act 2000 (Qld) and set out in PAMD Form 27C (exhibit 13) detailed her relationship with the mortgage brokers as well as solicitors Cameron Price lawyers.

90 Furthermore, in relation to the question of whether the plaintiffs had independent legal advice, the plaintiffs followed the fourth and fifth defendants' recommendation and appointed Cameron Price Lawyers to act for them in respect of the purchase of Cowrie Apartment 216. Again, like the mortgage brokers, the solicitors were recommended by the fourth and fifth defendants. In addition, the solicitors – Cameron Price Lawyers, were the same lawyers that had a relationship with first to third defendants having introduced them to Mr Kubblins on whose behalf a number of Cowrie Apartments were sold. The solicitors clearly had an ongoing relationship with at the very least, the first to third defendants.

91 It is necessary to consider separately each of the representations pleaded by the plaintiffs at paragraph 21 of the statement of claim. For this purpose, I have adopted the categories in which they are pleaded in the statement of claim.

The Radio Promotion(Statement of claim 10)

92 It is not disputed by any party that Mrs Murray heard the radio advertisement and that MyDomaine represented that:

(a) it could help clients create wealth through investment property;

(b) it would help clients source a property investment; and

although the fourth and fifth defendants say, in any event, that it does not concern them.

93 Whilst the first to third defendants admit that the representations were made, they argue that these statements are mere 'puffery designed to entice prospective clients to contact MyDomaine and make further inquiries'. Additionally, the first to third defendants argue that there is no evidence that would support a claim that the plaintiffs relied upon these statements when entering into the contract for the purchase the property.

94 I do not accept the first to third defendants' submission to the effect that the words conveyed by the Radio Promotion amounted to puffery. The words of the radio promotion were clear in their meaning and purpose. The words conveyed to the listener that MyDomaine had certain skills or knowledge that could help their clients to create wealth. The statements were not merely laudatory and could not be categorised as mere puffery. I am satisfied that the first defendant caused the Radio Promotion.

Did the plaintiffs rely upon the Radio Promotion?

95 It was only Mrs Murray that heard the radio promotion. There is no evidence that she conveyed the words of the Radio Promotion to Mr Murray. There was nothing said by either Mrs Murray or Mr Murray in their evidence that would necessarily lead to the conclusion that these representations alone materially caused either of them to enter into the contract.

96 Recognising that there may be a real difference between taking some preliminary steps in the process towards purchasing an apartment, as against the words materially causing the plaintiffs to purchase the apartment, the words clearly caused Mrs Murray to call Mrs Clack. That led to the meetings that subsequently took place between the plaintiffs and Mr and Mrs Denton. The Radio Promotion is clearly part of the relevant background. As already noted, the words of the radio promotion were clear in their meaning. Consequently, the Radio Promotion is relevant when considering the nature of the relationship between the plaintiffs and the defendants, how it developed and whether in fact a duty of care did exist as between them.

Events following the Radio Promotion

97 The plaintiffs claim that following the Radio Promotion, there were a number of representations made to them by the defendants. These representations arose in the context of a meeting between the plaintiffs and the fourth and fifth defendants on 16 March 2009. These representations were in the form of oral and written representations.

98 So far as the representations relied upon are said to have been made orally, the plaintiffs must prove them with a sufficient degree of precision. In Shaddick v JDV Ltd [2012] WASC 120 Allanson J, with reference to Watson v Foxman (1995) 49 NSWLR 315, 318 - 319, summarised the law relating to the level of precision required to be proved by a party where oral representations are alleged. His Honour said [39]:

… It is not necessary for the plaintiff to prove the precise words spoken on each occasion. The court needs to be satisfied that it is more probable than not that words were spoken that would reasonably have conveyed the representation alleged. I can reach that satisfaction if I am satisfied that the substance or effect of what was spoken conveyed the misleading representations:

James Hardie Industries NV v Australian Securities and Investments Commission

[2010] NSWCA 332 [269].

The second to fifth defendants' trip to Palm Cove to inspect apartments

99 Prior to considering the meeting that took place between the plaintiffs and Mr and Mrs Denton on 16 March 2009, it is relevant to consider the evidence relating to the second to fifth defendants' travel to Queensland for the purposes of inspecting properties in Palm Cove. That evidence came from Mrs Clack, Mrs Denton and Mr Denton.

100 Mrs Clack said that in about late February 2009, upon her suggestion, she and her husband Mr Clack, together with the Dentons, travelled to Palm Cove. They stayed there three to four nights. They all met and discussed with Mr Kubblins the Tiger Cowrie apartments that he had for sale in Palm Cove. Arrangements were made for them to inspect the apartments, which they did. Mrs Clack also took photos of the apartments. The asking price by Mr Kubblins for the Tiger Cowrie apartments was $220,000 each. Mrs Clack made no mention of travelling to Melbourne during this trip.

101 Mrs Denton's evidence about the trip to Queensland included that, in the course of learning about the business, she took steps to familiarise herself with the properties that were being offered by MyPortfolio. According to Mrs Denton, towards the end of February or the beginning of March 2009, she together with Mr Denton and Mr and Mrs Clack, travelled to Queensland and Melbourne and inspected most of the properties that they were presenting. They 'inspected Drift, Palm Cove and also the Cowrie property, Cowrie Apartments in Palm Cove and also there was some house and land packages in Palm Cove'. They also 'went to Melbourne and had a look at the properties they had available in Melbourne'(ts 623). Mrs Denton's evidence differed from Mrs Clack's evidence in that, according to Mrs Denton, the Dentons and the Clacks also travelled to Melbourne together for the purpose of inspecting other properties.

102 According to Mr Denton, in either late March or early April 2009 (this date was qualified in cross-examination to be February 2009), he travelled to Palm Cove Queensland to look at the properties that MyPortfolio were presenting. Prior to that date, he had also become aware that Mr Kubblins had a number of apartments for sale in the Tiger Cowrie complex. His travel to Palm Cove resulted in him also inspecting the Tiger Cowrie apartments. He travelled to Palm Cove with his wife Mrs Denton and the Clacks (ts 682 - 683). He made no mention of the trip also involving travel with the Clacks to Melbourne to inspect the properties that were available there. This was a curious omission in both his and Mrs Clack's evidence if it in fact had occurred. It is difficult to accept that this detail was simply overlooked in their evidence. The omission strongly points to a conclusion that Mrs Denton was either not honest or reliable in relation to her account that they had travelled to Melbourne during this trip. It tends to suggest that Mrs Denton was exaggerating this aspect of her evidence to enhance the level of research that she claimed that they had undertaken in determining the true value of the properties they were promoting.

103 On the other hand, the second to fifth defendants' trip to Palm Cove is relevant for a number of other reasons. The trip obviously included the Clacks and the Dentons inspecting the Tiger Cowrie apartments that were available for sale by Mr Kubblins as well as inspecting the complex in which Cowrie Apartment 216 (Cowrie Spindle apartments) was situated. Consequently, not only were the Clacks and Dentons aware of the location and state of the various apartments, but were involved in discussions with Mr Kubblins who ultimately wanted to sell his un-renovated apartments.

