Rozene Pty Limited v Raine and Horne Commercial (NSW) Pty Limited

[2005] NSWSC 792

CITATION:	Rozene Pty Limited v Raine & Horne Commercial (NSW) Pty Limited [2005] NSWSC 792
HEARING DATE(S):	23 May 2005 - 27 May 2005, 2 June 2005
JUDGMENT DATE :	5 August 2005
JUDGMENT OF:	Barr J at 1
DECISION:	Verdict for the defendant. Plaintiff to pay the defendant's costs.

PARTIES:	Rozene Pty Limited, Raine & Horne Commercial (NSW) Pty Limited
FILE NUMBER(S):	SC 012765/89
COUNSEL:	Plaintiff: P Biscoe QC/J Kirk Defendant: D Fagan SC/P Bolster
SOLICITORS:	Plaintiff: Summit Law Defendant: Colin Biggers & Paisley

LOWER COURT JURISDICTION:

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

GRAHAM BARR J

5 AUGUST 2005

012765/89 ROZENE PTY LIMITED v RAINE & HORNE COMMERCIAL (NSW) PTY LIMITED

JUDGMENT

1 HIS HONOUR: The plaintiff, Rozene Pty Limited (Rozene) sues the defendant, Raine & Horne Commercial (NSW) Pty Limited (Raine & Horne) for damages arising out of the sale by Rozene of a building. The building was situate 116-122 Miller Street North Sydney (116 Miller Street) and comprised commercial and office space. Mr Nicholas Andrews was Managing Director of Rozene and at all material times controlled it and spoke for it. Raine & Horne was the letting agent for 116 Miller Street and Mr Guy Walter, a Director of Raine & Horne, managed its business arrangements with Rozene.

2 116 Miller Street was not far from the intersection of Miller Street and Pacific Highway. The building adjoining it on the northern side was 112 Miller Street. The Australia and New Zealand Bank (ANZ) or interests which it controlled owned 112 Miller Street and carried out retail banking there. It also housed its data processing department in the building.

3 ANZ was in the business of buying and owning real property. So were certain entities under its control, namely subsidiary companies respectively called ANZ Investments and Securities Limited, which was the bank’s superannuation arm and which I shall call the Pension Fund, Australian Fixed Property Trust (AFT), Delfin Property Group Limited (Delfin) and Dalgety Investments Limited (Dalgety). AFT and Delfin were wholly owned by ANZ and Dalgety part-owned. Although those companies had their independent management and strategies, neither could without the authority of and funding from ANZ enter into a venture like the purchase of 116 Miller Street.

4 Rozene banked with ANZ. Mr Andrews also owned a meat exporting business with an annual turnover of $30 million, and that business, too, banked with ANZ. As an important client of the bank, Mr Andrews knew a number of its managers, including the manager for the time being of the branch at King and George Streets, Sydney, where he did his banking business. The branch manager at one time was Mr Hardy and later Mr Penn.

5 ANZ had a Property Group, the head of which was an Assistant General Manager, Mr Scott. Mr Scott’s office was in Melbourne. The principal officer of the Group in Sydney was Mr Peter Genery. His job was to provide premises for the several organs of the bank in New South Wales. This he did by planning and putting forward written proposals and submissions for consideration by Mr Scott and, if appropriate, the Board of Directors of ANZ. A step like the purchase of 116 Miller Street would have to be approved by the Board. A minute for the approval of the Board would have to have Mr Scott’s support.

6 Mr Andrews gave Mr Walter and Mr Genery, among others, to understand that Rozene would sell 116 Miller Street if a suitable price could be attracted. It was a three-storey building set among taller buildings and the site might have been thought suitable for redevelopment. The interest of ANZ in property generally, together with the possibility of jointly redeveloping the adjoining sites at 112 and 116 Miller Street, particularly as 112 Miller Street had the vehicular access to Pacific Highway that 116 lacked, might make the building especially attractive to ANZ.

7 There was not enough space at 112 Miller Street properly to accommodate the ANZ branch and the data processing department. Mr Genery foresaw a long term solution to the problem by the joint redevelopment of 112 and 116 Miller Street. He was therefore keen to interest the bank or any of its entities in purchasing 116 Miller Street.

8 At some stage Rozene appointed Raine & Horne selling agent. Mr Andrews and Mr Walter spoke about selling by tender. Then, having spoken to Mr Walter, Mr Andrews decided to sell by auction. Mr Walter made arrangements for auction on 7 June 1988 and continued speaking to developers likely to be interested in offering to buy. Offers were made by a number of interested companies but none was ever made by ANZ. In May 1988 Mr Andrew Clubb, a developer, indicated to Mr Walter that his company was interested in purchasing 116 Miller Street at $8.25 million on terms as to deposit and the time allowed for settlement. By 18 May Mr Andrews was prepared to sell to Mr Clubb’s interests. On 20 May contracts were exchanged with Mr Clubb’s company, Wedna Bulk Pty Limited (Wedna) for sale for $8.25 million. Settlement was to be after six months. The auction was cancelled.

9 Wedna entered into negotiations with ANZ and on 28 November 1988 exchanged contracts with it for the sale to the bank of 116 Miller Street for $12.816 million. Both contracts settled on 12 December 1988.

10 By para 8 of its Further Amended Statement of Claim Rozene asserts this -

8. On or about 7 April 1988, and on 13 May 1988, and again on or about 16 May 1988, and again on or about 17 May 1988, and again on or about 18 and 19 May 1988, Raine & Horne by its employee Mr Walter advised Mr Andrews on behalf of Rozene in regard to the Wedna Offer.
PARTICULARS
(aa) That the property should be sold by auction and not by tender.
(a) That the Wedna Offer was the best price that could be obtained for the property.
(b) That Raine & Horne had referred the Wedna Offer to all prospective purchasers.
(c) That no prospective purchasers had been prepared to offer a sum higher than the Wedna Offer.
(d) That Rozene could not reasonably expect to obtain a higher sum than the Wedna Offer if the property were to be offered for sale by auction.
(e) That he had spoken to the ANZ and they were not interested in acquiring the property.
(f) That Peter Genery of the ANZ (or in the alternative the ANZ) would be, and then had been, informed that contracts would be exchanged on the Wedna Offer on 19 or 20 May 1988.
(“the Wedna Advice”)

11 Raine & Horne accepts that it offered advice like that asserted in para (aa). It accepts the assertion in para (e) that it advised that ANZ was not interested in acquiring the property but says that the advice was true in that it meant that ANZ would not make an offer to purchase. Otherwise Raine & Horne disputes the terms of the advice Rozene says it offered.

12 Rozene asserts that the contract was entered into in reliance on the Wedna advice. It asserts that in giving the Wedna advice Raine & Horne breached the terms of its agreement with Rozene, was negligent and engaged in conduct and representations within the meaning of s51A Trade Practices Act 1974 which were misleading or deceptive. By para 12 the claim is particularised thus -

12. In giving the Wedna Advice Raine & Horne breached the terms of the Agreement.
PARTICULARS
(a) Raine & Horne failed to make any or proper enquiries of the ANZ Bank, Delfin and Dalgety in order to ascertain their interest in purchasing the property prior to advising Rozene to sell the property before auction.
(b) Raine & Horne failed to do all things that were necessary or appropriate as the agent of Rozene to sell the property at the best price which could be obtained.
(c) Raine & Horne failed to advertise (sic: advise that) the property should be offered for sale by tender and not by auction.
(d) Alternatively, Raine & Horne failed to conduct an auction and failed to advise the Wedna Offer should not be accepted.
(e) Raine & Horne remained silent when there was an obligation to speak in regard to (a) and (b) above.
(f) There were no reasonable grounds for saying that the Wedna Offer was the best price that could be obtained for the property.
(g) It was not the case that Raine & Horne had referred the Wedna Offer to all prospective purchasers.
(h) There were no reasonable grounds for saying that no prospective purchasers had been prepared to offer a sum higher than the Wedna Offer.
(i) There were no reasonable grounds for saying that Rozene could not reasonably expect to obtain a higher sum than the Wedna Offer if the property were to be offered for sale by auction.
(j) The Wedna Advice implied that satisfactory enquiries had been made and that such enquiries had revealed no better offer was available to Rozene, when this was not the case.
(k) Raine & Horne did not warn Rozene of alternative options available to Rozene in conducting the sale of the property on Rozene’s behalf including withdrawing the property from auction or setting a very high reserve in a strong market in circumstances where Raine & Horne knew or had reason to believe there were other parties who were prepared to pay an amount in excess of the Wedna Offer, and where such warning should have been given.
(l) Raine & Horne had not spoken to the ANZ as claimed.
(m) The ANZ itself or through its subsidiaries Delfin and Dalgety was interested in acquiring the property.
(n) Raine & Horne had not informed Peter Genery or anyone of the ANZ that contracts would be exchanged on the Wedna Offer on 19 or 20 May 1988.

