Schipp v Cameron

[1999] NSWSC 997

CITATION:	Schipp v Cameron, Harrison & ors [1999] NSWSC 997
CURRENT JURISDICTION:	Supreme Court, Equity Division
FILE NUMBER(S):	6425/91
HEARING DATE(S):	5&6.2.98, 6&7.4.98, 22-26.9.98, 29 & 30.9.98, 1,3,7-10,13,17,20-24 & 30.10.98, 3-7, 20&21.11.98, 1& 12.12.98
JUDGMENT DATE:	9 July 1998
PARTIES :	Delcie Joan Schipp (Plaintiff/Cross-Defendant) Donald Cameron (First Defendant/First Cross-Claimant) Donald Cameron Real Estate Pty Ltd (Second Defendant) George Harrison (Third Defendant/Second Cross-Claimant) Emibarb Pty Ltd (Fourth Defendant) Pyogrove Pty Ltd (Fifth Defendant) Aegon Insurance Company (UK) Ltd & ors (Seventh Defendants)
JUDGMENT OF:	Einstein J

COUNSEL :	M.J. Slattery QC and JM Hennessey (Plaintiff) Donald Cameron (First Defendant self litigant) S.J. Archer and M.G. Stubbs (Third & Fourth Defendants) N.C. Hutley SC and PJ Brereton (Seventh Defendants)
SOLICITORS:	Barker Gosling (Plaintiff) Hegarty & Elmgreen (Third & Fourth Defendants) Minter Ellison (Seventh Defendants)
CATCHWORDS:	Catchwords:; EQUITY - Joint Venture Agreement - Loan agreement - Ability to set aside - Unconscionable conduct - Position of special disadvantage or vulnerability arising from lack of experience and reliance - Exploitation of disadvantage - Economic duress - Whether illegitimate pressure exerted by defendants - Undue influence - Presumption of - Whether will of the plaintiff independent and voluntary.; EQUITY - Fiduciary duty - Breach - Joint venture agreement for property development - Duties of intending co-venturers - Whether fiduciary duties owed by joint venturers when agreement reached - Content of fiduciary obligations of participants in a joint venture - Circumstances in which a joint venture will bear sufficient similarity to a partnership to attract fiduciary obligations - Solicitor and client - Whether acting in capacity as a solicitor or entrepreneurial activity - Failure of solicitor to disclose interest - Propriety of acting in transaction for more than one party - Relationships of trust and confidence - Whether fiduciary who acts in breach of duty under a continuing liability to make restitution - Remedies of plaintiff - Equitable compensation for breach of fiduciary duty.; NEGLIGENCE - Duty of care - Breach - Solicitors - Whether retained to act for joint venturers in respect of property transactions - Whether retained to give advice in respect of tax liability and a loan agreement - Whether duty of care owed to third party - Whether any assumption of responsibility arising from knowledge of total dependence - Causation.; TRADE PRACTICES - Misleading and deceptive conduct - Trade Practices Act 1974 (Cth) section 52; Fair Trading Act 1987 (NSW) section 42.; INSURANCE - Professional indemnity insurance - Claims made policy - Proceeding against insurer direct - Whether statutory charge attaches to insurance moneys - Construction of statute - Remedial provision - Beneficial construction of statute - Principles applicable - Law Reform (Miscellaneous Provisions) Act 1946 (NSW), section 6; CONTRACT - Construction - Oral agreement - Agreement later reduced to written document containing different provisions - Implied Terms - Collateral contract - Failure of consideration.; INSURANCE - Professional indemnity insurance - Scope of indemnity - Whether insurer entitled to disclaim liability under policy - Whether loss under the policy includes liability to provide restitution or an account of profits - Whether conduct in connection with the business of a solicitor’s practice - Exclusion for loss brought about by dishonest conduct - Meaning of "dishonest" under the policy - Whether breach of solicitor’s fiduciary duties and duties of care owed to a client amounts to dishonest conduct - Requirement of causal link between dishonest conduct and liability incurred in order to invoke exclusion clause - Whether one or more claims made under policy - Meaning of "claim" - Value of deductible under policy.
ACTS CITED:	Fair Trading Act 1987 (NSW) section 42 Insurance Contracts Act 1984 (Cth) section 11 Law Reform (Miscellaneous Provisions) Act 1946 (NSW) section 6 Law Reform Act 1936 (NZ) section 9 Partnership Act 1892 (NSW) section 1 Trade Practices Act 1974 (Cth) section 52
CASES CITED:	Atanovic v Volker (1986) 7 NSWLR 151 Alexander v Cambridge Credit Corporation Ltd (1987) 9 NSWLR 310 Auag Resources Ltd v Waihi Mines Ltd [1994] 3 NZLR 571 Australia & New Zealand Bank Ltd v Colonial & Eagle Wharves Ltd [1960] 2 Lloyd’s Rep 241 Bailey v NSW Medical Defence Union Ltd (1995) 184 CLR 399 Baltic Shipping Company v Dillon (1992) 176 CLR 344 Bartlett v Barclays Trust Co (No 2) [1980] 1 Ch 539 Bell v Lever Brothers [1932] AC 161 Birtchell v Equity Trustees, Executors & Agency Co Ltd (1929) 42 CLR 384 Blomley v Ryan (1956) 99 CLR 362 Brickenden v London Loan & Savings Co [1934] DLR 465 Brusewitz v Brown (1887) 36 CLD Bryan v Maloney (1995) 182 CLR 609 Bull v Attorney General (NSW) (1913) 17 CLR 370 Canny Gabriel Castle Jackson Advertising Co Ltd v Volume Sales (Finance) Pty Ltd (1974) 131 CLR 321 Capita Financial Group Ltd v Triden Properties (unreported, Supreme Court of NSW, 6 September 1993, Cole J) Carnie v Richmond (unreported, Supreme Court of NSW, 9 September 1997, Dowd J) Catt v Marac Australia Ltd (1987) 9 NSWLR 639 Chan v Zacharia (1984) 154 CLR 184 Chittick v Maxwell (1993) 118 ALR 728Cobar Corporation Ltd v Attorney General (NSW) (1909) 9 CLR 378 Cocks v Hickman (1860) 11 HL Cas 267 Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 Comino v Manettas (1993) 7 ANZ Insurance Cases 61-162 Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 Commonwealth v Verwayen (1990) 170 CLR 394 Corporate Pension Planning Pty Ltd v NRG Victory Australia Ltd (unreported, Supreme Court of NSW, 8 April 1998) Crescendo Management Pty ltd v Westpac Banking Corporation (1988) 19 NSWLR 40 Crowe v Wheeler & Reynolds [1988] 1 Qd R 40 Drayton v Martin (1996) 67 FCR 1 East End Real Estate Pty Ltd t/a City Living v CE Health Casualty & General Insurance Ltd (1993) 7 ANZ Insurance Cases 61-151 English v Dedham Vale Properties Ltd [1978] 1 WLR 93 Estate Realties Ltd v Wignall [1992] 2 NZLR 615 FAI General Insurance Co Ltd v McSweeney (unreported, Federal Court of Australia, 12 March 1997, Lindgren J) FAI General Insurance Co Ltd v Ocean Marine Mutual Protection and Indemnity Association (1996) 41 NSWLR 559 FAI (NZ) General Insurance Co Ltd v Blundell and Brown Ltd [1994] 1 NZLR 11 Gala v Preston (1991) 172 CLR 243 Governor etc of the Poor Kingston Upon Hull v Petch (1854) 10 Exch 610 Government Stocks and Securities Co Ltd v Manila Rly Co Ltd [1897] AC 81 HG & R Nominees Pty Ltd v Fava [1997] 2 VR 368 Hawkins v Clayton (1988) 164 CLR 539 Haydon v Lo & Lo [1997] 1 WLR 198 Helmore v Smith (1886) 35 Ch D 436 Hill v Van Erp (1997) 188 CLR 159 Holroyd v Marshall (1862) 10 HLC 191; 11 ER 999 Hospital Products Pty Ltd v United States Surgical Corporation (1984) 156 CLR 41 Illingworth v Illingworth [1904] AC 355 Jaensch v Coffey (1984) 155 CLR 549 Jones v Mortgage Nominees (unreported, Federal Court of Australia, 10 November 1995, Davies J) Keith Murphy Pty Ltd v Custom Credit Corporation Ltd (1992) 6 WAR 332 Khoury v Government Insurance Office of New south Wales (1984) 58 ALJR 502 Leary v Federal Commissioner of Taxation (1980) 32 ALR 221 Lewis v Hillman (1852) 10 ER 239 Lord Goff-White v Jones [1995] 2 AC 207 Louth v Diprose (1992) 175 CLR 621 MacKender v Feldia [1967] 2 QB 591 McCann v Switzerland Insurance Australia Ltd (unreported, Supreme Court of NSW, 26 June 1998, Hunter J) McMillan v Joseph (1987) 4 ANZ Insurance Cases 60-822 Maguire v Makaronis (1997) 188 CLR 449 Manettas v Underwriters at Lloyds (1993) 7 ANZ Insurance Cases 61-180 March v E & MH Stramare Pty Ltd (1991) 171 CLR 506 Mar-con Corporation Pty Ltd v Campbell Capital Ltd (1989) 6 IPR 153 Markwell Bros Pty Ltd v CPN Diesels Queensland Pty Ltd [1983] 2 Qd R 508 Masters v Cameron (1954) 91 CLR 353 Metcalfe v Archbishop of York (1836) 1 My & Cr 547; 40 ER 485 Mount Isa Mines v Seltrust Corporation Pty Ltd (unreported, Supreme Court of Western Australia, 27 September 1985, Rowland J) Nader v Urban Transit Authority of New South Wales (1985) 2 NSWLR 501 National Mutual Fire Insurance Company Ltd v Commonwealth (1981) 1 NSWLR 400 National Mutual Property Services v Citibank Savings Ltd (1997) 9 ANZ Insurance Cases 61-335 Nichols v Jessup [1986] 1 NZLR 266 Noranda Australia Ltd v Lachlan Resources NL (1988) 14 NSWLR 1 Oswald v Bailey (1987) 11 NSWLR 715 Pacific Coal Pty Ltd v Indemitsu (Qld) Pty Ltd (unreported, Supreme Court of Queensland, 21 February 1992, Ryan J) Re Dawson; Union Fidelty Trustee Co Ltd v Perpetual Trustee Co Ltd (1966) 84 WN(Pt1)(NSW) 399; [1966] 2 NSWR 211 Reid Crowther & Partners Ltd v Simcoe & Erie General Ins Co (1993) 99 DLR (4th) 741 Rossiter v Miller (1878) 3 App Cas 1124 Rowe v Oades (1906) 3 CLR 73 Schipp v Cameron (unreported, Supreme Court of NSW, 4 May 1995) Young J) Sheinkopf v Stone 927 F 2d 1259 (1st Cir 1991) Smith v Anderson (1880) 15 Ch D 247 Solicitor’s Liability Committee v Gray (1997) 147 ALR 154 Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16 Sutherland Shire Council v Heyman (1985) 157 CLR 424 Tailby v Official Receiver (1888) 13 App Cas 523 Talbot v General Television Corporation Pty Ltd [1980] VR 224 Tagret Holdings Ltd v Redferns [1996] AC 421 Taylors Fahsions Ltd v Liverpool Trustees Co [1982] 1 QB 133 Tenture Pty Ltd v Costala Pty Ltd (unreported, Supreme Court of Victoria, 15 July 1997, McDonald J) Thorman v New Hampshire Insurance Co (UK) Ltd [1988] 1 Lloyd’s Rep 7 Transport Industries Insurance Co Ltd & Ors v NSW Medical Defence Union Ltd (1986) 4 ANZ Insurance Cases 60-736 Trollope & Colls Ltd v Haydon [1977]1 loyd’s Rep 244 Tufton v Sperni [1952] 2 TLR 516 Underwrites at Lloyds v Ellis (unreported, Court of Appeal, 25 February 1998, Meagher, Handley and Powell JJA) United Dominion Corporation Ltd v Brian (1985) 157 CLR 1 United States Surgical Corporation v Hospital Products Pty Ltd [1982] 2 NSWLR 766 Voli v Inglewood Shire Council (1963) 110 CLR 74 Warman International Ltd v Dwyer (1987) 182 CLR 544 West Wake Price & Co v Ching [1957] 1 WLR 45 White v Jones [1995] 2 AC 207 Whywait Pty Ltd v Davidson [1997] 1 Qd R 225 Wik Peoples v Queensland (1996) 187 CLR 1 Wilson v Jones (1867) LR 2 Ex 137
DECISION:	Further submissions to be brought in.

TABLE OF CONTENTS
Page Paragraph
INTRODUCTION 1 1
STRUCTURE OF THE FURTHER AMENDED STATEMENT OF CLAIM 2 7
16 Mary Street, Thirroul Claim 3 9
Sale of Mary Street and Retention of Proceeds by the
Cameron Harrison Interests 18 44

Purchase of the Kembla Street property 24 70
The duties of care alleged to have been owed by Mr Harrison and
by Mr Cameron and their two companies 27 77

Claim Against the Seventh Defendants 35 96
Claims to Relief 38 111
Fraud or Dishonesty - Disclaimed late in the Hearing 39 112
PRINCIPAL WITNESSES 40 113
Mrs Schipp 42 123
Mr Cameron 42 125
Mr Harrison 43 126
FINDINGS OF FACT 44 129
FURTHER OR COMPLEMENTARY FINDINGS OF FACT 165 595
Matters litigated; dishonesty, fraud, issues as to subjective intent 165 595
The Events in Question - An Overview Examination 186 646
Interrelated bases for granting relief 189 656
UNCONSCIONABLE CONDUCT 198 677
ECONOMIC DURESS 203 688
UNDUE INFLUENCE 205 691
FIDUCIARY OBLIGATIONS 207 695
General Principles 207 695
Negotiations to Enter a Partnership or Joint Venture 208 702
Fiduciary Obligations of a Joint-Venturer 210 706
The Content of the Fiduciary Obligations of Participants in
a Joint Venture 216 725
Solicitor Acting for a Client 218 733
Findings as to Fiduciary Obligations 219 736
Promoter 220
Joint Venturer 220
Trust and Confidence 220
Solicitor 220
RELIEF 221 738
Relief for Breach of Fiduciary Obligation 221 739
Equitable Compensation 222 741
Mrs Schipp’s claims to relief for breach of fiduciary duty 222 742
Relief in Relation to Mary Street Transaction 223 743
Relief in Relation to Entry into Kembla Street Transaction 223 745
DUTY OF CARE OWED BY MR HARRISON 227 757
Initial Enquiry-Examination of Terms of Retainer 227
Duty of Care May be Owed to Third Parties 230 766
Proximity in a Relationship of Solicitor-Client 231 768
Proximity, Reliance, Assumption of Responsibility 233 774
Control 234 775
Findings as to Duties of Care 235 780
Breaches of the Duties of Care 238 783
Causation 241 784
Kembla Street 241 786
Mary Street 242 791
MISLEADING AND DECEPTIVE CONDUCT 243 792
Mary Street 243 793
Kembla Street 244
NEGLIGENT MISSTATEMENT CASE 246 796
Mary Street 246
Kembla Street 246
CASE AGAINST THE SEVENTH DEFENDANT 247 801
Facts relating to the claim against the Seventh Defendants 247
Method of Proceeding 252 811
Section 6 of Law Reform (Miscellaneous Provisions) Act 253 812

Continuing Default of a Fiduciary who Acted
under Breach of Duty 255 819

Proper Construction of Section 6 258 830

Nature of Section 6 Charge 268 858

Section 6 Should be Construed Beneficially 275 882

Meaning of the word “loss” 278 895
Liability incurred in connection with Practice as a Solicitor 280 904
Exclusion Clause 284 910
Test for Application of an Exclusion Clause 292 934
Meaning of ‘Claims’ and the value of ‘Deductible’ under the Insurance Policy 295 946

Don Cameron Real Estate and Emibarb 301 970
FURTHER SUBMISSIONS 302 971

THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION - COMMERCIAL LIST

EINSTEIN J

9 July 1998

006425/91 DELCIE JOAN SCHIPP v DONALD CAMERON & 6 ORS

JUDGMENT

Introduction

1 The Plaintiff, Mrs Delcie Joan Schipp, was born in 1935 and married at the age of 21, having left school at the age of 15 to teach music. For most of her adult life, she has been a music teacher. She and her husband, Henry George Schipp, had 4 children, Katrina, Murray, Nerida and Alison. She had a nervous breakdown in 1968. She was divorced from her husband in about 1985 and, following the orders made in the Family Court upon that divorce, she received a settlement payment of $360,000. These proceedings concern her attempts to invest portion of that settlement payment and the circumstances in which she came to know and enter into business arrangements with the First Defendant, Mr Donald Cameron, a Wollongong estate agent, the Third Defendant, Mr George Harrison, a Wollongong solicitor, and with companies associated with them. Donald Cameron Real Estate Pty Limited ('Don Cameron Real Estate' or 'the Cameron Company') is the Second Defendant. Emibarb Pty Limited ('Emibarb' or 'the Harrison Company') is the Fourth Defendant. 2 It is convenient to use the phrase 'the Cameron Harrison Interests' as shorthand to refer to Mr Cameron and Mr Harrison and Don Cameron Real Estate and Emibarb. This is not to suggest that Mr Cameron had any shareholding in Emibarb or that Mr Harrison had any shareholding in Don Cameron Real Estate. 3 The proceedings concern two particular business transactions. The first transaction involved a property at 16 Mary Street, Thirroul ('the Mary Street property') which was to be developed by the construction of three town houses or home units. The second transaction involved a property on the corner of Kembla and Market Streets, Wollongong ('the Kembla Street property') which was to be developed by the construction of a three storey building. 4 The joint venture vehicle acquired for the purchase of the Kembla Street property was the Fifth Defendant, Pyogrove Pty Limited ('Pyogrove'). 5 Mrs Schipp’s claims against the Cameron Harrison Interests in relation to the Mary Street transaction were described in opening by the Plaintiff's counsel as ‘in essence, that in breach of fiduciary duty as co-venturers and in breach of obligations under the Trade Practices Act, misrepresentations were made and non-disclosures were made or were visited upon [Mrs Schipp] at the time that she entered into a joint venture in about February 1988 with those various interests’. 6 The claim in relation to the Cameron Harrison Interests concerning the Kembla Street property was described in opening by the Plaintiff's counsel as a claim ‘of a similar nature [to the claim made in relation to the Mary Street transaction]’, but as a claim which ‘is cumulative upon the events that occurred in relation to the Mary Street transaction’. The claim in relation to Kembla Street was said in opening to have ‘attached to it continuing non-disclosure of breaches of fiduciary duty in relation to the Mary Street transaction, conduct whereby [Mrs Schipp] was induced by strong means of persuasion to invest . . . the proceeds of the Mary Street transaction . . . into the Kembla Street transaction’.

Structure of the Further Amended Statement of Claim

7 The Third Further Amended Statement of Claim which includes the above causes of action, but covers a far wider ambit, is divided into 4 sections. The first deals with the claim concerning the Mary Street property. The second deals with the claim concerning the sale of the Mary Street property and the retention of the proceeds of sale by the Cameron Harrison Interests. The third deals with the claim concerning the purchase of the Kembla Street property. The fourth concerns Mrs Schipp's claims against the Third Defendant's underwriters brought after the grant of leave pursuant to s.6(4) of the Law Reform (Miscellaneous Provisions) Act 1946. 8 It is convenient to turn to the Third Further Amended Statement of Claim filed on 7 April 1998. Where appropriate, the following description will make plain which paragraphs, pressed during the hearing, were abandoned in final submissions.

16 Mary Street, Thirroul claim

9    Paragraph 2 alleges that on or about 25 February 1988, an agreement ('the Joint Venture Agreement') was entered into between Mrs Schipp, the Cameron Company and the Harrison Company whereby they agreed to associate themselves in a joint venture for the purpose of acquiring and developing the Mary Street property. 10    Paragraph 2A alleges the terms of the Joint Venture Agreement. These are alleged to have been :

‘(i) Mrs Schipp would purchase the Mary Street property in her own name and she would defray all expenses of and incidental to the purchase of the Mary Street property but not the development of the said property;
(ii) Mr Cameron and Mr Harrison would be the project managers for the development and sale of three units at the Mary Street property and that in consideration for their efforts in managing the development of the development project and only if the project was so developed, each would be entitled to one third of the profits on sale of the three units so developed on the Mary Street property;
(iii) Mr Cameron and Mr Harrison would undertake all reasonable efforts as project managers to develop the Mary Street property;
(iv) Mrs Schipp would be the legal and beneficial owner of the Mary Street property;
(v) Mrs Schipp would receive the rents and profits from the Mary Street property during the currency of the joint venture and before development occurred;
(vi) Mr Cameron, Mr Harrison and their companies would pay to Mrs Schipp interest at the rate of 14 per cent per annum on the purchase price of the Mary Street property in exchange for the opportunity to share equally in any profits from the development of the Mary Street property and without the need for Messrs Cameron and Harrison to make any capital contribution; and
(vii) Mr Cameron and Mr Harrison would be wholly responsible for the funding of the development of the Mary Street property.’

11    Paragraph 3 alleges that at all material times in and about the negotiations for and entry into and operation of the Joint Venture Agreement, Mr Cameron acted as agent for the Cameron Company and Mr Harrison acted as agent for the Harrison Company. 12    Paragraph 4 alleges that Mr Cameron and Mr Harrison prior to commencement of negotiations in relation to the Joint Venture Agreement, undertook to act on behalf of and in Mrs Schipp’s interests in and about the negotiations for, entry into and operation of the Joint Venture Agreement. 13    Paragraph 5 extends the allegation to allege that each of the Cameron Harrison Interests owed the following fiduciary duties to Mrs Schipp in and about the negotiation for, entry into and operation of the Joint Venture Agreement concerning the subject matter of the Agreement:

"(a) a duty not to permit a conflict, or the significant possibility of a conflict, to occur between the first to fourth defendants’ personal interests and their duty to carry out the task in which they have undertaken to act in the interests of the plaintiff (the ‘no-conflict principle’);
(b) a duty to account to the plaintiff for any benefit or gain obtained or received by the first to fourth defendants by reason of or by use of their fiduciary position (the ‘no-gain principle’);
(c) a duty when the first to fourth defendants were holding money or a piece of property on behalf of the plaintiff to distinguish that property from other similar things which the first to fourth defendants may acquire or hold for themselves, or in which they may be interested, and to give that money or piece of property to the plaintiff when requested together with an account thereof (the ‘accounting principle’);
(d) a duty when dealing as an interested party with the plaintiff in respect of :
(i) any money or property held by them on behalf of the plaintiff, or
(ii) any transaction with the plaintiff where their task as fiduciaries includes the giving of advice or information,
to disclose and furnish to the plaintiff all the relevant knowledge which the first to fourth defendants possess, and to conceal nothing from the plaintiff that might reasonably be regarded as relevant to the decision being made by the plaintiff to engage in the dealing with the first to fourth defendants (the ‘self-dealing principle’).

14    In final submissions by counsel for Mrs Schipp, the following was put :

“The subject matter of the fiduciary duties of the defendants described in [the Statement of Claim] paragraph 5 in respect of Mary Street comprises all their dealings with the plaintiff in relation to the negotiation for, entry into, and operation of the joint venture agreement. That includes the giving and withholding of any material information to the plaintiff, and being involved with the plaintiff’s decision making processes not only at the time of entry into the joint venture agreement but also at the time of the decision to sell Mary Street and then undertaking the sale process.”
[Vol 3 paras. 5 and 6, pages 9 - 10]

15    Paragraph 6 alleges that on 17 March 1988, in pursuance of the Joint Venture Agreement, Mrs Schipp executed, as purchaser, an agreement for sale of the Mary Street property which was settled in May 1988. 16    The retainer agreement as between Mrs Schipp and Mr Harrison is then pleaded in paragraph 7 of the Statement of Claim. Mr Harrison is said to have been retained to act as Mrs Schipp's solicitor in relation to two matters. These are :

(i) The negotiation for, entry into and operation of the Joint Venture Agreement;

(ii) The giving of legal advice to Mrs Schipp and the implementing of her instructions for the acquisition and conveyance to her of the Mary Street property.

17    Paragraph 8 is an alternative pleading. Here, Mrs Schipp alleges that in and about the negotiation for, entry into and operation of the Joint Venture Agreement and in relation to the conveyance to her of the Mary Street property :

(i) Mr Harrison undertook the exercise of his professional skill as her or a solicitor in tasks which, to Mr Harrison's knowledge, may cause loss to the Plaintiff if carelessly performed, whereby Mr Harrison expressly or implicitly assumed a legal responsibility to Mrs Schipp in the undertaking of those tasks, and in the alternative;
(ii) Mrs Schipp is said to have relied upon the exercise by Mr Harrison of his professional skill as her or a solicitor in the carrying out by Mr Harrison of the tasks, which reliance is said to have at all material times been known to Mr Harrison.

18    The tasks alleged were :

(a) The drafting and execution of the Joint Venture Agreement.

(b) The conduct of the conveyance of the Mary Street property to Mrs Schipp.

