Read v Burns
[2017] ACTSC 184
•27 July 2017
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Read v Burns |
Citation: | [2017] ACTSC 184 |
Hearing Dates: | 1-5 February 2016 and 16-20 May 2016 |
DecisionDate: | 27 July 2017 |
Before: | Burns J |
Decision: | There will be judgment for the first and third defendants against the plaintiff. Unless any party applies for a different costs order within 28 days of publication of these reasons, I order the plaintiff to pay the first and third defendants’ costs of the proceedings. |
Catchwords: | EVIDENCE – credibility and the reliability of evidence – contemporaneous documents – recollection of events – plaintiff’s evidence unreliable – expert evidence – expert code of conduct – partisan witness and not subject to the expert witness code of conduct – failure to call witnesses – Jones v Dunkel – cannot give rise to any inference. TRADE AND COMMERCE – trade practices – misleading and deceptive conduct – misrepresentations – s 12BB of the Australian Securities and Investments Commission Act 2001 (Cth) – false representations and other misleading or offensive conduct – reliance on representations – Corporations Act 2001 (Cth) – accessorial liability – whether defendant must have reasonable basis for statement – seminar – marketing document – plaintiff cannot establish liability – registrable bodies – registration of managed investment schemes – scheme was a managed investment scheme – required to be registered – scheme not illegal or unlawful. NEGLIGENCE – allegations of negligent acts and omissions in the provision of legal services – terms of retainer – solicitor’s duty of care – failure to act with due skill, care and attention – failure to make necessary enquiries – no breach established – first defendant not liable in negligence. DAMAGES – suffered loss and damage – exemplary damages – consequential losses – reduced value of unit – reduced income – no evidence plaintiff suffered any loss or damage. |
Legislation Cited: | Australian Securities and Investments Commission Act 2001 (Cth) ss 12BB, 12DA, 12DC Civil Law (Wrongs) Act 2002 (ACT) Chapter 4 Strata Schemes Management Act 1996 (NSW) s 13(3) |
Cases Cited: | Agar v Hyde [2002] HCA 41; 201 CLR 552 Ali v Hartley Poynton Ltd [2002] VSC 113; 20 ACLC 1006 Collen v Wright (1857) 120 ER 241 Cousins v Cousins [1991] ANZ ConvR 245 Crossley v Crowther (1851) 9 Hare 386 Hawkins v Clayton (1988) 164 CLR 539 John Pfeiffer Pty Ltd v Rogerson [2000] HCA 36; 203 CLR 503 Regent Leisuretime Ltd v Skerrett [2006] EWCA Civ 1184 Robertson Street Properties Pty Ltd v RPM Promotions Pty Ltd [2005] QCA 389 Yorke v Lucas (1985) 158 CLR 661 |
Texts Cited: | J D Heydon, Cross on Evidence, Australian Edition (Butterworths, 1996) |
Parties: | Jeffery Maxwell Read (Plaintiff) Diana Mary Burns (First Defendant) Prime Property Investment Pty Ltd (Second Defendant) Sidney Knell (Third Defendant) |
Representation: | Counsel Self-represented (Plaintiff) Mr MJ Walsh SC (with Mr WDB Buckland 1-5 February 2016) (First Defendant) Dr B O’Hair (Second and Third Defendants) |
| Solicitors Self-represented (Plaintiff) Boettcher Law (First Defendant) S & T Lawyers (Second and Third Defendants) | |
File Number: | SC 350 of 2008 |
BURNS J:
In December 2001, the plaintiff, together with his daughter Susan Read and a friend Sharon Lim, attended a seminar or presentation given by the second defendant Prime Property Investment Pty Ltd (PPI) in Canberra. This seminar focussed on the potential for investment in serviced apartments, and in particular, in the Waldorf South Sydney development (the Waldorf development). The vendor of the apartments was FAI General Insurance Company Ltd (FAI), a company in liquidation. Because the vendor was a company in liquidation, some aspects of the sales arrangements had to be approved by the New South Wales Supreme Court and by the Australian Securities and Investments Commission (ASIC). The apartments were marketed by PPI on behalf of the vendor and they were offered for sale on the basis that a purchaser could enter into a management agreement which offered a five year rental guarantee.
At this seminar the plaintiff obtained a booklet or brochure prepared by PPI and entitled “Investment Opportunities Through PPI Pty Ltd – Waldorf South Sydney”. The plaintiff referred to this document as the “Waldorf Disclosure Document” because he wished to assert that it was a disclosure document for the sale of securities for the purposes of the Corporations Act 2001 (Cth) (the CA). For the reasons I will give, I am satisfied that it was not a disclosure statement. I will retain the plaintiff’s description of the document where I quote the plaintiff, but otherwise I will refer to it as the Waldorf marketing document.
In May 2002 the plaintiff purchased unit 206. The first defendant, a firm of lawyers practising in the Australian Capital Territory (ACT), acted for him, although there is a dispute about the terms of the retainer agreement. At the time of purchasing unit 206 the plaintiff also entered into a Unit Management Agreement (UMA) with Waldorf Apartments South Sydney Pty Ltd (WASS), a company associated with the vendor. Another company associated with the vendor, Rinbac Pty Ltd (Rinbac), had previously been appointed Manager of the Waldorf development.
The plaintiff asserted that misrepresentations were made to him by PPI concerning the property and the UMA before he purchased the property and entered into the UMA. In 2015, PPI entered into a Deed of Company Arrangement, and upon pleading the Deed in its Defence, the proceedings against it were dismissed. The plaintiff declined to participate in the Deed of Company Arrangement. The third defendant, Sidney Knell was a director of PPI in 2001 and 2002. The plaintiff claimed that the first defendant was negligent while acting as his lawyer on the purchase of unit 206. He also claimed that the third defendant is liable as an accessory to the second defendant with respect to misrepresentations made by PPI. He claimed to have suffered significant losses as a result of the negligence of the first defendant and the misrepresentations made by PPI.
The plaintiff was part of a group of people who were known to each other and who purchased apartments in the Waldorf development at about the same time. Ms Read purchased unit 220 and Ms Lim purchased unit 208. Both Ms Read and Ms Lim retained the first defendant to act for them in their transactions, but the plaintiff provided significant assistance and advice to them. They also commenced proceedings against the defendants, but those proceedings resolved at mediation.
The misrepresentations alleged by the plaintiff mostly fall into three categories:
(a)the “mixed-use representation” – the plaintiff alleged that it was represented to him that units in the Waldorf development could be used as a permanent residence, as a serviced apartment or could be let out under a residential tenancy agreement;
(b)the “no additional outgoings representation” – the plaintiff alleged that it was represented to him that for the period unit 206 was managed under a UMA he would not be required to pay outgoings for the unit except for land tax, any special body corporate levies and an annual contribution to the sinking fund; and
(c)the “ASIC approval representation” – the plaintiff alleged that it was represented to him that the management scheme comprised of the UMA was to be approved by ASIC as a managed investment scheme (MIS).
For the reasons that follow, the plaintiff’s claims fail. Before addressing the plaintiff’s claims, I will first outline the procedural history of the matter in some detail.
Procedural History
The plaintiff commenced proceedings by an Originating Claim and Statement of Claim lodged with this Court on 1 May 2008. At this time the plaintiff was represented by a legal practitioner. The claim was particularised as a claim for damages arising from negligence on behalf of the first defendant and from breaches of ss 52 and 53A of the Trade Practices Act 1974 (Cth) (the TPA) by the second and third defendants.
On 23 May 2008, the first defendant filed a Notice of Intention to Respond. On 17 June 2008, the second and third defendants also filed a Notice of Intention to Respond.
On 13 October 2008, the Registrar made orders that the first, second and third defendants file their Defences on or before 24 November 2008.
On 27 November 2008, the second and third defendants filed their Defences. On 5 December 2008, the first defendant filed her Defence.
Between 24 November 2008 and 14 December 2009, the parties appeared before the Registrar and the Deputy Registrar on a number of occasions. During that period various orders were made to facilitate the progress of the matter. I note that while no formal order or direction was made, the present matter was often heard before the Registrar with the matters of Ms Read and Ms Lim.
On 22 June 2009, the third defendant filed an Amended Defence pursuant to a direction of the Registrar. Also pursuant to a direction of the Registrar, the first defendant filed an Amended Defence on 13 July 2009. The first defendant filed a Notice claiming contribution or indemnity to both the second and third defendants on 8 October 2009.
On 4 March 2010, the plaintiff’s legal representatives filed an application in proceeding seeking leave to withdraw as his solicitors in the matter. On 15 March 2010, the Registrar granted leave, and the plaintiff’s legal representatives filed a Notice of Withdrawal of Solicitor on 19 March 2010. On 31 March 2010, the plaintiff filed a Notice indicating that he was now acting in person pending the appointment of another solicitor.
Between 27 April 2010 and 11 July 2011, the parties appeared before the Deputy Registrar on a number of occasions for the purpose of case managing the matter. The plaintiff appeared in person during this period.
On 21 July 2010, the second and third defendants filed an affidavit detailing a list of discoverable and privileged documents. On 25 February 2011, the first defendant filed the same.
On 7 July 2011, the plaintiff filed a Notice of Appointment of Solicitor.
On 13 September 2011, the plaintiff filed an application in proceeding seeking that the matter be referred to mediation and consequential orders. An affidavit in support of that application was filed by the plaintiff’s solicitor. On 16 September 2011, Uwe Boettcher, the lawyer for the first defendant, also filed an affidavit in relation to that application. In that affidavit Mr Boettcher stated that in or around the beginning of August 2010 the defendants and the plaintiff began exploring the possibility of attending formal mediation. The parties had agreed to mediation. During this period the plaintiff was self-represented. He then detailed the following events:
(a)on 23 August 2010, the second and third defendants confirmed their attendance at the scheduled mediation conference in September 2010;
(b)on 24 August 2010, the first defendant forwarded correspondence confirming the mediation;
(c)on 25 August 2010, via telephone the plaintiff confirmed his attendance at the mediation;
(d)on 25 August 2010, the plaintiff had a further telephone conference with Mr Boettcher and two other employees of that law firm. On that date, the plaintiff requested to meet the mediator prior to the mediation taking place. Mr Boettcher confirmed that he was happy to arrange a preliminary conference for the plaintiff to meet the mediator and noted that the mediator must be agreed upon for the mediation conference in September to take place;
(e)on 30 August 2010, the mediator informed Mr Boettcher that he no longer wished to act as a mediator in the matter. On or about that date, Mr Boettcher arranged for an alternative mediator;
(f)on 31 August 2010, Mr Boettcher, the plaintiff and another employee of Boettcher Law attended a preliminary conference with the alternative mediator appearing via telephone conference;
(g)on 31 August 2010, Mr Boettcher sent a letter to the plaintiff referring to proposed mediation dates in November and the steps that needed to be taken prior to the mediation conference;
(h)on 4 September 2010, the plaintiff sent an email stating he was not prepared to go forward with the mediation. He specifically objected to the mediator and “excessive extravegence [sic]” of the proposed arrangements. It seems that this is a reference to the proposed venue options and their associated costs in addition to the cost of the mediator. However, the plaintiff subsequently agreed to attend the proposed mediation in November;
(i)on or about 9 September 2010, the plaintiff informed Mr Boettcher that he was no longer prepared to proceed with either the mediator or the mediation;
(j)on 9 March 2011, Mr Boettcher attended a settlement conference with the plaintiff and two other employees of Boettcher Law;
(k)on 27 May 2011, a further settlement conference was scheduled by the first defendant and at the request of the plaintiff. Robert Reis of the ACT Law Society was appointed to act as an independent chair;
(l)at the request of the plaintiff, the scheduled conference was postponed until 3 June 2011. The plaintiff subsequently withdrew his agreement to have Mr Reis act as an independent chair; and
(m)on 3 June 2011, Mr Boettcher, the plaintiff and two other employees of Boettcher Law attended a settlement conference.