13 Raine & Horne denies that any advice tendered constituted less than reasonable care, for the purposes of the action in contract and tort, or misleading or deceptive conduct.

Events occurring between 1986 and 1988

14 This action, which was heard in 2005, concerned events between seventeen and nineteen years old. The first and principal affidavit sworn by Mr Andrews, and the one upon which all the others followed or to which they responded, was made on 15 May 2002. Many conversations were referred to in that affidavit. Commonly, the style was that a particular person said words “to the effect of”, followed by words in direct speech as though they were the words actually spoken. I do not mean to suggest that I have ever been under the impression that Mr Andrews was saying that those precise words were spoken. Even so, the style of the affidavit was calculated to give the impression that Mr Andrews had a precise recollection of what was said. I do not think that he did or could have had after that length of time.

15 Mr Andrews used to keep a journal in a book of ruled, bound, machine-numbered pages. He used to write it up as events happened, though occasionally he went back to an existing record and added to it a note of some relevant development. He relied extensively on the journal in the preparation of the affidavit upon which his case is essentially based. Relavantly, the journal does not generally record direct speech. Two comments may be made for the moment. The first is that Mr Andrews asserts in a number of places in his evidence that on occasions which he identifies certain people said certain significant things, yet the journal contains no reference to such things. Wherever those matters are in dispute I have looked for evidence corroborating Mr Andrews’ version of events and have been inclined otherwise, because of the absence of any precise contemporary record, to doubt the accuracy of what he says. The second is that there seems to be a noticeable incidence of entries about ANZ occurring at the conclusion of entries and appearing possibly to have been inserted after entries have been ruled off. I shall make further reference to such matters as I deal with the evidence.

16 In determining questions whether conversations took place and whether a thing was said as asserted I have taken into account, in addition to the long period of time which has elapsed since the events out of which the claim arises, my impression of the witnesses. Mr Andrews strikes me as a shrewd, forceful, strong-minded man who forms strong opinions about matters and is apt to recall distant events in a manner favourable to his own case. He was at some pains in his evidence to stress that if he engaged a professional person, like a real estate agent, he relied on the opinion of that person. I do not accept that claim at face value. I do not doubt that Mr Andrews listened to whatever Mr Walter had to say from time to time, but I think that Mr Andrews made up his own mind about things.

17 Apart from the difficulties posed by the discrepancy between the journal entries and the evidence of Mr Andrews, I noticed a reluctance on his part to acknowledge the force of reasonable propositions that he thought might damage his case. I shall give some examples.

18 Mr Andrews was being cross-examined about a concern that Mr Walter said he had that Mr Walter’s discussions with agents or developers, mentioning the price he wanted, might lead potential purchasers to suspect that he was not a genuine seller. Having been asked about a counter-offer he had made to an agent called van der Woude that he required $8 million on a seven-month settlement, he was asked these questions and gave these answers -

Q. You agree with me the effect of putting back a counter offer like that of $8 million as at this date in mid March 1988 was, in effect, conveying to at least one interested party in the market the sort of level that you would accept, wasn't it?

A. There were negotiations. If I had accepted it remains to be seen.

Q. But it was with respect to your talking price in this manner?

A. Yes.

Q. To prospective purchasers, that Mr Walter warned you at about this time that this would compromise attempt to sell the property, didn't he?

A. I can't recall.

Q. He warned you that talking price in this manner would convey to purchasers what level you were expecting so that if you were simply to put the property out to tender parties who might otherwise have put in a larger number would have an understanding of what you were willing to expect and it would put a cap on what offers you would get?

A. With Mr Walter we were talking prices and prospective purchasers quite often.

Q. But in that context he warned you along the lines I have suggested, didn't he?

A. It was a dual understanding.

Q. Do you agree he warned you of the consequence, the adverse consequences?

A. I can't recall that .

19 I thought that this passage of evidence showed that Mr Andrews was less than frank in answering questions about his direct dealing with potential purchasers -

Q. But whether you informed Mr Walter of what you were doing or not, the fact is you were carrying on a lot of negotiations with other prospects, including through other agents such as van der Woude of Baileys?

A. Yes, but they were not under agreement to sell the property. Everybody had to go through Mr Walter, Raine and Horne.

Q. Well, they did not have to go through Mr Walter to put an offer to you or to get a response from you, did they?

A. Why not?

20 There was this evidence when Mr Andrews was being asked whether he recognised the risk, if he rejected Mr Clubb’s offer and went on to auction, that Mr Clubb might go cold -

Q. And you recognised, didn’t you, that if you rejected Mr Clubb’s offer and went on to an auction you would run the risk that he might find something else that he would develop, whether in North Sydney or somewhere else, and put his money into (it) and not attend the auction?

A. If I had known that ANZ were interested with the property they owned joined to mine next door, then I would not accept the offer through Raine and Horne’s eight and a quarter million, I would let it go to the auction.

Q. Please answer my question?

A. OK.

Q. What I put to you was that you recognised the risk when you had Mr Clubb’s offer in hand, that if you knocked it back?

A. No -

Q. No, just wait - and went on to the auction, that he might between then and the auction, which was a month away, change his mind about trying to buy your property and/or not attend the auction?

A. I am sorry, I can’t work out other people’s minds. If I knew the bank were interested, I would go to the auction.

Q. I know you want to keep saying that, Mr Andrews, but just concentrating on Mr Clubb for me, if you would, you could not read other people’s minds?

A. No.

Q. And therefore you knew that it was a risk, that you could not be sure he would come along to the auction and bid up to that same price, could you?

A. I didn’t know that, but also I did know that he would not turn up to the auction.

Q. Would you repeat the last answer please?

A. I did know that he wouldn’t come to the auction, but also I did not know that he will come to the auction.

Q. You did not know one way or the other?

A. One way or the other, yes.

21 Not long before the property was sold Mr Andrews attended a meeting with Mr Ell of Leda and Mr Walter, during which Mr Ell, having already offered $8 million, threw doubt on whether the offer would stand. Mr Andrews was asked in cross-examination whether his assessment at the time had been that Leda would not increase its offer of $8 million. There were these questions and answers -

Q. And you assessed that he would not pay any more?

A. If he would have got to the auction I would never know how much he would have paid.

Q. And that is why you did not want to take the risk, wasn’t it?

A. When I had Raine and Horne as my adviser and he was marketing the property and Mr Guy Walter who was looking after it personally himself, that was, with all the inquiries that were available from the developers, the property surely would have achieved the best price like he has done on the end of the day by going through an auction.

Q. I will put the question again. When you went to this lunch and Mr Ell said that he would not pay more than $8 million - you agree that he did say that?

A. He did say that, yes.

Q. And in that lunch he tried to talk down the property market, didn’t he?

A. Every prospective buyer he will do the same, and I will do the same if I was in his position.

Q. Maybe?

A. Yes.

Q. But I am asking you about Mr Bob Ell at lunch on 17 May. To answer my question, he did try to talk down the property market?

