Quine, L.R. v Gippsland & Northern Pty Ltd

No judgment structure available for this case.

.IN THE FEDERAI. COURT OF AUSTRALIA )
1

VICTORIA DISTRICT REGISTRY 1 No VG 85 of 1987
1
GENERAL DIVISION 1

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I i I

BETWEEN: LAUReNCE RICHARD OUINE r ;

(First Applicant) i

m: MARY CHRISTINA OUINE i
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(Second Applicant) l :
l

AND : GIPPSLAND & NORTHERN PTY I :
LTD

(First Respondent) 1:. l

AND: BARRY REDMOND
20 MAR 1992
FEDERAL COURT OF

AUSTRALIA (Second Respondent) i
PRINCIPAL l'

REGISTRY AND : PETER DWYER \.

(Third Respondent) 1
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m: PEDIHA NOMINEES PTY LTD i
L

(Fourth Respondent) I
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AND : BIRCH ROSS & BARLOW
fa firm1

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(Fifth Respondent) I- I
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. - . . -. -. - . - . . - - . . . . - -

- - Coram: Ryan J

1. That the application be dismissed as against the first second third and fifth respondents. .-

Date: 19 March 1992
Place: Melbourne

MINUTES OF ORDER

THE COURT ORDERS:
2. That the applicants pay the costs of the first, second, third and fifth respondents, including reserved costs such costs to be taxed.
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m: Settlement and entry of orders is dealt with Order
36 of the Federal Court Rules.

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C -, Ll PI \ ~ \ S ~ \ & J T I O ~
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IN THE FEDERAL COURT OF AUSTRALIA )
1
VICTORIA DISTRICT REGISTRY

) No VG 85 of 1987
i
GENERAL DIVISION 1
BETWEEN: LAURENCE RICHARD OUINE
(First Applicant)

m: MARY CHRISTINA OUINE
(Second Applicant)

AND : GIPPSLAND & NORTHERN PTY LTD
(First Respondent)

m: BARRY REDMOND
(Second Respondent)

AND : PETER DWYER
(Third Respondent)

AND : PEDIHA NOMINEES PTY LTD
(Fourth Respondent)

m: BIRCH ROSS h BARLOW (a firm)
(Fifth Respondent)

Coram: Ryan J
Date
-- 19 March 1992

Place: Melbourne REASONS FOR JUDGMENT
Early in 1984 the applicants had formed the view that their existing dairy farm at Jeetho was not large enough to provide a satisfactory income for themselves and their two grown sons. Accordingly, when the first respondent, Gippsland & Northern
Pty. Ltd. ("G &.Nu) advertised for sale a larger farm property at .

Waratah Bay, Quine contacted the second respondent, an
employee of G & N I and arranged to inspect that property. After the inspection Mr Redmond arranged for Mr and Mrs Quine to meet Mr Hoysted, the manager of Murray-Goulburn Co-operative ("Murray-
Goulburn"), at Leongatha which had purchased milk from the
Waratah Bay property when it was last operated as a dairy farm.

The Waratah Bay property was passed in at auction and sold about a week later. Mr and Mrs Quine made no offer for that property, having decided that their available capital was insufficient to fund the purchase. Late in May 1984 Mr Redmond telephoned Mr Quine and told him that he had a property at Yanakie which would meet the applicants' requirements. Mr and Mrs Quine travelled to Yanakie on the same day and were met at the property on Paterson's Road by Mr Redmond and the third respondent, Mr Dwyer, who was also an employee of G & N. Mr and Mrs Quine were then conducted on an inspection of the property which was curtailed because of heavy rain. They were introduced to Mr Kalliakoudis, a director of the vendor of the Yanakie property, who was then living in the homestead on the property.

However, Mr Kalliakoudis did not accompany the applicants on

their inspection which took in another, vacant, house formerly
occupied by a share-farmer.
The inspection took something over two hours after which Mr

and Mrs Quine returned with Mr Redmond and Mr Dwyer to the Leongatha office of G & N. They there discussed how Mr and Mrs Quine could raise the money to purchase the Yanakie property. It was indicated that they would sell their existing farm at Jeetho
and two houses in Korumburra owned by Mr Quine. Mr Redmond had earlier been acquainted with the proposed realization of those properties when Mr and Mrs Quine were contemplating the purchase of the property at Waratah Bay.
Mr Redmond indicated that the Jeetho farm and the Korumburra houses were all readily saleable and suggested a value of $2,000 per acre for the farm and a value of about $40,000 each for the two houses. He also suggested that Mr and Mrs Quine should attend

again on Mr Hoysted of Murray-Goulburn which also had the milk
contract for the Yanakie property. The purpose of that attendance was to obtain Mr Hoysted's assistance in completing applications to the Rural Finance Commission and the Commonwealth Development Bank for finance to defray the balance of the purchase price for the Yanakie property. That price had earlier been agreed at $420,000.
In the application to the Rural Finance Commission, the
current values of the Jeetho property and the Korumburra houses

were stated to be respectively $256,000, $45,000 and $40,000. In that application and in the application to the Commonwealth

Development Bank estimated income from the Yanakie farm after acquisition by the Quines included a projected return from dairying of $89,590 based on 170 cows, each producing 170 kilograms of butter fat, making a total of 28,900 kilograms, to be sold at a price of $3.10 per kilogram. Projected expenditure for the twelve months following acquisition by the applicants included $4,500 for fertilizer and $7,000 for fodder and seed. The latter application concluded with the following analysis of the funding required by the applicants:
"To purchase 106.3 Ha dairy farm
Stamp Duty and Legal Fees
Herd ourchase 70 cows @ S350

20 2y0 @ 5350
30 yearlings @ $250

Fundinq
Sale of 128 acre dairy farm
Sale of house Victoria Street
Sale of house Guys Road

Less 1st Mortaaae 128 acre 560.000 . . ~

Less 1st ~ortgage Vo1.6921
Fol. 083 25,000 85,000

AMOUNT REQUIRED $ 242,000 "

On 5 June 1984, Mr and Mrs Quine attended, by arrangement, at the Leongatha office of G & N to sign a contract for the

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purchase of the Yanakie property. Mr Redmond then suggested that 1 .

they should retain Mr Barlow of the fifth respondent firm, Birch 8 .

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Ross & Barlow, as their solicitor in connection with the purchase

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of the Yanakie property. Mr and Mrs Quine agreed and an i ,
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appointment was made by telephone for them to see Mr Barlow I

almost immediately. . . .. - :I

When Mr and Mrs Quine, accompanied by Mr Redmond, attended at Mr Barlow's office, Mr Kalliakoudis, the director of the

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vendor company, was also there. In the course of a discussick of j
the sale and purchase, Mr Kalliakoudis suggested that finance
might be provided to the Quines by City Credit Corporation

(Mortgages) Pty Ltd ("City Credit") which held an existing second i I .

mortgage over the Yanakie property. Mr Kalliakoudis then i

telephoned a Mr Lucas of City Credit, and told those present in 1, I I
Mr Barlow's office that finance could be obtained from City i
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Credit.

Mr Kalliakoudis then instructed Mr Barlow to act as well for the vendor on the sale of the property. A form of contract was then prepared which recited, among the general conditions, that:

"1. This s a l e i s sub lec t t o -

1.3 The lender ( i f any) approving t h e loan on t h e s e c u r i t y

of t h e proper ty by t h e approval d a t e o r any l a t e r d a t e

allowed by t h e Vendor f a i l i n g which a l l monies s h a l l

be refunded whereupon t h i s con t rac t s h a l l be n u l l and

v o ~ d , but only i f t h e Purchaser -

(a) has made m e d i a t e app l i ca t ion f o r t h e loan; and

( b ) has done everyth ing reasonably required t o ob ta in
approval of t h e loan; and

( c ) has given t h e Vendor prompt w r ~ t t e n no t rce of r e f u s a l

of t h e loan; and

( d ) is not i n breach of anv o the r condi t ions of t h r s c o n t r a c t

when he g i v e s t h e n o t i c e r e fe r red t o i n paragraph (c) of
t h i s condition."

The particulars of - sale as inserted in the printed form of !. .
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contract used by Mr Barlow were:

"PARTICULARS OF SALE -.

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VENDOR'S AGENT Gippsland & Northern Company Limited of 11

McCartin S t r e e t , Leongatha

DX T e l : Ref: &.B. Redmond

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VENDOR'S SOLICITOR Messrs. Birch, Ross & Barlow of 45a Ba i r . .

S t r e e t , Leongatha

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DX 34021 Te1:(056)622275 Ref: JB:WN 5.6.84
PURCHASER'S SOLICITOR As Above

VENDOR PEDIHA NOMINEES PTY. LTD. of 231 Bourke
Street, Melbourne

PURCHASER

LAURENCE RICHARD OUINE Farmer and m CHRISTINA OUINE Married Woman both of Jeetho, Via Loch

LAND

Described in the attached copy Title containing 106.3 hectares or thereabouts (262.67 acres) being Crown Allotment 14 in the Parish of Yanakie County of Buln Buln and being the whole of the lands more particularly described in Crown Grant Volume 9287 Folio 685.
PROPERTY the land together with any mprovements
known as
ADDRESS Paterson Road, Yanakie
CHATTELS as per the Schedule attached hereto

(Valued at $ which sum is included
in the price)
PRICE FOUR HUNDRED AND TWENTY THOUSAND DOLLARS
($420,000.00)
DEPOSIT $42,000.00 to be paid in the following
manner: -

( f ) $5,000.00 on the signing hereof.

this Contract of Sale becoming
(11) The resrdue namely $37,000.00 on
unconditional as is hereinafter provided.