Mr Boettcher stated that in the settlement conferences the plaintiff made claims beyond those pleaded in his Statement of Claim. Mr Boettcher stated that there was no basis for the first defendant to re-evaluate the plaintiff’s position until all of the plaintiff’s evidence had been filed and served. Mr Boettcher also noted that at this time the plaintiff was in breach of multiple directions of this Court to file and serve his expert evidence and he had continually failed to provide evidence in support of his claim made against the defendants.
Mr Boettcher stated that it was his opinion that any future settlement negotiations or mediation between the parties would fail without the plaintiff seeking leave to amend his claim to include other claims which were not included in the plaintiff’s then Statement of Claim, and the filing and serving of all evidence that the plaintiff intended to rely upon.
On 19 September 2011, the plaintiff’s application for mediation came before the Registrar. That application was dismissed. The Registrar directed that any application for the plaintiff to amend his Statement of Claim be filed by 31 October 2011. On that date the Registrar referred the matter to me, together with the claims by Ms Read and Ms Lim.
Matter referred to a judge
On 1 November 2011, the plaintiff filed a Notice indicating that he was acting in person in the proceedings pending the appointment of another solicitor.
On 2 November 2011, the matters first came before me for directions. On that date I adjourned the matters for further directions on 5 December 2011. I expected that by that date the other parties who were legally represented would be in a position to advise of any amendments to their Statements of Claim. On 5 December 2011, I directed the plaintiffs to serve any expert reports and/or statements on which they proposed to rely on by 30 March 2012.
On 2 April 2012, the plaintiff filed a Notice of Solicitor Acting. On that date, the matters also came before me again for directions, however, they were adjourned to allow the plaintiff’s solicitor an opportunity to become better acquainted with the matter and to brief counsel. On 16 April 2012, the matter was before me for directions and again adjourned for further directions.
On 15 May 2012, the matters again came before me for directions. On that date, I granted leave for the plaintiff’s solicitor to withdraw from the matter. An affidavit of Tracey Mylecharane dated 15 May 2012 was read on that date. Ms Mylecharane was instructed by the plaintiff. In that affidavit Ms Mylecharane noted that the plaintiff was yet to return the costs agreement provided to him on 2 April 2012. She also noted that she had briefed counsel in the matter and she and counsel had appeared before me for directions on 16 April 2012. She stated that she sent an email to the plaintiff detailing work that was required to be completed. On 20 April 2012, she also met with the plaintiff in a lengthy conference and provided legal advice to the plaintiff in relation to the issues in the proceedings, the issues that did not currently form part of the proceedings and the appropriate way forward. She received correspondence from the plaintiff on 26 April 2012 in which the plaintiff put forth certain legal arguments and instructed her to adopt certain conclusions from legal authorities he had read. The plaintiff provided her with instructions as to how the law and the authorities applied to his case and how he would like his case run. She detailed an exchange of correspondence where the plaintiff refused to accept her legal advice and declined to provide her with instructions to enable her to properly conduct the case.
On 15 May 2012, I also gave directions in relation to two of the plaintiffs filing and serving any application seeking leave to amend their Statements of Claim and advised the parties that on the next occasion I would give directions designed to move the matter towards a hearing date.
The plaintiff’s application to amend his Statement of Claim
On 18 June 2012, I ordered the plaintiffs to file and serve any application to amend their Statements of Claim within one month and directed that any such application was to be returnable on 18 July 2012.
On 28 June 2012, despite the orders I had made on 18 June 2012, the plaintiff filed an Amended Statement of Claim.
On 17 July 2012, the plaintiff filed an application seeking leave to amend his Statement of Claim. The next day, I made a number of orders in relation to the Amended Statement of Claim filed by the plaintiff. I note that on that date I directed that the plaintiff’s Amended Statement of Claim be uplifted from the Court file and provided to the plaintiff to allow him to underline all proposed amendments. I noted that the proposed Amended Statement of Claim could be re-filed as part of the plaintiff’s application to amend his Statement of Claim.
On 14 August 2012, the plaintiff amended his application seeking leave to amend his Statement of Claim and again filed an Amended Statement of Claim with the proposed amendments underlined.
On 15 August 2012, I directed that the plaintiff file and serve his draft Amended Statement of Claim by 17 August 2012 and that the defendants were to make any objections by 7 September 2012. From this date forward the proceedings involving Ms Read and Ms Lim parted ways with the plaintiff’s matter. The proceedings involving Ms Read and Ms Lim matters resolved at mediation.
On 17 August 2012, the plaintiff filed a draft Amended Statement of Claim.
On 7 September 2012, the defendants filed their grounds of opposition to the plaintiff’s application to amend his Statement of Claim. The plaintiff filed his Response on 11 September 2011.
On 11 September 2012, the plaintiff filed an application seeking leave to add Further and Better Particulars to his proposed Amended Statement of Claim. The plaintiff filed an affidavit in support of this application. He said that the further amendment was necessary as on 23 August 2012 the first defendant sought Further and Better Particulars in respect of his “lost opportunity” claim. The plaintiff said he provided those Further and Better Particulars in an affidavit filed on 27 August 2012 and sought to add those matters in that affidavit to his Statement of Claim. On 11 September 2012, the matter also came back before me for directions. On that date I directed that the plaintiff file and serve any affidavits in support of his applications (being the application to amend his Statement of Claim and the application to add Further and Better Particulars to his Statement of Claim) by 19 September 2012. I also made consequential orders in relation to the defendants filing and serving any affidavits and the plaintiff filing and serving any affidavits in reply. I listed the applications for hearing on 19 October 2012.
On 19 October 2012, the matter was further adjourned to 16 November 2012 for the hearing of the plaintiff’s applications. On this date I also directed that the plaintiff was not to file any further documentation in support of his applications to amend his Statement of Claim without leave of the Court.
On 16 November 2012, I heard the plaintiff’s applications. At that time I reserved my decision with respect to those applications and made directions for the filing of submissions in relation to the applications. The defendants opposed the plaintiff’s applications on the ground that the amendments pleaded new causes of action that were statute barred.
On 14 January 2013, the second and third defendants filed an Amended Defence and Counterclaim.
On 10 May 2013, I delivered my judgment with respect to the plaintiff’s applications: Read v Burns (t/as Diana Burns Solicitors) and Prime Property Investment Pty Ltd and Knell [2013] ACTSC 83. I granted the plaintiff leave to file and serve an Amended Statement of Claim consistent with my reasons within 14 days. I also ordered that the plaintiff pay the defendants’ costs of the application, but deferred that payment until the conclusion of the proceedings. In that judgment I also warned the plaintiff that he ran the risk of costs penalties if he were unsuccessful in pursuing the issues raised in the amendments, even if he succeeded in the proceedings (at [12]).
On 10 May 2013, I ordered the first defendant to request Particulars of the plaintiff’s Amended Statement of Claim within 21 days of being served with a sealed copy of the Amended Statement of Claim and that the plaintiff answer the first defendant’s request for Particulars within 21 days. I also directed that the defendants file and serve their Amended Defences within 28 days of receipt of the plaintiff’s Particulars.
On 5 July 2013, the parties appeared before me again for directions. The plaintiff had not yet filed his Amended Statement of Claim in accordance with my orders of 10 May 2013. On that date I directed that any further application to amend pleadings be made within two weeks. I indicated on that date that if there was no movement in the matter within two weeks, I would give the matter a hearing date.
On 18 July 2013, the plaintiff filed an application seeking leave to file and serve an Amended Statement of Claim dated 18 July 2013, which was effectively a Further Amended Statement of Claim. The plaintiff also asked the Court to note that the Amended Statement of Claim was in accordance with the judgment of 10 May 2013 to the extent that the “[p]laintiff believes those reasons have not been compromised” by the Amended Defence and Counterclaim filed by the first and third defendants on 14 January 2013. That application was made returnable on 2 August 2013.
On 19 July 2013, I stayed the proceedings pending the plaintiff’s compliance with my orders of 10 May 2013. I noted that the matter could be relisted on seven days notice upon compliance.
On 29 July 2013, the plaintiff filed and served his Amended Statement of Claim.
On 2 August 2013, the matter again came before me. On that date the defendants alleged that the plaintiff’s Amended Statement of Claim was not in compliance with my orders of 10 May 2013. I directed the first defendant to file and serve any objections she had to the Amended Statement of Claim at least 14 days prior to 30 August 2013. I adjourned the plaintiff’s application dated 18 July 2013 to 30 August 2013.
On 30 August 2013, I directed that the defendants file and serve documents setting out any objections to the Amended Statement of Claim and the amendments thereto proposed by the plaintiff by 12 September 2013.
On 24 September 2013, I ruled on the plaintiff’s application to amend his Statement of Claim dated 18 July 2013. I allowed some of the proposed amendments. On that date I granted the plaintiff leave to file his Further Amended Statement of Claim (FASOC) by 27 September 2013. I also directed that the defendants request Further and Better Particulars by 4 October 2013 and the plaintiff to respond to that request by 11 October 2013. I directed that the defendants file Amended Defences by 25 October 2013. I ordered that the plaintiff pay the defendants’ costs of the application to amend as that is the usual and appropriate order in cases of amendment to originating process.
On 27 September 2013, the plaintiff filed his FASOC. On 10 October 2013, the plaintiff filed the plaintiff’s “Further and better particulars – Oct 2013”.