(c) The advising of Mrs Schipp from time to time as to the operation of the Joint Venture Agreement.
[Particulars to para 8]

19    On Mrs Schipp’s case, a number of tasks still remained to be completed from December 1988 to March 1989. These were :

(a) The giving of an account to Mrs Schipp of the operation of the Mary Street Joint Venture.

(b) The distribution to Mrs Schipp of her share of the proceeds of the sale of the Mary Street property.

(c) Amending the Joint Venture Deed to reflect the late January 1989 conversation alleged to have taken place with Mr Harrison and Mr Cameron in which, having shown Mrs Schipp calculations, a conversation is alleged to have taken place as follows :

On Mrs Schipp's case Mr Cameron said in Mr Harrison's presence:
“There’s the interest that you’re being paid at 14% and on the purchase price of $150,000. We’ve also taken into account all of the expenses that you paid and we’ve paid you interest on those as well. You’ll see that we’ve deducted 2/3rds of the rent which you received. We’re sorting the figures out on the basis that you’re contributing the $100,000 to the Kembla Street development and also lending your $40,000 profit in Mary Street to George and I. We’ll take the $40,000 into our businesses. This should sort out your problem with being taxed on your profit.”

Harrison at this meeting, or shortly after it, said :

“We’ll have to re-do the earlier agreement to reflect this arrangement.” Or words to that effect.

20    The duties of care alleged to have arisen from the circumstances pleaded in Paragraphs 7 and 8 are put as relating “not only to the entry into the Joint Venture Agreement, but also its operation . . . [which] continues through until the completion of the sale of Mary Street and the ultimate return of moneys to the plaintiff”.

[Submissions Vol 3 page 5 para 11]

21    Paragraph 9 alleges fiduciary duties to have been owed to Mrs Schipp by Mr Harrison and duties of care Mr Harrison owed to Mrs Schipp. Both categories of duties are put as having arisen at all material times in relation to the negotiation for, entry into and operation of the Joint Venture Agreement and in relation to the conveyance to Mrs Schipp of the Mary Street property. The fiduciary duties owed to the Plaintiff are alleged to have arisen from Mr Harrison's position 'as the solicitor of [Mrs Schipp]'. 22    The following particulars were given of the fiduciary obligations alleged to have been owed by Mr Harrison as a solicitor:

(a) all the fiduciary duties described in paragraph 5 of the Statement of Claim;

(b) a duty when dealing as an interested party with the Plaintiff in respect of :


(i) any money or property held by the Third Defendant on behalf of the Plaintiff, or

(ii) any other transaction relating to the role being undertaken by the Third Defendant as a solicitor,

firstly, to furnish the Plaintiff with all relevant knowledge which the Third Defendant possessed; secondly, to give the best advice that the third defendant could give had he not had, but a third party had, a financial interest in the other side of the transaction; and thirdly, to obtain for the Plaintiff the best terms which the Plaintiff could have obtained from a third party if the solicitor was exercising due diligence in such a transaction. (Note: this is put as a special application of the self-dealing principle by reason of the special duties of solicitors) and;
(c) a duty to give a special degree of loyalty to the client, the Plaintiff, by approaching his task with nothing in mind but the protection of that client’s interests (the ‘solicitor's loyalty principle’).

23    The duties of care are put as duties to take reasonable care and to avoid a real and foreseeable risk of economic loss being suffered by Mrs Schipp. 24    In contrast with the allegations as to the general fiduciary duties of the Defendants [see paragraph 14], the subject matter over which the Third Defendant’s fiduciary duties as a solicitor extended was put as a more confined one. It was said to be grounded upon his “doing the legals”, which he did first in drafting the joint venture agreement and conveying the property into the joint venture. His duties as a solicitor in relation to Mary Street then ceased. They were later re-activated at the time of the sale, when instructions for the sale were given by the Plaintiff. They continued through until the completion of the sale of Mary Street, and the final distribution of the proceeds of that sale to the plaintiff. 25    Particulars were given of the duties of care alleged. These asserted that Mr Harrison was obliged to :

(a) properly advise Mrs Schipp
(i) as to the legal effects of the Joint Venture Agreement,
(ii) as to her entitlements under the Joint Venture Agreement,
(iii) as to whether the written form of the Joint Venture Agreement accurately reflected the terms of the Joint Venture Agreement as Mrs Schipp understood this;
(b) prepare the Joint Venture Agreement in accordance with Mrs Schipp’s instructions;
(c) warn Mrs Schipp of any legal hazards that she might encounter by participating in the Joint Venture Agreement.

26    Paragraph 10 deals with assertions that the Joint Venture Agreement as executed did not, as intended by Mrs Schipp, embody the terms of the Joint Venture Agreement. In this paragraph, the agreement is alleged to have been executed on 25 February 1988; the agreement is alleged to have been intended by Mrs Schipp and by the Cameron Harrison Interests, to embody the terms of the Joint Venture Agreement. Mrs Schipp alleges that the form of agreement did not in fact embody the terms of the Joint Venture Agreement. 27    In the alternative to the allegation that Mrs Schipp and the Cameron Harrison Interests executed the agreement in the belief that the form of agreement did embody the terms of the Joint Venture Agreement, Paragraph 10 alleges a Taylor v Johnson claim, namely that Mrs Schipp and Messrs Cameron and Harrison executed the document at a time when Mrs Schipp believed both that the form of agreement embodied the terms of the Joint Venture Agreement and that the Cameron Harrison Interests were executing the form of agreement on the same basis. The Taylor v Johnson allegation is then that at the material time the Cameron Harrison Interests were aware of Mrs Schipp's belief and were aware that she was mistaken as to her belief because, as they were aware, the form of agreement did not in fact embody the terms of the Joint Venture Agreement. [Cf. Taylor v Johnson (1982) 151 CLR 422] 28 The first undue influence claim is put in Paragraph 10A of the Statement of Claim. The allegation is that at all material times the Cameron Harrison Interests by reason of their commercial experience and the manner in which they advised and assisted Mrs Schipp were in a relationship of undue influence over her. The allegation is that the execution of Mrs Schipp of the form of agreement was occasioned by this relationship of undue influence. 29 Paragraph 11 alleges a number of representations by Mr Cameron, by the Cameron company by its agent Mr Cameron, by Mr Harrison and by Mr Harrison's company by him as its agent. The alleged representations are as set out in sub-paragraphs (ii) to (vii) - see Judgment Paragraph 10. 30 Paragraph 12 then alleges breaches of fiduciary duties by the Cameron Harrison Interests and breaches by Mr Harrison of duties of care. 31 These are put as failures to disclose the following matters :

(i) That the Cameron Harrison Interests intended
(a) to take a profit from the Mary Street property irrespective of whether the property was developed; and
(b) to use Mrs Schipp's money through the form of agreement to earn for themselves a capital profit on resale.
(ii) That they had no intention of developing or, alternatively, that they had strong suspicions they were unlikely ever to develop the Mary Street property past the point of obtaining development application and building application plans. [No longer pressed - see Plaintiff's Written Submissions Vol. 3 Page 2].
(iii) That the form of the Joint Venture Agreement created a trust of Mrs Schipp's interest in the Mary Street property for the benefit of the Cameron and Harrison companies which trust was not conditional upon development of the Mary Street property.
(iv) That at all material times the intention of the Cameron Harrison Interests was to take one-third each of the rents and profits from the Mary Street property prior to development.
This is said to have been a ‘failure to advise, warn or draft with a view to protecting [Mrs Schipp’s] pre-development rental entitlements . . . a manifestation of the breach identified in . . . para. 12(iii)’. [Written submissions Vol 3 page 4 para 6 - said to have been ‘a less significant breach’].
(v) That the form of agreement did not secure Mrs Schipp's rights to rents and profits before a development would take place. [In final submissions, Mrs Schipp’s counsel did not press any breach of duty of care causing loss to Mrs Schipp in relation to this allegation].
(vi) That there was no mechanism in the form of agreement for the payment of 14 per cent per annum interest on the purchase price on the property. [In final submissions, Mrs Schipp’s counsel did not press any breach of duty of care causing loss to Mrs Schipp in relation to this allegation].
(vii) That by the form of agreement, the property itself was to be used as security for funding the development and that the Cameron Harrison Interests would not themselves be responsible for funding the development from their own resources.

32    Mrs Schipp’s case was that ‘the form of the Joint Venture Agreement did not conform with her understanding of it in two principal ways: first, she was not a full beneficial owner of the Mary Street property; and secondly, the agreement did not provide that the Second and Fourth Defendants’ entitlements were conditional upon development of the Mary Street property’.

[Submissions Vol 3 page 3 para 5].

Paragraphs 12 (i), (iii) and (iv) of the Second Further Amended Statement of Claim are also alleged to have constituted breaches of fiduciary obligation.
[Submissions Vol 3 page 4 para 8].

33    The Plaintiff’s written submissions [Vol 3 pages 10-12 paras 7-11] put the case as to breaches of fiduciary duty in the following terms :

‘The breaches of fiduciary duty relied upon by the plaintiff in the pleadings in relation to Mary Street (FASC paras 12, 35 and 44) are principally breaches of the self-dealing principle. All the allegations of non-disclosure of information fall into this category. The other general category of breach of fiduciary duty described in these paragraphs relates to the central allegation of the plaintiff in relation to Mary Street; the creation of the Joint Venture Agreement giving the first to fourth defendants an entitlement to profits and an interest in the property to which, on the plaintiff’s understanding of the agreement, they were not entitled. The drafting of the Joint Venture Agreement with these characteristics, and without disclosing them to the plaintiff, was a breach of the self-dealing principle and the no-conflict principle. The conduct of the first to fourth defendants later at the time of the sale in taking that profit was in breach of the no-gain and accounting principles.
There is one other characteristic of the allegations of breach of fiduciary duty in relation to Mary Street that requires special comment beyond the above analysis. The allegation is made that there was a failure on the part of the defendants to disclose their prior breaches of fiduciary duty. As is discussed below in the second part of this section, in cases where fiduciaries may be said to have no relevant knowledge (in this case, of their own prior breaches of fiduciary duty) because of their own negligence, the fiduciaries’ unconscientiousness should be judged as equally culpable and liable to account (Meagher Gummow & Lehane, Equity - Doctrines & Remedies, 1992, Butterworths, 3rd Edition at 532). ’
The third defendant’s role as a solicitor in relation to Mary Street continued through until he accounted to the plaintiff for the proceeds of the sale. The precise tasks that the Third Defendant was undertaking are identified in [paras 8, 48A and 48AB and in the particulars to those paras]. Those continuing tasks also define the ambit of the third defendant’s corresponding fiduciary duties. He also was subject during that period in undertaking those tasks to all the fiduciary duties described in FASC para 9. Specifically, the money he was holding from the proceeds of Mary Street was held by reason of the role he had as a solicitor. The negotiations for the plaintiff to invest in Kembla Street specifically involved those very moneys. The non-disclosures and breaches of fiduciary duty pleaded in FASC paras 44 and 51 were breaches of the self-dealing principle and the solicitor’s loyalty principle in relation to those moneys, and occurred in circumstances where there was also a continuing breach by the first to fourth defendants of the accounting, no conflict, and no-gain principles. The breach of the accounting principle directly led to the plaintiff’s investment in Kembla Street.

The first to fourth defendants’ general fiduciary duties (FASC para 5) continued through in relation to the joint venture negotiations for the Kembla Street transaction. (FASC para 48). The subject matter of these duties was all the information held by the defendants, and their conduct in relation to the entry into the Kembla Street joint venture.

The third defendant was also acting in relation to Kembla Street in the role of a solicitor for the plaintiff and for the joint venturers through Pyogrove, as is fully described in the particulars provided to paras 48A and 48AB of the FASC. In these roles the third defendant owed fiduciary duties to the plaintiff herself under the no-conflict and self-dealing principles. Specifically, these tasks related to advising the plaintiff in relation to her commitment to AGC and the second joint venture agreement, and acting for all the joint venturers in undertaking the conveyancing on its behalf. These tasks activated the no-conflict and self-dealing principles because of the third defendant’s interest as a vendor in the transaction. The various non-disclosures alleged in FASC para 51 were breaches of the self-dealing principle. The entry into the transaction was a breach of the no-conflicts principle.’

34    Paragraph 13 then alleges that in and about the negotiation for and execution of the form of agreement, the agreement was unjust in the circumstances relating to it at the time it was executed for a number of reasons. The reasons alleged are as follows:

There was a material inequality in the bargaining power as between Mrs Schipp on the one hand and the Cameron and Harrison companies on the other hand in that Mrs Schipp had extremely limited commercial real estate experience and no legal experience whereas the Cameron company was an established and experienced real estate agent and the Harrison company was managed or operated by a qualified solicitor.

The provisions of the agreement were not the subject of any negotiation but were presented as a package to Mrs Schipp for her acceptance or rejection.

It was not reasonably practicable for Mrs Schipp to negotiate for the alteration of, or to reject any of the provisions of the contract, by reason of her lack of experience and resources and because the form of agreement was presented to her on the same day that she was expected to sign it and she had no opportunity to take it away or consider its terms.

The economic circumstances and educational background of Mrs Schipp relative to the Cameron Harrison Interests were such that Mrs Schipp could not have been expected by the Cameron Harrison Interests to know whether or not the form of agreement was commercially advantageous from her point of view. The allegation is that the Cameron Harrison Interests were aware of Mrs Schipp's lack of knowledge in this regard.

The legal language used in and form of the agreement was such that it was not readily intelligible to Mrs Schipp.

Mrs Schipp obtained no independent legal or other expert commercial advice prior to execution of the form of agreement. Further, Mr Cameron and his company, to the knowledge of Mr Harrison and his company, induced Mrs Schipp not to seek advice from her accountant. The Cameron Harrison Interests are also alleged to have encouraged Mrs Schipp to obtain legal advice concerning the Joint Venture Agreement from Mr Harrison.

Undue influence, unfair pressure and unfair tactics are said to have been exerted on and used against Mrs Schipp by Mr Cameron's company and by Mr Harrison's company as parties to the form of agreement and by Mr Cameron and Mr Harrison as persons acting or appearing or purporting to act on behalf of their companies as parties to the contract, to the knowledge of each of the Cameron Harrison Interests, in that :

(a) Mrs Schipp was denied or induced not to seek independent legal or accounting advice;

(b) The Cameron Harrison Interests were aware of Mrs Schipp's lack of commercial experience;

(c) Mr Cameron and his company to the knowledge of Mr Harrison and his company represented that the Joint Venture Agreement was advantageous to the Plaintiff and in her best interests;

(d) None of Messrs Cameron or Harrison or their companies advised Mrs Schipp that Mr Harrison was in a position of conflict of interest with Mrs Schipp, or that Mr Cameron was in a position of conflict of interest. Mr Cameron's conflict of interest is said to have been a conflict arising through the earning by him of fees from the sale of the Mary Street property.

(e) The Cameron Harrison Interests were aware that the terms of the Joint Venture Agreement were not adequate to protect Mrs Schipp's interests in any legal contest between herself and the Cameron and Harrison companies in relation to the enforcement Mrs Schipp's understanding of the Joint Venture Agreement as represented by the Cameron Harrison Interests to Mrs Schipp.

It is then alleged that by reason of these circumstances, the commercial setting of the form of agreement and the purpose and effect of the agreement, were such as to permit the Cameron company and the Harrison company and through them Mr Cameron and Mr Harrison to make a substantial capital gain in relation to the sale of the Mary Street property without any real intention on their part to develop it for their mutual benefit, or in the alternative, with a strong suspicion, undisclosed to Mrs Schipp that it would not be developed.

35 The representational case is pleaded in Paragraphs 14 to 18. The case is put in the alternative. The representations described in Paragraph 11 and the conduct described in Paragraph 12 are said in Paragraph 14 to have been representations and conduct by or on behalf of the Cameron Harrison Interests with the purpose on their part of inducing Mrs Schipp to enter into the form of agreement. 36 Paragraph 15 pleads that the representations and conduct did induce Mrs Schipp to execute the form of agreement on 25 February 1988. 37 Paragraphs 16 and 17 allege that the representations and conduct were made in trade and commerce by the Cameron Harrison Interests and that the representations and conduct, were false, misleading and deceptive in contravention of section 52 of the Trade Practices Act and section 42 of the Fair Trading Act. In the alternative, it is put that the Cameron Harrison Interests had no reasonable grounds for the making of such representations. 38    The misleading and deceptive conduct case relies upon the following alleged conduct:

(a) Representation as to Ownership of Land
The allegation is that the Cameron Harrison Interests represented that Mrs Schipp would be the legal and beneficial owner of the Mary Street property.
Conduct said to have been Misleading and Deceptive
Joint Venture Deeds 1 and 2 are said to have created a trust. Mrs Schipp is said to have been unaware of the fact that she was not the legal and beneficial owner of Mary Street until she consulted with Mr Baird. The misleading nature of the representations is said to have caused Mr Baird to give the advice about Joint Venture Deed 1 which he gave.
[Paragraph 2.4 Plaintiff's Written Submissions Vol. 3]
(b) Representation as to Project Management being a Condition of Profit Share
The allegation is that the Cameron Harrison Interests represented that Mr Cameron and Mr Harrison would be project managers for the development of three units and that once the project was developed, each would be entitled to one third of the profits on the sale of the units so developed.
Conduct said to have been Misleading and Deceptive
All parties are said to have proceeded upon the assumption that Messrs Cameron and Harrison would project manage the building of the town houses or units upon the property. None of the parties is said to have contemplated what would occur if the development did not proceed. Mrs Schipp's case is that in these circumstances the conduct of drafting and presenting to her an open-ended joint venture deed which did not make clear that the profit was conditional upon the project management role, was misleading and deceptive. The effect of the conduct is said to have continued up to the point in time when Mr Baird gave advice to Mrs Schipp about Joint Venture Deed 1.
[Paragraph 2.11 Plaintiff's Written Submissions Vol. 3]
(c) Representation as to the Funding of the Mary Street Development
The allegation is that the Cameron Harrison Interests represented that they would be wholly responsible for the funding of the development of Mary Street.
Conduct said to have been Misleading and Deceptive
In the event that Joint Venture Deed 1 is found to have been the final Joint Venture Deed, Mrs Schipp's case is that the inclusion of paragraph 9(b) of the Joint Venture Deed which provides that the land would be used as security for any further development finance, constitutes misleading and deceptive conduct.
The Plaintiff concedes that on its own, the representation probably did not occasion any loss to Mrs Schipp because the Mary Street development was sold before development occurred.
[Paragraph 2.15 Plaintiff's Written Submissions Vol. 3]

39 Paragraph 18 alleges that Mr Cameron and Mr Harrison aided and abetted the contravention by their respective companies of the Trade Practices Act and the Fair Trading Act and were directly or indirectly knowingly concerned in or parties to these contraventions. 40    A duty to take reasonable care case is pleaded in Paragraphs 19, 20 and following. Here the alternative case that the Cameron Harrison Interests were each under a duty to take reasonable care in making the representations described in Paragraph 11 and in engaging in the conduct described in Paragraph 12 are put. The duty is said to have been a duty to take reasonable care to make accurate statements when making material representations. The representations are said to have been made and the conduct is said to have been carried out negligently and in breach of the duty to take reasonable care. 41    A further breach of the terms of the Joint Venture Agreement is said to have been constituted by conduct described later in the Statement of Claim in Paragraph 38 thereof. Paragraph 38 of the Statement of Claim contains allegations in relation to the conduct of Mr Cameron and Mr Harrison after the sale of Mary Street where they are said to have refused to give Mrs Schipp her share of the proceeds of the sale of Mary Street; to have refused to pay her interest on such money; to have disclosed for the first time and represented to Mrs Schipp that she might have to pay tax upon her part of the proceeds of the sale of Mary Street; to have said to Mrs Schipp that if she insisted on being paid by interest by Mr Cameron and Mr Harrison she would have to pay $20,000 in tax which would be her choice; to have failed to disclose to Mrs Schipp readily where the proceeds of sale were held; and to have represented that Mrs Schipp's liability to pay tax could be eliminated by her further investment in the Kembla Street property. 42    Mrs Schipp's claims in respect of breaches of agreement and/or entry into the agreement and/or the breaches of duty pleaded in Paragraph 12, are put in Paragraph 21 where she is said, by reason of these matters, to have suffered loss and damage, and where the Cameron Harrison Interests are said to have been unjustly enriched at Mrs Schipp's expense. 43    The Plaintiff's claims in relation to the entry of the Joint Venture Agreement as against the Cameron Harrison Interests are put in Paragraph 22 of the Statement of Claim where Mrs Schipp seeks :

(i) damages for breach of the joint venture agreement;
(ii) equitable compensation and restitution;
(iii) an account of all the transactions involving and profits made by the First, Second, Third and Fourth Defendants from the Joint Venture Agreement.

Sale of Mary Street and Retention of Proceeds by the Cameron Harrison Interests

44    The bracket of the Statement of Claim dealing with the sale of Mary Street and the retention of the proceeds of sale is dealt with in Paragraphs 23 to 46 inclusive. 45    Paragraph 23 alleges that between July and September 1988, Mr Cameron acting on behalf of himself and his company and Mr Harrison and his company represented to Mrs Schipp :

That the professional suite of units, the subject of the Mary Street development, would be too small and could not be sold for the price originally planned.
That the Mary Street property should be auctioned.
That the development as planned by the Cameron Harrison Interests was not viable and should not be carried out.

46    Paragraph 24 alleges that Mrs Schipp did not wish to dispose of or auction the Mary Street property. 47    Paragraph 25 is an allegation as to an overbearing by Mr Cameron and Mr Harrison of Mrs Schipp's will and resistance to a sale of the Mary Street property. Mr Cameron and Mr Harrison for themselves, and on behalf of their respective companies, are here said to have overborne Mrs Schipp's will and resistance to a sale of the Mary Street property and to have caused Mrs Schipp to execute an authorisation for the auction sale of the property. 48    Paragraph 26 alleges that after the execution of the authorisation for the auction sale, Mrs Schipp permitted the Cameron Harrison Interests to cause the Mary Street property to be sold by auction on or about 15 October 1988. 49    The execution by Mrs Schipp of the authorisation for the auction sale of Mary Street and Mrs Schipp having permitted the Cameron Harrison Interests to cause the Mary Street property to be sold by auction are said in Paragraph 27 to have occurred while Mrs Schipp continued in a relationship of undue influence by Mr Cameron and Mr Harrison. This paragraph alleges that the overbearing of Mrs Schipp's will was occasioned by the existence of this relationship of undue influence. 50    Paragraph 28 alleges that the overbearing of Mrs Schipp's will in the matter of her having been caused to execute the authorisation for auction sale of Mary Street and in the matter of her having permitted the Cameron Harrison Interests to cause Mary Street to be sold by auction was caused by the duress and pressure of Messrs Cameron and Harrison. 51    Representations by implication are relied upon in paragraph 29 of the Statement of Claim. Here the alleged earlier expressed representations as to the size of the professional suite units, as to the inability to sell those units for the price originally planned, as to the importance of Mary Street being auctioned and as to the non-viability of the development, are said by implication to have involved the making of the following further representations by the Cameron Harrison Interests, namely :

That the Cameron Harrison Interests at all material times had genuine intentions of developing Mary Street in the joint interests of themselves and Mrs Schipp.
That the Cameron Harrison Interests had genuinely decided that the project was not viable.
That in the event that the project was not viable, it was a commercial necessity for it to be sold and that Mrs Schipp had no choice other than to sell it.

52 Paragraphs 30 and 31 deal with the representations by implication having been, as it is alleged, made in trade and commerce and having been false, misleading and deceptive in contravention of s.52 of the Trade Practices Act and s.42 of the Fair Trading Act. 53    The alternative case of a duty to take reasonable care in the making of these representations in the Cameron Harrison Interests is put in paragraph 32 of the Statement of Claim. Paragraph 33 then pleads that the Cameron Harrison Interests made the representations which are said to have been implicit, negligently and in breach of their duty of care. 54    The subject of continuing fiduciary duties is raised in paragraph 34 of the Statement of Claim. Here the allegation is that while the representations which had been implicitly made were acted upon, the Cameron Harrison Interests continued under the fiduciary duties earlier pleaded in paragraph 5 of the Statement of Claim and Mr Harrison continued in the relationship of solicitor for or in relation to Mrs Schipp and was under a fiduciary duty to her and a duty to take reasonable care as her solicitor as described earlier in paragraphs 7, 8 and 9 of the Statement of Claim. 55    The breaches of fiduciary duty become the subject of paragraph 35 of the Statement of Claim. Here the Cameron Harrison Interests are alleged, in having induced her to sell Mary Street, to have breached their fiduciary duties to the Plaintiff in that they are said to have failed to disclose, or to warn, or to suggest a number of matters to Mrs Schipp; to have failed to cause her to obtain independent advice; and to have caused her to form a particular belief. The Cameron Harrison Interests are said to have failed to have disclosed:

(i) their conflicts of interest in relation to the sale transaction;
(ii) that one of their purposes in inducing Mrs Schipp to auction the Mary Street property was ultimately to cause her to invest the proceeds of sale thereof in the Kembla Street property, then owned by or on behalf of Mr Harrison. [No longer pressed - See Plaintiff's Written Submissions Vol. 3 Page 2].
(iii) their prior breaches of fiduciary duty;
(iv) that they intended to retain the proceeds of sale of the Mary Street property.

