Opalswan Pty Ltd v Commercial & General Acceptances Pty Ltd
[1996] FCA 1032
•18 Nov 1996
CATCHWORDS
TRADE AND COMMERCE - consumer protection - misleading and deceptive conduct - representations - reliance - causation - purchase of three earthmoving scrapers - provision of finance - representations as to availability of finance and settlement - whether misleading and deceptive - whether representor a broker - damages
EQUITY AND COMMON LAW - economic duress and unconscionable conduct - sale of three earthmoving scrapers - conclusion of contract in respect of two scrapers - request for variation or acceleration of payments by other party to contract - other party as potential financier of purchase of third scraper - whether purchaser at a special disadvantage - whether request for payment unconscionable - whether request for payment by financier unconscionable
TRADE AND COMMERCE - Consumer Protection - unconscionable conduct - as for Equity and Common Law
Trade Practices Act (Cth), s4(1), s51A, s51AA, s51AB, s52, s75B
Fair Trading Act 1987 (WA), s5, s9, s10, s11, s11(2), s5
Federal Court Rules, O11 r10
Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 42 FCR 470
Adour Holdings Pty Limited (In Liquidation) v Commonwealth Bank of Australia (1991) ATPR 41-147
Bateman v Slatyer (1987) 71 ALR 553
Bright v Sampson and Duncan Enterprises Pty Ltd (1985) 1 NSWLR 346
Bromley v Ryan (1956) 99 CLR 362
Byrd v Nunn (1897) 7 Ch D 284
Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447
Crescendo Management Pty Ltd v Westpac Banking Corp (1988) 19 NSWLR 40
Davie v New Merton Board Mills Ltd [1959] AC 604
Dimskal Shipping Co SA v International Transport Workers Federation [1992] 2 AC 152
Elna Australia Pty Ltd v International Computers (Aust) Pty Ltd (No 2) (1987) 16 FCR 410
Enzed Holdings Ltd v Wynthea Pty Ltd (1984) 57 ALR 167
Gates v The City Mutual Life Assurance Society Ltd (1986) 150 CLR 1
Gould v Vaggelas (1958) 157 CLR 215
James v Australia and New Zealand Banking Group Ltd & Ors (1986) 64 ALR 347
Jones v Dunkel (1959) 101 CLR 298
The King v Hay [1924] VLR 97
Kizbeau Pty Ltd v W G & B Pty Ltd (1995) 131 ALR 363
O'Brien v Komesaroff (1982) 150 CLR 310
In re Robinson's Settlement; Grant v Hobbs [1912] 1 Ch 717
Shepherd v Noyes Bros Pty Ltd (1985) ATPR 40-588
Tefbao Pty Ltd v Stannic Securities Pty Ltd (1995) ATPR 41-391
Wardley Australia Ltd v Western Australia (1992) 175 CLR 514
Warnock v ANZ Banking Group Ltd (1989) ATPR 40-92
Wheeler Grace & Pierucci Pty Ltd v Wright & Anor (1989) ATPR 40-940
OPALSWAN PTY LTD v COMMERCIAL AND GENERAL ACCEPTANCES PTY LTD and IAN SCOTT
NO WAG 86 OF 1994
R D NICHOLSON J
PERTH
18 NOVEMBER 1996
IN THE FEDERAL COURT OF AUSTRALIA )
WESTERN AUSTRALIA DISTRICT REGISTRY )
GENERAL DIVISION ) NO WAG 86 OF 1994
B E T W E E N: OPALSWAN PTY LTD
Applicant
and
COMMERCIAL AND GENERAL ACCEPTANCES PTY LTD
First Respondent
and
IAN SCOTT
Second Respondent
MINUTE OF ORDER
JUDGE MAKING ORDER: R D NICHOLSON J
DATE OF ORDER: 18 NOVEMBER 1996
WHERE MADE: PERTH
THE COURT ORDERS THAT:
Judgment for the applicant against the first respondent for $89,000.00.
Issue whether judgment should be entered against second respondent reserved for submissions.
Costs reserved for submissions.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
WESTERN AUSTRALIA DISTRICT REGISTRY )
GENERAL DIVISION ) NO WAG 86 OF 1994
B E T W E E N: OPALSWAN PTY LTD
Applicant
and
COMMERCIAL AND GENERAL ACCEPTANCES PTY LTD
First Respondent
and
IAN SCOTT
Second Respondent
CORAM:R D NICHOLSON J
DATE:18 NOVEMBER 1996
PLACE:PERTH
REASONS FOR JUDGMENT
INDEX
Page No
Witnesses5
Admissibility of evidence on Prestige Securities 6
THE SEQUENCE OF EVENTS 7
Initial contact 7
Incorporation of Opalswan 8
Liquidation of Productive Parts 9
First offer9
First written offer 10
First representation (par13) 11
Business card 11
Caratti's role 11
Second written offer 12
Arrangements with Grangefield 12
The Strathfield Deed 13
Second representations (par20) 13
Third written offer 13
The Archibalds Contract 14
Page No
Third & Fourth representations (pars21 & 22) 15
2 October agreement and the fifth representation 16
(par 23)
Possession of two scrapers 20
Sixth representation (par27) 21
Threatened termination of the Archibalds Contract 22
Demand and Seventh representation (par30) 23
Eighth representation (par32) 26
Continuing negotiations 26
Additional payment 27
Ninth representation and CAGA Loan Deed (par34) 27
Purchase of spare parts - tenth, eleventh,
twelfth, thirteenth and fourteenth
representations (pars36, 37, 38, 40 and 43) 29
Further additional payment 31
Further December developments 32
Carmille as alternative lender 34
Written authority 36
Fifteenth representation (par49) 37
CAGA as lender (again) 37
Third Strathfield Deed 38
Productive Parts writ 39
Carmille again 40
Strathfield again 40
8 March settlement deadline 41
Zel as purchaser of 089 42
THE TRADE PRACTICES CLAIMS 43
Whether Scott Agent for CAGA 44
Whether Scott directly and knowingly concerned 44
CAGA Relationship to Opalswan 44
CLAIMS FOR ECONOMIC DURESS AND UNCONSCIONABLE CONDUCT 50
Page No
DAMAGES54
The alternative bases for damages 56
Revenue Account Claim 56
The Capital Account Claim 63
The Claim for Fees 65
Hiring of alternate Equipment 65
Cost of Repairs, Parts and Labour 66
Conclusion67
APPENDIX
REPRESENTATIONS AS FOUND 69
TABLE 1
ORIGINAL PROPOSAL 57
TABLE 2
ZEL SCHEME - As at 10 March 1994 58
REASONS FOR JUDGMENT
The applicant ("Opalswan") seeks damages, firstly, in respect of alleged advice and confirmations given by the second respondent ("Scott") allegedly as servant and agent of the first respondent ("CAGA"). It is alleged such advice and confirmations were false or in the alternative were made without reasonable grounds to believe they were true. It is further alleged that they were related to future matters, the advice and confirmations were misleading and deceptive conduct by operation of s51A of the Trade Practices Act (Cth) ("the TPA") and s9 of the Fair Trading Act 1987 (WA) (the "FTA").