A. I can’t recall the conversation.

22 Mr Andrews was referred to his diary note and conceded that he had been satisfied from the conversation that Leda would not pay more than $8 million. This evidence followed -

Q. Well, from this conversation I put it to you you decided that if you went on to an auction you could not expect Bob Ell to offer any more than $8 million at the auction?

A. We will never know.

Q. But based on your experience of this sort of negotiation and discussion with prospective purchasers, when you said to him that you wanted eight and a half million you would have considered it pretty clear to him that you had an offer close to that?

A. I can’t comment what was going through my mind then.

23 I shall deal later in this judgment with particular criticisms made of Mr Walter as a witness of truth. My overall impression is that he was trying to tell the truth. He appeared resentful, understandably perhaps, at having to remember the detail of conversation said to have taken place seventeen years and more earlier on.

24 The third principal witness was Mr Genery. I formed a poor opinion of his evidence for reasons which I shall explain.

25 The events of May 1988 can be properly understood only in the light of the events of previous years. Mr Andrews was a well-established investor in real property, having bought and sold many properties since his first commercial acquisition in 1974. His strategy was to hold onto premises for a number of years and then sell or develop them to realise their increased capital worth. He bought 116 Miller Street, which was called The Stramit Centre, in 1980. He met Mr Walter in 1985 when Raine & Horne were involved in the sale of an adjoining property in which Mr Andrews had been interested. Later in the same year Mr Andrews appointed Raine & Horne to manage 116 Miller Street. They had regular meetings over lunch at which they discussed the property market. There came a time at which they discussed the prospect of Rozene’s selling 116 Miller Street.

26 In May 1986 Mr Genery got in touch with Mr Walter to ask about the availability of premises for lease in North Sydney. Mr Genery was concerned about the cramped conditions that existed at 112 Miller Street. Mr Walter suggested that Mr Genery consider acquiring 116 Miller Street.

27 On 30 July 1986 Mr Walter wrote to Mr Genery about ANZ premises in North Sydney, setting out a list and description of possibly available premises. The covering letter included these paragraphs -

On the sales side, clearly the next door location to your Miller Street, North Sydney office, which we manage, is of interest. We have had discussions with the Principal of this property and it seems that he is likely to sell in the near future subject to assessing the alternative methods of sale.
These include the assessment of the viability of obtaining air rights on the site. We would advise that we believe it is in your best interest to pursue the purchase of the site and include your Superannuation Investment Fund to capitalise on this location.

28 According to Mr Andrews’ journal, he had lunch on 29 September 1986 with Mr Toomey and Mr Penn of ANZ. In his affidavit he swore that on that occasion Mr Penn asked him whether he had spoken to Mr Genery about 112 Miller Street and said “the bank wants it”. There is no reference to that conversation in the journal and I do not accept that it took place.

29 Mr Andrews says that in October or November 1986 he visited Mr Genery in his office. There is no journal entry to that effect. It was not the sort of event Mr Andrews would not have recorded. I doubt whether the meeting took place. Mr Andrews may have had in mind a meeting he had with Mr Genery on 2 September 1987.

30 By 22 October 1986 Mr Bruce Moore, the manager of the Pension Fund, had visited and inspected the premises. At first he considered them suitable for purchase and development by the Pension Fund. So much appears from an internal bank memorandum written by Mr Genery on 22 October 1986. However, Mr Genery admitted in cross-examination that within weeks or months after that date Mr Moore informed him that the Pension Fund was no longer interested in acquiring the property.

31 On 10 November 1986 Mr Andrews and Mr Walter met to discuss an intended visit by Mr Walter to Melbourne to talk to ANZ. Mr Andrews made a record of the conversation in his journal in the following words -

METTING 9AM GUY WILL GO TO MELBURNE TO TALK TO ANZ TO BUY MILLER ST PR. …

32 In his affidavit Mr Andrews swore that Mr Walter said on that occasion -

The bank is definitely the buyer for the site. I will go to Melbourne to discuss it with Peter Genery’s seniors.

33 I do not think that Mr Walter could have had any idea at that stage whether the bank regarded itself as a definite buyer. There would have been no purpose in his speculating to that effect. I do not think that he said those words.

34 On 8 December 1986 Mr Walter again wrote to Mr Genery describing how the bank might solve its space problems by acquiring 116 Miller Street. The letter set out various ways in which this might be achieved, all of which entailed the purchase of 116 Miller Street and some of which entailed the amalgamation of that and the adjoining sites. Mr Genery was not impressed with the suggestions, but took the matter no further. He engaged no expert and commissioned no study. That was because this was not to be a purchase by the bank and there was no budget to do such things.

35 On 18 December Mr Walter told Mr Andrews that he had met a representative of ANZ. Presumably this was Mr Moore. The representative had told Mr Walter that the bank was interested in buying the property for a good price. Mr Andrews instructed Mr Walter to ask for an offer.

36 On 5 January 1987, in another internal memorandum, Mr Genery wrote about the lack of suitable space in North Sydney, particularly for data processing operations, and referring to discussions which had been had with the Pension Fund about redevelopment of 116 Miller Street alone, 116 Miller Street plus any air rights attaching to 112 Miller Street and a joint development of the two sites. Mr Genery mentioned a broad estimate of $25 million for a joint redevelopment of the two sites and went on to observe that in the light of “current budgetary constraints” it had been determined that another floor could be added to the data processing building. The Assistant General Manager, Banking, for New South Wales considered that the redevelopment of 116 Miller Street could not occur quickly enough to meet the needs of the North Sydney branch.

37 It was therefore recommended to leave the data processing operation where it was but move the branch out into other leased premises in North Sydney. The data processing operation could be adequately provided for by the addition of a floor to 112 Miller Street and the vacation by the branch of the ground floor of the same premises. Accordingly, there was no longer any thought of a joint redevelopment of the two sites and it seems that the most Mr Genery was then prepared to contemplate was to redevelop 116 Miller Street in due course with the benefit of any air rights still attaching to 112 Miller Street after the addition of the proposed new floor.

38 Approval was given by ANZ for Mr Genery to proceed as recommended. A floor was added to 112 Miller Street some time later.

39 On 21 January 1987 Mr Andrews and Mr Walter met on the Gold Coast. The journal states that they discussed Miller Street and that Mr Walter said that he had ANZ and Austwide interested. In his affidavit Mr Andrews took the matter further, stating that he asked Mr Walter how the feasibility for the bank was going and that Mr Walter said that he was working on it. I do not accept that any such thing was said. As will appear, it was not until about 3 March 1987 that Mr Genery asked Mr Walter to provide a feasibility study.

40 On 3 March 1987 Mr Genery wrote a letter to Mr Walter confirming that the Pension Fund was interested in buying and redeveloping 116 Miller Street and asking for the preparation of a feasibility study at no cost to the bank. A study dated 4 June was prepared by Rice Daubney, architects, and was submitted in July 1987. However, Mr Genery did not send the feasibility calculations and drawings to Mr Moore. I think that that was probably because he had by then learned that Mr Moore would not commit the Pension Fund to the purchase.

41 On 31 July 1987 Mr Andrews told Mr Penn that he should let the investment department of the bank know that he would sell for $7.5 million to $8 million, that he, Mr Andrews, was working on the sale and that if the bank was interested it had better come forward “now”.

42 As have said, Mr Andrews and Mr Penn used to talk a lot and had substantial mutual interests. I do not think that Mr Penn would have failed to relay that message to Mr Genery. Mr Genery had no recollection of the matter, but that is explained by the passage of time and Mr Genery’s poor memory.

43 On 6 August 1987, four days later, Mr Andrews’ journal recorded that he had spoken by telephone to Mr Genery who said that the bank was not interested in jointly developing 112 and 116 Miller Street. It would build one more storey on no.112 but was interested in purchasing no.116. Mr Andrews told him that he had purchased a certain amount of air rights and would let Mr Genery know the latest price within a few days.