104 It is of note that on or about 7 April 2009, that is about three weeks after the meeting between the Dentons and the Murrays which took place on 16 March 2009, Mr and Mrs Denton, through their company RJR Investments, agreed to purchase five apartments in the Tiger Cowrie complex from Mr Kubblins. RJR Investments purchased the apartments for $1,170,248.76. The purchase price including associated expenses (see exhibit 88). Subsequently they spent approximately $200,000 renovating and refurbishing the apartments (see exhibit 88). The Clacks, or at the very least the first defendant, contributed funds towards the expenses associated with the project. The agreement between the Dentons and the Clacks was that the Dentons would market the apartments on behalf of RJR Investments and in return would receive 40% of the profits. The total cost involved in the venture involving the five apartments, including the purchase price, renovation and fit-out of the apartments was $1,400,642.93. The net profit after sale of the apartments was $380,665.50. This was divided between the Dentons and the Clacks on a 60/40 basis. (see ts 687 and 688; exhibit 88).

105 The negotiations for the purchase of the apartments by RJR Investments from Mr Kubblins was what Mr Denton described as 'a team effort' involving the Clacks and the Dentons (ts 690, 700). Interestingly, despite Mr Denton referring to the negotiations for the purchase of the five apartments as being a 'team effort,' Mrs Clack claimed that although she became aware of the Dentons' purchase of the five apartments, she had no involvement in the purchase (ts 480). Mrs Clack's evidence on this issue lacks credibility in light of all the surrounding evidence including the fact that she and her husband had inspected the apartments, met with Mr Kubblins in Palm Cove, contributed funds towards the venture and ultimately received 40% of the profit for the sale of these apartments.

The meeting involving the plaintiffs and the fourth and fifth defendants on 16 March 2009 - Mrs Murray's evidence about the meeting

106 Both the plaintiffs and the fourth and fifth defendants gave evidence about the meeting that took place at the plaintiffs' home on 16 March 2009. Mrs Clack gave evidence about the arrangements for and the lead up to the meeting. For the reasons already articulated and those that follow, where there is a dispute between the evidence of the various witnesses, the evidence of Mrs Murray is preferred to that of the other witnesses.

107 Mrs. Murray was the first witness to give evidence about the meeting. Mrs Murray was obviously anxious and appeared to be a person that was not used to public speaking. Nonetheless, she impressed as being an honest and generally reliable witness. Mrs. Murray said that prior to the Dentons attendance on 16 March 2009, Mrs Clack asked her to provide the plaintiffs' 'financials to the office so they could see what equity and assets and liabilities [they] had, and our income' and do an analysis (ts 121 - 122). This evidence is consistent with the evidence of Mrs Clack, and both Mr and Mrs Denton.

108 Mrs Murray's evidence was that it was Mrs Denton that did most of the talking at the meeting. Mrs Murray said that the fourth and fifth defendants advised her that, based upon their financials, they could afford to purchase two properties (ts 122).

109 According to Mrs Murray, early in the conversation Mr Denton suggested a house in Queensland that had a pool. She had rejected that suggestion because she did not favour a property with a pool due to previous experience (ts 123). Mrs Murray said that the subject of the Cowrie Apartment came up shortly thereafter. Brochures were then shown to the plaintiffs. The first was a document contained in a purple folder (Purple Document). The second was contained in a gold folder (Gold Document). The plaintiffs were taken through the Purple and Gold Documents (exhibits 1 and 2 respectively) by the fourth and fifth defendants. (These documents will be addressed as separate representations in the reasons that follow).

110 In terms of the Gold Document, Mrs Murray remembered being taken through the slides contained therein, but did not specifically remember the conversation that occurred around these slides. According to Mrs Murray whose evidence I accept, they did not go through all the various properties displayed in the document 'because it was already decided which property [they] should be buying' (ts 128). She identified slide number 37 in the Gold Document because that was the point at which MyPortfolio was explained in the brochure. According to her, with reference to the Gold Document (exhibit 2), it was mostly the page captioned 'POSITIVE CASHFLOW DIAGRAM' that they discussed because that was the document that detailed how the investment was to work (ts 129 - 130).

111 With reference to the Purple Document, which was specifically about the Cowrie apartments, Mrs Murray remembered being shown a picture of the apartments.

112 Hardcopies of both the Purple Document (exhibit 1) and the Gold Document (exhibit 2) were left with the plaintiffs. Mrs Murray thought that she may have browsed through them at a later date.

113 In terms of specific things said by either the fourth or fifth defendant during the course of the meeting, Mrs Murray said:

• she was told by them that 'we could obtain two properties with the equity we had in our home' (ts 122);

• she remembered ' a conversation about the five-year guarantee' (ts 125);

• she was 'advised that it was a great opportunity' and that they (the fourth and fifth defendants 'had been there and it was a lovely location and that we should buy in there'(ts 125);

• she recalled something 'about the three-year lease and it was a great opportunity' and that there were two options of five years after the initial five-year period (ts 130); and

• they were told that 'this was the last one with five years' (ts 130).

114 Although there was no discussion about what the lease options meant, according to Mrs Murray it was 'a selling point [to them because it meant] that we wouldn't need to worry about the rent because we had guaranteed rental income' (ts 130).

115 Mrs Murray said that there was no real discussion about the asking price of $365,000 for the Cowrie apartment. She noted that that was the price listed in the Purple Document (exhibit 2).

116 It is clear that following the meeting with the Dentons, the plaintiffs subsequently signed two separate expressions of interest and paid two separate deposits of $1,000 in relation to each of the Cowrie Apartment and the Merriview Apartment. These documents were both dated 18 March 2009 (exhibits 4.1, 4.2 and 10).

117 Mrs Murray said that she signed the expression of interest in relation to the Cowrie property because it was the only property that was shown to them and that she acted on the fourth and fifth defendants' recommendation as they appeared knowledgeable in property investing. So far as the Cowrie property being the 'only' property shown to them, that could not be the case since as at that time they were clearly considering purchasing the Merriview apartment as well.

118 The reasons given by Mrs Murray as to why she signed the expression of interest to buy the Cowrie Apartment need to be considered in light of all the evidence about what was then known to Mrs Murray, including:

• The Radio Promotion;

• Mrs Murray's conversation with Mrs Clack; and

• the meeting with and presentation conducted by the fourth and fifth defendants on 16 March 2009.

The meeting involving the plaintiffs and the fourth and fifth defendants on 16 March 2009 – Mrs Denton's evidence about the meeting

119 Mrs Denton agreed that they discussed two properties with the plaintiffs, namely the Cowrie property and the Merriview property. However, Mrs Denton said that the suggestions were couched in terms of their suggestions being on the basis that 'if it was deemed to be suitable and that the Murrays were interested in looking at properties that they [the Cowrie Apartment and the Merriview apartment] would be two properties that would fit in with their equity and income and their situation': ts 658.