Damages are sought, secondly, in respect of certain conduct said to constitute economic duress and unconscionable conduct at common law and in equity and unconscionable conduct contrary to s51AA of the TPA and s11 of the FTA.
CAGA carried on business in its own right and under the business name "CAGA Finance". It is pleaded that the capacity in which CAGA acted in these alleged events was as agent for (1) Ross Norgard ("Norgard") initially the administrator and later the liquidator of Productive Parts Corporation Pty Ltd ("Productive Parts") and (2) various known and unknown financiers but including Strathfield Holdings Pty Ltd ("Strathfield"). In addition, it is pleaded CAGA "subsequently acted as its own principal for the purposes of providing finance for the purchase of the equipment" to which the pleadings relate.
As a further preliminary matter it is pleaded that at all material times on and after 4 August 1993 Frederick Ronald Johnson ("Johnson") and Bernard Wayne Johnson ("B Johnson") (collectively "the Johnsons") were directors of Opalswan. Additionally it is alleged John Michael Caratti ("Caratti") was and acted as an agent of Opalswan after the same date.
The central focus of these pleadings is the intended purchase by Opalswan of three motor scrapers (collectively described as "the Equipment"), namely:
·one caterpillar 651E serial no 89Z00093
·one caterpillar 651E serial no 89Z0089 ("the 089 scraper")
·one caterpillar 631D serial no 24 W03338
The two scrapers other than the 089 scraper are collectively described as "the two scrapers".
Opalswan's claim is that prior to 4 August 1993 the Johnsons and Caratti were advised by Scott CAGA had authority from both Productive Parts and a financier to arrange the sale of the Equipment and the finance to facilitate it. It is said that as a consequence Opalswan was incorporated to be the purchaser of the Equipment. The claim is constituted by a recitation of the advice, confirmations and conduct to which the claim relates and to which individual reference will be made. In short, Opalswan's case is that it was strung along concerning the availability of finance until a point had been reached where it had no choice but to implement the measures which it says gave rise to the damages it now claims.
Witnesses
Opalswan's case was supported by evidence from Johnson; P Townsend, Operations Manager of JJ Archibald & Co Pty Ltd ("Archibalds"); Caratti, unpaid Manager of Opalswan until he became a director in 1995; De Rosa, the "in-charge" accountant in the office of the liquidator; JJ Burton and N W Strickland, auctioneer valuers; R P Riseley, Contracts Manager for Henry Walker Contracting Pty Ltd; and R M Love ("Love"), business manager accountant and guarantor of certain debts of Productive Parts.
The only witness for CAGA was CR Hartz, director. Scott also gave evidence, making a brief statement and then opening himself to cross-examination from each other party.
I found De Rosa to be a witness who had maintained thorough records of all steps and conversations in which he was involved in the matter. In my opinion he was a very credible witness whose evidence is to be preferred to any evidence with which it is in conflict.
Admissibility of evidence on Prestige Securities
Hartz testified in his evidence‑in‑chief that in mid-1993 Scott's company Prestige Securities was engaged as a consultant to act as a finance broker. Objection to the admissibility of that evidence was taken on the ground that Prestige Securities is not referred to in CAGA's defence to the allegation in par 3 of the Amended Claim that Scott was the servant or agent of CAGA. CAGA did not admit this paragraph and Scott denied it. No prior cross-examination on the point had occurred. No application was made by CAGA to amend its defence to raise the question of Scott's relationship through a company. The evidence was heard subject to later resolution of the objection.
The evidence was such that, if not specifically pleaded, it took the other party by surprise and raised issues of fact not arising out of the preceding pleading: Federal Court Rules ("FCR") O11 r10. In my opinion the issue of whether Scott acted as an agent is so substantial an issue raised on the claim that it would be unjust to admit, unheralded by any pleading, evidence germane of Scott having acted through a company. See In re Robinson's Settlement; Grant v Hobbs [1912] 1 Ch 717 at 727-8; Davie v New Merton Board Mills Ltd [1959] AC 604; O'Brien v Komesaroff (1982) 150 CLR 310 at 317‑8; Bright v Sampson and Duncan Enterprises Pty Ltd (1985) 1 NSWLR 346 at 350 and 353; The King v Hay [1924] VLR 97 at
101; Byrd v Nunn (1897) 7 Ch D 284 at 285-6 and 287-8. I therefore allow the objection.
However, I do not consider that even if that evidence were admitted it would lead to a different result. There was no discovery in relation to Prestige Securities. No proof of the existence of the company was tendered. Neither Hartz nor Scott gave evidence of any legal relationship between Prestige Securities and Scott. Hartz testified Scott was a director of it but Scott denied he was. No documentation supported the alleged relationship between CAGA and Prestige Securities, for example evidence of the establishment of the consultancy arrangement or of payment to Prestige Securities. The evidence if admitted would not have carried any weight.
Furthermore, even if the evidence carried sufficient weight to establish a relationship between CAGA and Prestige Securities, it would remain for argument whether CAGA nevertheless held out Scott as its agent. The evidence of Scott was that potential clients of CAGA were not told about Prestige Securities and he admitted he did not tell Opalswan about Prestige Securities.
THE SEQUENCE OF EVENTS
The evidence discloses the following sequence of events.
Initial contact
In July 1993 Stephenson, whom Caratti then knew to be interested in a company managing the Equipment, contacted Caratti and advised him there was an opportunity to obtain an interest in the Equipment and the person to see was Scott.
Some time later Caratti became aware the owner of the Equipment was Productive Parts, a company engaged in earthmoving work. It went into voluntary administration on
15 July 1993. Caratti approached Johnson who was interested with him in Grangefield Holdings Pty Limited ("Grangefield"). Johnson had dealt with Scott over a number of years. Caratti therefore arranged for Johnson to inquire of Scott concerning the matter. Caratti did not tell Johnson to make known his involvement because he considered his name was not in good standing in the finance world.