RESIDUE THREE HUNDRED AND SEVENTY EIGHT THOUSAND

- - - DOLLARS ($378,000.00)

PAYMENT OF RESIDUE *on the 22nd day of August, 1984 or
earlier by agreement

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SETTLEMENT DATE 1s the date upon which vacant possession

of the Property and the Chattels (or !
recerpt of their rents and profits) shall

be grven, namely, upon acceptance of Title r
and payment of the balance of purchase I
monies I !
PURCHASER'S FINANCE *(details of loan referred to in General
Condition 1.3)

Lender: Messrs. Birch, Ross & Barlow, Rural Finance Commission, The Commonwealth Development Bank of Australia and/or other similar institutions

- Loan being not less than $420,000.00
A D D ~ O V ~ ~ Date 21St day of June, 1984

DAY OF SALE

is the earlier of the date of this Contract or the acceptance date of any prior Contract Note, namely the 5th day of June, 1984"

A schedule of chattels, stock and fittings annexed to the contract included:

"CATTLE

100 Friesian and Jersey cross m~lking cows

DAIRY

18 unit swrng-over herringbone dairy complete, three pressure pumps in dairy, one 120 gallon hot water service, five wash-down hoses at dairy, one 350 gallon bulk milk vat (Way), one 260 gallon bulk milk vat (Frigrite), four electric fans and one large silo."
Special conditions also forming part of that draft contract stipulated, amongst other things:

"LEASE

7. From the 16th day of June, 1984 to the date of settlement the I
purchasers shall have the right to lease the subject property and I ,
all improvements erected thereon save and except house number 1 I
the 16th day of June, 1984 the Purchasers shall also take for a rental of $100.00 per acre payable monthly in advance. On
possession of the livestock and plant and from that date such 1

shall be at their own r~sk. All income obtained from the livestock

and plant from the 16th day of June, 1984 shall belong to the !
period. A formal-Lease encumbering the aforesaid shall be prepared
Purchasers together with any calves born of livestock during that i
by the Vendors Solicitors at the Purchasers' cost."
On 12 June 1984 City Credit wrote to M r Kalliakoudis making t ,

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the following offer of finance: 1 .' I

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"Mortuaaee: Petluc Investments Pty. Ltd i
Suite 6, 456 St. Kilda Road, Melbourne and I ,
or Nominee. L - '
Mortaaaors: Laurence Richard Quine.
Mary Quine.
Both of Jeetho, via Loch, Victoria.
Security: A registered First Mortgage over the property sltuated Paterson Road, Yanakie, Vrctoria.
Purpose: To complete the purchase of the security
property.
Loan Amount: $345,000.00
Loan Term: 3 years.
Interest Rate: Acceptable Rate - 13% per annum.
Penalty Rate - 3%.
Reeavments: Interest payable three months' in advance, with the right to repay multiples of $5,000.00 principal at any quarter.

Title Details: Volume 9287. Folio 685.
Credit Stamp Duty: Not Applicable.
Structural Insurance: Satisfactory insurance to be produced at settlement from an Underwriter acceptable to the Mortgagee for full replacement value of the amprovements.

Varrable Interest:

The rate of interest applrcable to thls loan will be fixed for the flrst three months and rs then variable to the rate then applying for similar loans at the tlme of varration notice, but never less than the original commencrng rate. Should you not agree with hrgher rate requested, you wlll have the option to repay the loan withln 60 days of the date of the notlce. In that event penalty rnterest would not apply.

Earlv Discharoes:

Early drscharges require one month's notice. Three monthsr interest will only be charged at time of discharge.

Special Conditions:

(1). A commatment fee of 1% of the loan amount, namely $3,450.00, 1s payable to the Mortgagee on acceptance of this letter of offer on the attached form.
(2). This offer will lapse if not
accepted within four days of the
headed date.

- .. (3). Brokerage fees to be paid . at. - - settlement.

In accordance with the Finance Brokers Act of 1969, we enclose our Authority to Act, which we require to be signed, dated, witnessed and returned to this office with the acceptance of our letter of offer and the commitment fee."
Mr Redmond conveyed that offer to Mr and Mrs Quine and

arrangements were made for them to attend again at Mr Barlow's
office on 13 June 1984. The offer from City Credit was then
discussed and there was no dissent from the view that it offered
a more favourable rate of interest than could be obtained from
the Rural Finance Commission or the Commonwealth Development Bank
which were each expected to charge 17% per annum. It was then
agreed that the application for finance to City Credit should be
proceeded with and that the applications to the Rural Finance
Commission and the Commonwealth Bank should not be pursued.

Mr Barlow accordingly wrote to City Credit this letter, omitting formal parts, which was dated 15 June 1984:
"Further to our recent telephone conversation we now enclose our separate account cheque for $3,450.00 representing the commitment fee of 1% of the loan amount.
Regarding this matter generally we note settlement is to take place on the 22nd August, 1984 and in addition to you getting your Solicitors to prepare the fresh Mortgage documents with Mr. & Mrs. Quine, would you please arrange for your second Mortgage No. K584930 to be discharged.
There are other Mortgages to Eagle Star Nominees Limited and Trans Universal Flnance Corporation Pty. Ltd. and possibly you could let

where to write to and obtain discharges and payout figures." us have information on these two Mortgagees as we are uncertain

On 18 June 1984 Mr Barlow wrote to Mr and Mrs Quine, and Mr Kalliakoudis, in the following identical terms:

"We note unconditional Contracts have now been exchanged with

- - . - final settlement-to take -place on the -22nd -August,--1984.- --- - -
When further information is to hand we will be in contact with
YOU."

The contract there referred to was in identical terms to the
draft contract from which I have already quoted except that the
stipulations as to the deposit and purchaser's finance read as
follows :

"DEPOSIT $46,500.00 to be paid in the following
manner: -

(i) $5,000.00 on the signing hereof. L :

(ii) The residue' namely $41,500.00 on i

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this Contract of Sale becoming

unconditional as is hereinafter provided. i-
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PURCHASER'S FINANCE *(details of loan referred to in General

Cond~tron l. 3)
Lender: Credit City Corporation Pty. Ltd.
of 456 St. Kilda Road, Melbourne.
-Loan berng not less than $345,000.00 the
terms of whrch loan are to be approved by
the Purchasers.
ADDroval Date 21st day of June, 1984."

On the next day, 19 June 1984, Mr Barlow wrote on behalf of Mr and Mrs Quine to the Manager of the Commonwealth Trading Bank at Leongatha that:
"We would be grateful if we could by way of brrdging finance arrange a second Mortgage loan of $85,000.00 against the security of a property owned by Mr. Quine at Jeetho containing 125 acres or thereabouts and valued in the vicinlty of $250,000.00.
A copy of the Trtle is attached.
The first Mortgage is for $60,000.00 and the monies are required to assist Mr. Qurne in paying a deposrt on another property pending the sale of his home property.

The funds are required urgently.
By the time the funds have to be taken up in full or in part the matter of De Angelis will have been settled and our debt will rest at $85,000.00.
We look forward to hearing from you at your earliest convenience."

A favourable response to that request was received on 20 I.'

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June 1984, and, on 22 June 1984, Mr and Mrs Quine executed a 1
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lease prepared by Birch Ross & Barlow of the Yanakie property and a herd of 100 milking cows for a term of two months from 22 June

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1984 until 22 August 1984 at a rental of $2,190 a month. On the
same date Mr Barlow wrote to Mr and Mrs Quine advising them that:

"City Credit Corporation ( V i c ) Pty. Ltd. have requested a

Statement of A s s e t s and L i a b i l i t i e s a s a t t h e 30th June, 1984,
together with copies of your Taxation Returns f o r t h e years 1982
and 1983.
Please le t us have t h i s information a t your earliest convenience.

W e note t h e Vendor i s a l s o press ing f o r payment of t h e balance of

deposi t monies and would you please c a l l and d iscuss such wi th t h e
w r i t e r a t your earliest convenience.
The Lease documents and brrdging f inance documents wi th t h e Commonwealth Trading Bank of Aus t ra l i a have a l s o been prepared and requ i re your s igna tu re and would you a s a matter of urgency

telephone and make an appointment t o see t h e w r i t e r . "

In response to that request Mr Quine supplied Mr Barlow with a handwritten note of the applicants' assets and liabilities which read:
127 ac res Livestock Plant - Farm
& Farm Vehicles
House

55 V ~ c t o r i a S t

Korumburra $30,000
House
15 Guys Rd

Korumburra
Caravan parked i n

Dargo Caravan Park $7,000

Natol i $60,000 Farm
Oakley $25,000 Houses

Bank Overdfaft--- --- 5-5.,_000-- --p . . .- --

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Secured by $5,000 investment"

(The ascription of $350,000 as the value of the Jeetho
property was an error as M r Quine accepts that it should have

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been $250,000.)
On 5 July 1984 City Credit advised Mr Barlow that a loan of $345,000 to Mr and Mrs Quine, secured by a first mortgage on the Yanakie property, had been approved by Trion Holdings Nominees Pty Ltd and that a solicitor had been instructed to prepare the mortgage documents. On 6.July 1984 Mr Barlow forwarded'to.~ity
Credit copies of the Quines' tax returns for 1982 and 1983 and the following statement of assets and liabilities (reproducing the error as to the value of the Jeetho property which had occurred in Mr Quine's handwritten note):

"LIABILITIES ASSETS
Mortgage Loan - $60,000.00 127 acres at
Farm Jeetho
Mortgage Loans - $25,000.00 Livestock
Two houses

Bank Overdraft $5,000.00 Plant & Farm
Equipment

surplus of $397.OO(sic) House - 55
assets over Victoria Street,
l~abilities Korumburra
House - 15 Guys
Road, Korumburra
Caravan
Money lodged on

Fixed Deposit
with Bank

Between 6 July and mid-August, M r Barlow arranged for the
provision by clients of his firm of bridging finance to Mr and

_ _____ ^ _ _ --
Mrs Quine of $100,000 secured by a first mortgage over the ~eetho property in substitution for an existing mortgage to Mr A.B. Natoli, a solicitor of Kew, which M r Barlow arranged to be paid out. In addition, Mr Barlow arranged for G & N to be paid $4,970, the balance of its commission on the sale of the Yanakie property to which the Quines' preliminary deposit of $5,000 had earlier been applied.
During July it had become apparent that the Jeetho property could not be sold for an acceptable price by private treaty and, after consultation between Mr Quine and Mr Redmond, an auction of the property was appointed for 10 August 1984. No bid was received and the property was passed in. In mid-August 1984, Mr Barlow was advised by the solicitors for City Credit that the company nominated as the proposed first mortgagee of the Yanakie property had no funds "at this stage". Accordingly, Mr Barlow wrote on 21 August 1984 to Mr and Mrs Quine and to Kalliakoudis advising that settlement might be delayed for a further 14 days and that rent would be payable until the date of settlement.
In fact, the proposed first mortgage loan funds had not
become available by 17 September 1984 when Mr Barlow wrote to Mr

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and Mrs Quine as follows:

22nd August, 1984, because your Mortgagee ($345,000.00) drd not "We note this matter was not settled on the due date namely the
have sufficient funds.

Apparently these funds will be to hand in the next few days and settlement effected at that stage but in the meantime we note that you must continue to pay rental under the Leasing Agreement at the rate of $2,190.00 per month until date of final settlement.

-- Obviously rental-is cheaper than interest;- - - - - - - - - - - -- - - - - - - -.
We suggest that the rental be paid an a lump sum at settlement but if you have any queries kindly contact the writer.
As soon as we receive Mortgage documents from the Solicitors for the Mortgagee and receive some information as to the date of settlement we will be in immediate contact with you."