56    The Cameron Harrison Interests are also said to have failed to cause Mrs Schipp to seek independent legal advice. 57    The Cameron Harrison Interests are also said to have failed to warn Mrs Schipp of the legal and financial consequences of the sale of the property before it was sold; to have failed to suggest to Mrs Schipp that she obtain independent commercial or accountancy advice before authorising the execution of the authority to auction. 58    The Cameron Harrison Interests are also said to have caused Mrs Schipp to believe that notwithstanding the terms of the Joint Venture Agreement they were entitled to have a say in the sale of Mary Street at that time and were entitled to one-third of any profit on the sale irrespective of the fact that the development had not taken place. 59    Paragraph 36 pleads that as a result of the giving of the authority for the auction sale Mrs Schipp suffered loss and damage. 60    Paragraph 37 then pleads that in or about mid-November 1988 after the auction sale of the Mary Street property Mrs Schipp wished to have returned to her a sum of money representing what she believed to be her share of the profits from the sale. 61    Paragraph 38 then deals with allegations as to the conduct of Mr Cameron and Mr Harrison after the sale of Mary Street. Messrs Cameron and Harrison are alleged to have:

(i) refused to give Mrs Schipp her share of the proceeds of sale; [relied upon only as a breach of fiduciary duty]
(ii) refused to pay Mrs Schipp interest on the money; [relied upon only as a breach of fiduciary duty]

(iii) disclosed for the first time, and represented to Mrs Schipp, that she might have to pay tax upon her part of the proceeds of sale;

(iv) said to Mrs Schipp that if she insisted on being paid interest by Mr Cameron and Mr Harrison then she would have to pay $20,000 in tax and that that would be her choice; [relied upon only as a breach of fiduciary duty]

(v) not having readily disclosed to Mrs Schipp where the proceeds of sale were held;

(vi) represented that Mrs Schipp's liability to pay tax could be eliminated by her further investment in the Kembla Street property.

62 A further allegation as to an overbearing of Mrs Schipp's will is made in paragraph 39. The point in time at which this overbearing of Mrs Schipp's will is put in paragraph 39 is on or about 9 January 1989. Paragraph 39 asserts that by this stage Mrs Schipp wished to extract herself from all financial dealings with the Cameron Harrison Interests and to have the value of her investment in the Mary Street property returned to her. The allegation is that on 9 January 1989 Mr Cameron and Mr Harrison overbore Mrs Schipp's will and caused her not further to seek the return of her investment. The allegation is also that by reason of the conduct of Mr Cameron and Mr Harrison pleaded in paragraph 38, Mrs Schipp was induced to leave her investment with Mr Cameron and Mr Harrison and their respective companies. In Volume 3 of the written submissions, Mrs Schipp’s counsel stated that these allegations were to be understood as an overbearing of Mrs Schipp’s will, not in an intentional dishonest sense, but as occurring in the context of a relationship of actual or presumptive undue influence. 63 The conduct of Mr Cameron and Mr Harrison pleaded in paragraph 38 of the Statement of Claim is alleged in paragraphs 40 and 41 to have been conduct in trade and commerce and to have been negligent, misleading and deceptive in contravention of s.52 of the Trade Practices Act and s.42 of the Fair Trading Act. 64    Paragraph 42 of the Statement of Claim pleads the causal nexus in asserting that by reason of Mr Cameron and Mr Harrison's conduct pleaded in paragraph 38, Mrs Schipp was and continued to be caused not to retrieve from the Cameron Harrison Interests the profit on her investment in the Mary Street property after its sale and to have been induced to agree to lend the profit on her investment to Mr Cameron and Mr Harrison whereby she alleges that she suffered loss and damage. 65    Paragraph 43 deals with an allegation that the previously alleged fiduciary relationships continued. The allegation is that in relation to the making of representations and inducements to Mrs Schipp not to retrieve her investment on the profit of her investment after the sale of the Mary Street property, the Cameron Harrison Interests continued to be fiduciaries of and to be in the fiduciary relationships with Mrs Schipp earlier described in paragraphs 5, 7,8 and 9 of the Statement of Claim. 66    Further allegations as to breaches of fiduciary duty are pleaded in paragraph 44 of the Statement of Claim. Here Mrs Schipp alleges that the breaches of fiduciary duty by the Cameron Harrison Interests were constituted by their failure to disclose the following matters to Mrs Schipp :

(i) her rights to have her investment profits returned to her;
(ii) her rights to have interest paid on her investment profits;
(iii) that part of the purpose of [the Cameron Harrison Interests] in making the representations described in paragraph 38 was a scheme to cause Mrs Schipp to invest the proceeds of sale of the Mary Street property into the Kembla Street property. [No longer pressed - See Plaintiff's Written Submissions Vol. 3 Page 2].
(iv) the Cameron Harrison Interests' knowledge of the breaches of fiduciary duty occasioned by them as described in paragraphs 12 and 35.

67    Paragraph 45 pleads Mrs Schipp's loss and damage said to have arisen as a result of the earlier described conduct of the Cameron Harrison Interests. 68    On Mrs Schipp’s case, all that resulted ‘from the breaches of continuing duties of care during [the period covering the sale of Mary Street and the retention of the proceeds of sale] is the liquidation of the Mary Street asset, [but for which] the investment in Kembla Street would not have occurred’.

[Submissions Vol 3 page 5 para 12]

69    Mrs Schipp's claims in relation to the Mary Street property and the retention of the moneys form the subject of paragraph 46 of the Statement of Claim. These claims are as follows :

'(i) damages;
(ii) equitable compensation and restitution;
(iii) an account of all the transactions involving and profits made by the first, second, third and fourth defendants with the plaintiff's entitlement;
(iv) interest;
(v) such further or other order as the case may require.'

Purchase of the Kembla Street property

70    Paragraph 47 of the Statement of Claim pleads that the Kembla Street property was purchased by Mr Harrison for approximately $42,000 in 1980 and in about January 1989 was encumbered by a mortgage in the sum of $300,000 to a financial institution. 71    The earlier described fiduciary duties and relationships are alleged to have continued between January and March 1989. Paragraph 48 alleges that during these months the Cameron Harrison Interests continued under the fiduciary duties and relationships described in paragraphs 5 to 9 of the Statement of Claim. 72    In paragraph 48A of the Second Further Amended Statement of Claim, Mrs Schipp pleads that in or about December 1988 to March 1989, Mr Harrison continued to carry out some of the tasks described in paragraph 8(i) of the Statement of Claim as modified as a result of the circumstances described in paragraphs 34(ii) and 43 whereby :

(i) Mr Harrison continued to expressly or implicitly assume a legal responsibility to Mrs Schipp in the carrying out of such tasks; and

(ii) Mrs Schipp continued, to the knowledge of Mr Harrison, to rely upon the exercise by Mr Harrison of his professional skill as her or a solicitor in the carrying out of such tasks.

73    In paragraph 48AB Mrs Schipp pleads that in or about December 1988 to March 1989, in relation to the purchase of the Kembla Street property and the investment by Mrs Schipp in Pyogrove:

(i) Mr Harrison undertook the exercise of his professional skill as her or a solicitor in tasks which, to his knowledge, may cause loss to Mrs Schipp if carelessly performed, whereby Mr Harrison is said to have expressly or implicitly assumed a legal responsibility to Mrs Schipp in the undertaking of those tasks, and in the alternative;
(ii) Mrs Schipp alleges that she relied upon the exercise by Mr Harrison of his professional skill as her or a solicitor in the carrying out by him of the tasks, which reliance is said to have at all material times been known to Mr Harrison.

74    The tasks alleged were :

Acting as her solicitor

(a) Dealing with Mrs Schipp in relation to the contents of the AGC loan documentation and guarantee.

(b) Supervising Mrs Schipp’s execution of the AGC loan documentation and guarantee.

(c) Foreshadowing the need for and advising Mrs Schipp in relation to the redoing of the Mary Street Joint Venture Agreement.

Acting as a solicitor

(d) Acting for Pyogrove on the purchase of the Kembla Street property.

(e) Arranging finance for Pyogrove to fund the Kembla Street purchase.

(f) Acting for the individual joint venturers in the Kembla Street property on the purchase of Kembla Street.

(g) Arranging finance to fund the Kembla Street purchase.
[Particulars to para 48AB]

75    Paragraph 48B of the Statement of Claim puts Mr Harrison's relevant duties in relation to the making of Mrs Schipp's decision to invest in the Kembla Street property as fiduciary duties owed to her by him as her solicitor and as duties to take reasonable care in so acting for her. 76    The particular duties of care alleged to have been owed to Mrs Schipp by Mr Harrison were to give her full legal advice with the commercial knowledge of the transaction available to him about the legal implications of the transaction she was entering and the guarantee she was giving such as would warn her as to foreseeable loss.

More specifically :
(a) to give her legal advice about the legal hazards of committing herself to the Kembla Street transaction;

(b) in arranging for finance for Pyogrove to provide her with reliable information as to :
(i) the nature and implications of the loan documentation she was entering into;
(ii) the nature of the guarantee that she was being asked to sign;


(c) in advising her in relation to the redrafting of the Joint Venture Agreement.
[Statement of Claim paras 48B(ii), 48A and 48AB; Plaintiff's written submissions Vol 2 page 34 para 5 and Vol 3 page 6 para 17]

The duties of care alleged to have been owed by Mr Harrison and by Mr Cameron and their two companies

77    The particular duties of care alleged to have been owed by Mr Harrison, by Mr Cameron and their two companies were ‘to take reasonable care in relation to the making of representations’.

[Statement of Claim para 57; Plaintiff's written submissions Vol 3 para 20 page 6]

The representations made by Mr Harrison and Mr Cameron on behalf of themselves and their companies are pleaded in para 49 as set out below.

78    In final submissions, the breaches of duties of care were put as falling -

"into two classes. The first class involves breaches in relation to the duty to advise in relation to the AGC documentation . . . . These breaches resulted in the plaintiff’s commitment to AGC and the particular legal expenses she has suffered as a result". [Vol 3 page 6 para 18],
“The second class relates to breaches in the course of advising her about the AGC documentation and acting in the role of solicitor for Pyogrove. To the extent that the third defendant had actual knowledge of legal hazards, especially increasing liabilities to AGC, that might be encountered should construction finance not be obtained, his duty to advise concerning AGC included a duty to warn of such legal hazards. This duty to warn existed quite apart from any fiduciary duty that might also be owed by him. The matters about which he should have warned the plaintiff include any matters that may have led to the plaintiff, once she had given her personal guarantee to AGC, becoming exposed to legal liability under that guarantee. [Specifically FASC paras 51 (iv), (v), (vi) and (vii)] The breach of the duties in this second class led to the plaintiff making the investment that she ultimately did in Pyogrove.”
[Volume 3 page 6 para 19]

79    Paragraph 49 of the Statement of Claim is the representational case in relation to the Kembla Street property. Here it is alleged that Mr Cameron and Mr Harrison on behalf of themselves and their respective companies represented to Mrs Schipp :

(i) that the Kembla Street property was then worth $600,000;

(ii) that the Cameron Harrison Interests had development plans for the Kembla Street property which were reasonable and viable;

(iii) that the Kembla Street property was in a prime position and that development plans would result in very up-market offices which would be in demand so that the investment would be a safe one for Mrs Schipp;

(iv) that Mrs Schipp's best course was to invest the $40,000 share of the profits from the sale of the Mary Street property into the Kembla Street property;

(v) that the further investment of $100,000 in the property would be a wise investment by Mrs Schipp and a suitable form of superannuation;

(vi) that the development of the Kembla Street property could safely be financed by selling parts of the property under the plan;

(vii) that the Kembla Street property would cost approximately $1.2 million to build;

(viii) that the Cameron Harrison Interests had a valuation of the Kembla Street property which indicated that it was worth $600,000 in January 1989.

80    Inducement to invest in the Kembla Street property is alleged in paragraph 50 of the Statement of Claim. The allegation is that the representations pleaded in paragraph 49 were made by the Cameron Harrison Interests for the purpose of inducing Mrs Schipp to invest in the Kembla Street property and in circumstances such that the Cameron Harrison Interests had reason to believe that Mrs Schipp would so invest. 81    Failures to disclose matters prior to the making of Mrs Schipp's investment in the Kembla Street property are pleaded in paragraph 51. Here, the Cameron Harrison Interests are alleged to have failed to disclose to Mrs Schipp prior to the making of her investment in the Kembla Street property the following matters :

'(i) the risks to her of such investment;
(ii) the history of the property described in paragraph 47;
(iii) the prior beaches of fiduciary duty by Mr Cameron, Don Cameron Real Estate, Mr Harrison and Emibarb described in paragraphs 12, 35 and 44 hereof;
(iv) that despite efforts to do so, Mr Cameron had been unable to obtain any pre-commencement commitment by lessees to the Kembla Street property;
(v) that there was no construction contract in existence for development of the Kembla Street property at $1.2 million or any other figure and there were no firm plans for execution of such a contract at a price which was likely to make the investment a profitable one for Mrs Schipp;
(vi) that applications for finance for development of the Kembla Street property had previously been rejected and there was no reasonable grounds for believing that such an application would succeed in the short term;
(vii) that there were reasonable grounds for believing that the Kembla Street property could not be developed viably at that time;
(viii) that Mr Harrison and Emibarb were being placed under financial pressure by the Commonwealth Bank to liquidate the Kembla Street property to reduce debt to that financial institution;
(ix) that Mr Harrison was the legal adviser to the Cameron Harrison Interests and was seeking to develop the Kembla Street property for his own benefit and was not protecting Mrs Schipp's separate legal interests;
(x) that there was a conflict between Mr Harrison's fiduciary obligations to Mrs Schipp as aforesaid and his financial position described in sub-paragraph (viii) hereof.'

82 Paragraph 52 pleads reliance and inducement. Mrs Schipp here alleges that by reason of the representations described in paragraph 49 and the non-disclosure of matters described in paragraph 51, she invested money in a company, Pyogrove Pty Limited, and entered into obligations with AGC (Advances) Limited in relation to the development of the Kembla Street property. It is common ground that Pyogrove was the investment vehicle formed for the specific purpose of acquiring the Kembla Street property and that Mrs Schipp by her company Jabele Holdings Pty Ltd, Mr Cameron by his company, Mr Harrison by his company and Mr Zander by his company obtained interests in the investment vehicle Pyogrove. The circumstances in which Jabele Holdings, a shelf company was acquired in 1989 for the purpose of being used as Mrs Schipp’s investment vehicle, are described below. 83 Paragraph 53 pleads that the failure to disclose the matters described in paragraph 51 were representations and conduct by the Cameron Harrison Interests that such matters did not exist. 84 Paragraphs 54 and 55 plead that the representations pleaded in paragraph 49 were made in trade and commerce and were misleading and deceptive and made in contravention of sections 52 and 51A of the Trade Practices Act and section 42 of the Fair Trading Act. Paragraph 55 also pleads that the representations described in paragraph 53 were misleading and deceptive and made in contravention of this legislation. 85    The misleading and deceptive conduct case relies upon the following alleged conduct:

(a) Representation as to Value of Kembla Street

The allegation is that the Cameron Harrison Interests represented that the Kembla Street property was then worth $600,000 and that the Cameron Harrison Interests had a valuation indicating that the land was worth $600,000.
Conduct said to have been Misleading and Deceptive
The allegation is that the true value of the land was well below $600,000.
[Paragraphs 2.19, 2.20 Plaintiff's Written Submissions Vol. 3]

(b) Representation that the Development Plans for Kembla Street would cost approximately $1.2m to build

The allegation is that the Cameron Harrison Interests represented that the Kembla Street property would cost approximately $1.2m to build.

Conduct said to have been Misleading and Deceptive

The allegation is that the representation was incorrect and constituted a substantial discounting of an estimate by Mr Skelcher, based on Cordell's cost figures of a $1.8m building cost. The case put is that it was misleading and deceptive to adopt and discount Mr Skelcher's estimate. Also that at the time of the making of the representation, Mr Cameron and Mr Harrison were aware that the project had not progressed to a stage where a proper assessment of building costs could be made.

[Paragraphs 2.24, 2.25 Plaintiff's Written Submissions, Vol. 3]

(c) Representations that Development Plans for Kembla Street were Reasonable and Viable

The allegation is that the Cameron Harrison Interests represented that they had development plans for the Kembla Street property which were reasonable and viable.

Conduct said to have been Misleading and Deceptive

The allegation is that there were a number of hurdles to the project proceeding which were not communicated to Mrs Schipp. When seen in the context of the positive representations about the Kembla Street development alleged to have been made to Mrs Schipp, the case is that the omission to mention these hurdles was likely to mislead her into believing that the development was viable. The case is that the Cameron Harrison Interests failed to alert Mrs Schipp to the true situation which in reality was that "the joint venturers were not investing in a viable project but were buying an opportunity to explore the merits of developing Kembla Street".
The case for Mrs Schipp put the following as undisclosed suggested hurdles to the development proceeding:

(i) The experience of the Cameron Harrison Interes ts which had been that it was not possible in 1988 to obtain pre-leasing commitments in the absence of some form of development activity being under way. The Commonwealth Bank had also required pre-leasing commitments as a condition to the provision of finance. No such pre-leasing commitments were obtained by the time Pyogrove agreed to purchase Kembla Street.

(ii) The need for the provision of adequate security by the parties to support the obtaining of finance needed to develop the property. The case for Mrs Schipp was that the question of whether the parties would be capable of providing sufficient security was not explored or discussed at any time before she invested in Kembla Street.

(iii) Detailed plans, specifications and full tender prices had not been obtained and were not available at the time of the discussions leading to the decision to invest in Kembla Street. Nor had the importance of obtaining such plans, specifications and tender prices been discussed with Mrs Schipp.
[Paragraphs 2.28 - 2.33 Plaintiff's Written Submissions Vol. 3]

(d) Representation that the Investment in Kembla Street was Wise and a Suitable Form of Superannuation

The allegation is that the Cameron Harrison Interests represented that Mrs Schipp's investment of $100,000 in Kembla Street would be a wise investment and a suitable form of superannuation.

Conduct said to have been Misleading and Deceptive

The case put is that there was insufficient evidence available to determine whether the investment was a wise one or a good one or a suitable form of investment. Further, that without accurate cost projections, any pre-leasing commitments, any definite security arrangements for development finance or any detailed analysis of the viability of the venture, there was no basis for any such statements.
[Paragraphs 2.37 Plaintiff's Written Submissions Vol. 3]

86    Paragraph 56 pleads that the matters described in paragraphs 49, 51, 51, 52 and 53 were also contraventions of section 59(1) of the Trade Practices Act and section 54(1) of the Fair Trading Act. 87    Breaches of duty to take reasonable care and of fiduciary duties to Mrs Schipp are pleaded in paragraph 57. The allegation here is that at all material times the matters described in paragraphs 49 to 53 constituted breaches by the Cameron Harrison Interests of their duties to take reasonable care and of their fiduciary duties to Mrs Schipp described in paragraphs 48 and 48B. 88    Mrs Schipp is alleged to have been induced to act, and the Cameron Harrison Interests are alleged to have been unjustly enriched, by reason of the representations and conduct of the Cameron Harrison Interests. These allegations are to be found in paragraph 58 of the Statement of Claim where Mrs Schipp is alleged by reason of the representations to have :

(i) invested the sum of $100,000 in Pyogrove;
(ii) invested the proceeds of the profit on the sale of Mary Street in Pyogrove;
(iii) on January 1989, to have executed an agreement to take a loan from AGC;
(iv) on 31 January 1989, to have executed a Deed of Loan and Guarantee with AGC.

89    Paragraph 58 then alleges that Mrs Schipp suffered loss and damage and the Cameron Harrison Interests had been unjustly enriched at Mrs Schipp's expense by reason of these matters. 90    Paragraph 59 pleads that Mrs Schipp at all material times was in a position of special disadvantage. The precise allegation is that at all material times in relation to the execution by Mrs Schipp of the Deed of Loan and Guarantee, Mrs Schipp was in a position of special disadvantage with respect to the Cameron Harrison Interests and with respect to Pyogrove. 91    Paragraph 60 pleads how it is that the situation of special disadvantage is said to have arisen. The allegation is that Mrs Schipp's situation of special disadvantage arose in part from the circumstances earlier pleaded and in part from a number of matters then set out which are also said to have caused the Deed of Loan and Guarantee and the arrangements whereby the investments described in paragraph 58 were made by Mrs Schipp to be unjust in the circumstances at the time they were made. 92    The particular matters relied upon are as follows :

'(i) there was material inequality in bargaining power between Mrs Schipp and Pyogrove in relation to the investment;
(ii) there was no negotiation concerning Mrs Schipp's interests at or before the time that the agreement was made between Mrs Schipp and Pyogrove;
(iii) it was not reasonably practicable for Mrs Schipp to negotiate for the alteration of or to reject any of the provisions of the contract whereby she invested in Pyogrove;

(iv) the relative economic circumstances and educational background of Mrs Schipp were such that she was known to the Cameron Harrison Interests and to Pyogrove not to be in a position to be able to protect herself and her best commercial interests with respect to the Cameron Harrison Interests and Pyogrove;
(v) the deed of loan and guarantee was not readily intelligible to Mrs Schipp;
(vi) to the knowledge of the Cameron Harrison Interests and Pyogrove Mrs Schipp did not have any independent legal or other commercial advice before entering into the agreement for the investment in Pyogrove and the deed of loan and guarantee and she was not encouraged by any of the Cameron Harrison Interests or Pyogrove to obtain such advice;
(vii) the provisions of the agreement whereby the investment in Pyogrove took place and the provisions of the deed of loan and guarantee and their legal and practical effect were not accurately explained to Mrs Schipp by any person and in particular it was not explained to her that the document she was signing would place any of her personal assets at risk;
(viii) undue influence, unfair pressure or unfair tactics were exerted on or used against Mrs Schipp by the Cameron Harrison Interests in relation to the investment by Mrs Schipp in Pyogrove;
(ix) the commercial setting, purpose and effect of the contract for investment of the funds in Pyogrove was such that the Cameron Harrison Interests were aware that Pyogrove had no practical means at the time of such investment of developing the property in the manner described to Mrs Schipp.'

93 Paragraph 61 pleads that at all material times Pyogrove was controlled by Mr Cameron and Mr Harrison and their respective companies. 94 Paragraph 62 is an allegation of unconscionable conduct in contravention of s.51AB of the Trade Practices Act. The allegation is that at all material times the conduct of the Cameron Harrison Interests and Pyogrove whereby the investment of money in Pyogrove by Mrs Schipp took place was unconscionable conduct constituting such a contravention of the section. 95    Paragraph 64 alleges that by reason of the matters earlier pleaded the Deed of Loan and Guarantee entered into by Mrs Schipp and AGC is liable to be set aside and Mrs Schipp's agreement to invest moneys in Pyogrove is liable to be set aside.

Claim Against the Seventh Defendants

96    The claim against Mr Harrison's underwriters is a discrete section of the pleading. The claims are set out in paragraphs 64 to 69 of the Third Further Amended Statement of Claim. 97    Schedule A to the Statement of Claim lists the fourteen insurers against whom the Plaintiff presses these claims. 98    Paragraph 66 alleges that, by contract of insurance during the period 30 June 1991 to 30 June 1992 and providing cover through to the date of the filing of the notice of motion in these proceedings, "the Insurers agreed to indemnify [Mr Harrison] . . . against all loss to [him] whensoever occurring, arising from any claim or claims first made against [Mr Harrison] during the period of insurance in respect of any description of civil liability whatsoever incurred in connection with the business of practising as a solicitor." 99    Paragraph 67 alleges that the Insurers' appointed agent in NSW, said to be Lawcover Ltd, were notified of the making of the claim against Mr Harrison by the Plaintiff during the currency of the insurance policy. 100    Paragraph 68 alleges that Lawcover has wrongly refused to indemnify Mr Harrison in relation to the Plaintiff's claim. 101    The amount in respect of which the Plaintiff alleges that the insurers are liable to indemnify Mr Harrison is particularised in paragraph 69(a). The allegation is that the Plaintiff is entitled to recover damages and costs as a result of Mr Harrison's conduct in the proceedings and that the Insurers are liable to indemnify Mr Harrison for that amount. [Paragraph 69(b)] 102    Paragraph 69(c) alleges that the Plaintiff is entitled to a charge on all insurance moneys "that are, or may become, payable" by the Insurers to Mr Harrison in respect of Mr Harrison's liability to the Plaintiff. 103    Paragraph 69 (d) alleges that the Plaintiff is entitled to enforce that change by way of action against the Insurers. That entitlement of the Plaintiff is a right provided by section

6 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW), subject to leave being granted pursuant to section 6(4). Leave to join the Seventh Defendants as a party to the proceedings was granted by Young J: Schipp v Cameron (Unreported, Young J, Supreme Court of NSW, 4 May 1995).