Unfortunately, the plaintiff has chosen to repeatedly refer to this process of my ruling upon amendments he proposed to his claim, as one of me “approving” his claim, despite my repeated explanations to him that this was not the case. He has nevertheless continued to refer to the FASOC as “approved” by me, even up to his final written submissions. I reiterate that the FASOC has not in any sense been approved by me. My involvement in the drafting of the document has been limited to ruling upon objections made by the defendants to amendments proposed by the plaintiff. On 25 October 2013, the second and third defendants filed their Further Amended Defence.
On 29 October 2013, the matter again came before me for directions. On that date I directed that the plaintiff provide a response to the first defendant’s request for Particulars by 8 November 2013. I also directed that the first defendant file and serve her Further Amended Defence by 15 November 2013 with the plaintiff to file and serve any reply by 6 December 2013. I noted on that date that the first defendant considered that further discovery may be required.
On 26 November 2013, the matter was listed for directions. I noted that the plaintiff’s father’s funeral had occurred on 14 November 2013. As such, I extended the time for the plaintiff to provide answers to Particulars to 17 January 2014. I also directed that the first defendant file and serve her Further Amended Defence by 31 January 2014 with the plaintiff to file and serve any reply by 14 February 2014. I directed that the third defendant file and serve any Further Amended Defence by 17 January 2014. I ordered that no party was to file any further request for Particulars without the Court’s leave. At this stage in the proceedings the second defendant was in administration and the third defendant was seeking to represent himself. On this date I also indicated that no further extensions for pleadings would be permitted at this stage of the proceedings.
On 16 January 2014, the plaintiff filed his “Further and better particulars – Jan 2014”. On 31 January 2014, the first defendant filed her Second Further Amended Defence. The third defendant filed his Further Amended Defence on 4 February 2014
On 11 February 2014, the plaintiff filed a “Reply to the Third Defendant’s Jan 2014 Fourth Further Amended Defence”.
I note here that despite the first defendant raising the need for the plaintiff to amend his Statement of Claim as early as September 2011, this was not resolved until the beginning of 2014. This was largely due to the plaintiff’s conduct of the matter and failure to comply with the orders of this Court.
On 11 February 2014, the plaintiff filed a Notice that he was acting in person in the present proceedings, although, he had in fact been self-represented since May 2012. I encouraged the plaintiff on numerous occasions throughout these proceedings to seek legal representation, however, he continued to be self-represented for the remainder of the proceedings.
Preparing the matter for mediation
On 25 February 2014, I referred the matter to mediation and directed the mediation to occur prior to 31 March 2014. I directed the parties to serve on each other any documents that had not yet been discovered in the proceedings within seven days to facilitate mediation. Also on that date, the plaintiff filed a “Reply to the First Defendant’s Feb 2014 Second Further Amended Defence”.
The first defendant filed an application in proceeding on 5 March 2014, which was made returnable before me on 21 March 2014. That application sought that time be extended for the mediation to occur prior to 30 April 2014, rather than 31 March 2014, as the parties had been unable to arrange a mutually convenient date. The first defendant also submitted that mediation should take place after the parties had completed proper discovery. In support of this application the first defendant filed a schedule of correspondence. This schedule outlined the documents sought by the first defendant from the plaintiff, in particular a copy of the plaintiff’s personal and, if relevant, business taxation returns for the period 30 June 2000 to 30 June 2013.
On 21 March 2014, the plaintiff did not appear for the hearing of the first defendant’s application. As such, I did not address the plaintiff’s compliance with my direction that any documents that had not yet been discovered in the proceedings were to be served on the other parties. I directed the Registrar to notify the plaintiff that the matter had been adjourned to 28 March 2014 and that if he did not attend his claim would be struck out.
On 26 March 2014, Gary Weetman filed an affidavit on behalf of the first defendant. Mr Weetman asserted that the plaintiff had failed to discover documents that were or had been in his possession and which related directly or indirectly to matters in issue in the proceedings. To support this he particularised a number of letters and emails sent to the plaintiff requesting documents in addition to a number of Court orders that the plaintiff had failed to comply with.
On 28 March 2014, the matter again came before me for directions. On that date I ordered the plaintiff to produce personal and business taxation records for the financial years ending 30 June 2002 to 30 June 2013 within 21 days. I considered that these would be relevant to the question of damages. I also extended the time for mediation to occur to on 30 May 2014.
On 9 May 2014, the plaintiff told the Court that he had no documents to produce. I directed that the plaintiff swear and file an affidavit as to documents limited to discovery of his personal income taxation returns from 2002 to the present, being May 2014. On that date I also confirmed that the mediation was to take place on 28 May 2014.
On 20 May 2014, the plaintiff filed an affidavit verifying a list of documents. Attached to this document was a “List of documents”. The only document that was listed, which was listed as “plaintiff’s discoverable personal taxation returns not in possession of Defendant [sic]”, was described as “Electronic lodgement data comprising the Plaintiff’s personal taxation records from 2003-04 to present”. It was described as not being in the plaintiff’s possession upon signing and that the document’s current status was “Accountant’s [sic] – various interstate”. Also in this affidavit the plaintiff affirmed the following:
(a)I have made all reasonable inquiries about the personal tax returns of the plaintiff;
(b)I believe there are no discoverable personal tax returns of the Plaintiff, other than those mentioned in the list of documents that have been in the plaintiff’s possession;
(c)I believe that the personal tax returns mentioned in the list as not in the Plaintiff’s possession are not in the plaintiff’s possession...
On 21 May 2014, I revoked the mediation order I had previously made, as I did not consider it appropriate for the mediation to take place without the relevant taxation records having been provided. I stayed the proceedings until the plaintiff complied with my orders of 28 March 2014. I also ordered that the plaintiff pay costs thrown away as a consequence of the mediation not proceeding within 14 days. I noted that if the plaintiff did not comply with the orders of 28 March 2014 by 28 September 2014, the proceedings would stand dismissed.
On 30 May 2014, the matter came back before me for directions. On that date I again explained to the plaintiff why the mediation was cancelled and noted that there was no reason the parties could not continue to negotiate or hold a mediation without a court order.
On 9 December 2014, I ordered the plaintiff to file an affidavit explaining the status of his tax returns. I gave the plaintiff specific directions as to what that affidavit should include and I relisted the matter for directions on 3 February 2015. I extended the plaintiff the indulgence of allowing six months to produce the relevant taxation records because he said this was the period of time that it would take him to collect the records.
On 22 December 2014, the plaintiff filed an affidavit verifying a list of documents. The plaintiff affirmed that his draft taxation returns for the years 2002 to 2013 were prepared by him in the period subsequent to 20 May 2014 and submitted to a registered taxation agent for finalisation and lodgement.
On 3 February 2015, I adjourned the directions to 9 February 2015. I noted that on that date I would deal with the issue of whether there had been non-compliance with my directions of 9 December 2014.
On 9 February 2015, the plaintiff did not attend. I noted that the first defendant was seeking to cross-examine the plaintiff on his affidavits. I listed the matter for the plaintiff to be cross-examined and directed the Registrar to notify the plaintiff.
On 19 February 2015, the plaintiff was cross-examined. On that date I indicated that I was not persuaded that there were taxation returns for the years 2002 to 2013 in existence prior to the plaintiff preparing his affidavit and lodging his returns in late 2014. As a result I decided not to dismiss the proceedings, as sought by the first defendant. On that date I ordered the plaintiff to file and serve an affidavit attaching all relevant documents within 28 days. I also made orders for inspection of those documents to take place. I relisted the matter for 2 April 2015 for directions, by which time I expected that the parties would have agreed to conduct a mediation and appoint a mediator. I indicated that if this had not occurred by that date, I would set the matter down for hearing. I also ordered that the plaintiff file and serve any expert valuation evidence prior to 2 April 2015, in default of which the plaintiff would be precluded from relying on any such expert testimony at the hearing without leave of the Court.
On 23 March 2015, the first defendant filed an application in proceeding seeking that the proceedings to be struck out as the plaintiff had failed to comply with a number of Court orders, including my orders of 19 February 2015 to file and serve an affidavit attaching all relevant documents within 28 days. On 2 April 2015, I set down the first defendant’s application for 20 April 2015. I made it clear to the plaintiff on that date that if he did not provide the affidavit attaching all relevant documents by 20 April 2015 I would seriously consider entering judgment for the defendants.
On 20 April 2015, I adjourned the strike out application. I ordered the plaintiff to prepare an affidavit verifying and annexing lists of discoverable documents. I gave directions as to the process the plaintiff should undertake and made it clear that the matter could be relisted on short notice if at any stage he was uncertain about the orders I had made.
On 1 May 2015, the plaintiff filed an affidavit verifying a list of documents. Also on that date I indicated that if the parties did not agree on a mediator at the next appearance I would appoint a mediator. I also directed the Registrar to provide a Notice of Listing to the second and third defendants indicating that if they did not attend on the next occasion judgment may be entered against them, as they had failed to attend on a number of occasions.
On 21 May 2015, the parties had agreed on a mediator and I referred the matter to mediation, which was to occur on 24 June 2015. I also noted that the second defendant had entered into a Deed of Company Arrangement.
Preparing the matter for hearing
On 29 June 2015, the parties indicated that there was no resolution at mediation. I made orders on that date that the matter would be set down for hearing on 14 December 2015. This was subsequently vacated and the matter was brought forward for hearing to 26 October 2015.
On 20 August 2015, the matter appeared in the Deputy Registrar’s non-compliance list, as the plaintiff had yet to attend to payment of the hearing or setting down fee despite the notice of fees payable being sent on 30 June 2015. The plaintiff failed to attend and the matter was adjourned.
On 3 September 2015, I made orders in chambers that the matter be listed before me on 11 September 2015 to address the plaintiff’s failure to pay the hearing or setting down fee. On 9 September 2015, the second defendant filed an application to have the claims against it dismissed.
On 11 September 2015, the plaintiff advised that the hearing date of 26 October 2015 was unsuitable. The first and second defendants objected to any adjournment. I provided dates suitable to the Court to the parties and I adjourned the matter to 21 September 2015 to allow the defendants to obtain counsel’s availability in relation to those proposed dates. I also indicated that on 21 September 2015 I would deal with the plaintiff’s failure to pay the setting down and hearing fees. I noted that the question of costs thrown away as a consequence of any adjournment would also be dealt with on that date.
On 21 September 2015, I set the matter down for hearing on 1 February 2016 with a five day estimate. I ordered the plaintiff to pay the defendants’ costs thrown away by reason of adjourning the hearing. I listed the second defendant’s application, dated 9 September 2015, to have the claims against the second defendant dismissed for hearing on 10 November 2015 and made orders as to the filing of affidavits in preparation for that hearing. On 15 October 2015, the third defendant also filed an application to have the claims against him dismissed, which was made returnable before me on 10 November 2015.