After the inquiry Scott spoke to the administrator of Productive Parts ("Norgard"), and to its financier Strathfield, the principal of which was Coles. Caratti's evidence was he suggested to Johnson to approach CAGA and Scott from CAGA concerning purchase of the Equipment and a package of finance. Scott testified Johnson approached him in the above terms; he approached Norgard who said he was interested in an offer; he then had discussions with Coles of Strathfield who said it could arrange suitable finance; he informed Johnson of these responses. Scott's evidence corroborates Johnson's evidence that Strathfield was the financier to the purchase of the Equipment by Productive Parts, which had by then gone into liquidation. I therefore find Scott advised Johnson that both Productive Parts and Strathfield as financier would agree to the sale of the Equipment and finance to facilitate the same. I do not find, as par7 of the Claim pleads, that Scott advised Johnson CAGA had the authority of those entities to arrange the sale and finance it.
The administration of Productive Parts had come about at the instance of Love, the guarantor to the purchase of the Equipment by that company. Love testified he was approached by Scott who told him he had a buyer and finance had been arranged through CAGA. Scott denied this. Love informed De Rosa.
Incorporation of Opalswan
Caratti and Johnson did not want to assume the risk of acquiring the Equipment in Grangefield, so they brought about
the incorporation of Opalswan on 4 August 1993. Their intention was for Opalswan to hold title to the Equipment and for it to be leased to Grangefield for use. The Johnsons became the directors and shareholders in Opalswan. Johnson and Caratti's evidence was Johnson held his shares in trust for Caratti. In cross-examination Johnson accepted that when he first dealt with Archibalds, Scott and De Rosa he had not disclosed Caratti's involvement (in Opalswan or Grangefield) although he had done so to Coles. Townsend testified in cross-examination he did not know Caratti was involved when he entered into arrangements with Johnson and only learnt about it two months later.
Liquidation of Productive Parts
On 12 August 1993 Norgard ("the liquidator") was appointed liquidator of Productive Parts.
First offer
It is pleaded that around the end of August 1993 Johnson for Opalswan orally agreed with Scott (as agent of CAGA) that he would arrange the sale and financing of the Equipment for $430,000.
It was Johnson's evidence that near the end of August 1993 Opalswan agreed with Scott to buy the Equipment free of encumbrances for $430,000. Johnson said there were to be separate hire purchase agreements for each scraper with respective residuals of $30,000 on each 651E and $20,000 on the 631D. Payments were to be in arrears over 36 months with interest at 12.45%.
With respect to scraper 089, which was in a disassembled state, it was proposed $20,000 of the purchase price would come back to the purchaser to cover its costs of reassembling the scraper.
Caratti gave no evidence on this. Scott testified only to a series of offers. The case for Opalswan did not lead evidence on Scott's authority to conclude this particular agreement. It is apparent neither Scott nor CAGA had title. There is no evidence to support a finding Scott ever had the authority of the liquidator. I find the agreement pleaded as the First Agreement (par9 of the Claim) is not made out. However, I find an offer in the above terms was made on behalf of Opalswan to Scott.
First written offer
Shortly afterwards Opalswan saw the prospect of undertaking work in Collie and Johnson expressed a need for the Equipment to Scott. He was advised by Scott the price would be increased to $450,000. Scott told him there would be a brokerage fee of $5,000. Johnson agreed. Scott requested him to put the deal in writing. He did so in a letter dated 2 September to CAGA (Attn Scott). The letter recorded agreement to pay a fee of $5,000 to CAGA refundable if the deal did not proceed. When delivering the letter to Scott on that day, Johnson paid a bank cheque for $5,000. A receipt for it was issued in the name of CAGA, describing the payment as being for an "application fee". In doing this he acted on the instruction of Caratti.
It is apparent the payment was made pursuant to the agreement recorded in the letter.
The letter was addressed to CAGA. In cross-examination Johnson testified that up to that date he had thought CAGA were the lenders. Scott informed the liquidator Opalswan had presented the offer.
It is pleaded (par11) that agreement was reached but as CAGA did not have title and as the receipt characterised the payment as an application fee, I consider the letter constituted an offer.
First representation (par13)
I find that on 2 September Scott advised Johnson the owner of the Equipment approved the sale and finance had been approved. He told Johnson the finance would be received by Opalswan on 10 September 1993 ("the first representation"). Scott affirmed this on 7 September.
Hartz first heard of Opalswan when Scott reported to a regular fortnightly meeting about September or October on new applications for finance.
Business card
In early September at the offices of CAGA Scott gave to Caratti a business card showing the name of CAGA on which Scott was described as "Manager". Scott accepted he had used the card and testified he regarded himself as one of the managers. He could not recall whether he had Hartz' permission to use the card but he said it was one of a number of cards he used. He thought he should have sought Hartz' permission to use the card. Hartz testified the card was not authorised and he would have objected to it had he seen it. He could not say the card had not been arranged by his office.
I find Scott used the card which had been arranged by CAGA's office. The prima facie position arising from the nature of the card that it was authorised is not displaced by the above testimony. No evidence was led of the system attaching to the issue of cards, the other cards used by the office or accounting records pertaining to the printing of cards to support a finding the usage was beyond authority.
Caratti's role
Caratti's evidence was that on 3 September he visited Scott at CAGA concerning another matter. Opalswan was also discussed.
He said he informed Scott he was behind Opalswan and was a silent shareholder in it. Caratti's evidence was Scott said he knew this from discussions with Stephenson. Caratti testified Scott assured him the purchase and the finance were definitely going to occur.
Scott's evidence was he did not know of Caratti's involvement in Opalswan until November/December although he spoke to him on another matter involving the financing of the purchase of a bulldozer.
Second written offer
On 15 September Johnson for Opalswan, acting at the request of Scott, wrote to the liquidator of Productive Parts submitting the offer to purchase the Equipment for $450,000 on an "as is, where is" basis but in an up and running condition. Johnson testified in cross-examination he had some idea at that time there was a lender other than CAGA and that, although he had not dealt with a liquidator before, he appreciated possession could not be given until the assent of the person selling the scrapers had been obtained. Johnson's evidence in chief was that on that day Scott told him the finance had been approved and the owner had approved. In cross-examination he said this occurred within the next couple of days.
Johnson therefore thought Opalswan had a deal, particularly as the price offered was what had been proposed by the liquidator through Scott.
On 16 September Scott advised De Rosa he had been able to arrange independent finance for the sale of the Equipment. He did not identify the source of finance.
Arrangements with Grangefield
Earlier in September Caratti and Johnson resolved Grangefield would meet all the debts of Opalswan so that the latter was to be only a holding company.