On 24 September, and again on 1 October 1984, M r Barlow wrote to City Credit on behalf of Mr and Mrs Quine pressing for the first mortgage loan funds to be made available. Ultimately, the mortgage moneys were disbursed by Trion Holdings Pty Ltd and settlement of the purchase of the Yanakie property was ̂ effected on 9 November 1984. Thereafter, City Credit sent to Mr and Mrs
Quine this letter dated 14 November 1984 with a copy to
Mr Barlow:
"Our solicitors have confirmed that settlement of the above
Mortgage took place on the 9th instant.
The Mortgage has been transferred to Network Finance Limited of
464 St. Kilda Road, Melbourne and you are hereby requested to send
all payments due under the Mortgage direct to their office.

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Interest payments under the Mortgage are due quarterly in advance.
At settlement, interest of $11,212.50 was disbursed, being the

interest due for the first quarter. The next interest payment of 1..
$11,212.50 is due on the 9th February, 1985. Please arrange for 1 . I

payment to be made on or before the due date to a v o ~ d interest at r ,
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the higher rate, which will be $13,800.00. t
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For any further information you may require please contact: the I ,
undersigned."

In the meantime, Mr Barlow had apparently advised Mr and w s Quine that even if the first mortgage funds promised by City

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Credit were to become available, there would still be a shortfall l

of about $50,000. To make up that deficiency, $30,000 was t -
borrowed from a M r Ware, a cousin of Mr Quine, at an interest

rate of 15% per annum on the security of a stock mortgage and a 1. I
second mortgage over the Yanakie land. A further $18,000 was

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- advanced by Birch Ross & -Barlow secured -by - a - -first mortgage -over -

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the house property at Guy's Road, Korumburra.

On 5 November 1984, Mr and Mrs Quine attended at G & N's Leongatha office and signed a contract for the sale of the Jeetho

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property to a Mr and Mrs Enbom for $195,000. The balance of the I
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purchase moneys under that contract was received on 8 January f-.

1985 and, about two weeks- later, the balance of the proceeds from I
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the sale of the house property at Victoria Street, Korumburra, ; ,
for a price of $28,000 was received. However, despite the i.'
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receipt of those moneys, Mr and Mrs Quine realized that they

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would not be able to pay the instalment of interest due to the i
first mortgagee of the Yanakie property. They consulted Mr Barlow

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who suggested that an application for further finance should be I
made to the Commonwealth Development Bank. That application was made but, on 12 March 1985, the Bank advised Mr and Mrs Quine that their application was refused. Consequently, Mr and Mrs Quine fell into arrears under the mortgage and M r Barlow wrote to them on 1 April 1985 that:
"Trion Holdings Pty. Ltd. are prepared to allow you to the 30th April, 1985 to bring up to date the interest arrears provided you pay one month's penalty interest on or before the 9th April, 1985.

We calculate this amount to be 54.887.50 beina one month's

lnterest at the penalty rate of 17% o n the sum, namely
$345,000.00.
Please contact our Mr. Barlow immediately regarding payment of this amount and, in this respect, note it may be possible to arrange an advance fzom Gippsland & Northern Company Limited secured by the proceeds of the sale to take place on the 18th April, 1985."

As an alternative means of obtaining-money--m. mee-t..-their -_-.- .

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liability for interest, Mr and Mrs Quine resolved to subdivide l.
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the Yanakie property and sell off the share farmer's house and 1
surrounding land of about five acres together with three one-acre I

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lots fronting Paterson's Road. Instructions to prepare a plan of
subdivision accordingly were given to a firm of surveyors.
In mid-February 1985, M r and Mrs Quine, accompanied by Mr Barlow and Mr Redmond, attended in Melbourne at the office of the solicitors for Network ("Network") Finance, the assignee of the mortgage. Network was advised of the proposal to subdivide and sell off certain lots on the Yanakie property and also of a projected sale of Mr and Mrs Quine's dairy herd. Early in March 1985, Mr and Mrs Quine instructed G & N to auction their cattle on 16 April 1985 and later gave instructions, also to G & N, to conduct a clearing sale of the fittings and chattels on the Yanakie property.
On 22 May 1985 a contract was executed for the sale of the house property at Guy's Road, Korumburra for $27,500, and settlement under that contract occurred on 24 July 1985.

On 4 November 1985 the Yanakie property was offered for sale at the instigation of Network but was not then sold. After being

served on 28 November 1985, on behalf of Network, with a Notice

to Pay under the mortgage and a Notice to Quit, Mr and Mrs Quine left the Yanakie property in February 1986. After completion of

. ..- -. .the subdivision, the -property -was--subsequently- sold-between- -1986----- - -

and 1988 for a total price of $332,500.

By their amended statement 'of claim the applicants have alleged that G & N and Mr Redmond and Mr Dwyer, in order to

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induce the applicants to enter into the contract for the purchase of the Yanakie property in contravention of s.52 of the Trade Practices Act, fraudulently or negligently made the following

representations ("the representations"):
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"(a) That the fences on the farm were in good order;

(b)

That the farm had an excellent irrigation and watering system comprising two windmills, and a 17 acre foot irrigation dam and an underground bore;

(c)

That rrrigation system would provide unlimited water for the house and land;

(d)

The farm had the ability, facilities, equzpment and capacity to mrlk 190 to 200 cows;

(e)

The fann was self-sufficient and could manufacture enough hay and silage to feed between 190 and 200 cows in winter;

(f)

The fann would bring in S80.000.00 net profit per annum from milklng the 190 to 200 cows;
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(g)

That 30 tonnes of superphosphate had been spread on the said land in the past few months;

(h)

That the Applrcants would be able to sell wrthin six weeks their farm property at Jeetho for $250,000.00 and their house properties at 15 Guys Road Korumburra and at 55 Victorra Street Korumburra for $40,000.00 each (herernafter collectively called 'the Applicants properties') and thereby frnance the purchase of the said land."
It is then alleged by paragraph 8 of the amended statement

of claim that:

Applicants executed the said agreement for the purchase of the "In relrance on the representations and induced thereby the

said land and incurred obligations and liabilities under and pursuant to the said bgreement and completed the said agreement and further put up for sale and ultimately sold the Applicants' properties to finance the purchase of the said land."

Each of the representations is alleged to have been untrue -. .---- - -- - - . - - .-- - - -7-

. . . . - - . - - - -

. . - . - - . . - - - -

and misleading as a result of which, it is pleaded, the applicants suffered loss and damage in consequence of having purchased the Yanakie farm.

. . -

It is convenient to examine each of the representations in order and to make findings of fact as to the terms (if any) in which each was made, the respects (if any) in which it was false or misleading, and the extent (if any) to which Mr and Mrs Quine suffered loss as a result of the falsity or misleading character of each representation.

(a) FENCES:
According to Mr Quine when he and his wife were shown the
Yanakie property in late May 1984 they were told by Mr
Redmond when they were in the vicinity of the milking shed
that the electric fence for the dairy was in good order.
Similarly, he claimed that when they were driving through
the property in the course of the same inspection, Mr
Redmond said that the fences were in good order and
condition. In part, that statement was reinforced, Mr Quine
said, by Mr Redmond's pointing to the front fences as the
inspection party travelled down Paterson Road. Mr Redmond's

version of what he said, although not as specifically referable to different parts of the fencing, was not 1

markedly different from M r Quine's. According to Mr

Redmond, he told M r and Mrs Quine that it was good stock- r

1

proof fencing throughout the property. I am satisfied that

i

_ Mr Redmond made a general statement- to- the effect that the -

fencing on the property was good or stock-proof but I am 1
unable to find that to have been misleading or deceptive. !
i
The condition of the fences was something which would have
l
been readily apparent on a visual inspection either when
i

and Mrs Quine first visited Yanakie or on a subsequent m ,

occasion. It is therefore inherently unlikely that Mr
Redmond would have made a statement about the condition of

the fences which could readily have been demonstrated to be t,,
, -
untrue. Moreover, apparently neither of the Quines took

: .-
issue with Mr Redmond's description applied to so much of
1 .
:
the fencing as they could see during the first inspection, j -
or during a second inspection which Mr Quine undertook on i : ,
. ~

the following day with his son, Shane. In addition, Mr i
,

Dortmans who had occupied the property as a share farmer L.'

;- >
I
before Mr and Mrs Quine went into possession testified that I /
he left the fences stock-proof. Although Mr Quine swore

- -- - .

.. . -.
I I

that ihe electric fences were "virtually all down" when he I
I
!
and his wife went into possession, the only specific I ,
evidence that Mr and Mrs Quine expended any money, labour or I
materials on repairs to fencing during their period of
I.
occupation is that of Mrs Quine who said that she and her L
husband had to patch up some of the electric fences around 1

the cowyard. Nor is this part of their case made out by the l L

evidence of Mr Bright, the subsequent purchaser of the 1
I
Yanakie property who acknowledged that it could be seen on I
walking around it that the fences were "not terrific". I
1 :
F '

1; I

- . - - - Although-. -I --have - -found - that ---there- was --a - general------- - F.
representation to the effect that the fencing on the

property was "good" or "stock-proof ", I am unable, for the I :

-

reasons indicated above, to find that representation to have

i I'

been false or misleading. Nor am I satisfied that Mr and I
i

- - . . - . -
i '
i .-

Mrs Quine relied on that representation in deciding to purchase Yanakie.
(b)
and
(C) IRRIGATION AND WATERING SYSTEM:
Mr Quine said that, at the outset of their inspection of the
Yanakie property, he and his wife were told by Mr Redmond
that the property had all the water it needed for the house
and dairy and it was all in perfect condition. Unlimited
water, they were told, came from an 18 acre feet irrigation
dam with windmills off it and a bore at the rear of the

property. According to Mr Quine, Mr Redmond also said that !

all the pumps were in good working order, and that the - - -

.- - - -

. . . . .

windmills were also in working order and were pumping water

up to the tanks. Mr Quine conceded that he verified those I
statements to some extent by turning on a couple of pumps

which appeared to work. Mr Quine also said, under cross- i m I
' _

examination, that he learned from Mr Dortmans , the previous :
share farmer of the Yanakie property, that he, Doztmans, had

! -
i

encountered problems with the watering system. However, no 1
l

evidence on that subject was elicited from Mr Dortmans. I
i

1. l
I
Mrs Quine identified an account which had been paid for :-
> ,

..

repairs to, or replacement of, a pump, but conceded in

! -

- . . - - - - - - cross-examination - thav-the --relevant - pump "blew -upM -in -about -- - - -
l.
l

October or November 1984. She also indicated that it had * .

been necessary on two occasions to cart water from outside , . 1 ,
the property because there were not enough tanks and the S -.

rain water tanks had been filled with water from the dam . - . I
i

.- - -.- - . -
. --.