Seventh Defendants' Defence

104 The Seventh Defendants’ Defence to the Further Amended Statement of Claim was filed on 12 November 1997. 105 The Seventh Defendants admit the existence of a contract of insurance between Mr Harrison and themselves pursuant to which the Seventh Defendants agreed to indemnify Mr Harrison in the terms pleaded in paragraph 66 of the Further Amended Statement of Claim. [Paragraphs 4(a) and 4(b)] Paragraph 4(c) alleges that the period of insurance was from 1 July 1991 to 30 June 1992. 106 The Seventh Defendants deny that Mr Harrison is liable to the Plaintiff and that the Seventh Defendants have wrongfully refused to indemnify Mr Harrison in relation his liability, if any, to the Plaintiff. [Paragraph 5] 107 The Seventh Defendants plead, in Paragraph 6(a), that if, contrary to their contentions, Mr Harrison is liable to the Plaintiff, his liability was not incurred in connection with the business of practising as a solicitor. Paragraph 6(b) alleges that any liability of Mr Harrison to account to the Plaintiff for profits and to pay interest on such an account of profits, or to pay restitutionary damages and interest on such damages, or to pay the Plaintiff the principal of loans made by her to Mr Harrison and interest on such loans, is not a loss for the purposes of the contract of insurance. 108 The Seventh Defendants allege that any liability of Mr Harrison to the Plaintiff was brought about by his dishonest or fraudulent acts or omissions and assert that the general exclusion in clause 5(e)(v) of the policy, which provides that the Insurers were not liable to indemnify in respect of any liability brought about by dishonest or fraudulent acts or omission on the part of Mr Harrison, applies. [Paragraph 6(c)] 109 Paragraph 6(d) alleges that if Mr Harrison is liable to the Plaintiff, the Seventh Defendants' obligation to indemnify Mr Harrison is subject to a $100,000 deductible. In this paragraph of their Defence, the Seventh Defendants' sought to rely on clause 5(a) of the insurance policy. During the course of final submissions, however, the Seventh Defendant submitted that the relevant clause in the insurance policy in relation to the amount of the excess was not clause 5(a). Rather, it was conceded that the relevant clause was clause 5(b) which provides for an excess of $3000 in relation to each claim including claimants costs made by Mr Harrison. It follows that Paragraph 6(d) of the Seventh Defendants' Defence is now to be regarded as alleging that a deductible of $3000 applies, as opposed to a deductible of $100,000. 110 The Seventh Defendants' allege, in Paragraph 7, that if, contrary to their contentions, Mr Harrison is liable to the Plaintiff, and the Insurers are liable to indemnify Mr Harrison in respect of that liability, no charge under section 6(1) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) attaches to moneys payable in respect of that liability because the event or events giving rise to the liability occurred prior to 1 July 1991, that is prior to the commencement of the period covered by the policy of insurance.

Claims to Relief

111    Claims to relief are set out generally in paragraph 71 of the Statement of Claim where the Plaintiff claims the following relief :

'(i) a declaration that the deed of loan and guarantee is void;
(ii) a declaration that the agreement whereby she invested moneys in the fifth defendant is void;
(iii) a release from all liability to the defendants;
(iv) an account of the profits made by the first, second, third, fourth and fifth defendants;
(v) damages, equitable compensation and restitution;
(vi) interest;
(vii) against the Insurers a declaration that the third defendant is entitled to be indemnified by the Insurers in respect of the third defendant's liability for damages and costs in these proceedings;
(viii) a declaration that the plaintiff is entitled to a charge on all insurance moneys which are payable by the Insurers to the third defendant in respect of any liability of the third defendant to the plaintiff; and
(ix) an order that within twenty eight (28) days of the determination of the quantum of the liability of the third defendant to the plaintiff that the Insurers pay the sum so determined to the plaintiff.'

Fraud or Dishonesty - Disclaimed late in the Hearing

112    Towards the end of the cross examination of Mr Harrison, notwithstanding the state of the pleadings, the manner in which Mrs Schipp's case had been presented up to that point in time and the content of the cross examination of Mr Cameron then completed, and of the cross examination of Mr Harrison, Mr Slattery QC indicated for the first time that the Plaintiff would not be seeking a finding of actual dishonesty by Mr Harrison. In final written submissions, the Plaintiff's Counsel made plain that:

(a) "[the Plaintiff] did not seek findings that [Mr Harrison's] conduct should be characterised as dishonest or fraudulent" [Plaintiff's Submissions Vol. 3 Pages 1 - 2].
(b) "The Plaintiff has already indicated that she is not making a case of dishonest or fraudulent conduct on the part of [Mr Harrison] . . . The Plaintiff submits that that statement brings with it the conclusion that no part of the Statement of Claim should be read as alleging fraud or dishonesty or making out such a case. The Statement of Claim does not anywhere use the words 'fraud' or 'dishonesty'. The Plaintiff has elected to no longer press paragraph 12(ii), 35(ii) and 44(iii) . . . because they are the three provisions within the Further Amended Statement of Claim which, in the judgment of the Plaintiff, may be most strongly taken as possibly suggesting fraud or dishonesty and the Plaintiff wishes to make it clear that no such suggestion is made.
All other paragraphs of the pleadings . . . which plead other intentional conduct or acts of misrepresentation, in the absence of any express pleading of fraud or dishonesty (and in light of the Plaintiff's disclaimer of such allegation) should not be taken as importing any such allegations".
[Plaintiff's reply to Seventh Defendant's response to Plaintiff's Proposed Amendments to Statement of Claim].
During the course of the proceedings, the Plaintiff filed two subsequent amended Statements of Claim. The various amendments did not relevantly affect the substance of the Plaintiff's claim against the Seventh Defendants except to the extent that fraud and dishonesty were disclaimed as providing a basis of any cause of action pleaded by the Plaintiff. In final submissions, counsel for the Seventh Defendants submitted that the Plaintiff could not escape the consequences of Mr Harrison's alleged dishonesty by electing not to press those paragraphs of her pleadings which alleged or which might be read as alleging fraud or dishonesty [Seventh Defendants' Submissions Paragraph 2.4.23].

Principal Witnesses

113    I have had the benefit of observing Mrs Schipp, Mr Cameron and Mr Harrison, giving their evidence in the witness box and being cross-examined. In Mrs Schipp's case, the cross-examination extended over nine days. In Mr Cameron's case, the cross-examination extended over five days. In Mr Harrison's, case the cross-examination extended over three days. 114    A large amount of documentary material was either tendered during the course of the evidence given or was cross-examined upon in circumstances in which the tender of the material became unnecessary. 115    It is fair to say that each of Mrs Schipp, Mr Cameron and Mr Harrison were extensively tested upon the material sections of their affidavits in support and upon their affidavits in reply to one another's affidavits. In Mrs Schipp's case, she had made an initial affidavit which, together with annexures, covers 137 pages and is dated 28 November 1992. Mrs Schipp made two later affidavits, one on 24 August 1994 which runs to 40 pages and the other on 9 July 1996 which together with annexures, runs to 36 pages. The second and third affidavits principally respond to affidavits filed by or on behalf of the Defendants and, in some instances, give additional evidence in chief. 116    Mr Cameron made an initial affidavit on 10 February 1993 which together with annexures, runs to 93 pages and which covers his responses to Mrs Schipp's first affidavit and other matters. Mr Cameron made two later affidavits, one on 8 November 1994, which runs to 32 pages and one on 29 February 1996 which together with annexures, runs to 25 pages. These affidavits are principally affidavits which respond to affidavits filed by or on behalf of Mrs Schipp, but additionally also add further material in chief. 117    Mr Harrison made an initial affidavit on 10 February 1993 which together with annexures, runs to 176 pages. Mr Harrison made three further affidavits; the first on 4 March 1996 which expands on matters dealt with in his earlier affidavits, another on 27 August 1996 which is principally a responsive affidavit, and a final affidavit on 10 September 1997 which runs, together with annexures, to 104 pages, and covers a large number of matters in chief, as well as referring to earlier affidavits filed by or on behalf of the Plaintiff which, as Mr Harrison says in paragraph 2 of his affidavit of 10 September 1997, "for reasons I cannot now explain have not been addressed previously in affidavits sworn by me". 118    In consequence, the principal actors whose recollections were extensively tested in cross-examination had between them filed in the order of 650 pages of affidavit material before the Court, including annexures. 119    There are an enormous number of differences and discrepancies between the versions of events sworn to by these three principal actors in their affidavits. The matter is even more confused because the affidavits filed by the principal actors do not methodically travel in a chronological fashion through the events in issue, but jump from event to event, from evidence in chief to reply, and so on. In consequence, it is impossible to reconstruct any particular order from these affidavits and a great deal of patient work has to be done by the reader in moving backwards and forwards through the several affidavits to try to follow all of the references which any of these deponents wish to make to any particular event. 120    When the cross-examination of the three principal actors is added into the equation, one finds numerous references to particular events covered through the cross-examination at different points in time. Here again, each of the principal actors on numerous occasions departed from their affidavits when being tested in cross-examination, and departed, even within their cross-examinations, very often, from versions of events earlier given by them through the cross-examinations. 121    One may certainly understand how difficult it must be for the principal actors in October 1997 to give, in a coherent fashion, evidence of events which by and large took place 8 to 9 years ago. This becomes more difficult where the oral evidence is given some 4 to 5 years after the initial affidavits had been filed by these principal actors. 122    In short, the task of the Court in endeavouring to discern what are the versions originally, and then ultimately, contended for by the principal actors is extremely difficult. In a case where the parties disagreed as to the timing and content of so many events, this adds to the difficulties which the Court faces in making findings of fact. As counsel for the Seventh Defendant submitted, "the divide between the Plaintiff and the Defendants on matters of fact is vast." [Para 1.01 submissions, 22 December 1997]

Mrs Schipp

123    I accept Mrs Schipp as having given evidence to the best of her recollection as to the events which took place. Mrs Schipp has obviously lived with this case for some 9 or so years and in many instances her recollection has been shown to be faulty during the course of cross-examination. Notwithstanding these matters, I accept the evidence of Mrs Schipp as having been given without any intention to mislead the Court, and as constituting her best recollection of the events which took place. Mrs Schipp cannot be accepted in every instance of a conflict of fact between her recollection and that of Messrs Cameron and Harrison, but in many of the areas where there was principal dispute as to material facts or conversations, I accept Mrs Schipp as a reliable and honest witness. 124    I have derived considerable assistance in unravelling Mrs Schipp’s recollections from [Exhibit P1], a letter written by Mrs Schipp to Mr Baird. Such a letter written within a relatively short period after the events in question may be relied upon as giving a reasonable overview of the facts and perceptions of Mrs Schipp.

Mr Cameron

125    Mr Cameron was an unsatisfactory and unreliable witness who, in my opinion, should not be believed as to very many of the facts which he gives evidence of and as to much of his recollection. I was not impressed with his demeanour and formed the distinct view that he was frequently content to tailor his evidence to support his case. I formed the view that on occasion he was content to lie under oath.

Some of the principal areas in which shortcomings in Mr Cameron’s evidence were evident were in relation to:


(a) His departure from contemporaneous documents [as for example the matter dealt with in paragraphs 297 to 299].

(b) His failure to admit that in and after November 1987 he appreciated that his involvement as a person sharing commission with Mr J.B. Potter, should have been disclosed to the vendor of the Mary Street property. Also his failure to concede the real purpose of ensuring that Mrs Schipp’s true address was not disclosed on the deposit slip, contract for sale or sales advice note notice [this is dealt with in paragraphs 158 to 162].

(c) His fabricated evidence as to the date and circumstances in which the Second Joint Venture Agreement was entered into [this is dealt with in paragraphs 241 to 253 and 431 to 436; see also paragraph 445].

Mr Harrison

126    Mr Harrison was an unsatisfactory and unreliable witness. He was argumentative and to my observation, tailored his evidence to support his case. I was not impressed by his demeanour . He frequently tailored his evidence to support his case. I formed the view that on occasion he was content to lie under oath. 127    Some of the principal areas in which shortcomings in Mr Harrison's evidence were evident were in relation to :

(a) The exchange of the Mary Street contract [this is dealt with in paragraphs 195 to 211]

(b) The significance of the 30 January 1989 Kembla Street settlement date [this is dealt with in paragraph 638]
(c) His departure from contemporaneous documents.
(d) His unwillingness to concede that financial difficulties existed or had any relevance to his actions.
(e) His failure to include reference to the $1.2m Foreign Currency Loan in a Statement of Assets and Liabilities in support of an application to AGC [this is dealt with in paragraph 536]
(f) The van issue [this is dealt with in paragraphs 168 to 172]
(g) His fabricated evidence as to the date and circumstances in which the Second Joint Venture Agreement was entered into [this is dealt with in paragraphs 241 to 253 and 431 to 456].
(h) His evidence as to the decision to name the account opened in late 1988 with the Commonwealth Bank as a ‘Solicitors Settlement Deposit Account [this is dealt with in paragraphs 322 to 326].

128    As a result the findings of fact set out below generally accept Mrs Schipp as a witness of truth whose recollections although faulty, can usually be relied upon in preference to the recollections and, on occasion, fabricated evidence of Messrs Cameron and Harrison.

FINDINGS OF FACT

129    I proceed to set out my findings of fact. As appropriate, I shall from time to time refer to evidence given before me. Such references are not to be taken as exhaustive; plainly all of the evidence is taken into account in my findings of fact.

Early Years

130    Mrs Schipp and her husband purchased a newsagency at Erskineville in 1960. Between 1961 and 1976 Mrs Schipp assisted her husband with a newsagency business when not looking after her children. Her principal duties involved serving customers and restocking shelves and dealing with sales representatives. She was not involved in the financial side of the business and did not, for example 'cash up' at the end of the day. 131    Mr Schipp had become active in the area of property development of various sites in the early to mid-1970s, initiating the development projects by selecting sites, negotiating the purchase price and being actively engaged as a builder/labourer in a number of these sites, including residential premises for his family. Mr Schipp was appointed as an alderman in 1971 or 1972. Mrs Schipp, as I find, was neither interested, nor emotionally strong enough, to assume any active role in her husband's various projects. She was fairly fully involved with looking after her four children, at the same time with the social responsibilities of being involved with the wife of an alderman. 132    Mrs Schipp suffered a nervous breakdown in 1968 as a result of which she was hospitalised and treated by several specialists.

Mrs Schipp's business experience

133    Some emphasis was made in the cross-examination of Mrs Schipp on a suggestion that she had had fairly extensive experience in the field of property transactions as she had been a director and secretary of Dapto Newsagencies Pty Ltd over a period of time in which it had been involved in the building of houses and shops and in relation to several developments. It was put to Mrs Schipp that she was called upon to sign documents from time to time for Dapto Newsagencies which documents included documents relating to transfer of title to land, mortgages and company documents such as annual returns and the like. 134    Mrs Schipp as I have said, had left school at the age of 15. Her evidence was that when she had been involved as a director of companies operated by her former husband, he had organised all of the paperwork and the business side of the companies and she had done no more than sign where her husband asked her to sign. Her evidence was that she had had no experience at all in the field of property transactions, but that her husband had attended to those matters. She said that she was a person of very limited business experience by which she meant, "I was a music teacher. I was a mother and grandmother. I had in the past helped my husband in a newsagency business. He then became a developer of property which I had a limited knowledge of". I accept this evidence. 135    Mr Schipp gave evidence in a forthright fashion. I accept Mr Schipp as, in general, a reliable witness. 136    He was asked to describe a typical situation, for instance when an annual return to be filed with the Corporate Affairs Commission had to be signed. He was asked to explain the procedure he would normally go through on such a typical situation so far as his wife's director's duties were concerned. His answer was:

"Well I would, on any occasion, whether it was to purchase a property or to sign a lease, or, as you say, an annual return, I would fill the document in. I would do whatever had to be done to get to that stage for signature and then she would sign it. I would sign it and say 'Well now your signature goes there' and she would sign it."

137    I find that Mrs Schipp did not have considerable experience in buying, developing and selling of properties prior to the occasion when she met Mr Cameron. On the contrary, she had close to no experience in such matters. After her nervous breakdown and until 1984 when she separated from her husband, she played, as I find, a negligible role in her husband's business affairs. 138    It was put to Mrs Schipp that she had informed Mr Cameron in early discussions:

(a) that she had experience in the field [meaning property developments] [Transcript page 185];
(b) that she had been "heavily involved in planning and development and with [her] experience in these areas [she could] help with [the Mary Street] project. [Transcript page 216]

139    Mrs Schipp denied making such statements. I find that although Mrs Schipp may have informed Mr Cameron that she and her husband had been involved in building projects [See paragraph 71 of the affidavit of Mrs Schipp made 24 August 1994], she did not inform Mr Cameron that she had played any significant role in these projects or had acquired experience in planning and development. I find that Mr Cameron, through his discussions with Mrs Schipp and Mr Harrison, first through his discussions with Mr Harrison about Mrs Schipp and secondly with Mrs Schipp directly, had no basis for forming the view that Mrs Schipp was experienced in buying, developing or selling properties and, on the contrary, formed the view that she had close to no experience in such matters but had relied upon her husband as the moving party in their business affairs. Likewise I find that Mr Harrison formed the view that Mrs Schipp had close to no experience in such matters but had relied upon her husband as the moving party in their business affairs.

Mr Cameron's business experience

140    As at 1988 Mr Cameron had been a licensed real estate agent, business agent and auctioneer for twelve years. [Transcript page1237] The evidence satisfied me that he had had extensive business experience primarily related to real estate sales and property development.

Mr Harrison's business experience

141    The Commonwealth Bank file notes in evidence which record the property transactions of Mr Harrison and his related companies from March 1988 until January 1989 demonstrate that he had extensive commercial interests and significant commercial experience arising from his own investments and developments. He had qualified as a solicitor in the Supreme Court of NSW in 1973 and had practised as a solicitor from 1973 until 1988. In giving evidence he demonstrated a close familiarity with business affairs and with conveyancing and general commercial legal transactions.

Mrs Schipp first meets Mr Cameron

142    Mrs Schipp first met Mr Cameron on the occasion of her purchase, after her divorce, of her home unit at Smith Street, Wollongong. This was in approximately December 1986. This was the first property that Mrs Schipp had ever determined on her own to purchase or had ever purchased in her own right.

April 1985 - Multi-currency floating interest rate loan

143    In about April 1985, Emibarb, as borrower, entered into a multi-currency floating interest rate loan of Australian dollars ($1.2 million) with the Commonwealth Bank of Australia ('the foreign currency loan'). The agreement allowed borrowers to rollover 3-monthly or 6-monthly. Borrowers had a choice. Mr Harrison was in fact using the 6-month rollover choice. 144    The rollover of the foreign currency loan took place on approximately 31 January and 31 July of each year. At each rollover, the offshore loan would be converted into Australian dollars and the borrower was required to pay interest, Australian withholding tax and any parity adjustments. The parity adjustments were only payable if there had been more than a 5% adverse movement in the exchange rates or any trading losses in the interim. 145    The policy of the Commonwealth Bank was to allow borrowers to manage their own loans and exchange currencies with the assistance of the Commonwealth Bank's risk management information services. Mr Harrison elected to manage Emibarb's foreign currency loan and did so until 31 January 1989. 146    Pursuant to the Bank's policy each foreign currency loan borrower was given the right to trade his exposure offshore during a rollover period. It was the endeavour of the borrower to try and put himself in a weakening currency so that he would reduce his foreign currency exposure. Each contract cancelled the previous one so that at the end of a 6-month rollover period one would have the starting point, and then one would have the finishing point, and one would determine whether or not the borrower had been successful in reducing his foreign currency exposure or if in fact those trades had increased the exposure. In Mr Harrison's case, he had by 31 January 1989 incurred an Australian dollar equivalent of $187,000 loss on trade. This was on top of the actual principal borrowing and the interest and withholding tax. 147    Mr Harrison was not required to meet the loss on trading to be able to take the principal borrowing back offshore again, but had to meet his interest and withholding tax before he would be allowed to take his loan back offshore. However, as to the trading loss, the Bank was prepared to domestically fund the trading loss but Mr Harrison had to meet it from his own resources and his dealing rights were in due course withdrawn. [Transcript page 857]

Offices of Don Cameron Real Estate Pty Limited

148    Don Cameron Real Estate operated from its principal premises on the ground floor of Graovac House at 73 Church Street, Wollongong from 1975 until about July 1989. Mr Harrison's office was within these offices of Don Cameron Real Estate from approximately June 1988 to early 1989. [Transcript pages 1106 and 1107] There was no financial arrangements between Mr Cameron and Mr Harrison in relation to Mr Cameron permitting Mr Harrison to use the office. 149    Mr Cameron gave evidence that over a period of time Don Cameron Real Estate had up to eight branches including the principal office, some of which were franchises and some independent.

1 February 1987 - Agreement with Mr Potter

150    On 1 February 1987, Mr Cameron entered into an agreement with Mr J.B. Potter pursuant to which Mr Potter was to act as the independent licensee manager of the Thirroul office of Don Cameron Real Estate on the basis of a profit-sharing arrangement. The licensee manager was not subject to the direction and control, as to the day-to-day administration and management of the Thirroul office, by the directors of Don Cameron Real Estate. The agreement was that net profits earned by the Thirroul office from 1 February 1987 would be shared as to two-thirds to Mr Potter and as to one-third to Don Cameron Real Estate. 'Net profit' in this sense, meant all the commission income earned from sales less all the business expenses paid and incurred by the Thirroul office. The arrangement could be terminated on one week's notice.

Mid to late 1987 - Mr Harrison is warned of the Bank's concerns at its escalating debt

151    In mid to late 1987, Mr Watson, who was then a member of the Commonwealth Bank's foreign currency loan control cell and who had had frequent communications with Mr Harrison, informed Mr Harrison of the Bank's concerns at the escalating debt on the foreign currency loan and the fact that evidence before the Bank indicated, as far as the Bank was concerned, that Emibarb would have been having difficulty in meeting the interest and normal obligations required to service those borrowings. Mr Harrison sought to assure Mr Watson and the Commonwealth Bank that he was rectifying the situation and that his businesses were being brought into order so that the debts could be serviced and so that the security position would be in a position to satisfy the Bank's requirements. At the same time, Mr Watson drew Mr Harrison's attention to the subject of a reduction in Mr Harrison's and his group of companies' exposure to the Bank. Mr Watson said to Mr Harrison that the Bank was looking for a reduction in exposure, either by way of cash flow or by way of sale of specific assets. Mr Harrison told Mr Watson that he required time to be able to complete those requirements and he sought that time from the Bank.

Mr Watson raises with Mr Harrison questions as to the ability of his interests to service the foreign currency loan rollover payments

152    On a number of occasions as early as Mr Watson's first meeting with Mr Harrison, Mr Watson said to Mr Harrison that the Bank required, as a minimum, that interest and withholding tax be met at rollover on the foreign currency loans and on any domestic facilities that Mr Harrison's company had. Mr Watson said that if such interest payments could not be met then a situation of default in those loans would occur and the Bank would be required to act in accordance with its securities to protect the position of the Bank. On the occasions when Mr Watson informed him of these matters, Mr Harrison would always assure Mr Watson that he was doing his utmost to ensure that interest would always be available at each rollover.

Late 1987 to early 1988 - Emibarb begins to divest assets

153    By late 1987 to early 1988, Mr Harrison and Emibarb had begun to divest assets. At about the same time, Mr Harrison sold his interest in the legal partnership Harrison and Biddell. Mr Cameron was used by Mr Harrison as the Real Estate Agent in respect of his programme of asset sales during 1988 and 1989. [Transcript page 1262] Mr Harrison told Mr Cameron that "he had to sell assets". [Transcript page 1262] From time to time Mr Harrison informed Mr Cameron that he was "selling something to pay off . . . the bank". [Transcript page 1262]

October 1987

154    In October 1987, Mr Skelcher, an architect, was introduced by Mr Cameron to the Mary Street property with a view to developing the property jointly with Mr Cameron. Mr Skelcher was then carrying out a feasibility study at the site for this purpose.

Initial Meeting with Mr Cameron in relation to Mary Street

155    The events with which these proceedings are principally concerned commence with an initial meeting which Mrs Schipp had with Mr Cameron in approximately late October or early November 1987. On this occasion, she attended at the offices of Don Cameron Real Estate and had a conversation with Mr Cameron in which she said that she had approximately $150,000 to invest and wanted to find a unit and would like Mr Cameron to help her find something. Mr Cameron said that they could probably invest in something where they could both make some money. 156    Mr Cameron said that there were a couple of properties. He said that one was a property at Thirroul and that they could both make some money from the property. He said that the property was right on the beach and was then a house divided into three flats. He said that there were fabulous prospects for the development of three townhouses and that the house was up for sale at $120,000 so that she should be able to afford it.

Initial Visit to Mary Street

157    Shortly after this conversation, Mrs Schipp and Mr Cameron visited some properties including the beach house at 16 Mary Street, Thirroul. On this occasion, or soon thereafter, Mr Cameron and Mrs Schipp had a conversation in which Mr Cameron said that Mrs Schipp could buy the land and he could develop it. He said that they could put up an up-market building on the land with three townhouses which they could strata title and then sell and make some money. Mrs Schipp responded by saying that the property was in a great position so that it should have a lot of potential.