120 Mrs Denton claimed to be able to recall some of the specific details about the meeting with the plaintiffs. Her evidence included that:

• she said to the plaintiffs 'a couple of times' that 'it was very important that they were on the same page', and at the end of the meeting she said 'they needed to really look and think about whether that – it was something that they were both wanting to do and that they would need to do their own research and … due diligence and that they needed to make sure that it was something that they both wanted': ts 633;

• they talked to the plaintiffs about the rental yield that the Cowrie apartment was achieving and that it was much higher than the property that the plaintiffs had in Safety Bay, and was also a much higher yield than we were achieving in our rental properties in Perth': ts 658;

• In response to the question: 'And you told the Murrays that based on the information that you had that the Cowrie property was suitable to their needs?' Mrs Denton said: '--We – we said that they would have to have their finance capacity verified by a financial broker ... -- but that given the details that – the brief details that had been given to Shelley that these two properties seemed to fit in with their financial capacity and their needs, correct.' (ts 658);

• she denied saying that the Cowrie Apartment was 'perfect', but agreed that they had discussed the lease guarantee and that 'it fitted in with Lynda's needs [to have] … regular and reliable income': ts 659; and

• Mrs Murray was sometimes absent from the presentation while she was attending to the plaintiffs' children: ts 664.

The meeting involving the plaintiffs and the fourth and fifth defendants on 16 March 2009 - Mr Denton's evidence about the meeting

121 Mr Denton said that the meeting lasted two hours. It was he that conducted the presentation to the plaintiffs.

122 In relation to his understanding of what the plaintiffs' financial position was, he said that: ' -- We had a – a very broad brush overview of their position.' (ts 717).

123 According to Mr Denton, based on what he understood to be the plaintiffs' financial position, he recommended the investments in Cowrie and Merriview, but qualified that by saying that it had to be approved by a finance broker (ts 717).

124 According to Mr Denton, he gained the impression that the meeting was really for Mr Murray's benefit rather than Mrs Murray. This was because at times during the meeting Mrs Murray was distracted by her children and consequently, according to Mr Denton, 'she would not be listening or not be participating in the - in the discussion. She wasn't concerned about that' (ts 680). This evidence is at odds with Mrs Murray's evidence about the meeting.

125 Mr Denton was generally an unimpressive witness. At times I formed the view that he was neither credible, nor reliable. In evidence-in-chief, despite not having taken contemporaneous notes at the meeting (ts 704), he was apparently easily able to remember specific details of Mrs Murray's involvement in the approximately two hour long meeting that took place on 16 March 2009. For example, he was able to recall that during this meeting, at a point he nominated as being no more than two thirds of the way through his power-point presentation, Mrs Murray 'interjected to ask what property we had available, Can - can we go to the property section?' (ts 689).

126 He also gave evidence that Mrs Murray had made clear to him that she was knowledgeable about property investing. Again, this evidence is inconsistent with Mrs Murray's evidence and inconsistent with the objective evidence that whilst she may have read some literature on the subject, at that stage Mrs Murray had not ventured into the property investment market.

127 It is of note that when Mr Denton was asked questions by counsel for the plaintiffs that related to his travel to Queensland for the purposes of inspecting various apartments including the apartments at Palm Cove which he and Mrs Denton ultimately purchased, he was unsure of the month of the initial visit and could not say precisely how many times he actually travelled to Queensland for this purpose. This was despite the fact that he acknowledged that his investment in these properties was a significant event.

128 Furthermore, the conduct of Mr and Mrs Denton during the trial caused some concern. It appeared to me that while Mr Denton was being cross-examined by counsel for the plaintiffs and at a time that he had some difficulty answering some of those questions, Mr Denton looked to Mrs Denton for some assistance. Mrs Denton was seated at the back of the court room. Whilst I cannot conclusively say that Mrs Denton was providing the answers from the back of the court room, their conduct suggested she was. When the issue was raised, Mrs Denton voluntarily left the courtroom. Their behaviour at this time did not assist either in terms of their credit.

The Attendance Representations (Statement of claim par 16)

129 As already noted above, following the call between Mrs Murray and Mrs Clack, Mrs Clack arranged for the Dentons to attend upon the Murrays at their home. They attended on or about 16 March 2009.The Dentons attendance was as agents on behalf of the first to third defendants. According to Mr Denton, by February 2009 he was already aware of the plaintiffs because he had heard the name from his wife and Mrs Clack (ts 704).

130 Prior to the Dentons attending that meeting, Mrs Denton, either alone or together with Mr Denton, had discussed with Mrs Clack what properties they were going to present to the plaintiffs as being suitable for their needs and financial position (Mr Dentons evidence was that he had discussed with both Mr and Mrs Clack what properties were to be presented. They had agreed that the Cowrie Apartment and the Merriview Apartment would be presented to the plaintiffs (ts 704)).

131 Mr Denton was at that time also aware that the first defendant had entered into a commercial arrangement with Indigo Real Estate Pty Ltd to market the Cowrie complex in Palm Cove to prospective purchasers. He knew that the first defendant represented the seller of both the Cowrie apartment and the Merriview apartments at the time that he promoted it to the plaintiffs. He was aware that the first defendant stood to receive a payment upon a sale of those apartments (ts 704 – 705).

132 By this stage, Mrs Murray had provided some information about the plaintiffs' financial position to at least the first and second defendants. Some of that information was noted by Mrs Clack in her evidence in relation to the telephone call (see par 63 above). At least some of this information had been conveyed to the Dentons. According to Mrs Denton, the information provided by the plaintiffs amounted to 'brief details' about their financial capacity and needs (ts 658). Mr Denton described the information he had about the plaintiffs' financial position as amounting to a 'very broad brush overview of their position' (ts 717).

133 Despite having very limited information about the plaintiffs' financial position, it is clear that Mr and Mrs Denton, following consultation with at least Mrs Clack, attended upon the plaintiffs with the intention of recommending two separate properties. These properties were the Cowrie Apartments in Palm Cove and the Merriview apartment in Victoria. The Dentons came armed with the Purple and Gold Documents. The Purple Document was a document specifically promoting the Cowrie Apartments. Other than a similar purple document relating to the Merriview Apartment (Mrs Denton, ts 632), the Dentons did not produce any other promotional documents that highlighted other properties during their meeting with the plaintiffs.

134 Whilst it is clear that the Gold Document contained many other properties then being marketed by the defendants, and that Mr Denton made reference to another property in Queensland, the Dentons' clear intention was to promote the Cowrie apartments (which included Cowrie Apartment 216) and Merriview apartments. This is the only reasonable inference available when regard is had to the totality of the evidence relating to the meeting on 16 March 2009.

135 So far as the 'attendance representations' are concerned, the plaintiffs' pleaded representations at par 16 of the statement of claim (leaving aside par 16(i) which the plaintiffs now concede is not sustainable on the evidence) are;

(ii) that the first defendant had undertaken an analysis of the plaintiff's financial position ('the Financial Analysis');

(iii) that the first defendant had undertaken an analysis of property for investment Australia wide ('the Property Analysis'); and

(iv) based upon the Financial Analysis and the Property Analysis the first defendant had a number of recommended investments for the plaintiffs ('the Attendance Representations').

136 There are a number of difficulties with the pleaded 'attendance representations' which the plaintiffs did not address in either the evidence or the final submissions.