On 10 November 2015, I heard both the second and third defendants’ applications. I reserved by decision in relation to both applications.
On 25 January 2016, I handed down judgment with regards to the second and third defendants’ applications: Read v Burns & Ors [2016] ACTSC 1. In relation to the second defendant’s application, I granted leave for it to file and serve an Amended Defence pleading the Deed of Company Arrangement. I ordered that upon the filing of that Amended Defence the plaintiff’s claim against the second defendant would be dismissed. I directed the parties to provide written submissions on costs. In relation to the third defendant’s application, I ordered that the plaintiff was to provide Further and Better Particulars to the third defendant as required in the third defendant’s letter of 13 August 2014. I otherwise dismissed the application and reserved the costs of the application.
The hearing
On 1 February 2016, the hearing commenced before me. I will address the evidence later in these reasons, however, I will first give a brief overview as to how the hearing proceeded. As I have already mentioned, the plaintiff was self-represented. On that date, I granted leave for the second defendant to file its Second Further, Further Amended Defence in Court. As a result of my orders of 25 January 2015 the plaintiff’s claim against the second defendant was dismissed.
The parties consented to the first defendant amending her Second Further Amended Defence, which effectively deleted a limitation defence. I granted leave for the first defendant to file her Second Further Amended Defence in Court. I also granted leave for the third defendant to amend his current Defence. The third defendant effectively sought to mirror the Defence of the first defendant. I was satisfied that there was no prejudice to the plaintiff in allowing those amendments at that time, albeit that they were made late because they raised issues between the plaintiff and the third defendant that had always been issues in the trial.
The first defendant also handed me a copy of a Notice to Produce taxation returns lodged by a company, Activate Strategic Partnerships Pty Ltd given to the plaintiff the Wednesday prior to the commencement of the hearing. The first defendant called on that Notice to Produce. This was subsequently stood over for the balance of the week.
Following those matters, the plaintiff and first defendant completed their opening addresses. Prior to the conclusion of the matter for the day I advised the plaintiff that the next day he would need to identify evidence, such that if he was relying upon affidavits that he had filed in the proceedings he would need to identify those affidavits so the parties would know what affidavit evidence is being relied upon. I also informed him he would be able to give oral evidence or he may wish to tender documents, and that as part of this process I would hear whether there were any objections raised by the other parties to any of that material.
The plaintiff requested that the matter commence at a later time the following day, as he had not received any sleep the night before as a result of preparing for the matter. As such, the matter was listed to recommence at 11.00 am the following day. I also directed the plaintiff to serve by email a list of affidavits that he had filed and intended to rely upon in the hearing by 6.00 pm on 1 February 2016 to the defendants.
On 2 February 2016, the plaintiff commenced giving evidence. At the invitation of the defendants, and in an effort to save time, he swore to the accuracy of his FASOC, Further and Better Particulars of October 2013 and Further and Better Particulars of January 2014. The plaintiff then gave some further oral evidence and the first defendant commenced cross-examination. It soon became clear, however, that there was other material upon which the plaintiff wished to rely and which had not been produced. I allowed him the opportunity to produce that material. The rest of the week proceeded with difficulty. The plaintiff, not being legally qualified, was unprepared to present evidence to support his case. At one stage, I adopted the somewhat unusual course of directing my associate to assist him by compiling bundles of documents that he sought to rely upon but had only sent through in an electronic form to the parties and the Court. The defendants also attempted to provide assistance to the plaintiff to allow the matter to proceed more expeditiously. Despite the assistance provided to the plaintiff, a lot of the hearing time was occupied by ruling on the admissibility of the documents the plaintiff sought to tender. On 4 February 2015, the plaintiff sought to tender affidavits that had been filed by him in the proceedings that contained numerous annexures, which occupied most of the day. The plaintiff made an application for the case to be divided in two parts, the first being liability and the second being quantum of damages. I refused this application as I considered it would be an inefficient way to proceed and that ample opportunity had been afforded to the plaintiff to prepare his case. I also noted that the question of quantum of damages had always been in issue in the hearing and that the plaintiff should have been aware that he was required to prove quantum. The plaintiff then applied for the matter to be adjourned for one month, which I also refused. I considered that the obligation on the plaintiff to produce documents was not an onerous one, particularly since the documents that he had been required to produce had been specifically identified in affidavits the plaintiff had referred to. Also on this date the first defendant made an application for costs thrown away by reason of the plaintiff’s conduct. I reserved my decision in relation to costs of that day, however, I warned the plaintiff that as a result of the way he conducted the trial he may receive an adverse costs order against him.
On 5 February 2016, it was evident that the matter was not going to conclude, as the plaintiff had not yet closed his case. The matter was unable to proceed the following week and was relisted for a further five days to commence on 16 May 2016. Also on this date, in relation to the first defendant’s Notice to Produce, I ordered that the plaintiff produce within 28 days:
(a)originals and/or copies of all taxation returns lodged by Activate Strategic Partnership Pty Ltd (ASP) for the period of 30 June 2001 to 30 June 2013;
(b)all documents or records evidencing the lodgement and/or preparation and/or assessment by the Australian Taxation Office of the taxation return by the same company for the period of 30 June 2001 to 30 June 2013;
(c)all financial records kept or maintained by ASP for the period of 30 June 2001 to 30 June 2013; and
(d)any documents sent to or received from ASIC by ASP for the period of 30 June 2001 to 30 June 2013.
I also ordered that the plaintiff produce within 28 days any information which was provided to his registered taxation agent for the preparation of his personal taxation returns for the period of 30 June 2002 to 30 June 2014. I amended the order I made on 25 January 2016 in relation to the written submissions the parties were to provide on costs. I effectively removed the due date for those submissions to allow the plaintiff time to prepare for the continued hearing.
On 4 April 2016, the matter was relisted for directions as a result of the plaintiff’s failure to comply with my orders of 5 February 2016. On that date the plaintiff said that he had none of the documents he was required to produce because the documents did not exist. I ordered that the plaintiff produce within 14 days any information which was provided to his registered taxation agent for the preparation of his personal taxation returns for the period of 30 June 2002 to 30 June 2014. I made no further orders with respect to the documents relating to ASP.
On 16 May 2016, the hearing continued and the plaintiff remained in cross-examination. On 18 May 2016, the first defendant finished her cross-examination and the third defendant commenced his cross-examination. On 19 May 2016, the plaintiff closed his case. The first defendant also closed her case.
On 20 May 2016, the hearing concluded and I indicated to the parties that I would reserve my decision once I had received written submissions from the parties. The plaintiff indicated that he would prefer to provide written submissions, and I made directions in relation to the filing of submissions. I ordered:
(a)the plaintiff to file and serve his written submissions on or before 10 June 2016;
(b)the first and third defendants to file and serve their written submissions on or before 1 July 2016; and
(c)the plaintiff to file and serve any written submissions in reply on or before 15 July 2016.
The written submissions
On 20 June 2016, the matter was relisted for directions as a result of the plaintiff’s failure to file his written submissions by 10 June 2016. On that date, I amended my order of 20 May 2016 to extend the timetable for the filing of written submissions. I directed the plaintiff to file and serve his written submissions by 4 July 2016 and made consequential amendments to the timetable I had set on 20 May 2016.
On 5 July 2016, the plaintiff sent an email to my associate advising that he was unable to meet the deadline and he sought a one month extension. The first defendant opposed this extension and the matter was relisted for directions on 18 July 2016. On that date I amended my order of 20 June 2016 to allow the plaintiff until 12 August 2016 to file and serve his written submissions and amended the timetable I had set on 20 June 2016.
On 16 August 2016, the plaintiff delivered his submissions via email and filed them on 19 August 2016. On 19 August 2016, the first defendant sought a minor extension for the filing of the defendants’ submissions as a result of the plaintiff filing his submissions late. The plaintiff consented to the amendment and I made orders in chambers that the defendants file and serve their written submissions by 12 September 2016 and that the plaintiff file and serve any submissions in reply by 26 September 2016.
On 12 September 2016, I received the first defendant’s submissions via email. On 14 September 2016, I received the third defendant’s closing submissions. On 20 September 2016, the third defendant delivered via email the final copy of the third defendant’s submissions. The third defendant provided an errata so that any corrections were transparent.
On 9 October 2016, I received the plaintiff’s submissions in reply to the third defendant’s submissions.
On 15 November 2016, the first defendant sought to have the matter relisted for directions as the plaintiff was yet to file his submissions in reply to the first defendant’s submissions. I relisted the matter for directions on 22 November 2016.
On 22 November 2016, I directed the plaintiff to file and serve his final submissions by close of business on 15 December 2016. I warned the plaintiff that I would not receive any submissions after that date.
On 16 December 2016, the plaintiff delivered via email his submissions in reply to the first defendant’s submissions.
On 19 December 2016, I informed the parties that I had received the plaintiff’s submissions and had officially reserved my decision.
I have referred to the procedural history in such detail for two reasons. First, to explain the length of time that it has taken to resolve this claim since it was filed in 2008. Secondly, to emphasise the latitude shown to the plaintiff and the indulgences granted to him to try to ensure that he had every opportunity, consistent with fairness to the defendants, to present his case.
The plaintiff’s credibility and the reliability of his evidence
Before examining the plaintiff’s case against the first and third defendants, it is appropriate to make general findings as to his credibility and the reliability of his evidence. There are a number of contemporaneous documents to which I will refer in due course, but the only affidavits filed in the plaintiff’s case were those affirmed by him, and the only oral evidence in the plaintiff’s case was given by him. As such, his credibility and the reliability of his evidence are important issues.
The essential events relevant to this claim occurred between late 2001 and May 2002. The plaintiff did not commence these proceedings until 1 May 2008, nearly six years after the relevant events. He prepared and filed, often without direction of the Court, numerous affidavits, but it was not until 2016 that he gave evidence of the relevant events. The defendants, not surprisingly, challenged the plaintiff’s recollection of events, an approach which seemed to surprise the plaintiff. The plaintiff’s approach to the whole case appeared to be that it was self-evident that he was in the right, and that it was equally self-evident that his evidence was both truthful and reliable. It is important to acknowledge the distinction between truthful evidence and reliable evidence in this context. After a gap of 14 years a witness, particularly one convinced that an injustice has been done to them, may give evidence which they believe to be the truth, but other evidence or contemporaneous documents may reveal that the witness’s recollection is unreliable.
It is also important to acknowledge that the plaintiff holds the onus of establishing his case. His case is defined in his pleadings, and where he pleads facts essential to establishing a cause of action, he holds the onus of proving those facts unless they are admitted by the relevant defendant. Such facts must be proved on the balance of probabilities.