6 November 1987 - Payment of Deposit

158    At about the same time, Mrs Schipp paid a $1,000 deposit at the Thirroul office of Don Cameron Real Estate towards purchasing the land at the asking price of $120,000. The deposit slip was filled out 'Received from D.J. Schipp of C/- 39 Beatson Street, Wollongong'. This was not Mrs Schipp's address. It was the address of Mr Skelcher, architect, who had previously been a proposed joint venturer with Mr Cameron in relation to the Mary Street property. By late October/early November 1987, Mr Skelcher had decided that he no longer wished to be involved in any development of the Mary Street property. 159    Mr Cameron was unable to provide any reasonable explanation as to how it had come about that Mrs Schipp's personal address had not been placed on the deposit slip or on later conveyancing documents such as the Transfer of the Mary Street property or the Contract for Sale of the property. His evidence provided numerous contradictions regarding the issue of who provided the information to Mr Potter that Mrs Schipp's address was 39 Beatson Street. It was put to Mr Cameron that his profit sharing arrangements with Mr Potter, meant that Mr Cameron was anxious to avoid the vendor who had retained the franchisee as selling agent, from having any opportunity of learning that Mr Cameron was involved as a co-purchaser. 160    Mr Cameron conceded that had he turned his mind to the matter, he would have appreciated that his involvement as a person sharing in Mr Potter's commission, should have been disclosed to the vendor, Mr Solano. This fact was not disclosed to Mr Solano. 161    I do not accept that at the time Mr Cameron did not have this conflict of interest in mind. 162    I find that Mr Cameron was so anxious that the vendor not learn that Mr Cameron was a part-buyer, that he ensured that the deposit slip did not record Mrs Schipp's true address and ensured that Mrs Schipp's true address was not disclosed on the contract for sale or on the sale's advice note notice. I find that Mr Cameron was concerned at the possibility that, in the course of the conveyancing transaction, the vendor might, if he knew of Mrs Schipp's true address, have occasion, either personally or through his solicitors, to communicate with her and then learn of Mr Cameron's secret which was that he was to derive, as I find he was to and did, a part-commission from a transaction where he was in fact one of the purchasers.

Introduction to Mr Harrison

163    Shortly after Mrs Schipp and Mr Cameron's first visit to the Mary Street property and payment of the deposit, that is to say within a week or so of the initial inspection and payment of the deposit, Mr Cameron telephoned Mrs Schipp and said that he would pick her up in his car and they could have another look at the land. Mr Cameron picked Mrs Schipp up. Mr Harrison was in the car. Mr Harrison was introduced to her in the words: "This is George Harrison. He's a solicitor". Prior to the time when she met him, Mrs Schipp did not even know that Mr Harrison existed. Mrs Schipp had never heard of Mr Harrison in relation to this venture. 164    During the next few hours conversations took place between Mr Cameron, Mrs Schipp and Mr Harrison. Mr Cameron said that it was possible to fit three townhouses on the site and that one would have to have garage facilities underneath. He said that it would have to be an upmarket development with a "top finish" inside and out. 165    Mrs Schipp said that she did not know anything about building and did not want any more involvement beyond buying the property. She said that she did not need any added stress or worry at the time. 166    Mr Cameron said that Mrs Schipp would not have to have any involvement beyond buying the property, as "[Mr Harrison's and Mr Cameron's] role would be as project managers so that [they] would organise the development of the units and then, once the units [were] developed and sold, [they] would share in the profits one-third each". [Paragraph13 Affidavit of Mrs Schipp dated 10-11-92, emphasis added] Mr Cameron said that they would have to get some plans drawn up and that he knew a good architect named Rob Skelcher. He said that what they could do would be to sell one to two units off the plan and that this could fund the building. He said "Harrison could do the legals and so you also won't have that part of it to worry about and no added expense as he won't charge you for the legals". Mrs Schipp said that she did not have enough cash to finance any outgoings and asked what they would do about this. 167    Mr Cameron said that he and Mr Harrison would arrange all of these matters and that all they needed Mrs Schipp to do was to buy the property up front.

Mr Harrison Interrogates Mrs Schipp as to her circumstances

168    After Mrs Schipp had inspected Mary Street with Mr Harrison and Mr Cameron and had the above described conversation, Mr Harrison drove her home and they had a lengthy conversation on this occasion. She told Mr Harrison about her former husband, her divorce and her distress at being separated from her children. 169    Mr Harrison wanted to know about Mrs Schipp's children and whether she had very much contact with them. She said that she hardly saw them. Mr Harrison asked if she was on her own. She said that she was on her own and was very distressed because she missed her children and was very lonely. 170    Mrs Schipp’s recollection of this event as set out in the letter, was “George was very interested in what relationship I had with my ex-husband and children and he knew by our conversation that I had no contact at all with my ex and through him little contact with my children. In fact I was very much on my own and very alone, and had had and was having a very stressful life without my children”. 171    I find that, in the course of this conversation, Mr Harrison closely examined Mrs Schipp in relation to her personal circumstances and ascertained that she had assets and funds to invest and was essentially alone and divorced and unhappy and without the protection of close family or advisers. 172    One matter which occupied some attention during the hearing, concerned Mrs Schipp's evidence that Mr Harrison had driven her home in a van. Mr Harrison denied ever having owned a light coloured van in 1988 and denied that the restaurant had owned a van with registration number OFJ 896 in 1987. Ultimately the matter was one of little significance although I formed the view that Mr Harrison's strenuous attempts to deny association at the relevant time with a van suggested that the issue tendered as to the early enquiry of Mrs Schipp’s personal circumstances was a sensitive point. Mr Harrison did not prove what he set out to establish.

Price Rise to $150,000

173    Shortly after Mrs Schipp's initial inspections of Mary Street, that is to say with Mr Cameron and later with Mr Cameron and Mr Harrison, Mr Cameron telephoned her and said that the owner had rethought his price and now wanted $150,000 for the land. Mr Cameron said that he still thought it was a good buy and that she should go ahead. 174    Mrs Schipp said that she had put a deposit for a purchase at $120,000 and so was not happy but that if Mr Cameron thought it was a good buy then she was content. 175    Mr Cameron said that he would go ahead and get all the paperwork prepared for the sale. He said that he would get back to her when the paperwork was ready and that she could then come up to his office to sign the paperwork.

Further Conversations Leading to Joint Venture Agreement

176    During the same period, Mrs Schipp had several other conversations with Mr Cameron in his office and also on the telephone in relation to the proposed development of Mary Street. They discussed several details of the proposed development. In the course of the discussions, Mr Cameron said that coloured washing machines and dryers and bidets and spa baths would be put into the bathrooms. He said that it had to be an upmarket development and that he believed that the top unit would go for at least $195,000. He said that the middle and bottom units would go for a little less as their aspects were not quite as good as the aspect of the top unit. 177    At some time on or prior to 13 February 1988, Mr Cameron and Mr Harrison said that they would pay 14% interest on the purchase price to Mrs Schipp. On 16 February 1988 Mrs Schipp paid a further deposit of $5,000 and received a refund of the initial deposit. 178    On a number of occasions Mr Cameron, while updating Mrs Schipp with details of progress, asked her whether she would consider putting her unit up as security if this was required. She replied that she would in no way consider doing this as she would never put her home at risk. 179    During meetings between Mr Cameron, Mr Harrison and Mrs Schipp prior to 25 February 1988, Mrs Schipp was advised by Mr Cameron and Mr Harrison that the arrangement was : · that Mrs Schipp was to purchase the property;
· that Mr Cameron and Mr Harrison would build [i.e. arrange for the building of] three townhouses on the property and would arrange for the selling of the townhouses;
· that the building would be financed by selling units off the plan;
· that Mr Harrison would "look after all the legal aspects";
· that Mr Cameron would arrange for the plans to be drawn up;
· that when the units had been built and were sold, Mr Cameron and Mr Harrison would each have one third of the profits;
· that Mrs Schipp would be paid by Mr Harrison and Mr Cameron 14% on the moneys she was to advance on the purchase;
· that all Mrs Schipp would have to do was to outlay the purchase moneys and expenses incidental to the purchase. 180    At some time thereafter Mr Cameron said to Mrs Schipp that Mr Harrison had drawn up a contract for the three of them. He said that she would have to sign up when she was next in the office.

25 February 1988 - Execution of Joint Venture Agreement

181    On a particular occasion, Mrs Schipp attended at Mr Cameron's office. This probably occurred on 25 February 1988. Present in the office were Mr Cameron and Mr Harrison. A type-written document was on the table. This was the document referred to during the hearing as the first Joint Venture Agreement. Mr Harrison quickly read through the document. I find that he did not give any detailed explanation as to the precise terms of the document. From time to time, he would pause and give a brief explanation of a particular section of the document. Mrs Schipp was not given a copy of the document to read before signing. After Mr Harrison had quickly read through the document, he asked Mrs Schipp to sign it. Neither Mr Cameron nor Mr Harrison suggested that Mrs Schipp seek any independent advice in relation to the agreement before signing it. Mrs Schipp did not ask for a copy or ask to take the agreement away with her because she thought that Mr Harrison was acting on behalf of herself, Mr Cameron and himself. She trusted Mr Harrison's judgment as a solicitor and relied upon his expertise in dealing with the legal aspects of their agreement. 182    The Agreement was in the following terms :

'This agreement made the 25th day of February1988.

PARTIES
1. Delcie Joan Schipp of 39 Beatson Street, Wollongong in the State of New South Wales (hereinafter called the trustee).

2. THE "PARTICIPANTS" ARE: ("the participants")
(a) Don Cameron Real Estate Pty Limited
(b) Emibarb Pty Limited
(c) Delcie Joan Schipp

RECITES
A. The participants have agreed to associate themselves in a joint venture for the purpose of acquiring a property at 16 Mary Street, Thirroul being Lot 14, D.P. 4882 being the whole of the land in Certificate of Title Volume 14620, Folio 113 for the purpose of building 3 units (the "project").

B. The participants have agreed with the trustee for the acquisition by the trustee of 16 Mary Street, Thirroul (the land) for the purposes of the project in its capacity as trustee.

IT IS HEREBY AGREED By and between the parties in consideration of their mutual covenants.
1. The trustee holds the said land and the full beneficial interest therein upon trust for the said "participants" absolutely and will at all times hold the said land as trustee.
2. The trustee shall at the request or direction of the participants do all such acts, deeds and things as shall be required to enable the participants to become the registered proprietors of the land.
3. The trustee shall deal with the land including but without limiting the generality hereof the execution of a transfer of the estate in the fee simple therein in favour of the participants.
4. The participants hereby covenant with each other that they will use their best endeavours to procure the purposes of the project.

5. THE TRUSTEE'S OBLIGATIONS

(a) The legal estate in the trust property shall be vested in the trustee who hereby acknowledges and declares that she holds the Trust Property as trustee for the participants.
(b) All moneys received by the trustee in the exercise and performance of the powers and duties or otherwise received on behalf of the project or the participants shall be paid into a bank account opened on behalf of the project out of which all expenses incurred in connection with the project shall be paid.

6. SHARES OF PARTICIPANTS

The participants acknowledge and agree that they are entitled to 1/3 profit and liable for 1/3 loss of the project and hereby covenant with each other:
(i) To indemnify each other for any liability in excess of the participants correct share.
(ii) To administer the trust so that the profit and/or loss is distributed or borne in those proportions.
(iii) To distribute any income derived from the project to the participants equally.

7. TRUSTEE'S POWERS
(a) To borrow any moneys required to complete the project on the security of the land.
(b) To appoint agents, solicitors, accountants or other consultants and to pay all their fees and charges.

8. Should the participants be unable to come to a unanimous agreement on any matter relating to the project the subject matter shall be referred to arbitration whose decision shall be binding and the parties shall act in accordance therewith. The arbitration shall be:
1. As to matters relating to building and the development of the land to Robin Skelcher.
2. As to legal matters to a barrister of at least five years standing at the New South Wales Bar appointed by the President for the time being of the Bar Association of New South Wales.

9. CONTRIBUTION OF FUNDS
(a) Delcie Joan Schipp shall lend the trust the full amount of the purchase price and the stamp duty and shall be paid interest on the said loan at the rate of 14% P.A. commencing from the date of exchange of contracts to the date of repayment of the loan.
(b) The balance of funds required to complete the project shall be received from the Commonwealth Bank or any other bank or Building Society as shall be agreed by the participants using the land as security.

10. PARTICIPANTS OBLIGATIONS
(a) George Andrew Harrison and Donald Ross Cameron shall be the Project Managers and shall not be paid any remuneration.
(b) The participants covenant with each other that they will execute all such further documents as are required or are necessary for effectuating the provisions of this agreement.

Signed by Delcie Joan Schipp as trustee in the presence of :

Signed for and on behalf of Don Cameron Real Estate Pty Limited by its duly appointed agent in the presence of :

Signed for and on behalf of Emibarb Pty Limited by its duly appointed agent in the presence of :'

Mrs Schipp's Beliefs as to the Transaction

183    At the time that Mrs Schipp signed the agreement and resulting from so much as Mr Harrison had explained to her as he quickly read through the agreement, Mrs Schipp believed that she was buying the property at Mary Street and that the land would be in her name and would belong to her. She understood that Mr Cameron and Mr Harrison would be project managers for the development and sale of the three units upon the property. She understood that in payment for Mr Cameron and Mr Harrison's efforts in managing and selling the development project, they would each be entitled to one-third of the profits upon the sale of the three units after the development was completed. She understood that Mr Cameron and Mr Harrison's rights to a one third share in the profits each was dependent upon and contingent upon the development and sale of the units. 184    She did not understand what the significance of a trust was. At the time she signed the Joint Venture Agreement she did not intend to sign an agreement which provided that she would hold Mary Street "upon trust" for Mr Cameron and Mr Harrison. She understood that the land was hers and that she did not have any obligation to transfer it or hold it upon trust for anyone else. She simply believed that after the development was completed and in payment for Mr Cameron and Mr Harrison's efforts as project managers in relation to the development and sale of the three units, they would be entitled to one-third each of the profits upon the sale of the three units. 185    Mrs Schipp also understood at the time she was signing the Joint Venture Agreement that Mr Cameron and Mr Harrison would pay her 14% interest on the moneys she was to advance as the purchase price of the Mary Street property and for stamp duty, as Mr Cameron and Mr Harrison were, upon completion of the development, to share equally in the profits on the investment without making any capital contribution. 186    Mrs Schipp, at the time she signed the Joint Venture Agreement, was totally unaware that the agreement provided for the balance of funds required to complete the project to be funded by an outside borrowing from a bank or building society to be agreed upon by herself, Mr Cameron and Mr Harrison, using the land as security - see Clause 9(b). She did not agree to use the land as security for the balance of funds required to complete the project. No one had said to her that the land would be required for security in this way. She had been told and believed and understood that the development of the building would be funded by the pre-sale of units off the plan. Had she been informed that funds would be required to be borrowed using the property as security and that this could involve her giving a personal guarantee, she would not have agreed to participate in the venture as she had strong views about exposing her home unit to any risk. Indeed some months later, Mrs Schipp expressly declined the suggestion that, if necessary, she put up her home unit as security for any borrowings upon the basis that the unit was all she had and that she would never consider risking it.

Mrs Schipp First Receives a copy of the Joint Venture Agreement

187    Several months after the Joint Venture Agreement was signed, Mrs Schipp asked Mr Cameron for some verification of her having purchased Mary Street and Mr Cameron then gave her a copy of the Joint Venture Agreement. She did not read the Joint Venture Agreement until about December 1988.

"Mum's the Word"

188    Mr David Daly of the firm Gole and Daly, accountants, was Mrs Schipp's accountant in February 1988. 189    On a number of occasions in and around 25 February 1988, Mr Cameron said to Mrs Schipp that he did not want anyone knowing his business because too many people in the town liked to know his business. He said: "Mum's the word. I don't want you to talk to Daly about this deal because he is an old woman and tells everybody everything". 190    Mr Cameron reminded Mrs Schipp repeatedly, almost every time that he would speak with her about the Mary Street property, that he did not want anyone knowing his business and she was not to talk about the matter.

26 February 1988

191    On 26 February 1988 Mr Skelcher prepared Sheet No. 3 of plans for erection of three units, each with three bedrooms, on the Mary Street property.

1 March 1988

192    A development Application enclosing the 26 February 1988 plan was lodged in respect of Mary Street on 1 March 1988.

3 March 1988 and 17 March 1988

193    Meetings were held of the Council’s Architectural Advisory Panel with Mr Skelcher. Matters raised with him by the Advisory Panel included landscaping and balconies' encroachment.

On 16 March 1988 - Mr Harrison attends a meeting with Bank Officers

194    The whole of the financial position of the companies associated with Mr Harrison including Emibarb, Cafzan Pty Limited (then in liquidation) and Pyengala Pty Limited was discussed on this occasion. In the bank manager's diary note of this conference dated 21 March 1988, Mr West wrote: "We have stressed on a number of occasions CBA would not be receptive to further borrowings at this point in time."

Exchange and Conveyance of Mary Street

195 The agreement for sale of the land in relation to Mary Street was signed by Mrs Schipp in late February and was exchanged on 26 February 1988. The conveyance was settled on 3 May 1988. 196 A substantial issue of fact arose in relation to how it came about that the date shown upon the counterpart signed by the vendor of the agreement for the sale of the Mary Street property appeared as 17 March 1988. The issue gives rise to an important adverse finding in relation to Mr Harrison's credit and in relation to the significance which the Court can place on Mr Harrison's diary note entries. 197 It is quite plain that the contracts were exchanged on 26 February 1988. There can be no doubt about this matter. A letter from the vendor's solicitors to the vendor, dated 6 May 1988, confirms that contracts were exchanged on 26 February 1988. A letter from the vendor to the vendor's solicitor, dated 26 April 1988, confirms that according to the vendor's records, contracts were exchanged on 26 February 1988. Mr Harrison conceded in evidence that the exchange of contracts had occurred on 26 February 1988. Mr Cameron was the one who actually exchanged contracts and he did so at Mr Harrison's invitation. Mr Cameron's evidence was that the date of exchange was 26 February 1988. 198 Mr Cameron in paragraphs 18(a) and 18(e) of his first affidavit deposed that the contracts were exchanged on 17 March 1988. 199 Mr Harrison deposed in paragraph 34 of his first affidavit that contracts were not exchanged until 17 March 1988. Mr Harrison repeated in paragraph 61 of his first affidavit that contracts were exchanged on 17 March 1988. 200 Exhibit D3U is the counterpart of the contract signed by the vendor. It bears the date 17 March 1988. 201 Mr Harrison's 1988 diary includes an entry in his own handwriting on 17 March 1988 which reads 'Exchange contracts re Mary Street'. 202 Stamp duty was paid on the contract at about the time when the Mary Street transaction was settled, that is to say early May 1988. 203 Part of Exhibit D3T is a form of lodgment of documents, including the contract for sale, at the stamp duties office dated 6 May 1988. 204 It was put to Mr Harrison that the contract had been incorrectly dated to avoid payment of penalty stamp duty. It was put to Mr Harrison that it was unnecessary for him to have in his diary a note of the exchange of contracts but that he had put this note into his diary against the event that there might have been an enquiry from the Stamp Duties Office as to the date of exchange. 205 Mr Harrison swore that he had first ascertained that the date on the front of the contract [Exhibit D3U] was incorrect when he was involved with the Solano proceedings. Mr Harrison gave evidence that he gave the file to Mr Mathey on or after 25 March 1988 when he negotiated a fee with Mr Mathey who told Mr Harrison that he would complete the conveyancing transaction for $300. He said that he had asked Mr Mathey where the date had come from and that Mr Mathey had said to Mr Harrison: "I was out of time and I put a date on the contract. I'm going to be reprimanded for it. I'll take the consequences." Mr Harrison was unable to explain a number of aspects of these incidents. He had personally been negotiating with the vendor's solicitor when the vendor had threatened to rescind. 206 Mr Mathey was called to respond to Mr Harrison's grave allegation as to his conduct. Mr Mathey denied informing Mr Harrison that he had been out of time stamping the contract and had post-dated it so that a fine would not be incurred. I accept Mr Mathey's evidence as reliable and reject Mr Harrison's evidence on this issue. 207 Mr Mathey's evidence was that in about April 1988 Mr Harrison gave him a number of files including the purchase by Schipp file and that Mr Harrison had said to him: "This is a file that must be settled quickly and we only have a very short time to do so"; and that Mr Harrison had asked him to do whatever was necessary to get the matter settled, which included doing the enquiries, preparing the transfer, submitting it to the other solicitor and arranging settlement. Mr Mathey denied that he had told Mr Harrison that he wished to be paid for whatever work he did and said that he had not actually charged any costs for the Schipp but had only covered his disbursements. 208 Mr Mathey was unable to recall whether he had been told of what date to place upon the contract or had estimated the date from the file. On being shown the file whilst in evidence, he was unable to locate any document which, had he seen it in 1988, would have been the source of the information that the date of the exchange was 17 March 1988. 209 Naturally this evidence assumed, possibly incorrectly, that no documents had been removed from the file which could have been the source of the information. 210 It seems to me highly likely and I find that Mr Harrison told Mr Mathey to put the date 17 March 1988 on the contract and that Mr Harrison placed the incorrect diary note into his diary against the event that there might have been an enquiry from the Stamp Duties Office about the matter. Mr Harrison's false evidence that Mr Mathey had later conceded that he had been out of time and had dated the contract is strongly corroborative of an intent to cast the blame upon Mr Mathey to avoid the obvious inference that Mr Harrison was the source of the incorrect date. 211 As Mr Harrison was content to insert an incorrect diary note to give support in the event of a Stamp Duty Office enquiry, I am of the view that his diary notes generally cannot be relied upon as correct.

Rental from Mary Street

212    Before settlement of the Mary Street property transaction, Mr Cameron had told Mrs Schipp what rent was payable in respect of the two existing units. In early February 1988, she received a letter from Mr Cameron, giving information as to the rent then being paid on the two then units situated at the property. Soon after the settlement, she realised that she had not received any rents in respect of Mary Street. She telephoned Mr Cameron and said that she needed the rents from the flats to live on as she did not earn very much money from teaching music. Mr Cameron asked her whether she earned approximately $20,000 a year. Mrs Schipp said that she earned much less and in fact did not know exactly how much, as it varied. Mr Cameron suggested that she collect the cheques for the rent from his office. 213    Mrs Schipp later enquired about the rent and was informed by Mr Cameron that she could have the rent moneys which she then obtained from Don Cameron Real Estate and cashed with Mr Harrison by endorsing the cheques "please pay Lagoon Restaurant". 214    An allegation was made that Mrs Schipp sought to disguise her handwriting so as to make it difficult to identify her as having cashed the cheques. The handwriting does appear unusual. I do not accept that Mrs Schipp’s credit as a witness of truth is affected by this matter. 215    Mr Harrison deposed that "it was always a clear arrangement between Mrs Schipp, Mr Cameron, and [him] that all rent collected [was] to be paid to [Mrs Schipp] to offset interest which Mr Cameron and [he] were liable to pay to Mrs Schipp . . . ". This is consistent with the conversations and would be reasonable to imply as a term of the oral agreement.

Telephone call from Watson to Harrison of 20 March 1988

216    On 20 March 1988, Mr Harrison updated the financial position in a conversation with Mr Watson of the Bank. He informed Mr Watson that the Kembla Street property had had the Development Application passed by Council and plans approved. He indicated that a developer had offered $550,000 for the site and that he, Mr Harrison, was debating whether he should join in the development of the site.

22 March 1988

217    Mr Potter, in fact, exercised his right to give notice terminating the Licensee Manager Agreement by letter dated 22 March 1988 giving one week's notice of intention to terminate the Licensee Management arrangement [see page 107A of Exhibit D3X]. 218    Notwithstanding that Mr Potter had terminated the Licensee Manager Agreement, Mr Potter continued to work for Don Cameron Real Estate as an employee at the Don Cameron Real Estate Thirroul office.

23 March 1988

219    On this date, Mr Skelcher drew up a revised plan - sheet 4, save for an alteration in the number of bedrooms for the ground floor unit, the plan was not materially different in any significant way to the 26 February 1988 plan. The revised plan was submitted to the Council on 13 April 1988.

Post-settlement Discussions

220    After settlement of the purchase on 3 May 1988, Mrs Schipp had several discussions with Mr Cameron in relation to the plans for the development of the three townhouses on the property. She was aware that engineers and architects had been retained in respect of development plans as from time to time she was given accounts by Mr Cameron and asked to pay them. She was, however, at no stage involved in preparation of the Development Application or Building Application in respect of Mary Street.

6 May 1988

221    On 6 May 1988, the Council’s Architectural Advisory Panel met and determined to request the architect to soften the shape and external treatment of the proposed building to blend with existing residential development. Suggestions were made in this respect.

17 May 1988

222    A further revision (undated) was made to the plan and was on 17 May 1988 resubmitted to the Council. The revised plan took account of the Council’s requests. Significantly, as Mr Skelcher stated in cross examination, to the extent that the revised plan differed so far as room size was concerned, from the plan dated 23 March, those differences did not reduce, but marginally increased room sizes.

1 July 1988

223    On 1 July 1988, the Council granted Development Consent for the Mary Street Development.

Shortly before 4 July 1988 Mr Harrison and his financial controller are interviewed by the Bank

224    Shortly prior to 4 July 1988, Mr Harrison and his financial controller were interviewed by the Bank. Discussions took place in relation to Mr Harrison saying that he would be prepared to give a charge over his family trust on the assumption that the bank would agree to increase facilities to Emibarb and to encompass all outstanding debts and a particular proposal to this effect was put to the Bank. Detail of that proposal was not tendered in evidence. However, Mr Harrison did state to the bank that he would not accept responsibility for debts above $615,000 on account of Cafzan. 225    Discussion took place in relation to the profitability and repayment capacity of the Lagoon Restaurant. 226    The bank manager's notes in relation to discussions to do with profitability and repayment capacity include the following :

"The Group's only realistic alternative to extricating itself from the present position appears to be the short-term sale of substantial freehold assets to reduce its total borrowing commitments."
"Harrison has admitted that he agrees with this approach."