The evidence relevant to the Attendance Representations

137 The first issue relates to the plaintiffs' failure to prove the falsity of the pleaded Attendance Representations. On the evidence, the fourth and perhaps the fifth defendant had in fact undertaken a financial analysis of the plaintiffs' position. Mrs Denton said that she had used a software program to produce a property investment analysis using the financial information available about the plaintiffs' position. Using that information, the fourth and fifth defendants used the software program to determine financial projections relevant to the plaintiffs. That information was then used to determine what properties to recommend to the plaintiffs. There is no evidence to suggest that the recommended properties did not match the financial analysis performed by the fourth and fifth defendants.

Did the plaintiffs rely upon the Attendance Representations?

138 In addition to failing to prove the alleged falsity of the Attendance Representations, there is no evidence that the plaintiffs' specifically relied upon these representations. The closest that the evidence comes to satisfying the pleadings at par 16 of the statement of claim is Mrs Murray's evidence that the plaintiffs were told that they could obtain two properties with the equity they had in their home (ts 122) and in all the circumstances they accepted the fourth and fifth defendants' recommendation with respect to the purchase of the Cowrie apartment.There was nothing said by either Mrs Murray or Mr Murray in their evidence that would necessarily lead to the conclusion that these representations alone materially caused either of them to enter into the contract.

139 Nonetheless, as with the Radio Promotion, what occurred during the attendance on 16 March 2009 is relevant when considering the totality of the circumstances involved. It is relevant when considering the nature of the relationship between the plaintiffs and the defendants, in conjunction with all the other surrounding evidence, to determine whether in fact a duty of care existed as between them. The pleaded representations at par 16 do not stand alone. They need to be considered together with the Gold Representations (statement of claim 18) and the Purple Representations (statement of claim 19).

308 Mr Myers' opinion that the market value of the property as at 6 May 2009 was $280,000 was arrived at on the basis that the property was unfurnished and without the benefit of any value for the lease. The figure of $280,000 included an allowance of $35,000 for the renovation and fit-out costs of the apartment. The figure of $35,000 was derived from information prepared by RJR Investments setting out the costs associated with purchase, renovation and fit-out of the Tiger Cowrie apartments (page 46 of exhibit 46).

309 Mr Myers subsequently accepted in cross examination by counsel for the first to third defendants that:

• if sold furnished, at least $10,000 should be added to the value of the Property (ts 309); and

• since the property was sold subject to a lease to Drift Palm Cove (Management) Pty Ltd (exhibit 14) that would have resulted in a 'profit rent' to the plaintiffs, a further sum of about $18,200 could be added to the value of the property (at ts 308 – 315 Mr Myers' evidence in relation to how a figure for the 'profit rent' was calculated is set out).

310 Consequently, the first to third defendants submit that on Mr Myers' evidence the property was worth at least $308,000 ($280,000 + $10,000 + $18,200). Mr Myers accepted this would take the value of the property to $308,200 (ts 315).

311 Following the trial, the first to third defendants in their written closing submissions contend that when the correct calculations of the net profit rent based upon Mr Myers evidence and exhibit 14 is factored in, the evidence suggests that the value of Cowrie Apartment 216 was is in fact between $317,957.05 and $321,066.18. This issue is further considered at pars 370 - 375 below under the heading of Loss and Damage.

312 The defendants also submit that Mr Myers' opinion of the value of the property should only be treated as a lower range of the value and that in fact the true value of the property, at the time of sale to the plaintiffs, 'comfortably' exceeded the sum of $321,066.18. That submission was based on a number of matters that the first to third defendants submit undermined the valuation provided by Mr Myers. Those matters included:

• Mr Myers did not visit the properties he relied upon as comparable sales.

• two of the transactions he relied upon were sales of Cowrie Tiger apartments by Mr Kubblins via QES-HW.com (see exhibits 40 and 41) which were un-renovated apartments that were furnished to a lower standard than the property being a renovated Cowrie Spindle apartments.

• Mr Myers had not relied upon any of the sales of Cowrie Spindle apartments by Palm Cove Apartments Pty Ltd (each of which was sold for around the same price as the price that the plaintiffs paid for their property) in assessing the value.

• Mr Myers had relied upon 'undisclosed hearsay in the form of undiscovered and unproduced 'file notes' and 'additional information' to exclude the sales of Cowrie Spindle apartments by Palm Cove Apartments Pty Ltd.

313 Mr Myers accepted that, 'in general terms', a sale of an apartment in the same building, which had been fitted out exactly the same, between arms-length transactors would be a good indication of the market value of the Property (ts 318).

314 During the trial the plaintiffs floated the notion that the defendants had deliberately set out to create a false market. Mr Myers had noted that the sale of the Cowrie Spindle apartments had not been marketed to local buyers. Whilst he accepted that he did not know whether any of the sales of the Cowrie Spindle apartments by Palm Cove Developments Pty Ltd were engineered so as to create a false market (ts 316 - 317), he said:

I think there's enough concern with the purchasers all coming from the same place and the contracts of sale being in such a close proximity and it's on the other side of the country (ts 322).

315 It is clear that Mr Myers had formed the view that there was something untoward about the sale of the Cowrie Spindle apartments (ts 323). Mr Myers ultimately described the sales of Cowrie Spindle apartments by Palm Cove Apartments Pty Ltd for about $365,000 as 'outliers' (ts 302). Mr Myers, as a qualified and very experienced property valuer with specialist knowledge of the Palm Cove market was well placed to know whether these prices were anomalies in the market.

316 Exhibit 39, being the information from the Queensland Department of Environment and Resource Management being the sales data report (QVAS data), included sales records for sales of properties being part of BUP70885: PAR SMITHFIELD on Coral Coast Drive, Palm Cove, Queensland. The table below (Table 1) sets out most, if not all of the relevant properties. Most of the 23 properties listed in Table 1 measured between 77 - 78 sqm. The sales were in the period between 11 January 2008 and 27 August 2009. Those properties ranged in price between $202,500 and $365,000. They are listed in Table 1 below:

Table 1

No.	Date of agreement	Address of sale property	Vendor	Purchaser	Size of property (metres squared)	Purchase Price
1	11/01/2008	235 Coral Coast Drive, Palm Cove Lot 73 BUP70885	Julia Jane Pty Ltd, Paddington, NSW.	A.E.M.Boersen & H.R.Klipp, Palm Cove, Qld.	78	$202,500
2	23/04/2008	411 Coral Coast Drive, Palm Cove Lot 78 BUP70885	C.M. & M.B. Kensell Lane Cove, NSW	P. Scarmarico Greenvale, Vic.	78	$230,000
3	27/04/2008	241 Coral Coast Drive, Palm Cove Lot 35 BUP70885	QES-HW.COM Pty Ltd, Brisbane, QLD.	J.W. & V.L. Astle Clifton Beach, Qld.	78	$225,000
4	26/06/2008	Coral Coast Drive, Palm Cove Lot 51 BUP70885	Palm Cove Apartments Pty Ltd Brisbane, Qld	G.J. French Cannon Hill, Qld.	78	$365,000
No.	Date of agreement	Address of sale property	Vendor	Purchaser	Size of property (metres squared)	Purchase Price
5	15/07/2008	Coral Coast Drive, Palm Cove Lot 43 BUP70885	Palm Cove Apartments Pty Ltd Brisbane, Qld	A.D. Baker Herne Hill, WA	77	$360,000
No.	Date of agreement	Address of sale property	Vendor	Purchaser	Size of property (metres squared)	Purchase Price
6	30/07/2008	319 Coral Coast Drive, Palm Cove Lot 78 BUP70885	R W George Pty Ltd Palm Cove, Qld	G.E. & R.J. Howard Wilberforce, NSW	78	$240,000
7	20/08/2008	Coral Coast Drive, Palm Cove Lot 59 BUP70885	Palm Cove Apartments Pty Ltd Brisbane, Qld	K.A. Riddell Maddington, WA	78	$365,000
8	01/09/2008	241 Coral Coast Drive, Palm Cove Lot 34 BUP70885	QES-HW.COM Pty Ltd, Brisbane, QLD.	R.M. Mullin Southport, Qld.	78	$255,000
9	02/09/2008	Coral Coast Drive, Palm Cove Lot 78 BUP70885	Palm Cove Apartments Pty Ltd Brisbane, Qld	M.R. Brandon & N.T.C.E McClean-Brandon Berowra, NSW	78	$360,000
10	09/01/2009	241 Coral Coast Drive, Palm Cove Lot 15 BUP70885	QES-HW.COM Pty Ltd, Brisbane, QLD.	A.S. Mule Morley WA	78	$260,000
11	20/02/2009	222 Coral Coast Drive, Palm Cove Lot 60 BUP70885	A.K. Duerdoth & B. Guettler Deer Park, Vic.	B.A. & G.E. Harris California, USA	95	$250,000
12	07/04/2009	241 Coral Coast Drive, Palm Cove Lot 12 BUP70885	QES-HW.COM Pty Ltd, Brisbane, QLD.	RJR Investments (WA) Pty Ltd	78	$220,000
13	07/04/2009	241 Coral Coast Drive, Palm Cove Lot 18 BUP70885	QES-HW.COM Pty Ltd, Brisbane, QLD.	RJR Investments (WA) Pty Ltd	78	$220,000
14	07/04/2009	241 Coral Coast Drive, Palm Cove Lot 19 BUP70885	QES-HW.COM Pty Ltd, Brisbane, QLD.	RJR Investments (WA) Pty Ltd	78	$220,000
15	07/04/2009	241 Coral Coast Drive, Palm Cove Lot 26 BUP70885	QES-HW.COM Pty Ltd, Brisbane, QLD.	RJR Investments (WA) Pty Ltd	78	$220,000
No.	Date of agreement	Address of sale property	Vendor	Purchaser	Size of property (metres squared)	Purchase Price
16	07/04/2009	241 Coral Coast Drive, Palm Cove Lot 28 BUP70885	QES-HW.COM Pty Ltd, Brisbane, QLD.	RJR Investments (WA) Pty Ltd	78	$220,000
17	07/04/2009	241 Coral Coast Drive, Palm Cove Lot 29 BUP70885	QES-HW.COM Pty Ltd, Brisbane, QLD.	RJR Investments (WA) Pty Ltd	78	$220,000
18	20/04/2009	Coral Coast Drive, Palm Cove Lot 54 BUP70885	Palm Cove Apartments Pty Ltd Brisbane, Qld	D.P. & L.G. Murray Brisbane, Qld*	78	$365,000
19	02/07/2009	241 Coral Coast Drive, Palm Cove Lot 29 BUP70885	RJR Investments (WA) Pty Ltd	A.M. & C.A. Byrne Mindarie, WA	78	$360,000
20	21/07/2009	241 Coral Coast Drive, Palm Cove Lot 18 BUP70885	RJR Investments (WA) Pty Ltd	J.D. Appavoo & S. Ramiah Lansdale, WA	78	$360,000
21	21/07/2009	241 Coral Coast Drive, Palm Cove Lot 28 BUP70885	RJR Investments (WA) Pty Ltd	S.G.J.A. Spinetti Canningvale, WA	78	$360,000
22	27/08/2009	241 Coral Coast Drive, Palm Cove Lot 12 BUP70885	RJR Investments (WA) Pty Ltd	D.K. McVilly, Karnup, WA	78	$360,000
23	01/09/2008	241 Coral Coast Drive, Palm Cove Lot 34 BUP70885	QES-HW.COM Pty Ltd, Brisbane, QLD.	R.M. Mullin Southport, Qld.	78	$255,000

317 As has already been noted, on 17 April 2008 MyDomaine Pty Ltd entered into a commercial arrangement with Indigo Real Estate Pty Ltd to market Queensland properties, including apartments at the Cowrie complex in Palm Cove, North Queensland.

318 Mrs Clack and MyDomaine sold a number of the Indigo Group's properties in the latter half of 2008 (see properties 4, 5, 7 & 9 in the table above). The Indigo Group set the asking price at $360,000 for these properties. Each property was sold at or over that price.

319 In January 2009 the Clacks were involved in the sale of one of the adjacent un-renovated Cowrie Tiger apartments on behalf of the vendor Mr Mike Kubblins. The sale price was $260,000 (see property 10 above).

320 Mrs Clack's said that 9 of the 18 available Cowrie Spindle apartments were sold by MyDomaine to Western Australians. This included the five properties sold on behalf of RJR Investments Pty Ltd the company (ts 492 - 493).

321 An analysis of the properties listed in the table above reveals that on 7 April 2009 RJR Investments purchased five properties for $220,000 each. Apart from properties sold by either Palm Cove Apartments or RJR Investments, all other 11 apartment sales were for under $260,000.

322 Each of the sales by either Palm Cove Apartments, or RJR Investments was for either $360,000 or $365,000. Each of those sales was to an interstate purchaser – seven in Western Australia (the sale to the plaintiffs recorded their address as being Brisbane which was the address of their appointed solicitor, not their residential address), one in Cannon Hill, Queensland (a suburb of Brisbane) and one in Berowra, New South Wales. The only sale to a purchaser in Far North Queensland (Clifton Beach) was for the purchase price of $225,000.

Conclusion as to the 'true market value' of Cowrie Apartment 216

323 In the circumstances, the mere fact that nine properties were sold for at or above $360,000 does not lead to the conclusion that they represented what the true market value for renovated apartments in Palm Cove was at the time. Each of those sales was through a specific marketing agreement and every one of the purchasers came from either interstate or Brisbane. They were not local purchasers.

324 Mr Myers was qualified and very experienced in his area of property valuation. He was generally an impressive witness who made relevant concessions when appropriate. The defendants did not call any expert opinion evidence to contradict Mr Myers.

325 Given the stark contrast between the sale price of properties sold by MyDomaine as opposed to those sold by others, it is not surprising that Mr Myers was reluctant to rely upon the properties sold by MyDomaine. In my opinion a prudent valuer such as Mr Myers was right to exclude the properties sold by MyDomaine as 'outliers' when arriving at his opinion of market value.326 I am satisfied on the balance of probabilities, based upon Mr Myers evidence (leaving aside the calculations appended to the third and fourth defendants' closing submissions to the effect that the true market value based upon Mr Myers evidence was between $317,957.05 (10% discount) and $321,066.18 (6% discount)) that the true market value of Cowrie Apartment 216 was $308,200.00.