The plaintiff is clearly a very intelligent man. He has tertiary qualifications in theoretical physics, including a doctorate. He headed up “a biology research group of Macquarie University to a major national facility” and was also responsible for “commercialisation of a bionic ear”. He testified to having worked in a number of capacities, often in the public sector, which involved him having to apply for grants, although he denied being meticulous in his approach to such matters. He described himself as more of an ideas person. After the plaintiff left Macquarie University in 1998 he conducted his own business as a technologist, which operated both in Australia and internationally.
The plaintiff is also a man confident in his own abilities. After the cases of his co-plaintiffs resolved at mediation, and his did not, he dispensed with the services of his lawyers and took over the conduct of his case himself. This started with a root and branch review of his pleadings, which he clearly considered did not adequately set out his case. The plaintiff was warned on a number of occasions of the difficulty of conducting such a case on his own and without legal representation, but he was determined to act for himself and not to engage lawyers. This, of course, was his right, and is irrelevant to whether he has proven his case, but it does demonstrate that he is a man who possesses great confidence in his own abilities and in his own judgment.
The plaintiff also had experience in purchasing property as an investment prior to December 2002; he had previously purchased a serviced apartment at the Paramount Serviced Apartment complex in Melbourne in 2001 through PPI.
The fact that the plaintiff is a man of considerable intellectual ability who has confidence in his abilities and judgment is not a criticism. Those qualities are, in general, admirable. Similarly, the fact that the plaintiff had experience in business or commerce is not a circumstance that is anything but admirable. I raise these matters because it is important to understand something of the character of the plaintiff in considering the likelihood of him having acted in particular ways at the time of the relevant events.
The defendants submitted that a number of circumstances or matters demonstrated that the plaintiff was not a credible witness, or that his evidence was unreliable. First, they submitted that he was argumentative and unresponsive in giving his evidence. The first defendant provided a list of transcript references of occasions where, she said, the plaintiff had been argumentative. No real purpose would be served by setting out that list here, or setting out the relevant parts of the transcript. I readily accept that the plaintiff was, from time to time, argumentative both with counsel and with myself, but whether I should draw an inference contrary to the plaintiff from that fact is a different matter. A witness, and particularly a party giving evidence, may be argumentative for many reasons. It may, for example, simply be a reflection of their personality, or it may reflect a deep (and perhaps justifiable) belief in the justice of their case. In my opinion, courts should be slow to draw an inference that a witness is not credible based solely upon their demeanour. There will of course be cases where it is clear that argument by a witness is part of a process of obfuscation, or has the object of avoiding addressing difficult issues, and in such cases the court may safely draw an inference that the witness is not credible based upon their demeanour.
In most cases it is preferable to determine the credibility of a witness based upon what they have said, rather than the way in which they said it.
One instance of argumentative behaviour by the plaintiff, and referred to by the first defendant, deserves a brief mention. In cross-examination of the plaintiff, the issue of his use of the honorific “Doctor” was raised:
MR WALSH: Doctor, do you have before you a document with 36 p in the top right-hand corner?--- Yes, I do.
Is it dated 18 March 2002?--- Yes, it is.
And it’s unsigned?--- Yes, it is.
It’s addressed to Mr Jeffrey Maxwell Read?---Well, it’s addressed to care of Prime Property Investment Pty Ltd.
Doctor, is the letter addressed to Mr Jeffrey Maxwell Read or not?---The address that I can read is care of Prime Property Investment Pty Ltd.
Doctor, is the first line of the address “Mr Jeffrey Maxwell Read”?---It is.
Is that your name?---It is my name. Well, except for the doctor.
You’re quite proud of the doctor, aren’t you?---Not at all. I never used it.
You’re not? Never used it?---No. Once you get - no.
No, that’s not right because you’ve used it constantly?---Rubbish.
Haven’t you?---Rubbish. I’ve never used it in my life.
Is that so, doctor?---Yes.
Well, just hang onto that thought and we’ll come back to it?---I will, yes.
In the above, the plaintiff forcefully asserted that he did not use the title “Doctor”, going so far as to assert that he had never used it. Later in his evidence, the plaintiff was taken to a letter which he prepared in 2002 on his own letterhead in which he described himself, on the letterhead, as “Dr Jeffrey M Read”. The plaintiff agreed that this was a letterhead which he used regularly in 2002. His acknowledgement that he regularly described himself on his letterhead in 2002 as “Dr Jeffrey M Read” is clearly inconsistent with his earlier assertion that he had never used that title in his life.
By itself, this may be thought to be a matter of trifling importance. It is not a matter directly relevant to any issue in the proceedings, but it does reveal something about the personality of the plaintiff which is relevant to determining his credibility, and the reliability of his evidence. What it reveals is a willingness on the part of the plaintiff to forcefully assert as factual matters based, at best, upon a faulty memory. There could be nothing discreditable about the plaintiff using the title “Doctor”: he has a PhD and is entitled to use the title. One could understand the plaintiff not possessing a complete memory of those occasions in the past on which he described himself by use of that title, but to vehemently assert that he had never used the title, when clearly he had, suggests a willingness to assert questionable propositions as firm factual recollection.
A more significant example of this type of behaviour was the plaintiff’s evidence concerning his need to purchase an apartment in Sydney in order to complete a contract and to perform a consultancy agreement in 2002 and 2003. It was the plaintiff’s case that one of the reasons for his purchase of this apartment was because he was required by contract to work for extended periods in Sydney throughout 2002 and 2003, and he needed a base in Sydney to perform that contract. The contract to which he referred was a contract between his company, Activate Strategic Partnerships Pty Ltd (ASP), and another company Australian Surgical Design and Manufacture Pty Ltd (ASDM) which was effectively owned and operated by Dr Greg Roger. The plaintiff, in his Further and Better Particulars of 16 January 2014, claimed a sum of $100,000.00 for lost income as a consequence of not being able to complete the contract because he could not use unit 206 as his Sydney base. The plaintiff was cross-examined by counsel for the first defendant on this aspect of his claim.
MR WALSH: Before you read it would you just assist me. Do you recall the terms of Activate’s agreement with ASDM?---Yes. We were going to commercialise a technology and I was going to get a very substantial grant for it and we were going to go ahead.
Well, when you say you it was in fact Activate that was doing the work on the grant, wasn’t it?---No, it was me that was doing the work on the ground. The agreement was with Activate but it was actually me that was doing the work on the ground.
I’m sorry, the grant, g-r-a-n-t? Activate had agreed to do work for the submission of a grant to the government?---A very large one; $20 million or something.
$20 million?---Yes.
And, doctor, that was something called a Start Grant, wasn’t it? ---Well, that’s the name of the grant, yes.
Yes, and the period for the work to be performed by Activate in regard to consultancy work on the grant was in 2001, wasn’t it? ---It was but it extended. It expanded over.
Well, doctor, under this agreement you would agree that the obligations upon Activate were to provide strategic consultancy services for the period of the calendar year?---Yes, but it extended. It extended over. It was a very big project and the reason we came apart was because I wasn’t down there working at the company.
You say that the lack of a unit prevented you performing the requirements for [A]ctivate to fulfil its obligations of the grant? ---I didn’t think that but Greg did.
Yes, and - - -? ---He wanted me on the ground every day.
You see the truth is that the agreement between Activate and ASDM was for the services provided by Activate to be provided for the purposes of the submission of a large start grant as early as possible in the calendar year 2001. That’s the truth, isn’t it?---No, the truth is that the date was the date that, you know, we sat down there but the fact is in a project of this size we had started it. We started the thing and we came apart because I wasn’t there. He wanted me there. He opened a new factory. We had started the thing off and I wasn’t there and that was the central dispute that went on over 2002 until we came to legal action over it.
Well, you and Dr Roger didn’t come to legal action. Your company, Activate, ASDM, came to legal action? That’s correct, isn’t it?---My understanding was that we went to mediation and it was me and Roger’s - - -
Just one moment. You would be aware that you are not permitted to reveal what happens at mediation? --- I forgot that, yes.
Now, the proceedings were commenced by your company, Activate, against ASDM?---They were, yes.
And they were the two parties to the proceedings in this court?---Yes, but the people who were - - -
No. Just one at a time please?---Yes.
Yes. Thank you, and the document before you makes it quite clear in paragraph 1 that the submission of the large start grant was as early as possible this calendar year being 2001. That’s true, isn’t it?---Yes, I am.
Do you agree with that?---I do, yes.
Do you have the document there? ---I don’t need to. I mean it was very - - -
Yes, you remember? --- This was a big project. It was $20 million and I would have got $10 million out of it and the government had already put a reasonable amount in. The figure of $100,000 actually related to money that I put in that I didn’t get paid back and it was – well, I’m not allowed to tell you that was the amount that was agreed at mediation and then - - -
Well, doctor, we’ll leave that aside - - -? ---Yes.
- - - because that’s a different dispute? --- But I’m just trying to put the context of the $100,000. That sounds - - -
We’ll come to the context in a moment, doctor. Might I ask you - - -? ---Yes.
- - - to look to this document and particularly the fact that ASDM made payments to Activate during 2001? --- Yes, and Activate made payments to ADSM and was down a few hundred thousand dollars.
The plaintiff was then taken to a series of emails between himself and Dr Roger from 5 December 2001 until 16 January 2002, which revealed a breakdown in the relationship between the plaintiff and Dr Roger, culminating in Dr Roger telling the plaintiff in strong terms in an email dated 16 January 2002 that the START grant “is now history”. The following cross-examination then took place regarding the plaintiff’s assertion that the consultancy agreement with ADSM carried over into 2002:
MR WALSH: By the time that he wrote that email to you on 16 January 2002 the calendar year had passed in 2001?---Yes.
You knew in January 2002 that the consultancy contract was no longer on foot?---No, I didn’t know that, but I’m not disputing the papers you’ve put forward. You know, this is a sort of, you know, to and froing that goes on. Unfortunately, money ruined a good relationship here.
Yes?---But I’m not disputing what you’ve put forward, but I guess all I can say is that this sort of thing is part of the toing and froing, and I would have – without the Waldorf we would have got back together. In fact, it is quite disappointing that it ended up here. But we did, through the legal process, find out the reasons, and what I’ve put to you is the truth.
Well, doctor, just one moment? ---Yes, okay.
You see, on 17 December 2001?---Yes.
Dr Roger had said to you, “It’s too late”?---He did, and he wrote it. And I think you’ve got the uncensored versions. No, you’ve got the censored versions.
The consultancy agreement had come to an end?---That’s what he said, yes.
Yes, and you knew that?---I knew that’s what he said. I didn’t - - -
Yes, and you knew that was the fact?---No, I knew that it was, you know, going to be a thing, and he really demanded I be down there.