18 July 1988

227    By 18 July 1988, the application for additional accommodation by Emibarb had been considered by the Bank which had determined to decline the application. 228    Following a telephone conversation between Mr Harrison and a bank officer in approximately July 1988, the following note appeared in the Bank. These are contemporaneous documents.

"Harrison's long term goal is to reduce his end debt down by trading. Within the next six months Harrison intends to gear his business up so he can afford to take extra risks. I pointed out to him again that profits through forward dealings are possible but unlikely and he should concentrate on protecting the Australian dollar debt as it stands . . . and take benefit from any improvement in the Aussie throughout the term of his loan."

229    On the rollover date, 29 July 1988, the amount of $US1,283,874.97 was rolled over for a period of 6 months, the Australian dollar equivalent of that amount being $1,594.875.74. Interest and Australian withholding tax then amounted to $83,582.22.

19 July 1988

230    Mrs Schipp on 19 July 1988 signed an exclusive Selling Agency Agreement giving to Don Cameron Real Estate exclusive selling rights in respect of 3 home units at Mary Street.

Mrs Schipp refuses to put up her own unit as security

231    At some time in about mid-1988, Mr Cameron spoke to Mrs Schipp and asked whether, if necessary, she could put her unit up as security. Mrs Schipp said that there was no way in which she would put her unit up as security for any borrowings as the unit was all that she had and she would never consider risking it.

7 September 1988

232    On 7 September 1988, Mr Skelcher wrote to Mr Cameron confirming instructions to proceed with the Mary Street Building Application.

8 September 1988

233    On 8 September 1988, Mr Skelcher wrote to Mr Cameron confirming instructions to proceed with the Kembla Street Building Application. In terms of carrying out work for preparation of applications to Council Mr Skelcher had been dealing in parallel with the two projects.

30 June 1988 to August 1988

234    During this period, Mr Cameron sought to market the proposed units.

22 July 1988

235    On 22 July 1988, Mr Cameron responded in writing to an enquiry by a prospective purchaser. He indicated that the asking price for the property in its undeveloped state was $250,000.

23 or 24 August 1988

236    On 23 or 24 August 1988, Mr Cameron first made a preliminary approach to a financial institution about construction finance for Mary Street. He approached Advance Commercial Finance Limited.

8 September 1988

237    By the 8 September 1988, Mr Cameron and Mr Harrison had determined to proceed with the building application for the Kembla Street property.

Cameron letter to Commonwealth Bank of 9 September 1988

238    On 9 September 1988, Mr Cameron wrote to the Commonwealth Bank submitting a proposal for finance for development of the Kembla Street property. This letter was written wholly without Mrs Schipp's knowledge and had not been discussed with her.

At the time that the letter was written, Mrs Schipp had not indicated any interest in Kembla Street.

239    In this letter Mr Cameron advised, inter alia:

'The partnership is the owner of a property at 16 Mary Street. Arrangements are being made to sell the property at an auction on 15 October 1988. It is expected that a sale price of $250,000 to $270,000 would be achieved at the auction. The proceeds of this sale would be used to reduce the borrowings on 55-57 Kembla Street.'

September 1988 - Mrs Schipp is pressured to agree to sell

240    In September 1988, Mr Cameron first told Mrs Schipp that the units would have to be smaller than he had expected and that there was some difficulty with the design of balconies.

Mr Cameron’s Evidence

241    According to Mr Cameron, it was many months earlier than this when he learned from Mr Harrison on 25 March 1988, that Mrs Schipp wanted to urgently see both of them, and the three then met during the afternoon on 25 March 1988. Mr Cameron's evidence was that Mrs Schipp said at this time that she wanted to get out of the agreement because she was frightened about the price increase and about the market. She said that she had to spend some money on her unit and could not afford to risk her capital unless Mr Cameron and Mr Harrison could guarantee that she was not going to lose her money. 242    Mr Cameron's evidence was that he said that he and Mr Harrison could not guarantee Mrs Schipp a profit and that there was a risk factor in all developments. Mr Cameron's evidence was that he said to Mrs Schipp that she should know that if she pulled out of the joint venture and they made a profit then Mr Harrison and he would give Mrs Schipp a gratuitous payment out of the profits. This way Mrs Schipp would not be risking anything and would get back her money plus interest whether or not there was a profit. 243    According to Mr Cameron, Mrs Schipp said that she felt better now that Mr Cameron and Mr Harrison had agreed to let her out of the agreement, as she was very distressed. She said that she was happy to leave the money in there that she had paid up to that point in time and would lend the rest of the money to Mr Cameron and Mr Harrison at the same interest but did not want any losses. 244    Mr Cameron's evidence was that amendments were made on a word processor to the form of the First Joint Venture Agreement previously signed and a copy of the new Joint Venture Agreement ("the Second Joint Venture Agreement") was given to Mr Harrison and Mrs Schipp and Mr Cameron to read. 245    The Second Joint Venture Agreement was in the following terms :

'This agreement made the 25th day of March, 1988.
PARTIES
1. Delcie Joan Schipp C/- 39 Beatson Street, Wollongong in the State of New South Wales (hereinafter called the trustee).

2. The "PARTICIPANTS" ARE: ("the participants")

(a) Don Cameron Real Estate Pty Limited as to one third Share. Registered office at 73 Church Street, Wollongong, 2500.
(b) Emibarb Pty Limited as to the remaining two thirds. Registered office at 34 Eastern Avenue, Mangerton, 2500.

RECITES

A. The participants have agreed to associate themselves in a joint venture for the purpose of acquiring a property at 16 Mary Street, Thirroul being Lot 14, D.P. 4882 being the whole of the land in Certificate of Title Volume 14620, Folio 113 for the purpose of building 3 units (the "PROJECT").

B. The participants have agreed with the trustee for the acquisition by the trustee of 16 Mary Street, Thirroul (the land) for the purpose of the project in its capacity as trustee.

IT IS HEREBY AGREED By and between the parties in consideration of their mutual covenants.
1. The trustee holds the said land and the full beneficial interest therein upon trust for the said "participants" absolutely and will at all times hold the said land as trustee.
2. The trustee shall at the request or direction of the participants do all such acts, deeds and things as shall be required to enable the participants to become the registered proprietors of the land.
3. The trustee shall deal with the land including but without limiting the generality hereof the execution of a transfer of the estate in the fee simple therein in favour of the participants.
4. The participants hereby covenant with each other that they will use their best endeavours to procure the purpose of the project.

5. THE TRUSTEE'S OBLIGATIONS
(a) The legal estate in the trust property shall be vested in the trustee who hereby acknowledges and declares that she holds the Trust Property as trustee for the participants.
(b) All moneys received by the trustee in the exercise and performance of the powers and duties or otherwise received on behalf of the project or the participants shall be paid into a bank account opened on behalf of the project out of which all expenses incurred in connection with the project shall be paid.

6. SHARES OF PARTICIPANTS

The participants acknowledge and agree that they are entitled to profit and liable for the loss in the Shares shown above of the project and hereby covenant with each other:
(a) To indemnify each other for any liability in excess of the participants correct share.
(b) To administer the trust so that the profit and/or loss is distributed or borne in those proportions.
(c) To distribute any income derived from the project to the participants in the proportions mentioned above.

7. TRUSTEE'S POWERS

(a) To borrow any moneys required to complete the project on the security of the land.
(b) To appoint agents, solicitors, accountants or other consultants and to pay all their fees and charges.

8. Should the participants be unable to come to a unanimous agreement on any matter relating to the project the subject matter shall be referred to arbitration whose decision shall be binding and the parties shall act in accordance therewith. The arbitration shall be :
1. As to matters relating to building and the development of the land to Robin Skelcher.
2. As to legal matters to a barrister of at least five years standing at the New South Wales Bar appointed by the President for the time being of the Bar Association of New South Wales.


9. CONTRIBUTION OF FUNDS

(a) Delcie Joan Schipp shall lend the trust the full amount of purchase price and the stamp duty and other amounts payable in respect of the project.
(b) The participants shall pay interest at the rate of 14% per annum on all amounts paid calculated from the date when the amounts where contributed by the Trustee.

Signed by Delcie Joan Schipp as trustee in the presence of :

Signed for and on behalf of Don Cameron Real Estate Pty Limited by its duly appointed agent in the presence of :

Signed for and on behalf of Emibarb Pty Limited by its duly appointed agent in the presence of :'

246    The significant differences between the two Joint Venture Agreements are :

Joint Venture Agreement 1	Joint Venture Agreement 2
Trustee [Cl.1]	Mrs Schipp to hold land upon trust for the three participants	Mrs Schipp to hold land upon trust for the two participants
Participants [Recital 2]	Don Cameron Real Estate P/L Emibarb Mrs Schipp	Don Cameron Real Estate as to a one third share Emibarb as to a two thirds share
Shares of Participants [Cl.6]	The three participants entitled to one third profit and liable for one third loss. Distribution of income to participants equally.	The two participants entitled to profit and liable for loss as to Don Cameron Real Estate - one third, and as to Emibarb - two thirds Distribution of income to participants in same one third/ two third ratio.
Contribution of Funds [Cl.9(a)]	Mrs Schipp to lend trust full amount of purchase price and stamp duty. Mrs Schipp to be paid interest on loan at 14% p.a. commencing on exchange of contracts to date of loan repayment.	Mrs Schipp to lend trust full amount of purchase price and stamp duty. Mrs Schipp to also lend trust any other amounts payable in respect of the project No reference to security being provided to Mrs Schipp.
[Cl.9(b)]	Balance of funds required to complete project to be received from Commonwealth Bank or any other bank or building society as shall be agreed by participants using land as security.	No reference to borrowings outside of Mrs Schipp's loan. Participants to pay interest at 14% p.a. on all amounts from date when amounts contributed by Mrs Schipp.
Participants' obligations [Cl.10(a)]	Harrison and Cameron to be Project Managers without being paid remuneration.	No provision as to this matter.
[Cl.10(b)]	The three participants covenant to execute such further documents as required/necessary for effectuating provisions of Agreement.	No provision as to this matter.

247    The above table makes clear that :

(a) Mrs Schipp was not, by the terms of the Second Joint Venture Agreement, to have any equity interest whatever as a participant in the project. Her status was as trustee.
(b) Mrs Schipp was by the terms of the Second Joint Venture Agreement, to be obliged to lend the trust all amounts which may be payable in respect of the project, that is to say, not only the purchase price and stamp duty. No provision was made for Mrs Schipp to take the land as security for such loans. No provision of any other form of security to support loans by Mrs Schipp was made. No provision was made for outside finance.
(c) No provision whatever was made by the terms of the Second Joint Venture Agreement for Mr Harrison and Mr Cameron to be project managers.

248    Mr Cameron's evidence was that Mr Harrison said to Mrs Schipp that because this affected the whole of their relationship, it was very important that she get further advice and come back and that they would sign the agreement on the following day. 249    Mr Cameron's evidence was that Mrs Schipp appeared to read the agreement and said:

"This agreement lets me out of the joint venture and guarantees me my money plus interest and that's all I want. I would like to help with the development."

250    Mr Cameron's evidence was that at the same time, Mrs Schipp, he and Mr Harrison signed the agreement and that a Mr Chapman witnessed their signatures. 251    Mr Cameron's evidence was that he then said to Mrs Schipp:

"Don't forget we will still give you a gratuitous payment if we make a profit. George and I wouldn't expect you to bear any of the losses in the future";


and that Mrs Schipp said that she was happy about this.

Mr Harrison’s Evidence

252    Mr Harrison's version of events was not dissimilar. His evidence was as follows :

"On 25 March 1988, the Plaintiff telephoned me to meet her at Mr Cameron's office. I met her at Mr Cameron's office where she told both of us :
'I want to be let out of this venture as I really don't need any added stress or worry.'


A fresh joint venture agreement was prepared at Mr Cameron's office incorporating the change. A copy was handed to the Plaintiff.

I gave the document to the Plaintiff to take it away and re-think her position after getting the advice of her Solicitor. The Plaintiff said :

'I told you both that I don't really want any added stress or worry and I am told that it is really risky to do such a development at this time. The price increase over a short period of time is reflective of an uncertain future market. I want to sign it now and get it over and done with. In any event, you are not in any way inconvenienced because I am still going to lend you the money and you will continue to have my input in designing the units.'

Mr Cameron said :

'Del, if we make a profit on this deal, George and I will give you your one-third share of the profits whether or not you are involved although we wouldn't expect you to meet any of the losses if we incur any.'

I said :

'I will instruct Frank Mathey, solicitor, and if you want anything done you should contact him with regards to the matter.'


Both the Plaintiff and Mr Cameron were happy with my suggestion. They acknowledged my intention."

Findings

253    I find that no such conversation took place and reject the evidence of Mr Cameron and Mr Harrison which I find to be a total fabrication. I find that the Second Joint Venture Agreement was prepared and executed well after completion of the sale of Mary Street. Mr Baird gave evidence which I accept that he had not been shown the Second Joint Venture Agreement until 1991. This matter of the circumstances in which the Second Joint Venture Agreement was prepared is dealt with later in the judgment. 254    Mrs Schipp never met Mr Frank Mathey, solicitor, and gave him no instructions in relation to the conveyance and never spoke to him. She directed any enquiries she had in relation to the Mary Street conveyance to Mr Harrison or to Mr Cameron. 255    There never was an occasion when Mrs Schipp approached Mr Cameron and Mr Harrison seeking to be let out of the Mary Street joint venture or indicating that she could not afford to risk her capital unless Mr Cameron and Mr Harrison could guarantee that she was not going to lose her money. She was not at this stage asked to agree to the so called 'gratuitous payment' arrangement. 256    In fact, what occurred was that at some stage shortly before 12 September 1988, Mr Cameron said to Mrs Schipp that the units were going to be too small, that there was some difficulty with the design of balconies and that the units would never be able to be sold for the price they had been asking and that he thought the land should be auctioned. 257    Mrs Schipp said that she really did not want to auction the land and Mr Cameron repeated that the units were too small and, in fact, smaller than Mrs Schipp's unit. In cross-examination, Mr Cameron admitted that he knew the size of the units from early May 1988 [Transcript page 1247] and that at that size they were attracting attention in the market [Transcript page 1248]. 258    Shortly after this conversation, Mr Cameron telephoned Mrs Schipp and said that there was a contract drawn up in relation to the auction of the site and that Mr Harrison had the contract in Mr Cameron's office to sign. Mrs Schipp reminded Mr Cameron that she had already told him she did not want to sell the land and she said she was coming around to see Mr Cameron about the matter.

The Children's Meeting

259    Following this conversation, Mrs Schipp went to Mr Cameron's office where there were present, in addition to Mr Cameron, Mr Harrison and some of Mr Harrison's children. This was a day when Mrs Schipp had returned from teaching music in Sydney from 8.30am until the late afternoon. The meeting started at approximately 7.30pm and continued until about 10.30pm. Mrs Schipp, who was very tired and wished to voice her strong objection to the sale of Mary Street, listened while Mr Cameron talked about the need to sell the units. Mr Cameron repeated that the units were really too small. He said that they could not sell the units off the plan. 260    The date of the meeting is able to be fixed as I accept Mrs Schipp's evidence that at the end of the meeting she signed the exclusive selling agency agreement. It is dated 12 September 1988. 261    Mrs Schipp said that she could not believe that the project would not work. She said that the land was right next to the beach and she thought that it was just perfect. 262    Mr Cameron said that it was not possible to make the development viable. He said that he had a contract in relation to the auction of the site which he wanted her to look at and wanted her to sign. She did not sign the contract but put it back on the table and said that she was not signing it. 263    Mr Cameron and Mr Harrison said that the units were really too small and that they would not be able to get the money for them that they had expected. 264    Mr Cameron said that if the price of the units was reduced the costs would be too great given the fit-out expenses. He said that they had had to scale down the balconies for the Council and that the units just would not have the same prestige as they previously would have had. He said that he and Mr Harrison thought that one should sell them as a concept and would do well out of it anyway. He said that the time was right just then to auction the property. 265    At about this point in the meeting, Mr Harrison said that he had to take his children home and left in order to do that. While he was away, Mr Cameron said to Mrs Schipp that Mr Harrison really needed the money for the bank. Mrs Schipp did not take much notice of this comment at the time but since then has come to realise that Mr Harrison had a foreign currency loan at the time with the Commonwealth Bank of Australia. In fact, the principal reason why Mr Cameron and Mr Harrison pressured Mrs Schipp to agree to a sale was Mr Harrison’s pressing financial difficulties at the time. 266    After the return of Mr Harrison to the meeting, the discussion continued when Mr Cameron said that it was a great time to auction the property. He said that the development idea would not work any longer and was too expensive and that Mrs Schipp really had no option but to sell. 267    Mrs Schipp was very tired after this very lengthy session and by about 10.30pm she said

"Well all right if you really think that this is the best thing - go ahead."

268    Mrs Schipp then signed a handwritten note giving Mr Potter "permission to sell my property at 16 Mary Street and appointing Mr Harrison as my appointee", as well as the exclusive selling agency agreement dated 12 September 1988 giving exclusive selling rights over the property to Don Cameron Real Estate. At the time of signing the documents Mrs Schipp was not aware of what Mr Cameron or Mr Harrison would be entitled to receive under their arrangements. 269    Before the auction of Mary Street, Mrs Schipp had had no discussions with Mr Cameron nor Mr Harrison regarding what they would be paid, if anything, in relation to the Mary Street joint venture which was not to proceed into a development.

26 September 1988

270    A bank manager's diary note dated 26 September 1988, in relation to Mr Harrison, Mr Cameron and Mrs Schipp reads as follows :

"The above applicants have formed a partnership with the intention of developing a commercial site located in Kembla Street . . . ".

271    This information could only have been communicated to the bank by Mr Harrison and/or Mr Cameron as Mrs Schipp had not, as I find, communicated with the bank at this time. The information was incorrect. No such partnership had yet been formed. Mrs Schipp had not yet been involved in the making of any decision at all with respect to developing the Kembla Street property. The significance of the bank diary note is to show, as I find, that as early as 26 September 1988, Mr Cameron and Mr Harrison intended that all or a substantial portion of the moneys which had been invested to that point in time in Mary Street would be invested in the Kembla Street property.

Early October 1988

272    Shortly before 4 October 1988 the Commonwealth Bank received from Mr Harrison a copy of the First Joint Venture Agreement. Mr Scotland of the Commonwealth Bank gave evidence that he had never seen the Second Joint Venture Agreement. 273    In view of Mr Harrison’s financial situation and the fact that the Second Joint Venture Agreement ex facie purported to give him an entitlement to two-thirds of the profits of the Mary Street sale, it is unlikely in the extreme, that had the Second Joint Venture Agreement been in existence as at early October 1988, Mr Harrison would not have forwarded it to the Bank. 274    This factor supports the inference which I draw that the Second Joint Venture Agreement was prepared and executed at a later date. This matter is dealt with later in the judgment.

4 October 1988 - Commonwealth Bank letter

275    On 4 October 1988, the Commonwealth Bank wrote to Messrs Cameron and Harrison advising that it was unable to give finance for the Kembla Street development. The Commonwealth Bank indicated that it would be prepared, however, to give further consideration to the proposal on the basis of being provided with a number of materials including, relevantly :

(a) detailed plans and specifications for the project incorporating Council approval together with firm tender prices for construction; and
(b) 'documentary evidence as to full pre-leasing of the complex being arranged at the rental levels detailed in your submission'.

15 October 1988 - Mary Street auction

276    On 15 October 1988, the Mary Street property was sold at the auction for $317,000. The vendor's solicitors are described in the contract as 'self'.

17 October 1988 - Sales Advice Note

277    The sales advice note prepared after the auction of the Mary Street property records the vendor's solicitor as '- . . . refer to Mr G. Harrison'. 278    On 17 October 1988, a letter was written by Mr Harrison to the purchaser's solicitors in relation to the Mary Street sale. In this letter, Mr Harrison said: 'I write to inform you that I will be acting on behalf of the vendor Mrs Schipp in the abovementioned sale'.

Between 15 October 1988 and early December 1988 - Tax Problem Discussion

279    At some time between 15 October 1988 and early December 1988, Mr Cameron and Mr Harrison had a discussion with Mrs Schipp in which they informed her that because Mary Street had been sold within 12 months of its acquisition, she now had a tax problem. They informed her that they did not have a tax problem as they had their own businesses and were able to take their profits in through their businesses and write off any tax in that way. They said to her that they were able to help her with her tax problem and could take her profit in through their businesses and in that way help her with her tax problem. Mrs Schipp was stunned at this news of a tax problem. She was not given any detail of precisely what legislation posed this tax problem for her. Her lack of understanding as to her legal position in the events which had happened coupled with the blithe assumption and statement by Mr Cameron and Mr Harrison that they had profits through the dealing, led Mrs Schipp to not question why it was that Mr Cameron and Mr Harrison had any right to profits when the development had not proceeded. 280    At Transcript page 1796 line 36, Mr Harrison swore that he had never had a discussion with Mrs Schipp about a tax problem and that this tax problem issue was a figment of Mrs Schipp’s imagination. I reject this evidence.

October/November 1988 - Cameron advises Mrs Schipp to change her accountant and to retain Cameron's accountant

281    In about October/November 1988, Mr Cameron suggested to Mrs Schipp that she should change accountants. Up to this point in time, her accountant had been Mr Daly of Gole and Daly. Mr Cameron suggested that Mr Bourke from K.E. Downing & Co was his accountant and was very good and suggested that Mrs Schipp should meet Mr Bourke. In early January, a meeting took place with Mr Cameron, Mr Harrison, Mrs Schipp, Mr Zander and Mr Bourke, who travelled to Wollongong to attend two meetings around this time. 282    Mrs Schipp had, in fact, been thinking of changing accountants before this time because her ex-husband also used Gole and Daly and so she agreed to meet Mr Bourke in about November 1988. From early January 1989 he was retained to be her accountant and to look after her tax returns. Mr Bourke became Mr Harrison's accountant in October 1994. At the time the matter was heard, Mr Bourke remained the accountant of Mr Harrison and Mr Cameron. Mrs Schipp ceased to retain Mr Bourke in June 1993.

First Introduction to Kembla Street Property Transaction

283    There was a sharp contrast between the versions given by Mrs Schipp as to when, and in what circumstances, she first learned of and spoke to Mr Cameron and Mr Harrison in relation to the Kembla Street property on the one hand, and the versions given by Mr Cameron and Mr Harrison in relation to this question on the other hand.

Mrs Schipp's Evidence

284    In Mrs Schipp's first affidavit, she deposed that between about September and October 1988, she had a conversation with Mr Cameron in which he said that Mr Harrison had a site at the corner of Kembla and Market Streets, that he and Mr Harrison thought the site could be developed and that perhaps Mrs Schipp would like to put some money from the Mary Street property into the project. Mr Cameron had said, so Mrs Schipp deposed, that the site was a prime piece of real estate in a good part of the commercial area. 285    Mrs Schipp deposed in her first affidavit that in this conversation she had said that she really needed to think about the matter and would probably take her money out of Mary Street and put it into the bank until she found another property which she could rent out. 286    On being closely tested in cross-examination in relation to the first occasion when the Kembla Street property was discussed, Mrs Schipp placed the conversation as having occurred either on the same occasion as Mr Cameron and Mr Harrison informed her that she had a tax problem which they could help her with by taking in her profits through their businesses, or at another meeting a few days after this tax problem discussion.

Mr Cameron's Evidence

287    Mr Cameron gave a number of different versions which were inconsistent, as to when Mrs Schipp and he and Mr Harrison had resolved to go ahead with the Kembla Street development. 288    In his first affidavit, he deposed that on 12 September 1988 he had a conversation with Mrs Schipp and Mr Harrison in the course of which Mrs Schipp said that she thought it was a good idea to test the market in relation to sale of Mary Street. She said that if they could get a good price they may sell and consider developing an office block on the corner of Kembla and Market Streets, Wollongong. According to Mr Cameron, she said that she did not have any superannuation for herself, and that if they could build an office block and lease it out, this would give her a good income for her future when she stopped teaching music. According to Mr Cameron, she said that she thought he was right, and that they should write a letter to the Commonwealth Bank to enquire about a loan, and that the bank should do something for them as they all banked with the Commonwealth. According to Mr Cameron, she said that she had been involved in similar projects and thought this would be a much better development than the residential units in Mary Street. According to Mr Cameron, she said that, as he had pointed out, there was no one interested in buying the Mary Street units anyhow. According to Mr Cameron, she said that if they were anything like her former husband and she had been, they would have the building up in no time. 289    Mr Cameron repeated in his first affidavit a statement that at meetings of 9 and 12 September 1988 when, so he said, the decision to sell Mary Street in the first instance was made, and later, when Mrs Schipp attended to sign the auction agency agreement, Mrs Schipp brought up the question of developing Kembla and Market Streets. In paragraph 24(c) of Mr Cameron's first affidavit, he said that he never suggested to her that she should invest her money into Kembla and Market Streets. 290    In his first affidavit, Mr Cameron deposed that the first meeting held concerning the Kembla Street project after Mrs Schipp, so he said, had raised it on 9 September 1988, was on 8 December 1988. Mr Cameron deposed that on 8 December 1988 Mrs Schipp, himself and Mr Harrison were present and "at this point each of us had resolved to go ahead with the project". 291    In cross-examination, Mr Cameron was closely tested on this matter and then sought to suggest that on 8 December, he and Mr Harrison and Mrs Schipp had merely resolved to look at proceeding with the project, as opposed to being committed to going ahead with the project. 292    In cross-examination, Mr Cameron sought to suggest that the month of December included a number of meetings of the 7th, 8th, 10th, 20th and 28th December. He said quite clearly that on 28 December Mrs Schipp finally committed or resolved to go ahead with Mr Cameron and himself in the Kembla Street project.