. - - - . .

- !

which was not clean enough for use in the homestead and dairy. That evidence is not easy to reconcile with that of Mr Quine on the same topic which was that, as he found the system, the windmills pumped first to troughs which were emptied by the cattle during the day, leaving no water to wash out the dairy at night. Mr Quine claimed to have rectified that defect by having the pumps directly fill the tanks and letting the water reticulate from the tanks. Mr Bright, the subsequent purchaser of the Yanakie property said that pumps to the cow shed had to be replaced after he had been in occupation for about two months.

. . . - - -

Mr Redmond's evidence was that, in the course of conducting Mr and Mrs Quine around the property, he had pointed out the constituant parts of the watering and irrigation system, including the dam which he claimed to have said had a capacity of 17 acre feet. Although at one point Mr Redmond testified that he had not formed an opinion as to the quality of the watering and irrigation system, he went on to

water supply systems in the area in terms of the amount of say that he regarded the property as having one of the best
water available.

. . - - I am satisfied that- any statements -made -by M.-Redmond -in --
respect of the irrigation and watering systems were expressions of opinion based on the components of those systems which could be discerned by visual inspection-. I am not able to find that any of those statements were intended

- . - . . . . - - - . - .

by Mr Redmond, or were understood by Mr or Mrs Quine, to go to the question of whether each of those components was then in sound working order and would remain so for a particular length of time. Given that limitation, the evidence does not admit of a .conclusion ,that. any of Mr Redmond's
representations on this head was misleading or deceptive. There is no evidence to suggest that the property did not have two windmills or an underground bore or that the capacity of the dam was less than 17 acre feet. Even the evidence of Mr and Mrs Quine standing alone does not bear out the representation pleaded in paragraph 7 of the amended statement of claim that the irrigation system would provide - "unlimited" water for the house and land. The evidence as a whole does not suggest that the rainwater tanks were insufficient to provide the clean water needed for the house and dairy. Whether those tanks became filled with water from the dam, on the two occasions deposed to by Mrs Quine, because of some dysfunction of the pumps or through human
regard those incidents as establishing the falsity of any of error or some other cause is not clear. However, I do not
the expressions of opinion in this context which may have
been made by Mr Redmond. Nor am I able to find that the applicants relied on those expressions of opinion when they

- - -.

determined -to buy the Yanakie -property, -

and (d)
(e) piRRYING CAPACITY:

Mr Quine gave evidence that in the initial conversation when
he and his wife were introduced to the Yanakie property he
was told that it was 265 acres and had a capacity to milk
200 cows and carry young stock. Mr Quine also said that Mr
Redmond told him that the property "would make all the hay
and silage to see me through the winter and had the capacity
to do it." In the course of inspecting the hay shed,
according to Mr Quine, Mr Redmond told him and his wife that
"we would have to rear 50 calves at least for replacements
of our 200 cow herd." Mrs Quine confined her husband's
attribution to Mr Redmond of an assertion that they could
milk 200 head, rear replacement stock and make enough hay

..

and silage for the winter.
Later at a meeting with Mr Redmond and the solicitor, Mx Barlow, shortly before the contract was signed, it was said by one or other of them, according to Mr Quine, that, with a farm of the size of Yanakie and 200 cows, the Quines would

have no worries about making payments of $38,000 a year under a loan from the Commonwealth Development Bank. Under
cross-examination, Mr Quine acknowledged that a few days
after inspecting the property he had spent three or four
hours with Mr Hoysted, the Administration Manager of the

Leongatha branch .of Murray-Goulburn-Co-operative which -had - .
the contract to buy the Yanakie property's milk production.
In the course of that discussion, Mr Hoysted was said to
have told Mr Quine that the property "had milked up to 200 -

the same as Barry (Redmond) did. " However, according to Mr

. -. . . . . . . -- -

-.-

. -

t

Quine, Mr Hoysted also told him that the outgoing share i .
farmer, M r Dortmans had run 188 milkers and had lost 18. An I
application by Mr and Mrs Quine to the Rural Finance
Commission for finance to enable them to purchase the 1-
Yanakie property was prepared at that time, largely by Mr !
:
Hoysted, and contained the following projection of income:

"Dairying (estimated maximum number of cows malked - 170 cows @ C

170 kgs - 28,900 @ $3.10 89,590."

In a covering letter of 30 May 1984 in support of the same application, Mr Hoysted wrote:
"They (the Quines) are takang on a big project, but this is a most highly productive property with exceptionally high yields from a dastant owner/sharefarmer operataon this will improve wath a family unit running the property. The last sharefarmer lost 13 cows durang the past season - malk fever, calving, grass tetany, these cows in the previous season averaged in excess of 170 kge."

An accompanying letter of the same date from Nr and Mrs
Quine, also apparently typed in Mr Hoysted's office included

this statement: ( _ . . ,
I

i

"The purchase of this farm will enable us to keep our family !
200 cows; it is an exceptaonally well appoanted farm, we realise
together and the family will have a property big enough to malk i
our borrowing is large but we also recognise that with this size
herd we get into a production that makes it possible to service j ,I
this type of borrowing. I
' .
Should entitlements come in, this farm has had an outstanding production record."
l ..

Mrs Quine recalled the same interview with Mr Hoysted I '
although she was inclined to put its duration at about two ,.
I .
1 '.
hours.

She thought that Mr Redmond was present for part only of the interview and suggested that the information

1. : I

i ' !
\

provided to the Rural Finance Commission came partly from i
her husband and herself, and partly from M r Redmond with I I

. .
most details of the farm and its production coming from Mr

Hoysted. She identified as one of the factors which influenced her husband and herself to purchase Yanakie as

, .
!.
i'
I _
! I
,
"the ability to milk 200 head of cows which we had worked i
I-
out was what we would need to make a decent living and have :
I
the kids all together, which they wanted to be, working on 1 ,
, ,
the farm."

W Redmond's evidence was that he had been instructed by Mr . .

Kalliakoudis at the time when the Yanakie property was offered for sale in 1984 that it was then milking about 150 cows and that hay or silage or both could be cut from it. He claimed to have told Mr and Mrs Quine that it was "a good
150 cow farm" but went on to say:

"I would l i k e t o c l a r r f y t h a t a l i t t le b i t by sayrng every farmer

has h i s own way of running th ings and i f t h e t u r n out paddock i s

ava i l ab le , t h e p lace has t h e capaci ty t o milk a l o t more, o r i f

t hey want t o concentra te feed, t h e r e a r e d i f f e r e n t ways of doing

it, b u t a s f a r a s an independent c a p a c ~ t y t o c a r r y milkers, d ry

s t o c k and hay, it was a good 150 cow fann."

It is not clear from that passage of Mr Redmond's examination-in-chief whether he was asserting that he

.

_

..-..

- _ _ .

-- -

.

-- - . - .
articulated that "clarification" to the Quine's or whether
he regarded it as implicit in his alleged reference to a

"good 150 cow farm". That ambiguity was not resolved in . -
cross-examination, although Mr Redmond did then expand on

l

his reasoning by saying that as a rule of thumb, a 150 acre i

farm could be expected to milk 100 cows if the manager were to keep his own dry stock on it and cut his own hay. He extrapolated from that to assess the 256 acres at Yanakie as

i L
a 150 cow farm assuming the same management strategl, but
i
went on to say that the same farm could milk 200 cows with !
i
intense feeding, young stock kept elsewhere and hay brought I
t
I

in from outside. Also under cross-examination, Mr Redmond I
I .~

denied any knowledge of discussion of the figure 200 in : 1 .
I ,
relation to carrying capacity. 1
l i .
The evidence reveals that the maximum number of cows ever i

.
!

milked at Yanakie by Mr and Mrs Quine was 194. Mr Dortmans

,

the sharefarmer who previously managed the property said he
I
t

milked between 160 and 170 cows, at which point he regarded l

it as fully stocked. Mr Bright the purchaser who succeeded ; '
Mr and Mrs Quine said that he milked 123 cows in his first . . year gradually increasing it to 137 with some use of fodder

! -

from outside and partly rearing replacement stock on the I
property. Mr Wagstaff, another farmer, who had contemplated

purchasing the property after Mr and Mrs Quine had left, had 1:
framed a budget on his assessment that it could carry 140
!.
milkers together with young stock. He had heard that i

I I
i .- . - -- .- -. I

previous- -share£ armers -had-- mi-lked -up --to- -170- cows---without -

1 '

carrying young stock. Mr Teese, an agricultural consultant, 1,;

! who examined the Yanakie property in February 1990 expressed

the opinion in'a written report that: L :

\
* .
I .
t

- 27 -

"Very few fanners on dryland fanus with similar rainfall and soils i:
would manage their farms at a stocking rate equivalent to 200 I
milking cows and replacements on 105 ha (1.9 cows/ha). The I

average stocking rate on dry land da~ry farms in Gippsland is 1.2-

1.3 milking cows and replacements per hectare. The Yanakie 1
property would not carry this number of cows profitably because: 8 -
1'

(a) The balance of soil types with only 25% of the farm being a

heavy clay which has higher grass production in summer when S .
the sandy loam soils on the higher areas becomes too dry for r
high grass production. 8.

(b)

Based on the amount of feed that was brought in to eustain 170 milking cows (See Visser statement).

!
. .
l

(c) Experience on other farms in the Yanakie area which do not have such high stocking rates.

:
I

(d) The area of the farm which is sublect to flooding." i .

It became clear from Mr Teese's written report and oral i.
testimony and report and oral testimony and from the i , I
evidence of other witnesses, that the carrying and income-

I. I
i
earning capacity of a dairy farm depends on a number of P
! .
l

variables. For example, Mr Teese acknowledged that a production rate of 170 kilograms of butter fat per cow per

I
!.
I .
annum had been achieved on the Yanakie farm by the

I !

sharefarmer who preceded Mr and Mrs Quine with a herd of 170 -
1 ) 1 -~

milking cows and buying in additional feed. On the other

hand, if the farm were to breed and carry its own I
! -

replacement stock and cut its own hay the number of milking cows which could-be carried while sustaining the same rate

1 . .

of production would be of the order of 140. -. .

! I
i
1,

-..---v - --

-. .- - .- .- . -. . -. - - - ---
!