44 On 31 August Mr Andrews sent to Mr Genery by facsimile transmission a copy of the Rice Daubney papers, though I think that he had already received them. At any rate, he did nothing of consequence with them.

45 On 2 September 1987 Mr Andrews met Mr Genery in his office and asked for “no less than $8 million”. So much appears from a journal note for that day, which I accept as genuine. He also proposed in the alternative that he, Mr Andrews, build on the property and the bank lease the new building back from him. Mr Genery said that he would get back to him by the following week, through the agent.

46 Mr Genery accepted that that meeting took place but said that all he said to Mr Andrews was that he did not want to talk about the property without the presence of Mr Walter. I do not accept Mr Genery’s evidence in that respect. I think that the whole of the circumstances were bound to produce a firm statement from Mr Andrews how much he wanted for the building and that that is what happened. It would otherwise be difficult to understand why the meeting took place at all.

47 On 14 September 1987 a journal note records that Mr Andrews quoted Mr Penn $11.7 million for the property and asked him “to talk to Peter Genery now for better offer”. This figure must have incorporated an allowance for the value of air rights.

48 On 23 September 1987 Mr Andrews gave Mr Penn a copy of the Rice Daubney material.

49 According to a journal entry on 19 October 1987 Mr Genery told Mr Andrews that he was waiting for Mr Walter to work out the amount that he should pay for Miller Street “this week”. Mr Andrews’ affidavit refers to that note but goes significantly beyond the entry and attributes to Mr Genery a statement that -

The bank is interested in picking up your property.

50 It seems unlikely, in view of what Mr Genery then knew about Mr Moore’s attitude, that he would have said such a thing. I do not think that he did.

51 On 3 December Mr Walter told Mr Andrews that he had spoken to Mr Genery and had asked for not less than $8 million. He said that he was preparing a report for the bank to support that figure and hoped to have it to Mr Genery by late December.

52 On 9 December 1987 Mr Walter wrote to Mr Genery enclosing a Project Analysis Sheet. The sheet calculated the potential profit to the bank on the purchase price of $8 million. It was a plain indication to Mr Genery that that was the figure Mr Andrews was asking for.

53 A journal note recorded on 19 January 1988 states that Mr Andrews met Mr Walter and that Mr Walter said that he could sell air rights for a particular price per square foot “and 8M for land”. The note continues -

HE S/T ANZ.

54 That meant that Mr Walter had told Mr Andrews that he had spoken to ANZ. In his affidavit Mr Andrews swore to a somewhat more favourable statement by Mr Walter, thus -

I can definitely get you $8 million for the land. I have spoken to the ANZ and I don’t think it will be a problem.

55 It is impossible to understand how Mr Walter could by that stage have had any notion that the bank was likely to pay $8 million for the land. Mr Walter had no reason to speculate. I think that all he said to Mr Andrews was that he could get $8 million for the property. He probably also said that he had spoken to the bank, though there is no warrant for running the two statements together.

56 According to a diary note made on 28 January 1988, Mr Andrews spoke to Mr Genery on that day. It was a courtesy call. He told Mr Genery that he might sell the property within a few days. The note continues -

IF YOU WANT IT LET GUY KNOW SOON.

57 Mr Genery told Mr Andrews that he was waiting for information from Mr Walter. He would receive it that day and would put it up to Melbourne to decide.

58 On the same day Mr Walter faxed a more detailed calculation to Mr Genery, one of the assumptions in which was a land cost of $7.8 million.

59 Notwithstanding what he had told Mr Andrews, Mr Genery did not send any proposal to Melbourne for decision. Instead, on 29 January 1988 he wrote to the Pension Fund a memorandum that included these passages -

Some fifteen months ago we introduced to your Mr. B.W. Moore the above investment opportunity. At that time it was felt by Mr Moore to be worthy of exploration which we undertook. Nothing resulted however because of a reluctance by the owner of the property to establish a firm sale price or be a genuine seller.
We have continued to pursue the matter through property consultants Raine & Horne who are well known to the vendor. They advise that he is now inclined to a sale and have prepared the enclosed brief feasibility to indicate the level of investment potential.
…
We consider the proposal to be well worthy of your further investigation. We have also spoken with the owner of the Stramit property and have confirmed that he is now a seller. However he is also a well known local property dealer and had advised us that he is exploring the sale with other parties. This would quite undoubtedly be the case and any action by you would need to be expedited at least to the extent of indicating a firm interest.

60 Not long afterwards, Mr Genery informed Mr Walter that the Pension Fund was unable to purchase the property. Mr Walter telephoned Mr Moore, who confirmed that that was so.

61 Mr Genery was acutely aware of the accommodation problems the bank was experiencing in North Sydney and was always enthusiastic about the acquisition of 116 Miller Street as part of the solution. He communicated his enthusiasm to his fellow officials at the bank as well as to Mr Walter. Whether anybody else at ANZ was as enthusiastic however, is doubtful.

62 Mr Genery, as I have said, could not decide to purchase and redevelop. He could only recommend. He had no budget from which he could purchase property. Neither, according to the evidence, did the bank generally have a budget which would have permitted the expenditure of the amount of money 116 Miller Street was likely to cost. All Mr Genery could hope to do was persuade some bank entity to put up the purchase money. The entities like the Pension Fund that Mr Genery had to persuade were bound to approach any proposal as a commercial proposition. Any proposal would have to promise an acceptable return on capital. Neither the Pension Fund, AFT, Delfin nor Dalgety had any obligation to deal favourably with Mr Genery or to furnish premises for ANZ.

63 The coolness of the Pension Fund was a blow to his hopes and he responded by trying to get AFT interested. It was not, and he told Mr Walter. Mr Walter telephoned Mr McCarthy at AFT and he confirmed that AFT would not be a buyer.

64 In the meantime, in November 1987, Dalgety had begun making inquiries about 116 Miller Street. The person responsible for Dalgety’s national property portfolio, Mr Richard Wright, got in touch with Mr Walter to ask him about the property. In December, a man called Graham Miller, also of Dalgety, inquired. Mr Walter did not know Mr Miller and asked him to write to confirm his authority to represent Dalgety. He did not do so. Neither Mr Wright nor Mr Miller mentioned any joint approach by Dalgety and Delfin. Neither made any offer. Mr Walter did not know that Dalgety was an organ of ANZ and nobody told him so.

65 Mr Genery’s last chance was to try to interest Delfin or Dalgety in the purchase. Apparently he did not know that Dalgety had already made inquiries. He spoke to Mr Bird, the manager of Delfin, who told him that Delfin and Dalgety had done some preliminary work on the matter and were interested in carrying out a feasibility study in order to determine a purchase price.

66 Time was not on the bank’s side, however. Mr Andrews wanted to sell. He instructed Mr Walter to auction the property. Mr Walter told Mr Genery that there was to be an auction.

67 Central to Rozene’s case is what is said to be the loss of the opportunity to sell 116 Miller Street to ANZ. That case depends partly on the evidence of Mr Genery, who swore an affidavit in these terms about the news that there was to be an auction -

54. I remember being quite shocked to hear this development because of the fact that over the preceding 20 months or so, there had been an ongoing dialogue between myself on behalf of the Bank, and Mr Walter for Raine & Horne, in respect of the Bank’s interest in 116 Miller Street. In addition to this dialogue, I had also done a significant amount of work to inform Mr Walter of the Bank’s genuine interest in the Stramit building and its preparedness to put an offer in relation to the property. It was my view that Mr Walter could not have been in any doubt that the Bank had a strong and continuing interest in 116 Miller Street, and that it was the logical purchaser of it, both in the light of its commitment to the project which had been continually expressed by me, and also the space constraints associated with 112 Miller Street to which I have referred and to which I had made Mr Walter well aware.
55. Upon hearing of Mr Walter’s plans to auction 116 Miller Street, I specifically recall voicing my surprise and disappointment, the substance of which was in words to the following effect:
That’s a disappointment considering all the work that’s been put in. I’ve always kept you right up to date concerning the Bank’s interest in the property with a view to acquiring it.