The Strathfield Deed
Scott accepted in cross-examination for CAGA that around this time he had a willing seller, an anxious buyer and a willing financier in Strathfield and he was conveying this to Johnson.
Around 20 September 1993 Scott requested Opalswan to execute a Deed of Loan and Chattel Mortgage with Strathfield ("the first Strathfield Loan Deed") in connection with the agreed purchase and financing of the Equipment. This was then done, although the deed is dated 30 September 1993.
Caratti accepted in cross-examination that therefore as at 20 September he knew the financier was going to be Strathfield.
Second representations (par20)
Scott was aware the work had to be undertaken on 27 September. He accepted he told Johnson on 21 and 22 September finance was set and the money coming. Likewise he accepted that on 24 September he told him he would do his best to have settlement that day. Further he accepted on 27 September he said to Johnson finance would be available by 28 September. I find that in the weeks commencing 20 and 27 September Scott confirmed to Johnson on numerous occasions settlement would take place and possession of the Equipment would be given to Opalswan within a few days or less ("the second representations").
Third written offer
On 21 September Johnson on behalf of Opalswan signed a letter to the liquidator in terms prepared by Caratti at the request of Scott. The letter purported to confirm a conversation between Scott, Love and Johnson on that date stating how certain parts were be released and the price was to be
$450,000 with $20,000 being returned to Opalswan to complete the rebuilding of the engine of the 089 scraper.
When Johnson had delivered the letter to Scott, Scott asked that a more detailed letter be written to the liquidator. Scott notated the letter with suggested amendments which were incorporated. The amended letter was sent under the signature of Johnson as director to the liquidator dated 22 September. It confirmed the offer to purchase the Equipment unencumbered for $450,000. The 089 scraper was to be rebuilt. $20,000 was to be repaid to Opalswan for purchase of new parts for this scraper and completion of rebuilding. These matters were expressed to be subject to the financing arrangements set out in the letter of 2 September 1993 to Scott. The letter had been preceded by discussions between the liquidator, Coles and Scott and came as no surprise.
On 23 September the liquidator wrote to Opalswan accepting the letter offer of 22 September subject to certain qualifications ("the counteroffer"). Settlement was to be within seven days. The $20,000 was to be paid to Opalswan later on the settlement date. Details were provided concerning the location and delivery of each scraper. The liquidator requested Opalswan to contact CAGA's Scott to arrange settlement at the earliest possible date.
On 23 September, at Scott's request, Johnson wrote to CAGA (Attn Scott) setting out a cash flow projection said to show capacity to pay for the Equipment. This was requested by Scott for Strathfield and in supplying it Johnson was in no doubt Strathfield was then the intended financier.
The Archibalds Contract
The tender for the work at Collie was won by Archibalds. Johnson for Grangefield arranged for Archibalds' to use the Equipment for that work. On 23 September 1993 Archibalds
placed an order with Grangefield for supply of the two scrapers for work to commence on 27 September ("Archibalds Contract"). It follows from the fact the order was only for two scrapers that it was known at the date of the order the 089 scraper was not then available. This inference is supported by evidence that Johnson was aware at the time the 089 scraper would take a week to re-assemble.
When Scott received the purchase order he obtained Johnson's consent to amend the name of the supplier to Opalswan on the basis that Opalswan was the party in respect of which finance was being sought. There is no evidence that Archibalds novated the contract with Opalswan. To the contrary there is evidence of Townsend that he met Johnson when he represented Grangefield at a tender meeting. It is apparent Townsend dealt with Johnson as the representative of Grangefield. In my opinion Opalswan's case does not establish that it ever had a contract with Archibalds. The contract was between Archibalds and Grangefield.
A copy of the counteroffer was returned to the liquidator on 2 October with an acceptance executed by the directors of Opalswan. De Rosa in cross-examination accepted the counteroffer was subject to finance.
Third & Fourth representations (pars21 & 22)
It is pleaded that on 1 October 1993 Scott advised Caratti Strathfield held insufficient funds to finance the whole of the Equipment but it could finance the two scrapers within a week ("the third representation"). Caratti's evidence was to that effect, adding that Scott requested a new deed executed to reflect the purchase price of $270,000 for the two scrapers. He testified he accepted this variation on the condition the 089 scraper would follow in a matter of days. His evidence was Scott assured him it would ("the fourth representation"). In cross-examination he stated he believed
Scott's assertion which was that settlement and possession would be given in that time.
Scott denies this evidence on the basis that he did not know of Caratti's involvement until later.
Johnson testified to Scott having advised "us" on 1 October that Strathfield did not have enough money to set the three scrapers.
De Rosa testified in cross-examination that Coles, the Johnsons and Love were all expressing to the liquidator the view that if he wished to sell the Equipment in the short term he should do so in a manner which would enable Opalswan to honour its contract with Archibalds.
Caratti's evidence is corroborated by Johnson and is consistent with the stage to which matters had developed as testified to by De Rosa. I accept Caratti's evidence and in doing so also reject Scott's evidence that he had no contact with Caratti on this matter until November.
2 October agreement and the fifth representation (par 23)
I reject Scott's evidence concerning the events of 1-3 October where it conflicts with the evidence of De Rosa or other witnesses. I therefore do not accept Scott left the Johnsons to deal with De Rosa and Love or that he did not attend the meeting on the morning of 2 December. Relying in particular on the evidence of De Rosa I find the events of 2 October occurred as follows.
Settlement had not occurred on 30 September. Nevertheless there was a commonality of interest among all parties in the three machines being sold and purchased while the Archibalds contract was on foot.
On 1 October 1993 Opalswan through Caratti agreed to accept the two scraper agreement in reliance on the third and fourth representations made by Scott.
De Rosa, being aware that Strathfield may only be able to finance the two scrapers, attended on the liquidator's solicitors and had prepared a draft "Memorandum of Understanding". The Memorandum provided for Strathfield to finance the sale by Productive Parts to Opalswan of the two scrapers, the payment of the purchase price and the application of it by the liquidator. It included the following clause:
"[CAGA] agrees to use its best endeavours to arrange finance to enable Opalswan to complete the purchase of the [089 scraper]...by not later than 15 October 1993 failing which Strathfield will provided finance by no later than 25 October 1993 or such other date as may mutually be agreed between [Productive Parts] and Strathfield"
De Rosa discussed the draft with the liquidator who instructed him the provision for CAGA to "use its best endeavours" was not acceptable to him. He required an undertaking from CAGA it would unequivocally arrange the finance.