: I

I am satisfied that in the course of discussing the carrying !
capacity of Yanakie various assertions were made by both Mr I
i
I
Redmond and Mr Quine based on different hypotheses as to the l
L

strategies which might be adopted in working the farm. I am !
5

, . ,

- --

- - - . .- ..

- ..
i
1 .
I - .
1

also satisfied that Mr Redmond in the course of those discussions mentioned a figure of 190 or 200 cows, or adopted one of those figures after it had been nominated by Mr Quine. However, I am not satisfied that, in so doing, Mr Redmond represented that the farm could carry 190 'or 200 milking cows as well as young stock being reared as replacements and dry cows. Moreover, the actual performance of the property was canvassed with Mr and Mrs Quine by Mr

, .

Hoysted, the Murray-Goulburn Co-operative executive with ' ,
direct knowledge of the carrying capacity achieved by the
previous share-farmer. It is significant that MI Hoysted, I
who was not called as a witness, based the projections of I
,
income which he prepared in support of the Quines' I
i .
application for a loan from the Rural Finance Commission on I ,
1

an estimated maximum of only 170 milkers. It is clear ! .

therefore that any belief which M r and Mrs Quine had that !
I ,
i

the property could carry 200 milking cows was derived from-a -

'-

sanguine expectation that, working as a family unit, they -. - . - -. .

. - ... -

could increase capacity to that level. I am unable to find l

that Mr Redmond made any false or misleading representation

as to an existing fact which induced that belief. Indeed, t
0 I
having regard to the interposition of Mr Hoysted, and Mr Quinels understanding that Mr Redmond's practical dairy

t

_.. _ _ :

- - - - - - -

farming - experience; --if -any, --was -much--moYe- limited thzn-his'-
I
i

own, I cannot find that the applicants placed any reliance ! .
on any expressions of opinion by Mr Redmond on this head. I

- - 1 :
:. ,
L

Although I accept that Mr Redmond told Mr and Mrs Quine that silage or hay or both could be cut from the property, he did not represent that by that means sufficient fodder could be obtained to feed 200 milkers during winter. Indeed, a representation to that effect is not pleaded in paragraph 7(e) of the amended statement of claim. It is also significant that Mr Hoysted's projections for the Rural Finance Commission included $7,000 for buying fodder and seed for an assumed milking herd of 170. Had Mr and Mrs Quine been told a little earlier that the farm could carry 200 milkers without buying in fodder, it is reasonable to assume that they would have demurred to that projection as unduly conservative. As well, Mr Quine has sworn in answers to interrogatories in these proceedings that Mr Redmond had represented the carrying capacity of the property to be 185 plus 30 yearlings.

In the circumstances, I am not persuaded that - -
paragraphs (d) and (e) of paragraph 7 of the amended
representations as to the carrying capacity and self- sufficiency of the property were made as pleaded in sub-

statement of claim. Nor am I persuaded that the applicants in agreeing to purchase the property relied on any

. - .- - - - - - - representations- of -fact- made - orbehalf -of G &- N- in respect---
of those matters.

(f) PROFITABILITY:
The evidence discloses only that in preparing his projections for the Rural Finance Commission and the Commonwealth Development Bank, Mr Hoysted arrived at the figure of $89,590.00 as the projected return from dairying activities after Mr and Mrs Quine commenced operation at Yanakie. That projection assumed a herd of 170 milkers and made other assumptions about butter fat yields per cow and prices which would be obtained. There is nothing to suggest that Mr Hoystedrs projections were derived from anything said by Mr Redmond or otherwise on behalf of G & N. Although the applicants have totally failed to adduce evidence to substantiate the representation pleased in paragraph 7(f) of their amended statement of claim, I do not adopt the suggestion by Mr Burnside QC for the first, second and third respondents that this failure redounds against their credit on other issues.

(g) SUPERPHOSPHATE:
Mr Quine said that in the course of his first inspection of the Yanakie property he had asked M r Redmond whether superphosphate had been put on it, and had been told that

-

- - . . - - - something - like -three bins - had-been-applied in- February. ' ' He- - - - -
was either told, or inferred, that the amount so applied was 21 tonnes. He also claimed that Mr Redmond told him that

. .

superphosphate had been put on every year. Mrs Quine's
recollection was that she and her husband were told that
"super had been put on within the last couple of months". She went on to say that she and her husband had spent $3,106 in spreading superphosphate in September 1984 because the grass was not then growing as well as it should have been had superphosphate been applied, as claimed by Mr Redmond, earlier in the year. She had not anticipated a need to spread superphosphate before the autumn of 1985. Mr Redmond's evidence was that he had been instructed by Mr Kalliakoudis, the principal of the vendor Pediha Pty Ltd, that 30 tonnes of fertilizer had been put on each year and that he repeated that to Mr and Mrs Quine when showing them the property.
Mr Dortmans, the share farmer who had managed the Yanakie
property for twelve months from 1983 to 1984 gave evidence that he had applied superphosphate "from the year I arrived". He was not asked how much. Mr Bright, the purchaser who took over the property after Mr and Mrs Quine

higher areas to the lower section where it could be leached left, acknowledged that superphosphate could be washed from from the soil by flooding.
On the whole of the evidence, including that which suggests

-. - - - - -

- - -that- the property-experienced -unusually- heavy--rainsoin- mid-
1984, I cannot find on the balance of probabilities that Mr
Redmond's representation that at least 21 tonnes of superphosphate had been spread early in 1984 was untrue.

Moreover, in the light of the evidence that Mr and Mrs Quine , .
spent $3,106 on superphosphate in September 1984 without

! 8 ,
apparent complaint to G & N or any other person on behalf of

i .'
the vendors, I am not safisfied that they relied on the : '
). .
, -
representation about a February application of

- 1 .

superphosphate in deciding to purchase the Yanakie property.

(h) ABILITY M SELL JEETAO. GUYS ROAD AND VICTORIA STREET
PROPERTIES
In his evidence-in-chief Mr Quine said that some days after
he and his wife had inspected the Yanakie property, Mr
Redmond telephoned him and said "I will be able to sell your
properties within five or six weeks". Further, according to
Mr QuQe, Mr Redmond said that Jeetho was a good little -
property which would sell well because it was close to
Melbourne and there would be no trouble getting $250,000 for
it. As well, Mr Quine understood that Mr Redmond had, on
the previous day, inspected the two house properties at

was close to the tennis courts, bowling and croquet greens

Korumburra. As recounted by Mr Quine, Mr Redmondf assessment of the house properties was that Victoria Street s

and football ground and there would be no trouble getting $40,000 for it, while Guy's Road was close to the shopping

centre -and- churches - and would' bring $35 ;OO0 ; ~-Mr-S--QKiiiee-also -

, ,

gave evidence that Mr Redmond had expressed the opinion that I .
!
all three properties would sell very quickly, or within I
about six weeks.
I /
Mr Quine also testified that he gave instructions for an I
l
auction of the Jeetho property because "Barry [Redmond] had I
i
not sold it, he had not sold any of the houses so we had to
1.
do something about trying to sell some property because i ,

8 :
settlement was due on 22 Augustu. At: that time, according 1
. .
, ,
to Mr Quine, Mr Redmond reiterated his early assessment that , .
' .
the property would bring about $250,000 (or $2,000 an acre) , -
I
l
and said "it would sell well because it is close to 6
Dandenong and Melbourne and would be a good hobby farm for ! .
t ; ;
someone". ! ,
8 -
In the event, as noted above, the Jeetho property was not I
r !
sold until 5 November 1984 and then for only $195,000. The

1 r ,-
Victoria Street house was sold on 8 January 1985 for $28,000 i:
and the Guy's Road house was eventually sold on 25 May 1985 1
for $27,500. On neither of the latter sales did G&N act as

i ! 8 .
selling agent. i '
i ' I,

Mr Redmond agreed that shortly after the inspection of the !

1. ! -'

Yanakie property, he had visited Jeetho and the two houses : '
at Korumburra and later told Mr and Mrs Quine that he
thought that Jeetho would bring in the area of $250,000 and 1 .,
l

should be able to be sold reasonably quickly. However, Mr

I:' I - '

- - ,

. . . - - - - - - - - . -

Redmond -claimed- that- his - opId10n- of-the KO&-urra-liou-s553 1
i
: ' .

which he expressed to Mr and Mrs Quine, was that "they would r
make in the area of $30,000 to $35,000" each, and that he i .

I -

I . !

could not see any reason why they would not sell reasonably 1

1.

quickly. According to Mr Redmond, Mr Quine was inclined to put a higher value of $40,000 on each house.

I.
!
It is to be remembered that in the application to the Rural
Finance Commission which was prepared by or .with the i .
I .,
! -
assistance of Mr Hoysted of Murray-Goulburn values of i
I
$45,000 and $40,000 were ascribed to the Korumburra houses

! I _
I
while the similarly prepared application to the Commonwealth I
Development Bank showed as sources of funding -

"Sale of 128 acre dairy farm $250,000

Sale of house Victorra Street 40,000
Sale of house Guys Road 35,000"

There is no suggestion that Mr Redmond was present when

I ,

those figures were supplied to or discussed with Mr Hoysted.

!

Moreover, when M r Quine drew up in his own hand shortly

. ,

after 22 June 1984, a list of assets in support of his 1 '
application to City Credit for finance, he ascribed values i.
of $30,000 and $35,000 respectively to the Victoria Street I

and Guys Road house. i ,
I - ' I

No version of the evidence bears out the allegation in 1 .,
paragraph 7(h) of the amended statement of claim that it was 1 :,

represented that each house would sell for $40,000. Nor I !
I
l .

. - -

does -the -evidence-establish-tlie -concluiiiKg- assert-Zen-in 'that - ' - , .

sub-paragraph that it was represented that the applicants I
I ..
would "thereby (i.e. by reason of the sale of Jeetho, Guys f
i
Road and Victoria Street at the prices allegedly ascribed to 1.

I_ '
them) be able to "finance the purchase of the said land."
I :.
The evidence suggests that any representation on this matter was made shortly after the inspection of the Yanakie property. It was then manifestly clear that even if $330,000 were realized from the existing properties additional finance would be needed to complete the purchase of Yanakie and Mr Redmond had not by then taken part in any discussions of the source of that additional finance. I therefore regard it as inherently unlikely that he said anything to the effect of the concluding words of sub- paragraph 7(h) which are redolent of a pleader's flourish.
I find that Mr Redmond told Mr and Mrs Quine in effect that
the Jeetho property would sell for about $250,000 and the
two houses for amounts in the vicinity of $35,000 each and
that each property could be sold reasonably quickly if
offered at those prices. As is apparent from their form and
the circumstances in which they were made, those statements

were expressions of Mr Redmond's opinion and were so ...-

- - . -
-

. . -. - .