Were any of the defendants aware of the true market value of Cowrie Apartment 216?

327 Given each of the defendants' role in purchasing, renovating and marketing the apartments, and the evidence relating to the information, research, involvement and knowledge of the price of the Cowrie Apartments, I am satisfied that all of the defendants were aware that the true market value of Cowrie Apartment 216 was well below the asking price of $365,000.

Conclusion as to the claims for negligent failure to provide advice (statement of claim [49(xxii)] & [46(a)]) and the failure to make adequate market enquiries as to the true market value of the property (statement of claim [46(b)])

328 I am not satisfied that the defendants failed to make adequate market enquiries as to the true market value of the property (statement of claim [46(b)]). On the contrary, all the evidence satisfies me that their enquiries and the state of their knowledge was that all the defendants were generally aware of the true market value of the property.

329 I am satisfied that they had a duty of care to the plaintiffs to provide advice to the plaintiffs in circumstances where they held themselves out to be acting for them. That advice included the information, contrary to what they had represented to the plaintiffs, that there were investment units on the market in Palm Cove substantially cheaper than $365,000.

330 In the circumstances all the defendants had a duty of care to the plaintiffs to ensure that they avoided loss and damage and that they breached that duty of care by failing to provide any or adequate advice to avoid loss or damage (statement of claim 46(a) and 49 (xxii)).

331 For the reasons already stated, I am not satisfied that the breach of the duty of care was cured by the provision of any of the documents being PAMD Form 27c or PAMD Form 30c.

Conclusions in relation to the plaintiffs' claim in negligence

332 I am satisfied to the requisite standard being on the balance of probabilitiesthat all of the defendants are liable in negligence in relation to the following claims:

• their failure to warn or provide adequate advice to the plaintiffs to avoid loss or damage (statement of claim 46(a)); and

• Gold Representations• First Gold Representation - statement of claim 18(v): Slide 4 - MyPortfolio 'represent[s] You not the seller'; and

• Fourth Gold Representation - statement of claim 18(ix): Slide 5 – 'We [My Portfolio] provide you an unbiased consultative service'.

333 Whilst it is true that there was no direct evidence that the plaintiffs relied upon the representations, direct evidence of reliance is not always necessary. A conclusion that the plaintiffs relied upon the representations can be reached by way of inference: see the decision of Owen J in Casinos Austria International (Christmas Island) Pty Ltd v Christmas Island Resort Pty Ltd [1998] WASC 387 (16 December 1998) with reference to Dominelli Ford (Hurstville) Pty Ltd v Karmot Auto Spares Pty Ltd [1992] FCA 550; (1992) 38 FCR 471, 482 - 483; Huntsman Chemical Co Australia Ltd v International Pools Australia Pty Ltd (1995) 36 NSWLR 242, 263, 266.

334 In relation to the Gold Representations above, Mr and Mrs Clack were aware, or ought to have been aware of what was contained in the Gold Document. Mr Clack had created the Gold Document. The Clacks had also trained Mr and Mrs Denton for the purposes of the business.

335 On all the available evidence, I am satisfied that all of the defendants knew, or ought to have known, that what was contained in each of these representations was false. The first, fourth and fifth defendants are directly liable for the false representations made to the plaintiffs in the slides (First Gold Representation on slide 4 and Fourth Gold Representation on Slide 5) which were presented to the plaintiffs. The second and third defendants are liable as they knew the relevant representations were false and were negligent as to whether they would be presented to the plaintiffs. The first defendant accepts it is liable for the acts of the fourth and fifth defendants.

336 Although a number of the Purple Representations found in the Purple Document were clearly false, there was no evidence that any reliance was place on them by the plaintiffs.

337 The combination of factors that causally contributed to the plaintiffs' purchase of Cowrie Apartment 216 included their reliance upon the representations made to them by the defendants. This is to be inferred from all of the available evidence including the fact that the plaintiffs, on the evidence of Mrs Murray, were induced to do so. No one fact should be looked at in isolation. This decision to ultimately purchase Cowrie Apartment 216 was one that the plaintiffs made at the end of a series of events that included:

• the Radio Promotion;

• Mrs Murray's conversation with Mrs Clack; and

• the meeting with and presentation conducted by the fourth and fifth defendants on 16 March 2009.

338 Mrs Murray ultimately relied upon those representations as part of a matrix of facts presented to her by the defendants. This lead the plaintiffs to form the view that MyPortfolio, represented by the Dentons, were 'knowledgeable in property investing' and that they were acting in the plaintiffs' best interests. Consequently, they accepted the fourth and fifth defendants' recommendation with respect to the purchase of Cowrie Apartment 216.

339 In all the circumstances all the defendants owed the plaintiffs a duty of care which was breached by all of them.

Deceit - fraudulent misrepresentation (statement of claim 53)

340 The plaintiffs' claim for fraudulent misrepresentation, pleaded generally against each of the defendants at par 53 of the statement of claim, is referrable to all the preceding paragraphs. The paragraph also generally pleads an alternative claim of unconscionable conduct which is no longer pursued.

341 There is some force in counsel for the first to third defendant's submission that the plaintiffs have failed to 'properly plead and particularise their allegations of fraud' (par 105 of the First to Third Defendants' Outline of Closing Submissions). However, despite the manner in which it is pleaded, it is clear that the claim for fraudulent misrepresentation is limited to those representations and matters set out at pars 10 - 21 and par 48 of the statement of claim.

342 I have already set out at par 332 above the two Gold Representations which I am satisfied were false, made negligently by the defendants and relied upon by the plaintiffs.

The law relating to fraudulent misrepresentation or recklessness

343 In order to prove fraudulent misrepresentations, the plaintiff must not only prove that the statement was false, but also that that the defendant had no honest belief in the truth of the representation in the sense in which the defendant intended it to be understood: Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563, 576 and 578.

344 The plaintiffs' case on fraudulent misrepresentation is alternatively put on the basis of recklessness. To establish recklessness, it must be established that a defendant had no reasonable grounds for believing the relevant statement to be true: Derry v Peek(1889) 14 App Cas 337.

345 In Australia, what was said by Lord Herschell in Derry v Peek was adopted by the High Court in Magill v Magill [2006] HCA 51; (2006) 226 CLR 551 [113], and in Banditt v The Queen [2005] HCA 80; (2005) 224 CLR 262 by Gummow, Hayne and Heydon JJ. In Banditt the High Court said that in order to sustain an action in deceit, three things must be proved. They are:

(1) that the false representation was made knowingly, and

(2) without belief in its truth, or

(3) recklessly, careless whether it be true or false.

346 The court went on to say that (3) is but an instance of (2), because one who makes a statement under the circumstances in (3) can have no real belief in the truth of what he or she states.