De Rosa attended at CAGA's office on the morning of Saturday 2 October and discussed the draft Memorandum with Scott. Scott approved of it, including amendments to the above clause so that it then read:
"[CAGA] undertakes to arrange finance to enable Opalswan to complete the purchase of the [089 scraper] ... by no later than 15 October 1993"
On the Saturday afternoon, De Rosa again attended upon the liquidator's solicitors who prepared a further draft Memorandum of Understanding which purported to embody the adjustments discussed with the liquidator and Scott.
On the morning of the Saturday Opalswan executed an agreement to purchase the 089 scraper "as per previous discussions"
("the 089 agreement"). Caratti's evidence was this had been dictated by Scott, which Scott denied. At the same time Opalswan executed a substitute Deed of Loan and Chattel Mortgage with Strathfield ("the second Strathfield Loan Deed") providing for the advance of $270,000 to finance the purchase in the Two Scraper Agreement. It also executed a letter of offer from Opalswan to Productive Parts ("the fifth written offer") offering to purchase scraper 089 for $180,000. This was prepared by De Rosa at the liquidator's request. The offer was expressed to be "subject to finance but [CAGA] (Mr I Scott) will give you an undertaking to provide the necessary finance simultaneously with this offer."
The offer provided for settlement on the 089 scraper within 14 days or as earlier agreed. De Rosa testified there was agreement to settle within 7 days.
Around midday on 2 October Johnson delivered to Scott the 089 agreement and the fifth written offer. Scott requested him to take them to De Rosa, which he did. Scott accepted he then told Johnson not to worry about the finance for the 089 scraper because that would be set within a few days ("the fifth representation").
The amended Memorandum of Understanding was taken to a meeting on the evening of the same day attended by Coles, Love, Johnson and De Rosa. Scott declined to attend. Other amendments were made and these were the subject of detailed discussion. Johnson therefore explicitly or implicitly acceded to the amendments. The clause providing for CAGA's obligation in relation to the 089 scraper appeared in its original unaltered form. It was amended to convert the obligation on CAGA to "use its best endeavours" to one of undertaking to arrange finance, with the added statement that "failing which Strathfield will use its best endeavours to provide finance by no later than 25 October 1993" or later agreed date. The document as so amended will be described as
"the varied Memorandum of Understanding." It was executed on behalf of Strathfield, M & W Holdings and Love. Neither the liquidator nor CAGA executed the document.
De Rosa left the meeting considering finance was a foregone conclusion because either CAGA or Strathfield would fund the settlement. Love had learned at the meeting that Strathfield was the financier. However, he considered Strathfield had made it clear at the meeting it did not want to finance the 089 scraper. Love understood the effect of the varied Memorandum was CAGA had undertaken to arrange finance, failing which Strathfield would do so. De Rosa regarded the provision for Strathfield to use its best endeavours as no more than a prudent commercial fall-back position.
That night the sale of the two scrapers was finalised (the "Two Scraper Agreement").
On 3 October De Rosa advised Scott of what had occurred at the meeting on the evening of 2 October and asked Scott to confirm the availability of finance. Scott then faxed a letter dated 2 October on the letterhead of CAGA Finance which confirmed "we have a private lender prepared to advance $180,000 on the third piece of equipment subject to registration of securities over the equipment tendered." Scott's evidence in cross‑examination was that the "private lender" referred to in this letter was Strathfield. This is not consistent with the evidence of De Rosa, Johnson and Love that at the meeting on 2 October Coles had indicated Strathfield could not fund the 089 scraper. It is only explicable on the basis Scott had not attended the meeting on the Saturday night or been properly informed of its outcome. De Rosa's evidence was that he told Scott of the "events of the previous day" on 3 October and of the understanding CAGA would give an undertaking to provide finance. He also testified he asked Scott to confirm such undertaking that day and Scott did so. Scott's evidence is inconsistent with what De Rosa testified he told him. Even if
De Rosa's briefing did not specifically refer to the change made to the document to merely oblige Strathfield to use its best endeavours, the advice of the obligation which now fell on CAGA would not have left Scott in the position where he could have regarded Strathfield as the lender. What De Rosa told Scott carried the inference that Strathfield was not the lender. I therefore do not accept Scott's evidence on this issue.
The qualification in the fifth written offer was to be understood with reference to the words which qualify the expression "subject to finance", namely "but [CAGA] (Mr I Scott) will give you an undertaking to provide the necessary finance simultaneously with this offer." Those qualifying words are consistent with knowledge by Opalswan prior to the varied Memorandum of Understanding that CAGA having been asked to assume and having assumed the obligation to provide finance. It was the assumption of that obligation which Scott had assumed in making the fifth representation. It is the true explanation for him having written the letter of 2 October following advice to him by De Rosa of the content of the varied Memorandum.
In cross-examination for CAGA Johnson was referred to certain affidavits sworn in the proceedings by Productive Parts in the Supreme Court in which he averred that it was as a result of assurances from De Rosa at the meeting that Opalswan had no doubt finance would be forthcoming. He maintained, despite this, it was what Scott told them that Opalswan relied on.
Caratti denied he was relying on Johnson, asserting he relied totally on CAGA and Scott.
Possession of two scrapers
On 3 October Scott, at De Rosa's request, confirmed in writing to De Rosa in a letter dated 2 October on the letterhead of
CAGA Finance that "we have a private lender prepared to advance $180,000" on the 089 scraper subject to registration of securities. Scott's evidence was the private lender referred to was Strathfield. This is inconsistent with the final form of the varied Memorandum of Understanding and the evidence of De Rosa, Johnson and Love. It is explicable only on the basis that Scott did not attend the meeting on the evening of 2 October.
On 3 or 4 October 1993 possession of the two scrapers was given to Opalswan and handed over to Grangefield. This occurred in reliance upon the third, fourth and fifth representations.
On 5 October 1993 Grangefield commenced work with the two scrapers. It relied on the same representations to assure it would meet the Archibalds Contract.
Sixth representation (par27)
From 4-13 October De Rosa telephoned Scott on six occasions to bring about the execution of the varied Memorandum of Understanding by CAGA in accordance with Scott's undertaking and to obtain the unconditional commitment of the financier with a view to settlement occurring within the agreed time. On 5 October Scott confirmed to De Rosa the varied Memorandum of Understanding was consistent with earlier discussions between them. On 6 October Scott advised him he expected the financier's commitment on 7 October. Scott accepted this. On 8 October Scott informed him he expected an unconditional commitment to finance by Monday 11 October with settlement by 13 October. Scott accepted this evidence.
Johnson's evidence was that on 7 October Scott advised him funds would be available on 8 or 9 October. That was denied by Scott.