Mr Harrison's Evidence

293    Mr Harrison's version of the first discussions in relation to Kembla Street was put in his first affidavit as having taken place on 9 September 1988 at a meeting between himself, Mr Cameron and Mrs Schipp. Mr Harrison deposed that they had discussed the response to their advertising campaign for the sale of the individual units at Mary Street and had noted that they had received no response although they had received two offers for sale. According to Mr Harrison in paragraphs 88 and 89 of his first affidavit, the meeting concluded with a decision by the three persons present, that the better decision was to auction the site. Mr Harrison also deposed that at this same meeting Mrs Schipp had discussed the prospect of buying his site at 55 Kembla Street and developing a three-level office block. He deposed that the decision was made to write to the Commonwealth Bank and seek development finance. He deposed that Mrs Schipp had liked the idea and had said to the meeting :

"I haven't got any superannuation and if we build the office at 55 Kembla Street it would give me a good income for my future when I finish teaching music."

294    He deposed that at the same meeting Mrs Schipp had told Mr Cameron and himself about her involvement with her husband in building projects of this nature, and that she never raised any opposition to selling Mary Street.

Findings

295    I find that although Mrs Schipp may have been, in general terms, made aware of the Kembla Street property earlier, the first in-depth discussion in relation to the Kembla Street property with Mr Cameron and Mr Harrison took place at or about the same time as the discussion where Mr Cameron and Mr Harrison told Mrs Schipp that she had a tax problem, namely at some time between 15 October 1988 and early December 1988. I find that Mr Cameron and Mr Harrison first introduced the subject of Mrs Schipp possibly investing in the Kembla Street property by saying that they were going to build a building on Mr Harrison's land and wanted to form a syndicate to do this and wanted to know how much money she could put into the land. Mr Cameron said words to the effect:

"George has this land at Kembla Street for sale at $600,000. It is a very upmarket part of Wollongong. It would be a great superannuation thing for you. We are going to make up a syndicate to build a big office block on it."

296    Mrs Schipp said that she needed to think about this and would probably take her money out of Mary Street and put it in the bank until she found another property which she could rent out.

25 October 1988 - Interview at the Commonwealth Bank with Mr Cameron and Mr Harrison

297    On 25 October 1988, Mr Cameron and Mr Harrison were interviewed at the Commonwealth Bank. Significantly, Mrs Schipp did not participate in this interview and, as I find, had not been informed that any meeting was to take place with the Commonwealth Bank at this time. 298    The bank manager's diary note includes the following :

"'Cameron was questioned as to what stage had been reached in putting this project together and at this stage no plans have prepared, no formal intentions to lease have been obtained, no DA or BA Applications have been prepared. On this basis applicants were advised that until all of the above together with detailed plans, specifications and firm tender prices for construction were provided, there was no application to consider."


The same bank manager's diary note includes the statement :

'We cannot proceed with any half baked proposal for these people . . .

299    Although Mr Cameron, in evidence, denied that this note was an accurate statement of what the Bank had been informed, I find that the note does accurately record the content of the conference.

Mid-November 1988 - Request for Interest

300    In about mid-November 1988, Mrs Schipp spoke with Mr Harrison and said that she wanted him and Mr Cameron to pay her interest on her money. Mr Harrison said that he would have to discuss Mrs Schipp's proposal with Mr Cameron. Shortly thereafter, Mr Harrison said to Mrs Schipp that he and Mr Cameron had decided that they were not going to pay her interest. He said that she could have her money but she would have to pay $20,000 in tax and that this was a matter for her choice. 301    Following these conversations with Mr Harrison, Mrs Schipp came to believe that she had no choice other than to pay $20,000 tax or pay Mr Cameron and Mr Harrison her share of the profits interest free. She believed that Mr Cameron and Mr Harrison's scheme of taking her share of the profits was a legal way of dealing with the tax problem. She had no understanding of tax laws and relied upon what Mr Harrison had told her in relation to her having a tax problem.

Bank Manager's Diary Note of 29 November 1988

302    By 29 November 1988, Mr Harrison had been advised by the Commonwealth Bank that should interest and settlement obligations for his foreign currency loan not be met at the next call-over, the Commonwealth Bank had determined that it would have little alternative but to seriously consider appointment of receivers and managers to oversee Emibarb's operations. 303    The bank manager's diary note confirms that at this stage the possibility of the joint venture development of the Kembla Street property had been given up and an outright sale had been sought. 304    The Diary Note includes the following :

'As part of the approach Harrison has been advised that should interest and settlement obligations for the foreign currency loan not be met at next rollover, we have been advised . . . that there would be little alternative but to seriously consider appointment of receivers and managers to oversee Emibarb's operations. This approach has evidently had the desired effect as Harrison has now advised that sale of both Kembla and Market Street properties and the Cafzan site have virtually been finalised. As of the date of this report we are unable to confirm sales as contracts have not yet been issued, however, Harrison's advices are detailed below:


Kembla and Market Streets

The possibility of some form of joint venture development of this site has now been given up and an outright sale has been sought. Harrison claims discussions have been held with a local property valuer, J.M. Bell, to purchase the property for $600,000, however, a delayed settlement of 6 months is being sought by this prospective purchaser which Harrison realises is not feasible and the prospective purchaser has been advised that settlement must be effected by the end of January . Subsequent to this initial approach, a second prospective purchaser is also supposedly interested in the property and Harrison is confident a sale can be arranged within a couple of weeks. A cash contract will be a prerequisite to the sale of this property with settlement required by the end of January at Harrison's insistence. The borrower realises he may have to negotiate a sale price lower than $600,000 to effect a quick sale but claims he is prepared to negotiate to effect the required result.'
The same banking document includes the following :

' Rollover Costs/Settlement Obligations

As of the date of this report we understand that above costs amount of $US153,321.00 which at current exchange rate . . . equates to $A175,304.00. Our recent discussions with the borrower in respect of his proposals to meet these costs have resulted in the following information.

The recent sale of the development site located at Thirroul, of which Harrison was a one-third partner has netted some $300,000 with Harrison's share being $100,000. These funds were originally earmarked for further property speculation, however, following settlement, due within 2 weeks, Harrison's share is to be deposited with CBA. . . . Having apparently realised the seriousness of his position, Harrison also proposes to realise on personal assets including gold bullion and coins which he anticipates are worth $100,000 to $120,000. Realisation of these assets will bridge the gap to meet the required rollover costs/settlement obligations. We have clearly informed Harrison that all funds are to be placed with the Commonwealth Bank before rollover date.' [Emphasis added]

305    I find that Harrison had informed the Commonwealth Bank that his share of the Mary Street property sale entitled him to $100,000 of the proceeds of sale. This was an untrue statement made, as I find, to assist Mr Harrison in the extremely difficult financial position which, by this point in time, he had in relation to his borrowings from the Commonwealth Bank. 306    At about this time, that is to say in about late November 1988, Mr Harrison spoke to Mr Watson. Initially, the conversations revolved around meeting the holding costs of the bank of the loan. Subsequent discussions between Mr Watson and Mr Harrison also revolved around the need for Mr Harrison's company to divest itself of assets to reduce exposure because of the company's growing inability to be able to meet its interest obligations. 307    In one of these discussions, Mr Harrison telephoned Mr Watson concerning the level of debt and said that he was selling his interests in Harrison and Biddle which was the legal partnership he had in Wollongong, and that he was going to use those funds to meet the interest costs on a particular rollover. Mr Watson asked Mr Harrison how much longer he was going to be in a position to be able to continue to sell such assets without actually having to start to reduce the loan, and Mr Harrison said to Mr Watson that it was getting near to the point where he had to start divesting himself of principal assets to reduce the exposure because Mr Harrison agreed that he was running out of other assets to sell. 308    Mr Watson's evidence, which I accept, was that he was constantly pressuring Mr Harrison to put forward proposals similar to this for divesting of assets. He had similar conversations to the conversation described above from time to time with Mr Harrison throughout 1988 and 1989.

Late November 1988 - Settlement and Pregnant Silence

309    In late November 1988, Mr Cameron told Mrs Schipp that the Mary Street sale was due to be settled within the next week. 310    Mrs Schipp did not hear further from Mr Cameron nor Mr Harrison in relation to this matter. Settlement had in fact taken place on 6 December. On settlement a cheque was made payable to Mr Harrison in the sum of $285,406.51. [Exhibit D3X at page 289E] The cheque was deposited on 7 December 1988 into an account with the Commonwealth Bank of Australia in the name of the Third Defendant in trust for the Third Defendant, the Plaintiff and the First Defendant. [See paragraph 322 and following]. 311    On or about 9 December 1988, Mrs Schipp telephoned Mr Cameron. She asked him when they were going to settle and he said that settlement had taken place a few days before this. Mrs Schipp said: "Well where's the money?" Mr Cameron said: "In Harrison's bank". Mrs Schipp said: "Why didn't you tell me?" Mr Cameron said: "You knew about settlement anyway". 312    Immediately after this conversation, Mrs Schipp telephoned Mr Harrison who she was not able to speak with as he was not available, so she was informed, until 13 December. When she was finally able to speak to Mr Harrison on 13 December she said to him: "Where's the money from the settlement". Mr Harrison answered by saying: "The money is in the Commonwealth Bank. You can contact them and they will tell you where it is". 313    The off-handed way in which Mrs Schipp learned that settlement had taken place and was told that she could contact the Commonwealth Bank in order to find out where the money from the settlement was, did much to worry Mrs Schipp who was due to fly to Queensland where she was visiting her sister on the following day. 314    Mr Cameron in his affidavit, said that Mrs Schipp had instructed Mr Harrison to invest the funds in a trust account with the Commonwealth Bank so that a credit line should be established with the bank making it easier to obtain development finance for the Kembla Street property. I reject this evidence. No such instruction was ever given. At the time Mrs Schipp learned that settlement had taken place, she had not had any recent discussions with Mr Cameron and Mr Harrison in relation to investing in Kembla Street. The matter had not been put to her since she had previously indicated that she would need to think about it. As to the diary note dated 30 November 1988, part of Exhibit P32, I find that this diary note was not then entered into Mr Cameron's diary but was inserted into the diary at a much later date.

The Bank's memorandum dated 6 December 1988

315    The Bank's memorandum dated 6 December 1988 makes clear that for some time up to that date the Bank had been awaiting a report confirming the details of proposed property sales to reduce debt load and that all outstanding security matters had been completed. Harrison was to call for discussions on 6 December and so the branch had been asked to provide a report with whatever information they had available. That report set out the then position. [Exhibit D3X at page 285] The report noted that due to several unsuccessful deals during the current interest period, a potential settlement obligation of $US83,558.00 existed. The borrower only had until 31 January 1989 to reduce or eliminate this.

The note includes :
'George has promised to have $132,000 in the sinking fund account by 31 December 1988 from sale of properties that he has interests in. Further sales of personal assets valued at around $120,000 are said to be being undertaken to make up the difference and will also be required now to satisfy residual CBFC debt.'

Letter of 7 December 1988 from Don Cameron Real Estate to Mrs Schipp is never received

316    A letter was tendered dated 7 December 1988 from Don Cameron Real Estate to Mrs Schipp and signed by Mr Potter advising that the matter, having settled, Mrs Schipp should find enclosed bank cheques in the sum of $24,417.85 being the balance of the deposit. I find that this letter was never received by Mrs Schipp. 317    The amount referred to in the document which went into evidence was in fact deposited on 14 December 1988 into the account with the Commonwealth Bank.

Reasons why the moneys were placed with the Commonwealth Bank in Mr Harrison's name

318    Mr Cameron was asked why the money received on settlement of the Mary Street property sale was not paid directly to Mrs Schipp, to himself and to Mr Harrison by bank cheque by direction to the purchaser at settlement. He was asked why, as he recalled it, the funds went into the account with the Commonwealth Bank in Mr Harrison's name. 319    Mr Cameron's evidence was that the funds were put into this account in order to earn interest to which Mrs Schipp had agreed. He gave evidence that the funds were paid into a central bank account in order that the funds be there as Mrs Schipp was entering also into the Kembla Street project and therefore, so Mr Cameron said, the funds would be set aside until a point of time of an agreed situation; that they would be dispersed and then projected into the Kembla Street project development. 320    Mr Cameron was asked :

"Q. So do you say before Mrs Schipp was told on . . . 8 December . . . that settlement had taken place and that the money was invested in the Commonwealth Bank, she had already said to you and to Mr Harrison that the money was to be invested in Kembla Street?
A. That the money would be put aside and that the money would be - that the structure of going into Kembla Street would be coming from at a point of time when that disbursement was going to happen, which happened on 30 January".

321    I do not accept this evidence of Mr Cameron. Mrs Schipp was not told that the funds from the sale of Mary Street would be placed into the Commonwealth Bank in order that they be held until projected into the Kembla Street project development. Mrs Schipp, as I find, had received no information whatever about the proceeds of the Mary Street settlement. She was unaware before the settlement as to what would occur with the funds, and after the settlement and until she spoke to Mr Harrison, she was totally unaware of the funds having been placed in the Commonwealth Bank. She gave no permission for the funds, or any part of the funds, to be placed with the Commonwealth Bank. It was a surprise to her to learn, and to learn in the off-handed fashion to which I have already referred, that the funds had been placed in the Commonwealth Bank. She was entitled to be anxious, and extremely anxious, as to what it was that was going on in relation to these moneys. Mr Cameron and Mr Harrison played upon this anxiety in their later discussions with Mrs Schipp in relation to Kembla Street. This parameter of the later discussions lay beneath the surface but represented a fact of life and a significant bargaining chip in the armoury of the Cameron Harrison Interests.

The Net Proceeds of Sale of Mary Street are placed into a Solicitor's Settlement Deposit Account

322    On 7 December 1988 [Transcript page 1628] an account entitled 'Solicitors Settlement Deposit Account' was opened by Mr Harrison with the Commonwealth Bank. The net proceeds of the Mary Street sale were deposited into the account. 323    On 23 December 1988 Mr Harrison wrote a letter which Mrs Schipp could not recall receiving. In that letter Mr Harrison informed Mrs Schipp that 'the net proceeds of [the sale of Mary Street] were invested with the Commonwealth Bank in a Solicitors Settlement Account . . .'. 324    The account opening card, signed by Mr Harrison, read 'George Andrew Harrison in trust for George Andrew Harrison, Donald Ross Cameron and Delcie May Schipp'. 325    I reject Mr Harrison's evidence that the Bank, not he, determined to call the account a solicitors settlement account. Mr Harrison was asked:

'Q. . . . did you or did you not regard that [solicitors settlement account] as an apt description of that account?
A. That's how the bank described it, yes.
Q. Did you, Mr Harrison, regard it as an apt description of the account?
A. No.'

326    This evidence was, in my opinion, false and was given because Mr Harrison well knew in being cross examined, that Mrs Schipp's case sought to place the mantle 'solicitor' upon the capacity in which Mr Harrison acted in opening and retaining the account. 327    Mr Cameron, at Transcript pages 1291 and 1292, recalled Mr Harrison using the words 'solicitors trust account' and possibly also 'solicitors settlement account', albeit in a conversation said to have taken place with Mrs Schipp. I reject the evidence that such conversation took place. The evidence does, however, confirm me in the holding that Mr Harrison well knew and intended that the account be styled 'solicitors settlement account'. 328    The relevance of this is that Mr Harrison continued to act as a solicitor for the vendor in opening the account and to so act until, in late January 1989, the proceeds of the deposit were paid out. 329    I reject Mr Cameron's evidence that there was a meeting on 8 December 1988 between himself, Mr Harrison and Mrs Schipp in the course of which Mrs Schipp had asked when the matter was to be settled, and in which Mr Harrison had said that settlement took place on the Tuesday, and that he had invested the money in the Commonwealth Bank "as we agreed". 330    Mrs Schipp was asked whether, as at 8 December 1988, she did not trust Mr Harrison at all. Her answer was: "I did trust him in the first instance. It was only when he offhandedly said to me "Find the money in the bank" that I suddenly became wary". I accept this evidence.

Mr French expresses the view that he is concerned as to the viability of the venture and the looseness of the financial projections

331    Mr French was a lecturer at TAFE who met, became friendly with and then carried on work for Mr Cameron from the early 1980's up to the late 1980's and later in about 1993 and 1994. His initial task was to maintain trust accounts in providing bookkeeping expertise to Mr Cameron's business. He was paid for his services. He regarded himself as obtaining exposure to 'real life' business to assist him in his lecturing and at the same time was being paid for imparting his expertise. Initially he would keep a record of the hours which he spent, on the basis of which record he was reimbursed, and later he was employed on a retainer basis, being paid an amount per week. He understood his role as to supervise the trust accounting bookkeeping aspects of Mr Cameron's business. 332    In about 1993/94 when Mr Cameron moved back into the residential real estate business again, Mr French who had ceased to work for Mr Cameron since 1988, returned and this time his function was again the maintaining of trust records. On this occasion, the reason Mr French became involved, was because Mr Cameron had become involved in the residential property management market in which he had not previously been involved, so that the trust records required to be changed slightly to adapt to the new business interests of Mr Cameron. Here again in 1993/94, Mr French was paid on an hourly basis which then moved to a retainer. 333    Mr French's income, received from Mr Cameron's businesses, supplemented his income from the university. 334    Mr French gave evidence that to his observation, in early December 1988 when he first heard of the Mary Street project, most of the details of the development were vague and financial projections were quite loose. His evidence was that when he attended a meeting some two weeks later, on about 20 December, the details of the development appeared no more precise or definite to him than at the previous meeting. His further evidence was that at the meeting of 6 January, he expressed concern as to the viability of the venture and the looseness of the financial projections.

8 - 20 December 1988

335    Mr French gave evidence that he first met Mrs Schipp on Thursday 8 December 1988 at a meeting held in Mr Cameron's office at which Mr Harrison and Mr Cameron were present and that Mr Murphy of AGC joined the meeting. His evidence was that he observed that the parties were at ease with each other and were confident and optimistic and that Mr Cameron had said that they had done very well on Mary Street and Mrs Schipp had said that she was very happy with the result and asked whether she would definitely receive her one-third share of the profit as well as the interest on the money she had loaned. According to Mr French, Mr Cameron replied: "Del, George and I said you would receive one-third of the profits and you will". 336    Mr French had not been able to fix the precise date of this meeting in his first affidavit; referring to it as "early December 1988". However, some three years later, he made a second affidavit in which he fixed the date of the meeting by reference to Mr Cameron and Mr Harrison's diary entries then shown to him. 337    Mr Murphy of AGC deposed that he first met Mrs Schipp in early January 1989. I find that Mr French was incorrect in his recollection and that he has confused his dates. The meeting with Mr Murphy took place in early January 1989. 338    I find that no meeting with Mrs Schipp present took place on 8 December 1988. Mrs Schipp had not, as I find, spoken to Mr Harrison or Mr Cameron since being told by Mr Cameron in late November that the Mary Street sale was due to be settled within the following week. I have already dealt with her telephone call to Mr Cameron of 9 December. 339    Mr Zander, a pharmacist who, through his company, came to invest in Kembla Street, in his first affidavit, deposed that in mid-December he was present at a conversation with Mr Cameron, Mr Harrison and Mrs Schipp at which Mr Cameron or Mr Harrison said: "Didn't we do well out of Mary Street - wasn't that lucky"; that Mrs Schipp replied: "Good. I'd like to do it again" and that Mr Harrison said "Thank God we got out of it at that price. The poor chap who bought it has no profit left in it". 340    Some three years later, Mr Zander in his second affidavit deposed that, aided by reference to Mr Cameron's diary entry of 10 December 1988, he now believed the meeting to have taken place on 10 December 1988. 341    I find that no such meeting took place. Mr Zander is likely to have confused the dates with one of the meetings of late December 1988 or early January 1989. In fact on 10 December Mrs Schipp, as I have already found, had been trying without success to contact Mr Harrison; she finally managed to speak with him on 13 December. Mr Zander was confused on a number of aspects although, as I find, he gave his evidence believing the same to be truthful. An example of Mr Zander's erroneous recollection is his evidence that the contract for sale was executed on 30 January 1989 and not on 7 January 1989 [paragraph 50 - First Affidavit]. The passage of time has meant that Mr Zander's evidence is not always reliable. His evidence was frequently dependent upon the correctness of diary entries which were not his own. 342    Mr Cameron had also deposed in his affidavit that a meeting took place on 10 December 1988 at which there were present himself, Mr Harrison, Mrs Schipp and Mr Zander. He then gave evidence that on 10 December, Mr Zander at the meeting said that he was prepared to invest $100,000, that Mrs Schipp was contemplating investing $100,000 and that he and Mr Harrison were each contemplating investing $50,000.00. 343    I reject so much of Mr Cameron's and Mr Harrison's evidence as alleged that meetings with Mrs Schipp took place on 8 December and 10 December 1988. 344    Mr Zander also deposed in his first affidavit to a meeting with Mr Harrison, Mr Cameron, Mrs Schipp and Mr French of late December 1988 in the course of which the following was, inter alia, said :

Mrs Schipp - "Will I definitely be receiving my one-third share of the profits as well as the interest on the money I have loaned to you?"
Mr Cameron - "Del, George and I have always said we would give you a gratuitous payment even though you pulled out of the venture."
Mr Zander - "I have organised a loan of $100,000 from the ANZ Bank and I am happy to invest this in the project."
Mrs Schipp - "Bob, I am also happy to invest $100,000. I have spoken to others about the project and I feel it would be a good superannuation for me."

345    Three years later, aided by Mr Cameron and Mr Harrison's diary notes, Mr Zander placed this meeting as having occurred on 20 December 1988. 346    I reject Mr Zander's evidence - here again he is likely to have become confused, possibly through discussions over the years with Mr Cameron and Mr Harrison as to what had occurred. I do not find that he intentionally gave false evidence. It was at all times plain to me, that he was endeavouring to do his best to recall events which were extremely hazy in his mind. 347    Mr Cameron deposed that, on 20 December 1988, a meeting took place between himself, Mrs Schipp, Mr Harrison, Mr Zander and Mr Skelcher. According to Mr Cameron, Mrs Schipp said nothing about the proceeds of sale of Mary Street during this meeting or as to where they were. 348    Mr Cameron asserts that on this occasion a valuer named Mr Bell was put through to the meeting on a loud speaker telephone and that Mr Bell advised that Kembla Street was, in his opinion properly valued at $600,000. 349    Mrs Schipp denied having been present in Mr Cameron's office on this occasion when a Mr Bell was spoken to on the loud speaker phone, and denied ever having been present in Mr Cameron's office when Mr Cameron was speaking to Mr Bell on the loud speaker phone. Whilst I accept that Mrs Schipp has no present recollection of hearing Mr Bell on a speaker phone indicate that Kembla Street was, in his opinion valued reasonably at $600,000, the combined evidence of Mr Cameron and Mr suggests, and I accept, that at some stage such a discussion did take place. This is likely to have been in late December or early January. 350    Mr French had also deposed that he attended a meeting on 20 December 1988 at which there were present Mr Cameron, Mr Harrison, Mrs Schipp and Mr Zander. He said that at this meeting Mr Harrison, Mr Cameron and Mrs Schipp again expressed complete satisfaction at the conclusion of the Mary Street development and that all had seemed relaxed in their relationship with each other. He said that the purpose of the meeting as he recalled it was to discuss the proposed development at Kembla and Market Streets. I reject this evidence - Mr French is likely to have been confused. The meeting may have taken place in very late December or early January. 351    I reject also so much of Mr Cameron's and Mr Harrison's evidence as suggested that a meeting took place on 20 December 1988 with Mrs Schipp. Mr Cameron had deposed that on 20 December 1988 Mr Skelcher was present as well as Mrs Schipp, Mr Harrison, Mr Zander and himself. Mr Skelcher, however, gave no evidence of attending such a meeting. 352    In fact, as I find, Mrs Schipp having just returned from Queensland, conferred with Mr Baird on 21 December 1988. She had not seen Mr Cameron or Mr Harrison since weeks earlier.

13 December 1988

353    Mr Watson's diary notes of 13 December 1988 include the following :

"For many months now we have been trying to get George to accept the seriousness of his financial situation and to finalise sales of various securities and provide additional security sought in our memorandums of 8 April and 12 April."

354    The same diary note refers to an interview with Mr Harrison which took place on 13 December 1988. The diary note includes the words :

"During the entire interview George . . . kept seeking assurances that the Bank would not put in the receivers to his companies. He was told that the Bank's actions would based on how George performs with the sale of his various securities. These proposals are as follows . . .