. -

understood, at least by Mr Quine. That conclusion is borne

out by the way in which he adopted or departed from, as he saw fit, the values ascribed by Mr Redmond to the house

properties. Nor did Mr Quine reproach Mr Redmond when it had become apparent by late July that he had been unable to sell Jeetho -or either of the -houses and-it was .necessary -to give instructions to auction Jeetho. I am not persuaded that Mr Redmond did not in fact hold the opinions to which I have just referred when he expressed them. Indeed, Mr Lee, a sworn valuer called by the appellants who assessed the value of the Jeetho property in May 1984 at $202,500
conceded that another valuer could not unreasonably have
valued it as at the same time at $250,000.
Mr Redmond had no motive to mislead Mr and Mrs Quine about
his opinion as to the prices likely to be obtained for their
existing properties or how quickly they could be sold,
because there is nothing in the evidence to suggest that
their decision to purchase the Yanakie property turned on
the existing properties realizing between them not less than
$320,000 or on their being sold within some specified time.

That absence of reliance on Mr Redmond's opinions, at least . -

in respect of the Korumburra houses, is borne out by the fact that Mr and Mrs Quine did not seek any second opinion although Mr Redmond was known to them as a former twine and farm supplies merchant and resident of Leongatha primarily concerned with the sale of farms.

CONCLUSION AS TO THE REPRESENTATIONS:
It will be apparent from the resum6 which I have just given, that the applicants have not established in respect of any one

- - representation -pleaded in -paragraph -7 -of--the amended statement' of -.
claim, the three elements necessary to found recovery of damages. Those three elements are that the representation was made in the terms pleaded, that it was false or misleading, and that the applicants relied on it in deciding to enter into the contract to
purchase the Yanakie property. The question of how the damages claimed by the applicants against the first second and third

! .

respondents should be quantified also raised considerable !'
l
difficulties, both factual and legal for the applicants.
However, because of their failure to make out the other elements

I,. 1-
essential to a cause of action based on any of the !
I
I
representations pleaded, it is unnecessary for me to consider l I
that issue further. Accordingly, the action against the first
three respondents must be dismissed.
CLAIM AGAINST TIIE FIFTH RESPONDENT:
).
The claim against the fifth respondent firm, Birch Ross & Barlow, i
is embodied in the following paragraphs of the amended statement
of claim:

"18. Further, the applicants in or about the first week of June, 1984 retained and employed the fifthnamed respondent to act as the solicitors !
for the applicants in connection with:- . .&

I !
i

(a) the purchase of the said land; I
(b) financing of the purchase of the said land; I
(C) the sale of the applicants' properties;

(d) advising the applicants generally in connection with the purchase of the said land, the financing of the same, the

l-

sale of the applicants' properties and as to the affairs of !
the applicants in connection therewith (hereinafter called
"the said retainer"). i L

PARTICULARS 1. .
I

The said retainer was partly oral comprised in conversations taking 1 :
place at the offices of the fifthnamed respondent in or about the first I
week of June, 1984 between the applicants of the one part and John L

I Barlow of the fifthnamed respondent of the other part the material I

- - . - - -. - -

substance -of which '-was- toKthe ef feet-alleged-Xni partly -to be implied

from the conduct and relataonship of the parties to the said retainer, l
from the nature of the subject matter thereof, to give commercial ,I
efficacy to the intentions of the parties, by operation of law and from I -
[all] of the facts and circumstances of the case. I

I I

19. It was a term of the said retainer that:- - . . .
I

T 6
8

m .
1

- - -

-

i

(a) the fifthnamed respondent would exercise all reasonable care
and skill in the discharge of the fifthnamed respondent's

duties pursuant to the said retainer;
the fifthnamed respondent would at all times act in the best
(b) interests of the applicants;
(C) the fifthnamed respondent would give the applicants proper
advice.
20. The fifthnamed respondent pursuant to the said retainer acted as the applicants' solicitors in connection with the matters referred to in paragraph 19 hereof.
21. In breach of the saad retainer:-
in early June, 1984 the frfthnamed Respondent:-

(a)

failed to advise the applicants that they did not have the financial capacity to purchase the property;
Ib)

failed to advise the amlicants to ~ersist with their
. .
applications for fina;lce to thG Rural Finance
Commissron and the Commonwealth Development Bank;

(c)

failed to advise the applrcants that any contract for the purchase of the property should be condltronal upon: -

-

(i)

obtaining finance from Rural Finance Commission and the Commonwealth Development Bank;

(ii)

alternatively, obtarning frnance from a reputable financial rnstitution at rates which they could afford to pay;
(ili) the sale of their existing properties for

particular prrces wlthin a part~cular perlod;

(d) failed to advase the applrcants of the terms and
-- conditions upon whrch finance from City Credit was offered;

(e) advising the applicants to accept the offer of finance

from City Credat;

(f)

fa~led to advise the applicants to seek independent advice or expert advrce on the feasibil~ty, viabrlity or appropriateness of the purchase.

Prior to the sale of the Jeetho property and/or the settlement of the purchase on 5th November, 1984 the fifthnamed respondent:-

. -

_

_

_ _

._ _-

- 7_-..-----

- . _ _ . . _ C . . - .

- -. - - - -.

. .
- -

- . -. .-- -... - .

. - - --Cap - -permitted-the-contract-of - s a l e 0 -become- unc0nditfona~'-I

without finance being available;

(b)

advised the applicants to take bridging finance on terms and in circumstances which affected their ability to proceed with the transaction;

(C)

failed to advise the applicants of any rights they may have had to avoid the purchase or to take any further action in relation to the repreaentations made by the other respondents concerning the property.
22.    By reason of the matters aforesaid the applicants have suffered
loss and damage.

(a) The applicants could have avoided the said agreement on or about 22nd June, 1984 and would have elected to do so. The applicants had not sold any of the applicants' properties at that time and would have incurred minimal losses. The applicants refer to and repeat the particulars subjoined to paragraph 13 hereof.
(b) The applicants have paid legal fees to the fifthnamed respondent which were wasted, full particulars of which will be provided prior to trial of the action herein.
23.   Further, in actlng as the solicitors for the applicants in connection with the matters referred to in paragraph 19 hereof, the fifthnamed respondent was negligent in the conduct of such matters on behalf of the applicants.
The applicants refer to and repeat the particulars subjoined to paragraph 22 hereof.
24.    By reason of the matters aforesaid the applicants have suffered loss and damage.

PARTICULARS

The applicants refer to and repeat the part~culars subjoined to paragraph 23 hereof."
It has been pointed out in Hawkins v Clavton (1988) 164 CLR 539 by Mason C.J. and Wilson J. at 544 that the extent of the duty of care owed by a solicitor to his client depends on the terms and

!

limits of the retainer or conduct under which the work was done. t
I
It is clear that Mr and Mrs Quine retained Mr Barlow to act for i ,
1.
them in connection with-the purchase of the Yanakie property.
L '
Almost immediately after that retainer was given and accepted the . 1: I
prospect was raised of finance to complete the purchase being
- - --------

_ _ _ _

. .

, obtained from City Credit. When a firm offer of finance from f ; "

I City Credit was received it was discussed with Mr Barlow and j , ~ .
:
I.
aspects of it were compared with the terms which it was believed t

- . -

I l .

I might be offered by the Rural Finance Commission or the I

- . t

i I ,

Commonwealth Development Bank. I accept, therefore, that it is 1

to be implied from that discussion that the terms of the retainer I _ ,
, -
were expanded to oblige Mr Barlow to advise M r and Mrs Quine

I - i
whether it was in their interests to accept a loan on the terms 1 .
offered by City Credit rather than to proceed with an application t
to either of the other prospective lenders for finance. 1 .

l -
It appears from the amended statement of claim that the
applicants seek to establish a breach of duty arising from the 1.
retainer as so expanded which is predicated on the view that it

! I. !
would have been more advantageous for Mr and Mrs Quine to have I
obtained finance from either the Rural Finance Commission or the i

Commonwealth Development Bank, than to have accepted the offer from City Credit. By way of refining that predicate, it-is implied in sub-paragraphs (c) and (d) of paragraph 21 of the amended statement of claim that City Credit was not a reputable financial institution, that it offered rates of interest which Mr and Mrs Quine could not afford to pay, and that the terms and
conditions which it offered were otherwise more onerous than those available from either the Rural Finance Commission or the Commonwealth Development Bank.
None of those implications has been made out on the evidence. Mr

- - . Barlow-was -unshaken -when-cross-examined-on--his-assertion 'that -hK-'---- 1
I '
!

regarded the rate of 13% per annum offered by City Credit as an i
I :
"excellent rate of interest". It is true that the rate offered 8 *

- - . I

by City Credit was variable after- three months with a right in S ,
the borrower to repay the loan within 60 days if the new, higher,

1 : I

1 , t *

rate was not acceptable. However, the evidence suggests that the rate of interest then being offered by the Commonwealth Development Bank was similarly variable, and the rate offered by the Rural Finance Commission, although fixed, was applicable to loans up to a maximum of $100,000. That, of course, was much less than the $345,000 offered by City Credit, the full amount of which was required by Mr and Mrs Quine to finance their purchase of the Yanakie property.
As well, both the Rural Finance Commission and the Commonwealth
Development Bank would have required the contract to purchase to
be conditional for sixty days pending approval of the loan
application. In the light of the vendor's insistence that the
contract become unconditional by 21 June 1984, being the
advertised date for the auction of the property, and Mr and Mrs

Quinefs anxiety to conclude a contract before then, I do not !