Caratti testified that from 3 October Scott named almost every Friday in the month as a possible settlement date. He was told by Scott some time between 5 and 8 October the finance would be available by 8 October. This was denied by Scott on the basis he had not then become involved with Caratti, a basis which has already failed.
I am unable to accept Scott's evidence of denial in the face of the evidence of his advice to De Rosa and acceptance of that evidence. The evidence of both Johnson and Caratti is consistent with what Scott was stating to De Rosa at the time. It is improbable he would not have said the same or similar to Johnson or Caratti or that their evidence on these representations is manufactured.
I find that on or about 5 to 8 October 1993 Scott assured Caratti the settlement on the 089 scraper would take place on 8 October 1993 ("the sixth representation").
Threatened termination of the Archibalds Contract
Johnson testified that on 8 October Archibalds told him the contract would be cancelled and another contractor engaged if the 089 scraper did not come on site.
The evidence of Johnson and Caratti establishes that on 11 October, in an attempt to avoid termination of the Archibalds Contract, Opalswan caused Robinswood Pty Ltd ("Robinswood"), a family company of Caratti, to provide two additional Caterpillar 631C motor scrapers ("the additional scrapers") at a cost to Opalswan of a mobilisation fee of $1,000.00 and a daily hiring fee of $1,000.00 per scraper pending the availability of the 089 scraper.
There is a question of to which company the additional scrapers were provided. Johnson's evidence was "we" would pay the hire and "he" charged "us". Caratti's evidence was the
hire was to Opalswan. The hiring is undocumented. Although there is evidence the work on the ground was being executed by Grangefield, the foregoing evidence supports a finding the hiring was an obligation undertaken by Opalswan.
Demand and Seventh representation (par30)
On 19 October CAGA, under the signature of Scott and on the letterhead of CAGA Finance, wrote to De Rosa confirming it had a lender for $180,000 on the 089 scraper subject to all parts being available in one place. It stated it was awaiting confirmation of Opalswan's accounts from its accountants following which contracts could be prepared for submission.
The liquidator replied immediately confirming matters clarified by a telephone conversation between Scott and De Rosa in response to CAGA's letter and requesting confirmation the lender had made an unconditional commitment. In cross-examination Scott could not recall receiving this document or responding to it.
De Rosa's evidence (which Scott did not dispute) was that on 25 October Scott told him settlement would be within 24 hours of security documents being returned by Opalswan. De Rosa testified Scott later told him on 27 October that settlement would be on 29 October and on that date said it would be on 1 or 2 November. Scott agreed with this evidence.
In his cross‑examination by counsel for CAGA, Scott said the reasons settlement did not occur were firstly, knowledge that Johnson had been involved with AGC in allegations he had stripped a machine and dispersed parts; secondly, the disassembled state of the 089 scraper until early November; thirdly, ongoing contention between Opalswan and Strathfield concerning the structure and repayment of the agreement on the two scrapers; fourthly, knowledge of Caratti's involvement.
Scott's evidence was "Strathfield was continually seeming to change [its] opinion about that".
On 2 November Scott for CAGA Finance wrote to Johnson of Opalswan stating he had conflicting opinions from Opalswan and Strathfield as to the amount and the date of the first payment due under the second Strathfield Loan Deed. Scott requested payment that day failing which Scott asserted he would be put in an untenable position in processing the proposal concerning the 089 scraper. In cross-examination for Opalswan Scott testified he had been asked by Johnson to argue a case on the issue. He had made a phone call to Coles on this prior to the fax. His evidence was that argument on the issue was not really of relevance as far as he was concerned.
Caratti and Johnson discussed this and Caratti dictated a response in Johnson's name which was sent that day to CAGA Finance (Attn Scott). This insisted the payments provided for be adhered to because they were reached as a trade off for an increased interest rate. In cross-examination Scott testified he simply filed this letter, so it is apparent the information in it was not passed on to Coles.
In cross-examination Caratti testified this dispute did not lead him to consider there was a problem with the finance with Strathfield because he considered the finance to be in place. He said the response had been sent to Scott to inform him of Opalswan's position because he regarded Scott as Strathfield's agent. He had been told by Scott title to the 089 scraper was with Strathfield and he was unaware of any argument between Strathfield and Productive Parts concerning title to it.
Scott's evidence was the request for payment came about because Coles and Opalswan were at loggerheads as a result of Coles trying to change the basis of the agreement on the two scrapers. Coles had agreed to finance the 089 scraper and Scott saw himself as trying to keep that in place. His
evidence was that restructuring of the two scraper transaction was a matter of discussion between Johnson and Coles in which he, Scott, did not become involved. His further evidence was the reassembly of the 089 scraper was an issue between the liquidator and Johnson. The liquidator had pushed the issue and Johnson was doing his best to satisfy him. He was aware of the issue but that was all.
Caratti testified that from 2 and 3 November Scott was telling him continuously the 089 scraper would settle just about every Friday. This evidence is too general to support a finding in terms of the pleaded seventh representation that on 3 November Scott advised Caratti that Opalswan would have possession of the 089 scraper by 9 November.
On 4 November Opalswan forwarded to Strathfield the first instalment of $7,427.08 on the second Strathfield Loan Deed ahead of due date "as a sign of good faith only". Caratti's evidence was Scott contacted him and advised Coles was insisting a payment was due under the second Strathfield Loan Deed. Although Caratti informed Scott the payment was not due until December, Scott was "fairly insistent" he could not settle the 089 scraper while Strathfield was requiring the payment to be made. He therefore made the payment in order to appease Strathfield.
In Johnson's cross-examination it was put to him the payment was made simply because it was due and, unless paid, any financing on the 089 scraper would not be forthcoming. Johnson denied that.
Scott in cross‑examination for Opalswan could not recall the conversation with Caratti. However, when Johnson's evidence was put to him he thought the amount of the payment was for a monthly commitment. Scott therefore appears to have had only limited recollection of the circumstances of the payment which, given the significance of the payment, is not credible.
Scott accepted that after the payment had been made he phoned Caratti and referred to the fact the payment would satisfy Coles.
I find the demand for such payment was made by Scott on Opalswan in order to ensure finance for the 089 scraper would be approved and the payment was made under protest.
Eighth representation (par32)
Caratti testified that on 4 November Scott stated to him the finance on the 089 scraper would be completed within a few days ("the eighth representation"). Scott denied this. The only apparent basis for the denial is Scott's earlier rejected evidence concerning his involvement with Caratti occurring later. I find the eighth representation was made.
Continuing negotiations
On 6 or 7 November Scott was told by Coles the 089 scraper had been removed by Opalswan.