You see, the truth is that if you told Ross Burns on 18 December 2001 that you needed an apartment to live in Sydney for the duration - - -? ---The timing would be almost perfect.
Please, let me finish?---Yes.
The ASDM consultancy contract, and that was untrue?---No, that was a sign that there was an urgent need to rectify the relationship. You know, absence doesn’t make the heart grow fonder. I mean not that this was that sort of relationship, but we needed to interact on a day-to-day basis because it was an ideas – it was, you know a (indistinct) type of thing.
Under the terms of the contract - - -? --- Yes, you are correct. You’ve already been through that. I agree that’s what the documents say, yes.
There was only 13 days to run until the end of the year?---Yes, that’s what you’ve said on the thing. I guess the position I’m putting was that I would have thought that if I had got down there and lived – but everything you’ve said is correct factually.
Yes. Thank you. You were speculating that you might have been able to mend some bridges with Dr Roger?--- No, I’m not speculating, but I can’t – you’ve pointed out that I can’t explain to you that that was the absolute reason that it came down to.
The plaintiff agreed that START grants were administered by the Industry Research and Development Board, a part of the Department of Industry, Tourism and Resources, in 2001. He further agreed that the Board ceased approving grants from January 2002, and that an application for a grant which had not been submitted by the end of December 2001 would not have been approved. The following evidence then occurred:
MR WALSH: So, earlier, I took you to your further and better particulars, paragraph 51, in which you state that you lost income of a minimum of $100,000 on being unable to complete a contract which required work during the week in Sydney for extended intervals?---Yes.
And that was the contract between - - -?---With ADSM, yes.
And Activate?---Yes.
And you said that was for extended intervals throughout 2002 and 2003? --- Yes.
And you said that loss was due to your inability to occupy the Waldorf unit?--- Yes, I did.
And the truth of the matter is the contract was at an end on 31 December 2001? ---Yes. There was in anticipation that there would be a long-term relationship in development of this technology and the contract that you’ve – the one-page contract that you’ve presented ended as you said.
Yes? --- It ended there.
So what you say in paragraph 51 of your particulars is false? ---No. No, I don’t believe so. I believe that this was - - -
All right. Thank you, doctor? --- This was a working relationship that would have extended on.
All right. Doctor, I’m obliged to put these things as a matter of fairness to you? --- Well, you are.
If you would go to MFI 17? ---Yes.
HIS HONOUR: Show it to the witness.
MR WALSH: If you would go to page 99. This is your further amended statement of claim. You’ve got that, haven’t you?---Yes, I have.
Please turn to page 9 at paragraph 13. I must formally put to you that what you say in the particulars that you told Mr Burns that you required a unit to be able to live and work in Sydney during the week to complete a large consultancy job and you say that took place, that conversation, on 18 December 2001 in paragraph (a) - - -?---I do, yes. Yes.
- - - that that is false? ---No, it’s not false.
And if you would go to paragraph 15(b), which is on page 10? ---Yes.
Your statement there that in the first week of April 2002 you instructed the first defendant that you, as you say in the particulars, required a unit to be available for residential use during the term or until you finished your consultancy job is likewise untrue? --- No. I had a belief that there would be a working relationship and that I, you know, we would continue on with this technology, as I pointed out, albeit for a period under a loan. But, you know, this was a fairly significant enterprise so my belief was that it wouldn’t have ended if I was able to work there and re-establish our relationship. But, I mean, you’ve put the papers?> I accept the papers put that position and - - -
You accept the accuracy of the papers, doctor, don’t you? --- I accept that that’s what the papers say, as you pointed out, but as I pointed out, I had been working for Greg for quite a long time. We had a very good relationship. It wasn’t the first time that we’d had a biff and a bash but I expected that relationship to go on.
In the course of cross-examination the plaintiff asked whether he could address some of the issues raised by the first defendant about the START grant, and I advised him that he would have an opportunity to do so at the conclusion of cross-examination. The plaintiff had pens and paper with him throughout the hearing and made notes on a regular basis. When cross-examination concluded, the plaintiff did address a number of matters which had arisen in cross-examination, but gave no further evidence relating to the consultancy agreement or the START grant.
The plaintiff was ultimately forced to agree that the consultancy agreement between ASP and ASDN had concluded by the end of December 2001. There was no evidence from the plaintiff or Dr Roger, or by way of contemporaneous documents, of any further communication between the plaintiff and Dr Roger after 16 January 2002, or of any continued business dealings between them, or even of any attempt by the plaintiff to renew his company’s business relationship with ASDN.
In the light of the above it seems improbable that the plaintiff was, in mid-December 2001, looking to purchase an apartment in Sydney as a base from which to perform his consultancy obligation for ASP in its contract with ASDN. It is, of course, possible that the plaintiff at that time held some hope that the consultancy agreement would be extended, but in the light of the emails from Dr Roger to the plaintiff on 17 December 2001 and 16 January 2002, it is not possible to believe that by the end of January 2002, at the very latest, the plaintiff held any belief that the consultancy between ASP and ASDN would be extended, or that he was continuing to perform obligations under that consultancy agreement.
Why, then, did the plaintiff continue between 2008, when these proceedings were commenced, and 2016, when they proceeded to hearing, to assert that he lost at least $100,000.00 by reason of his inability to perform his duties as a consultant under the agreement between ASP and ASDN due to his inability to use the Waldorf apartment as his Sydney base? Only two possibilities exist: either the plaintiff genuinely came to believe in the years between 2002 and 2008 that the consultancy between ASP and ASDN extended into 2002; or he did not hold such a belief and his assertion that he suffered such a loss was a dishonest statement made with a view to inflating his claim for damages against the defendants. If the first, and most generous, alternative is correct, it is another example of the plaintiff forcefully asserting an erroneous recollection as an historical fact. If the second alternative is correct, the plaintiff’s credibility would be severely, adversely affected. Whilst I am loath to make a finding of dishonesty against the plaintiff, I find it very difficult to accept in the light of the documentary evidence that he ever held an honest belief that the consultancy contract had continued post-December 2001, such that he had lost a significant sum as he alleged.
This is a much more significant issue than whether the plaintiff had incorrectly testified to never using the title “Doctor”. It is a central plank of the plaintiff’s case that he told the first defendant from the start that he required the apartment for his own use for part of the year as part of his business arrangements. The only business arrangements the plaintiff identified in that regard was the consultancy between ASP and ADSM. If, in truth, there were no business arrangements in 2002 that required the plaintiff to have a base in Sydney, it is improbable that he would have instructed the first defendant that he needed such a base, or that he needed to occupy the apartment personally for periods of time during the year for such a purpose. There was no suggestion by the plaintiff that he purchased the apartment in the hope or belief that work other than with ADSM may eventuate, requiring him to spend time in Sydney.
If there was in truth no basis for the plaintiff to have believed or asserted in the period December 2001 to May 2002 that one of his requirements in purchasing the apartment was for his own business use, the probability that the apartment was purchased as a pure investment becomes quite high.
It is clear, and only to be expected, that the plaintiff has little actual recollection of the events in question in these proceedings, particularly with regard to his dealings with the first defendant; after all, there was little reason for the plaintiff to make an attempt to recollect them until many years after they occurred. In his response to the first defendant’s written submissions, the plaintiff, after noting that the first defendant had submitted that he based his case on contemporaneous documents and not on a present recollection of events, said:
3. The Plaintiff admits this allegation and acknowledges that his claim is based on the contemporaneous documents...
The plaintiff’s lack of recollection of the events of 2001 and 2002 is exemplified by his evidence regarding his dealings with the firm of Landerer and Co, the solicitors acting on behalf of the vendor of the apartment. The plaintiff gave evidence that he had been interested in purchasing a number of different units in the Waldorf complex before he settled on purchasing unit 206. As I understand it, his initial choice had been unit 208 but he had “lost” that unit. His second choice, unit 220, was also “lost”. In fact, Ms Read purchased unit 220 and Ms Lim purchased unit 208. The plaintiff said that he did not proceed with his third choice, unit 304, because the first defendant identified that the unit did not include a car park. The plaintiff testified that the vendor sent the contracts, and particularly the proposed contracts for units 304 and 206, to the first defendant, and not to him, the plaintiff, personally. The plaintiff went so far as to testify that he “had no dealings with Lander [sic] and Co” and that he “was dealing with Ross Burns”. In fact, the sales instruction prepared by the second defendant regarding the proposed sale of unit 304 to the plaintiff does not identify the first defendant as the plaintiff’s solicitor, and by letter dated 18 March 2002 addressed to the plaintiff care of the second defendant, the contract for sale of unit 304 was forwarded to the plaintiff. After it was identified that unit 304 did not include a car space, the plaintiff moved his attention to unit 206. By letter dated 4 April 2002 (Exhibit AG) the plaintiff personally wrote to Landerer and Co in the following terms:
Attention: Geoff Farland
YOUR CLIENT: FAI GENERAL INSURANCE COMPANY LIMITED
PROPERTY: WALDORF APARTMENTS 47-49 CHIPPEN STREETPREMISES: UNIT 206 (LOT 40) STRATA PLAN 64972
I am purchasing the above property from the Vendor – your client FAI General Insurance Company Limited (in liquidation) – through its agent Prime Property Investment Pty Ltd.
Enclosed is the signed Contract together with a cheque covering the full deposit of $17,765 being 10% of the purchase price of $177,650.
Please note the agreed amendments as marked on the Contract. These are summarised for your convenience in the attached Table.
· My Tax File Number is [redacted].
· I wish to enter into a “Unit Management Agreement” (UMA) as provided for under Clause 58.1 of the Contract and hereby request the Vendor to procure the Manager to enter into such an Agreement in accordance with the provisions specified in that Clause.
· I require the “Sum” to be invested by the Vendor as specified in Clause 58.8.
· I request the “Information” indicated in Clause 60.1 be provided to me in due course as specified in that Clause.
Yours sincerely
Dr J M Read
This letter demonstrates that the plaintiff did have direct dealings with the vendor’s solicitors concerning the proposed purchase of a unit in the Waldorf development. The forwarding of the contract directly to the plaintiff (via PPI) by the vendor’s solicitors with respect to unit 304 suggests that Landerer and Co were of the belief, at that time, that the plaintiff was not represented by the first defendant. These direct communications with the vendor’s solicitors are yet another example of the unreliability of the plaintiff’s memory regarding the events of 2001 and 2002. It also relates to an important issue, being the extent to which he personally dealt with the vendor as opposed to utilising the services of the first defendant, which is relevant to determining the terms of the retainer of the first defendant.