I I
f . .
consider that Mr Barlow could reasonably have insisted that they
I_
I

forego the offer from City Credit and continue their applications

I- I
I

for finance to the Rural Finance Commission and the Commonwealth i
Development Bank. I am reinforced in that conclusion by the fact I

that although a commitment fee and brokerage fees were attracted B ,
i .
. .
, ..
by the loan from City Credit, some establishment fees were also
!

payable to, at least, the Commonwealth Development Bank. . . .-. I- 1

Most significantly, on this aspect, there is no evidence that the i
I
interest payable by Mr and Mrs Quine, had an appropriate amount I
1 -:
been borrowed from either the Rural Finance Commission or the
I
Commonwealth Development Bank, would have been less than the l .
I

i
I

amount in fact paid as rent to the vendor pending completion and as interest to Trion Holdings Pty Ltd which came to be substituted for City Credit as first mortgagee. Consequently, Mr and Mrs Quine have not been shown to have suffered any damage, if, contrary to the finding indicated above, their solicitors were in breach of some duty in advising them to obtain the loan which they did.
The next group of related allegations out of which a breach by Birch Ross & Barlow of their duty of care as solicitors was said to have arisen concerned their failure to advise Mr and Mrs Quine that they lacked the financial capacity to purchase the Yanakie property, or at least to advise them to seek other, independent, expert advice on that matter.
Mr J.M. Dwyer, a senior solicitor from Warrnambool with wide experience of conveyancing of dairy farms, was called as a witness by Counsel for the applicants. He expressed the opinion

purchasers of a dairy farm could viably conduct the enterprise that a prudent solicitor would assess whether prospective

and would take into account their ability to service the loan required to complete the purchase. He also indicated that assistance in making such an assessment should be sought from the

-prospective purchasers ' - -accountant,- and, - - possibly-,--'Xroii--- an ---- - .--

agricultural consultant. However, Mr Dwyer very properly conceded that the primary duty of a solicitor is to carry out the client's retainer. As well, he acknowledged that a solicitor does not usually hold himself out as possessing expertise as a land valuer or financial adviser.

That acknowledgment conforms with what was decided in Rendel v Edaelow (1909) 53 Sol. J. 237. ' As noted in that report, Neville
J "appears to have assumed that the plaintiff, the client, had
acted injudiciously in contracting for the purchase of certain house property and building land. But he could not hold that the defendant, the solicitor, who acted for the plaintiff in the purchase and in raising money by mortgage for that purpose, was responsible merely because he had not dissuaded the plaintiff from entering into the different transactions."
In the present case, the evidence does not suggest that Mr Barlow. had any retainer from Mr and Mrs Quine other than to act in the conveyance and to attend to what was required to effect the provision of finance by City Credit once that company had been fixed on as the appropriate source of funds. There is nothing to

Quine's ability to derive enough income from the Yanakie property indicate that Mr Barlow held himself out as assessing Mr and Mrs

to pay the interest on the loans necessary to complete its purchase. On the contrary, he was made aware that the applicants had obtained information from Mr Hoysted of Murray-Goulburn as to

. - -. - . -. . -- - -

the productivity -of the-fdrm~-as-'mana~ed-byy'y'the previous share-
farmer. That information was not provided to Mr Barlow.
Moreover, it is clear that he would have required many other

-

details before he could usefully judge whether the Quines' project was economically viable, assuming always that he had the expertise to make such a judgment. In this context, the following passage from the judgment of Williams J (with whom Connolly and McPherson JJ concurred) in Orszulak v Hoy (1989) Aust. Torts Reports 80-293 at 69, 184 can be paraphrased to apply to the circumstances of this case:
Y h e extent of a solicitor's duty to his client depends upon the terms and limits of the retainer. Here the only retainer was to act in the conveyances. On the earlier date, when the appellants had arguably sought commercial or business advice, the respondents had sent them off to an accountant; therefore it could not be said that by prior conduct the respondents had held themselves out as being willrng or able to offer commercial advice. Further, on the evidence the appellants dad not put the respondents in a position enablrng them to give meaningful commercial advice as to the transaction. The evidence clearly establashes, as found by the learned trial Judge, that the respondents did not know at the material tune detarls of the appellantsr financial standing."

See also Hoqan v Howard Finance Ltd (1987) ASC 55-594 at 57,539.
It may be that a cautious and experienced practitioner observing
the standards which appear to have guided Mr Dwyer would have
advised Mr and Mrs Quine to obtain detailed accounting advice
with variable cash flow projections to ensure that they could
meet their new liabilities even in the most adverse eventualities
which could be predicted. However, to spell out of the retainer

to Barlow, a duty to tender that advice would be to impose a

different standard of care on different solicitors retained on similar terms according to their experience of the vicissitudes of dairy farming or any other economic activity proposed by the

-. .--- client. - In~declining~to--taketha~ourse.,I-adopt-.with-respect-~~~- . .

. - - - .-- .--- - -
the following observations of Oliver J in Midland Bank v Hett.
Stubbs & KemD [l9791 1 Ch. 384 at 402:

--

"Now no doubt the duties owed by a solicitor to his client are high, in the sense that he holds himself out as practising a highly skilled and exacting profession, but I thlnk that the court must beware of imposing

upon solicitors - or upon professional men in other spheres - duties which go beyond the scope of what they are requested and undertake to do. It may be that a particularly meticulous and conscientious practitioner would, in his client's general ~nterests, take it upon himself to pursue a line of inquiry beyond the strict limits comprehended by his instructions. But that is not the test. The test ie what the reasonablv comwtent ~ractitioner would do havina reaard to the standards nonualiy adGpted Ln his profes&, and cases &ch as Duchess of Arwll v Beuselinck [l9721 2 Lloyd's Rep. 172; Griff~ths v Evans [l9531 1 W.L.R. 1424 and Hall v MevriCk [l9571 2 Q.B. 455 demonstrate that the dutv is directlv related to the confines of the

-

*
retainer."
The next identifiable breach of duty alleged against Birch Ross & Barlow is their failure to advise Mr and Mrs Quine that the contract for the purchase of the Yanakie property should be conditional on the sale of the Jeetho property and the Korurnburra houses for particular prices within- a particular period. As already recounted, the bulk of the price of $195,000 for the Jeetho property was received on 8 January 1985. On 22 June 1984, and, as I infer, at all material times before that its net value had been assumed to be $190.000. Had it been sold by the end of September 1984 for a price which realized that net value, Mr and Mrs Quine would have saved an amount by way of interest in the order of $9,000 between that time and 8 January 1985 when its .

sale was completed. Accordingly there was a considerable benefit

to be achieved by making the purchase of the Yanakie property - .-

conditional on the- sale of Jeetho by 30 September 1984 for not
less than $250,000.

. .

.- -. - - - . -- - .-- - - - - - - . - --

However, two principal difficulties stand in the way of the applicants' establishing this alleged breach of duty by the applicants' solicitors. The first is the finding already recorded, that the vendor would not have agreed to the insertion
in the contract of any term which had the effect of preserving it as a conditional contract after 21 June 1984. In the light of the applicants' communicated anxiety to proceed with the purchase there would have been no point in Mr Barlow's insisting on the insertion of a condition to the' effect which I have' just described. In the second place, there is no evidence that once it became apparent in or after August 1984 that a sale of Jeetho could not be concluded by the end of September for $250,000 or anything like that amount, Mr and Mrs Quine would have resiled from the contract to purchase Yanakie had that course been open to them. They did not pay the balance of the price for Yanakie until 9 November 1984 but made no attempt before that date by way of instruction to M r Barlow or otherwise to escape from their obligation to complete the purchase of the Yanakie property.
Similar considerations apply to the suggestion that Mr Barlow should have insisted that the contract to purchase the Yanakie property be conditional on the sale of the house properties at

Victoria Street and Guy's Road Korumburra for gross amounts of $40,000 and $35,000 respectively by, say, 15 August 1984. Had the properties been sold in accordance with such a condition, Mr

and Mrs Quine would have achieved a saving of interest between mid- August 1984 and 24 July 1985, when the sale of Guy's Road was completed, in the order of $7,500. However, it was 'clear in

I June 1984 that the vendor of the Yanakie property would not have
I
I agreed to its sale being conditional on the sale by M r and Mrs

i

Quine of the Korumburra house-properties. Moreover, during the period of delay until November 1984, in receiving funds from the
l

ultimate first mortgagee, it had become apparent that the Korumburra house properties were not readily saleable at anything like the prices variously ascribed to them. Nevertheless, Mr and Mrs Quine did not seek in any way, in consequence of that realization, to withdraw from the purchase of the Yanakie property.

Accordingly, the applicants have not established a breach of duty by Mr Barlow arising from the fact that the contract for the purchase of the Yanakie property was not subject to either of the conditions just discussed. In addition, because of the absence of evidence that they would have invoked either condition in mid- August 1984 to avoid the contract to purchase the Yanakie property it has not been shown that any damage flowed from this alleged breach of duty.
I turn to consider the allegation that in further breach of his
retainer, or negligently, Mr Barlow "advised the applicants to

::a
take bridging finance on terms and in circumstances which

affected their ability to proceed with the transaction". I. !. ,
i
1.

The bridging finance to provide the deposit on the purchase of I
the Yanakie property was obtained from the Commonwealth Bank and

i Il ..

..the..necessity-for--it -arose-from --the-fact -that- Mr-and-Mrs-Quine- on - - - - -

- - -

I-:
!
22 June 1984 had no funds of their own from which the deposit

j.

could be paid. There is no evidence to suggest that bridging I
!

finance could have been obtained on more favourable terms from I .
any other source.

The bridging finance secured by a first mortgage over the Jeetho I
\
property was in part necessary to discharge the existing mortgage i
over that property to Mr Natoli's clients. The balance of that i
finance and the whole of that obtained from the Commonwealth Bank
was, I infer, applied to the payment of rent for the Yanakie l
property pending settlement, interest and living and incidental I
expenses of Mr and Mrs Quine and their family. The need to i
obtain so-called "bridging finance" to meet those expenses 1
!
I
demonstrates that Mr and Mrs Quine were not generating sufficient
i

income from their farming activities to meet current expenses and

I I
had no liquid funds at all. However, apart from the possibility
l I ,
discussed above that the purchase of Yanakie might have been made I_
conditional on the sale of Jeetho and, perhaps, the Korumburra
houses, there is nothing to support the suggestion that the 1.
bridging finance to which I have so far referred was unnecessary. I.
Nor does it appear to have been obtained at higher rates of

1 t -
, .

interest, or otherwise on tens more onerous to Mr .and Quine, ; = I

.- L

. - - - .-- . .-

.-- I
than similar finance available from other sources.

i

The remaining "bridging financev consisted of $30,000 advanced in 1
!L.

November 1984 by Mr Ware on the security of a second mortgage over the Yanakie property and a stock mortgage and $18,000

1 ,
advanced by Messrs Ross and Barlow on the security of the Guy's
? .

- - Road house.--Again, there-is nothing--to suggest that--the rates ,
I

interest or other terms applicable to these loans were more ,
onerous than those which would have applied to other finance !

- obtained in the same circumstances. It is clear that the need 1, ,-
for that finance arose fzom the failure to complete by November
1984 a sale of any of the Jeetho farm and the Korumburra houses.
No responsibility for that failure can be attributed to any negligence or other breach of duty by Mr Barlow.
The final breach of his retainer or negligent omission alleged against Mr Barlow's firm is that it "failed to advise the applicants of any rights they may have had to avoid the purchase or to take any further action in relation to the representations made by the other respondents concerning the property".