On 8 November Scott spoke to De Rosa concerning the remedying of a default with respect to the sale of the two scrapers. He denied, as De Rosa testified, that he identified the Commonwealth Development Bank as the lender.
Scott accepted that on 9 November he told De Rosa the finance approval would be sent that day. Nothing was received.
On 10 November De Rosa faxed Opalswan particulars of the parts which he had ordered for it to perfect the 089 scraper on the assumption the 089 was to be acquired by it.
Johnson testified that prior to 12 November Scott told him Coles no longer wanted a balloon payment system under the second Strathfield Loan Deed but required equal instalments. Johnson was angered by this and demanded the finance for the 089 scraper. Scott responded that if Johnson agreed to amend
the second Strathfield Loan Deed he would set the finance with CAGA as lender. Scott denied this under cross-examination. In my opinion Johnson's evidence is consistent with the preceding developments. It is also consistent with the execution on 15 November of the CAGA Loan Deed. I therefore accept Johnson's account and find accordingly. In the result Opalswan agreed to amend the second Strathfield Loan Deed to avoid balloon payments at the end if CAGA would finance the 089 scraper.
On 12 November CAGA under Scott's signature on the letterhead of CAGA Finance wrote to Johnson at Opalswan confirming "we now have funding arrangements completed" but adding that if all components that make up the machine could be bought into one place for inspection "we can complete the funding". The liquidator immediately responded by fax referring to his letter of 19 October, giving updated information and requesting De Rosa be contacted for inspection and to discuss settlement. Scott gave no immediate response.
Scott agreed that he advised Johnson on 14 November that finance for the 089 scraper would be completed by 19 November.
Additional payment
Caratti's evidence was that around 15 November Scott requested and was given a further fee of $4,000 to complete the financing of the 089 scraper. He said this was done because Scott had said without it CAGA would not finance the 089. Scott accepted he requested and received this payment for that reason but did so in relation to B Johnson. I find the payment was made on behalf of Opalswan for the reason stated.
Ninth representation and CAGA Loan Deed (par34)
Caratti's evidence was that around 9-12 November, after continuous pressure from Caratti to Scott to settle on the 089 scraper, Scott advised him the second Strathfield Loan Deed had to be changed. Caratti said he was told by Scott this was because the balloon payments were to be changed to 36 equal payments. Scott accepted this evidence. However, Scott denied he also told Caratti he had a new deed prepared for the 089 scraper because Strathfield were not going to finance it. In the light of the subsequent execution of documents, I do not accept Scott's denial of this aspect.
On 15 November Opalswan executed the amended second Strathfield Loan Deed. Caratti testified Scott made it quite clear to him that if Opalswan was prepared to amend the second Strathfield Loan Deed as proposed, CAGA would finance the 089 scraper. I therefore accept Johnson's evidence in cross‑examination that Opalswan agreed to amend the second Strathfield Loan Deed because Scott told it unless the amendment was made the 089 deal would not go through ("the ninth representation").
On the same date Opalswan executed a Deed of Loan and Chattel Mortgage with CAGA ("the CAGA Loan Deed") which provided for a loan of $180,000 on the 089 scraper. Scott accepted he had prepared it. His evidence was Johnson had requested him to cast around to find some other sources of finance because, although Strathfield was still in contemplation, it was proving difficult. Caratti testified in cross-examination he therefore knew at 19 November finance was in place with CAGA Finance because the CAGA Loan Deed was executed and Scott had said it was accepted.
The CAGA Loan Deed was not executed by CAGA. Hartz testified there never was any authority for the document. Scott accepted if CAGA had entered into the CAGA Loan Deed it would have been bound to advance the money. However, he testified it was standard practice for an agreement such as this to be assigned to another viable source of finance. Scott further testified he had asked Hartz to execute the document and he had refused. Hartz testified he had not seen the document until its discovery in the course of this proceeding.
Purchase of spare parts - tenth, eleventh, twelfth, thirteenth and fourteenth representations (pars36, 37, 38, 40 and 43)
Scott accepted, and I so find, that on 19 November he told Caratti a cheque for $20,000 ("the Replacement Cheque") would be provided to Opalswan by 23 November for the agreed part payment of the spare parts needed for the 089 scraper ("the tenth and eleventh representations").
Scott accepted settlement was expected around 19 November so that I accept Caratti's evidence that in the week leading up to 19 November Scott had assured him settlement would occur on that date (part of the pleaded tenth representation).
Later Scott had assured him settlement would occur on 23 November and, when that did not occur, 26 November.
Scott also accepted he told Johnson on 14 November finance on the 089 scraper would be available by the end of the following week. He accepted also that on 19 November he told Johnson settlement on the 089 scraper would proceed on 23 November and he was free to collect the parts of the 089 scraper and reassemble it, and I so find ("the twelfth representation"). Scott did not accept he had represented to Johnson the Replacement Cheque would be received because his evidence was the reimbursement for the repairs executed by Opalswan was to be effected by set-off at settlement.
However, Johnson testified that on 25 November he was told by Scott the Replacement Cheque would be forthcoming at settlement on 26 November. I accept this evidence as more probable than not and so find ("the thirteenth representation").
On 19 November, with the authority of the liquidator, Opalswan had taken possession of the 089 scraper and caused the repairs to it to be completed. Caratti purchased the spare parts required for its reassembly with cheques of Grangefield
post‑dated to 29 November in the total amount of $22,765.23, although it is not disputed the total so expended was $22,838.55. Caratti's evidence was that a cheque for $20,000 constituting the major part of this expenditure was paid by Grangefield in the expectation CAGA would settle and the Replacement Cheque would be received. That, however, was a cheque which would have been payable to Opalswan. Johnson's evidence in cross-examination was that Grangefield would meet the financial obligations of Opalswan in respect of the equipment "and that sort of thing." The submissions for CAGA, which advert to this evidence, are made on the basis the expenditure by Grangefield on repairs can be found to be an expenditure by Opalswan. I therefore accept Johnson's evidence extends to payment of the cost of repairs and the expenditure by Grangefield on repairs was expenditure for Opalswan.
On 28 November the reassembled scraper was transported to Collie. I am satisfied Opalswan so acted in reliance upon tenth, eleventh, twelfth and thirteenth representations that the Replacement Cheque would be provided.
Caratti testified he was told by Scott in a heated telephone conversation on 29 November the Replacement Cheque would be provided to Opalswan by 3 December. Scott denied this evidence but testified he told Caratti Opalswan was one hundred per cent sure to have the Replacement Cheque any day. In my opinion Caratti's evidence is more consistent with the history of the matter and I accept his evidence. I find Scott made the stated representation to him ("the fourteenth representation").