347 In Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; (1992) 67 ALJR 170, 171 , Mason CJ, Brennan, Deane and Gaudron JJ, made it clear that although the ordinary standard of proof onus in civil litigation is proof on the balance of probabilities, 'the strength of the evidence necessary to establish a fact or facts on the balance of probabilities may vary according to the nature of what it is sought to prove. Where a serious a matter such as fraud is alleged, a tribunal of fact is required to have clear or cogent evidence of that fact before being so satisfied: Briginshaw v. Briginshaw [1938] HCA 34; (1938) 60 CLR 336, 362. Furthermore the High Court in Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (at page 172) went on to say:

When an issue falls for determination on the balance of probabilities and the determination depends on a choice between competing and mutually inconsistent allegations of fraudulent conduct, generalisations about the need for clear and cogent proof are likely to be at best unhelpful and at worst misleading. If such generalisations were to affect the proof required of the party bearing the onus of proving the issue, the issue would be determined not on the balance of probabilities but by an unbalanced standard. The most that can validly be said in such a case is that the trial Judge should be conscious of the gravity of the allegations made on both sides when reaching his or her conclusion. Ultimately, however, it remains incumbent upon the trial Judge to determine the issue by reference to the balance of probabilities.

Have the plaintiffs made out their case in fraudulent misrepresentation against any of the defendants?

348 I am conscious of the gravity of the allegations made. In order to make a finding of fraudulent misrepresentation against any defendant, the plaintiffs would have to satisfy me to the requisite standard that any or all of the defendants had either no honest belief in the truth of the representations in the sense in which the defendants intended it to be understood, or no reasonable grounds for believing the relevant statement to be true. The consideration of these issues requires an objective assessment of what each of the defendant's subjective state of mind was at the time. This assessment needs to be done separately in relation to each of the two Gold Representations I have found were negligently made and separately in relation to each defendant.

349 The second and third defendants were directors of the first defendant. Whilst the second, fourth and fifth defendants gave evidence during the trial, the third defendant did not. Consequently there is no direct evidence of the third defendant's state of mind in relation to the representations. Mr Clack's state of mind in relation to these representations needs to be inferred from the facts that I find proved on the balance of probabilities with reference to the test in Briginshaw v Briginshaw.

350 I have already dealt with the objective evidence that lead to my findings that the First and Fourth Gold Representations were negligently made by each of the defendants. An assessment of the roles played by each defendant is important when considering their respective states of mind. In that regard, the following circumstances which I find proved are relevant and significant:

• On 17 April 2008 the first defendant signed a marketing agreement with Indigo Real Estate.

• The fourth and fifth defendants presented the Gold Document to the plaintiffs during their meeting with them.

• Mrs Clack made the appointment for the plaintiffs to meet with the Dentons.

• Mr Clack had created the Gold Document for the purposes of marketing the properties.

• Mrs Clack was aware of the contents of the Gold Document.

• The Dentons were trained by Mr and Mrs Clack in the business of MyPortfolio.

• The second, third, fourth and fifth defendants had travelled to Palm Cove together and met with Mr Kubblins.

• Prior to the meeting on 19 March 2009, the second to fifth defendants had discussed with Mr Kubblins the purchase of apartments within the Cowrie Complex with a view to renovating them and re-selling them for profit.

351 Whilst the second and third defendants may not have directly presented the Gold Document to the plaintiffs, in all the circumstances the only reasonable inference to draw is that both Mr and Mrs Clack were aware that there was a real likelihood that the Gold Document would be used and relied upon by the Dentons in the course of their presentation to the plaintiffs. The purpose of preparing the Gold Document was to present it to prospective clients.

352 Mrs Clack made a number of attempts to draw a distinction between her role as an agent as against the second and third defendants' role acting through MyPortfolio. I have previously set out above some of her evidence. Specifically in relation to Slide 4 and the First Gold Representation, Mrs Clack's evidence (at ts 560) included that:

• Although Mrs Clack conceded that she was acting for the seller, she did not meet with the plaintiffs.

• She did not agree that the statement 'We represent you, not the seller' was false, because:

• the fourth and fifth defendants met with the plaintiffs; and

• that the fourth and fifth defendants 'were working as their portfolio manager'; and

• Mrs Clack was working for the agent Indigo Real Estate representing the seller.

• She (Mrs Clack) was 'the agent' who 'helped facilitate any documents to get to a settlement'.

• That perhaps the document (Slide 4 of the Gold Document) was a mistake.

353 I have already previously noted that Mrs Clack's evidence lacked credibility. In my view her attempts to draw the distinction between her role as an agent for Indigo Real Estate and the roles of the fourth and fifth defendants were motivated in part by the fact that she knew that some of the representations made in the Gold Document were false, particularly the First Gold Representation. Mrs Clack was anxious to distance herself from the meeting between the fourth and fifth defendants and the plaintiffs. I am mindful that Mrs Clack's evidence was given some time after the events and that I am considering her state of mind at the time the representations were made.

354 In relation to the First Gold Representation, namely that MyPortfolio represented 'you, not the seller', Mr Denton's evidence was that this statement was made in the context of MyPortfolio being a portfolio manager (ts 709). He candidly conceded that MyPortfolio did represent the seller.

355 Mrs Denton's evidence included that she knew that MyPortfolio was receiving a fee from the seller.

356 Whilst the evidence of the second, fourth and fifth defendants was generally unimpressive, I am left in some doubt in relation to the question of whether each of the defendants had no honest belief in the truth of the representations (both the First and Fourth Gold Representations) in the sense in which each of the defendants intended it to be understood. Consequently, I am not satisfied that the plaintiffs have proved that any of the defendants did not have an honest belief in the truth of the First and Fourth Gold Representation in the sense in which any of the defendants intended it to be understood.

357 I am however satisfied to the requisite standard that the first to third defendants had no reasonable grounds for believing that the representation on Slide 4, namely 'MyPortfolio 'represent[s] You not the seller', was true (First Gold Representation) . Nothing said by the second defendant in neither her evidence nor any document tendered in the trial, or any other evidence could lead to a conclusion that there were reasonable grounds for the first to third defendants to believe the statement to be true. At all times they knew that the first defendant was acting for the seller of the property.

358 I am not satisfied that the same conclusion can be reached in relation to the fourth and fifth defendants. Unlike the second and third defendants, they were not the controlling minds of the business. Most significantly, they did not prepare the Gold Document and I am left in some doubt about whether or not they had reasonable grounds to believe the representation to be true.

359 Consequently, I find that the first, second and third defendants are liable in relation to the plaintiffs claim in fraudulent misrepresentation as they knew the First Gold Representation was false, were recklessly indifferent as to whether it would be presented to the plaintiffs and had no reasonable grounds for believing that the representation on Slide 4, namely MyPortfolio 'represent[s] You not the seller', was true.

Did the plaintiffs consent to the conflict and profit?

360 The defendants argue that since the plaintiffs signed the PAMD Form 27c, it binds them to their acknowledgement and consent to the potential conflict and profit by MyDomaine, notwithstanding they may not have read the form: Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd(2004) 219 CLR 165, [42] - [47].