68 Mr Genery is put forward as an unbiased and disinterested witness, but I do not think that he should be so accepted. Of course, he has no interest in the result of the action, but in my view he has an interest in justifying the position he took throughout his dealings with Raine & Horne and the result that followed. Although he denied it, I think that he must have felt embarrassed that ANZ had to pay a lot more for the property than Rozene sold it for. If Mr Genery’s claim to have been shocked on hearing the news of the auction is true, it shows how unrealistic his attitude must have been. He had been dealing with Mr Walter for eighteen months, continually asserting how much the bank would like to acquire the premises, yet had never had never put up a firm proposal to purchase and had never achieved so much as the making of a single offer. It is difficult to understand how he could reasonably have expected Rozene to withhold the property indefinitely from a vigorous market just in case ANZ ever decided to make an offer.

69 I think that in giving evidence Mr Genery had an interest in justifying his position and, in doing so, exaggerating the chances of ANZ’s becoming the purchaser.

Interested purchasers

70 During 1987 the North Sydney property market recovered and Mr Walter spoke to a number of possible purchasers. There was at that time no formal selling agency agreement, let alone any appointment of Raine & Horne as sole agent, and Mr Andrews, as was his right, was speaking to others, including agents, about 116 Miller Street. It was no secret that he wanted to sell it.

71 The persons to whom Mr Walter was speaking included those who had been interested in the North Sydney Technical College site, which had sold in May 1987 for a high price. They included Leda Holdings Pty Limited (Leda) and Ellison Investments Limited (Ellison). As instructed by Mr Andrews, Mr Walter informed those parties that 116 Miller Street was for sale for $6.5 million.

72 Mr Walter did not cease, however, to speak to Mr Genery. Raine & Horne already had a connection with ANZ, established over the bank’s purchase of 112 Miller Street. It was because of that connection and at the suggestion of the managing director of Raine & Horne that Mr Genery had approached Mr Walter in the first place about finding additional office space for the bank’s North Sydney operations. Raine & Horne wanted to further that connection and accordingly Mr Walter was very keen for ANZ to be the buyer. That explains his repeated approaches to Mr Genery in the face of what must have appeared to be at the most modest activity on the part of the bank.

73 By September or October 1987 Leda had offered $8 million for the site. Leda wanted a long settlement date – 12 months - and neither that nor the price offered was attractive to Mr Andrews.

74 Mr Walter was concerned about the way in which Mr Andrews had been speaking to prospective purchasers during the year and counselled him not to talk about a required sale price. He recognised the risk that the market might see Mr Andrews as less than a genuine seller. He thought that offers to purchase ought to be attracted publicly and spoke to Mr Andrews about it. The choice was between tender and auction. Mr Walter thought tender better and advised that means, and Mr Andrews agreed. The two proceeded accordingly and went on to consider details it is not necessary to recount here, like air rights, whether there should be a development application, and so on.

75 On about 5 February 1988 Mr Walter received a letter from Leda offering $7.5 million on terms. Mr George, the writer of the letter, told Mr Walter that Leda would not bid by tender or auction.

76 According to the evidence of Mr Walter, which I accept, Mr Andrews raised the subject of auction rather than tender early in April 1988. Mr Walter responded that that was an appropriate way to proceed and accordingly Mr Andrews instructed Mr Walter to prepare for auction. He began to do so.

77 Mr Walter continued his discussions with Mr George in the hope of getting him to increase Leda’s offer, as requested by Mr Andrews. Shortly before 2 May Mr George raised the offer to $8 million. Mr Walter arranged a meeting in his office between Mr Andrews, Mr George and himself. During the meeting Mr George confirmed the $8 million offer. Mr Andrews said that the sum was acceptable.

78 On 3 May Mr Andrew Clubb made his first inquiry about 116 Miller Street. On the following day he offered $8.25 million conditional upon settlement taking place within twelve months and certain terms as to the deposit. Mr Walter told Mr Andrews about the offer.

79 Mr Andrews asked Mr Walter to try to persuade Leda to increase its offer. A lunch with Mr Robert Ell from that organisation was arranged for 17 May. Mr Ell and Mr Grady, also from Leda attended, so did Mr Andrews. Mr Ell began to talk down the value of the property and the implication was that Leda was no longer prepared to pay $8 million.

80 The meeting ended. Mr Andrews told Mr Walter that he had accepted the Clubb offer and had instructed his solicitors to prepare the contracts. I accept the evidence of Mr Walter that even at that stage there was no formal agency agreement. Raine & Horne did not have any copy of the contract for sale.

The last chance for ANZ

81 Shortly afterwards, before there had been any exchange of contracts and before the auction date, Mr Walter asked Mr Andrews whether he wanted him to go back to the top four prospects. He also suggested that, although he had not heard from Mr Genery for some time, he telephone ANZ as a matter of courtesy. Mr Andrews agreed. Mr Walter made four telephone calls, including one to Mr Genery. The other persons he spoke to were Triden, Ellison and Condux Corporation. In each conversation he said that an offer had been received, that he could not say what it was, but that if the listener looked at his watch between 8:00 and 8:30 he would have a good idea of what it was. The implication in each of these telephone calls was that the offer was acceptable to Rozene.

82 Mr Walter’s evidence was that Mr Genery asked him whether he had spoken to Mr Bird of Delfin. Mr Walter said that he had not. Mr Genery said that he would follow him up.

83 Mr Genery denies that any such conversation took place.

84 The relationship between Raine & Horne and ANZ and the desire of Raine & Horne that ANZ should be the purchaser is important. I think it quite unlikely that Raine & Horne would have contemplated letting a sale be made to anybody other than ANZ without warning ANZ that such a thing was imminent, provided it could properly do so. It would have been surprising, after Mr Walter’s herculean efforts to attract an offer from Mr Genery, if he had not tipped off the bank. This circumstance supports the evidence of Mr Walter that it was his idea to ring ANZ and that the conversation with Mr Genery took place. Mr Genery’s denial is without support. I prefer Mr Walter’s evidence.

85 Mr Bird had taken his inquiries some little way and was hoping to put up to the Delfin Board a proposal that Delfin undertake one-half of a proposed offer of $8.75 million for 116 Miller Street, provided Dalgety did the same. Mr Bird understood that a proposal in like terms was to go before the Dalgety Board. Both Boards would consider those matters before the proposed auction date, 7 June. At long last two of the entities of ANZ were trying to enable themselves to make an offer.

86 The trouble was that nobody told Mr Walter.

87 Mr Genery did not inform Mr Bird or anybody else associated with this attempt that Mr Andrews had received an acceptable offer.

The resolution of the issues raised for trial

Mr Walter told Mr Andrews that -

(a) The Wedna Offer was the best price that could be obtained.
(d) Rozene could not reasonably expect to receive a higher price at auction.

88 In its defence to the Further Amended Statement of Claim Raine & Horne pleaded that the defendant -

8. (ab) Says that on 16 May 1988, Mr Walter, on behalf of the Defendant advised Mr Andrews on behalf of the Plaintiff that he should “go ahead with the Clubb offer of $8.25 million”.
(a) Says that on 18 or 19 May 1988, Mr Walter , on behalf of the Defendant advised Mr Andrews the Wedna Offer was a good offer for the property; that he would approach other potential purchasers to determine whether any of those parties was prepared to make a higher offer for the property.

89 Rozene submitted that it was implicit in those admitted representations that Rozene could not reasonably expect to obtain a higher offer at auction. I do not accept that submission. In the circumstances that obtained, Mr Walter’s advice to accept the offer did not imply that Rozene might not reasonably have received a higher offer at auction, or that it was the best price that could be obtained.