43 In the present case, Universal is no longer a party to the proceeding because, as I have said, the proceeding has now been dismissed as against Universal. Accordingly, it is no longer possible for Universal to adduce any evidence in the proceeding. On one view, if s 51A(2) applies as against Mr Kotowicz, it would give rise to an irrebuttable presumption so far as he is concerned. That is to say, since Universal cannot adduce evidence to the contrary, it is deemed, as against Mr Kotowicz not to have had reasonable grounds for making any relevant representation. No evidence led by Mr Kotowicz would lead to any different conclusion.
44 One view of s 51A is that it provides that a corporation is deemed, as against any party to a proceeding, not to have had reasonable grounds for making a representation unless that party adduced evidence to the contrary – see King v GIO Australia Holdings Limited [2001] FCA 308 paras [28]-[30]. That, however, is not what the section says. There could well be good policy reasons for imposing on a person who makes a representation with respect to a future matter the evidentiary onus of demonstrating that the representation was not misleading. It is a different matter altogether, however, to impose such a burden on a person who did not make the representation, albeit a person who was knowingly involved in the making of the statement.
45 That is a good reason for construing s 51A as giving rise to a deeming only as against a principal contravener of the Act. That is to say, it does not have any relevance as regards a claim against a person who is only alleged to have been involved in or to have been a party to a contravention by another person. That is the present case.
(Emphasis in original.)
The case of King v GIO Holdings Limited (2001 184 ALR 98 referred to by his Honour was a decision of Moore J on a pleading strikeout application. Moore J at [30] held it was arguable that “it” in s 51A(2) could extend to a person treated by s 75B as being involved in a corporation’s conduct. Thus his Honour declined to strike out a pleading in which the applicant did not assume the initial burden of proving that the misrepresentations with respect to future matters were misleading. This was in a context where counsel for the applicant had made it plain that it was not part of his case that the respondent alleged to be liable under s 75B knew the representations were false, misleading and deceptive; see King184 ALR 106 at [17].
Moore J of course did not have to reach a final conclusion on this point. However Emmett J did. We find his Honour’s reasoning persuasive.
This approach to the interpretation of the operation between future matter provisions and accessorial liability provisions appears to have been widely, if not universally, adopted: see Robertson Street Properties Pty Ltd v RPM Promotions Pty Ltd [2005] QCA 389 at [36] per Keane JA; Dawson v LNG Holdings [2008] NSWSC 137; Hattv Magro [2007] WASCA 124; 34 WAR 256 at [42].
It follows that where it is alleged by the plaintiff that the third defendant is liable by reason of an accessorial liability provision for a representation made by PPI as to a future matter, the onus falls on the plaintiff to prove that the third defendant had actual knowledge that PPI had no reasonable grounds for making the representation.
Plaintiff’s Claim Against Third Defendant – Consideration.
I am satisfied that the Waldorf marketing document, viewed objectively, contained a number of misleading and/or deceptive statements. The document clearly suggested that those who purchased apartments in the Waldorf development would be able to reside in those apartments as owner/occupiers. This was incorrect because the relevant development consent restricted their use to that of serviced apartments. I am also satisfied that the document suggested incorrectly that an owner had the option of renting a unit under a “standard real estate lease”, implying that the property could be leased as a long term residence under a standard residential lease. This was in fact not a permitted use of the apartments. Based upon the slides prepared by PPI for its seminars marketing the Waldorf development, I am unable to be satisfied that this mixed-use representation was made orally by the third defendant in the course of his presentation on 12 December 2001. I accept that the Waldorf marketing document, in which the representations were clearly made, was available to attendees at the seminar, and it is probable that the plaintiff obtained a copy at this seminar.
I am not satisfied that the third defendant knew that the mixed-use representation, found in the Waldorf marketing document, was made to the plaintiff. I am not satisfied on the evidence that the third defendant had any role in preparing that document, or had at any relevant time knowledge that the document contained the mixed-use representation.
I am satisfied that while the focus of the seminar on 12 December 2001 was on the Waldorf South Sydney development, it is highly probable that the seminar provided general information about property investment and in particular investment in serviced apartments. It is also highly probable that the presentation referred to properties other than the Waldorf South Sydney development, and that brochures which were made available by PPI to attendees at the seminar also referred to other properties.
I am not satisfied that the oral representations said to have been made by the third defendant to the plaintiff immediately after the seminar were, in fact, made by the third defendant. Bearing in mind his role at these seminars, it is unlikely that he would have engaged in a conversation with the plaintiff of this level of particularity. I am also not satisfied that Mr Knell handed a copy of the Waldorf marketing document to the plaintiff after the seminar. I accept the evidence of Mr and Mrs Knell that this was not part of his role at such seminars.
The evidence of Mr Knell was equivocal as to whether he conducted a three hour strategy meeting with the plaintiff or Ms Read or Ms Lim before they purchased apartments. His final position seemed to be a concession that this was possible. There is, however, in my opinion no reliable evidence of the nature of any discussions that occurred at that meeting. It is material to observe that in his 50 issues document the plaintiff raised an issue about clause 30.5 of the contract for sale, which provided that “[t]he purchaser does not rely on any other letter document correspondence or arrangement whether oral or in writing, as adding to or amending the terms, conditions, warranties and arrangements of this contract”. The plaintiff was astute to the implications of this clause, and at issue II of the 50 issues document wrote: “Reliance on Waldorf Brochures and Advertisements re Reciprocal rights RCI and other Waldorf properties and returns – These are the basis of purchase – see prospectus and ad in Jan 2002 ‘Australian Property Investor’”. This, of course, is a contemporaneous document and it makes no reference to the plaintiff having relied on oral representations made by the third defendant. It is unlikely, in my opinion, that the plaintiff would have neglected to include reference to the alleged oral representations made by Mr Knell if they had in fact been made.
One of the PowerPoint slides said to have been used at the 12 December 2001 seminar is headed “Issues to be considered with a Serviced Apartment Investment”, and one of the dot-point issues is “Flexibility/Alternative Use”. This is apparently part of a generic presentation on “Understanding Risk” in serviced apartment investment. There is no reliable evidence that Mr Knell discussed this issue during the seminar either generally or in the context of a purchase in the Waldorf development. The presence of this dot-point does not establish either that Mr Knell made a mixed-use representation during the seminar or, if he did, that he knew it was incorrect.
The other representations alleged by the plaintiff are the “no operational outgoings” representation, and the “ASIC approval representation”. The plaintiff alleged that the no operational outgoings representation was made in the Waldorf marketing document and was complied with by the Manager for the purposes of the UMA (WASS), until about 31 May 2007 when it started charging “the body corporate costs” of the scheme which owners had to meet. I will assume for present purposed that this was the case, and that in charging such costs to individual unit owners the Manager was acting contrary to representations made in the Waldorf marketing document. As the plaintiff acknowledged in his submissions, the representation was as to a future matter. There is no evidence that the third defendant had actual knowledge that PPI had no reasonable grounds for making the representation. I should note in passing that while the Waldorf marketing document may have been misleading as to the period during which the no operational outgoings representation was to operate, the contract for sale was not. The contract for sale made it clear that the period during which WASS as the Manager of the UMA was to be responsible for the majority of the outgoing was the “guarantee period” of five years from the date of completion of the sale. I have no doubt the plaintiff was aware of this from his own study of the contract. This finding is supported by the contents of a letter written by the plaintiff to Jameson & Associates Unit Services Pty Ltd dated 15 February 2008 concerning alleged arrears of strata levies for unit 206. In that letter the plaintiff stated “up to and including 31 May 2007 Waldorf Apartments was required under the terms of the Unit Management Agreement to ‘pay’ all ‘property expenses’ ...” (emphasis as per original). He then went on to say “Under the terms of the UMA I became responsible for payment of levies from 1 June 2007”: Exhibit AE, p 93. For this reason, I am satisfied that the plaintiff did not rely upon the no operational outgoings representations when he purchased unit 206.
With regard to the ASIC approval representation, assuming it to be a representation as to a future matter, making the same assumptions that I made regarding the no operational representation, I make the same finding that there is no evidence that the third defendant had actual knowledge that PPI had no reasonable grounds for making the representation.
The plaintiff alleged that the facsimile from Mr Rubinstein to the first and third defendants dated 1 February 2002 contained the ASIC approval representation. The relevant portion of that document relied upon by the plaintiff reads:
Please be aware that the UMA have [sic] been designed to comply with ASIC requirements and therefore it seemed complicated in certain aspects. Both the UMA & The contract have been previously approved by ASIC & THE NSW Supreme Court and it is unlikely that the liquidator will be prepared to amend them again.
As per my discussion with Sydney The Waldorf will consider minor amendments to THE UMA as long as there are no changed in the commercial term and the concept as approved by ASIC & The Court is not been [sic] affected.
Later in that document, when addressing the plaintiff’s concern that clause 37 of the UMA may make the agreement uncertain, Mr Rubinstein said:
We have now almost finalized [sic] agreement, any changed will be to comply with ASIC & The Supreme Court.
The plaintiff appeared to suggest that this was a representation that ASIC was in the process of approving the UMA for the purpose of it being registered as a MIS. I do not accept that the documents relied upon by the plaintiff can be read that way and I am certain that the plaintiff himself did not read them that way. It is clear from the context in which these statements were made that the need for ASIC approval concerned issues arising from the liquidation of the vendor, and was not a representation that ASIC was approving the UMA for the purpose of registering a MIS. In that regard, I note that the alleged representations refer to approval by ASIC and the NSW Supreme Court, and that the latter body has no role to play in the registration of an MIS.
In any event, to the extent that the ASIC representation was one of present fact, there is no evidence that the third defendant knew that any such representation was false.
The plaintiff also relied on statement made in Mr Rubenstein’s response to his 50 issue document as reiterating the no operational outgoings representation. For the same reasons I have given when addressing that representation as found in the Waldorf marketing document, the plaintiff cannot establish liability on the part of the third defendant based on the statements by Mr Rubenstein in this response.
For completeness, I should add that I am not satisfied that the plaintiff relied on the mixed-use representations when he purchased unit 206, as I am satisfied that he was well aware of the nature of his purchase and the relevant limitations upon the use to which it could be put.
For these reasons the plaintiff’s claim against the third defendant fails.
The Evidence Concerning Loss and Damage
I have found that the plaintiff’s claims against the first and third defendants fail. I will nevertheless consider the evidence adduced by the plaintiff concerning loss and damage, proof of which, of course, is an integral part of proof of his claim in negligence against the first defendant. I will consider both whether the plaintiff has established that he suffered a loss and whether the evidence allows for any such loss to be quantified. The plaintiff adduced no expert evidence of any losses he said he suffered as a consequence of purchasing unit 206 and entering into the UMA. It is consistent with the plaintiff’s confidence in his own abilities and judgment that he ignored advice about the need for such evidence and proceeded to attempt to assess his own losses. The difficulties in adopting such a course are manifest.