It will be apparent from what I have already said that Mr and Mrs Quine did not have any riqht after entering into it to avoid the contract to purchase the Yanakie property. Had Mr Barlow advised them at some time before November 1984 to refuse, in breach of contract, to proceed with the purchase, they would have forfeited the deposit and exposed themselves to an action for damages or specific performance as a result of which they could well have sustained even greater losses than those which they incurred after completing the contract.

The evidence does not suggest that Mr and Mrs Quine ever sought

advice from Birch Ross & Barlow in relation to representations

I made by Mr Redmond or any of the other respondents concerning the
!
I

- - Yanakie property. - Indeed,-- it -- does-- not- -appear that---they even--.
complained that anything said to them about the property had proved to be false or misleading. In any event, since I have

1 I

! held in the earlier part of these reasons that the applicants
have not made out a cause of action based on any representation

concerning the Yanakie property made by any other respondent, it t I ~

I

follows that Birch Ross & Barlow were not in breach of any I
retainer or other duty to the applicants in not advising them to !,
I
take action against those other respondents. L

1. ~
CONCLUSION . .
!
This case has revealed that a crippling loss of tragic
i
proportions has been suffered by the applicants. However, I am l
forced to conclude that the loss was sustained because they il
attempted with insufficient capital resources to make the !-.
I '
transition to a larger farm at a time of a downturn in the dairy I
!
industry with a concomitant fall in butterfat prices. Those
circumstances had a repercussive effect on the value of the farm :
I
which they had previously conducted at Jeetho and to a lesser
t I
extent on the value of the house properties at Korumburra. Their :
already insufficient capital resources were thus further
depleted, and their failure to maintain the previous levels of , ,
productivity which had been achieved at Yanakie compounded their I
1 .-

difficulties. However, for the reasons given above I am unable i
I

to attach responsibility for those difficulties to any I _
1
misrepresentation by the first, second or third respondent or any r-
breach of duty by the fifth respondent. Accordingly, the 1

, :. ,
I
application against each of those respondents must be dismissed i -.

with costs. . . - - - - -. -
-

- . .- - .

-. - -

.-
I certify that the
preceding fifty (50) pages
are a true copy of
the reasons for judgment
of his Honour Mr Justice Ryan
Associate: TV

Counsel for the Applicants: Mr G.R. Anderson QC and
Mr N.F. Coburn
Solicitors for the Applicants: Herbert, Geer and Rundle
Counsel for the First,
Second and Third Respondents: Mr J.W.K. Burnside QC and
F! M.T. Bevan-John
Solicitor for the First,
Second and Third Respondents: Godfrey Stewart & CO

Counsel for the Fifth

Respondent: Mr M.J. Crennan
Solicitor for the Fifth
Respondent: Sly and Weigall

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Citations

Quine, L.R. v Gippsland & Northern Pty Ltd [1992] FCA 129

Cases Citing This Decision

0

Cases Cited

1

Statutory Material Cited

0

Hawkins v Clayton [1988] HCA 15

VICTORIA DISTRICT REGISTRY	1	No VG 85 of *1987*
1
GENERAL DIVISION	1

m:	Settlement and entry of orders is dealt with Order
36 of the Federal Court Rules.

The Waratah Bay property was passed in at auction and sold about a week later. Mr and Mrs Quine made no offer for that property, having decided that their available capital was insufficient to fund the purchase. Late in May 1984 Mr Redmond telephoned Mr Quine and told him that he had a property at Yanakie which would meet the applicants' requirements. Mr and Mrs Quine travelled to Yanakie on the same day and were met at the property on Paterson's Road by Mr Redmond and the third respondent, Mr Dwyer, who was also an employee of G & N. Mr and Mrs Quine were then conducted on an inspection of the property which was curtailed because of heavy rain. They were introduced to Mr Kalliakoudis, a director of the vendor of the Yanakie property, who was then living in the homestead on the property.	However, Mr Kalliakoudis did not accompany the applicants on	their inspection which took in another, vacant, house formerly
occupied by a share-farmer.

On 5 June 1984, Mr and Mrs Quine attended, by arrangement, at the Leongatha office of G & N to sign a contract for the	,
:
purchase of the Yanakie property. Mr Redmond then suggested that	1 .

of the Yanakie property.	Mr and Mrs Quine agreed and an	i ,
. ,

When Mr and Mrs Quine, accompanied by Mr Redmond, attended at Mr Barlow's office, Mr Kalliakoudis, the director of the	1:
!

(Mortgages) Pty Ltd ("City Credit") which held an existing second	i	I .
mortgage over the Yanakie property.	Mr Kalliakoudis then	i

telephoned a Mr Lucas of City Credit, and told those present in	1, I I
Mr Barlow's office that finance could be obtained from City	i
! .
Credit.
Mr Kalliakoudis then instructed Mr Barlow to act as well for the vendor on the sale of the property. A form of contract was then prepared which recited, among the general conditions, that:

allowed by	t h e Vendor	f a i l i n g which	a l l monies	s h a l l
be	refunded	whereupon	t h i s con t rac t s h a l l be	n u l l and

The particulars of	- sale as inserted in the printed form of	!. .
!

7. From the 16th day of June, 1984 to the date of settlement the	I
purchasers shall have the right to lease the subject property and	I ,
all improvements erected thereon save and except house number 1	I
the 16th day of June, 1984 the Purchasers shall also take	for a rental of $100.00 per acre payable monthly in advance. On
possession of the livestock and plant and from that date such	1
shall be at their own r~sk.	All income obtained from the livestock
and plant from the 16th day of June, 1984 shall belong to the	!
period. A formal-Lease encumbering the aforesaid shall be prepared
Purchasers together with any calves born of livestock during that	i
by the Vendors Solicitors at the Purchasers' cost."
On 12 June 1984 City Credit wrote to *M r* Kalliakoudis making	t ,

"Mortuaaee:	Petluc Investments Pty. Ltd	i
Suite 6, 456 St. Kilda Road, Melbourne and	I ,
or Nominee.	L - '
Mortaaaors:	Laurence Richard Quine. Mary Quine. Both of Jeetho, via Loch, Victoria.
Security:	A registered First Mortgage over the property sltuated Paterson Road, Yanakie, Vrctoria.
Purpose:	To complete the purchase of the security property.
Loan Amount:	$345,000.00
Loan Term:	3 years.
Interest Rate:	Acceptable Rate - 13% per annum. Penalty Rate - 3%.
Reeavments:	Interest payable three months' in advance, with the right to repay multiples of $5,000.00 principal at any quarter.
Title Details:	Volume 9287.	Folio 685.
Credit Stamp Duty:	Not Applicable.

Special Conditions:	(1). A commatment fee of 1% of the loan amount, namely $3,450.00, 1s payable to the Mortgagee on acceptance of this letter of offer on the attached form.
(2). This offer will lapse if not

June 1984, and, on 22 June 1984, Mr and Mrs Quine executed a	1
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lease prepared by Birch Ross & Barlow of the Yanakie property and a herd of 100 milking cows for a term of two months from 22 June	.	-	I
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"LIABILITIES	ASSETS
Mortgage Loan - $60,000.00	127 acres at
Farm	Jeetho
Mortgage Loans - $25,000.00	Livestock
Two houses

Bank Overdraft	$5,000.00	Plant & Farm Equipment
surplus of	$397.OO(sic)	House - 55
assets over	Victoria Street,
l~abilities	Korumburra
House - 15 Guys Road, Korumburra
Caravan
Money lodged on

22nd August, 1984, because your Mortgagee ($345,000.00) drd not	"We note this matter was not settled on the due date namely the
have sufficient funds.
Apparently these funds will be to hand in the next few days and settlement effected at that stage but in the meantime we note that you must continue to pay rental under the Leasing Agreement at the rate of $2,190.00 per month until date of final settlement.

interest due for the first quarter. The next interest payment of	1..
$11,212.50 is due on the 9th February, 1985. Please arrange for	1 . I

payment to be made on or before the due date to a v o ~ d	interest at	r ,
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the higher rate, which will be $13,800.00.	t
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[1992] FCA 129

19 Mar 1992

For any further information you may require please contact: the	I ,
undersigned."

In the meantime, Mr Barlow had apparently advised Mr and w s Quine that even if the first mortgage funds promised by City	I	I
Credit were to become available, there would still be a shortfall	l
of about $50,000.	To make up that deficiency, $30,000 was	t -

property to a Mr and Mrs Enbom for $195,000.	The balance of the	I
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We calculate this amount to be 54.887.50 beina one month's
lnterest at the penalty rate of 17% o n the	sum, namely
$345,000.00.

liability for interest, Mr and Mrs Quine resolved to subdivide	l.
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the Yanakie property and sell off the share farmer's house and	1
surrounding land of about five acres together with three one-acre	I

On 4 November 1985 the Yanakie property was offered for sale at the instigation of Network but was not then sold. After being	served on 28 November 1985, on behalf of Network, with a Notice
to Pay under the mortgage and a Notice to Quit, Mr and Mrs Quine left the Yanakie property in February 1986. After completion of

"(a)	That the fences on the farm were in good order;
(b)	That the farm had an excellent irrigation and watering system comprising two windmills, and a 17 acre foot irrigation dam and an underground bore;
(c)	That rrrigation system would provide unlimited water for the house and land;
(d)	The farm had the ability, facilities, equzpment and capacity to mrlk 190 to 200 cows;
(e)	The fann was self-sufficient and could manufacture enough hay and silage to feed between 190 and 200 cows in winter;
(f)	The fann would bring in S80.000.00 net profit per annum from milklng the 190 to 200 cows;

(g)	That 30 tonnes of superphosphate had been spread on the said land in the past few months;
(h)	That the Applrcants would be able to sell wrthin six weeks their farm property at Jeetho for $250,000.00 and their house properties at 15 Guys Road Korumburra and at 55 Victorra Street Korumburra for $40,000.00 each (herernafter collectively called 'the Applicants properties') and thereby frnance the purchase of the said land."

fencing on the property was good or stock-proof but I am	1
unable to find that to have been misleading or deceptive.	!
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The condition of the fences was something which would have
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been readily apparent on a visual inspection either when
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that ihe electric fences were "virtually all down" when he	I
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and his wife went into possession, the only specific	I ,
evidence that Mr and Mrs Quine expended any money, labour or	I
materials on repairs to fencing during their period of
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occupation is that of Mrs Quine who said that she and her	L
husband had to patch up some of the electric fences around	1