90 Then Rozene relied on passages in Mr Andrews’ affidavit sworn on 15 May 2002, attributing these words to Mr Walter -

(i) On 13 May 1988 -

Look, Clubb’s agreed on the 8.25 million with an exchange of contracts today. The settlement is six months. You should speak to your solicitor and get the contract exchanged now.

…

Nick it is a good offer. You may not do as well as auction. If we push it to anyone else Clubb might withdraw anyway. I think you should take it. I don’t believe you’ll get more.

(ii) On 16 May 1988 -
…I strongly recommend you take the offer. I believe you should exchange and cancel the auction.

(iii) On 17 May 1988 -
Clubb’s offer is the best, this fella is looking for a long settlement, so he won’t be at the auction.

(iv) On 18 May 1988 -
8.25 million is a very good price.
(v) And on 19 May 1988 -

I really don’t think you can do better at auction and you could do a lot worse. I really think you should take Clubb’s offer.

91 As to the asserted conversation of 13 May, the second reported part finds no place in the journal entry recording the events of that day. I think that Mr Andrews has probably added the words to suit his case.

92 As to the conversation of 16 May, the words relied on do not appear in the journal and I do not find that they were said in terms. In fact Mr Andrews quotes a much longer passage in his affidavit, none of which is supported by the journal, and includes Mr Andrews saying -

But what about the bank. They have shown interest all along.

and Mr Walter replying -

Look, they haven’t made up their minds yet…

93 A statement of that kind from Mr Walter seems improbable in view of the efforts he had put into trying to persuade Mr Genery to make an offer and the dismal lack of response. As Mr Walter said in his evidence -

Q. Okay. Mr Genery didn't tell you that he wasn't interested, did he?

A. Mr Genery has never said that he wasn't interested. We just couldn't get Mr Genery to perform.

94 I am not confident that Mr Walter said the words relied on. The evidence shows no more than that he considered the Clubb offer a good one and that he advised Mr Andrews to accept it. The offer was a record per square foot for North Sydney – about one-third higher than the previous highest – and that was good ground for Mr Walter’s opinion.

95 In any event, I am not satisfied that anything Mr Walter said persuaded Mr Andrews to do anything he had not already decided to do. He told Mr Walter as they left the meeting with the representatives of Leda that he had decided to accept the Clubb offer. Mr Andrews’ decision was based on his own extensive inquires. Mr Andrews would have withdrawn the property from auction whether or not Mr Walter advised him to accept the Clubb offer.

Mr Walter told Mr Andrews that -

(b) Raine & Horne had referred the Wedna offer to all prospective purchasers.
(c) No prospective purchaser had been prepared to offer a sum higher than the Wedna offer.

96 The evidence of Mr Walter, which I accept, shows that after the Leda lunch on 17 May 1988 he telephoned the best prospects. He also telephoned Mr Genery. He let them know what the offer was that they were being invited to beat. No call brought forward any indication of any offer better than the Clubb offer. That is what Mr Walter told Mr Andrews that he had done.

97 Otherwise Rozene’s case on these particulars is not made good.

Mr Walter told Mr Andrews that -

(e) Mr Walter had spoken to ANZ and they were not interested.

98 In its defence to the Further Amended Statement of Claim, Raine & Horne admitted that on 18 or 19 May 1988 Mr Walter advised Mr Andrews that he would approach other potential purchasers to determine whether any of those parties was prepared to make a higher offer and that from about March 1988 Raine & Horne continued to regard ANZ as having some possible continued interested in purchasing 116 Miller Street: paras 8(a), 11(a)(iii).

99 It was submitted on behalf of Rozene that those pleadings implied that it was admitted that on 18 or 19 May Mr Walter advised Mr Andrews that he would approach ANZ to determine whether it was prepared to make a higher offer, ANZ being a potential purchaser.

100 I do not accept the submission. The running together of the statements in the defence is not warranted. To admit that ANZ had some possible continued interest in purchasing is not to say that the ANZ was a potential purchaser. That was precisely the difficulty Mr Walter was having. Try as he might, he could not get ANZ to be a potential purchaser, that is, to make an offer, even though it was always interested.

101 The evidence of Mr Walter was as I have already summarised, namely that he asked Mr Andrews whether he would like him to go back to the best prospects and see whether he could persuade them to better their and the Clubb offers. He also suggested that he speak to ANZ. He spoke to Mr Genery. He told Mr Andrews after making the telephone calls that he had not succeeded in attracting any offer better than Mr Clubb’s.

102 It was submitted on behalf of Rozene that Mr Walter’s evidence to that effect was false because he had not spoken to Mr Genery and because it would not have been true to say that the bank was not interested.

103 The first submission relied on the evidence of Mr Genery and on what Mr Walter is asserted to have known about the efforts of Delfin and Dalgety to prepare themselves to make an offer.

104 Mr Genery denied that Mr Walter told him that an acceptable offer had been received. The evidence shows that a few days later, on 26 May, he wrote a memorandum which included a statement that he had been advised that the property was to be auctioned in June and noting that Delfin and Dalgety were endeavouring to acquire it. It was not until 31 May that he recorded having learned that the building had been sold prior to auction.

105 I do not think that Mr Genery deliberately falsified his version of events, but I think that his memory of them was poor. Justifying his failure to have anybody at ANZ make an offer on 116 Miller Street, he said that he never knew how much Mr Andrews wanted for the building. I have set out some (but not all) of the occasions on which Mr Walter wrote or Mr Andrews spoke to Mr Genery or Mr Penn about the asking price and I am satisfied that Mr Genery well knew how much Mr Andrews wanted. By the time he was asked to swear an affidavit, however, he had forgotten.

106 I think that Mr Genery also forgot Mr Walter’s tip-off. He always believed that Mr Andrews would sell to nobody but ANZ and I think that this settled and ultimately unrealistic expectation probably led him to pay insufficient regard to what Mr Walter was telling him or even to write it down. I give no weight to Mr Genery’s denial of the conversation.

107 It was submitted that if Mr Genery had said what Mr Walter said he said, Mr Walter would have realised that Mr Bird and Delfin were offering a real prospect of a bid. Mr Walter would therefore have got in touch with Mr Bird, yet he did not. He had, after all, spoken to Mr Moore and Mr McCarthy about the respective positions of the Pension Fund and AFT.

108 I do not accept that submission. I would not infer from Mr Walter’s calls to Mr Moore and Mr McCarthy that he was obliged or able or felt able to get in touch with organs of the bank independently of Mr Genery. There was a well established line of communication with ANZ. Mr Walter’s telephone calls to Mr Moore and Mr McCarthy were made in exceptional circumstances after Mr Genery had told him that the Pension Fund and AFT respectively had lost interest in the purchase. No such circumstances applied to Delfin.

109 The version of the conversation put forward by Mr Walter in his affidavit is as follows -

Walter: An offer has been made. I can’t tell you what the offer is but the interest was over 8. If you picked the time to be between 8 and 8.30 you’d have a good idea where the offer is.
Genery: Has Delfin Armco contacted you?
Walter: No.
Genery: Delfin’s contact is Neil Bird.
Walter: I know him, I think I met him with Max Raine.
Genery: I will follow him up.

110 By the time Mr Walter swore his affidavit on 30 August 2002 he knew the importance that Delfin had for the Rozene case. It is an indicator of his honesty that he repeated in his affidavit Mr Genery’s reference to Delfin and Mr Bird. The reference to Delfin Armco was an error. There was apparently an unrelated company having that name or a name like it. However, that does not affect my assessment of Mr Walter’s honesty.