Opalswan never received the Replacement Cheque or funds in that amount by any other means. Scott offered no explanation why this was so.
Further additional payment
De Rosa had found that after 25 November his telephone calls to CAGA were not returned. On 7 December De Rosa, acting after discussion with Coles, arranged for the liquidator to write to Opalswan inquiring whether the machine had been removed from its Bunbury location and requiring an explanation and identification of its present whereabouts.
Johnson responded that day for Opalswan asserting it had purchased the unit; documentation of that was held by it; possession of the unit and its parts had been given on 19 November; and $40,485 had been expended on it by Opalswan.
Caratti accepted in cross-examination this letter was prepared by him. He testified the reference to "documentation" was to the CAGA Loan Deed; the possession had been given by Scott and De Rosa.
The liquidator immediately wrote to Scott referring to the preceding correspondence and requesting an explanation. On the letterhead of CAGA Finance Scott responded on 8 December that settlement had not been completed and that, due to a number of (unspecified) factors, "it is unlikely we shall be able to proceed".
Hartz testified that in December 1993 Scott reported to one of the regular meetings there were some problems between the Johnsons and Strathfield which were causing delays in finance approval.
On 8 December the liquidator wrote to Opalswan referring to a discussion with Johnson and agreeing to consider allowing a further 14 days for settlement and generally asserting his rights in the circumstances.
Around 8 December Scott advised Caratti that Strathfield required an immediate additional payment of $12,367.16 pursuant to the amended second Strathfield Loan Deed. Caratti's evidence to that effect was accepted by Scott. Scott denied he had also said that if the payment was not made to Strathfield, CAGA would not provide the finance on the 089 scraper because CAGA was not providing that finance. He accepted he would have said that unless the payment was made he would have no hope of getting Strathfield to complete their part of the deal.
Accordingly Carratti arranged for Opalswan to pay to Strathfield c/- CAGA (attn Scott) $12,367 being "at the higher rate". In an accompanying letter dictated by Caratti, Opalswan made clear the payment was under protest and in reliance on Scott's advice to appease Coles. Opalswan inquired in the same letter what was happening on the 089 scraper.
In cross-examination Caratti testified the payment was made because Scott required it. He said the Strathfield and CAGA financing had become mixed up because Scott was refusing to settle until Strathfield had "settled down". The payment had been made to Strathfield on the understanding Scott would settle the 089 with funds from CAGA.
Caratti's view from mid-November was that the finance was coming from CAGA.
Scott in cross-examination for Opalswan testified he would have passed the letter and cheque on to Strathfield.
Further December developments
It was accepted by Scott that on 14 December De Rosa telephoned him and advised everything was in order and early settlement was pending.
On 15 December, in response to a request from Scott, De Rosa forwarded to him a pro forma invoice for settlement. Scott
advised approval of it the next day and said settlement would be on 17 December. This is supported by a letter sent on 17 December by CAGA on the letterhead of CAGA Finance under the signature of Scott addressed to De Rosa confirming documents had been properly completed and drawdown of funds had been requested from the prime lender and, once received, settlement time would be advised.
On 17 December the solicitors for Opalswan wrote to the liquidator's solicitors giving undertakings concerning the location of the 089 scraper, declining to accept (unstated) amendments to the contract concerning it and ascribing the problem of delay to CAGA.
The liquidator immediately wrote to CAGA Finance (Attn Scott) with a copy of this correspondence requesting urgent confirmation of time, date and place of settlement.
Although Scott denied it, I accept Johnson's testimony that around 21 December Scott advised him settlement would take place in another few days. Johnson's evidence is consistent with Scott's letter of 17 December and De Rosa's evidence accepted by Scott.
On 21 December the solicitors for Opalswan wrote to the solicitors for CAGA requesting detailed advice on the matters which needed to be attended to on Opalswan's behalf prior to settlement and requesting confirmation that once they were attended to CAGA would be in a position to arrange settlement.
Scott was unaware whether a reply was sent.
On December 24 the liquidator advised CAGA its solicitors would attend to settlement matters.
When forwarding payment for January to Strathfield C/- CAGA on 31 December Opalswan requested urgent advice concerning
settlement on the 089 scraper. Scott accepted this letter passed through CAGA's office.
Scott testified that in December Johnson had requested that CAGA cast around for other sources of finance. This was not put to Johnson. Scott's evidence was that of the three he spoke to only a company called Carmille expressed interest. He said it did not proceed because Carmille chose not to do so. Documents had been prepared and sent to Carmille for execution but they were not returned.
Carmille as alternative lender
In early 1994 Scott told Love that, due to the problems with Opalswan, the 089 would not be financed. He suggested to avoid legal action the price of the 089 scraper be reduced and Strathfield buy it. Love met with Coles who confirmed he was not interested in financing it for Opalswan and wanted to buy it himself. Love refused to reduce the price. In cross‑examination Love testified Coles had been seeking a price in the vicinity of $130,000-$140,000.
In January Scott told Caratti the money was coming from Carmille. Caratti's evidence was Scott described Carmille as a company which was part of the CAGA Group and based in Hong Kong. De Rosa testified Scott told him Carmille was a Hong Kong company. The evidence of Scott and Hartz establishes Carmille was a Sydney based company trading in commodities which had an office in Hong Kong. Scott denied having said Carmille was part of the CAGA group. Given De Rosa's evidence, I accept Scott's denial of that aspect.
Scott's evidence in cross-examination for CAGA was Johnson had asked him in January to further pursue Carmille as a lender. This was not put to Johnson. He testified Carmille had been pursued in parallel with Strathfield.
On 12 January 1994 Scott for CAGA Finance wrote to Opalswan's solicitors advising he would notify them "Thursday morning" when settlement would occur. On 13 January Scott for CAGA Finance wrote to the same solicitors stating the lender (acknowledged by Scott as a reference to Carmille) was overseas so a settlement could not occur that day and seeking an extension of time.
On 14 January the solicitors for Opalswan wrote to CAGA (attn Scott) asserting their client had been awaiting settlement since 19 November; requiring CAGA to settle immediately; requesting confirmation from CAGA Finance all approvals for finance have been given and all matters were in order for settlement; and proposing if CAGA Finance required time to complete it renegotiate with the liquidator. Johnson could not explain this last stipulation.
Counsel for the Respondent: Mr G Barrow
Solicitors for the Respondent: Williams & Hughes
Date of Hearing: 6, 7, 8, 9 and 10 May 1996
Date of Judgment: 18 November 1996
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