361 The test for the defence of consent is 'fully informed consent' (Phipps v Boardman [1967] 2 AC 46).

362 In BarescapePty LtdvBacchus HoldingsPty Ltd (No 9) [2012] NSWSC 984, Black J noted [154]:

Informed consent generally requires that a fiduciary disclose to the beneficiary all information in his or her possession in relation to the proposed transaction which was relevant to the beneficiary's consideration of whether or not to consent to it, and at least the material facts:

Boardman v Phipps

[1967] 2 AC 46 at 93, 98, 112;

New Zealand Netherlands Statement of claimiety 'Oranje' Inc v Kuys

[1973] 2 NZLR 163; 1 WLR 1126; 2 All ER 1222 at 1227;

Spellson v George

[1992] NSWCA 254; (1992) 26 NSWLR 666 at 670 per Handley JA; at 685 per Young AJA. It is not sufficient for a fiduciary to disclose information which is sufficient only to "put the principal on inquiry":

New Zealand Netherlands Statement of claimiety 'Oranje' Inc v Kuys

at 1227. The nature of existing legal rights between the parties may be material circumstances in respect of such consent:

Short v Crawley (No 30)

[2007] NSWSC 1322 at [619].

In Re McGrath & Anor (In their capacity as liquidators of HIH Insurance Ltd)

[2010] NSWSC 404; (2010) 78 ACSR 405, Barrett J referred to that decision in noting that the task of explanation inherent in a request to be excused from a fiduciary requirement is an onerous and exacting one.

363 The relevant level of sophistication and business experience of the persons to whom disclosure must be made will be a factor in determining whether disclosure was sufficient in all the circumstance: Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89.

364 The plaintiffs were clearly and obviously unsophisticated investors. Furthermore, given the findings in relation to the falsity of the two Gold Representations identified above, it is clear that the defendants did not disclose all relevant information to the plaintiffs before they signed the contract of sale.

365 All of the circumstances discussed above (at [222] – [247]) in relation to whether the provision of PAMD Forms 27c and 30c cured the misrepresentations are relevant to this issue. As already noted, the information provided by the second defendant on PAMD 27c created more confusion. Consequently, I am satisfied that the plaintiffs did not provide informed consent when they signed PAMD Form 27c. The defendants have not satisfied me that the plaintiffs consented to the potential conflict and profits of MyDomaine.

Contributory Negligence

366 If any action or inaction on the part of the plaintiffs contributed to them paying more for Cowrie Apartment 216 than it was worth, then any liability for the breach of a duty of care by the defendants may be reduced in an amount that is just and equitable having regard to the plaintiffs' share in responsibility for such loss, pursuant to s 5AK of the Civil Liability Act 2002 (WA).

367 The defendants plead a number of issues which they allege caused or alternatively contributed to the plaintiffs' loss. These include:

(a) The identification of the first defendant as agent for vendor in the Reference Schedule and General Conditions of the contract of sale;

(b) The warning to obtain legal advice on the PAMD 30C;

(d) The appointment of Cameron Price as their solicitors; and

(e) That the Murrays did not obtain legal advice or an independent valuation within the 5 day cooling off period.

368 Whilst I am not satisfied that any of the documents presented to the plaintiffs identified the first defendant as acting for the seller of the property, the PAMD Form 30c (exhibit 5) contained notices in large emboldened font on the front page warning the plaintiffs to obtain independent legal advice and to obtain an independent valuation before signing the contract or during the cooling-off period.

369 Whilst the plaintiffs were entitled in the circumstances to believe that the first to fifth defendants were representing their interests, I am satisfied that the plaintiffs negligently contributed to the loss they suffered by failing to heed the warnings and failing to obtain the recommended advice and valuation. Consequently, in all the circumstances I am of the view that any award of damages that they might be entitled to should be reduced by 10%.

Loss and Damage

370 I have already concluded that, on the evidence of Mr Myers, the true market value of the property at the time of contract was $308,200.

371 The first to third defendants contend that the over market rent benefit should in fact be between $27,957.05 and $31,066.18. This according to the first to third defendants, takes the value of Cowrie Apartment 216 to between $317,957.05 and $321,066.18. The relevant calculations were set out in a schedule provided to the court which was attached to the First to Third Defendants' Outline of Closing Submissions. Mr Myers made it clear that a number of factors needed to be considered (ts 313) when doing the relevant calculations.

372 I accept the plaintiffs' submissions to the effect that whilst the calculations may be mathematically correct, there may be differences in methodology, caveats or inputs which could potentially affect the extent to which they apply. These calculations were never specifically put to Mr Myers in cross-examination. The correctness of the amounts is not conceded by the plaintiffs. It would not be appropriate to adopt the calculations provided by the first to third defendants after the evidence was completed.

373 On the evidence I am satisfied that at the time of the contract Cowrie Apartment 216 was worth $308,200.

374 Since the plaintiffs paid $350,000 for the apartment, and allowing for a 10% discount for contributory negligence, subject to the further issue of the 'taxation benefits' they received, they are entitled to damages in the sum of $37,620.

375 I note that the parties agree that the issue of the 'taxation benefits' received by the plaintiffs may require a grossing up of the judgement sum and that these issues should be the subject of conferral after judgement but prior to the handing down of final orders.

Plaintiffs claim for exemplary damages

376 The plaintiffs seek an award of exemplary damages on the basis that the defendants deliberately set out to market properties in a way which represented to prospective purchases that they were being offered services and expertise to their benefit whilst simultaneously concealing the commercial relationship between the defendants and the vendors of such properties. The plaintiffs submit that the defendants conduct 'exhibited the kind of conscious and contumelious disregard of their rights as would justify an award of exemplary damages as both punishment and deterrence per Lord Diplock in Cassell & Co Ltd v Broome (No 2) [1972] AC 1136.

377 Exemplary damages cannot properly be awarded in cases of negligence where there is no conscious wrongdoing by the defendant: Gray v Motor Accident Commission(1998) 196 CLR 1 [22].

378 Since the plaintiffs have not established deliberate or conscious wrongdoing against the fourth and fifth defendants, no damages could be properly awarded against them for exemplary damages.

379 Whilst I am satisfied that the plaintiffs have established that the first to third defendants are liable for fraudulent misrepresentations in the sense that they have established that the first to third defendants had no reasonable grounds for believing that the representation on Slide 4, namely MyPortfolio 'represent[s] You not the seller' was true, nonetheless I am not satisfied that the first to third defendants committed 'conscious wrongdoing in contumelious disregard of another's rights': Gray v Motor Accident Commission(1998) 196 CLR 1 [14].

380 The first to third defendants' conduct falls short of that required to satisfy the court that they have acted deliberately and fraudulently in contumelious disregard of the plaintiffs' rights to cause damage to them. Consequently, there is no cause to award exemplary damages in the present case.

Conclusion

381 Each of the first to fifth defendants is liable in relation to the plaintiffs claim for negligent misrepresentation in relation to the two Gold Representations identified as being the First and Fourth Gold Representations.

382 Each of the first to fifth defendants is liable in relation to the plaintiffs' claim in negligence in that the defendants' failed to advise the plaintiffs of the risks associated with property investment.

383 Each of the first to third defendants is liable in relation to the plaintiffs claim against them for fraudulent misrepresentation in relation to the First Gold Representation.

384 All other claims are dismissed.

385 The final amounts of damages and the appropriate orders are to be determined after the parties have conferred in relation to the issue of the taxation benefits received by the plaintiffs. I will hear the parties further on these issues.

Murray v Mydomaine Pty Ltd

[2016] WADC 109

28 JULY 2016

MURRAY -v- MYDOMAINE PTY LTD [2016] WADC 109