111 Moreover, it was not untrue or misleading for Mr Walter to tell Mr Andrews that the bank was not interested. Mr Andrews well knew that Mr Genery had been “interested” for eighteen months or so, continually being told how much Rozene wanted for the property and continually saying that he would have the bank put an offer. However, it was not that kind of interest that Mr Andrews was concerned with. He wanted to know whether the bank was interested in the sense that it was likely to make an offer to better the Clubb offer. The answer was that it was not. Nothing was known to Mr Walter which would have given rise to any suspicion to the contrary. Even when he spoke to Mr Genery and Mr Genery mentioned Mr Bird’s name, he never told Mr Walter, if he knew it, that Mr Bird and Mr Wright were trying to get instructions to make a joint offer. Neither Mr Bird nor Mr Wright had said any such thing to Mr Walter, either.

112 There is no evidence that Mr Genery told Mr Walter before exchange of contracts that he had recommended 116 Miller Street to Delfin or that Delfin was attempting to formulate an offer. On 24 May 2005, seventeen years after the event, and one day after the commencement of the hearing, Mr Genery swore an affidavit that said this -

1. I refer to the conversation which I had with Mr Bird of Delfin Property Group Limited referred to in paragraph 49 of my affidavit of 21 May 2004. I recall that subsequently I had a conversation with Guy Walter in which I said words to the following effect: -
I have spoken to Neil Bird of Delfin Properties, a member of the ANZ Group, and he has indicated that Delfin is interested in exploring a purchase of 116 Miller Street. Neil told me that they have been making inquiries through Raine & Horne.
2. I can recall that on at least one further occasion before I found out that the property was to be auctioned I said to Guy Walter words to the effect:-
I want to remind you that I have introduced the property to Delfin and that they are proceeding with it.

113 Mr Genery was cross-examined about that affidavit and conceded that in giving his evidence he was assuming what he would have done rather than recollecting what happened. I accept that Mr Genery had no memory of the matter and I think that his assumption should be given no weight because it was coloured by his interest in justifying his position.

114 It was obvious from what Mr Genery said that Delfin had some association with ANZ, but I am satisfied that Mr Walter did not know the nature of it.

115 Of course, Mr Walter knew that Dalgety had shown an interest in the previous November, but he had no reason to believe that that interest had not died and no reason to believe that Dalgety was associated with ANZ.

116 Mr Andrews gave evidence that on 12 December 1988 Mr Walter said to him in response to a question whether he had contacted Mr Genery -

Well, I spoke with Rick Wright of Dalgetys before you signed and he said they wouldn’t pay more than $8 million.

117 It was submitted that that statement showed that Mr Walter knew before the exchange of contracts that Dalgety was interested and that it was connected with ANZ.

118 The journal entry of 12 December 1988 is a long one and covers conversations between Mr Andrews and Mr Walter precipitated by Mr Andrews’ request to Mr Walter to explain to him the circumstances in which Clubb had sold 116 Miller Street to ANZ. The first part of the recorded conversation ended with Mr Walter saying that he would telephone someone and speak again to Mr Andrews. The note records that Mr Walter telephoned Mr Andrews again and that the conversation continued. The portion of their conversation extracted above, from Mr Andrews’ affidavit, comes toward the end of their conversation. This is the journal entry -

HE SAID HE S/T RICK Right FROM DALGETYS + HE SAID HE PAY 8M BUT NO MORE

119 The difficulty with the journal entry is that is does not record when Mr Walter spoke to Mr Wright. It is possible, assuming that the conversation took place, that it happened after the exchange of contracts. It might even have been on 12 December 1988. I do not think that I should give weight to the evidence about the words “before you signed” included in the quoted words in Mr Andrews’ affidavit, since they were added to the text of the conversation so long after the event. I doubt whether those words were said.

120 This evidence does not support Rozene’s submission.

121 In my opinion it was accurate for Mr Walter to tell Mr Andrews that he had spoken to the bank and that the bank was not interested in purchasing at the price Mr Clubb was willing to pay, which is the substance of what he said.

122 Rozene further relied on a portion of Mr Andrews’ evidence in which he says that he asked Mr Walter -

But what about the bank? They’ve shown interest all along.

to which Mr Walter replied -

Look, they haven’t made up their minds yet...

123 I find unacceptable any assertion that Mr Walter was representing to Mr Andrews that the bank was in the process of making up its mind. Mr Walter’s opinion at the time was that the bank probably never would make up its mind to become a purchaser. He had good reason for taking that view.

124 I am satisfied that Mr Walter told Mr Andrews that he had spoken to ANZ and that ANZ was not interested, but I am not satisfied that anything he said was untrue to his knowledge.

Mr Walter told Mr Andrews that -

(f) Mr Genery or ANZ would be, then had been, informed that contracts would be exchanged on 19 or 20 May 1988.

125 This particular relies on evidence in Mr Andrews’ affidavit, paragraph 96 of which is as follows -

I had a further conversation with Walter on 18 May, 1988 in words to the effect of -

NA Have you spoken to the ANZ like we discussed last Monday.

GW Yes, they are not interested.

NA Can you speak to Peter Genery again and let him know we are exchanging contracts for 8.25 million tomorrow.

GW Okay, I will.

NA And you should really speak to all of the other interested parties and tell them the same thing.

126 In his affidavit Mr Andrews goes on to say that on the following day Mr Walter said this to him -

GW I have spoken to all the other interested parties. Condux appears to be the strongest interest but cannot pay more than 8 million. All the others have either lost interest or think it is writhe less (sic). I really don’t think you can do better at auction and you could do a lot worse. I really think you should take Clubb’s offer.
NA What about the air rights.
GW Clubb doesn’t want than but I am sure he will realise later that he needs them so you can make an additional profit selling them to him or someone else later. If you let me handle that there will be about $1.2 m profit in it which would make your total profit $10m.
NA Ask John Hill to put the air rights in the name of Rozene not me.
GW I’ll do that.
NA The deal with Clubb and retaining the air rights is the best way to go.

127 The submission was that what Mr Walter said on 19 May implied that he had told the persons he had spoken to that exchange of contracts was about to take place.

128 The evidence of Mr Andrews is based on his journal. At the foot of page 11128 there appears this entry -

R& H S/T SAID HAVE YOU S/T THE BANK AS WE
N/SYD TALK ABOUT LAST MON HERE YES THEY
Guy ARE NOT ENTER. S/T PETER AGAIN LET
HEM KNOW WE EXTCH CONT FOR 8 ¼ M
TOMORROW OK I WILL & CALL ALL

129 The entry was examined by a document examiner, Mr Westwood. He concluded, and was not cross-examined about it, that the entry which I have extracted was written up after the entries on the following page, which was also dated 19 May.

130 I accept that from time to time Mr Andrews would return to his diary and add a note to an existing note, perhaps a day or more after the original entry. But nothing about this entry suggests that that process was taking place.

131 Moreover, the entry is inconsistent with Mr Andrews’ evidence about a conversation he says took place earlier on the same day in which he asked Mr Walter whether he had spoken to the bank yet and Mr Walter told him that they were not interested. Mr Andrews responded -

Can you make sure you speak with everyone else. I am really not sure what to do.

132 Of course, that latter entry may be false, at least the part of it in which Mr Andrews asserted that he said that he did not know what to do. That might have been added in order to bolster Mr Andrews’ case that he relied on Mr Walter’s advice.

133 The discrepancies between the affidavit and the journal entries, the improbability of some of the things asserted to have been said and the fact that the second conversation said to have taken place on 18 May was not recorded on that day give rise to the most serious doubts about the authenticity of the journal. I am not satisfied that Mr Walter used the words attributed to him.

134 Rozene has failed to make its case on this particular.

Mr Walter advised Mr Andrews that -

(aa) The property should be sold by auction and not by tender.