Market and Kembla Streets

Contracts have yet to be exchanged, however, George states that it should be completed by next Friday 16 December. One buyer wants deferred settlement, 6 months forward, which George concedes not good enough. The other party is prepared to settle early as necessary George hopes it can be completed by 31 January 1989 (rollover date). If necessary he states he is prepared to accept a lesser price to secure an early settlement" . [emphasis added]

355    The same diary note includes the following :

' Upcoming Rollover

With settlement obligation he is looking at an all up bill of approximately $A180,000 on 31 January 1989. He stated he had no chance of coming up with that sort of money but would be able to meet interest, AWT, and a portion of the obligation. It was agreed that on that basis he could rollover again in a foreign currency, however, dealing rights will be withdrawn. He appeared to accept this and clearly understands that if interest cannot be met the loan will be declared in default and brought back into Australian dollars in terms of clause 8 of the stop/loss on 31 January 1989.' [emphasis added]

356    Certainly by 13 December 1988 and prior to that point in time Harrison was well aware of the rapid approach of the 31 January 1989 rollover date on his foreign currency loan. 357    The same diary note includes reference to the fact that Harrison had stated several times during discussions that he was then doing his utmost to clear his debt 'and kept seeking assurances that the Bank would not move against him. This assurance was not given .. . '.

13 December 1988 - telephone call from Mrs Schipp from Queensland to a Sydney solicitor, Mr Baird

358    On 13 December 1988, Mrs Schipp, who was then in Queensland, telephoned Mr Baird, a solicitor in Sydney because of her anxiety in relation to what had happened to the Mary Street proceeds of sale. Mr Baird had acted for Mrs Schipp in Family Court proceedings finalised in late 1986 and in relation to a Maintenance Agreement concluded in January 1989. She said: "I am sorry to disturb you at home but I am beside myself with worry . . . I have rung Harrison and Cameron and they very offhandedly told me that the proceeds of the sale were in the Commonwealth Bank and that I had to ring the bank if I wanted to find out where the proceeds were. Their attitude really concerns me - so I want you to freeze the CBA until I get home."

Mrs Schipp sees Mr Baird on 21 December 1988

359    Mrs Schipp having returned from Queensland, conferred with Mr Baird on 21 December 1988. Mr Baird who gave evidence, said that Mrs Schipp seemed to him to be distressed when he saw her. 360    In the course of this meeting, as Mr Baird deposed and as I find, Mrs Schipp showed him the Agreement of Sale of the Mary Street property by Solano to her and also the First Joint Venture Agreement. 361    Mrs Schipp said to Mr Baird that she did not want to sell the property so quickly and had wanted to go through with the development considering it a long-term thing. She said that she felt that after she had bought the property the rules had changed so that she really did not know what was happening at that time. She said: "I want to get away from Don Cameron and George Harrison and get my money and profit out. I put in $154,696.83 and I paid all the extra expenses". 362    Mrs Schipp also produced to Mr Baird on this occasion records of the payments she had made in relation to Mary Street. While she was present, Mr Baird dictated a letter to Mr Cameron and to the Commonwealth Trading Bank which were typed on 22 December 1988. These are referred to below. 363    Mrs Schipp gave evidence that she gathered from Mr Baird that she had done the wrong thing in relation to the Joint Venture Agreement which she had signed. She said that she had had her thoughts on what the joint venture was all about but 'When the nitty gritty was all sorted out, what was in the joint venture was quite different to what I thought it was'. 364    Mrs Schipp gave evidence that from 21 December to 24 December she was speaking to Mr Baird and did not rely upon Mr Harrison. 365    I find that Mrs Schipp did not show Mr Baird a copy of the Second Joint Venture Agreement when she saw him in late December 1988. Mr Baird could not recall seeing the document on 21 December 1988. His best recollection was that he may have first seen the Second Joint Venture Agreement in or around June 1991. He gave evidence that he was as sure as he could be that he had not seen this joint venture agreement on 21 December 1988 or in about December 1988. I accept this evidence.

22 December 1988

366    By letter, dated 22 December 1988, Mr Baird wrote to the manager of the Commonwealth Trading Bank of Australia in Wollongong advising that his firm acted for Mrs Schipp, one of the beneficiaries to an account entitled 'Trustee Account G.A. Harrison for G.A. Harrison, D.R. Cameron and D.M. Schipp'. He advised that there was a dispute between the parties regarding the resolution of the funds in the account and he instructed the Bank not to deal with the proceeds of the account without the authority of Mrs Schipp to be conveyed through his firm.

Mr Baird writes to Mr Cameron on 22 December 1988

367    By letter, dated 22 December 1988, Mr Baird wrote to Mr Cameron advising that he had been consulted by Mrs Schipp with regard to the joint venture undertaken with Mr Harrison and Mr Cameron to purchase the Mary Street property. He advised that Mrs Schipp believed that the sale had been concluded and the proceeds invested with the Commonwealth Bank. He advised that up to this point in time Mrs Schipp had not been supplied with a settlement statement when the property was acquired nor sold. He asked for a copy to be forwarded to Mrs Schipp from the solicitors who acted on the purchase and the sale. He also listed the expenses paid by Mrs Schipp towards the venture in order to enable, as he said, a complete accounting to be undertaken to enable the joint venture to be concluded. 368    Mr Baird further advised that Mrs Schipp reserved her right to appoint her own accountant to investigate the matters. He advised that on his instructions, unless his firm received a Statement of Account from Mr Cameron by 5pm on 12 January, Mrs Schipp's accountant would be appointed to investigate the matter. 369    Mr Baird also said :

"In the meantime we understand that funds have been invested in a trustee account with the Commonwealth Bank, Wollongong Branch in the name of Mr Harrison. Our client seeks the release from that account of all moneys paid by her without delay and payment to her of interest at the rate of 14% on the amounts contributed by her to the fund."

22 December 1988

370    On the same day Mr Baird delivered the letter to Mr Cameron.

On 23 December 1988 Mrs Schipp wrote to Mr Baird in the following terms:

"Sorry to be a worry to you but is it at all possible to do more about getting my money out of George Harrison's name at the Bank today as your office will be closed all next week till 4.1.89 which will seem like a lifetime to me.
George is usually at his [sic] until about 9.30am each day . . . Brian I am so worried about this situation - these two men should be exposed for what they have done to me, just who can you trust if you can't trust people in executive positions. I feel this matter is urgent."

22 December 1988

371    Mr French deposed that on this day he received a phone call from Mr Cameron requesting that he finalise the accounts for Mary Street as a matter of urgency because Mr Cameron said that he had received a letter from Mrs Schipp's solicitor demanding immediate presentation of this information.

23 December 1988 - letter from Harrison

372    On 23 December 1988, Mr Harrison wrote to Mrs Schipp in the following terms :

"The net proceeds of the sale of 16 Mary Street were invested with the Commonwealth Bank in a solicitor/settlement account in the names G.A. Harrison, Don Cameron and Delcie Schipp.
I have asked the Bank to give me a letter of confirmation. That letter will be given on Wednesday 28 December . . . "

Commonwealth Bank letter of 23 December 1988

373    By letter, dated 23 December 1988, the Commonwealth Bank wrote to Mr Harrison confirming that the sum of $307,824.36 was held in solicitor's settlement deposit account in the name of G.A. Harrison, trustee for G.A. Harrison, D.R. Cameron and D.M. Schipp.

Mrs Schipp still believed the funds were at risk as at 23 December

374    Mr Baird was asked in chief as to, whether as he recalled it, Mrs Schipp was or was not satisfied, by 23 December 1988, as to whether the money was still at risk. He recalled telling Mrs Schipp about the situation but did not know what her position was in relation to it.

23 December 1988

375    On approximately this day, according to Mr French's evidence, he attended Mr Cameron's office to prepare a reply to the request from Mrs Schipp's solicitor.

Mrs Schipp sees Mr Baird on 24 December 1988

376    On 24 December 1988, Mrs Schipp had a meeting with Mr Baird who had already seen Mr Harrison at the Lagoon Restaurant. Mr Baird told Mrs Schipp that Mr Harrison had said to him that the money was okay and that Mr Harrison and Mr Cameron would look after her and not to worry. Mr Baird also told Mrs Schipp that Mr Harrison had told Mr Baird about the Kembla/Market project and had said what a good thing it was going to be. Mr Baird said to Mrs Schipp that if he had a few dollars to spare he wouldn't mind putting his money in it. Mrs Schipp then said "So I sort of felt he sort of gave me a little bit of confidence back in the thought that he would put money into something with these fellows". Mrs Schipp accepted that Mr Baird, her solicitor, had advised her that, in his opinion, from what he had heard, Kembla Street was a good investment and she gave evidence that she was comforted by his advice. However, even though Mr Baird had said this to her, she gave evidence that: "I still was very wary and it was not until the meeting of 3 January that I actually thought - 'Well this has to be alright'". She did give evidence that she relied on Mr Baird's advice that Kembla Street looked like a good investment.

Mr Brown is still involved in Kembla Street

377    In December 1988, according to Exhibit D3X at page 284, Mr Harrison told Mr Cameron that a Mr Brown was going to buy Kembla Street.

Prior to 28 December 1988 Mrs Schipp was afraid of Cameron and Harrison

378    In evidence, Mrs Schipp said that before 28 December 1988 she was becoming very afraid of Mr Cameron and Mr Harrison.

28 December 1988

379    A factual issue in high contest arose as to whether or not a letter dated 28 December 1988 from Mr Cameron addressed to Mr Baird was written on that date or many months later. 380    I accept Mr French's evidence that he and Mr Cameron worked on preparation of aspects of a proposed letter to Mrs Schipp. Mr French worked on the figures and calculations. He also gave Mr Cameron some advice on the setting out of the document. Mr French was not able to recall seeing the letter as drafted. He was not certain of the dates of his attendance at Mr Cameron's office to work on the calculations. 381    Mrs Schipp's counsel submitted that "it should be accepted that there was a draft letter in existence containing Mr French's calculations but . . . the evidence suggesting the 28 December letter was not delivered is more compelling than the evidence to the contrary".

[Plaintiff's Submissions Vol 1 page 66]

382    I deal below with the meetings of 28 December and early January. It seems likely that one result of the meetings was that Mr Cameron and Mr Harrison felt that the pressure to produce the letter had eased. Mrs Schipp said on 28 December that she had been wrong to doubt Mr Cameron and Mr Harrison. It is probable that draft sections of the final letter had been prepared. To what extent the draft may have been incomplete as at 28 December is unclear. 383    I find that no such letter was written on 28 December 1988. Mr Baird swore that he had no record of receiving such a letter and did not think that he had seen the letter until some time later. He said that he had only seen the letter a long time after 28 December 1988. The evidence suggesting that the letter was not delivered is more compelling than the evidence to the contrary. The letter is likely to have been prepared some time later. 384    The letter read inter alia :

‘Re 16 Mary Street, Thirroul

Dear Sir,

Further to your letter and request as of 22nd December, 1988 we set out below a summary in respect of the purchase by Mrs Delcie Joan Schipp.

The property was settled on the 4/5/88
Purchase Price $150,000.00
Less Deposit paid $5,000.00
$145,000.00
Plus
Adjustment in respect of Council Rates
paid $950.87.
Purchasers proportion 241 Days 626.12
Adjustment in respect of Water Rates paid
$560.00. Purchasers proportion 57 days 87.21
$145,713.33
Less Discharge of 2 mortgages paid 78.00
Amount required to settle purchase $145,635.33

Set out as shown below is a summary of cheques as paid by Mrs D Schipp on settlement day 4/5/88.
Commonwealth Bank of Australia $15,004.95
A.N.Z. Bank Group Ltd. $26,802.01
Wollongong Council 474.00
Egisto & Romano Solicitors costs 677.00
J. Solano Vendor. $102,677.37
$145,635.33

Please Note that an amount of $300.00 was paid to Mr F. Mathey Solicitor for rate enquiries searches and costs for acting on the purchase.

It might be noted at this point that Mrs D. Schipp entered into an agreement to acquire the property known as 16 Mary Street Thirroul and to develop the property with Mr Harrison and Mr Cameron.
The agreement provided that Mrs Delcie Joan Schipp’s moneys be used to acquire the property and that the expertise of Mr Harrison and Mr Cameron be used to develop the property. . . .

Part of the decision to sell the property at Mary Street, Thirroul was to put the proceeds of the sale into the purchase of Market Street and Kembla Street which was to be a development of a modern 3 level office development plus basement.
D.A. PLANS have been approved and Building Plans plus engineering plans should be ready in early January, 1989. . . .

Expenses paid by Mrs Schipp on account of the joint venture as agreed that an interest rate of 14% be paid from the date the expense was paid up to the date of settlement.
Set out below is a summary of expenses paid by Mrs Schipp. . . .

Finalisation Summary of Joint Venture between the parties as shown below calculated as at 27/12/88.

Amounts received by Mrs D. Schipp in respect of rents of 16 Mary Street, Thirroul.
Month of May 827.70
“ “ June 618.80
“ “ July 655.80
“ “ August 690.20
“ “ September 581.40
“ “ October 655.80
Total Received $4029.70
1/3 Share is $1343 each.

Balance of proceeds from sale of 16 Mary
Street, Thirroul. $307,824.36

Less Amounts paid by into
Venture by Mrs D. Schipp. $163,054.83
Interest due and payable to Mrs Schipp 13,282.42
sub-total $176,337.25

Plus Auction Expenses paid by-
Mrs D. Schipp 466.00
Don Cameron 467.00
G. Harrison 466.00 1,400.00
$177,737.25

Other Expenses paid by -
D. Cameron 149 Cert 70.00
J.P. Legal Searches 16.00 $177,823.25
$130,001.11

1/3 SHARE OF CAPITAL PROFITS AT THIS POINT.
As shown below.

AMOUNTS DUE TO Mrs D. SCHIPP.
1/3 share of profit 43,333.71
Less 2/3 Rent of Flats 2,686.00
Amount due to Mrs. Schipp $40,647.71
Plus Repayment of capital
contributions 466.00
$41,113.71
Plus repayment of original funds $163,054.83
Plus interest due to date of
settlement 13,282.42
Total Due $217,450.96

AMOUNTS DUE TO EMIBARB PTY LTD
1/3 share of profit $43,333.70
Plus 1/3 share of Rents Rec’d 1,343.00
Repayment of capital contributions
Auction Expenses 466.00
Total Due $45,142.70

AMOUNTS DUE TO DON CAMERON REAL ESTATE PTY LTD
1/3 share of profits $43,333.70
Plus 1/3 share of rents rec’d 1,343.00
Repayment of capital contributions
Auction expenses 467.00
Out of pocket expenses 86.00
149 Cert & Search fees. _________
Total Due $45,229.70

Plus interest is to be taken into account at this date of 27/12/88. $2031.75
CALCULATION to be divided as shown below.

D. Schipp 217,451 % = 70.64 = $1435.23
Emibarb p/l 5,143 % = 14.67 = $298.06
Don Cameron R/e 45,230 % = 14.69 = $298.46
$307,824 100.00% $2031.75

We trust that the above is satisfactory to you and your client and sets out fully the amounts now due to each Joint Venturer at 27/12/88.'

Of particular note it will be seen that the letter included the following :
'Part of the decision to sell the property at Mary Street was to put the proceeds of the sale into the purchase of Market Street and Kembla Street which was to be a development . . . of a modern office . . . DA plans have been approved and building plans plus engineering plans should be ready in early January 1989.'

The letter also included the following :

'We note that funds are now invested as from 6 December 1988 in the solicitor's settlement deposit account'.

385    Mr Cameron gave evidence that on 28 December 1988 a meeting took place at which there were present Mr Harrison, Mr Cameron, Mr Zander and Mr French, which meeting Mrs Schipp joined. 386    Mr French gave evidence that on 28 December 1988 he attended a meeting with Mr Cameron and Mr Harrison at which Mrs Schipp was not present. This meeting was to discuss the Kembla and Market Street development again. Mr French's evidence was that he soon understood that Mrs Schipp was no longer a party to this development and that this was largely at the insistence of Mr Cameron. He deposed that he assumed this was a result of the letter received from Mrs Schipp's solicitor.

The 'Roaring Meeting'

387    In approximately late December 1988, an important meeting took place. Mrs Schipp, having been informed by Mr Baird that his office would be closed until about 9 January 1989, telephoned Mr Harrison and asked him where her money was. Mr Harrison invited her to attend at Mr Cameron's office to discuss the matter and Mrs Schipp agreed to meet Mr Harrison and Mr Cameron at Mr Cameron's office shortly thereafter on the same day. 388    Before arriving at Mr Cameron's office, Mrs Schipp intended to tell Mr Cameron and Mr Harrison that she would not have any more dealings with them and that she wanted all of her money back. 389    When the meeting commenced, Mr Cameron bellowed at Mrs Schipp, in an extremely loud and harsh fashion, asking why she had put Mr Baird onto the Commonwealth Bank. He said: "We have never been so humiliated. After all that we have done to help you, we couldn't believe you'd go behind our back to freeze the Commonwealth Bank account". 390    Mr Harrison said words to the effect :

"Nobody has ever done this to me before in all my years of doing business in this town. Baird should never have contacted the Bank. I would never have handled the matter the way Brian Baird has".

Mrs Schipp's description of Mr Cameron bellowing at her was :
"It was like thunder, absolute thunder, to the extent that I almost passed out."

391    Mrs Schipp said in evidence that "the bellowing would have gone on for some minutes - I honestly think that I passed out for a few minutes". 392    In cross-examination, Mrs Schipp added that Mr Cameron had said to her "I have this letter from the Commonwealth Bank and they have frozen my funds. I have never been treated in this way before. In all the time that I have been in business I have never been in this situation". 393    Mrs Schipp was so afraid and shocked by the verbal attack upon her by Mr Cameron and Mr Harrison and by their obvious anger directed at her and by what I find was a threatening and harsh tone/manner in which these matters were put to her that she either passed out or came close to passing out and had to be helped into a chair. Mr Cameron and Mr Harrison lowered their voices once she had been helped into the chair and Mr Cameron said that she had been wrong to doubt them and said that he and Mr Harrison had been very good to Mrs Schipp and were there to help her. 394    Mrs Schipp said, and I accept, that the effect of Mr Cameron and Mr Harrison's way of speaking with her made her quite terrified of them at the time and upset her whole balance. 395    Mrs Schipp swore that she didn't think that anybody should be subjected to other people's roaring and then accepted that it was not roaring but it was very, very harsh. 396    Mrs Schipp when closely tested on the content of the conversation said that both Mr Cameron and Mr Harrison had said the same things to her which was that they did not like her getting Mr Baird to freeze the account. She said that she had been sat in a chair and started to then quieten down because she was distressed. Her evidence was that Mr Cameron and Mr Harrison were "trying to quiet me down because they could see that they had really distressed me". 397    Mrs Schipp said that she felt intimidated and harassed by Mr Cameron and Mr Harrison in this meeting. She said that she felt intimidated in the fact that they had tried to smooth her over so that she felt as though she was the problem. She said "They made me feel as though I had done something very, very wrong, that I had done something against them". She said "All I can say is, that was absolutely horrific, what they did to me". 398    Mrs Schipp also said that there were a lot of other things said during the course of this meeting which she really cannot remember. She said "It was very distressing. I know that there were other things said on that day and I just can't pull them together". All in all she said that she was there for about half an hour. 399    Mrs Schipp's evidence was that Mr Cameron and Mr Harrison made her out to be the problem. She said that she was outclassed and manipulated in that Mr Cameron and Mr Harrison "made me out to be the problem to the extent that I said to them 'Look, I'm really sorry that I have done this. I didn't mean to do this to you'".

Kembla Street is raised again

400    Following the Roaring Meeting, further meetings took place in late December and early January. Mr Cameron and Mr Harrison pressed Mrs Schipp to become interested in the Kembla Street land which Mr Cameron repeated was for sale by Mr Harrison at $600,000. Mr Cameron told Mrs Schipp in Mr Harrison's presence that Mr Harrison would get the land independently valued and that subject to this, he and Mr Harrison wanted to make up a syndicate to buy the land and build an office block on it. Mr Cameron said that he thought that Mrs Schipp should go into this project with himself and Mr Harrison and that they wanted to talk to Mrs Schipp about how much she would be prepared to invest. He said that Mrs Schipp should know by now that Mr Harrison and he were there to help Mrs Schipp. 401    Mrs Schipp said that she was not really very interested but just wanted her money out of Mary Street.

Mr Cameron said words to the effect :

"I really think you should consider it because it would be a great form of superannuation for you. The property is in a prime position and the offices are going to be upmarket offices with balconies, modern interiors, etc. What we will do is sell most of the offices off the plan to finance the development of the project. George and I are both taking one office each on the first floor. You will be able to have your choice of an office too."

402    Mrs Schipp said that if she was to buy one of the offices in the building perhaps she could put her $40,000 share of the Mary Street profits into that office. 403    Mr Cameron said: "That could probably be done. We may get Mr Bob Zander to invest in the development as well. He's a chemist with his own business and he seems to be interested in the proposal, however, we want to see what you think about it before we commit ourselves to Zander". 404    At some stage during this conversation or another conversation and at about the same time, Mr Cameron said to Mrs Schipp that Mr Harrison and he would be getting the project together and there would not be anything for Mrs Schipp to worry about. He said that all of the funding for the office development would come from pre-sales off the plan which he would be organising.

Mrs Schipp decides to 'hang in there'

405    It was only later, that is to say in early January, that Mrs Schipp determined to participate in the Kembla Street transaction. 406    At this time Mrs Schipp, as I find, was keenly aware that she had not yet received the proceeds of her Mary Street investment from Mr Cameron and Mr Harrison. She gave evidence, which I accept, that in early January she saw herself in a position of having to deal with Mr Cameron and Mr Harrison in order to get her money back. She gave evidence, which I accept, that she could not have walked away and that she really did not know precisely how the new transaction which was being discussed would work "but all I knew was that I had to hang in there". 407    At this time, she said that she was extremely wary of Mr Cameron and Mr Harrison. 408    Mrs Schipp was very closely cross-examined as to how she came, shortly thereafter, to enter a new joint venture investment with Mr Cameron and Mr Harrison in circumstances in which she believed that Mr Cameron and Mr Harrison had effectively tricked her in relation to Mary Street. The transcript includes the following:

'Q. You would have His Honour believe that you, in effect, meekly accepted the theft of $80,000 by these two gentlemen and entered into a new investment with them; that's correct, isn't it?
A. After they had manipulated me in such a way that there just didn't seem any other way out.
Q. And after this manipulating had taken place by 3 January you trusted them again, you would tell His Honour; correct?
A. What else could I do?
Q. You could have distrusted them, couldn't you?
A. . . . what you have to believe, understand, Mr Hutley, they had my money. . .
Q. I think the settlement. I think I told you the settlement was on 6 December.
A. The settlement was on 6 December. Here it is into January. I hadn't even had an accounting of any of the money. I hadn't even had a cent of the money given to me. I had to hang in there." [Emphasis added]

Late December 1988

409    Mr Bourke deposed that sometime during the first to third weeks of December 1988 Mr Cameron telephoned him and informed him that Mr Cameron was going to do an office development in Wollongong as a joint venture, that the other participants were Harrison, Delcie Schipp and Bob Zander and that they were having a meeting early in January. The conversation is, in fact, likely to have taken place, as I find, right at the end of December or in very early January. 410    Mr Cameron, according to Mr Bourke, asked him to be the accountant and invited him to come down to Wollongong for the meeting. In the course of the same conversation, Mr Cameron, according to Mr Bourke, told him that Mrs Schipp was thinking about changing her accountant, was worried that her present accountant was passing on information to her former husband and said that he had suggested to Mrs Schipp that Mr Bourke might act for her and asked whether Mr Bourke would do that. Mr Bourke recalls saying that he would.

Zander in Waiting Room Meeting

411    On or about early January 1989, Mrs Schipp attended at another meeting with Mr Cameron and Mr Harrison. On this occasion, Mr Bob Zander, the pharmacist, was in the waiting room. During the meeting, Mr Cameron asked Mrs Schipp whether she could put $150,000 into the project. He said that Mr Zander who was sitting outside was interested in the project but that he and Mr Harrison wanted to see how much Mrs Schipp wanted to put into the project before they spoke to Mr Zander. 412    Mr Cameron, Mr Harrison and Mrs Schipp had a lengthy discussion about the Kembla Street property and the prospects of development. Mr Zander remained outside throughout. 413    Mrs Schipp said that she would think about it and get back to them on the matter. When she left the meeting Mr Zander had departed from the conference room. 414    When Mrs Schipp arrived at home she thought about the proposal and telephoned Mr Cameron and said that she really could not invest $150,000 because she had quite a few expenses to carry out in repairing her unit. Mr Cameron asked whether she could put $100,000 into the project and said he thought she would be mad not to do this. He reminded her that as he had said earlier, it would be her superannuation. 415    Mr Cameron spoke quickly and persuasively about the benefits of the Kembla Street development. He said that if she would invest she would not regret it. "It will be a great investment. You can't go wrong, I'll help you rent out the office if you want me to. You won't need to do anything but put your money in. We'll attend to everything else." 416    By the conclusion of this conversation, Mrs Schipp said that she would invest $100,000 in the Kembla Street development.

Last Modified: 04/19/2001