An expert is required to abide by the expert code of conduct set out in Schedule 1 to the Court Procedure Rules 2006 (ACT) (the CPR). The expert must not give oral evidence unless they have acknowledged in writing that they have read the code of conduct and agree to be bound by it. Expert reports must contain similar acknowledgments: r 1202 of the CPR.
The expert witness code of conduct set out in Schedule 1 of the CPR provides that the expert:
(a)has an overriding duty to assist the court impartially on matters relevant to the expert’s area of expertise;
(b)has a paramount duty to the court and not to the person retaining them; and
(c)is not an advocate for a party.
In any report prepared by an expert, he or she must state their qualifications for forming the opinions stated in the report, all material facts and assumptions on which the report is based, reasons for each opinion expressed, whether particular question or issues fall outside their area of expertise, and any reference to literature or other materials relied upon to support their opinions.
It is obvious that the value of expert evidence is derived from their demonstrated expertise in a particular field and from their independence. A judge or jury will not ordinarily possess expertise in fields such as valuation of property or businesses and will need to reply upon expert evidence.
In paragraph 23 of the FASOC, the plaintiff pleaded the heads of damage he alleged he sustained by reason of the actions of the defendants. The first such head of damage claimed that he sustained loss by reason of the reduced value of unit 206 as a serviced apartment compared with its value as a residential unit capable of being used or let as a permanent residence. In support of that claim the plaintiff filed an affidavit affirmed by himself on 28 March 2012 (Exhibit X). In this affidavit, he said that calculation of economic loss under this head of damage required determination of the “actual capital values” of unit 206 as at settlement date, 31 May 2002. He then asserted, based upon his “research in the context of the present proceedings” that there are three main approaches to calculating the value of short term accommodation: the income capitalisation approach, the sales comparison approach and the cost approach. In addition, the plaintiff asserted that the “lodging industry” has a “well-known rule of thumb”, known as the average daily rate rule (the ADR). The plaintiff then purported to apply each of these approaches and the ADR to unit 206, resulting in an asserted loss of $92,250.00 being the supposed difference in value of unit 206 as a serviced apartment as opposed to its value as a residential unit capable of being used or let as a permanent residence.
I will not set out the processes by which the plaintiff arrived at this figure, because there would be no point in doing so. I am not a valuer, and I do not purport to know whether the methods adopted by the plaintiff are appropriate, or have been validly applied. I do not know what research was undertaken by the plaintiff and it would be improper for me to undertake my own research on the matter. The plaintiff referred to various publications in his affidavit which are not in evidence, and there is no evidence that the contents of those publications are generally accepted by expert valuers.
The plaintiff demonstrated no qualifications or expertise in valuation. He did not demonstrate that he was entitled to give expert evidence as to the value of unit 206 at the time he purchased it, or the value of a hypothetical similar unit which could be used or rented out as a permanent residence. He is also a partisan witness and not subject to the expert witness code of conduct. His valuation evidence is worthless.
In a second affidavit also affirmed on 28 March 2012 (Exhibit W), the plaintiff addressed two other pleaded heads of damage, being reduced income by reason of utilising the property as a serviced apartment instead of letting the property as a permanent residence, and reduced income by reason of engaging WASS as Manager of the property as a serviced apartment. In this affidavit the plaintiff again referred to documents not in evidence and manipulated the data according to processes the validity of which was not subject to any expert evidence. He purported to determine the amount he would have received if the property had been let as a permanent residence by reference to the document titled “Report Produced by Primary Property Investment Pty Ltd for: Typical Investor on Top Marginal Rate, For Property Situations at: Waldorf South Sydney” which was part of the Waldorf marketing document prepared by PPI for use at the 12 December 2001 seminar. In my opinion, it is clear that the document in question is a financial analysis based on assumptions and not a representation as to what future returns the property will yield. In any event, in using the “Weekly Rent” figures in the way in which he has, the plaintiff has treated these figures as the equivalent of an admission in the proceeding by the third defendant that this is the income the property could have generated as a permanently let residence. This, of course, is incorrect. To the extent that the figures in the analysis could constitute representations, they were made by the second defendant which was responsible for the preparation and distribution of the document. For the reasons I have given, the third defendant was not a person “involved in” the making of the representation. In short, the document is not the third defendant’s and no representation made in that document can be relied upon by the plaintiff as an admission by the third defendant in these proceedings. The consequence is that there is no evidence of what income the property may have generated as a permanently let residence. The plaintiff has also treated figures in the document in the same way, e.g. Waldorf management fees, discount rates etc. There is no reliable evidence of what unit 206 may have returned if let as a permanent residence.
There is similarly no reliable evidence of reduced income being received by the plaintiff by reason of WASS being engaged as Manager of the property. It was of course inevitable that the plaintiff would be required to pay fees to WASS at some point, and to this extent would receive reduced income by reason of him retaining WASS, but I do not understand the plaintiff to allege that he suffered damages in this way. I understand the plaintiff’s claim to be that if the property could be let as a permanent residence he would not have been required to retain WASS to manage the property and accordingly would not have been required to pay its fees. It must be accepted that this would be the case, but in determining what loss, if any, the plaintiff may have suffered in that regard, it would be necessary to bring to account any costs that may arise from the property being let as a permanent residence and there is simply no reliable evidence whether there are any such costs or, if so, their amount.
The plaintiff also claimed damages for additional costs incurred by reason of special levies imposed “consequent on the exclusive rights granted” to Rinbac to require reimbursement of costs, charges and expenses in relation to the Waldorf development. The plaintiff would have been required to pay such levies even if the unit he purchased was capable of being let as a permanent residence, and there is no evidence that such levies were improperly levied, or were for inflated amounts. To the extent that the plaintiff may allege that he would not have proceeded with the purchase of unit 206 but for the alleged wrongdoing of the defendants, it would be necessary to bring to account any capital gain made by the plaintiff on his purchase of unit 206, which would require a valuation of that unit. The plaintiff has steadfastly declined to provide the Court with evidence of any such valuation, asserting instead that the unit simply has no value. There is simply no reliable evidence to establish that the plaintiff has sustained the alleged loss, or, if so, the quantum of that loss.
The plaintiff also claimed damages for additional costs in respect of the period 1 June 2007 to 16 July 2009 consequent upon an alleged breach of the no additional outgoings representation. No reliable evidence was adduced by the plaintiff to establish these losses.
The next claim by the plaintiff was for loss of the benefit of performance of the representations in respect of the outgoings on unit 206 post-16 July 2009, the date upon which he purported to accept repudiation of the UMA. There is again no reliable evidence that the plaintiff sustained such losses, or, if so, to what extent. The plaintiff further claimed loss of income or earnings consequent upon the breach of the mixed-use representation. Regrettably, there is again no reliable evidence that the plaintiff sustained such losses or, if so, the extent of those losses.
The plaintiff then claimed damages for loss of opportunity to purchase a residential property in Jerrabomberra for $300,000.00 as an alternative to unit 206. There are a number of problems with this claim. There is no reliable evidence that the plaintiff did not have the financial capacity to purchase the Jerrabomberra property in 2003, when he said that the opportunity arose for him to buy it. In 2006, the plaintiff purchased an apartment in Aurora Towers in Brisbane, borrowing $430,000.00 to do so. The plaintiff’s taxation and other financial records were not reliable so that I cannot be satisfied that the plaintiff missed the opportunity to purchase the Jerrabomberra property because he lacked the financial means to purchase it. There is also much to be said for the proposition that the temporal difference between the purchase of unit 206 and the plaintiff having the opportunity to purchase the Jerrabomberra property makes it entirely speculative whether if he had not purchased unit 206 he would have been in a position to purchase the Jerrabomberra property. There is also no reliable evidence of the comparative variations in value of either the Jerrabomberra property or unit 206, so there is no means to determine whether the plaintiff suffered any such loss.
The next claim made by the plaintiff is that he suffered the loss of an opportunity “to secure the represented annual net income returns by action to register the Waldorf scheme with ASIC and thereby put in place enforceable undertakings in respect of the represented owners ‘rights’ in respect of the outgoings on” unit 206. I take this to be an allegation that the plaintiff lost the opportunity before settlement of insisting that the MIS constituted by the UMA be registered in accordance with the CA. The plaintiff may well have lost that opportunity, but there is no evidence that he suffered any loss or damage as a consequence. I also note that registration of the scheme as an MIS would not have had the effects he suggests.
The plaintiff also alleged that he suffered loss as a result of incurring a net contractual liability as at 31 May 2002 to pay all operational outgoings including WASS imposed fees and charges over the period 1 June 2002 to 31 May 2011. I understand this claim to be that he suffered losses by reason of entering into the UMA. There can be no doubt that by entering into the UMA the plaintiff incurred financial liabilities. I am simply not satisfied that there is reliable evidence as to the extent of those liabilities.
Finally, I will address the plaintiff’s claim for exemplary damages against the third defendant. That claim fails for two reasons. Firstly, I am satisfied that exemplary damages are not available under the provisions of the TPA or CA relied upon by the plaintiff: see Nixon v Philip Morris (Australia) Ltd [1999] FCA 1107; 95 FCR 453 per Wilcox J at [96]-[103]; Munchies Management Pty Ltd v Belperio (1988) 84 ALR 700 at 713. The case cited by the plaintiff as authority for the proposition that exemplary damages may be awarded, Ali v Hartley Poynton Ltd [2002] VSC 113; 20 ACLC 1006, a decision of a single judge of the Supreme Court of Victoria, is not clear authority for the plaintiff’s proposition. The way in which the decision is set out makes it, with respect, difficult to follow, but it appears to me that the trial judge awarded exemplary damages with respect to common law causes of action. Secondly, even if such damages were available, the present case is not one where the making of an award would be appropriate. At its highest, the case against the third defendant may suggest some carelessness on his part, but nothing like the “conscious and contumelious disregard for the plaintiff’s rights” that would justify such an award: see Uren v John Fairfax & Sons Pty Ltd (1966) 117 CLR 118.
For completeness, I also note that by taking no steps to sell unit 206 after the plaintiff said he became aware of the true nature of his purchase in 2003, he failed to take reasonable steps to mitigate his losses. Insofar as the UMA constituted an unregistered MIS, the plaintiff had the option of having the scheme wound-up under s 601EE of the CA which would probably have provoked WASS to take steps to register the scheme.
Orders
There will be judgment for the first and third defendants against the plaintiff. Unless any party applies for a different costs order within 28 days of publication of these reasons, I order the plaintiff to pay the first and third defendants’ costs of the proceedings.
| I certify that the preceding four hundred and fifty-five [455] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Justice Burns. Associate: Date: 27 July 2017 |
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