135 This particular is conceded.

The advice given by Raine & Horne

136 Accordingly, I am satisfied that Mr Walter told Mr Andrews that the Clubb offer was a good offer and that it should be accepted, but not that Rozene could not reasonably expect to receive a higher bid at auction. I am satisfied that Mr Walter told Mr Andrews that he had referred the Clubb offer to the best of the offerors whom I have named and that none had been prepared to better it. I am not satisfied that Mr Walter said that he had referred the Club offer to all prospective purchasers. I am satisfied that he said that he had spoken to ANZ and that it was not interested in making an offer. I am not satisfied that Mr Walter told Mr Andrews that he would tell or had told ANZ that contracts were to be exchanged on 19 or 20 May 1988. I am satisfied that he advised Mr Andrews to sell at auction.

Was Raine & Horne in breach of its duty in advising Rozene?

137 It is convenient to repeat Rozene’s assertions of breach, particularised thus -

(a) Raine & Horne failed to make any or proper enquiries of the ANZ Bank, Delfin and Dalgety in order to ascertain their interest in purchasing the property prior to advising Rozene to sell the property before auction.
(b) Raine & Horne failed to do all things that were necessary or appropriate as the agent of Rozene to sell the property at the best price which could be obtained.
(c) Raine & Horne failed to advertise (sic: advise that) the property should be offered for sale by tender and not by auction.
(d) Alternatively, Raine & Horne failed to conduct an auction and failed to advise the Wedna Offer should not be accepted.
(e) Raine & Horne remained silent when there was an obligation to speak in regard to (a) and (b) above.
(f) There were no reasonable grounds for saying that the Wedna Offer was the best price that could be obtained for the property.
(g) It was not the case that Raine & Horne had referred the Wedna Offer to all prospective purchasers.
(h) There were no reasonable grounds for saying that no prospective purchasers had been prepared to offer a sum higher than the Wedna Offer.
(i) There were no reasonable grounds for saying that Rozene could not reasonably expect to obtain a higher sum than the Wedna Offer if the property were to be offered for sale by auction.
(j) The Wedna Advice implied that satisfactory enquiries had been made and that such enquiries had revealed no better offer was available to Rozene, when this was not the case.
(k) Raine & Horne did not warn Rozene of alternative options available to Rozene in conducting the sale of the property on Rozene’s behalf including withdrawing the property from auction or setting a very high reserve in a strong market in circumstances where Raine & Horne knew or had reason to believe there were other parties who were prepared to pay an amount in excess of the Wedna Offer, and where such warning should have been given.
(l) Raine & Horne had not spoken to the ANZ as claimed.
(m) The ANZ itself or through its subsidiaries Delfin and Dalgety was interested in acquiring the property.
(n) Raine & Horne had not informed Peter Genery or anyone of the ANZ that contracts would be exchanged on the Wedna Offer on 19 or 20 May 1988.

138 Particulars (a), (b), (e) may be taken together. I am satisfied that Raine & Horne made all proper inquires of ANZ. I am not satisfied that it knew before 19 or 20 May 1988 that Delfin had any connection with ANZ. Even then, I am not satisfied that it knew that Delfin had any interest in purchasing the property and I am not satisfied that Raine & Horne was obliged to make any inquiry of Delfin. I am not satisfied that Raine & Horne failed to do anything necessary or proper to sell the property at the best price or that it remained silent when it had any obligation to speak.

139 Particulars (c) and (d) may be dealt with together.

140 It was submitted on behalf of Rozene that the advice to go to auction was negligent. While an auction pits all buyers against each other it drives the highest bidder to a level which is only a little higher than that of the second highest bidder. If one particular bidder is much more keen than others and might be prepared to pay a premium, then an auction will deprive the seller of the chance to realise this premium. In a tender, the keen buyer will have to put in a bid that will secure the property and that means that the seller is more likely to “maximise the premium”. Secondly, where the property is a development site developer-purchasers may wish to vary the terms of the offer, for example, by making the bid conditional upon development approval. There is no room for such negotiation in an auction where bidders are bound by the issued contract.

141 I accept the evidence of Mr Walter that by April 1988 he was concerned that Mr Andrews had dealt with so many buyers. He thought that the market needed to know that Mr Andrews was serious about selling the property and that proceeding by auction was the best way of doing that. Offers made by tender would be private and would be more likely to reinforce than to dispel the view Mr Walter wanted to discourage.

142 It seems to me that there was good reason for Mr Walter to offer the advice he did. He was not the only one to suspect that Mr Andrews might be seen by the market as less than genuine. Mr Genery had earlier noted the opinion of the Pension Fund that that might be the case.

143 The arguments put forward by Rozene might in other circumstances have had force. There will be occasions when tender is the better way of proceeding. However, here no likely purchaser had any particular interest in 116 Miller Street which would be likely to attract a tender at a premium. ANZ might have been such a tenderer, of course, because of its ownership of the adjoining block and the possibility of a redevelopment of the two sites jointly. However, the bank was in no position to tender an offer.

144 Rozene called an expert, Mr Noel Carrig. He said that an agent ought to have strongly recommended in such a lively market that the best method of disposal was to sell by tender. It would produce these advantages, namely maximum competition between purchasers, a defined marketing period and closing date, the allowance for intending purchasers to put up conditional and unconditional offers, flexibility to the vendor as not requiring it to accept the highest, or any, tender and the opportunity to negotiate with various tenderers between the close of tenders and notification dates about price, terms and conditions.

145 Unfortunately there were a number of serious misconceptions on the part of Mr Carrig in offering this opinion. First, he assumed that 116 Miller Street had a particular value – called the “marriage value” – to ANZ because of its ownership of the adjoining premises. He was not aware that ANZ was never likely to make an offer.

146 Secondly, he had no notion of Mr Walter’s concern that the market might not show any or much interest if bids were to be by private tender, since that might reinforce the belief that Mr Andrews was not serious in his express desire to sell the property.

147 Thirdly, Mr Carrig was not privy to the evidence that was put before me of the multiplicity of inquiries that were made, especially in the first three months of 1988, from potential purchasers. When the decision was made to go to auction Mr Andrews noted in his journal the names of the eleven substantial companies who then appeared to be serious contenders. Mr Carrig assumed that Rozene had little idea of what offers the market was likely to produce. In fact Mr Walter and Mr Andrews had a very good idea and the process of playing off one offeror against another had probably pushed offers close to their limit.

148 The question is whether a reasonably competent real estate agent in the circumstances of Mr Walter marketing 116 Miller Street in about April 1988 was negligent in recommending auction over tender. I am not even satisfied that the choice and the recommendation were wrong, let alone negligent.

149 Rozene has failed to make good its case on these particulars.

150 The last thing that may be said about the advice to go to auction was that Mr Andrews did not rely on it but made his own decision to accept the Clubb offer.

151 As to particulars (j) and (k), I am satisfied that Raine & Horne’s inquiries were satisfactory and revealed that no better offer was available than the Clubb offer. Accordingly, no occasion arose for Raine & Horne to advise withdrawing the property from auction or setting any reserve higher than $8.25 million. Rozene has failed to establish that Raine & Horne knew or had reason to believe that there were other parties prepared to pay more than Mr Clubb had offered.

152 As to particular (m), Rozene has failed to establish that Delfin and Dalgety were interested in acquiring the property, using the word “interested” as meaning likely to make an offer exceeding Mr Clubb’s offer. It would not matter if Rozene were to prove that Delfin and Dalgety would probably have obtained instructions from their respective Boards to combine in an offer of $8.75 million, though I have the greatest reservations whether Rozene could establish such a thing in view of its failure to call anybody to give evidence who had first-hand knowledge of the matter and the probabilities. The point for the present, however, is that none of this was known to Raine & Horne, even though Raine & Horne had in my judgment made every inquiry it was appropriate and proper for it to make.

153 Accordingly, Rozene has failed to make good its case on this particular.

154 The remaining particulars, namely (f), (g), (h), (i), (l) and (n) do not need to be considered in view of the findings that I have made adverse to Rozene’s case.

155 The plaintiff has failed to prove any breach of duty on the part of the defendant. There will be a verdict for the defendant. The plaintiff must pay the defendant’s costs.

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